**Exhibit 10.1**

 

Confidential treatmenthas been requested for portions of this exhibit. The copy filed herewith omitsthe information subject to the confidentiality request. Omissions aredesignated as **. A complete version of this exhibit has been filed separatelywith the Securities and Exchange Commission.

 

**LICENSEAGREEMENT**

 

THIS LICENSE AGREEMENT (“Agreement”), originally entered into as of July 16,1993, (the “Original Effective Date”), as amended and restated effective as of October 6,1995 (the “First Amendment Date”), and as further amended and restatedeffective as of July 1, 2003 (the “Second Amendment Date”), among THETRUSTEES OF COLUMBIA UNIVERSITY IN THE CITY OF NEW YORK, a New York Corporation(“Columbia”), and COLD SPRING HARBOR LABORATORY, a New York corporation (“ColdSpring”) (hereinafter collectively referred to as “Licensor”), and PHARMACOPEIA DRUG DISCOVERY, INC., a Delaware corporationthat is the successor to the rights and obligations hereunder of PHARMACOPEIA, INC. (the “Company”).

 

**RECITALS**

 

1.                                       The Company has been formed for the purposesof developing combinatorial chemical libraries for the development of humanpharmaceutical products and methods of preparing and using such libraries todiscover, develop and sell products.

 

2.                                       Licensor is the owner of certain technology,materials, patents and patent applications relating to combinatorial chemicallibraries and methods of preparing and using the same, and Columbia and ColdSpring are, respectively, the employers of Dr. W. Clark Still (“Dr. Still”)and Dr. Michael H. Wigler (“Dr. Wigler”), each of whom is a named inventor on such patentsand patent applications.

 

3.                                       The Company desires to obtain, and Licensordesires to grant to the Company, a license under the technology, materials, patentsand patent applications of Licensor relating to combinatorial chemicallibraries and methods of preparing and using the same.

 

4.                                       Licensor and the Company have previouslyexecuted and delivered the following prior versions of, and additions and amendmentsto, this Agreement: (a) the original Agreement effective July 16,1993; (b) a letter agreement dated December 12, 1994 (the “December 1994Amendment”); (c) a letter agreement dated January 23, 1995 (the “January 1995Amendment”); (d) the amended and restated License Agreement effective October 6,1995; and (e) the Tolling Agreement effective on or about October 7,2004, as amended. The documents referred to in this paragraph 4 are attachedhereto as Exhibit A.

 

5.                                       The parties have executed this Agreement asof May 23, 2005, to be retroactive to the Second Amendment Date.  Thus, from and after the Second AmendmentDate, this Agreement shall amend and supersede in full all prior versions,additions and amendments (a) through (e) identified in paragraph 4above, and this Agreement shall be applicable to all matters and actionsoccurring on or after the Second Amendment Date.

 

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Now, Licensor and the Company agree as follows:

 

1.                                       Definitions.

 

a.                                       “Affiliate” shall mean any corporation orother business entity that directly or indirectly controls, is controlled by,or is under common control with, the Company. Control means ownership or otherbeneficial interest in 50% or more of the voting stock or other voting interestof a corporation or other business entity.

 

b.                                      “ECLiPS” is anacronym for “encoded combinatorial libraries on polymeric support,” and ismeant to refer to any chemical compound prepared by, or on behalf of, the Companyusing any Licensed Subject Matter and/or any research programs carried out and involvingany use of Licensed Subject Matter.

 

c.                                       “ECLiPS-enabledRevenues” shall have the meaning set forth in Section 3.a.(iii) below.

 

d.                                      “Field” shall mean combinatorial chemicallibraries encoded by detachable electrophoric tagsand methods of preparing and using the same.

 

e.                                       “Geographic Area” shall mean all countriesand other territories in the world.

 

f.                                         “ITD Costs” meansinternal technology development costs.  “CorporateITD Costs” and “Pro Rata ITDCosts” are defined in Section 3.a.(iii) below.

 

g.                                      “Licensed Patents” shall mean the patents andpatent applications, including any division, continuation, continuation inpart, substitute, renewal, reissue, extension, confirmation, reexamination orregistration and any patent issuing thereon, for which the Company was granteda license as of the Original Effective Date pursuant to the original Agreementeffective July 16, 1993. A list of Licensed Patents as of May 5, 2005is attached as Exhibit B.

