**Exhibit 10.37**

 

*Confidential treatment has been requested for portions of thisexhibit.  The copy filed herewith omitsthe information subject to the confidentiality request.  Omissions are designated as [*].  A complete version of this exhibit has beenfiled separately with the Securities and Exchange Commission.*

 

 

RESEARCH FUNDING AND OPTION AGREEMENT

 

by and between

 

THE SCRIPPS RESEARCH INSTITUTE,

a California nonprofit

public benefit corporation

 

and

 

NEORX CORPORATION,

a Washington corporation

 

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[*]         designates portions of this document that have been omitted pursuant toa request for confidential treatment filed separately with the Securities andExchange Commission.

 

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**TABLE OFCONTENTS**

 
| 1.   DEFINITIONS                                    |                                        |
|--------------------------------------------------------------------|---------------------------------------------|
| 1.1                                                                | Affiliate                                   |   |
| 1.2                                                                | Agreement Number                            |   |
| 1.3                                                                | [Left intentionally blank]                  |   |
| 1.4                                                                | Confidential Information                    |   |
| 1.5                                                                | Field                                       |   |
| 1.6                                                                | Joint Technology                            |   |
| 1.7                                                                | Patent Rights                               |   |
| 1.8                                                                | Principal Investigator.                     |   |
| 1.9                                                                | Process                                     |   |
| 1.10                                                               | Product                                     |   |
| 1.11                                                               | Research Program                            |   |
| 1.12                                                               | Research Tool                               |   |
| 1.13                                                               | Service                                     |   |
| 1.14                                                               | Technology                                  |   |
| 1.15                                                               | TSRI Technology                             |   |
| 1.16                                                               | Valid Claim                                 |   |
| 1.17                                                               | Option Exercise Period                      |   |
| 1.18                                                               | Reservation                                 |   |
| 1.19                                                               | Reservation Period                          |   |
| 1.20                                                               | Negotiation Period                          |   |
|                                                               |                                        |   |
| 2.   CONDUCT  OF RESEARCH PROGRAM                   |                                        |
| 2.1                                                                | Conduct of Research Program                 |   |
| 2.2                                                                | Supervision of Research  Program            |   |
| 2.3                                                                | Reports                                     |   |
| 2.4                                                                | Financial and Staffing  Obligations         |   |
|                                                               |                                        |   |
| 3.   GRANT OF  RIGHTS                               |                                        |
| 3.1                                                                | Grant                                       |   |
| 3.2                                                                | Disclosure of Technology                    |   |
| 3.3                                                                | Option Exercise / Reservation Period        |   |
| 3.4                                                                | Exercise of Option                          |   |
| 3.5                                                                | Patent Application Filings  and Prosecution |   |
| 3.6                                                                | Joint Technology                            |   |
| 3.7                                                                | Research Tools                              |   |
|                                                               |                                        |   |
| 4.   INTERESTS  AND RIGHTS IN INTELLECTUAL PROPERTY |                                        |
| 4.1                                                                | Title.                                      |   |
| 4.2                                                                | Governmental Interest                       |   |
| 4.3                                                                | Reservation of Rights                       |   |
|                                                               |                                        |   |
| 5.   CONFIDENTIALITY  AND PUBLICATION               |                                        |

 

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| 5.1                                         | Treatment of Confidential  Information |   |
|---------------------------------------------|----------------------------------------|--------|
| 5.2                                         | Publications                           |   |
| 5.3                                         | Publicity                              |   |
|                                        |                                   |   |
| 6.   WARRANTIES              |                                   |
|                                        |                                   |   |
| 7.   TERM AND  TERMINATION   |                                   |
| 7.1                                         | Term                                   |   |
| 7.2                                         | Termination by Mutual  Agreement       |   |
| 7.3                                         | Termination Upon Non-Payment           |   |
| 7.4                                         | Termination Upon Default               |   |
| 7.5                                         | Termination Upon Insolvency            |   |
| 7.6                                         | Effect of Expiration or  Termination   |   |
|                                        |                                   |   |
| 8.   ASSIGNMENT;  SUCCESSORS |                                   |
| 8.1                                         | Assignment                             |   |
| 8.2                                         | Binding Upon Successors and  Assigns   |   |
|                                        |                                   |   |
| 9.   GENERAL  PROVISIONS     |                                   |
| 9.1                                         | Independent Contractors                |   |
| 9.2                                         | Arbitration                            |   |
| 9.3                                         | Entire Agreement;  Modification        |   |
| 9.4                                         | California Law                         |   |
| 9.5                                         | No Use of Name                         |   |
| 9.6                                         | Headings                               |   |
| 9.7                                         | Severability                           |   |
| 9.8                                         | No Waiver                              |   |
| 9.9                                         | Attorneys’ Fees                   |   |
| 9.10                                        | Notices.                               |   |
| 9.11                                        | Compliance with U.S. Laws              |   |
| 9.12                                        | Counterparts                           |   |
|                                        |                                   |   |
| EXHIBIT A:                             | RESEARCH PROGRAM                       |   |
| EXHIBIT B:                             | BUDGET                                 |   |
| EXHIBIT C:                             | FORM MATERIAL  TRANSFER AGREEMENT |   |

 

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RESEARCH FUNDING AND OPTION AGREEMENT

 

This Agreement is entered into this 4th day ofAugust, 2005 (the “Effective Date”, by and between THE SCRIPPS RESEARCHINSTITUTE, 10550 North Torrey Pines Road, La Jolla, California 92037 (“TSRI”),a California nonprofit public benefit corporation, and NEORX CORPORATION (“Sponsor”),a Washington corporation located at 300 Elliott Avenue West, Suite 500,Seattle, WA 98119, with respect to the facts set forth below.

 

RECITALS

 

A.                                   TSRI is engaged in fundamental scientificbiomedical and biochemical research including research relating to thesynthesis and evaluation of novel kinase inhibitors, as more particularlydescribed herein.

