**ExhibitNo. 10.2**

 

**CONFIDENTIAL**

 

 

**Confidential Materials omitted and filed separately with the****Securitiesand Exchange Commission.  Asterisksdenote omissions.**

 

 

**RESEARCHCOLLABORATION AND LICENSE AGREEMENT**

 

**among**

 

**GENAISSANCEPHARMACEUTICALS, INC.,**

 

**BAYER AG**

 

**and**

 

**BAYERHEALTHCARE LLC**

 

**dated asof January 15, 2003**

 

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Table of Contents

 
|       |        | Page                                                            |
|------------|-------------|-----------------------------------------------------------------|
| ARTICLE  I | DEFINITIONS |                                                            |
|       | 1.1         | “Affiliate”                                           | 1 |
|       | 1.2         | “Approved Diagnostic  Product”                        | 1 |
|       | 1.3         | “ASR Product”                                         | 2 |
|       | 1.4         | “Bayer  Genetically-Targeted [**] Drug Product”       | 2 |
|       | 1.5         | “Bayer IP Rights”                                     | 2 |
|       | 1.6         | “Bayer Know-How”                                      | 2 |
|       | 1.7         | “Bayer Non-[**] Drug  Product”                        | 2 |
|       | 1.8         | “Bayer Other [**] Drug  Product”                      | 2 |
|       | 1.9         | “Bayer Patent Rights”                                 | 2 |
|       | 1.10        | “Bayer Polymorphism”                                  | 2 |
|       | 1.11        | “Bayer Prior IP”                                      | 2 |
|       | 1.12        | “Bayer Resulting IP”                                  | 2 |
|       | 1.13        | “Bayer SADR  Polymorphism Association”                | 3 |
|       | 1.14        | “Bayer SER  Polymorphism Association”                 | 3 |
|       | 1.15        | “Calendar Quarter”                                    | 3 |
|       | 1.16        | “Candidate Genes”                                     | 3 |
|       | 1.17        | “Clinical Phenotype”                                  | 3 |
|       | 1.18        | “Collaboration”                                       | 3 |
|       | 1.19        | “Collaboration  Marker Association”                   | 3 |
|       | 1.20        | “Collaboration Period”                                | 3 |
|       | 1.21        | “Collaboration Plan”                                  | 3 |
|       | 1.22        | “Collaboration [**]  Haplotype “                      | 4 |
|       | 1.23        | “Collaboration  SADR Haplotype Association”           | 4 |
|       | 1.24        | “Collaboration  SER *HAP*TM  Marker Association”  | 4 |
|       | 1.25        | “Confidential Information”                            | 4 |
|       | 1.26        | “Control” or “Controlled”                   | 4 |
|       | 1.27        | “European Union  Country(ies)”                        | 4 |
|       | 1.28        | “First Commercial Use”                                | 4 |
|       | 1.29        | “FTE”                                                 | 5 |
|       | 1.30        | “Genaissance Collaborator”                            | 5 |
|       | 1.31        | “Genaissance  Genetically-Targeted [**] Drug Product” | 5 |
|       | 1.32        | “Genaissance IP Rights”                               | 5 |
|       | 1.33        | “Genaissance Know-How”                                | 5 |
|       | 1.34        | “Genaissance  Non-[**] Drug Product”                  | 5 |
|       | 1.35        | “Genaissance  Other [**] Drug Product”                | 5 |
|       | 1.36        | “Genaissance Patent Rights”                           | 5 |
|       | 1.37        | “Genaissance Prior IP”                                | 5 |
|       | 1.38        | “Genaissance Resulting IP”                            | 6 |
|       | 1.39        | Genaissance SADR  Diagnostic Product”                      | 6 |
|       | 1.40        | Genaissance SER  Diagnostic Product”                       | 6 |
|       | 1.41        | “Gene”                                                | 6 |
|       | 1.42        | “Genetically-Targeted  [**] Drug Product”             | 6 |

 

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|   |   |                                                  | Page |
|--------|--------|-------------------------------------------------------|------|
|   | 1.43   | “GNSC SADR *HAP*TM  Marker Association”     | 6    |
|   | 1.44   | “GNSC SER *HAP*TM  Marker Association”      | 6    |
|   | 1.45   | “*HAPTM* Builder Software”              | 6    |
|   | 1.46   | “*HAP*TM Database”                          | 6    |
|   | 1.47   | “Haplotype”                                 | 7    |
|   | 1.48   | “*HAP*TM Marker”                            | 7    |
|   | 1.49   | “*HAP*TM Marker  Association”               | 7    |
|   | 1.50   | “*HAP*TM  Marker Association Patent Rights” | 7    |
|   | 1.51   | “*HAP*TM Marker  Patent Rights”             | 7    |
|   | 1.52   | “*HAP*TM Technology”                        | 7    |
|   | 1.53   | “*HAPTM* Typing Processes”              | 7    |
|   | 1.54   | “Home-Brew Product”                         | 7    |
|   | 1.55   | “Know-How”                                  | 8    |
|   | 1.56   | “Locus”                                     | 8    |
|   | 1.57   | “Marker”                                    | 8    |
|   | 1.58   | “Marker Association”                        | 8    |
|   | 1.59   | “Net  Sales”                                | 9    |
|   | 1.60   | “Non-[**] Drug Product”                     | 9    |
|   | 1.61   | “Other Product”                             | 9    |
|   | 1.62   | “Party”                                     | 9    |
|   | 1.63   | “Patent Prosecution”                        | 9    |
|   | 1.64   | “Patent Rights”                             | 10   |
|   | 1.65   | “Polymorphism”                              | 10   |
|   | 1.66   | “Prior  IP”                                 | 10   |
|   | 1.67   | “Product”                                   | 10   |
|   | 1.68   | “Program Manager”                           | 10   |
|   | 1.69   | “Regulatory Authority”                      | 10   |
|   | 1.70   | “[**]  Trial”                               | 10   |
|   | 1.71   | “Resulting IP”                              | 10   |
|   | 1.72   | “Resulting Patent Rights”                   | 10   |
|   | 1.73   | “ROW Country(ies)”                          | 10   |
|   | 1.74   | “Royalty-Paying Party”                      | 10   |
|   | 1.75   | “Royalty-Receiving Party”                   | 10   |
|   | 1.76   | “SADR”                                      | 10   |
|   | 1.77   | “SADR Clinical Phenotype”                   | 10   |
|   | 1.78   | “SADR Confirmation Gene”                    | 10   |
|   | 1.79   | “SADR Diagnostic Product”                   | 11   |
|   | 1.80   | “SADR Expansion Gene”                       | 11   |
|   | 1.81   | “SADR  Plan”                                | 11   |
|   | 1.82   | “SADR Study”                                | 11   |
|   | 1.83   | “SADR Study Term”                           | 11   |
|   | 1.84   | “SER”                                       | 11   |
|   | 1.85   | “SER Clinical Phenotype”                    | 11   |

 

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|        |             |                                        | Page                                             |
|-------------|------------------|---------------------------------------------|--------------------------------------------------|
|        | 1.86             | “SER Confirmation Gene”           | 11                                               |
|        | 1.87             | “SER Diagnostic Product”          | 11                                               |
|        | 1.88             | “SER Expansion Gene”              | 11                                               |
|        | 1.89             | “SER  Plan”                       | 11                                               |
|        | 1.90             | “SER  Study”                      | 12                                               |
|        | 1.91             | “SER Study Term”                  | 12                                               |
|        | 1.92             | “[**]”                            | 12                                               |
|        | 1.93             | “[**] Diagnostic Product”         | 12                                               |
|        | 1.94             | “[**] Drug Product”               | 12                                               |
|        | 1.95             | “STRENGTH Trial”                  | 12                                               |
|        | 1.96             | “Sublicense Income”               | 12                                               |
|        | 1.97             | “Surrogate Marker”                | 12                                               |
|        | 1.98             | “Territory”                       | 13                                               |
|        | 1.99             | “Third Party”                     | 13                                               |
|        | 1.100            | “Valid Claim”                     | 13                                               |
|        | 1.101            | Additional Definitions                      | 13                                               |
| ARTICLE  II | COLLABORATION    | 14                                          |
|        | 2.1              | SADR Study  Management and Responsibilities | 14                                               |
|        |             | 2.1.1                                       | SADR Plan                                        | 15 |
|        |             | 2.1.2                                       | SADR Study  Objectives and Responsibilities      | 15 |
|        | 2.2              | SER Study  Management and Responsibilities  | 18                                               |
|        |             | 2.2.1                                       | Notice and Timing                                | 18 |
|        |             | 2.2.2                                       | SER  Plan                                        | 18 |
|        |             | 2.2.3                                       | SER Study  Objectives and Responsibilities       | 18 |
|        | 2.3              | Steering Committee.                         | 20                                               |
|        |             | 2.3.1                                       | Formation and Composition                        | 20 |
|        |             | 2.3.2                                       | Steering  Committee Functions and Powers         | 21 |
|        |             | 2.3.3                                       | Decisions of the  Steering Committee             | 21 |
|        |             | 2.3.4                                       | Minutes and Reports                              | 21 |
|        | 2.4              | Program Managers                            | 21                                               |
|        | 2.5              | Regulatory Cooperation                      | 22                                               |
|        | 2.6              | Exchange of Prior IP  Information           | 22                                               |
|        | 2.7              | Data Access                                 | 22                                               |
|        | 2.8              | Product Labeling                            | 22                                               |
| ARTICLE III | GRANTS OF RIGHTS | 23                                          |
|        | 3.1              | Research Grants                             | 23                                               |
|        |             | 3.1.1                                       | Genaissance Research Grant                       | 23 |
|        |             | 3.1.2                                       | Bayer Research Grant                             | 23 |
|        | 3.2              | Diagnostic Products Grants                  | 23                                               |
|        |             | 3.2.1                                       | Bayer Diagnostic  Products License               | 23 |
|        |             | 3.2.2                                       | SER Diagnostic  Products Marketing Rights        | 24 |
|        |             | 3.2.3                                       | Genaissance  Diagnostic Products Purchase Rights | 27 |
|        |             | 3.2.4                                       | Genaissance  Diagnostic Products License         | 27 |

 

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|        |                   |                                                  | Page                                        |
|-------------|------------------------|-------------------------------------------------------|---------------------------------------------|
|        | 3.3                    | Therapeutic Products Grants                           | 27                                          |
|        |                   | 3.3.1                                                 | Genaissance [**]  Drug Products License     | 28 |
|        |                   | 3.3.2                                                 | Genaissance  Non-[**] Drug Products License | 28 |
|        |                   | 3.3.3                                                 | Bayer [**] Drug  Products License           | 28 |
|        |                   | 3.3.4                                                 | Bayer Non-[**]  Drug Products License       | 29 |
|        | 3.4                    | Other Grants                                          | 29                                          |
|        |                   | 3.4.1                                                 | Bayer Other Products  License               | 29 |
|        |                   | 3.4.2                                                 | Genaissance Other  Products License         | 29 |
|        | 3.5                    | Genaissance  Right of First Negotiation               | 29                                          |
|        | 3.6                    | Term of Licenses                                      | 30                                          |
|        | 3.7                    | Special Sublicensing Rights                           | 30                                          |
|        | 3.8                    | Non-Suit  Covenant with Respect to Selected Products  | 30                                          |
|        |                   | 3.8.1                                                 | Genaissance Covenant                        | 30 |
|        |                   | 3.8.2                                                 | Bayer Covenant                              | 30 |
|        | 3.9                    | Unitary  Contract; Rights Upon Rejection              | 31                                          |
|        |                   | 3.9.1                                                 | Unitary Contract                            | 31 |
|        |                   | 3.9.2                                                 | Rights Upon Rejection                       | 31 |
|        | 3.10                   | Terms  of Licenses and Sublicenses Granted by Parties | 31                                          |
| ARTICLE  IV | PAYMENTS               | 32                                                    |
|        | 4.1                    | *HAPTM  Typing Fee*                                   | 32                                          |
|        | 4.2                    | Sequencing Fee                                        | 32                                          |
|        | 4.3                    | Bayer Royalties                                       | 32                                          |
|        | 4.4                    | Genaissance Royalties                                 | 36                                          |
|        | 4.5                    | Royalty Obligation  Exception                         | 39                                          |
|        | 4.6                    | Royalty Terms                                         | 39                                          |
|        | 4.7                    | Late Payments                                         | 41                                          |
|        | 4.8                    | Tax Withholding                                       | 41                                          |
|        | 4.9                    | Blocked Payments                                      | 41                                          |
|        | 4.10                   | Right of Recoupment                                   | 42                                          |
| ARTICLE  V  | INTELLECTUAL  PROPERTY | 42                                                    |
|        | 5.1                    | Ownership of Inventions                               | 42                                          |
|        |                   | 5.1.1                                                 | Genaissance Inventions                      | 42 |
|        |                   | 5.1.2                                                 | Bayer Inventions                            | 42 |
|        |                   | 5.1.3                                                 | Joint Inventions                            | 42 |
|        |                   | 5.1.4                                                 | Assignment                                  | 42 |
|        |                   | 5.1.5                                                 | Inventorship                                | 43 |
|        | 5.2                    | Patent Prosecution                                    | 43                                          |
|        |                   | 5.2.1                                                 | General                                     | 43 |
|        |                   | 5.2.2                                                 | Genaissance IP Rights                       | 43 |
|        |                   | 5.2.3                                                 | Bayer IP Rights                             | 43 |
|        |                   | 5.2.4                                                 | Costs and Expenses                          | 43 |
|        |                   | 5.2.5                                                 | Cooperation.                                | 44 |
|        |                   | 5.2.6                                                 | Patent Interference  and Opposition         | 45 |

 

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|         |                                                     |                                           | Page                                  |
|--------------|----------------------------------------------------------|------------------------------------------------|---------------------------------------|
|         | 5.3                                                      | Third Party Infringement                       | 46                                    |
|         |                                                     | 5.3.1                                          | Notice                                | 46 |
|         |                                                     | 5.3.2                                          | Infringement Action                   | 46 |
|         |                                                     | 5.3.3                                          | Recoveries                            | 48 |
|         |                                                     | 5.3.4                                          | Patent Invalidity Claim               | 48 |
|         | 5.4                                                      | Claimed Infringement                           | 48                                    |
|         | 5.5                                                      | Patent Marking                                 | 48                                    |
| ARTICLE  VI  | CONFIDENTIALITY                                          | 49                                             |
|         | 6.1                                                      | Nondisclosure and  Non-Use Obligations         | 49                                    |
|         |                                                     | 6.1.1                                          | General                               | 49 |
|         |                                                     | 6.1.2                                          | Limitations                           | 49 |
|         | 6.2                                                      | Injunctive Relief                              | 50                                    |
|         | 6.3                                                      | Publication                                    | 50                                    |
| ARTICLE VII  | REPRESENTATIONS AND WARRANTIES; LIMITATION  OF LIABILITY |                                           |
|         | 7.1                                                      | Representations  and Warranties of Genaissance | 50                                    |
|         | 7.2                                                      | Representations  and Warranties of Bayer       | 50                                    |
|         | 7.3                                                      | Warranty Disclaimer                            | 51                                    |
|         | 7.4                                                      | Disclaimer of Consequential  Damages           | 53                                    |
| ARTICLE VIII | INDEMNITY                                                | 53                                             |
|         | 8.1                                                      | Bayer Indemnity Obligations                    | 53                                    |
|         | 8.2                                                      | Genaissance Indemnity  Obligations             | 53                                    |
|         | 8.3                                                      | Limitation on  Indemnity Obligations           | 53                                    |
|         | 8.4                                                      | Procedure                                      | 54                                    |
|         | 8.5                                                      | Insurance                                      | 54                                    |
| ARTICLE  IX  | TERM  AND TERMINATION                                    | 54                                             |
|         | 9.1                                                      | Term of Agreement                              | 54                                    |
|         | 9.2                                                      | Termination for  Material Breach               | 54                                    |
|         | 9.3                                                      | Bankruptcy                                     | 55                                    |
|         | 9.4                                                      | Effect of Termination                          | 55                                    |
|         |                                                     | 9.4.1                                          | Effect of  Termination by Genaissance | 55 |
|         |                                                     | 9.4.2                                          | Effect of Termination by  Bayer       | 55 |
|         | 9.5                                                      | Surviving Provisions                           | 55                                    |
|         | 9.6                                                      | Security Interest                              | 56                                    |
|         | 9.7                                                      | Rights of Secured Party                        | 56                                    |
|         | 9.8                                                      | No Encumbrances                                | 56                                    |
|         | 9.9                                                      | Further Assurances                             | 57                                    |
| ARTICLE  X   | MISCELLANEOUS                                            | 57                                             |
|         | 10.1                                                     | Force Majeure                                  | 57                                    |
|         | 10.2                                                     | Assignment                                     | 57                                    |
|         | 10.3                                                     | Severability                                   | 57                                    |
|         | 10.4                                                     | Notices                                        | 58                                    |
|         | 10.5                                                     | Applicable Law                                 | 59                                    |

 

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|   |   |                                     | Page          |
|--------|--------|------------------------------------------|---------------|
|   | 10.6   | Dispute Resolution                       | 59            |
|   | 10.7   | Entire Agreement                         | 59            |
|   | 10.8   | Publicity                                | 59            |
|   |   | 10.8.1                                   | Agreement     | 59 |
|   |   | 10.8.2                                   | Press Release | 60 |
|   | 10.9   | Headings                                 | 60            |
|   | 10.10  | No Partnership;  Independent Contractors | 60            |
|   | 10.11  | Exports                                  | 60            |
|   | 10.12  | Waiver                                   | 61            |
|   | 10.13  | Counterparts                             | 61            |
|   | 10.14  | No Strict Construction                   | 61            |

 

vi

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| Exhibits   |                      |
|------------|---------------------------|
| Exhibit  A | Gene  Criteria            |
| Exhibit  B | [**]  Trial               |
| Exhibit  C | SADR  Clinical Phenotypes |
| Exhibit  D | SADR  Study               |
| Exhibit  E | SER  Clinical Phenotypes  |
| Exhibit  F | SER  Study                |
| Exhibit  G | STRENGTH  Trial           |
| Exhibit  H | Draft  Press Release      |

 

vii

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**RESEARCHDEVELOPMENT COLLABORATION AND LICENSE AGREEMENT**

 

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

 

**INTRODUCTION**

 

1.                                       Genaissancehas expertise in discovering markers of genetic variation and correlating suchmarkers with drug response, and has conducted the STRENGTH Trial (as that termis defined below) to identify markers correlated with response to atorvastatincalcium (Lipitor ®), pravastatin sodium (Pravachol®), simvastatin (Zocor®) andlovastatin (Mevacor®).

 

2.                                       Bayerhas expertise in discovering, developing and commercializing diagnostic productsand has undertaken the [**] Trial (as that term is defined below), in whichcorrelations between genetic variation and the response to [**] have beenidentified.

 

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

 

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

 

NOW THEREFORE, Bayer and Genaissance agree as follows:

 

**ARTICLE I**

**DEFINITIONS**

 

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

 

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

 

1

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

 

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

 

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

 

1.4                                 “BayerGenetically-Targeted [**] Drug Product”.  Bayer Genetically-Targeted [**] Drug Productmeans any Genetically-Targeted [**] Drug Product that is (a) discovered ordeveloped by Bayer; and (b) for which labeling approved by the applicableRegulatory Authority indicates that such Product is approved for a populationdefined by (i) one (1) or more *HAP*TM Markers or Collaboration[**] Haplotypes in a Collaboration Marker Association or (ii) one (1) or moreSurrogate Markers of such markers.

 

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

 

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

 

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

 

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

 

1.9                                 “Bayer Patent Rights”.  Bayer Patent Rights means Patent Rights thatclaim Bayer Know-How.

 

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

 

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

 

2

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

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

 

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

 

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

 

1.25                           “Confidential Information”.  Confidential Information means anyinformation, inventions, copyrights, trade secrets, data or materials, whetherpatentable or not, received by a Party from the other Party in connection withthe performance of this Agreement.  AllBayer Know-How and Genaissance Know-How shall be considered ConfidentialInformation of both Parties.

 

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

 

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

 

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

 

1.29                           “FTE”.  FTE shallmean a full time equivalent person year (consisting of a total of 1,880 hoursper year) of scientific, technical or managerial work undertaken by a Partywith respect to a Product.

 

4

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

 

1.31                           “GenaissanceGenetically-Targeted [**] Drug Product”.  Genaissance Genetically-Targeted [**] DrugProduct means a Genetically-Targeted [**] Drug Product that is (a) discoveredor developed by Genaissance and (b) for which labeling approved by theapplicable Regulatory Authority indicates that such Product is approved for apopulation defined by (i) one (1) or more *HAP*TM Markers or Collaboration[**] Haplotypes in a Collaboration Marker Association or one (1) or moreSurrogate Markers of such markers or (ii) one (1) or more Bayer Polymorphismsin a Bayer SER Polymorphism Association or a Bayer SADR PolymorphismAssociation or one (1) or more Surrogate Markers of such markers.

 

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

 

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

 

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

 

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

 

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

 

1.37                           “Genaissance Prior IP”.  Genaissance Prior IP means all intellectualproperty that (a) is Controlled by Genaissance and developed independentlyfrom the Collaboration prior to the end of the Collaboration Period and(b) relates to associations between Polymorphisms and Clinical Phenotypesdiscovered in the STRENGTH Trial or (c) relates to *HAP*TM Markers referenced in a*HAP*TMMarker Association or in a Collaboration SADR Haplotype Association;****provided,however, that the term Genaissance Prior IP shall not includeintellectual property related to *HAP*TM Technology.  For purposes of clarity, any Know-Howdeveloped by Genaissance as a result of the analysis of genotyping data thatare generated in the conduct of the STRENGTH Trial prior to the first SteeringCommittee meeting (and any related Patent Rights) shall be consideredintellectual property arising from the STRENGTH Trial and, therefore,Genaissance Prior IP, irrespective of whether such analysis occurs prior to orafter the first Steering Committee meeting.

 

5

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.46                           “*HAP*TM Database”.  *HAP*TM Database means the *HAP*TMMarkers database maintained by Genaissance.

 

6

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

 

1.48                           “*HAP*TM Marker”.  *HAP*TM Marker means anyPolymorphism or Haplotype that is (a) contained in the *HAP*TM Database atthe time of exchange of Prior IP pursuant to Section 2.6 or (b) discovered,pursuant to Article II, in a SADR Expansion Gene, a SER Expansion Gene or aCandidate Gene, using DNA samples from the Index Repository or from patientsthat participated in the STRENGTH Trial.

 

1.49                           “*HAP*TM Marker Association”.  *HAP*TM Marker Association meansa GNSC SADR *HAP*TMMarker Association, a GNSC SER *HAP*TM Marker Association, aCollaboration SER *HAP*TM Marker Association, or any combination of such MarkerAssociations.