 

B.                                     Sponsor is engaged in research anddevelopment of therapeutics for the treatment of diseases.

 

C.                                     Sponsor desires to provide certain funding aspart of TSRI’s research activities described above.

 

D.                                    TSRI has the exclusive right to grant alicense in and to any technology developed pursuant to the research programdescribed herein, subject to any non-exclusive rights of the U.S. Government,resulting from the receipt by TSRI of U.S. Government funding, to use suchtechnology for its own purposes.

 

E.                                      TSRI is willing to grant to Sponsor an optionto acquire rights and licenses to use, enhance and develop technology arisingfrom the Research Program and develop, market and sell products in the fielddescribed below, all as is more particularly described herein.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutualcovenants and conditions outlined herein, TSRI and Sponsor hereby agree asfollows:

 

1.                                       DEFINITIONS.

 

1.1                                 Affiliate.  Theterm “Affiliate” shall mean any entity which directly or indirectly controls,or is controlled by Sponsor.  The term “control”as used herein means (a) in the case of corporate entities, direct orindirect ownership of at least fifty percent (50%) of the stock or sharesentitled to vote for the election of directors; or (b) in the case ofnon-corporate entities, direct or indirect ownership of at least fifty percent(50%) of the equity interest with the power to direct the management andpolicies of such non-corporate entities. Unless otherwise specified, the term Sponsor includes Affiliates.

 

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1.2                                 AgreementNumber.  ThisAgreement is TSRI number SFP-1604.

 

1.3                                 [Left intentionally blank]

 

1.4                                 ConfidentialInformation.  The term “Confidential Information” shallmean any and all proprietary information of TSRI or Sponsor which may beexchanged between the parties at any time and from time to time during the termhereof.  The fact that a party may havemarked or identified as confidential or proprietary any specific informationshall be indicative that such party believes such information to beconfidential or proprietary, but the failure to so mark information shall notconclusively determine that such information was or was not consideredconfidential information by such party. Information shall not be considered confidential to the extent that it:

 

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

 

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

 

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

 

d.                                      Has been published by a third party as amatter of right; or

 

e.                                       Is required to be disclosed by law or courtorder, in which event the party required to make such disclosure shall limitthe same to the minimum required to comply with the law or court order, andprior to making such disclosure that party shall notify the other party, notlater than ten (10) days before the disclosure in order to allow thatother party to comment and/or to obtain a protective or other order, includingextensions of time and the like, with respect to such disclosure.

 

1.5                                 Field.  Theterm “Field” [*].

 

1.6                                 JointTechnology. The term “Joint Technology” shall mean anyTechnology developed jointly under principles arising under the patent laws ofthe United States of America by at least one employee of or other person whoassigns or is under duty to assign such Technology to Sponsor and at least oneemployee of or other person who assigns or is under duty to assign suchTechnology to TSRI.

 

1.7                                 Patent Rights.  Theterm “Patent Rights” shall mean rights under (a)  the U.S./PCT PatentApplication(s) covering Technology; (b) the foreign patent applications of(a); (c)  the patents proceeding from (a) and (b);  (d) divisionals, continuations,reissues, reexaminations, and extensions of any patent or application set forthin (a)- (c) above; and (e)  all claims of 

 

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[*]         designates portions of this document that have been omitted pursuant toa request for confidential treatment filed separately with the Securities andExchange Commission.

 

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continuations-in-partof (a) so long as any additional claims arise out of the Research Program,and so long as said patents in (a) - (e) above have not been heldinvalid and/or unenforceable by a court of competent jurisdiction from whichthere is no appeal or, if appealable, from which no appeal has been taken.

 

1.8                                 PrincipalInvestigator.  The term “Principal Investigator” shall meanChris Liang, Ph.D. together with such replacement persons selected inaccordance with the provisions of Section 2.2 hereof.

 

1.9                                 Process.  Theterm “Process” shall mean any process which is covered by a Valid Claim ofPatent Rights or the performance of which utilizes Technology.

 

1.10                           Product.  Theterm “Product” shall mean any product the manufacture, use, importation, saleor offer for sale of which is covered by a Valid Claim of Patent Rights orwhich incorporates or the production of which utilizes Technology.

 

1.11                           ResearchProgram.  Theterm “Research Program” shall mean the research program to be undertaken byTSRI under the direction and control of the Principal Investigator as expresslyset forth on Exhibit A hereto.

 

1.12                           Research Tool.  TheTerm “Research Tool” shall mean any Technology which is designed or utilizedfor basic research purposes or internal drug discovery purposes and which isnot utilized to produce a Product or incorporated into a Product, or utilizedin the performance of a Process or Service.

 

1.13                           Service.  Theterm “Service” shall mean the performance of a service for a third party, whichperformance uses or incorporates a Product or Process or the performance ofwhich utilizes Technology.

 

1.14                           Technology.  Theterm “Technology” shall mean any invention, discovery, know-how, trade secret,software, information and data, whether patentable or not, conceived ordeveloped in performance of the Research Program.

 

1.15                           TSRI Technology.  Theterm “TSRI Technology” shall mean any Technology developed solely by TSRI underprinciples arising under the patent laws of the United States of America.

 

1.16                           Valid Claim.  Theterm “Valid Claim” shall mean a claim of an issued patent within the PatentRights that has not lapsed, expired, been canceled, or become abandoned, andhas not been held invalid by a court or other appropriate body of competentjurisdiction, unappealable or unappealed within the time allowed for appeal andwhich has not been admitted to be invalid or unenforceable through reissue ordisclaimer or otherwise.  The term ValidClaim shall also include the claims of a pending patent application within thePatent Rights for a period of seven (7) years of filing that patentapplication, per country.

 

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1.17                           Option ExercisePeriod.  The term “Option Exercise Period” shall havethe meaning defined in section 3.3 herein.

 

1.18                           Reservation.  Theterm Reservation shall have the meaning defined in section 3.3 herein.

 

1.19                           ReservationPeriod.  Theterm Reservation Period shall have the meaning defined in section 3.3herein.