 

1.50                           “*HAP*TM Marker AssociationPatent Rights”.  *HAP*TMMarker Association Patent Rights means Patent Rights that claim a *HAP*TMMarker Association or the use thereof.

 

1.51                           “*HAP*TM Marker PatentRights”.  *HAP*TM MarkerPatent Rights means Patent Rights that claim a *HAP*TM Marker orthe use thereof.

 

1.52                           “*HAP*TM Technology”.  *HAP*TM Technology means thetechnology used by Genaissance for the identification or confirmation ofassociations between *HAP*TM Markers and other genericmarkers and patient response to a [**] Drug Product.

 

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

 

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

 

1.55                           “Know-How”.  Know-Howmeans any information, inventions, copyrights, trade secrets, regulatorysubmissions, data or materials, whether patentable or not, including, withoutlimitation, biological materials (such as cell lines, DNA, DNA fragments, RNA,RNA fragments, organisms, proteins, polypeptides, plasmids, vectors, fragmentsof such proteins, polypeptides,

 

7

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## plasmids and vectors, andderivatives, progeny and variants of all of the foregoing) and intellectualproperty of any kind, other than Patent Rights.

 

## 1.56                           “Locus”.  Locusmeans a location on a chromosome corresponding to a Gene or agenetically-controlled physical or phenotypic feature of a human individual.

##  

## 1.57                           “Marker”.  Markermeans a HAPTM Marker or a Collaboration [**] Haplotype referenced in a MarkerAssociation.

 

## 1.58                           “Marker Association”.  Marker Association means a *HAP*TMMarker Association or a Collaboration SADR Haplotype Association, or anycombination of such Marker Associations.

##  

## 1.59                           “Net Sales”. Net Sales means, with respect to a Product, the gross amount invoiced bythe Royalty-Paying Party, its Affiliates and/or its sublicensees on sales orother dispositions of Products to Third Parties, less the following deductions:

######  

###### (a)                                  Trade,cash and/or quantity discounts actually allowed and taken directly with respectto such sales;

######  

###### (b)                                 Tariffs,duties, excises, sales taxes or other taxes imposed upon and paid directly by aParty with respect to the production, sale, delivery or use of the Product(excluding national, state or local taxes based on income), as reflected in theamount invoiced;

######  

###### (c)                                  Amountsrepaid or credited by reason of rejections, defects, recalls or returns orbecause of chargebacks, refunds, rebates or retroactive price reductions; and

######  

###### (d)                                 Freight,insurance and other transportation charges incurred in shipping a Product toThird Parties, as reflected in the amount invoiced.

 

Such amounts shallbe determined from the books and records of the Royalty-Paying Party, itsAffiliates and/or its sublicensees, maintained in accordance with generallyaccepted accounting principles, consistently applied.  In the case of any sale of Products for consideration other thancash, such as barter or countertrade, Net Sales shall be calculated on the fairmarket value of the consideration received. In the event the Product is sold as part of a Combination Product, theNet Sales from the Combination Product, for the purposes of determining royaltypayments, shall be determined by multiplying the Net Sales of the CombinationProduct during the applicable royalty reporting period, by the fraction, A/A+B,where A is the average sale price of the Product when sold separately infinished form and B is the average sale price of the other product(s) includedin the Combination Product when sold separately in finished form, in each caseduring the applicable royalty reporting period or, if sales of both the Productand the other product(s) did not occur in such period, then in the most recentroyalty reporting period in which sales of both occurred.  In the event that such average sale pricecannot be determined for both the Product and all other products(s) included inthe Combination Product, Net Sales for the purposes of determining royalty paymentsshall be calculated by multiplying the Net Sales of the Combination Product bythe fraction of C/C+D where C is the fair market value of the Product and D isthe fair market value of all other product(s) included in the CombinationProduct.  In such event, theRoyalty-Paying Party shall in good faith make a determination of the respective

 

8

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

##  

## 1.60                           “Non-[**] Drug Product”.  Non-[**] Drug Product means a therapeuticdrug product that is not a [**] Drug Product.

##  

## 1.61                           “Other Product”. Other Product means any product developed with a demonstrable use ofResulting IP, other than a Bayer Genetically-Targeted [**] Drug Product, aBayer Other [**] Drug Product, a Bayer Non-[**] Drug Product, a GenaissanceGenetically-Targeted [**] Drug Product, a Genaissance Other [**] Drug Product,a Genaissance Non-[**] Drug Product, a SADR Diagnostic Product, a SERDiagnostic Product, a Genaissance SADR Diagnostic Product or a Genaissance SERDiagnostic Product.

##  

## 1.62                           “Party”.  Partymeans Bayer or Genaissance; “Parties” means Bayer and Genaissance.

##  

## 1.63                           “Patent Prosecution”.  Patent Prosecution means any or all of theactivities related to the filing, prosecution, maintenance and extension ofPatent Rights in one or more countries.

##  

## 1.64                           “Patent Rights”. Patent Rights means (a) any United States or foreign patent application,(b) any United States patent or foreign patent issuing from such patentapplication and (c) any continuation, continuation-in-part (to the extent theclaims in such continuation-in-part-application are directed to subject matterspecifically described in such prior patent application), divisional, reissue,re-examination, renewal, substitution, addition, extension, supplementaryprotection certificate or foreign counterpart thereof of any of the foregoing.

##  

## 1.65                           “Polymorphism”. Polymorphism means any alternative sequence found at a given position ina chromosome within a population including, but not limited to:  (a) single nucleotide polymorphisms(“SNPs”); (b) insertions and deletions of one or more nucleotides; (c) repeatsof one or more nucleotides; (d) restriction fragment length polymorphisms and(e) an ordered combination of two or more of such polymorphisms, e.g.,Haplotype.

##  

9

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## 1.66                           “Prior IP”. Prior IP means either Bayer Prior IP or Genaissance Prior IP, or both.

##  

## 1.67                           “Product”. Product means a Bayer Genetically-Targeted [**] Drug Product, a BayerOther [**] Drug Product, a Bayer Non-[**] Drug Product, a GenaissanceGenetically-Targeted [**] Drug Product, a Genaissance Other [**] Drug Product,a Genaissance Non-[**] Drug Product, a SADR Diagnostic Product, a SERDiagnostic Product, a Genaissance SADR Diagnostic Product, a Genaissance SERDiagnostic Product and/or an Other Product.

##  

## 1.68                           “Program Manager”.  Program Manager means the research scientist appointed by a Partyto serve as such Party’s principal coordinator and liaison for theCollaboration.

##  

## 1.69                           “Regulatory Authority”.  Regulatory Authority means (a) the UnitedStates Food and Drug Administration or any successor agency withresponsibilities comparable to those of the United States Food and DrugAdministration, or (b) a regulatory authority or agency of a country other thanthe United States with responsibilities comparable to those of the UnitedStates Food and Drug Administration.

 

## 1.70                           “[**] Trial”. [**] Trial means the study undertaken by Bayer as described in ExhibitB to this Agreement.

 

## 1.71                           “Resulting IP”. Resulting IP means the Bayer Resulting IP and the Genaissance ResultingIP.

 

## 1.72                           “Resulting Patent Rights”.  Resulting Patent Rights means Bayer PatentRights and Genaissance Patent Rights.

 

## 1.73                           “ROW Country(ies)”.  ROW Country(ies) means a country other than [**].

 

## 1.74                           “Royalty-Paying Party”.  Royalty-Paying Party means the Party payingroyalties pursuant to Section 4.3 or Section 4.4.

 

## 1.75                           “Royalty-Receiving Party”.  Royalty-Receiving Party means the party towhom royalties are paid pursuant to Section 4.3 or Section 4.4.

 

## 1.76                           “SADR”.  SADR meansa [**] adverse drug reaction.

 

## 1.77                           “SADR Clinical Phenotype”.  SADR Clinical Phenotype means a type ofadverse event following the administration of a [**] Drug Product, as selectedfrom the types listed on Exhibit C.

 

## 1.78                           “SADR Confirmation Gene”.  SADR Confirmation Gene means a Gene in theset of Genes to be analyzed by a Party or by both Parties in the SADR Studythat contains (a) a *HAP*TM Marker that is a part ofa GNSC SADR *HAP*TMMarker Association, and (b) is not a SADR Expansion Gene.

 

## 1.79                           “SADR Diagnostic Product”.  SADR Diagnostic Product means a [**]Diagnostic Product that detects directly or indirectly (a) one (1) or more *HAP*TMMarkers or Collaboration [**] Haplotypes referenced in a GNSC SADR *HAP*TMMarker Association or a Collaboration

##  

10

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## SADR HaplotypeAssociation or (b) one (1) or more Surrogate Markers of the markers referencedin subsection (a), whether or not such SADR Diagnostic Product also detectsdirectly or indirectly (i) one (1) or more *HAP*TM Markers referenced in a GNSC SER *HAP*TMMarker Association or a Collaboration SER *HAP*TM Marker Association or (ii) one (1) ormore Surrogate Markers of the markers referenced in subsection (i).

 

## 1.80                           “SADR Expansion Gene”.  SADR Expansion Gene means a Gene in the setof Genes to be analyzed by a Party or by both Parties in the SADR Study thatcontains a Bayer Polymorphism that is a part of a Bayer SADR PolymorphismAssociation.

##  

## 1.81                           “SADR Plan”. SADR Plan means the plan for the SADR Study set forth on Exhibit Dto this Agreement, as such plan may be modified from time to time pursuant toSection 2.1.1.

##  

## 1.82                           “SADR Study”. SADR Study means the study to be undertaken by the Parties pursuant toSection 2.1.

##  

## 1.83                           “SADR Study Term”.  SADR Study Term means the period commencing upon the EffectiveDate and ending on the earlier of (a) delivery of the Final SADR Study Reportpursuant to Section 2.1.2(g) or (b) the termination of this Agreement pursuantto Article IX.

##  

## 1.84                           “SER”.  SER means a[**] efficacy response.

##  

## 1.85                           “SER Clinical Phenotype”.   SER Clinical Phenotype means a type ofefficacy endpoint following the administration of a [**] Drug Product, asselected from the types listed on Exhibit E.

##  

## 1.86                           “SER Confirmation Gene”.  SER Confirmation Gene means a Gene in theset of Genes to be analyzed by a Party or by both Parties in the SER Study,that contains a *HAP*TM Marker that is a part of a GNSC SER *HAP*TMMarker Association.

##  

## 1.87                           “SER Diagnostic Product”.  SER Diagnostic Product means a [**]Diagnostic Product that detects directly or indirectly (a) one (1) or more *HAP*TMMarkers referenced in a GNSC SER *HAP*TM Marker Association or aCollaboration SER *HAP*TM Marker Association or (b) one (1) or more SurrogateMarkers of the markers referenced in subsection (a), but does not detect (i)one (1) or more *HAP*TM Markers or Collaboration [**] Haplotypes referenced ina GNSC SADR *HAP*TMMarker Association or a Collaboration SADR Haplotype Association or (ii) one(1) or more Surrogate Markers of the markers referenced in subsection (i).

##  

## 1.88                           “SER Expansion Gene”.  SER Expansion Gene means a Gene in the setof Genes to be analyzed by a Party or by both Parties in the SER Study, that(a) contains a Bayer Polymorphism that is a part of a Bayer SER PolymorphismAssociation, and (b) is not an SER Confirmation Gene.

##  

## 1.89                           “SER Plan”.  SERPlan means the plan for the SER Study set forth in Exhibit F to thisAgreement, as such Plan may be modified from time to time pursuant to Section2.2.2.

##  

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## 1.90                           “SER Study”. SER Study means the study to be undertaken by the Parties pursuant toSection 2.2.

##  

## 1.91                           “SER Study Term”. SER Study Term means the period commencing upon the giving of notice bythe Steering Committee pursuant to Section 2.2.1 and ending on the earlier of(a) delivery of the Final SER Study Report pursuant to Section 2.2.3(e) or (b)the termination of this Agreement pursuant to Article IX.

##  

## 1.92                           “[**]”.  [**] means atherapeutic compound that [**].

##  

## 1.93                           “[**] Diagnostic Product”.  [**] Diagnostic Product means any product orservice that is intended for use in the prognosis of an individual’s responseto a [**] Drug Product.

##  

## 1.94                           “[**] Drug Product”.  [**] Drug Product means a therapeutic drug product that(a) comprises a [**] and (b) is approved for treating individualswith [**].

##  

## 1.95                           “STRENGTH Trial”.  STRENGTH Trial means the study undertaken by Genaissance as describedin Exhibit G to this Agreement.

##  

## 1.96                           “Sublicense Income”.  Sublicense Income means [**] received from sublicensees of aParty in connection with a grant of rights pursuant to Article III by suchParty, excluding (a) [**], (b) [**], (c) [**], and (d) [**].  If non-monetary consideration is soreceived, then [**].

##  

## 1.97                           “Surrogate Marker”.  Surrogate Marker means any biomolecule (including but not limitedto Polymorphisms, proteins, sugars and lipids) or chemical compound (includingbut not limited to drugs and metabolites thereof), where the absence, presenceor quantity of such biomolecule or chemical compound in an individual ismeasurable or correlated to a statistically robust degree with one or more *HAP*TMMarkers, Collaboration [**] Haplotypes or Bayer Polymorphisms referenced in aGNSC SADR *HAP*TMMarker Association, Collaboration SADR Haplotype Association, GNSC SER *HAP*TMMarker Association, Collaboration SER *HAP*TM Marker Association, Bayer SERPolymorphism Association or Bayer SADR Polymorphism Association, unless suchbiomolecule was independently identified as being correlated with theunderlying Clinical Phenotype without use of information relating to such HAPTMMarkers or Collaboration [**] Haplotypes or the related Marker Associations.

##  

## 1.98                           “Territory”. Territory means all countries of the world.

##  

## 1.99                           “Third Party”. Third Party means any entity other than the Parties or their respectiveAffiliates.

##  

## 1.100                     “Valid Claim”. Valid Claim means either (a) a claim of a pending patent applicationwhich claim was filed in good faith and has not been abandoned or finallydisallowed without the possibility of appeal or re-filing of said patentapplication or (b) a claim of an issued and unexpired patent which has not beenheld permanently revoked, unenforceable or invalid by a decision of a court orother governmental agency of competent jurisdiction, unappealable or unappealedwithin the time allowed for appeal. Notwithstanding the foregoing, if a claim of a patent application hasnot issued as a claim of an issued patent within the Patent Rights within [**]([**]) years after the filing date from which such claim takes priority, suchpending claim

##  

12

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## shall cease to be a ValidClaim for purposes of this Agreement unless and until such claim becomes anissued claim of an issued patent within the Patent Rights.

##  

## 1.101                     Additional Definitions.  Each of the following definitions is setforth in the Section of this Agreement indicated below:

 
| **Defined  Term**                           |   | **Section** |
|---------------------------------------------|--------|-------------|
| Agreement                                   |   | Preamble    |
| Average Selling  Price                      |   | 3.2.2(c)    |
| Bankruptcy Code                             |   | 3.9.1       |
| Bayer                                       |   | Preamble    |
| Bayer Inventions                            |   | 5.1.2       |
| Bayer SADR  Diagnostic License              |   | 3.2.1(a)    |
| Bayer SER  Diagnostic License               |   | 3.2.1(a)    |
| Blocking IP                                 |   | 4.6(b)      |
| Breaching Party                             |   | 9.2.        |
| Collateral                                  |   | 9.6         |
| Combination  Product                        |   | 1.59        |
| Contract Year                               |   | 3.2.2(b)    |
| Effective Date                              |   | Preamble    |
| Excluded Bayer  Obligations                 |   | 3.10        |
| Excluded  Genaissance Obligations           |   | 3.10        |
| Exons                                       |   | Exhibit A   |
| Exon/Intron  Junction                       |   | Exhibit A   |
| Filings                                     |   | 9.6         |
| Final SADR Study  Report                    |   | 2.1.2(g)    |
| Final SER Study  Report                     |   | 2.2.3(e)    |
| Genaissance  Inventions                     |   | 5.1.1       |
| Genaissance                                 |   | Preamble    |
| Genaissance SADR  Diagnostic License        |   | 3.2.4(a)    |
| Genaissance SER  Diagnostic License         |   | 3.2.4(a)    |
| *HAP*TM Typing Fee                      |   | 4.1         |
| Indemnitee                                  |   | 8.4         |
| Indemnitor                                  |   | 8.4         |
| Index Repository                            |   | Exhibit A   |
| Introns                                     |   | Exhibit A   |
| Invalidity Claim                            |   | 5.3.4       |
| Joint Inventions                            |   | 5.1.3       |
| List of  Candidate Diagnostic Polymorphisms |   | 3.2.1© |
| Manufacturing  Fee                          |   | 3.2.2(b)    |
| Non-Breaching  Party                        |   | 9.2.2       |
| Obligations                                 |   | 9.6         |
| Party  Representatives                      |   | 10.6        |
| Preliminary SADR  Study Report              |   | 2.1.2(g)    |
| Preliminary SER  Study Report               |   | 2.2.3(e0    |

 

13

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| **Defined  Term**                          |   | **Section** |
|--------------------------------------------|--------|-------------|
| Projected Test  Quantity N1                |   | 3.2.2(b)    |
| Projected Test  Quantity N2                |   | 3.2.2(b)    |
| Promoter                                   |   | Exhibit A   |
| Purchase Price                             |   | 3.2.2(a)    |
| Purchase  Shortfall Payment                |   | 3.2.2(b)    |
| Quantity Sold                              |   | 3.2.2(c)    |
| Royalty Payment                            |   | 3.2.2(a)    |
| Royalty  Shortfall Payment                 |   | 3.2.2(b)    |
| Royalty Term                               |   | 4.6(a)      |
| SEC                                        |   | 10.8.1      |
| SNPs                                       |   | 1.65        |
| SADR Discovery Cohort                      |   | 2.1.2(c)(i) |
| SADR Validation Cohort                     |   | 2.1.2(c)(i) |
| SER Discovery Cohort                       |   | 2.2.3(c)(i) |
| SER Validation Cohort                      |   | 2.2.3(c)(i) |
| Start Date                                 |   | 3.2.2(b)    |
| [**]–Specific  SER Diagnostic Product |   | 3.2.2(a)    |
| Steering  Committee                        |   | 2.3.1       |
| Test Fee                                   |   | 3.2.2(b)    |
| Third Party Claim                          |   | 5.4         |
| Third Party  Payments                      |   | 4.6(b)      |
| Three-Prime  Untranslated Region           |   | Exhibit A   |

# ** **

# **ARTICLE II**

# **COLLABORA**TION

 

## 2.1                                 SADR Study Management andResponsibilities.

###  

### 2.1.1                        SADR Plan. The Parties shall undertake the SADR Study in accordance with thisArticle II and the SADR Plan, which the Steering Committee shall provide to theParties within sixty (60) days after the Effective Date, such plan to beappended hereto as Exhibit D.  TheProgram Managers shall review the SADR Plan on at least a monthly basis andsubmit any proposed updates or amendments to the Steering Committee for itsapproval, as well as proposed revised research goals.  Any such updates or amendments or revised research goals shallnot become effective until approved by the Steering Committee.  The Steering Committee shall review andconsider any such proposed updates or amendments or revised research goals on areasonably expeditious basis.  Once theSteering Committee decides that the SADR Study has been completed and noadditional work is to be scheduled, the Parties shall execute the final datatransfer according to Section 2.1.2(f) and prepare the Preliminary SADR StudyReport in accordance with Section 2.1.2(g).

###  

### 2.1.2                        SADR Study Objectives andResponsibilities.

####  

#### (a)                                  General.  The objectives of the SADR Study are to (i)confirm GNSC SADR *HAP*TM Marker Associations; (ii) expand the BayerSADR Polymorphism

####  

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#### Associations toCollaboration SADR Haplotype Associations; and (iii) discover CollaborationSADR Haplotype Associations for Candidate Genes.  Each Party agrees to use commercially reasonable efforts to (A)undertake the responsibilities assigned to such Party in this Article II andthe SADR Plan, including, but not limited to, the dedication of laboratoryfacilities, equipment and personnel appropriate to such efforts, (B) performits obligations hereunder in good faith in a scientific and workmanlike manner,(C) as appropriate, make available to the other Party those resources set forthin Article II and the SADR Plan, and (D) carry out all work done in the courseof the SADR Study in material compliance with all applicable federal, state orlocal laws, regulations and guidelines governing the conduct of such work.

####  

#### (b)                                 Confirmationof GNSC SADR *HAP*TM Marker Associations.  As part of the SADR Study, the Parties shallundertake a case/control study to confirm GNSC SADR *HAP*TM MarkerAssociations by analyzing SADR Confirmation Genes in DNA samples fromappropriate patients from the [**] Trial selected by the SteeringCommittee.  Bayer shall deliver toGenaissance the DNA samples for each patient to be analyzed by Genaissance todetermine the suitability of each such sample for use in one of Genaissance’sstandard *HAP*TMTyping Processes that is chosen by Genaissance in consultation with theSteering Committee for each SADR Confirmation Gene.  If Genaissance reasonably determines that any such DNA sample isunsuitable for use in such processes, Genaissance shall provide written noticeto Bayer of such determination and the Steering Committee shall determine ingood faith a proper course of action. All *HAP*TMTyping Processes and expenses incurred by Genaissance pursuant to thissubsection (b) shall be borne by Genaissance.

####  

#### (c)                                  Expansionof Bayer SADR Polymorphism Associations to Collaboration SADR HaplotypeAssociations.  As part of the SADRStudy, the Parties shall undertake a case/control study of SADR Expansion Genesin accordance with this subsection (c). Each SADR Expansion Gene shall preferably have a known genomicstructure; however, if an SADR Expansion Gene does not have a known genomicstructure, the Steering Committee shall decide whether to proceed with a *HAP*TMMarker discovery effort for such Gene or whether additional measures, such ascloning, should be undertaken to acquire the genomic sequence information.  The costs of acquiring such informationshall be borne by Bayer.

#####  

##### (i)                                     PatientSelection.  The Steering Committeeshall select [**] adverse event cases, and [**] matched controls from[**].  The case definition used for thisstudy shall be defined by the Steering Committee.  [**] cases and controls will be used for the discovery ofCollaboration SADR Haplotype Associations (the “SADR Discovery Cohort”), and[**]cases and controls will be used for the validation of these MarkerAssociations (the “SADR Validation Cohort”). Bayer shall send DNA samples from the selected [**] Trial patients toGenaissance to analyze their suitability for use in one of Genaissance’sstandard *HAP*TM**TypingProcesses chosen by Genaissance, with the written approval by the SteeringCommittee, for each SADR Expansion Gene. If Genaissance reasonably determines that any such DNA sample isunsuitable for use in such processes, Genaissance shall provide written noticeto Bayer of such determination and the Steering Committee shall determine ingood faith a proper course of action.