 

1.20                           NegotiationPeriod.  The term Negotiation Period shall have themeaning defined in section 3.4 herein.

 

2.                                       CONDUCT OF RESEARCH PROGRAM.

 

2.1                                 Conduct ofResearch Program. TSRI hereby agrees to use reasonable effortsto perform the Research Program subject to the provisions of this Agreement,including the attached Research Program. Notwithstanding the foregoing, TSRImakes no warranties or representations regarding its ability to achieve, norshall it be bound to accomplish, any particular research objective or results.

 

2.2                                 Supervision ofResearch Program.  TSRIagrees that the Research Program at TSRI shall be conducted by or under thedirect supervision of the Principal Investigator and in conjunction with thejoint steering committee (JSC), as set forth in the Research Program.  In the event that the Principal Investigatorleaves TSRI, or terminates his/her involvement in the Research Program, TSRIshall use its best efforts to find a replacement Principal Investigatoracceptable to Sponsor within 60 days, which acceptance shall not beunreasonably withheld.  In the event thatTSRI shall fail to appoint a replacement Principal Investigator reasonablyacceptable to Sponsor, Sponsor shall have a right to terminate this Agreementupon delivery to TSRI of written notice of intent to terminate pursuant to thisSection 2.2, which notice must be delivered to TSRI no more than 90 daysafter delivery by TSRI to Sponsor of the name of the replacement PrincipalInvestigator.

 

2.3                                 Reports.  TSRIagrees that within sixty (60) days following the last day of each three (3) monthperiod during the term of this Agreement, TSRI shall furnish Sponsor with awritten report summarizing the results of the research included within thescope of the Research Program conducted by TSRI, during the immediatelypreceding three (3) month period, including but not limited to all data,conclusions, results, observations and a detailed description of allprocedures. All such reports shall be maintained in confidence by Sponsor. Inthe event that, resulting from its review of such report, Sponsor identifiesany Technology to which it would like to exercise its option and which has notbeen previously disclosed to Sponsor by TSRI in accordance with Section 3.2,Sponsor shall notify TSRI of such in writing. Upon such notification, TSRIshall provide Sponsor with a Technology Disclosure in accordance with Section 3.2.Sponsor may exercise its option to the Technology covered by the TechnologyDisclosure as specifically set forth in Sections 3.3 and 3.4.

 

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2.4                                 Financialand Staffing Obligations

 

a.                                       Contributions of Parties to Research Program. Contributions in the form of financial support, equipment, personnel,technology and other necessary components for the conduct of the ResearchProgram shall be made by the parties in accordance with the terms set forth inExhibits A and B attached to this Agreement. All payments due to TSRI bySponsor shall be payable in U.S. Dollars by Sponsor in quarterly installmentsin advance, within ten (10) days of the dates set forth in the budgetattached hereto as Exhibit B.  Eachpayment must reference the Research Project title, Agreement Number andPrincipal Investigator for purposes of identification. Payments under this Section shallbe sent to:

 
|            |   | The Scripps Research Institute           |
|-----------------|--------|------------------------------------------|
|            |   | 10550 North Torrey Pines Road, TPC-7     |
|            |   | La Jolla, California 92037               |
|            |   | Attn: Vice President, Sponsored Programs |
|            |   | Fax No.: (858) 784-8037                  |
|            |   |                                     |
| With a copy to: |   | The Scripps Research Institute           |
|            |   | 10550 North Torrey Pines Road, TPC-9     |
|            |   | La Jolla, California 92037               |
|            |   | Attn: Director, Technology Development   |
|            |   | Fax No.: (858) 784-9910                  |

 

Subjectto a thirty (30) day written notice to Sponsor to cure, TSRI shall not beobligated to perform any of the research specified herein or to take any otheraction required under this Agreement if the funding is not provided as setforth in Exhibit B and in accordance with the payment schedule as setforth in this Section 2.4.a. Furthermore, should Sponsor fail to make the first payment to TSRI inaccordance with this Section 2.4.a., TSRI shall have the right toterminate this Agreement *ab initio.*

 

b.                                      Capital Equipment. Equipment purchased by TSRI with funds provided by Sponsor shall be theproperty of TSRI.  All capital equipmentprovided under this Agreement by Sponsor for the use of TSRI remains theproperty of the Sponsor unless other disposition is mutually agreed upon inwriting by the Parties. If title to this equipment remains with the Sponsor,Sponsor is responsible for maintenance of the equipment and the costs of itstransportation to and from the site where it will be used.

 

3.                                       GRANT OF RIGHTS.

 

3.1                                 Grant. Subject to the terms of this Agreement and the reservation of rightsspecified in Sections 4.2 and 4.3, TSRI hereby grants to Sponsor:

 

a.                                       anexclusive option to acquire an exclusive or non-exclusive (at Sponsor’selection) worldwide license, subject to Sections 4.2 and 4.3, including theright to sublicense, under TSRI’s rights in the Patent Rights and in theTechnology to make and have made, to use 

 

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and have used, to sell and have sold, to offer to sell and to importProducts, Services and Processes in the Field;

 

b.                                      an exclusive option to acquire anon-exclusive, worldwide license, without the right to sublicense, to make andhave made, to use and have used, to sell and have sold, to offer to sell and toimport any Research Tools in the Field; and

 

c.                                       anon-exclusive, royalty-free, non-transferable license to make and use PatentRights and Technology solely for internal research purposes. Any transfer ofmaterials to Sponsor under this Section 3.1. c shall require the executionof a Material Transfer Agreement. The terms of such Material Transfer Agreementshall be materially consistent with the form Material Transfer Agreement attachedhereto as Exhibit C. This grant and attendant Material Transfer Agreementin no way limits the option or licenses granted pursuant thereto under this Section 3.1.aor b, but are in addition to such grant.

 

3.2                                 Disclosure ofTechnology.  Assoon as reasonably possible, either upon conception or reduction to practice,as the case may be, TSRI shall disclose Technology in writing to Sponsor (the “TechnologyDisclosure”).  Scripps shall make itsbest efforts to provide a Technology Disclosure that contains sufficient detailto (i) enable both parties to determine whether or not the particularTechnology is TSRI Technology or Joint Technology; and (ii) enable Sponsorto evaluate the advisability of exercising the option granted hereunder withrespect to such Technology or reserving its right to exercise the option at alater date as set forth in Section 3.3. All such Technology Disclosures shall be maintained in confidence bySponsor.

 

3.3                                 Option Exercise/ Reservation Period. Sponsor shall have a period of ninety (90) days from receipt of theTechnology Disclosure from TSRI, within which to (a) exercise its optionas set forth in Section 3.4 to obtain a license in the Field to theparticular Technology disclosed therein (“Option Exercise Period”) or, in the alternative,(b) to reserve its right to exercise the option after such TechnologyDisclosure (“Reservation”) by notifying TSRI in writing that it is electing topay out-of-pocket patent-related costs as set forth in Section 3.5 duringthe period of time the option is reserved (“Reservation Period”). In the eventSponsor elects to reserve its right to exercise the option, upon written noticeby TSRI of completion of the Research Program, Sponsor shall have ninety (90)days after receipt of such notice within which to exercise its option as setforth in Section 3.4.  In the eventSponsor fails to pay the out-of-pocket patent-related costs during theReservation Period, subject to thirty (30) days’ written notice to cure suchfailure, the option shall expire.

 

3.4                                 Exercise ofOption. Sponsor shall exercise its option to obtain a license hereunder bydelivering to TSRI a written notice within the Option Exercise/ ReservationPeriod which specifies (i) the particular Technology for which the optionis being exercised; and (ii) the type of license that Sponsor wishes toobtain. Upon such notification, Sponsor and TSRI shall have a period of sixty(60) days from the date of exercise of option by Sponsor (“Negotiation Period”),within which to enter into a License Agreement upon commercially reasonableterms including reasonable license fees, royalty rates and commercialdevelopment obligations. The Negotiation Period can be extended at any time bymutual agreement of the Parties. 

 

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3.5                                 PatentApplication Filings and Prosecution.  Uponexercise of its option or reservation, except as provided in Section 3.7,Sponsor shall be required to pay for all costs associated with the preparation,filing and prosecution of any patent applications necessary to protect theproprietary positions of both parties in the Technology, as discussed morefully herein. The parties agree that until such time as Sponsor notifies TSRIthat it shall discontinue paying for the out-of-pocket patent-related costs,subject to six (6) months’ written notice, or upon completion of theResearch Program, whichever is first, the patent applications shall beprepared, filed and prosecuted by outside counsel approved by both parties, andwhile the outside counsel shall be supervised by and be under the direction ofTSRI, TSRI shall notify Sponsor of the prosecution strategies and shallconsider Sponsor’s comments regarding same. TSRI shall invoice Sponsor for all out-of-pocket patent-related relatedcosts, which invoice Sponsor shall pay within thirty (30) days.  If Sponsor notifies TSRI at any time that itwill discontinue paying for the patent-related costs, Sponsor’s option rightsherein to the particular Technology shall expire.

 

The parties agree that TSRI shall pursue patentprotection in [*], and Sponsor, to maintain its rights to a worldwide license,shall pay for such patent-related costs. Should Sponsor wish to pursue patentprotection in additional countries or regions, Sponsor shall make such requestof TSRI, which request shall not be unreasonably denied, and Sponsor shall payfor patent-related costs in such additional countries or regions. Sponsor isnot, however, required to pay for patent-related costs in such additionalcountries or regions to maintain its worldwide rights unless it makes suchrequest of TSRI. In the event TSRI wishes to seek patent protection incountries or regions where Sponsor has not elected to do so, TSRI will promptlynotify Sponsor and discuss the reasons for seeking such protection withSponsor.  If Sponsor declines to seek theprotection desired by TSRI, TSRI can pursue patent protection in thosecountries or regions at its own expense without affecting the worldwide rightsof Sponsor. However, should those patent-related rights then be shown toprovide significant economic value to Sponsor in that country or region, ,Sponsor shall repay TSRI for all reasonable patent-related costs, as well asany ongoing costs, the foregoing notwithstanding. The parties further agree,that should any patent filings or prosecution in any country or region be orbecome legally not feasible or commercially unreasonable, such filings orprosecution shall not be pursued and/or be discontinued without affectingSponsor’s rights under this agreement.

 

Except in the case of Research Tools and subject to Section 3.7,should TSRI reasonably determine at any time that it is necessary toexpeditiously file a patent application covering the Technology to avoid astatutory bar [*], upon reasonable notice to Sponsor and Sponsor input whichshall be reasonably considered, TSRI shall do so, the costs of which shall bereimbursed by Sponsor, if Sponsor wishes to preserve its rights pursuant to Section 3.3to exercise or reserve its option.

 

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[*]         designates portions of this document that have been omitted pursuant toa request for confidential treatment filed separately with the Securities andExchange Commission.

 

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3.6                                 JointTechnology.  Theparties hereby agree that in the event that the disclosed Technology is JointTechnology and that Sponsor does not exercise or reserve its option, bothParties shall (i) have no further obligations to each other with respectto such Joint Technology and any resulting patent rights; and (ii) be freeto independently use and license their rights to such Joint Technology,including any resulting patents on a worldwide basis, and shall be free toretain all income and proceeds therefrom without accounting to the other party.

 

3.7                                 Research Tools.  Inthe event that Sponsor exercises its option to obtain a non-exclusive licenseto Research Tools under Section 3.1b herein above and elects not to pursuepatent protection on such Research Tools, TSRI and Sponsor shall have sixty (60)days from the date of exercise of option by Sponsor in which to execute alicense agreement to such Research Tools. This shall in no way restrict TSRI’s right to obtain patent protectionon such Research Tools.