#####  

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##### (ii)                                  *HAP*TMMarker Discovery.  For any SADRExpansion Gene that does not have *HAP*TM**Markers in the *HAP*TMDatabase upon commencement of the Collaboration, Genaissance shall use itsstandard operating procedure and *HAP*TM Builder Software to discover *HAP*TMMarkers in its Index Repository, [**]. Any *HAP*TM**Markers so discovered shallbecome part of the *HAP*TM Database.

#####  

##### (iii)                               *HAP*TMMarker Assignment.  Usinginformation in the *HAP*TM Database andGenaissance’s proprietary algorithms, Genaissance shall select a minimal numberof SNPs needed for assigning *HAP*TM Marker pairs for each ofthe SADR Expansion Genes to the patients in the SADR Discovery Cohort and thepatients in the SADR Validation Cohort. The Steering Committee shall review and approve such selected SNPs.

#####  

##### (iv)                              Discoveryof Collaboration SADR Haplotype Associations.  Genaissance shall genotype the selected SNPsfrom the SADR Expansion Genes in samples from the SADR Discovery Cohort byusing standard *HAP*TM Typing Processes chosen by Genaissance inconsultation with the Steering Committee pursuant to Section 2.1.2 (c)(i).  Genaissance shall use the genotyping dataand its *HAP*TMBuilder Software to assign a *HAP*TM Marker pair for each SADRExpansion Gene to each patient in the SADR Discovery Cohort.  Bayer shall pay Genaissance the *HAP*TMTyping Fee as set forth in Section 4.1 for analysis of each SADRExpansion Gene in each patient in the SADR Discovery Cohort.

#####  

##### (v)                                 Validationof Collaboration SADR Haplotype Associations.  For each SADR Expansion Gene that has a *HAP*TMMarker in a Collaboration SADR Haplotype Association discovered hereunder,Genaissance shall genotype the previously-selected SNPs in samples frompatients in the SADR Validation Cohort. Genaissance shall use the genotyping data and its *HAP*TM BuilderSoftware to assign a *HAP*TM Marker pair to eachpatient in the SADR Validation Cohort. Bayer shall pay Genaissance the *HAP*TM Typing Fee as set forthin Section 4.1 for analysis of each SADR Expansion Gene in each patient in theSADR Validation Cohort.

####  

#### (d)                                 Discoveryof Haplotypes in [**] Trial Patients.  Genaissance shall sequence certain SADR Expansion Genes in DNAsamples from certain [**] Trial patients that displayed an adverse response oradverse response related endpoint.  TheSteering Committee shall select the SADR Expansion Genes and [**] Trialpatients.  Bayer shall pay Genaissancethe Sequencing Fee as set forth in Section 4.2 for this sequencingservice.  Genaissance shall, [**] usethe Polymorphism data from the selected [**] Trial patients and its *HAP*TMBuilder Software to determine the Collaboration [**] Haplotypes present in suchpatients and shall disclose such Collaboration [**] Haplotypes to Bayer.

####  

#### (e)                                  Discoveryof Collaboration SADR Haplotype Association Using Candidate Genes.  The Parties shall analyze Candidate Genes todiscover Collaboration SADR

####  

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#### Haplotype Associations asdescribed in Sections 2.1.2 (c)(i) through (v).  The Parties agree that the Steering Committee shall select nomore than [**] Candidate Genes for analysis. Additional selection criteria for Candidate Genes will be agreed upon bythe Steering Committee.  Bayer will payGenaissance [**] the *HAP*TM Typing Fee as set forthin Section 4.1 for each Candidate Gene and each patient in the SADR DiscoveryCohort and SADR Validation Cohort.

####  

#### (f)                                    DataAnalysis.  Genaissance and Bayershall provide to each other all clinical and*HAP*TM Marker data generated orused in the SADR Study on a regular basis so that each Party may perform itsown association analyses.  In performingsuch analyses, each Party may also include any relevant data present in [**][**] by means of the on-site access provided to the Steering Committee pursuantto Section 2.7.

####  

#### (g)                                 SADRStudy Report.  Within sixty (60)days after the final data exchange pursuant to Section 2.1.2 (f), each Partyshall provide to the other Party a written summary report in a mutually-agreedformat setting forth in reasonable detail such Party’s results with respect toany GNSC SADR *HAP*TM Marker Associations that are confirmed andany Collaboration SADR Haplotype Associations that are discovered in the SADRStudy (each, a “Preliminary SADR Study Report”).  Within thirty (30) days thereafter each Party shall provide tothe other Party comments on the other Party’s Preliminary SADR StudyReport.  If a Party receiving commentsdisagrees with such comments, it shall notify the commenting Party withinfifteen (15) days after receipt of the comments, following which the SteeringCommittee shall meet to resolve any issues and agree upon a final version ofboth Preliminary SADR Study Reports (the “Final SADR Study Report”).

##  

## 2.2                                 SER Study Management andResponsibilities.

###  

### 2.2.1                        Notice and Timing.  At the first Steering Committee meeting, the Steering Committeeshall determine the appropriate magnitude of the SER Study based on the targetgene information provided by both parties, or a portion thereof, and shallnotify the Parties in writing of such decision.  Such study shall proceed contemporaneously with the SADR Study.

###  

### 2.2.2                        SER Plan. The Parties shall undertake the SER Study in accordance with thisArticle II and the SER Plan, which the Steering Committee shall provide to theParties within thirty (30) days after the Steering Committee provides notice asset forth in Section 2.2.1 that the Steering Committee has determined theappropriate magnitude of the SER Study. The SER Plan will be appended hereto as Exhibit F. The Program Managersshall review the SER Plan on at least a monthly basis and submit any proposedupdates or amendments to the Steering Committee for its review.  Any such updates or amendments shall notbecome effective until approved by the Steering Committee.  The Steering Committee shall review andconsider any such proposed updates or amendments or revised research goals on areasonably expeditious basis.  Once theSteering Committee decides that the SER Study has been completed and no additionalwork is to be scheduled, the Parties shall execute the final data transferaccording to Section 2.2.3(d) and prepare the Preliminary SER Study Report inaccordance with Section 2.2.3(e).

###  

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### 2.2.3                        SER Study Objectives andResponsibilities.

####  

#### (a)                                  General.  The objectives of the SER Study are to (i)confirm GNSC SER *HAP*TM Marker Associations, and (ii) expand BayerSER Polymorphism Associations to Collaboration SER *HAP*TM MarkerAssociations.  Each Party agrees to usecommercially reasonable efforts to (A) undertake the responsibilities assignedto such Party in this Article II and the SER Plan, including, but not limitedto, the dedication of laboratory facilities, equipment and personnelappropriate to such efforts; (B) perform its obligations hereunder in goodfaith in a scientific and workmanlike manner; (C) as appropriate, makeavailable to the other Party those resources set forth in the SER Plan; and (D)carry out all work done in the course of the SER Study in material compliancewith all applicable federal, state or local laws, regulations and guidelinesgoverning the conduct of such work. [**]shall bear[**] costs in performing [**]obligations set forth in theSER Plan.

####  

#### (b)                                 Confirmationof GNSC SER *HAP*TMMarker Associations.  As part of theSER Study, the Parties shall undertake a case/control study to confirm GNSC SER*HAP*TMMarker Associations by analyzing SER Confirmation Genes in DNA samples from[**] [**] patients selected by the Steering Committee.  Bayer shall deliver to Genaissance the DNAsamples for each selected [**] Trial patient to be analyzed by Genaissance to determinethe suitability of each such sample for use in one of Genaissance’s standard *HAP*TMTyping Processes that is chosen by Genaissance in consultation with theSteering Committee for each SER Confirmation Gene.  If Genaissance reasonably determines that any such DNA sample isunsuitable for use in such processes, Genaissance shall provide written noticeto Bayer of such determination and the Steering Committee shall determine ingood faith a proper course of action.

 

#### (c)                                  Expansionof Bayer SER Polymorphism Associations to Collaboration SER *HAP*TMMarker Associations.  As partof the SER Study, the Parties shall undertake a case/control study of SERExpansion Genes in accordance with this subsection (c).  Each SER Expansion Gene shall preferablyhave a known genomic structure; however, if an SER Expansion Gene does not havea known genomic structure, the Steering Committee will decide whether toproceed with a *HAP*TM Marker discovery effort for such Gene orwhether additional measures such as cloning should be undertaken to acquire thegenomic sequence information.

 

##### (i)                                     PatientSelection.  The Steering Committeeshall select [**] sets of [**] patients from the [**] and assign patients fromeach set into various response categories [**] that will be defined by theSteering Committee based upon results from the [**] Trial.  [**]of patients will be used for thediscovery of Collaboration SER *HAP*TM**Marker Associations (the“SER Discovery Cohort”), and [**]of patients will be used for validation ofthese Marker Associations (the “SER Validation Cohort”).  Bayer shall send DNA samples from theselected [**] Trial patients to Genaissance to analyze their suitability foruse in one of Genaissance’s standard *HAP*TM**Typing Processes that ischosen by Genaissance in consultation with the Steering Committee for each SERExpansion Gene.  If Genaissancereasonably determines that any such DNA Sample is

#####  

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##### unsuitable for use in such processes, Genaissanceshall provide written notice to Bayer of such determination and the SteeringCommittee shall determine in good faith a proper course of action.

#####  

##### (ii)                                  *HAP*TMMarker Discovery.  For any SERExpansion Gene that does not have *HAP*TM**Markers in the *HAP*TMDatabase upon the commencement of the Collaboration, Genaissance shall use itsstandard operating procedure and *HAP*TM Builder Software to discover *HAP*TMMarkers in its Index Repository, [**]. Any *HAP*TM**Markersso discovered shall become part of the *HAP*TM Database.

#####  

##### (iii)                               *HAP*TM MarkerAssignment.  Using information inthe *HAP*TMDatabase and Genaissance’s proprietary algorithms, Genaissance shall select aminimal number of SNPs needed for assigning *HAP*TM Marker pairs for each ofthe SER Expansion Genes to the patients in the SER Discovery Cohort and thepatients in the SER Validation Cohort. The Steering Committee shall review and approve such selected SNPs.

#####  

##### (iv)                              Discoveryof Collaboration SER *HAP*TM Marker Associations.  Genaissance shall genotype the selected SNPsfrom the SER Expansion Genes in samples from the SER Discovery Cohort by usingstandard *HAP*TMTyping Processes chosen by Genaissance. Genaissance shall use the genotyping data and its *HAP*TM BuilderSoftware to assign a *HAP*TM Marker pair to eachpatient in the SER Discovery Cohort.

#####  

##### (v)                                 Validationof Collaboration SER *HAP*TM Marker Associations.  For each SER Expansion Gene that has a *HAP*TMMarker in a Collaboration SER *HAPTM* Marker Associationdiscovered hereunder, Genaissance shall genotype the previously-selected SNPsin samples from patients in the SER Validation Cohort.  Genaissance shall use the genotyping dataand its *HAP*TMBuilder Software to assign a *HAP*TM Marker pair to eachpatient in the SER Validation Cohort.

####  

#### (d)                                 DataAnalysis.  Genaissance and Bayerwill provide to each other all clinical and *HAP*TM Marker data used in theSER Study on a regular basis so that each Party may perform its own associationanalyses.  In performing such analyses,each Party may also include any relevant data present in the [**] by means ofthe on-site access provided to the Steering Committee pursuant to Section 2.7.

####  

#### (e)                                  SERStudy Report.  Within [**] daysafter the final data exchange pursuant to Section 2.2.3(d), each Party shallprovide to the other Party a written summary report in a mutually-agreed formatsetting forth in reasonable detail such Party’s results with respect to anyGNSC SER *HAP*TMMarker Associations that are confirmed and any Collaboration SER *HAP*TMMarker Associations that are discovered in the SER Study (each, a“Preliminary SER Study Report”).  Within[**] thereafter each Party shall provide to the other Party comments on theother Party’s Preliminary SER Study Report. If a Party receiving comments disagrees with

####  

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#### such comments, it shallnotify the commenting Party within [**] days after receipt of the comments,following which the Steering Committee shall meet to resolve any issues andagree upon a final version of both Preliminary SER Study Reports (the “FinalSER Study Report”).

##  

## 2.3                                 Steering Committee.

###  

### 2.3.1                        Formation and Composition.  A joint committee (the “Steering Committee”)comprised of an equal number of representatives of each of Bayer andGenaissance, one to be the Program Manager and at least one to be [**], shallbe appointed by the Parties within thirty (30) days after the EffectiveDate.  Each Party shall also designate aco-chair of its representatives to the Steering Committee within such 30-dayperiod.  The Steering Committee shallmeet as needed, but not less frequently than once each Calendar Quarter duringthe Collaboration Period.  The SteeringCommittee shall, if requested by a Party, meet within thirty (30) days afterthe request of such Party to act upon any matter requiring action by theSteering Committee for approval. Meetings shall be at such times agreed to by Bayer and Genaissance andshall alternate between [**], unless the Parties otherwise agree or shall be insuch other form (e.g., telephone or video conference) as the members of theSteering Committee shall agree.  Each Partyshall bear any and all expenses of its representatives in connection withSteering Committee participation.  TheSteering Committee shall remain in operation during the Collaboration Periodunless otherwise agreed by the Parties. A Party may change one or more of its representatives to the SteeringCommittee and/or its designated co-chair at any time upon written notice to theother Party.  The Parties may mutuallyagree to change the number of representatives which comprises the SteeringCommittee.  Either Party may permitadditional employees and consultants to attend and participate (on a non-votingbasis) in the Steering Committee meetings, subject to the confidentialityprovisions of Article VI.

###  

### 2.3.2                        Steering Committee Functions andPowers.  The Steering Committeeshall be responsible for the overall supervision and management of theCollaboration.  In particular, theSteering Committee shall:

####  

#### (a)                                  monitorand evaluate the status and progress of the Collaboration;

####  

#### (b)                                 approveany material modifications to the SADR Plan or SER Plan;

####  

#### (c)                                  definejoint processes to manage the Collaboration and the exchange of data pursuantto Section 2.6 and Section 2.7;

 

#### (d)                                 determineappropriate magnitude of the SER Study pursuant to Section 2.2.1

####  

#### (e)                                  performsuch additional tasks assigned to it in this Article II; and

####  

#### (f)                                    resolveoperational disputes between the Parties.

###  

### 2.3.3                        Decisions of the Steering Committee.  All decisions of the Steering Committeeshall be made by unanimous vote of the representatives of the Parties, witheach Party’s representatives collectively having one vote.  If the Steering Committee is unable to reach

 

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### agreement on any matterreferred to it for resolution within thirty (30) days after the matter isreferred to it, such matter shall be referred to the Party Representatives andshall thereafter be subject to Section 10.6. Notwithstanding the foregoing, a decision not to approve the inclusionin the SADR Study or the SER Study of any proposed work, or to remove from theSADR Study or SER Study work previously agreed to be included, shall be [**].

###  

### 2.3.4                        Minutes and Reports.  The Steering Committee shall be responsiblefor keeping accurate minutes of its deliberations which shall record allproposed decisions and all actions recommended or taken.  Within ten (10) business days after eachmeeting, the Party that hosted the meeting shall provide the other Party withdraft minutes of such meeting, including a summary of all actions taken at suchmeeting.  Within thirty (30) days aftereach meeting, the co-chairs will sign final versions of the meeting minutes andsuch minutes shall thereafter be recognized as duly accepted by theParties.  All records of the SteeringCommittee shall be distributed to and available to both Parties.

##  

## 2.4                                 Program Managers.  Genaissance and Bayer shall each appoint a Program Manager withinthirty (30) days after the Effective Date. Each Party shall have the right to designate a different Program Managerat any time.  The Program Managers shalljointly oversee the conduct of the SADR Study and SER Study and shall beresponsible for, among other things, recommending to the Steering Committee anyupdates and amendments to the SADR Plan and SER Plan.  The Program Managers shall confer with each other on a regularbasis, and each shall keep the other reasonably and candidly informed of alldevelopments in the conduct of the Collaboration.

##  

## 2.5                                 Regulatory Cooperation.  The Parties intend to obtain regulatoryapproval for the Products.  The Partywith the right to commercialize a Product hereunder shall have the solediscretion in determining the location and timing of any regulatoryfilings.  Such Party shall own all suchfilings.  Each Party shall reasonablyassist the other Party in making any regulatory approval filings.

##  

## 2.6                                 Exchange of Prior IP Information.  At the first Steering Committee Meeting,each Party shall provide the other Party with (a) a list of Genes andPolymorphisms or *HAP*TM Markers in its GNSC SADR *HAP*TMMarker Associations or Bayer SADR Polymorphism Associations, as applicable, (b)a list of Genes and Polymorphisms or *HAP*TM Markers in its GNSC SER *HAP*TMAssociations or Bayer SER Polymorphism Associations, as applicable; and (c) alist of Genes and Polymorphisms that [**], as applicable.  Additional information with respect to PriorIP that is developed by a Party prior to the end of the Collaboration Periodshall be provided in writing by such Party to the other Party within twenty(20) days after the end of the Collaboration Period.

##  

## 2.7                                 Data Access. To facilitate patient selection and association analysis pursuant to theSADR Study and the SER Study, each Party shall share with the other Party[**].  Bayer shall provide the SteeringCommittee with on-site access to [**]data [**].  Genaissance shall provide the Steering Committee with on-siteaccess to [**]data [**].  The SteeringCommittee’s access to [**] shall cease [**] ([**]) days after the later ofreceipt of the SADR Study Report by both Parties or the receipt of the SERStudy Report by both Parties.  The dataaccess also includes [**].

##  

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## 2.8                                 Product Labeling.  In so far as is permitted by the relevant Regulatory Authorities,the Genaissance name and logo shall each be displayed in the package insert ofany diagnostic Product developed, manufactured or commercialized by Bayer.  In so far as is permitted by the relevantRegulatory Authorities, all labeling, printed and electronic materials associatedwith such Products shall indicate that Products were developed with the use ofGenaissance technology.  Genaissanceshall grant Bayer an appropriate trademark license for such purpose.  The Bayer name and logo shall be displayedon any Product developed, manufactured or commercialized by Genaissance only ifGenaissance has obtained the prior written consent of Bayer with respect tosuch Product.

# ** **

# **ARTICLE III**

# **GRANTSOF RIGHTS**

## 3.1                                 Research Grants.

###  

### 3.1.1                        Genaissance Research Grant.  Subject to the terms and conditions of thisAgreement, Bayer hereby grants to Genaissance a non-exclusive,non-royalty-bearing license in the Territory, without****the right to grantsublicenses, under the Bayer IP Rights, to practice the Know-How covered by orincluded in the Bayer IP Rights, to the extent necessary or useful forGenaissance to perform those activities to be undertaken by Genaissance in theconduct of the Collaboration as set forth in this Agreement and in theCollaboration Plan.

 

### 3.1.2                        Bayer Research Grant.  Subject to the terms and conditions of this Agreement,Genaissance hereby grants to Bayer a non-exclusive, non-royalty-bearing licensein the Territory, without****the right to grant sublicenses, under theGenaissance IP Rights, to practice the Know-How covered by or included in theGenaissance IP Rights, to the extent necessary or useful for Bayer to performthose activities to be undertaken by Bayer in the conduct of the Collaborationas set forth in this Agreement and in the Collaboration Plan.

##  

## 3.2                                 Diagnostic Products Grants.

###  

### 3.2.1                        Bayer Diagnostic Products License.

####  

#### (a)                                  License.  Subject to the terms and conditions of thisAgreement, including, without limitation, the terms of Section 3.2.2,Genaissance hereby grants to Bayer (i) an exclusive, royalty-bearing (as setforth in Section 4.3(a)) license in the Territory, with the right to grantsublicenses, under Genaissance IP Rights, to research, develop, make, havemade, use, import, offer to sell and sell SADR Diagnostic Products (the “BayerSADR Diagnostic License”), and (ii) an exclusive, royalty-bearing (as set forthin Section 4.3(b)) license in the Territory, with the right to grantsublicenses, under Genaissance IP Rights, to research, develop, make, havemade, use, import, offer to sell and sell SER Diagnostic Products (the “BayerSER Diagnostic License”).  For thepurposes of clarity, neither the Bayer SADR Diagnostic License nor the BayerSER Diagnostic License shall include a right under Genaissance IP Rights toresearch, develop or commercialize therapeutic drug products.

####  

#### (b)                                 Terms.  Bayer shall [**] for any Bayer SERDiagnostic License or Bayer SADR Diagnostic License.  The Bayer SADR Diagnostic License shall become non-exclusive withrespect to a given Marker Association and its component Markers if Bayer failsto

####  

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#### meet its diligenceobligations as set forth in this subsection (b), provided, that,(i) if Bayer [**] or (ii) if [**], then the Bayer SADR Diagnostic License shallremain exclusive for all Markers in all Marker Associations for such SADRClinical Phenotype.  The Bayer SERDiagnostic License shall become non-exclusive with respect to a given MarkerAssociation and its component Markers if Bayer fails to meet its diligenceobligations as set forth in this subsection (b), provided, that(i) if Bayer [**],  or (ii) if [**],then the Bayer SER Diagnostic License shall remain exclusive for all Markers inall Marker Associations for such SER Clinical Phenotype.

####  

#### (c)                                  Diligence.  Diligence obligations for diagnostic productdevelopment, on a Clinical Phenotype-by-Clinical Phenotype basis, shall includefour (4) stages spanning no more than [**] ([**]) months.  Stage I diligence shall mean generation of aproduct development plan for each Clinical Phenotype within [**] ([**]) monthsafter the end of the Collaboration Period. Notwithstanding any other provision herein to the contrary, Bayer’s SERDiagnostic License with respect to a GNSC SER *HAP*TM Marker Association fora given SER Clinical Phenotype shall terminate if Bayer fails to meet Stage Idiligence for such Clinical Phenotype. Stage II diligence shall mean the verification of a diagnostic platform within[**] ([**]) months after the end of the Collaboration Period.  Stage III diligence shall mean thecompletion of technical feasibility, commercial feasibility and final productdesign requirements within [**] ([**]) months after completion of Stage IIdiligence and receipt from Genaissance of a list of the candidate Polymorphismsfor detecting the Haplotype(s) in each licensed Marker Association (the “Listof Candidate Diagnostic Polymorphisms”). Stage IV diligence shall mean the filing of an application forregulatory approval for marketing of a diagnostic product in [**] within [**]([**]) months after Stage III completion. Bayer shall have the right to extend for a reasonable period, any of thediligence deadlines set forth above, if unexpected non-technical-, ortechnical-related, events or difficulties occur during diagnostic productdevelopment, provided, that such reasonable period for extending anygiven diligence deadline for non-technical-related events or difficulties shallnot be longer than [**] percent ([**]%) of the original time period for suchdiligence stage (e.g., the reasonable period for extending Stage II diligenceshall not exceed [**] ([**]) months). For extensions due to technical-related events or difficulties, Bayershall provide Genaissance with a written report every month after the diligencedeadline that states what technical-related events or difficulties are causingthe need for an extension of the diligence period and summarizes what Bayer hasdone and plans to do to solve such technical-related events or difficulties.  Genaissance shall receive [**] percent([**]%) of Sublicense Income received by Bayer in connection with anysublicenses granted by Bayer pursuant to this Section 3.2.1.

###  

### 3.2.2                        SER Diagnostic Products MarketingRights.

####  

#### (a)                                  Rightto Commercialize. At any time during the term of the Bayer SER DiagnosticLicense, upon the written request of Genaissance, Bayer shall enter into goodfaith negotiations with Genaissance or a Genaissance Collaborator regarding theright to research, develop and commercialize an SER Diagnostic Product (a“[**]-Specific SER Diagnostic Product”) that is specifically designed for ormarketed for use with prescribing a Genetically-Targeted [**] Drug Product thatis Controlled by Genaissance or such Genaissance Collaborator.  In such event, Bayer shall enter into withGenaissance or such Genaissance Collaborator, as the case may be, an agreementproviding that (i) in exchange for a quarterly royalty payment (the “RoyaltyPayment”) calculated as set forth in Section 3.2.2(b), Bayer shall

####  

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#### grant to Genaissance orsuch Genaissance Collaborator, as the case may be, an exclusive license, withthe right to sublicense, under Bayer IP Rights and any intellectual propertyrights granted by Genaissance to Bayer pursuant to Section 3.2.1(a)(ii), toresearch, develop, make, have made, use, import, offer to sell and sell such[**]-Specific SER Diagnostic Product under Genaissance’s or such GenaissanceCollaborator’s label, or (ii) in exchange for the payment of a purchase price(the “Purchase Price”) calculated as set forth in Section 3.2.2(b), Bayer shall(A) enter into an exclusive supply agreement with Genaissance or suchGenaissance Collaborator, as the case may be, that obligates Bayer toexclusively supply to Genaissance or such Genaissance Collaborator, as the casemay be, such [**]-Specific SER Diagnostic Product researched, developed andmanufactured by Bayer for marketing and sale by Genaissance or such GenaissanceCollaborator, as the case may be, under Genaissance’s or such GenaissanceCollaborator’s label, and (B) agree to not market and sell such [**]-SpecificSER Diagnostic Product under Bayer’s own label.  Notwithstanding any other provision herein to the contrary, Bayershall retain the right to sell under Bayer’s own label any SER DiagnosticProduct that has uses other than determining whether to prescribe aGenetically-Targeted [**] Drug Product that is Controlled by Genaissance or aGenaissance Collaborator, whether or not such SER Diagnostic Product can alsobe used to determine whether to prescribe a Genetically-Targeted [**] DrugProduct that is Controlled by Genaissance or a Genaissance Collaborator.

####  

#### (b)                                 Payments.  For any [**]Specific SER Diagnostic Product,the Royalty Payment, if applicable, shall be equal to the product of theapplicable test fee (the “Test Fee”) multiplied by the actual quantity of testsperformed per quarter, and the Purchase Price, if applicable, shall be equal tothe product of the Test Fee plus a manufacturing fee (the “Manufacturing Fee”)multiplied by the quantity of tests purchased. Failure to pay any required Royalty Payment or Purchase Price if notcured within [**] ([**]) days after notice of default shall be grounds fortermination of the license or supply agreement.  In the case of a license agreement for a [**]-Specific SERDiagnostic Product, if the annual quantity of tests performed in any period of[**] consecutive calendar quarters (a “[**]”) commencing with the first day ofthe first calendar quarter after the First Commercial Sale of such[**]-Specific SER Diagnostic Product (the “Start Date”) or any anniversary ofthe Start Date is less than a first projected annual quantity (N1) of tests tobe performed (the “Projected Test Quantity N1”), the licensee shall be requiredto make a Royalty Shortfall Payment (the “Royalty Shortfall Payment”) within[**] ([**]) days after the end of the [**] equal to the difference between theaggregate Royalty Payments that would have been payable had N1 tests beenperformed during the [**] and the aggregate amount of the Royalty Paymentsactually made for such [**].   In thecase of a supply agreement for a [**]-Specific SER Diagnostic Product, if theannual quantity of tests performed in any [**] is less than a second projectedannual quantity (N2) of tests to be performed (the “Projected Test QuantityN2”), the purchaser shall be required to make a payment (the “PurchaseShortfall Payment”) within [**] ([**]) days after the end of the [**] equal to thedifference between the aggregate Purchase Price that would have been payablehad N2 tests been purchased during the [**] and the amount of the PurchasePrice actually made for such [**].  Ifthe [**]-Specific SER Diagnostic Product is on the label of theGenetically-Targeted [**] Drug, and the applicable Royalty Shortfall Payment orPurchase Shortfall Payment is not made and such failure is not cured within[**] days after notice from Bayer requiring that such payment be made in orderto maintain exclusivity, then the applicable license agreement or supplyagreement shall become non-exclusive. If the [**]-Specific SER Diagnostic Product is not on the label of theGenetically-Targeted [**] Drug, and the applicable Royalty Shortfall Payment orPurchase 

####  

24

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#### Shortfall Payment is notmade and such failure is not cured within [**] days after notice from Bayer,then the applicable license agreement or supply agreement shall becomenon-exclusive or shall be terminated, as specified in Bayer’s notice.

####  

#### (c)                                  PaymentValues.  Bayer agrees that it willnot refuse to enter into a license agreement or supply agreement solely on thebasis of a dispute with respect to the Test Fee, the Projected Test Quantity N1and/or the Projected Test Quantity N2 if in such agreement the Test Fee, theProjected Test Quantity N1 and the Projected Test Quantity N2 have thefollowing values:

 

##### (i)                                     thevalue for the Test Fee is [**] U.S. dollars ($[**]), subject to annualadjustment effective January 1 of each year beginning with January 1, 2004 toreflect changes in the Producer Price Index for Intermediate Goods Less Foodand Energy (“PPI”), as first published by the United States Bureau of LaborStatistics for the twelve (12) months ending with September of the precedingyear ;

#####  

##### (ii)                                  thevalue for the Projected Test Quantity N1 is [**] during the [**], and [**]during [**]; and

 

##### (iii)                               the value for theProjected Test Quantity N2 is [**] during the [**], and [**] during [**];

 

provided,that if any Bayer SER Diagnostic Product has, in any third or subsequentyear of product sales following launch of such product by Bayer, an averageselling price (the “Average Selling Price”) that is at least [**]percent([**]%) less than the value for the Test Fee or has a quantity sold (the“Quantity Sold”) that is at least [**] percent ([**]%) less than the value forthe Projected Test Quantity N1 or the Projected Test Quantity N2, asapplicable, then the values for the Test Fee and the Projected Test Quantity N1or the Projected Test Quantity N2, as applicable, for any [**]-Specific SERDiagnostic Product sold by Genaissance or such Genaissance Collaborator shallbe reset to equal the Average Selling Price and the Quantity Sold,respectively, for the third and subsequent [**] for such [**]-Specific SERDiagnostic Product.  Bayer shall have noobligation to negotiate with respect to any proposal with respect to the TestFee amount, Projected Test Quantity N1 or Projected Test Quantity N2 thatdiffers from the provisions set forth in the preceding sentence.

 

#### (d)                                 Terms.  The terms of any exclusive license agreementor any exclusive supply agreement entered into by Bayer pursuant to Section3.2.2(a) shall be commercially reasonable and customary in the diagnostics field.  Notwithstanding anything set forth herein tothe contrary, any such license or supply agreement with Genaissance shallterminate upon the termination of any license granted by Genaissance to Bayerunder this Agreement other than due to a material breach by Bayer or a failureby Bayer to meet its diligence obligations under such license.  Bayer may terminate any such license orsupply agreement with a collaborator of Genaissance upon termination of anylicense granted by Genaissance to Bayer under this Agreement that is requiredby Bayer to perform its obligations pursuant to such license or supplyagreement, unless the termination of such license granted by 

####  

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#### Genaissance is due to amaterial breach by Bayer or failure by Bayer to meet its diligence obligationsunder such license.

 

### 3.2.3                        Genaissance Diagnostic ProductsPurchase Rights.

####  

#### Bayer shall sellto Genaissance Products (including ASR Products and/or Approved DiagnosticProducts) developed by Bayer under the Bayer SADR Diagnostic License or theBayer SER Diagnostic License, for internal use by Genaissance in providingclinical testing services, on terms no less favorable than those available toany other customer purchasing such Products; provided, however,that in comparing prices for reagent Products purchased under arrangements,where instrumentation, financing and service are included in the price of thereagents, any increase in the price per test to Genaissance resulting fromamortization of instrumentation, financing and service over lower volumes shallnot be included in such comparison. Notwithstanding anything else to the contrary herein, such obligation tosell shall terminate upon the termination of any license granted by Genaissanceto Bayer under this Agreement other than due to a material breach by Bayer or afailure by Bayer to meet its diligence obligations under such license.

### 3.2.4                        Genaissance Diagnostic ProductsLicense.

####  

#### (a)                                  IfBayer fails to meet its diligence obligations with respect to an SADR ClinicalPhenotype in the Bayer SADR Diagnostic License, then, subject to the terms andconditions of this Agreement, Bayer shall grant to Genaissance a non-exclusive,royalty-bearing (as set forth in Section 4.4(a)) license in the Territory, withthe right to grant no more than one sublicense for a specific field of use,excluding any sublicenses with respect to contract, manufacturing or othersimilar services, under Bayer IP Rights, to research, develop, make, use,import, offer to sell and sell the applicable Genaissance SADR DiagnosticProduct (a “Genaissance SADR Diagnostic License”).  If Bayer fails to meet its diligence obligations with respect toan SER Clinical Phenotype in the Bayer SER Diagnostic License then, subject to theterms and conditions of this Agreement, Bayer shall grant to Genaissance anon-exclusive, royalty-bearing (as set forth in Section 4.4(b)) license in theTerritory, with the right to grant no more than one sublicense in a specificfield of use, excluding any sublicenses with respect to contract, manufacturingor other similar services, under Bayer IP Rights, to research, develop, make,use, import, offer to sell and sell the applicable Genaissance SER DiagnosticProducts (a “Genaissance SER Diagnostic License”).  For the purposes of clarity, neither a Genaissance SADRDiagnostic License nor a Genaissance SER Diagnostic License shall include aright under Bayer IP Rights to research, develop or commercialize therapeuticdrug products or any other diagnostic products.  Genaissance shall not be obligated to pay a license issue fee forany Genaissance SADR Diagnostic License and Genaissance SER DiagnosticLicense.  Bayer shall receive [**]percent ([**]%) of Sublicense Income received by Genaissance in connection withany sublicenses granted by Genaissance pursuant to this Section 3.2.4.

##  

## 3.3                                 Therapeutic Products Grants.

###  

### 3.3.1                        Genaissance [**] Drug ProductsLicense.  Subject to the termsand conditions of this Agreement, Bayer hereby grants to Genaissance an exclusive,royalty-bearing (as set forth in Section 4.4(c) and (d)) license in theTerritory, with the right to grant sublicenses,

###  

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### under Bayer IP Rights, touse GNSC SADR *HAP*TM Marker Associations, Collaboration SADRHaplotype Associations, Bayer SADR Polymorphism Associations, GNSC SER *HAP*TMMarker Associations, Collaboration SER *HAP*TM Marker Associations, Bayer SERPolymorphism Associations and their component *HAP*TM Markersand/or Collaboration [**] Haplotypes and/or Bayer Polymorphisms or any otherResulting IP to research, develop, make, have made, use, import, offer to selland sell any [**] Drug Product, subject to Bayer’s retention of aroyalty-bearing (as set forth in Sections 4.3(c) and (d)) right in theTerritory, without the right to license, to use Bayer SADR PolymorphismAssociations, Bayer SER Polymorphism Associations, Collaboration SADR HaplotypeAssociations and their component Bayer Polymorphisms and Collaboration [**]Haplotypes or any other Bayer Resulting IP to research, develop, make, havemade, use, import, offer to sell and sell any [**] Drug Product.  Genaissance shall not be obligated to pay alicense fee for any such license. Within [**] ([**]) months following the end of the Collaboration Period,the Parties shall negotiate reasonable due diligence obligations with respectto the development and sales of a [**] Drug Product based, at least in part, onBayer IP Rights for Genaissance to maintain the exclusivity of its license.  If the Parties are unable to agree on thedue diligence obligations within such [**] ([**]) month period, either Partymay demand resolution by an independent expert.  Within [**] ([**]) days after the date of such demand, each Partyshall submit its proposal to an independent expert in pharmaceutical licensingselected jointly by the Parties, and such expert shall accept the proposal ofone Party or the other Party in its entirety. Bayer shall receive [**] percent ([**]%) of Sublicense Income receivedby Genaissance in connection with any sublicenses granted by Genaissancepursuant to this Section 3.3.1; provided, however, that ifGenaissance grants sublicenses under Bayer IP solely to use Bayer SADRPolymorphism Associations and /or Bayer SER Polymorphism Associations and theircomponent Bayer Polymorphisms, then Bayer shall receive [**] percent ([**]%) ofSublicense Income received by Genaissance in connection with any suchsublicense granted pursuant to this Section 3.3.1.

###  

### 3.3.2                        Genaissance Non-[**] Drug ProductsLicense.  Subject to the termsand conditions of this Agreement, Bayer hereby grants to Genaissance anon-exclusive, royalty-bearing (with terms to be negotiated pursuant to Section4.4(e)), license in the Territory, with the right to grant sublicenses, underBayer IP Rights, to use Collaboration SADR Haplotype Associations,Collaboration SER *HAP*TM Marker Associations and their component *HAP*TMMarkers and/or Collaboration [**] Haplotypes or any other Resulting IP toresearch, develop, make, have made, use, import, offer to sell and sell anyNon-[**] Drug Product.  Bayer shallreceive [**] percent ([**]%) of Sublicense Income received by Genaissance inconnection with any sublicenses granted by Genaissance pursuant to this Section3.3.2.

###  

### 3.3.3                        Bayer [**] Drug Products License.  Subject to the terms and conditions of thisAgreement, Genaissance hereby grants to Bayer a non-exclusive, royalty-bearing(as set forth in Sections 4.3(c) and (d)) license in the Territory, without theright to grant sublicenses, under Genaissance IP Rights, to use CollaborationSADR Haplotype Associations and Collaboration SER *HAP*TM MarkerAssociations and their component *HAP*TM Markers or any otherResulting IP to research, develop, make, have made, use, import, offer to sell andsell any [**] Drug Product.

###  

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### 3.3.4                        Bayer Non-[**] Drug Products License.

####  

#### (a)                                  Subjectto the terms and conditions of this Agreement, Genaissance hereby grants toBayer a non-exclusive, royalty-bearing (as set forth in Section 4.3(e)),license in the Territory, with the right to grant sublicenses, underGenaissance IP Rights, to use Collaboration SADR Haplotype Associations,Collaboration SER *HAP*TM Marker Associations and their component *HAP*TMMarkers and/or Collaboration [**] Haplotypes and any other Resulting IP toresearch, develop, make, have made, use, import, offer to sell and sell anyNon-[**] Drug Product.  Genaissanceshall receive [**] percent ([**]%) of Sublicense Income received by Bayer in connectionwith any sublicenses granted by Bayer pursuant to this Section 3.3.4.

##  

## 3.4                                 Other Grants.

###  

### 3.4.1                        Bayer Other Products License.  Subject to the terms and conditions of thisAgreement, Genaissance hereby grants to Bayer a non-exclusive, royalty-bearing(as set forth in Section 4.3(f)), license in the Territory, with the right togrant sublicenses, under Genaissance Resulting IP, to use Collaboration SADRHaplotype Associations, Collaboration SER *HAP*TM Marker Associations andtheir component *HAP*TM Markers and/or Collaboration [**]Haplotypes or any other Resulting IP to research, develop, make, have made,use, import, offer to sell and sell any Other Product.

###  

### 3.4.2                        Genaissance Other Products License.  Subject to the terms and conditions of thisAgreement, Bayer hereby grants to Genaissance a non-exclusive, royalty-bearing(with terms to be negotiated pursuant to Section 4.4(f)), license in theTerritory, with the right to grant sublicenses, under Bayer Resulting IP, touse Collaboration SADR Haplotype Associations, Collaboration SER *HAP*TMMarker Associations and their component *HAP*TM Markers and/orCollaboration [**] Haplotypes or any other Resulting IP to research, develop,make, have made, use, import, offer to sell and sell any Other Product.

##  

## 3.5                                 Genaissance Right of FirstNegotiation.  Bayer herebygrants to Genaissance a right of first negotiation to perform genotyping andclinical association analyses with respect to additional pharmacogenomicstudies to be undertaken by Bayer Business Group Diagnostics within five (5)years after the date of this Agreement to identify correlations between geneticmarkers and SADR Clinical Phenotypes and/or SER Clinical Phenotypes for [**] asa class or for individual [**].  IfBayer intends to begin negotiations with a Third Party to perform such analyses(each, an “Opportunity”), Bayer shall provide written notice of such intent toGenaissance and Genaissance shall notify Bayer in writing within thirty (30)days (the “Response Period”) as to whether it has a *bona fide* interest indiscussing such Opportunity.  Suchwritten notice from Bayer shall include information reasonably necessary toenable Genaissance to make an informed decision with respect to suchOpportunity.  If, during the ResponsePeriod, Genaissance indicates that it is interested in discussing suchOpportunity, the Parties shall enter into good faith negotiations on such termsas may be mutually agreeable.  If (a)Genaissance does not indicate during the Response Period that it is interestedin discussing such Opportunity, (b) Genaissance indicates that it has nointerest in such Opportunity, or (c) Genaissance indicates an interest in suchOpportunity during the Response Period, but the Parties are unable to reachmutual agreement with respect to the Opportunity within sixty (60) days, Bayershall be free to enter into a transaction relating to such Opportunity with aThird Party or Affiliate. Notwithstanding the foregoing, such right of first negotiation (i) shallbe subject to the

##  

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## terms of the agreementdated August 31, 1999, between Bayer and the University of Regensburg and (ii)shall terminate upon a Bayer competitor acquiring a majority of the outstandingshares of stock of Genaissance or upon a merger, consolidation, or sale ofsubstantially all the assets of Genaissance with or to a Bayer competitor.

##  

## 3.6                                 Term of Licenses.  Unless earlier terminated in accordance with Article IX hereof,each license granted hereunder shall continue until the later of (a) the firstdate on which all claims of all Patent Rights included in such license haveexpired in all countries and no applications for any such Patent Rights arepending in any country or (b) twenty (20) years from the Effective Date; provided,that with respect to Know How not covered by any Valid Claim of any PatentRight, each such license shall be become fully-paid up and perpetual on thelater of such two dates if not terminated pursuant to Article IX prior thereto.

##  

## 3.7                                 Special Sublicensing Rights.  In the event that a Party transfers to aThird Party its business operations and assets relating to one or more of thefields in which such Party holds a license without sublicensing rightshereunder, such Party may grant a sublicense to the transferee covering suchfield(s), provided that such Party does not retain any right itself to practicein the field(s) covered by such license

##  

## 3.8                                 Non-Suit Covenant with Respect toSelected Products.

###  

### 3.8.1                        Genaissance Covenant.  Genaissance covenants not to sue Bayer (orits Affiliates, licensees, sublicensees, contractors or authorized purchasersof Products) under any Patent Rights now or at anytime hereafter owned orotherwise controlled by Genaissance, other than Genaissance IP Rights, in theexercise by Bayer (or its licensees or sublicensees) of its rights under theBayer SADR Diagnostic License and the Bayer SER Diagnostic License.  Genaissance further covenants that it shallensure that neither its licensees nor sublicensees shall sue Bayer (or itsAffiliates, licensees, sublicensees, contractors or authorized purchasers ofProducts) under any Patent Rights owned or otherwise controlled by suchlicensees or sublicensees of Genaissance that cover any inventions made throughthe use of Bayer IP Rights or Genaissance Resulting IP, in the exercise byBayer (or its licensees or sublicensees) of its rights under the Bayer SADRDiagnostic License and the Bayer SER Diagnostic License.

###  

### 3.8.2                        Bayer Covenant. Bayer covenants not to sue Genaissance (or its Affiliates, licensees,sublicensees, contractors or authorized purchasers of Products) under anyPatent Rights now or at anytime hereafter owned or otherwise controlled byBayer, other than Bayer IP Rights, in the exercise by Genaissance (or itslicensees or sublicensees) of its rights under the license grant set forth inSection 3.3.1 to research, develop and commercialize any Genetically-Targeted[**] Drug Product.  Bayer furthercovenants that it shall ensure that neither its licensees nor sublicensees shallsue Genaissance (or its Affiliates, licensees, sublicensees, contractors orauthorized purchasers of Products) under any Patent Rights owned or otherwisecontrolled by such licensees or sublicensees of Bayer that cover any inventionsmade through the use of Genaissance IP Rights or Bayer Resulting IP, in theexercise by Genaissance (or its licensees or sublicensees) of its rights underthe license grant set forth in Section 3.3.1 to research, develop orcommercialize any [**] Drug Product.

##  

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## 3.9                                 Unitary Contract; Rights UponRejection.

 

### 3.9.1                        Unitary Contract.  The Parties acknowledge and stipulate that this Agreement and thelicenses and other rights granted under this Agreement are an integrated unitarycontract and are part of a single transaction among the Parties.  The Parties further acknowledge andstipulate that in the event that a Party becomes a debtor in a proceeding underany Chapter of the United States Bankruptcy Code, 11 U.S.C. §101 et seq., asamended (the “Bankruptcy Code”), such Party (or any successor in interest,including any trustee as such term is used within Section 365 of the BankruptcyCode) may only assume or reject this Agreement in its entirety.  Notwithstanding the foregoing, that portionof this Agreement that constitutes a security agreement is non-executory andshall not be subject to rejection in the event of a bankruptcy.