 

4.                                       INTERESTS AND RIGHTS IN INTELLECTUAL PROPERTY.

 

4.1                                 Title.  TSRIshall retain sole ownership and title to TSRI Technology. TSRI shall, in thegood faith exercise of its discretion, undertake reasonable efforts to preserveand maintain its ownership and title as TSRI deems appropriate.  Ownership of and title to Joint Technologyshall be vested jointly in TSRI and Sponsor, with each owning an undividedinterest therein. Ownership of Patent Rights shall follow inventorship underprinciples arising under the patent laws of the United States of America.

 

4.2                                 GovernmentalInterest. Sponsor and TSRI acknowledge that TSRI has received, and expects tocontinue to receive, funding from the United States Government in support ofTSRI’s research activities.  Sponsor andTSRI acknowledge and agree that their respective rights and obligationspursuant to this Agreement shall be subject to TSRI’s obligations to the UnitedStates Government, including but not limited to 37CFR401, the NIH Grants PolicyStatement and NIH Guidelines for Obtaining and Disseminating BiomedicalResearch Resources.

 

4.3                                 Reservation ofRights.  Inkeeping with the license option granted herein, TSRI reserves the right to usefor any internal research purposes any Patent Rights licensed hereunder (butnot to generate materials or data for any commercial entity), without TSRIbeing obligated to pay Sponsor any royalties or other compensation.  In addition, TSRI reserves the right to grantnon-exclusive research use licenses to other non-profit or academicinstitutions to Patent Rights licensed hereunder, without the other non-profitor academic entities being obligated to pay Licensee any royalties or othercompensation.  Such non-profit oracademic institutions shall be prohibited from using the research license togenerate materials or data for any commercial entity. TSRI shall make allreasonable efforts to notify Sponsor of such use.

 

5.                                       CONFIDENTIALITY AND PUBLICATION.

 

5.1                                 Treatment ofConfidential Information.  Theparties agree that during the term of this Agreement, and for a period of three(3) years after this Agreement terminates, a party receiving ConfidentialInformation of the other party will (a) maintain in confidence suchConfidential Information to the same extent such party maintains its ownproprietary information; (b) not 

 

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disclosesuch Confidential Information to any third party without the prior writtenconsent of the other party;  and (c) notuse such Confidential Information for any purpose except those permitted bythis Agreement.

 

5.2                                 Publications. Sponsor acknowledges that it is the general policy of TSRI to encouragepublication of research results in technical or scientific journals; andSponsor agrees that TSRI shall have a right to publish in accordance with itsgeneral policy.  If a patent applicationcovering Technology disclosed by a proposed publication has not been filed,then prior to such publication, TSRI shall submit to Sponsor copies of proposedpublications which describe Technology and afford Sponsor a period of fortyfive (45) days to review the publication to (i) ascertain whether Sponsor’sConfidential Information would be disclosed by the publication; (ii) ascertainwhether or not the publication discloses any Technology to which Sponsor wishesto exercise its option; and (iii) to ascertain the necessity ordesirability of the filing of a patent application covering Technology prior tosuch publication. If such publication discloses either Sponsor’s ConfidentialInformation or Technology on which Sponsor wishes to file a patent application,upon Sponsor’s written request, TSRI shall remove such Confidential Informationand/or delay publication for up to an additional forty-five (45) days to allowSponsor to protect its Confidential Information or the Technology by filing apatent application(s).

 

5.3                                 Publicity. Except as otherwise provided herein or required by law, no party shalloriginate any publication, news release or other public announcement, writtenor oral, whether in the public press, stockholders’ reports, or otherwise,relating to this Agreement or to any sublicense hereunder, or to theperformance hereunder or any such agreements, without the prior writtenapproval of the other party, which approval shall not be unreasonably withheld.Nothing in this section shall, however, preclude Sponsor from describingthe existence and general scope of the research collaboration in generalbusiness communications, subject to fifteen (15) days prior written notice toTSRI describing the content of the communications, to the extent the contenthas not been previously provided to TSRI in some form. Scientific publicationspublished in accordance with Section 5.2 of this Agreement shall not beconstrued as publicity governed by this Section 5.3.

 

6.                                       WARRANTIES.

 

Limited Warranty.  TSRIhereby represents and warrants that it has full right and power to enter intothis Agreement.  TSRI MAKES NO OTHERWARRANTIES CONCERNING PATENT RIGHTS, TECHNOLOGY, RESEARCH****TOOLS OR BIOLOGICAL MATERIALS COVERED BYTHIS AGREEMENT, INCLUDING WITHOUT LIMITATION, ANY EXPRESS OR IMPLIED WARRANTYOF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AS TO PATENT RIGHTS,TECHNOLOGY, BIOLOGICAL MATERIALS, RESEARCH TOOLS OR ANY PRODUCT, PROCESS ORSERVICE.  TSRI MAKES NO WARRANTY ORREPRESENTATION AS TO THE VALIDITY OR SCOPE OF PATENT RIGHTS, OR THAT ANYPRODUCT WILL BE FREE FROM AN INFRINGEMENT ON PATENTS OR OTHER INTELLECTUALPROPERTY RIGHTS OF THIRD PARTIES, OR THAT NO THIRD PARTIES ARE IN ANY WAYINFRINGING PATENT RIGHTS, TECHNOLOGY**,**RESEARCHTOOLS****OR BIOLOGICAL MATERIALS 

 

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COVEREDBY THIS AGREEMENT.  FURTHER, TSRI HASMADE NO INVESTIGATION AND MAKES NO REPRESENTATION THAT THE RESEARCH TOOLS ORBIOLOGICAL MATERIALS SUPPLIED BY IT OR THE METHODS USED IN MAKING OR USING SUCHMATERIALS ARE FREE FROM LIABILITY FOR PATENT INFRINGEMENT.