###  

### 3.9.2                        Rights Upon Rejection.  The Parties acknowledge and stipulate thatthis Agreement is intended to and shall be deemed to be a license of rights tointellectual property within the meaning of Section 365(n) of the BankruptcyCode.  In the event that any Partyrejects this Agreement under which such Party is a licensor of such rights tointellectual property, the other Party shall be entitled to make the electionset forth in Section 365(n)(1)(A) or (B) of the Bankruptcy Code in accordancetherewith.  In the event that thenon-rejecting Party elects to retain its rights, as described in Section365(n)(1)(B), the non-rejecting Party shall continue to make all royaltypayments due under this Agreement for the duration of the term of thisAgreement, but all such royalty payments shall remain subject to theRoyalty-Paying Party’s right to recoup any damages arising from or relating tothe other Party’s failure to perform its obligations under this Agreement (butexcluding any right to offset damages arising solely from the rejection of thisAgreement) without prejudice to any and all other rights or remedies availableto such Party, whether arising under Section 365(n) of the Bankruptcy Code,this Agreement, the security interest granted to Bayer hereunder, or at equityor in law.

##  

## 3.10                           Terms of Licenses and SublicensesGranted by Parties.  Eachlicense of Bayer Resulting IP and each sublicense of Genaissance IP Rightsgranted by Bayer to a Third Party shall provide for assignment thereof toGenaissance as required pursuant to Section 9..4.1, shall require compliance bythe licensee or sublicensee with the terms of this Agreement with respect tosales of Products by such licensee or sublicensee and shall provide thatGenaissance shall have no liability for any obligations of Bayer under suchlicense or sublicense (“Excluded Bayer Obligations”) (i) arising prior to thedate that such assignment has been executed by Bayer and acknowledged by thelicensee or sublicensee or (ii) that does not correspond to the obligationsundertaken by Genaissance with respect to the licenses granted by Genaissancehereunder.  Bayer agrees to indemnify,defend, and to hold Genaissance harmless of and from any and all liability,loss or damage that it may or might incur by reason of any claims or demandsagainst Genaissance based on or arising out of an alleged assumption of anyBayer Excluded Obligations.  Eachlicense of Genaissance Resulting IP and each sublicense of Bayer IP Rightsgranted by Genaissance to a Third Party shall provide for assignment thereof toBayer as required pursuant to Section 9.4.2, shall require compliance by thelicensee or sublicensee with the terms of this Agreement with respect to salesof Products by such licensee or sublicensee and shall provide that Bayer shallhave no liability for any obligation of Genaissance under such license orsublicense (“Excluded Genaissance Obligations”) (i) arising prior to the datethat such assignment has been executed by Genaissance and acknowledged by thelicensee or sublicensee or (ii) that does not correspond to the obligationsundertaken by Bayer with respect to the licenses granted by Bayerhereunder.  Genaissance agrees toindemnify, defend, and to hold 

##  

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## Bayer harmless of andfrom any and all liability, loss or damage that it may or might incur by reasonof any claims or demands against Bayer based on or arising out of an allegedassumption of any Genaissance Excluded Obligations.

# ** **

# **ARTICLE IV**

# **PAYMENTS**

##  

## 4.1                                 *HAP*TM Typing Fee.  Bayer shall pay to Genaissance anonrefundable fee (“*HAP*TM Typing Fee”) calculatedin accordance with this Section 4.1, for assigning a pair of *HAP*TMMarkers to a patient sample on a per SNP assayed per sample basis, whether ornot successful, in connection with the SADR Study, as specifically set forth inSection 2.1.  On the Effective Date,Bayer shall pay to Genaissance [**] Dollars ($[**]) to be credited toward the *HAP*TMTyping Fees to be incurred by Bayer during the SADR Study.  Thereafter, Genaissance shall send to Bayermonthly invoices setting forth the *HAP*TM Typing Fees for the priorcalendar month.  If the actual amount of*HAP*TMTyping Fees owed by Bayer to Genaissance pursuant to this Agreement is lessthan such prepaid amount for any reason, including the termination of thisAgreement, then Genaissance shall return the excess prepayment amount to Bayer.

 
| **Number of SNPs Assayed** |   | **Fee Per  SNP** |   |
|----------------------------|--------|------------------|--------|
| 1 – [**]              |   | $                | [**]   |   |
| Over [**]                  |   | $                | [**]   |   |

##  

## 4.2                                 Sequencing Fee. Bayer shall pay to Genaissance a nonrefundable fee (“Sequencing Fee”) of$[**] for each sequencing run, whether or not successful, performed byGenaissance in connection with the SADR Study, as specifically set forth inSection 2.1.2(d).  On the EffectiveDate, Bayer shall pay to Genaissance [**] Dollars ($[**]) to be credited towardthe Sequencing Fees to be incurred by Bayer during the SADR Study.  Thereafter, Genaissance shall send to Bayermonthly invoices setting forth the Sequencing Fees for the prior calendarmonth.  If the actual amount ofSequencing Fees owed by Bayer to Genaissance pursuant to this Agreement is lessthan such prepaid amount for any reason, including the termination of thisAgreement, then Genaissance shall return the excess prepayment amount to Bayer.

##  

## 4.3                                 Bayer Royalties.

######  

###### (a)                                  SADRDiagnostic Product Royalties. Subject to Sections 4.5 and 4.6, Bayer shall pay to Genaissanceroyalties in an amount equal to the following percentage of the Net Sales ofeach SADR Diagnostic Product that (i) is sold or otherwise disposed of byBayer, its Affiliates and/or its sublicensees and (ii) (A) covered by a ValidClaim included within Genaissance IP Rights or Bayer Patent Rights, or (B)embodies or is discovered or developed using Know-How included withinGenaissance IP Rights or Bayer Know-How:

 
| **Cumulative Net Sales of such Product** |   | **Royalty  Rate** |   |
|------------------------------------------|--------|-------------------|--------|
|                                     |   |              |   |
| $0 <  $U.S.[**]                       |   | [**]              | %      |
|                                     |   |              |   |
| $U.S. [**] <  $U.S. [**]              |   | [**]              | %      |
|                                     |   |              |   |
| $U.S. [**] <  $U.S. [**]              |   | [**]              | %      |
|                                     |   |              |   |
| >  $U.S. [**]                         |   | [**]              | %      |

 

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Notwithstanding the foregoing, if in any [**] ([**]) consecutiveCalendar Quarters the amount of Net Sales of a SADR Diagnostic Product subjectto royalties in accordance with the preceding sentence is more than [**]percent ([**]%) lower than the amount of Net Sales of such SADR DiagnosticProduct for the corresponding Calendar Quarters of the prior [**], thencommencing with the [**] of such [**] Calendar Quarters, and continuing for theduration of the Royalty Term for such SADR Diagnostic Product, the applicableroyalty rate shall be the lower of the royalty rate determined in accordancewith the preceding sentence and a royalty rate determined as follows, based onthe Net Sales of such SADR Diagnostic Product to date for the [**] in whichsuch [**] Calendar Quarter occurs:

 
| **Annual Net Sales to date of such Product**                  |   | **Royalty  Rate** |   |
|---------------------------------------------------------------|--------|-------------------|--------|
|                                                          |   |              |   |
| Equal to or  greater than $U.S. [**]                          |   | [**]              | %      |
|                                                          |   |              |   |
| Equal to or  greater than $U.S. [**] but less than $U.S. [**] |   | [**]              | %      |
|                                                          |   |              |   |
| Equal to or  greater than $U.S. [**] but less than $U.S. [**] |   | [**]              | %      |
|                                                          |   |              |   |
| Less than $U.S.  [**]                                         |   | [**]              | %      |

######  

###### (b)                                 SERDiagnostic Product Royalties.  Subjectto Sections 4.5 and 4.6, Bayer shall pay to Genaissance royalties in an amountequal to the following percentage of the Net Sales of each SER DiagnosticProduct that (i) is sold or otherwise disposed of by Bayer, its Affiliatesand/or its sublicensees and (ii) (A) covered by a Valid Claim included withinGenaissance IP Rights or Bayer Patent Rights, or (B) embodies or is discoveredor developed using Know-How included within Genaissance IP Rights or BayerKnow-How:  

 

32

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| **Cumulative Net Sales of such Product** |   | **Royalty  Rate**   |   |
|------------------------------------------|--------|---------------------|--------|
|                                     |   |                |   |
| $0 < $U.S. [**]                       |   | [**]%               |   |
|                                     |   |                |   |
| $U.S. [**] < $U.S.  [**]              |   | [**]%               |   |
|                                     |   |                |   |
| $U.S. [**] < $U.S.  [**]              |   | [**]%               |   |
|                                     |   |                |   |
| >  $U.S. [**]                         |   | [**]% (if the [**]) |   |
|                                     |   |                |   |
|                                     |   | [**]% (if the [**]) |   |

 

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

 
| **Annual Net Sales to date of such Product**                       |   | **Royalty  Rate**  |   |
|--------------------------------------------------------------------|--------|--------------------|--------|
|                                                               |   |               |   |
| Equal to or  greater than $U.S. [**]                               |   | [**]% if the [**]) |   |
|                                                               |   |               |   |
|                                                               |   | [**]% if the [**]) |   |
|                                                               |   |               |   |
| Equal to or  greater than $U.S. [**] but less than $U.S. [**]      |   | [**]%              |   |
|                                                               |   |               |   |
| Equal to or  greater than $U.S. [**] [**] but less than $U.S. [**] |   | [**]%              |   |
|                                                               |   |               |   |
| Less than $U.S.  [**]                                              |   | [**]%              |   |

######  

###### (c)                                  BayerGenetically-Targeted [**] Drug Product Royalties.  Subject to Sections 4.5 and 4.6, Bayer shallpay to Genaissance royalties in an amount equal to (i) [**] percent ([**]%) ofthe Net Sales of each Bayer Genetically-Targeted [**] Drug Product that (A) isapproved for a population defined by one (1) or more *HAP*TM Markers in aCollaboration SER *HAP*TM Marker Association, or one (1) or more SurrogateMarkers of such markers, (B) is covered by a Valid Claim included withinGenaissance IP Rights or Bayer Patent Rights, or (C) embodies or is discoveredor developed using Know-How included within Genaissance IP Rights or BayerKnow-How, and (ii) one percent (1%) of the Net Sales of each BayerGenetically-Targeted [**] Drug Product that (A) is approved for a populationdefined by one (1) or more

######  

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###### *HAP*TM Markers or Collaboration [**]Haplotypes in a Collaboration SADR Haplotype Association, or one (1) or moreSurrogate Markers of such markers, (B) is covered by a Valid Claim includedwithin Genaissance IP Rights or Bayer Patent Rights, or (C) embodies or isdiscovered or developed using Know-How included within Genaissance IP Rights orBayer Know-How.

 

###### (d)                                 BayerOther [**] Drug Product Royalties. Subject to Sections 4.5 and 4.6, Bayer shall pay to Genaissanceroyalties in an amount equal to one-half percent (0.5%) of the Net Sales ofeach Bayer Other [**] Drug Product that is covered by a Valid Claim includedwithin Genaissance IP Rights or Bayer Patent Rights, or embodies or isdiscovered or developed using Know-How included within Genaissance IP Rights orBayer Know-How.

######  

###### (e)                                  BayerNon-[**] Drug Product Royalties. Subject to Sections 4.5 and 4.6,Bayer shall pay to Genaissance royalties on the Net Sales of each BayerNon-[**] Drug Product that is covered by a Valid Claim included withinGenaissance IP Rights or Bayer Patent Rights, or embodies or is discovered ordeveloped using Know-How included within Genaissance IP Rights or BayerKnow-How, at a royalty rate of not less than [**] percent ([**]%) and not morethan [**] percent ([**]%) to be agreed upon by the Parties as to any class ofNon-[**] Drug Products at any time upon request by Bayer during the term of thelicense described in Section 3.3.4. If the Parties are unable to agree upon the royalty rate for a class ofNon-[**] Drug Products within [**] ([**]) months after Bayer’s request, thenBayer may demand resolution by an independent expert.  Within [**] ([**]) days after the date of such demand, each Partyshall submit its proposal to an independent expert in pharmaceutical licensingselected jointly by the Parties, and such expert shall accept the proposal ofone Party or the other in its entirety. Any rate of royalty for a class of Non-[**] Drug Products establishedpursuant to this paragraph shall also be deemed established pursuant to paragraph4.4(e).

######  

###### (f)                                    BayerOther Product Royalties.  Subject toSections 4.5 and 4.6, Bayer shall pay to Genaissance royalties on the Net Salesof each Other Product that (a) is sold or otherwise disposed of by Bayer, itsAffiliates and/or its sublicensees, pursuant to the grant set forth in Section3.4.1, and (b) is covered by a Valid Claim included within the Resulting PatentRights, or embodies or is discovered or developed using Know-How includedwithin the Resulting IP, at a royalty rate of not less than [**] percent([**]%) and not more than [**] percent ([**]%) for a therapeutic drug Productand at a royalty rate of not less than [**] percent ([**]%) and not more than[**] percent ([**]%) for a diagnostic Product. The royalty rate shall as to any class of Other Products shall be agreedupon by the Parties upon request by Bayer at any time during the term of thelicense described in Section 3.4.1.  Ifthe Parties are unable to agree upon the royalty rate for a class of OtherProducts within [**] ([**]) months after Bayer’s request, then Bayer may demandresolution by an independent expert. Within [**] ([**]) days after the date of such demand, each Party shallsubmit its proposal to an independent expert in licensing in the field at issueselected jointly by the Parties, and such expert shall accept the proposal ofone Party or the other in its entirety. Any rate of royalty for a class of Other Products established pursuantto this paragraph shall also be deemed established pursuant to paragraph4.4(f).

##  

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## 4.4                                 Genaissance Royalties.

 

###### (a)                                  SADRDiagnostic Product Royalties. Subject to Sections 4.5 and 4.6, Genaissance shall pay to Bayerroyalties in an amount equal to the following percentage of the Net Sales ofeach Genaissance SADR Diagnostic Product that (i) is sold or otherwise disposedof by Genaissance, its Affiliates and/or its sublicensees and (ii) (A) iscovered by a Valid Claim included within Bayer IP Rights or Genaissance PatentRights or (B) embodies or is discovered or developed using Know-How includedwithin Bayer IP Rights or Genaissance Know-How.

 
| **Cumulative Net Sales of such Product** |   | **Royalty  Rate**   |   |
|------------------------------------------|--------|---------------------|--------|
|                                     |   |                |   |
| $0 < $U.S.  [**]                      |   | [**]%               |   |
|                                     |   |                |   |
| $U.S. [**] <  $U.S. [**]              |   | [**]%               |   |
|                                     |   |                |   |
| $U.S. [**] <  $U.S. [**]              |   | [**]%               |   |
|                                     |   |                |   |
| >  $U.S. [**]                         |   | [**]% (if the [**]) |   |
|                                     |   |                |   |
|                                     |   | [**]% (if the [**]) |   |

 

Notwithstanding the foregoing, if in any [**] ([**]) consecutiveCalendar Quarters the amount of Net Sales of a SADR Diagnostic Product subjectto royalties in accordance with the preceding sentence is more than [**]percent ([**]%) lower than the amount of Net Sales of such SADR DiagnosticProduct for the corresponding Calendar Quarters of the prior [**], thencommencing with the [**] of such [**] Calendar Quarters, and continuing for theduration of the Royalty Term for such SADR Diagnostic Product, the applicableroyalty rate shall be the lower of the royalty rate determined in accordancewith the preceding sentence and a royalty rate determined as follows, based onthe Net Sales of such SADR Diagnostic Product to date for the [**] in whichsuch [**] Calendar Quarter occurs:

 
| **Annual Net Sales to date of such Product**                  |   | **Royalty  Rate**  |   |
|---------------------------------------------------------------|--------|--------------------|--------|
|                                                          |   |               |   |
| Equal to or  greater than $U.S. [**]                          |   | [**]% if the [**]) |   |
|                                                          |   |               |   |
|                                                          |   | [**]% if the [**]) |   |
|                                                          |   |               |   |
| Equal to or  greater than $U.S. [**] but less than $U.S. [**] |   | [**]%              |   |
|                                                          |   |               |   |
| Equal to or  greater than $U.S. [**] but less than $U.S. [**] |   | [**]%              |   |
|                                                          |   |               |   |
| Less than $U.S.  [**]                                         |   | [**]%              |   |

######  

###### (b)                                 SERDiagnostic Product Royalties. Subject to Sections 4.5 and 4.6, Genaissance shall pay to Bayerroyalties in an amount equal to the following percentage of the

######  

35

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###### Net Sales of eachGenaissance SER Diagnostic Product that (i) is sold or otherwise disposed of byGenaissance, its Affiliates and/or its sublicensees and (ii) (A) is covered bya Valid Claim included within Bayer IP Rights or Genaissance Patents Rights or(B) embodies or is discovered or developed using Know-How included within BayerIP Rights or Genaissance Know-How:  

 
| **Cumulative Net Sales of such Product** |   | **Royalty  Rate** |   |
|------------------------------------------|--------|-------------------|--------|
|                                     |   |              |   |
| $0 < $U.S.  [**]                      |   | [**]              | %      |
|                                     |   |              |   |
| $U.S. [**] <  $U.S. [**]              |   | [**]              | %      |
|                                     |   |              |   |
| $U.S. [**] <  $U.S. [**]              |   | [**]              | %      |
|                                     |   |              |   |
| >  $U.S. [**]                         |   | [**]              | %      |

 

Notwithstanding the foregoing, if in any [**] ([**]) consecutiveCalendar Quarters the amount of Net Sales of a SER Diagnostic Product subjectto royalties in accordance with the preceding sentence is more than [**]percent ([**]%) lower than the amount of Net Sales of such SER DiagnosticProduct for the corresponding Calendar Quarters of the prior [**], thencommencing with the [**] of such [**] Calendar Quarters, and continuing for theduration of the Royalty Term for such SER Diagnostic Product, the applicableroyalty rate shall be the lower of the royalty rate determined in accordancewith the preceding sentence and a royalty rate determined as follows, based onthe Net Sales of such SER Diagnostic Product to date for the [**] in which such[**] Calendar Quarter occurs:

 
| **Annual Net Sales to date of such Product**                  |   | **Royalty  Rate** |   |
|---------------------------------------------------------------|--------|-------------------|--------|
|                                                          |   |              |   |
| Equal to or  greater than $U.S. [**]                          |   | [**]              | %      |
|                                                          |   |              |   |
| Equal to or  greater than $U.S. [**] but less than $U.S. [**] |   | [**]              | %      |
|                                                          |   |              |   |
| Equal to or  greater than $U.S. [**] but less than $U.S. [**] |   | [**]              | %      |
|                                                          |   |              |   |
| Less than $U.S.  [**]                                         |   | [**]              | %      |

######  

###### (c)                                  GenaissanceGenetically-Targeted [**] Drug Product Royalties.  Subject to Sections 4.5 and 4.6, Genaissanceshall pay to Bayer royalties in an amount equal to [**] percent ([**]%) of theNet Sales of each Genaissance Genetically-Targeted [**] Drug Product that iscovered by a Valid Claim included within Bayer IP Rights or Genaissance PatentRights or embodies or is discovered or developed using Know-How included withinBayer IP Rights or Genaissance Know-How.

######  

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###### (d)                                 GenaissanceOther [**] Drug Product Royalties. Subject to Sections 4.5 and 4.6, Genaissance shall pay to Bayerroyalties in an amount equal to [**] percent ([**]%) of the Net Sales of eachGenaissance Other [**] Drug Product that is covered by a Valid Claim includedwithin Bayer IP Rights or Genaissance Patent Rights or embodies or isdiscovered or developed using Know-How included within Bayer IP Rights orGenaissance Know-How.

######  

###### (e)                                  GenaissanceNon-[**] Drug Product Royalties. Subject to Sections 4.5 and 4.6, Genaissance shall pay to Bayerroyalties on the Net Sales of each Genaissance Non-[**] Drug Product that iscovered by a Valid Claim included within Bayer IP Rights or Genaissance PatentRights or embodies or is discovered or developed using Know-How included withinBayer IP Rights or Genaissance Know-How, at a royalty rate of not less than[**] percent ([**]%) and not more than [**] percent ([**]%).  The royalty rate as to any class of Non-[**]Drug Products shall be agreed upon by the Parties upon request by Genaissanceat any time during the term of the license described in Section 3.3.2.  If the Parties are unable to agree upon theroyalty rate for a class of Non-[**] Drug Products within [**] ([**]) monthsafter Genaissance’s request, then Genaissance may demand resolution by anindependent expert.  Within [**] ([**])days after the date of such demand, each Party shall submit its proposal to anindependent expert in pharmaceutical licensing selected jointly by the Parties,and such expert shall accept the proposal of one Party or the other in itsentirety.  Any rate of royalty for aclass of Non-[**] Drug Products established pursuant to this paragraph shallalso be deemed established pursuant to paragraph 4.3(e).

######  

###### (f)                                    GenaissanceOther Product Royalties.  Subject toSections 4.5 and 4.6, Genaissance shall pay to Bayer royalties on the Net Salesof each Other Product that (a) is sold or otherwise disposed of by Genaissance,its Affiliates and/or its sublicensees, pursuant to the grant set forth inSection 3.4.2 and (b) is covered by a Valid Claim included within the ResultingPatent Rights or embodies or is discovered or developed using Know-How includedwithin the Resulting IP, at a royalty rate of not less than [**] percent([**]%) and not more than [**] percent ([**]%) for a therapeutic drug Productand at a royalty rate of not less than [**] percent ([**]%) and not more than[**] percent ([**]%) for a diagnostic Product. The royalty rate as to any class of Other Products shall be agreed uponby the Parties upon request by Bayer at any time during the term of the licensedescribed in Section 3.4.2.  If theParties are unable to agree upon the royalty rate for a class of Other Productswithin [**] ([**]) months after Bayer’s request, then Bayer may demandresolution by an independent expert. Within [**] ([**]) days after the date of such demand, each Party shallsubmit its proposal to an independent expert in licensing in the field at issueselected jointly by the Parties, and such expert shall accept the proposal ofone party or the other in its entirety. Any rate of royalty for a class of Other Products established pursuantto this paragraph shall also be deemed established pursuant to paragraph 4.3(f).

##  

## 4.5                                 Royalty Obligation Exception.  Notwithstanding anything in this Agreementto the contrary, no royalties shall be payable by a Party under this Article IVwith respect to the sale or other disposition of a Product by such Party, itsAffiliates or its sublicensees where such Product (a) is neither covered by aValid Claim included within the other Party’s Prior IP or within the ResultingIP nor discovered or developed using Know-How included within the other Party’sPrior IP or within the Resulting IP, and (b) can be sold or otherwise disposedof by such

##  

37

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## Party, its Affiliates orits sublicensees in the absence of any license set forth in Article III withoutthe misappropriation of any Know-How included within the other Party’s PriorIP.