TSRIMAKES NO WARRANTIES OR REPRESENTATIONS REGARDING ITS ABILITY TO ACHIEVE, NORSHALL IT BE BOUND TO ACCOMPLISH, ANY PARTICULAR RESEARCH OBJECTIVE OR RESULTS.

 

IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANYINDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT LIMITATION,DAMAGES FOR LOSS OF PROFITS OR EXPECTED SAVINGS OR OTHER ECONOMIC LOSSES, ORFOR INJURY TO PERSONS OR PROPERTY) ARISING OUT OF OR IN CONNECTION WITH THISAGREEMENT OR ITS SUBJECT MATTER, REGARDLESS OF WHETHER IT KNOWS OR SHOULD KNOWOF THE POSSIBILITY OF SUCH DAMAGES.  TSRI’SAGGREGATE LIABILITY FOR ALL DAMAGES OF ANY KIND RELATING TO THIS AGREEMENT ORITS SUBJECT MATTER SHALL NOT EXCEED THE AMOUNT PAID BY SPONSOR TO TSRI UNDERTHIS AGREEMENT.  THE FOREGOING EXCLUSIONSAND LIMITATIONS SHALL APPLY TO ALL CLAIMS AND ACTIONS OF ANY KIND, WHETHERBASED ON CONTRACT, TORT (INCLUDING, BUT NOT LIMITED TO NEGLIGENCE), OR ANYOTHER GROUNDS.

 

7.                                       TERM AND TERMINATION.

 

7.1                                 Term. Unless terminated sooner, the initial term of this Agreement shallcommence on the Effective Date and shall continue for two (2) years andtwo months, as set forth in the Research Program and the Budget.  The Term can be extended by mutual agreementof the parties. Upon mutual written consent, the parties may extend thisAgreement for up to an additional two (2) years, under the same terms andconditions.

 

7.2                                 Termination byMutual Agreement.  ThisAgreement may be terminated at any time upon the mutual written agreement ofthe parties.  In the absence of anagreement to the contrary, no such termination shall have the effect ofrelieving Sponsor of its monetary obligations to fund the Research Program.

 

7.3                                 TerminationUpon Non-Payment.  Inthe event that Sponsor fails to pay to TSRI any payment within the time frameset forth in Sections 2.4.a, or 3.5, and subject to thirty (30) days writtennotice to cure the non-payment, TSRI shall not be obligated to perform any ofthe research specified herein or to take any other action required under thisAgreement and may terminate this Agreement immediately upon such non-payment,in which case Sponsor shall forfeit any rights grated to Sponsor herein.  Termination pursuant to this Section 7.3shall not relieve Sponsor of any liability.

 

7.4                                 TerminationUpon Default. Except as otherwise specified herein, the failure of a party to performany obligation required of it to be performed hereunder and the failure to curewithin sixty (60) days after receipt of notice from the other partyspecifying in reasonable detail the 

 

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natureof such default, shall constitute an event of default hereunder.  Upon the occurrence of an event of default,the non-defaulting party may deliver to the defaulting party written notice ofintent to terminate, such termination to be effective upon the date set forthin such notice.  Such termination rightsshall be in addition to and not in substitution for any other remedies that maybe available to the non-defaulting party serving such notice against thedefaulting party.  Termination pursuantto this Section 7.4 shall not relieve the defaulting party of liabilityand damages to non-defaulting party for breach of this Agreement.  Waiver by any party of a single default or asuccession of defaults shall not deprive such party of any right to terminatethis Agreement arising by reason of any subsequent default.

 

7.5                                 TerminationUpon Insolvency.  This Agreement may be terminated as to anyparty (“Insolvent Party”) by another party giving written notice of terminationto the Insolvent Party upon the filing of bankruptcy or bankruptcy of theInsolvent Party or the appointment of a receiver of any of the Insolvent Party’sassets, or the making by the Insolvent Party of any assignment for the benefitof creditors, or the institution of any proceedings against the Insolvent Partyunder any bankruptcy law.  Terminationunder this section shall be effective upon the date specified in thisnotice.

 

7.6                                 Effect of Expiration or Termination.

 

a.                                       Termination Upon Default of Sponsor.  Uponthe termination of this Agreement by reason of a default by Sponsor, neitherparty shall have any further rights or obligations with respect to thisAgreement, other than the obligation of Sponsor to make any and all finalpayments accrued prior to the date of termination and the obligation of theparties to make all reports required hereunder. Upon such termination of this Agreement, the parties shall continue toabide by their non-disclosure obligations as described in Section 5.1 andeach party hereto shall fulfill any other obligations incurred prior to suchtermination.  Any such termination ofthis Agreement shall not constitute the termination of any license or any otheragreements between the parties which are then in effect, except as expresslyprovided therein and any non-exclusive licenses that have been granted under Section 3.1.cshall survive.

 

b.                                      Expiration or Termination upon Default ofTSRI.  Upon the expiration of this Agreement at itsregularly scheduled expiration date, or upon a termination of this Agreement onaccount of a default by TSRI, then TSRI shall make the disclosures required by Section 3.2for TSRI Technology conceived or reduced to practice up to the date of saidexpiration or termination; and Sponsor shall have the right to exercise itsoption with respect to said TSRI Technology in accordance with the schedule andprocedures specified in Sections 3.3 and 3.4 above; and any non-exclusivelicenses that have been granted under Section 3.1.c shall survive.  Additionally, each party shall perform allother obligations up to the date of said expiration or termination; and theparties shall continue to abide by their non-disclosure obligations describedin Section 5.1; and any previously existing license agreements or otheragreements between the parties shall continue in effect.

 

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8.                                       ASSIGNMENT; SUCCESSORS.

 

8.1                                 Assignment.  Anyand all assignments of this Agreement or any rights granted hereunder bySponsor are void except (i) to an Affiliate of Sponsor; (ii) inconjunction with the sale of all or substantially all of the assets of Sponsor,or the consolidation or merger of Sponsor with another entity; or (iii) asexpressly permitted hereunder, without the prior written consent of TSRI.  Any and all assignments of this Agreement orany rights granted hereunder by TSRI are void without the prior written consentof Sponsor.