##  

## 4.6                                 Royalty Terms.

######  

###### (a)                                  Lengthof Royalty Payments; Royalty Reduction. The royalties payable under Section 4.3 and Section 4.4 shall be paid ona country-by-country basis on each Product until the later of (i) theexpiration of the last-to-expire Valid Claim included within the Patent Rightsof the Royalty-Receiving Party or within the Resulting Patent Rights of theRoyalty Paying Party that cover such Product or component thereof in suchcountry, or (ii) the earlier of (A) ten (10) years after the First CommercialUse of such Product in such country or (B) twenty (20) years from the EffectiveDate (the “Royalty Term”), provided,however, that at any timeduring the Royalty Term, with respect to a Product, when no Valid Claimincluded within the Patent Rights of the Royalty-Receiving Party or within theResulting Patent Rights of the Royalty-Paying Party covers such Product or anycomponent thereof within a country, the royalty rate on such Product in suchcountry shall be reduced to [**] percent ([**]%) of the applicable rate setforth in Section 4.3 or Section 4.4. Notwithstanding the foregoing, (A) the First Commercial Use of a Productin any European Union Country shall be [**], and the First Commercial Use in anyROW Country shall be [**], and (B) a diagnostic Product shall not be considereda new Product having a new date of First Commercial Use unless (1) [**] or (2)[**].

######  

###### (b)                                 RequiredThird Party Payments.  TheRoyalty-Paying Party shall be entitled to deduct from the royalty paymentsrequired to be paid pursuant to Section 4.3 or Section 4.4, payments made bythe Royalty-Paying Party to a Third Party with respect to sales of a Product ina country to license patents that the Royalty-Paying Party reasonablydetermines to be required to make, use or sell the Product in such country(“Third Party Payments”); provided, however, that, (i) nomore than [**] percent ([**]%) of Third Party Payments may be deducted forlicenses under Third Party patents covering [**] (“Blocking IP”), (ii) nomore than [**] percent ([**]%) of Third Party Payments may be deducted forlicenses under Third Party patents covering [**] (“Enabling IP”) and (iii) inno event shall a deduction under this Section 4.5(b) for Third Party Paymentsfor either or both of Blocking IP and Enabling IP reduce any royalty paymentotherwise due to the Royalty-Receiving Party in a country in a reporting periodby more than [**] percent ([**]%).  Anydeduction that is not usable in a reporting period pursuant to thisSection 4.5(b) may be carried forward for use in a future reportingperiod.

######  

###### (c)                                  RoyaltiesPayable Only Once.  The obligationto pay royalties is imposed only once with respect to the same unit of aProduct.  Except as specificallyprovided in this Agreement, it is understood and agreed that there shall be nodeductions from the royalties payable under this Agreement.

######  

###### (d)                                 Salesto Affiliates and Sublicensees. Sales of Products between the Royalty-Paying Party and its Affiliates orpermitted sublicensees, or among such Affiliates and permitted sublicensees,shall not be subject to royalties under Section 4.3 or 4.4, but in such casesthe royalties shall be calculated on the Net Sales by such Affiliates orsublicensees to a Third Party.

######  

38

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###### (e)                                  RoyaltyReports and Accounting.

 

(i)                                     RoyaltyReports; Royalty Payments.  TheRoyalty-Paying Party shall deliver to the Royalty-Receiving Party, within sixty(60) days after the end of each Calendar Quarter, reasonably detailed writtenaccountings of Net Sales of Products that are subject to royalty payments dueto the Royalty-Receiving Party for such Calendar Quarter.  Such quarterly reports shall indicate NetSales on a country-by-country and product-by-product basis, and the resultingcalculation of royalties, provided, that where a Party receives reportsof Net Sales from Affiliates or sublicensees on a regional rather than countrybasis, reporting hereunder may use such regional Net Sales figures.  When the Royalty-Paying Party delivers suchaccountings to the Royalty-Receiving Party, the Royalty-Paying Party shall alsodeliver all royalty payments due under Section 4.3 or Section 4.4 to theRoyalty-Receiving Party for the Calendar Quarter, provided that if both Partieshave incurred royalty obligations during a Calendar Quarter, no payments shallbe due with the reports and instead the Royalty-Paying Party owing the greateramount shall remit a net payment of the difference between the two royaltyamounts within fifteen (15) days after the later of (i) receipt by such Partyof the other Party’s accounting for such Calendar Quarter or (ii) the due datefor such Party’s own accounting for such Calendar quarter.  With respect to sales of Products invoicedin United States Dollars, the sales and royalties payable shall be expressed inUnited States Dollars.  With respect tosales of Products invoiced in a currency other than United States Dollars, thesales and royalties payable shall be expressed in their United States Dollarequivalent, calculated using the applicable conversion rates for buying UnitedStates dollars published by The Wall Street Journal on the last businessday of the Calendar Quarter to which the royalty report relates, provided thata Party may elect to use the conversion method used generally in its auditedfinancial statements.

 

(ii)                                  Audits.  The Royalty-Paying Party shall keep, andshall require its Affiliates and sublicensees to keep, complete and accuraterecords of the latest three (3) years of sales to which royalties attach.  For the sole purpose of verifying royaltiespayable to the Royalty-Receiving Party, the Royalty-Receiving Party shall havethe right annually at the Royalty-Receiving Party’s expense to retain anindependent certified public accountant selected by the Royalty-Receiving Partyand reasonably acceptable to the Royalty-Paying Party, to review such recordsin the location(s) where such records are maintained by the Royalty-PayingParty, its Affiliates or its sublicensees upon reasonable notice and duringregular business hours and under obligations of confidence.  Results of such review shall be madeavailable to both the Royalty-Receiving Party and the Royalty-PayingParty.  If the review reflects anunderpayment of royalties to the Royalty-Receiving Party, such underpaymentshall be promptly remitted to the Royalty-Receiving Party, together withinterest calculated in the manner provided in Section 4.6.  If the underpayment is equal to or greaterthan [**] percent ([**]%) of the royalty amount that was otherwise due, theRoyalty-Paying Party shall pay all of the costs of such review.  If the review reflects an overpayment ofroyalties to the Royalty-Receiving Party, the amount of such overpayment shallbe credited against future royalties owned by the Royalty-Paying Party to theRoyalty-Receiving Party.

##  

## 4.7                                 Late Payments. The Royalty-Paying Party shall pay interest to the Royalty-ReceivingParty on the aggregate amount of any payments that are not paid on or beforethe date such payments are due under this Agreement at a rate per annum that isequal to the lesser of [**] for the applicable period, or the highest ratepermitted by applicable law, calculated on the number of days such payment isdelinquent.

##  

39

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## 4.8                                 Tax Withholding.  The Parties shall use all reasonable and legal efforts to reducetax withholding on payments made to the Royalty-Receiving Party hereunder.  Notwithstanding such efforts, if theRoyalty-Paying Party concludes that tax withholdings under the laws of anycountry are required with respect to payments to the Royalty-Receiving Party,the Royalty-Paying Party shall withhold the required amount and pay it to theappropriate governmental authority.  Insuch a case, the Royalty-Paying Party shall promptly provide theRoyalty-Receiving Party with original receipts or other evidence reasonablydesirable and sufficient to allow the Royalty-Receiving Party to document suchtax withholdings adequately for purposes of claiming foreign tax credits andsimilar benefits.

##  

## 4.9                                 Blocked Payments.  In the event that, by reason of applicable laws or regulations inany country, it becomes impossible or illegal for the Royalty-Paying Party orits Affiliates or sublicensees, to transfer, or have transferred on its behalf,royalties or other payments to the Royalty-Receiving Party, such royalties orother payments shall be deposited in local currency in the relevant country tothe credit of the Royalty-Receiving Party in a recognized banking institutiondesignated by the Royalty-Receiving Party or, if none is designated by theRoyalty-Receiving Party within a period of thirty (30) days, in a recognizedbanking institution selected by the Royalty-Paying Party or its Affiliates orsublicensees, as the case may be, and identified in a notice in writing givento the Royalty-Receiving Party.

##  

## 4.10                           Right of Recoupment.  Notwithstanding the royalties payable underSection 4.3 and Section 4.4, the Royalty-Paying Party shall be entitled torecoup the amount of any obligation of the Royalty-Receiving Party to theRoyalty-Paying Party arising out of any material breach of this Agreement bythe Royalty-Receiving Party and not otherwise recovered.

# ** **

# **ARTICLE V**

# **INTELLECTUAL PROPERTY**

##  

## 5.1                                 Ownership of Inventions.

###  

### 5.1.1                        Genaissance Inventions.  Subject to Section 5.1.4, Genaissance shallexclusively own all inventions made solely by its employees, agents andconsultants in the conduct of the Collaboration (“Genaissance Inventions”).

###  

### 5.1.2                        Bayer Inventions.  Subject to Section 5.1.4, Bayer shall exclusively own allinventions made solely by its employees, agents and consultants in the conductof the Collaboration (“Bayer Inventions”).

###  

### 5.1.3                        Joint Inventions.  Subject to Section 5.1.4, all inventions made jointly byemployees, agents and consultants of Bayer and employees, agents andconsultants of Genaissance in the conduct of the Collaboration (“JointInventions”) shall be owned jointly on the basis of each Party having anundivided interest in the whole.

###  

### 5.1.4                        Assignment. Notwithstanding the foregoing, (a) Genaissance hereby assigns to Bayerall of its right, title and interest in and to Genaissance Inventions and JointInventions each relating exclusively to (i) Collaboration [**] Haplotypes and(ii) Collaboration SADR Haplotype Associations, excluding, in each of (i) and(ii), inventions relating exclusively to *HAP*TM Markers and *HAP*TMMarker Associations, (b) Bayer hereby assigns to Genaissance all

###  

40

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### of its right, title andinterest in and to Bayer Inventions and Joint Inventions each relatingexclusively to *HAP*TM Markers and *HAP*TM MarkerAssociations, excluding any inventions relating exclusively to BayerPolymorphisms, (c) Genaissance hereby assigns to Bayer all of its right, titleand interest in and to Genaissance Inventions and Joint Inventions not referredto in (a) or (b) made using samples owned by Bayer, (d) Bayer hereby assigns toGenaissance all of its right, title and interest in and to Bayer Inventions andJoint Inventions not referred to in (a) or (b) made using samples owned byGenaissance, (e) Genaissance hereby assigns to Bayer all of its right, titleand interest in and to Genaissance Inventions and Joint Inventions not referredto in (a), (b), (c) and (d) for which Bayer owns the most closely related priorart, (f) Bayer hereby assigns to Genaissance all of its right, title andinterest in and to Bayer Inventions and Joint Inventions not referred to in(a), (b), (c), (d) or (e),   EachGenaissance Invention, Bayer Invention or Joint Invention, as applicable,assigned pursuant to the immediately preceding sentence shall thereby cease tobe a Genaissance Invention, Bayer Invention or Joint Invention, as the case maybe, as originally owned and become a Bayer Invention or Genaissance Invention,as the case may be, in accordance with the assignment thereof, as set forthabove.

###  

### 5.1.5                        Inventorship. The determination of inventorship shall be made in accordance with therelevant patent law of the country in which the particular invention has beengenerated.

##  

## 5.2                                 Patent Prosecution.

###  

### 5.2.1                        General.  TheParties recognize that a single patent application may disclose and claim morethan one invention, e.g., a Genaissance Invention and a Bayer Invention.  In so far as practicable, the Parties shalldraft their respective patent applications such that assignments made inaccordance with Section 5.1.4 shall result in assignment of the entire right,title and interest in and to a given patent application.  Furthermore, the Parties agree to file anycontinuation or divisional patent applications needed to effect the separateprosecution of Genaissance Inventions and Bayer Inventions.  If under the circumstances of a given patentapplication, such separate prosecution is not practicable or materiallyadversely affects patentability, then the Parties shall agree as to which ofthem shall be responsible for the Patent Prosecution of such patent applicationand any resulting patent, and such Patent Prosecution shall be pursued inaccordance with Sections 5.2.4 and 5.2.5.

###  

### 5.2.2                        Genaissance IP Rights.  Genaissance shall have the exclusive rightand option to pursue the Patent Prosecution of Genaissance IP Rights; provided,however, that in the event that Genaissance declines to pursue thePatent Prosecution of (a) any Genaissance IP Rights covering (i) an SADRDiagnostic Product that is the subject of the Bayer SADR Diagnostic Licenseand/or (ii) an SER Diagnostic Product that is this subject of the Bayer SERDiagnostic License as long as any such license remains exclusive, or (b) anyGenaissance Resulting IP, Genaissance shall give Bayer no less than sixty (60)days written notice to this effect and thereafter Bayer may, upon writtennotice to Genaissance, elect to assume sole control over the Patent Prosecutionof such Genaissance IP Rights in Genaissance’s name; provided, further,that in the event that Bayer ceases to pursue the Patent Prosecution of anysuch Genaissance IP Rights, Bayer shall give Genaissance no less than sixty(60) days written notice to this effect and thereafter Genaissance may, uponwritten notice to Bayer, elect to assume sole control over the PatentProsecution of such Genaissance IP Rights. In the event that the Bayer

###  

41

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### SADR Diagnostic Licenseand/or the Bayer SER Diagnostic License becomes non-exclusive, Bayer’s rightsunder this Section 5.2.2 with respect to Genaissance IP Rights other thanGenaissance Resulting IP shall terminate to the extent that Genaissance iswilling to, and does, resume control over the Patent Prosecution of therelevant Genaissance IP Rights other than Genaissance Resulting IP.

###  

### 5.2.3                        Bayer IP Rights.  Bayer shall have the exclusive right and option to pursue thePatent Prosecution of the Bayer IP Rights; provided, however,that in the event that Bayer declines to pursue the Patent Prosecution of (a)any Bayer IP Rights covering (i) a Genaissance SADR Diagnostic Product and/or(ii) a Genaissance SER Diagnostic Product and/or (iii) a [**]-Specific SERDiagnostic Product that is the subject of a license, if any, to Genaissance ora Genaissance Collaborator pursuant to Section 3.2.2, and/or (iv) a [**] DrugProduct that is the subject of a license to Genaissance pursuant to Section3.3.1(a), as long as any such license remains exclusive or co-exclusive, as thecase may be, or (b) any Bayer Resulting IP, Bayer shall give Genaissance noless than sixty (60) days written notice to this effect and thereafterGenaissance (or, in the case of a [**]-Specific SER Diagnostic Product, aGenaissance Collaborator, if applicable) may, upon written notice to Bayer,elect to assume sole control over the Patent Prosecution of such Bayer IPRights and maintain such Bayer IP Rights in Bayer’s name; provided, further,that in the event that Genaissance (or a Genaissance Collaborator, ifapplicable) ceases to pursue the Patent Prosecution of any such Bayer IPRights, Genaissance (or a Genaissance Collaborator, if applicable) shall giveBayer no less than sixty (60) days written notice to this effect and thereafterBayer may, upon written notice to Genaissance (or a Genaissance Collaborator,if applicable), elect to assume sole control over the Patent Prosecution ofsuch Bayer IP Rights.  In the event thata license described in this Section 5.2.3 becomes non-exclusive, Genaissance’s(or a Genaissance Collaborator’s, if applicable) rights under this Section5.2.3 with respect to IP other than Bayer Resulting IP to the extent that Bayeris willing to, and does, resume control over the Patent Prosecution of therelevant Bayer IP Rights.

###  

### 5.2.4                        Costs and Expenses.  [**] in accordance with this Section 5.2.

###  

### 5.2.5                        Cooperation.

####  

#### (a)                                  General.  Each Party agrees to cooperate with theother with respect to Patent Prosecution pursuant to this Section 5.2,including, without limitation, the execution of all such documents andinstruments and the performance of such acts as may be reasonably necessary inorder to permit the other Party to continue any Patent Prosecution that suchParty has elected not to pursue, as provided for in this Section 5.2.  Each Party shall, on an annual basis,provide to the other Party a list of all patents and patent applications filed,prosecuted maintained and/or extended by it pursuant to this Section 5.2, includingthe status thereof.

####  

#### (b)                                 Bayer.  Bayer shall have the right to receive,within ten (10) business days after receipt by Genaissance, copies of allcorrespondence to and from patent offices that are related to patentapplications and/or patents within the Genaissance Resulting IP or within theBayer IP Rights for which Genaissance has assumed control of the PatentProsecution in accordance with Section 5.2.3, and shall further have the rightto review and comment upon such patent applications and/or patents, and thePatent Prosecution thereof by

####  

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#### Genaissance, includingthe right to receive and review drafts of patent applications no less than ten(10) business days prior to filing with any patent office.  Genaissance shall consider Bayer’s commentsin good faith.

####  

#### (c)                                  Genaissance.  Genaissance shall have the right to receive,within ten (10) business days after receipt by Bayer, copies of allcorrespondence to and from patent offices that are related to patentapplications and/or patents within the Bayer Resulting IP or within theGenaissance IP Rights for which Bayer has assumed control of the PatentProsecution in accordance with Section 5.2.2, and shall further have the rightto review and comment upon such patent applications, and/or patents, and thePatent Prosecution thereof by Bayer, including the right to receive and reviewdrafts of patent applications no less than ten (10) business days prior tofiling with any patent office.  Bayershall consider Genaissance’s comments in good faith.

###  

### 5.2.6                        Patent Interference and Opposition.

####  

#### (a)                                  Bayer.  Bayer shall have the exclusive right andoption to determine and undertake the course of action required in the event ofthe discovery of a request for, or the filing or declaration of anyinterference, opposition, or reexamination proceeding (each, an “InterferenceAction”) with respect to the Bayer IP Rights; provided, however, thatin the event that Bayer fails to take such appropriate action in connection withan Interference Action with respect to the Bayer IP Rights for whichGenaissance (or a Genaissance Collaborator, if applicable) has assumed, or hasthe right to assume, control of the Patent Prosecution in accordance withSection 5.2.3 within ninety (90) days after becoming aware of such action, thenGenaissance (or a Genaissance Collaborator, if applicable) may, in itsdiscretion, as long as Genaissance’s (or a Genaissance Collaborator’s, ifapplicable) rights under Section 5.2.3 remain in effect, provide Bayer withwritten notice of its intent to take such appropriate action, such notice to beprovided within thirty (30) days after the expiration of such ninety (90) dayperiod.  If Genaissance (or aGenaissance Collaborator, if applicable) provides such notice and Bayer failsto take such appropriate action within thirty (30) days after receipt of suchnotice from Genaissance (or a Genaissance Collaborator, if applicable), thenGenaissance (or a Genaissance Collaborator, if applicable) shall have the rightto take appropriate action that it believes is reasonably required to protectthe relevant Bayer IP Rights. Genaissance (or a Genaissance Collaborator, if applicable) shall giveBayer sufficient advance notice of its intent to take any such action and thereasons therefor, and shall provide Bayer with an opportunity to makesuggestions and comments regarding such action.  The Parties shall cooperate with each other and each shallprovide the other with any information or assistance that the other may reasonablyrequest with any action so taken.  Inthe event that Genaissance (or a Genaissance Collaborator, if applicable) takesaction in connection with an Interference Action with respect to Bayer IPRights in accordance with this Section 5.2.6(a), Genaissance (or a GenaissanceCollaborator, if applicable) shall keep Bayer informed of all developments insuch interference, opposition, reexamination or reissue, including to theextent permissible the status of any settlement negotiations and the terms of anysettlement offer.  Genaissance (or aGenaissance Collaborator, if applicable) shall provide Bayer with copies of allsubmissions or agreements arising in connection with such proceedingsufficiently in advance of their filing or due date so as to give Bayersufficient time to comment thereon. Genaissance (or a Genaissance Collaborator, if applicable) shall givegood faith consideration to Bayer’s comments.

####  

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#### Genaissance (or aGenaissance Collaborator, if applicable) shall not enter into any settlement orconsent decree regarding any Bayer IP Rights with respect to which Genaissance(or a Genaissance Collaborator, if applicable) has taken action in connectionwith an Interference Action in accordance with this Section 5.2.6 or assent tothe grant of any reissued or reexamined patent within the Bayer IP Rightswithout the prior written consent of Bayer, which shall not be withheld ordelayed unreasonably.

####  

#### (b)                                 Genaissance.  Genaissance shall have the exclusive rightand option to determine and undertake the course of action required in theevent of any Interference Action with respect to the Genaissance IP Rights; provided,however, that in the event that Genaissance fails to take suchappropriate action in connection with an Interference Action with respect tothe Genaissance IP Rights for which Bayer has assumed, or has the right toassume, control of the Patent Prosecution in accordance with Section 5.2.2within ninety (90) days after becoming aware of such action, then Bayer may, inits discretion, as long as Bayer’s rights under Section 5.2.2 remain in effect,provide Genaissance with written notice of its intent to take such appropriateaction, such notice to be provided within thirty (30) days after the expirationof such ninety (90) day period.  IfBayer provides such notice and Genaissance fails to take such appropriateaction within thirty (30) days after receipt of such notice from Bayer, thenBayer shall have the right to take appropriate action that it believes isreasonably required to protect the relevant Genaissance IP Rights. Bayer shallgive Genaissance sufficient advance notice of its intent to take any suchaction and the reasons therefor, and shall provide Genaissance with anopportunity to make suggestions and comments regarding such action.  The Parties shall cooperate with each otherand each shall provide the other with any information or assistance that theother may reasonably request with any action so taken.  In the event that Bayer takes action inconnection with an Interference Action with respect to Genaissance IP Rights inaccordance with this Section 5.2.6(b), Bayer shall keep Genaissance informed ofall developments in such interference, opposition, reexamination or reissue,including to the extent permissible the status of any settlement negotiationsand the terms of any settlement offer. Bayer shall provide Genaissance with copies of all submissions oragreements arising in connection with such proceeding sufficiently in advanceof their filing or due date so as to give Genaissance sufficient time tocomment thereon.  Bayer shall give goodfaith consideration to Genaissance’s comments. Bayer shall not enter into any settlement or consent decree regardingany Genaissance IP Rights with respect to which Bayer has taken action inconnection with an Interference Action in accordance with this Section 5.2.6 orassent to the grant of any reissued or reexamined patent within the GenaissanceIP Rights without the prior written consent of Genaissance, which shall not bewithheld or delayed unreasonably.

##  

## 5.3                                 Third Party Infringement.

###  

### 5.3.1                        Notice.  EachParty shall promptly report in writing to the other Party during the term ofthis Agreement any (a) known or suspected infringement of any of the PatentRights of the other Party, or (b) unauthorized use of any of the Know-How ofthe other Party, of which such Party becomes aware, and shall provide the otherParty with all available evidence supporting such infringement, suspectedinfringement, unauthorized use or suspected unauthorized use.

###  

####  

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### 5.3.2                        Infringement Action.