 

8.2                                 Binding UponSuccessors and Assigns. Subject to the limitations on assignment set forth herein, thisAgreement shall be binding upon and inure to the benefit of any successors ininterest and assigns of TSRI and Sponsor. Any such successor to or assignee of a party’s interest shall expresslyassume in writing the performance of all the terms and conditions of thisAgreement to be performed by such party.

 

9.                                       GENERAL PROVISIONS.

 

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

 

9.2                                 Arbitration.  Anycontroversy or claim arising out of or relating to this Agreement, or thebreach thereof, shall be settled by binding arbitration in accordance with theCommercial Arbitration Rules of the American Arbitration Association (“AAA”),and the procedures set forth below.  Inthe event of any inconsistency between the Rules of AAA and the proceduresset forth below, the procedures set forth below shall control.  Judgment upon the award rendered by thearbitrators may be enforced in any court having jurisdiction thereof.

 

a.                                       Location.  The location of thearbitration shall be in the County of San Diego.

 

b.                                      Selection of Arbitrators.  Thearbitration shall be conducted by a panel of three neutral arbitrators who areindependent and disinterested with respect to the parties, this Agreement, andthe outcome of the arbitration.  Eachparty shall appoint one neutral arbitrator, and these two arbitrators soselected by the parties shall then select the third arbitrator.  If one party has given written notice to theother party as to the identity of the arbitrator appointed by the party, and theparty thereafter makes a written demand on the other party to appoint itsdesignated arbitrator within the next ten days, and the other party fails toappoint its designated arbitrator within ten days after receiving said writtendemand, then the arbitrator who has already been designated shall appoint theother two arbitrators.

 

c.                                       Discovery.  Unless the parties mutuallyagree in writing to some additional and specific pre-hearing discovery, theonly pre-hearing discovery shall be (a) reasonably limited production ofrelevant and non-privileged documents; and (b) the identification ofwitnesses to 

 

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becalled at the hearing, which identification shall give the witness’s name,general qualifications and position, and a brief statement as to the generalscope of the testimony to be given by the witness.  The arbitrators shall decide any disputes andshall control the process concerning these pre-hearing discovery matters.  Pursuant to the Rules of AAA, theparties may subpoena witnesses and documents for presentation at the hearing.

 

d.                                      Case Management. Prompt resolution of any dispute is important to both parties; and theparties agree that the arbitration of any dispute shall be conductedexpeditiously.  The arbitrators areinstructed and directed to assume case management initiative and control overthe arbitration process (including scheduling of events, pre-hearing discoveryand activities, and the conduct of the hearing), in order to complete thearbitration as expeditiously as is reasonably practical for obtaining a justresolution of the dispute.

 

e.                                       Remedies.  The arbitrators may grant anylegal or equitable remedy or relief that the arbitrators deem just andequitable, to the same extent that remedies or relief could be granted by astate or federal court, provided however, that no punitive damages may beawarded.  No court action may bemaintained seeking punitive damages.  Thedecision of any two of the three arbitrators appointed shall be binding uponthe parties.

 

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

 

g.                                      Confidentiality. Except as set forth below, the parties shall keep confidential the factof the arbitration, the dispute being arbitrated, and the decision of thearbitrators.  Notwithstanding theforegoing, the parties may disclose information about the arbitration to personswho have a need to know, such as directors, trustees, management employees,witnesses, experts, investors, attorneys, lenders, insurers, and others who maybe directly affected.  Additionally,Sponsor may make such disclosures as are required by applicable securitieslaws.

 

9.3                                 EntireAgreement; Modification.  ThisAgreement sets forth the entire agreement and understanding between the partiesas to the subject matter hereof.  Thereshall be no amendments or modifications to this Agreement, except by a writtendocument which is signed by both parties.

 

9.4                                 California Law.  ThisAgreement shall be construed and enforced in accordance with the laws of theState of California notwithstanding any conflict of laws provisions.

 

9.5                                 No Use of Name.  Theuse of the name “The Scripps Research Institute”, “Scripps”, “TSRI” or anyvariation thereof in connection with the advertising or sale of Products isexpressly prohibited.

 

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9.6                                 Headings.  Theheadings for each article and section in this Agreement have beeninserted for the convenience of reference only and are not intended to limit orexpand on the meaning of the language contained in the particular article orsection.

 

9.7                                 Severability. Should any one or more of the provisions of this Agreement be heldinvalid or unenforceable by a court of competent jurisdiction, it shall beconsidered severed from this Agreement and shall not serve to invalidate theremaining provisions thereof.  Theparties shall make a good faith effort to replace any invalid or unenforceableprovision with a valid and enforceable one such that the objectivescontemplated by them when entering this Agreement may be realized.

 

9.8                                 No Waiver.  Anydelay in enforcing a party’s rights under this Agreement or any waiver as to aparticular default or other matter shall not constitute a waiver of such party’srights to the future enforcement of its rights under this Agreement, exceptingonly as to an express written and signed waiver as to a particular matter for aparticular period of time.

 

9.9                                 Attorneys’ Fees.  Inthe event of a dispute among the parties hereto or in the event of any defaulthereunder, the party prevailing in the resolution of any such dispute ordefault shall be entitled to recover its reasonable attorneys’ fees and othercosts incurred in connection with resolving such dispute or default.

 

9.10                           Notices.  Anynotices required by this Agreement shall be in writing, shall specificallyrefer to this Agreement and shall be sent by registered or certified airmail,postage prepaid, or by telefax, telex or cable, charges prepaid, or byovernight courier, postage prepaid, and shall be forwarded to the respectiveaddresses set forth below unless subsequently changed by written notice to theother party:

 
| FOR TSRI:       |   | The Scripps Research Institute         |
|-----------------|--------|----------------------------------------|
|            |   | 10550 North Torrey Pines  Road, TPC-9  |
|            |   | La Jolla, California 92037             |
|            |   | Attn: Director, Technology Development |
|            |   | Fax No.: (858) 784-9910                |
|            |   |                                   |
| With a copy to: |   | The Scripps Research Institute         |
|            |   | 10550 North Torrey Pines Road, TPC-8   |
|            |   | La Jolla, California 92037             |
|            |   | Attention: General Counsel             |
|            |   | Fax No.: (858) 784-9910                |

 

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| FOR SPONSOR: |   | NeoRx Corporation                       |
|--------------|--------|-----------------------------------------|
|         |   | 300 Elliott Avenue West, Suite 500 |
|         |   | Seattle, Washington 98119               |
|         |   | Attn: Vice President, Legal             |
|         |   | Fax No.: (206) 286-2537                 |

 

Noticeshall be deemed delivered upon the earlier of (i) when received; (ii) three(3) days after deposit into the mail; (iii) the date notice is sentvia telefax, telex or cable; or (iv) the day immediately followingdelivery to overnight courier (except Sunday and holidays).

 

9.11                           Compliance withU.S. Laws. Nothing contained in this Agreement shall require or permit TSRI orSponsor to do any act inconsistent with the requirements of any United Stateslaw, regulation or executive order as the same may be in effect from time totime.

 

9.12                           Counterparts.  ThisAgreement may be executed in counterparts, which together shall be construed asfully executed.  Facsimile signatures shallbe considered original signatures.

 

 

IN WITNESS WHEREOF, the parties have executed thisAgreement by their duly authorized representatives as of the date set forthabove.

 

 
| TSRI:                          | SPONSOR:                    |
|--------------------------------|-----------------------------|
|                           |                        |
|                           |                        |
| THE SCRIPPS RESEARCH INSTITUTE | NEORX CORPORATION           |
|                           |                        |
|                           |                        |
| By:                            |  /s/ POLLY A. MURPHY   |   | By: |  /s/ GERALD MCMAHON |   |
| Title:                         |  Senior Vice President |   | Title: | Chairman and CEO |   |
|                                |                             |  |  |  |  |  |  |  |  |

 

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**EXHIBIT A**

** **

**RESEARCH PROGRAM**

**[*]**

 

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[*]         designates portions of this document that have been omitted pursuant toa request for confidential treatment filed separately with the Securities andExchange Commission.

 

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**EXHIBIT B**

** **

**BUDGET**

[*]

 

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[*]         designates portions of this document that have been omitted pursuant to a request for confidentialtreatment filed separately with the Securities and Exchange Commission.

 

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**EXHIBIT C**

** **

**FORM OFMATERIAL TRANSFER AGREEMENT**

** **

**THE SCRIPPSRESEARCH INSTITUTE**

 

**MATERIALTRANSFER AGREEMENT**

 

[Date]

 

[Contact’sName]

[Sponsor’sname]

[Sponsor’sAddress]

 

 

DearDr. [Contact’s Name]:

 

Thisis to acknowledge your request for the [Materials Requested] to be provided by[Principal Investigator] at The Scripps Research Institute (TSRI) pursuant to Section 3.1.cof the Research Funding and Option Agreement between TSRI and [Sponsor’s name]dated                         .  This material and all modifications andderivatives of this material are referred to herein as “Materials”.

 

TSRIis pleased to cooperate with your use of these Materials at [Sponsor’s name]for your scientific research.  However,before forwarding them to you, TSRI needs [Sponsor’s name] to agree to thefollowing terms and conditions:

 

(1)                                  that TSRI hereby grants Sponsor anon-exclusive, royalty-free, non-transferable license to make and use theMaterials solely for internal research purposes;

 

(2)                                  that the Materials shall be received by[Sponsor’s name] only for use in scientific research in [Sponsor’s name]’s laboratoriesand that all applicable guidelines set forth by the National Institutes ofHealth (NIH), U.S. Department of Agriculture (USDA) or other governmentagencies regarding the use of these Materials shall be followed;

 

(3)                                  these Materials are provided as a service tothe research community.  THE MATERIALSARE BEING SUPPLIED TO YOU WITH NO WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANYWARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE;

 

(4)                                  that [Sponsor’s name] shall bear all risk to[Sponsor’s name] and/or any others resulting from any use, directly orindirectly, to which [Sponsor’s name] puts the Materials or any other materialsthat could not have been made but for these Materials;

 

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(5)                                  that [Sponsor’s name] agrees to defend,indemnify, and hold harmless TSRI, its trustees, officers, employees and agentsfrom any loss, claim, damage, or liability, of any kind whatsoever, which mayarise from [Sponsor’s name]’s use, storage or disposal of the Material or anyother material that could not have been made but for the Materials, except tothe extent such arise due to the gross negligence or willful misconduct ofTSRI;

 

(6)                                  that you provide us with your Federal Expressaccount number or an account number for another courier service, so that we mayship the Materials to you.

 

TheMaterials are to be used with caution and prudence in any experimental work,since all of their characteristics are not known.  Moreover, they are not to be used for testingin or treatment of humans.

 

Ifyou agree to accept these Materials under the above conditions, please sign theenclosed duplicate copy of this letter, have it signed by an authorizedrepresentative of [Sponsor’s name] and return one original to me.  Upon receipt of that confirmation I willforward the Materials to you.

 

 
| THE SCRIPPS RESEARCH INSTITUTE   |
|----------------------------------|
|                             |
|                             |   |
| Jennifer L. Dyer                 |
| Director, Technology Development |
| [Date]                           |

 

 

**ACCEPTED:**

 

 
|                                    |                                    |   |   |
|-----------------------------------------|-----------------------------------------|--------|--------|
| Recipient’s Signature              | Authorized Institutional Rep. Signature |
|                                    |                                    |
|                                    |                                    |   |   |
| Recipient’s Printed Name and Title | Authorized Rep. Printed Name and Title  |
|                                    |                                    |
|                                    |                                    |   |   |
| Date                                    | Date                                    |

 

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