 

#### (a)                                  Bayer.  Bayer shall have the exclusive right andoption to initiate a suit or take other appropriate action that it believes isreasonably required to protect the Bayer IP Rights; provided, however,that in the event that Bayer fails to initiate such suit or take suchother appropriate action within ninety (90) days after becoming aware of thealleged infringements or unauthorized use of Bayer IP Rights for whichGenaissance (or a Genaissance Collaborator, if applicable) has assumed, or hasthe right to assume, control of the Patent Prosecution in accordance withSection 5.2.3, then Genaissance (or a Genaissance Collaborator, if applicable)may, in its discretion, as long as Genaissance’s (or a GenaissanceCollaborator’s, if applicable) rights under Section 5.2.3 remain in effect,provide Bayer with written notice of its intent to initiate such suit or takesuch other appropriate action, such notice to be provided within thirty (30)days after the expiration of such ninety (90) day period.  If Genaissance (or a GenaissanceCollaborator, if applicable) provides such notice and Bayer fails to initiatesuch suit or take such other appropriate action within thirty (30) days afterreceipt of such notice from Genaissance (or a Genaissance Collaborator, ifapplicable), then Genaissance (or a Genaissance Collaborator, if applicable)shall have the right to initiate a suit or take other appropriate action thatit believes is reasonably required to protect the relevant Bayer IPRights.  Genaissance (or a GenaissanceCollaborator, if applicable) shall give Bayer sufficient advance notice of its intentto file any such suit or take any such action and the reasons therefor, andshall provide Bayer with an opportunity to make suggestions and commentsregarding such suit or action. Genaissance (or a Genaissance Collaborator, if applicable) shall havethe sole and exclusive right to select counsel for any suit initiated by itpursuant to this subsection, which counsel shall be reasonably acceptable toBayer.  If necessary or desirable, Bayershall join as a party to the suit. Bayer shall have the right to participate in and be represented in anysuch suit by its own counsel at its own expense.

####  

#### (b)                                 Genaissance.  Genaissance shall have the exclusive rightand option to initiate a suit or take other appropriate action that it believesis reasonably required to protect the Genaissance IP Rights provided, however,that in the event that Genaissance fails to initiate such suit or takesuch other appropriate action within ninety (90) days after becoming aware ofthe alleged infringements or unauthorized use of Genaissance IP Rights forwhich Bayer has assumed, or has the right to assume, control of the PatentProsecution in accordance with Section 5.2.2, then Bayer may, in itsdiscretion, as long as Bayer’s rights under Section 5.2.2 remain in effect,provide Genaissance with written notice of its intent to initiate such suit ortake such other appropriate action, such notice to be provided within thirty(30) days after the expiration of such ninety (90) day period.  If Bayer provides such notice and Genaissancefails to initiate such suit or take such other appropriate action within thirty(30) days after receipt of such notice from Bayer, then Bayer shall have theright to initiate a suit or take other appropriate action that it believes isreasonably required to protect the relevant Genaissance IP Rights.  Bayer shall give Genaissance sufficientadvance notice of its intent to file any such suit or take any such action andthe reasons therefor, and shall provide Genaissance with an opportunity to makesuggestions and comments regarding such suit or action.  Bayer shall have the sole and exclusiveright to select counsel for any suit initiated by it pursuant to thissubsection, which counsel shall be reasonably acceptable to Genaissance.  If necessary or desirable, Genaissance shalljoin as a party to the suit. Genaissance shall have the right to participate in and be represented inany such suit by its own counsel at its own expense

####  

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#### (c)                                  Cooperation.Each Party (or a Genaissance Collaborator, if applicable) shall keep the otherParty (or a Genaissance Collaborator, if applicable) promptly informed, andshall from time to time consult with the other Party (or a GenaissanceCollaborator, if applicable) regarding the status of any such suit or action undertakenby such Party (or a Genaissance Collaborator, if applicable) pursuant to thisSection 5.3.2, and shall provide the other Party (or a GenaissanceCollaborator, if applicable) with copies of all material documents (i.e.,complaints, answers, counterclaims, material motions, orders of the court,memoranda of law and legal briefs, interrogatory responses, depositions,material pre-trial filings, expert reports, affidavits filed in court,transcripts of hearings and trial testimony, trial exhibits and notices ofappeal) filed in, or otherwise relating to, such suit or action.  Each Party (or a Genaissance Collaborator,if applicable) shall offer reasonable assistance to the Party (or a GenaissanceCollaborator, if applicable) undertaking such suit or action in connectiontherewith at no charge to the Party (or a Genaissance Collaborator, ifapplicable) undertaking such suit or action except for reimbursement ofreasonable out-of-pocket expenses incurred in rendering such assistance.  The Party (or a Genaissance Collaborator, ifapplicable) undertaking any such suit or action shall assume and pay all of itsown out-of-pocket costs incurred in connection with any litigation orproceedings described in this Section 5.3.2, including, without limitation, thefees and expenses of the counsel selected by it.  In the event that a Party (or a Genaissance Collaborator, ifapplicable) initiates a suit or takes other appropriate action with respect tothe Patent Rights and/or Know-How of the other Party in accordance with thisSection 5.3, the Party (or a Genaissance Collaborator, if applicable)undertaking such suit or action shall not settle any such suit or actionwithout obtaining the prior written consent of the other Party, which consentshall not be unreasonably withheld or delayed.

###  

### 5.3.3                        Recoveries. Any recovery obtained as a result of any proceeding described in thisSection 5.3 shall be applied in the following order of priority:

####  

#### (a)                                  first,the Party initiating the suit or action shall be reimbursed for all costs inconnection with such proceeding paid by such Party and not otherwise recovered;

####  

#### (b)                                 second,the other Party shall be reimbursed for all costs in connection with suchproceeding paid by the other Party and not otherwise recovered;

####  

#### (c)                                  third,any remainder shall be paid [**] percent ([**]%) to the Party initiating suchsuit or action and [**] percent ([**]%) to the other Party.

###  

### 5.3.4                        Patent Invalidity Claim.  If a Third Party at any time asserts a claimthat any Patent Right is invalid or otherwise unenforceable (an “InvalidityClaim”), whether as a defense in an infringement action brought by a Partypursuant to this Section 5.3 or in a Third Party Claim brought againstGenaissance or Bayer, the Parties shall cooperate and shall endeavor to agreeupon an appropriate course of action.

##  

## 5.4                                 Claimed Infringement.  In the event that a Third Party at any timeprovides to a Party written notice of a claim, or brings an action, suit orproceeding against a Party claiming, that the activities to be performed underthis Agreement by such Party infringe such Third Party’s Patent Rights or makeunauthorized use of such Third Party’s Know-How (a “Third Party Claim”), suchParty shall promptly notify the other Party of the claim or the commencement of

##  

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## such action, suit orproceeding, enclosing a copy of the claim and/or all papers served.  The Parties shall cooperate and shallendeavor to agree upon an appropriate course of action.  Each Party agrees to make available to theother Party its reasonable advice and counsel regarding the technical merits ofany such claim and to offer reasonable assistance to the other Party.  Such advice, counsel and assistance shall beprovided without charge to the other Party, unless such advice, counsel andassistance would require such assisting Party to incur material external costs,in which case the assisting Party shall not be required to provide such advice,counsel and assistance unless the other Party agrees to reimburse them.

##  

## 5.5                                 Patent Marking. The Parties agree to comply with any applicable patent marking statutesin any country in which any Product is sold by a Party, its Affiliates or itssublicensees.

# ** **

# **ARTICLE VI**

# **CONFIDENTIALITY**

##  

## 6.1                                 Nondisclosure and Non-Use Obligations.

###  

### 6.1.1                        General. Except as otherwise provided in this Article VI, during the term of thisAgreement and for a period of [**] ([**]) years thereafter, each Party shallmaintain the Confidential Information of the other Party in confidence and useit only for purposes specifically authorized under this Agreement.

###  

### 6.1.2                        Limitations. The Parties agree that the receiving Party shall not have any obligationof confidentiality with respect to such Confidential Information that:

####  

#### (a)                                  isor becomes part of the public domain other than by unauthorized acts of theParty obligated not to disclose such Confidential Information;

####  

#### (b)                                 canbe shown by written documents to have been disclosed to the receiving Party bya Third Party, provided, that such Confidential Information wasnot obtained by such Third Party from the other Party to this Agreementpursuant to a confidentiality agreement;

####  

#### (c)                                  priorto disclosure under this Agreement, was already in the possession of thereceiving Party, provided, that such Confidential Information wasnot obtained from the other Party to this Agreement pursuant to aconfidentiality agreement;

 

#### (d)                                 canbe shown by written documents to have been independently developed by thereceiving Party without breach of any of the provisions of this Agreement;

####  

#### (e)                                  isdisclosed by the receiving Party pursuant to an order or demand issued by acourt or governmental agency or as otherwise required by law; provided, thatthe receiving Party notifies the other Party prior to disclosure, giving suchother Party sufficient advance notice, if possible, to permit it to seek aprotective order or other similar order with respect to such ConfidentialInformation and provided,further,that the receivingParty furnishes only that portion of the Confidential Information which it isadvised by counsel is legally required whether or not a protective order orother similar order is obtained by the other Party; or

 

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#### (f)                                    wherethe receiving Party reasonably believes such disclosure is necessary orappropriate to fulfill its obligations or exercise its rights under thisAgreement, with such disclosure being limited to:

#####  

##### (i)                                     actualor potential licensees or sublicensees, consultants, outside contractors andclinical investigators, on a need-to-know basis and on condition that suchentities or persons agree to keep the Confidential Information confidential tothe same extent as such Party is required to keep the Confidential Informationconfidential for a term not less than [**] ([**]) years from the date ofdisclosure to such party; provided, that, Bayer shall nothave the right to disclose any HAP Marker to any external genotyping contractorhired by Bayer, unless such HAP Marker was known to Bayer prior to the firstSteering Committee meeting, as evidenced by contemporary written documentation;and

 

##### (ii)                                  governmentor other Regulatory Authorities to the extent that such disclosure isreasonably necessary to obtain or maintain patents or authorizations to conductclinical trials of, and to commercially market, Products pursuant to thisAgreement.

##  

## 6.2                                 Injunctive Relief.  The Parties understand and agree that remedies at law may beinadequate to protect against any breach of any of the provisions of thisArticle VI by either Party or their employees, agents, officers or directors orany other person acting in concert with it or on its behalf.  Accordingly, each Party shall be entitled tothe granting of injunctive relief by a court of competent jurisdiction againstany action that constitutes any such breach of this Article VI.

##  

## 6.3                                 Publication. The Parties agree to use commercially reasonable efforts to monitorpublic scientific and other disclosures of the results of the Collaboration toprevent any premature public disclosure of such results.  The Parties shall establish a procedure forpublication review, which shall include Steering Committee approval, not to beunreasonably withheld.  Each Party shallfirst submit to the other Party an early draft of all such publications,whether they are to be presented orally or in written form, at least [**]([**]) days prior to submission (if in written form, including abstracts) orpresentation (if an oral disclosure) to determine (a) whether the proposeddisclosure contains any Confidential Information of the other Party or (b)whether the information contained in the proposed disclosure should be thesubject of a patent application prior to such disclosure.  The other Party shall have [**] ([**]) daysfrom its receipt of any such abstract, manuscript or presentation in which tonotify the Party in writing of any specific objections to the disclosure, basedon either the need to seek patent protection or concern regarding the specificdisclosure of the Confidential Information of such Party.  In the event a Party objects to thedisclosure, the other Party agrees not to submit the publication or make thepresentation containing the objected-to information until the Party is given areasonable additional period of time (not to exceed an additional [**] ([**])days) to seek patent protection for any material in the disclosure which itbelieves is patentable or, in the case of Confidential Information, to allowthe Party to delete any Confidential Information of the other Party from theproposed disclosure.  Each Party agreesto delete from the proposed disclosure any Confidential Information of theother Party upon request.  The Partiesagree that all publications of results of

##  

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## the Collaboration shallacknowledge the contribution of the other Party to such results, which shall beco-authorship in accordance with accepted practices of authorshipjustification.

 

# **ARTICLE VII**

# **REPRESENTATIONSAND WARRANTIES; LIMITATION OF LIABILITY**

##  

## 7.1                                 Representations and Warranties ofGenaissance.  Genaissancerepresents and warrants to Bayer as of the Effective Date that:

 

###### (a)                                  Genaissanceis a corporation duly organized, validly existing and in corporate goodstanding under the laws of Delaware, whose organization number assigned by theSecretary of State of Delaware is 2288980;

######  

###### (b)                                 Genaissancehas the legal right, authority and power to enter into this Agreement, performits obligations under this Agreement, and grant to Bayer the licenses, securityinterest and other rights granted pursuant to this Agreement;

######  

###### (c)                                  uponthe execution and delivery of this Agreement, this Agreement shall constitute avalid and binding obligation of Genaissance enforceable in accordance with itsterms, except as enforceability may be limited by applicable bankruptcy,insolvency, reorganization, moratorium or similar laws affecting creditors’ andcontracting parties’ rights generally and except as enforceability may besubject to general principles of equity (regardless of whether suchenforceability is considered in a proceeding in equity or at law);

######  

###### (d)                                 allnecessary consents, approvals and authorizations of all government authoritiesand other persons required to be obtained by it in connection with the execution,delivery and performance of this Agreement have been obtained;

######  

###### (e)                                  notwithstandinganything to the contrary in this Agreement, the execution and delivery of thisAgreement, the performance of Genaissance’s obligations in the conduct of theCollaboration and the licenses, security interest and other rights grantedpursuant to this Agreement (i) do not conflict with or violate any requirementof applicable laws or regulations existing as of the Effective Date, and (ii)do not conflict with, violate, breach or constitute a default under anycontractual obligations of Genaissance existing as of the Effective Date;

######  

###### (f)                                    allof its employees, officers, consultants and advisors who are or will beinvolved in the Collaboration have executed or will have executed agreements orhave existing obligations under law requiring assignment to Genaissance ofinventions made by them in the conduct of the Collaboration, and obligatingsuch individuals to maintain as confidential Bayer’s Confidential Information,to the extent required to support Genaissance’s obligations under thisAgreement;

######  

###### (g)                                 tothe knowledge of Genaissance, the Genaissance Prior IP and the GenaissanceKnow-How that will be used by the Parties in the Collaboration have not beendeveloped or obtained by Genaissance in violation of any contractual obligationto any Third Party nor have they been misappropriated from any Third Party orobtained without the proper consent of any Third Party;

 

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###### (h)                                 exceptas otherwise disclosed to Bayer by Genaissance as of the Effective Date, thereis no action, suit or proceeding which is pending or, to the knowledge of theofficers of Genaissance, no written claim or demand of any Third Party that hasbeen received, that challenges or would materially adversely affect (i) theright of Genaissance to use in the conduct of the Collaboration the GenaissancePrior IP, the Genaissance Know-How or the Genaissance Patent Rights that arereasonably expected to be utilized by the Parties to fulfill their duties underthe Collaboration Plan, or (ii) the right of Genaissance to grant to Bayer therights and licenses to use such Genaissance Prior IP, Genaissance Know-How orGenaissance Patent Rights, as contemplated under this Agreement.

##  

## 7.2                                 Representations and Warranties ofBayer.  Bayer represents andwarrants to Genaissance as of the Effective Date that:

######  

###### (a)                                  (i)Bayer AG is a corporation duly organized, validly existing and in corporategood standing under the laws of Germany and (ii) Bayer Corporation is acorporation duly organized validly existing and in corporate good standingunder the laws of Indiana;

######  

###### (b)                                 Bayerhas the legal right, authority and power to enter into this Agreement, andperform its obligations under this Agreement, and grant to Genaissance thelicenses and other rights granted pursuant to this Agreement;

######  

###### (c)                                  uponthe execution and delivery of this Agreement, this Agreement shall constitute avalid and binding obligation of Bayer enforceable in accordance with its terms,except as enforceability may be limited by applicable bankruptcy, insolvency,reorganization, moratorium or similar laws affecting creditors’ and contractingparties’ rights generally and except as enforceability may be subject togeneral principles of equity (regardless of whether such enforceability isconsidered in a proceeding in equity or at law);

######  

###### (d)                                 allnecessary consents, approvals and authorizations of all government authoritiesand other persons required to be obtained by it in connection with theexecution, delivery and performance of this Agreement have been obtained;

######  

###### (e)                                  notwithstandinganything to the contrary in this Agreement, the execution and delivery of thisAgreement, the performance of Bayer’s obligations in the conduct of theCollaboration and the licenses and other rights granted pursuant to thisAgreement (i) do not conflict with or violate any requirement of applicablelaws or regulations existing as of the Effective Date and (ii) do not conflictwith, violate, breach or constitute a default under any contractual obligationsof Bayer existing as of the Effective Date;

###### (f)                                    allof its employees, officers, consultants and advisors who are or will beinvolved in the Collaboration have executed or will have executed agreements orhave existing obligations under law requiring assignment to Bayer of inventionsmade by them in the conduct of the Collaboration, and obligating suchindividuals to maintain as confidential Genaissance’s Confidential Information,to the extent required to support Bayer’s obligations under this Agreement;

######  

###### (g)                                 tothe knowledge of Bayer, the Bayer Prior IP and the Bayer Know-How that will beused by the Parties in the Collaboration have not been developed or obtained by

######  

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###### Bayer in violation of anycontractual obligation to any Third Party nor have they been misappropriatedfrom any Third Party or obtained without the proper consent of any Third Party;and

######  

###### (h)                                 exceptas otherwise disclosed to Genaissance by Bayer as of the Effective Date, thereis no action, suit or proceeding which is pending or, to the knowledge of theofficers of Bayer, no written claim or demand of any Third Party that has beenreceived, that challenges or would materially adversely affect (i) the right ofBayer to use in the conduct of the Collaboration the Bayer Prior IP, the BayerKnow-How or the Bayer Patent Rights that are reasonably expected to be utilizedby the Parties to fulfill their duties under the Collaboration Plan, or (ii) theright of Bayer to grant to Genaissance the rights and licenses to use suchBayer Prior IP, Bayer Know-How or Bayer Patent Rights, as contemplated underthis Agreement.

##  

## 7.3                                 Warranty Disclaimer.  EXCEPT AS OTHERWISE EXPRESSLY PROVIDED INARTICLE VII OF THIS AGREEMENT, THE PARTIES MAKE NO REPRESENTATIONS AND EXTENDNO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, STATUTORY OROTHERWISE.  THE PARTIES HEREBY DISCLAIMWARRANTIES OF TITLE, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE ANDNONINFRINGEMENT WITH RESPECT TO PRODUCTS, BAYER POLYMORPHISMS, BAYER SADRPOLYMORPHISM ASSOCIATIONS, BAYER SER POLYMORPHISM ASSOCIATIONS, *HAP*TMMARKERS, MARKER ASSOCIATIONS AND COLLABORATION [**] HAPLOTYPES.

##  

## 7.4                                 Disclaimer of Consequential Damages.  NEITHER PARTY WILL BE LIABLE FOR SPECIAL,INCIDENTAL, PUNITIVE, EXEMPLARY, MULTIPLE, CONSEQUENTIAL OR OTHER INDIRECTDAMAGES ARISING OUT OF THIS AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER,OR ANY LOST PROFITS, LOST SAVINGS, LOST REVENUES OR LOST DATA, REGARDLESS OF ANYNOTICE OF SUCH DAMAGES.  NOTHING IN THISSECTION 7.4 IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OROBLIGATIONS OF EITHER PARTY UNDER ARTICLE VIII.

 

# **ARTICLE VIII**

# **INDEMNITY**

##  

## 8.1                                 Bayer Indemnity Obligations.  Bayer agrees to defend, indemnify and holdGenaissance and its directors, officers, employees and agents harmless from alllosses, damages or expenses (including attorneys’ fees) arising as a result ofany Third Party claims relating to:  (a)claims for bodily injury, death or property damage attributable to thedevelopment, manufacture, or use of Products developed, manufactured or sold byBayer, its Affiliates, or its sublicensees (excluding those claims for whichGenaissance indemnifies Bayer pursuant to Section 8.2); (b) a recall of anyProduct developed, marketed, sold or manufactured by Bayer (excluding thoseclaims for which Genaissance indemnifies Bayer pursuant to Section 8.2) orderedby a governmental agency or required by a confirmed product failure; (c) abreach of any of the representations, warranties or material obligations ofBayer under this Agreement; or (d) performance by Bayer of its obligationsunder this Agreement or as a result of Bayer’s use of its

##  

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## proprietary technologyand/or any Third Party technology including, but not limited to, any claimthat[**].

##  

## 8.2                                 Genaissance Indemnity Obligations.  Genaissance agrees to defend, indemnify andhold Bayer and its directors, officers, employees and agents harmless from alllosses, damages or expenses (including attorneys’ fees) arising as a result ofany Third Party claims relating to (a) claims for bodily injury, death orproperty damage attributable to the development, manufacture, or use of anyProducts developed, manufactured or sold by Genaissance, its Affiliates, or itssublicensees (excluding those claims for which Bayer indemnifies Genaissancepursuant to Section 8.1); (b) a recall of any Product developed, marketed, soldor manufactured by Genaissance which is ordered by a governmental agency orrequired by a confirmed product failure (excluding those claims for which Bayerindemnifies Genaissance pursuant to Section 8.1); (c) a breach of any of therepresentations, warranties or material obligations of Genaissance under thisAgreement; or (d) performance by Genaissance of its obligations under thisAgreement or as a result of Genaissance’s use of its proprietary technologyand/or any Third Party technology including, but not limited to, any claimthat[**].

##  

## 8.3                                 Limitation on Indemnity Obligations.  Neither Party nor its respective directors,officers, employees and agents shall be entitled to the indemnities set forthin Section 8.1 and Section 8.2 where the claim, loss, damage or expense forwhich indemnification is sought was caused by a negligent act or omission orwillful misconduct by such Party, its directors, officers, employees orauthorized agents.

##  

## 8.4                                 Procedure.  Ifthe Party being indemnified hereunder or its respective directors, officers,employees or agents (the “Indemnitee”) intends to claim indemnification underthis Article VIII, the Indemnitee shall promptly notify the other Party (the“Indemnitor”) of any loss, claim, damage, liability or action in respect ofwhich the Indemnitee intends to claim such indemnification, and the Indemnitorshall manage and control, at its sole expense, the defense of the claim and itssettlement.  The Indemnitee shallcooperate with the Indemnitor and may, at its option and its own expense, berepresented in any such action or proceeding. The Indemnitor shall not be liable for any litigation costs or expensesincurred by the Indemnitee that have not been approved in advance in writing bythe Indemnitor.  The indemnityobligations under this Article VIII shall not apply to amounts paid insettlement of any loss, claim, damage, liability or action if such settlementis effected without the consent of the Indemnitor.  The Indemnitor may enter into a settlement without the consent ofthe Indemnitee unless such settlement (a) does not include a complete releaseof the Indemnitee from all liability with respect thereto, or (b) imposes anyrestrictions on the Indemnitee.  TheIndemnitee under this Article VIII shall cooperate fully with the Indemnitorand its legal representatives in the investigation of any action, claim orliability covered by this indemnification. The Indemnitor shall additionally be liable to pay the reasonable legalcosts and attorneys’ fees incurred by the Indemnitee in establishing its claimfor indemnity.

##  

## 8.5                                 Insurance. Each Party shall maintain insurance, including product liabilityinsurance, with respect to its activities hereunder.  Such insurance shall be in such amounts and subject to suchdeductibles as the Parties may agree based upon standards prevailing in theindustry at the time, providedthat, as of the First CommercialUse, each Party shall maintain a minimum of [**] Dollars ($[**]) in productliability insurance.  Either Party maysatisfy its

##  

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## obligations under thisSection 8.5 through reasonable self-insurance to the same extent.  A Party shall name the other Party as anadditional insured on any policies it maintains pertaining to the development,manufacturing, marketing or sale of any Products.

# ** **

# **ARTICLE IX**

# **TERM AND TERMINATION**

 

## 9.1                                 Term of Agreement.  This Agreement shall become effective as of the Effective Date,may be terminated as set forth in this Article IX, and shall otherwise remainin effect until the later of: (i) the expiration of all obligations to makepayments set forth in Article IV, or (ii) the expiration of all licenses andother rights granted in Article III, other than licenses having a perpetualterm.

##  

## 9.2                                 Termination for Material Breach.  Upon any material breach of a provision ofthis Agreement by a Party (the “Breaching Party”), the other Party (the“Non-Breaching Party”) may terminate this Agreement by providing [**] ([**])days written notice to the Breaching Party, specifying the material breach.  The termination shall become effective atthe end of the [**] ([**]) day period, or if such breach is not susceptible tocure within [**] ([**]) days after the receipt of written notice of the breach,and if the Breaching Party is diligently pursuing a cure, then terminationshall become effective within [**] ([**]) days of the receipt of written noticeof the breach.  Notwithstanding theforegoing, if such breach, by its nature, is incurable, this Agreement may beterminated immediately.  The Partiesshall use reasonable efforts to work together to cure any breach.

##  

## 9.3                                 Bankruptcy. Each Party may terminate this Agreement if the other Party (i) makes anassignment for the benefit of creditors; (ii) applies for, seeks, consents to,acquiesce in, or have appointed for it a receiver, custodian, trustee,examiner, liquidator or similar official for it or substantially all of itsproperty; (iii) institutes any proceeding seeking an order for relief under theBankruptcy Code or any other proceeding seeking to adjudicate it a bankrupt orinsolvent, or seeking dissolution, winding up, liquidation, or composition ofit or its debts under any law relating to bankruptcy, insolvency, orreorganization of all or substantially all of its assets; or (iv) hasinstituted against it an involuntary proceeding under the Bankruptcy Code orany bankruptcy, reorganization of all or substantially all of its assets,arrangement, insolvency or similar proceedings under the laws of anyjurisdiction, if not dismissed or stayed within [**] ([**]) days after suchcommencement.

##  

## 9.4                                 Effect of Termination.

###  

### 9.4.1                        Effect of Termination by Genaissance.  If this Agreement is terminated byGenaissance under Section 9.2 or Section 9.3, then, to the extent permittedunder the Bankruptcy Code or under other applicable law, (a) the license grantsto Bayer under Sections 3.1.2, 3.2.1, 3.3.3, 3.3.4 and 3.4.1 and the otherrights granted to Bayer under Section 3.8.1 shall terminate and all rightsunder sublicenses granted by Bayer with respect to Genaissance IP Rights shallbe assigned to Genaissance, (b) subject to Genaissance’s compliance with allobligations set forth in Section 9.5 and without prejudice to Bayer’s rights toreceive payments under Article IV of this Agreement, net of the amount of anydamages incurred by Genaissance as a result of breach of this Agreement byBayer and not otherwise recovered, the license grants to Genaissance under

###  

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### Sections 3.1.1, 3.2.4, ifany, 3.3.1, 3.3.2 and 3.4.2 and the other rights granted to Genaissance underSections 3.2.2, 3.2.3, 3.5 and 3.8.2 shall survive termination of thisAgreement; (c) all Bayer Resulting IP and, all rights under licenses grantedthereunder by Bayer shall be assigned to Genaissance and Bayer’s rights to andunder the Bayer Resulting IP shall immediately and automatically cease, withoutprejudice to Bayer’s rights to receive payments under Article IV of thisAgreement, net of the amount of any damages incurred by Genaissance as a resultof breach of this Agreement by Bayer and not otherwise recovered, and (d) anyand all Confidential Information of, and materials provided by the Partiespursuant to this Agreement, and any copies thereof (including electroniccopies) shall be promptly returned by each Party to the other Party ordestroyed, except to the extent necessary to exercise rights retained pursuantto this Section.

###  

### 9.4.2                        Effect of Termination by Bayer.  If this Agreement is terminated by Bayerunder Section 9.2. or Section 9.3, then, to the extent permitted under theBankruptcy Code or under other applicable law, (a) the license grants toGenaissance under Section 3.1.1 3.2.4, if any, 3.3.1, 3.3.2 and 3.4.2 and theother rights granted to Genaissance under Sections 3.2.2, 3.2.3, 3.5 and 3.8.2shall terminate and all rights under sublicenses granted by Genaissance withrespect to Bayer IP Rights shall be assigned to Bayer; (b) subject to Bayer’scompliance with all obligations set forth in Section 9.5, and without prejudiceto Genaissance’s right to receive payments under Article IV of this agreement,net of the amount of any damages incurred by Bayer as a result of breach ofthis agreement by Genaissance and not otherwise recovered, the license grantsto Bayer under Sections 3.1.2, 3.2.1, 3.3.3, 3.3.4 and 3.4.1 and the otherrights granted to Bayer under Section 3.8.1 shall survive such termination ofthis Agreement; and (c) all Genaissance Resulting IP and all rights underlicenses granted thereunder by Genaissance shall be assigned to Bayer and Genaissance’srights to and under the Genaissance Resulting IP shall immediately andautomatically cease, without prejudice to Genaissance’s rights to receivepayments under Article IV of this Agreement, net of the amount of any damagesincurred by Bayer as a result of breach of this Agreement by Genaissance andnot otherwise recovered, and (d) any and all Confidential Information of, andmaterials provided by the Parties pursuant to this Agreement, and any copiesthereof (including electronic copies) shall be promptly returned by each Partyto the other Party or destroyed, except to the extent necessary to exerciserights retained pursuant to this Section.

##  

## 9.5                                 Surviving Provisions.  The expiration or termination of thisAgreement shall not relieve the Parties of any obligation accruing prior tosuch expiration or termination.  Theprovisions of Articles IV, VI, VIII, IX and X and Sections 5.1, 7.3 and 7.4hereof shall survive the expiration or termination of this Agreement.

##  

## 9.6                                 Security Interest.  To secure the prompt and complete performance when due of allobligations of Genaissance under this Agreement (the “Obligations”),Genaissance hereby grants to Bayer a first priority security interest in all ofGenaissance’s rights, title and interests in and to the Genaissance ResultingIP (whether now existing or hereafter arising) , all licenses thereof, and allof the rights and benefits therefrom, including without limitation all licensepayments and royalties, the right to sue for past, present and future infringementsand proceeds thereof (the “Collateral”). Genaissance hereby authorizes the filing of appropriate UCC FinancingStatements relating thereto and any other federal or state filings that may berequired to perfect or otherwise secure Bayer’s security interest in theCollateral as granted herein (collectively, “Filings”), and Bayer shall havethe right to file the same in order to secure its 

##  

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## interests therein.  To the extent permitted by law, Bayer shallinclude in the Filings (other than continuation statements) a statement thatthe Collateral secures only the Obligations. Genaissance’s sole remedy for any breach of Bayer’s obligation under thepreceding sentence shall be to require Bayer to amend, and Bayer shall soamend, as promptly as is reasonably practicable the relevant Filing to complywith the foregoing requirement.

##  

## 9.7                                 Rights of Secured Party.  Bayer shall have, in addition to the rightsand remedies given under this Agreement, those rights allowed by law or atequity and the rights and remedies of a secured party under the UniformCommercial Code.  Notwithstandinganything herein or under any applicable law to the contrary, Bayer shall notexercise or otherwise enforce its rights to the Collateral as a secured partyuntil this Agreement is terminated by Bayer under Section 9.2 or until theoccurrence of any event described in Section 9.3 with respect to Genaissance.

##  

## 9.8                                 No Encumbrances.  Genaissance represents, warrants and agrees that neither theGenaissance Resulting IP nor the licenses, proceeds nor rights to paymentsrelated thereto is, or hereafter shall be, encumbered (by act of Genaissance orby operation of law) without the prior written consent of Bayer, except for (i)the security interest in favor of Bayer granted hereunder, (ii) liens arisingin the ordinary course of business for sums not overdue or being contested ingood faith by appropriate proceedings and not involving any borrowed money orthe deferred purchase price of property or services, and in each case, forwhich Genaissance maintains adequate reserves; and (iii) licenses permitted bythis Agreement.

##  

## 9.9                                 Further Assurances.  Genaissance shall from time to time promptly execute and deliverany Filings and such other instruments and documents that comply with the termsof Section 9.6 as Bayer may reasonably request to evidence Bayer’s securityinterest in the Collateral or for Bayer to obtain the full benefits of therights granted under Section 9.6.

 

# **ARTICLE X**

# **MISCELLANEOUS**

 

## 10.1                           Force Majeure. Neither Party shall be held liable or responsible to the other Party norbe deemed to have defaulted under or breached this Agreement for failure ordelay in fulfilling or performing any term of this Agreement when such failureor delay is caused by or results from causes beyond the reasonable control ofthe affected Party, including but not limited to fire, floods, embargoes, war,acts of war (whether war is declared or not), terrorism, insurrections, riots,civil commotion, strikes, lockouts or other labor disturbances, acts of God oracts, omissions or delays in acting by any governmental authority or the otherParty; providedthat the Party so affected shall use reasonablecommercial efforts to avoid or remove such causes of nonperformance, and shallcontinue performance hereunder with reasonable dispatch whenever such causesare removed.  Either Party shall providethe other Party with prompt written notice of any delay or failure to performthat occurs by reason of *force**majeure*. The Parties shall mutually seek a resolution of the delay or the failureto perform as noted above.

##  

## 10.2                           Assignment. This Agreement may not be assigned or otherwise transferred by eitherParty without the consent of the other Party; provided,thateither Genaissance or Bayer may, without such consent, assign its rights andobligations under this Agreement (a) to any

##  

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## Affiliate, or (b) inconnection with a merger, consolidation or sale of substantially all of suchParty’s assets relating to this Agreement to a Third Party; provided,further,that such Party’s rights and obligations under this Agreement shall beassumed by its successor in interest in any such transaction and shall not betransferred separate from all or substantially all of its other business assetsrelating to this Agreement, including those business assets that are thesubject of this Agreement.  Anypurported assignment in violation of the preceding sentence shall be void.  Any permitted assignee shall assume allobligations of its assignor under this Agreement.

##  

## 10.3                           Severability.  If any provision hereof should be held invalid, illegal orunenforceable in any respect in any jurisdiction, then, to the fullest extentpermitted by law, (a) all other provisions hereof shall remain in fullforce and effect in such jurisdiction and shall be liberally construed in orderto carry out the intentions of the Parties as nearly as may be possible and (b)such invalidity, illegality or unenforceability shall not affect the validity,legality or enforceability of such provision in any other jurisdiction.

##  

## 10.4                           Notices.  Anyconsent, notice or report required or permitted to be given or made under thisAgreement by one of the Parties to the other Party shall be in writing,delivered personally or by facsimile (and promptly confirmed by telephone,personal delivery or courier) or courier, postage prepaid (where applicable),addressed to such other Party at its address indicated below, or to such otheraddress as the addressee shall have last furnished in writing to the addressorand shall be effective upon receipt by the addressee.

 
| If to  Genaissance: | Genaissance  Pharmaceuticals, Inc.  Five Science Park  New Haven, Connecticut 06511  Attention:  Chief Executive Officer  Telephone:  (203) 773-1450  Facsimile:   (203) 562-9377 |
|---------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                |                                                                                                                                                                                                  |
| With a copy to:     | Hale and Dorr  LLP  60 State Street  Boston, Massachusetts 02109  Attention:  Steven D. Singer  Telephone:  (617) 526-6000  Facsimile:   (617) 526-5000                           |

 

56

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

 

 

And

 

 

Bayer  Aktiengesellschaft  Bayer HealthCare  Bayerwerk  51368 Leverkusen  Germany  Attention:  CAO  Telephone: +49-30-76732  Facsimile: +49-30-52248                     |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|            |                                                                                                                                                                                                                                                                                                                                                                                                      |
| With a copy to: | BAYER HEALTHCARE  LLC, Diagnostics Division  511 Benedict Avenue  Tarrytown, New York 10591  Attention:  Law & Patents  Telephone:   914-631-8000  Facsimile:  914-524-3594

 

 

And

 

 

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

##  

## 10.5                           Applicable Law. This Agreement shall be governed by and construed in accordance with thelaws of the State of [**], without giving effect to the choice of lawsprovisions thereof.

##  

## 10.6                           Dispute Resolution.  The Parties hereby agree that they will attempt in good faith toresolve any controversy or claim arising out of or relating to this Agreementpromptly by negotiations.  If acontroversy or claim should arise hereunder, the matter shall be referred to anindividual designated by the Chief Executive Officer (or the equivalentposition) of Genaissance and an individual designated by the head of Bayer’sBusiness Group Diagnostics (or the equivalent position) of Bayer (the “PartyRepresentatives”).  If the matter hasnot been resolved within [**] ([**]) days after the first meeting of the PartyRepresentatives (which period may be

##  

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## extended by mutualagreement) concerning such matter, subject to rights to injunctive relief andspecific performance, and unless otherwise specifically provided for herein,any controversy or claim arising out of or relating to this Agreement, or thebreach thereof, may at the election of either Party be pursued by whateverother remedies are legally available to resolve the dispute.

##  

## 10.7                           Entire Agreement.  This Agreement, together with the exhibits hereto, contains theentire understanding of the Parties with respect to the subject matterhereof.  All express or impliedagreements and understandings, either oral or written, heretofore made areexpressly superseded by this Agreement. This Agreement may be amended, or any term hereof modified, only by awritten instrument duly executed by both Parties.

##  

## 10.8                           Publicity.

###  

### 10.8.1                  Agreement. Except as required by law, and subject to Section 10.8.2, Genaissanceand Bayer each agree not to disclose the existence or any terms or conditionsof this Agreement to any Third Party without the prior written permission ofthe other Party; provided,that either Party may make suchdisclosures to its financial and legal advisers or actual or potentialinvestors, acquirors, licensees or sublicensees on a need to know basis andsubject to a confidentiality agreement. In the event that this Agreement shall be included in any report,statement or other document filed by either Party or an Affiliate of eitherParty with the United States Securities and Exchange Commission (the “SEC”),such Party shall provide the other Party with reasonable notice and shall use,or shall cause its Affiliate, as the case may be, to use, reasonable efforts toobtain confidential treatment from the SEC of any financial information orother information of a competitive or confidential nature, and shall include insuch confidentiality request such provisions of this Agreement as may bereasonably requested by the other Party.

###  

### 10.8.2                  Press Release. Notwithstanding the foregoing, Genaissance and Bayer agree that a pressrelease may be issued promptly after execution of this Agreement by eitherParty in the form(s) agreed by the Parties and as set forth in Exhibit Hattached hereto.  The Parties agree thatany announcement by either Party will not contain confidential business ortechnical information and, if disclosure of confidential business or technicalinformation is required by law or regulation, will make commercially reasonableefforts to minimize such disclosure and obtain confidential treatment for anysuch information which is disclosed to a governmental agency or group.  Each Party agrees to provide to the otherParty a copy of any public announcement with respect to this Agreement or thesubject matter of this Agreement as soon as reasonably practicable under thecircumstances prior to its scheduled release. Except under extraordinary circumstances, each Party shall provide theother Party with an advance copy of any such press release at least [**] ([**])business days prior to the scheduled disclosure.  Each Party shall have the right to review and recommend changesto any announcement regarding this Agreement or the subject matter of thisAgreement.  Except as otherwise requiredby law, the Party whose press release has been reviewed shall remove anyinformation the reviewing Party reasonably deems to be inappropriate fordisclosure and shall use all reasonable efforts to accommodate the reviewingParty’s other comments.  The contents ofany such announcement or similar publicity which has been reviewed and approvedby the reviewing Party can be re-released by either Party without a requirementfor re-approval.

##  

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## 10.9                           Headings.  Thecaptions to the several Articles and Sections hereof are not a part of thisAgreement, but are merely guides or labels to assist in locating and readingthe several Articles and Sections hereof.

##  

## 10.10                     No Partnership; IndependentContractors.  It is expresslyagreed that the relationship between Genaissance and Bayer shall not constitutea partnership, joint venture or agency. Neither Genaissance nor Bayer shall have the authority to make anystatements, representations or commitments of any kind, or to take any action,which shall be binding on the other, without the prior consent of the otherParty to do so.

##  

## 10.11                     Exports.  TheParties acknowledge that the export of technical data, materials or products issubject to the exporting Party receiving any necessary export licenses and thatthe Parties cannot be responsible for any delays attributable to exportcontrols which are beyond the reasonable control of either Party.  Genaissance and Bayer agree not to export orre-export, directly or indirectly, any information, technical data, the directproduct of such data, samples or equipment received or generated under thisAgreement in violation of any applicable export control laws or governmentalregulations.  Genaissance and Bayeragree to obtain similar covenants from their licensees, sublicensees andcontractors with respect to the subject matter of this Section.

##  

## 10.12                     Waiver.  Thewaiver by either Party of any right hereunder or of the failure to perform orof a breach by the other Party shall not be deemed a waiver of any other righthereunder or of any other breach or failure by the other Party whether of asimilar nature or otherwise.

##  

## 10.13                     Counterparts. This Agreement may be executed in two or more counterparts, each ofwhich shall be deemed an original, but all of which together shall constituteone and the same instrument.

##  

## 10.14                     No Strict Construction.  This Agreement has been prepared jointly andshall not be strictly construed against either Party.

 

**[Remainderof page intentionally left blank]**

 

59

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INWITNESS WHEREOF, the Parties have caused their duly authorized officers toexecute and deliver this Agreement as of the date first set forth above.

 

**BAYER AG**

 
| By:     | /s/ Dr.  Jan-Anders Karlsson |   |
|---------|------------------------------|--------|
|    |                         |
| Name:   | Dr. Jan-Anders  Karlsson     |   |
|    |                         |
| Title:  | Executive Vice  President    |   |
|    |                         |
| And by: | /s/ [Illegible]              |   |
|    |                         |
| Name:   | [Illegible]                  |   |
|    |                         |
| Title:  | Head of  [Illegible]         |   |
|         |                              |        |  |  |  |  |

 

 

**BAYERHEALTHCARE LLC, Diagnostics Division**

 
| By:    | /s/ Peter C.  Knueppel |   |
|--------|------------------------|--------|
|   |                   |
| Name:  | Peter C.  Knueppel     |   |
|   |                   |
| Title: | Senior Vice  President |   |
|        |                        |        |  |  |

 

 

**GENAISSANCEPHARMACEUTICALS, INC.**

 
| By:    | /s/ Kevin Rakin                        |   |
|--------|----------------------------------------|--------|
|   |                                   |
| Name:  | Kevin Rakin                            |   |
|   |                                   |
| Title: | President and  Chief Executive Officer |   |
|        |                                        |        |  |  |

 

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**ExhibitA**

** **

**Gene Criteria**

 

The *HAPTM*Database shall consist of Genaissance’s proprietary information and publiclyavailable information.

 

The currentprocedure for discovering *HAP*TM Markers for a Gene is tosequence, from Genaissance’s collection of individuals of diverse ancestry (the“Index Repository”), ninety-three (93) individual samples of human genomic DNAand one (1) sample of chimpanzee genomic DNA. The genomic regions of each Gene, which are targeted for sequencing, areas follows.

 

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

 

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

 

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

 

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

 

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

 

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

 

Once a Gene iscompletely sequenced, *HAP*TM Markers will beconstructed for that Gene and placed into the *HAP*TMDatabase.  A Gene shall be consideredcompletely sequenced if sequence information is obtained for at least [**] ofthe [**].  A specific region

 

1

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targeted forsequencing within a Gene shall be considered completely sequenced if sequenceinformation is obtained for at least [**].

 

If a Gene is notcompletely sequenced after each fragment targeted for sequencing has beenattempted once, each of the failed fragments will be resequenced usingredesigned amplification/sequencing primers. However, the presence of runs of guanine and cytosine, secondarystructure or errors in publicly available sequence information may prevent thegeneration of sufficient sequence information for that Gene to be consideredcompletely sequenced.  Thus, if the Genedoes not meet the completely sequenced criteria after the above resequencingstep, *[**]*.

 

Genaissance shalluse commercially reasonable efforts to incorporate into the *HAP*TMDatabase other information about Genes, including: (i) genomic structure; (ii)cDNA and protein sequences; (iii) publicly available Polymorphisms andHaplotypes; (iv) location of these publicly available polymorphic sites withinthe genomic structure and also in the messenger RNA if these Polymorphismscause coding changes; (v) publicly available association(s) of Polymorphism(s)with phenotype(s); and (vi) whether the publicly available Polymorphism(s)is/are in linkage disequilibrium with any of Genaissance’s proprietaryPolymorphisms.

 

2

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**Exhibit B**

** **

**[**] Trial**

** **

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

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

 

The [**] examinedin the association study [**].  Another[**].  The rationale for [**].

 

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

** **

**1**

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** **

**Exhibit C**

** **

**SADR ClinicalPhenotypes**

** **

[**]

 

Clinical Diagnosis: [**]

 

[**]

 

[**]

[**]

 

1

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**ExhibitD**

** **

**SADR Pla**n

** **

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

** **

**1**

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** **

**Exhibit E**

** **

**SER ClinicalPhenotypes**

 

[**] [**]

 

1

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**ExhibitF**

** **

**SER Pla**n

** **

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

** **

**1**

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** **

**Exhibit G**

** **

**STRENGTH Tria**l

** **

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

** **

All patients were sequenced for one hundred one (101) genes known orbelieved to play a role in lipid metabolism, lipid trafficking, energymetabolism, and inflammation. Additionally,[**]all patients will be genotyped for SNPs from ADME Genes(some of which are also contained in the set of 101 sequenced Genes).  The genotyping and sequencing informationderived will then be used to assign specific *HAP*TM Markerpairs to each of the STRENGTH Trial patients for all of the Genes.

** **

**1**

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** **

**Exhibit H**

** **

**Press Relea**se

 

1

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