 

h.                                      “Licensed Products” shall mean any product orservice incorporating, or discovered utilizing, Licensed Subject Matter.

 

i.                                          “Licensed Materials” shall mean materialsprovided by Licensor to the Company relating to the Field, including anychemical compound or substance.

 

j.                                           “Licensed Subject Matter” shall mean theLicensed Patents, Licensed Materials and Licensed Technology.

 

k.                                       “Licensed Technology” shall mean anytechnology communicated by Licensor to the Company relating to the Field andnot covered by a claim of a Licensed Patent.

 

1.                                       “Net Sales” shall mean all ** charged by theCompany or an Affiliate for the **, **

 

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**.In the case of ** by an Affiliate, Net Sales shall be based upon the greater ofthe ** or ** by the Company to a Third Party and the ** or ** by the Company tothe Affiliate.

 

m.                                    “R&D Costs” (“research and developmentcosts”) are defined in Section 3.a.(iii) below.

 

n.                                      “Sublicensees”shall mean Third Parties to whom the Company has granted sublicenses under theLicensed Subject Matter.

 

o.                                      “Third Party” shall mean any party other than(i) Licensor or (ii) the Company.

 

2.                                       License Grant.

 

a.                                       Licensor grants to the Company and itsAffiliates, subject to all the terms and conditions of this Agreement, anexclusive, worldwide license under the Licensed Subject Matter, with the rightto sublicense, to develop, manufacture, have made, use, sell, rent, or lease LicensedProducts for the term of this Agreement, provided that any Sublicenseeagrees to comply with terms and provisions of this Agreement, where applicable,and that the Company takes all reasonable steps to safeguard the proprietarynature of the Licensed Technology in connection with any such sublicense. No Sublicensee shall have any right to further grant sublicenses.With respect to any such sublicense: (i) Companyshall continue to be responsible to Licensor for any obligations of Companyunder this Agreement; (ii) Licensor shall have no responsibility to anysuch Sublicensee; and (iii) Company shall beresponsible for enforcing compliance by Sublicenseeswith applicable provisions of Section 10.

 

b.                                      All rights granted by Licensor to the Companyunder this Section 2 and under this Agreement are subject to therequirements of 35 U.S.C. §200 et seq. andimplementing regulations.

 

3.                                       Royalties and Payments.

 

a.                                       In consideration of the license granted underSection 2(a) of this Agreement, the Company shall pay to Licensor:

 

(i)                                    non-refundable annual license fees whichshall be payable in accordance with the following schedule:

 

(a)                                 One-hundred thousand dollars ($100,000.00),in four equal installments of twenty-five thousand dollars ($25,000) each,during the third and each subsequent year of this Agreement after the OriginalEffective Date, payable at the end of each three (3) month period of eachsuch year. Such annual non-refundable license fees shall be creditable in fullagainst royalty payments due Licensor from the Company pursuant to Section 3(a)(ii) and, against payments due Licensor from theCompany pursuant to Section 3(a)(iii) hereof, in each case for theyear in which such annual fee is

 

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paid. To the extent any portion of such annual fee has not been socredited, fifty percent (50%) of the remaining uncreditedportion amount shall be creditable against royalty payments due Licensor fromthe Company after such year. For purposes of this Agreement, a “year” means theperiod from July 1 of a calendar year through June 30 of thefollowing calendar year.

 

(b)  Licensor and the Company confirm that all theannual license fees set forth in sub-sections 3.a.(i)(a) through(c) of the version of this Agreement that was amended and restatedeffective as of October 6, 1995 have been paid by Company in theirentirety.

 

(ii)                                  a “Direct Payment,” equal to ** percent (**%)of all Net Sales made by the Company and its Affiliates of Licensed Productsmanufactured, used, or sold by the Company and its Affiliates for use byconsumers as a pharmaceutical product or for manufacture into a pharmaceuticalproduct for use by consumers.

 

(iii)                               a “Pass-Through Payment,” equal to ** percent(**%) of all ECLiPS-enabled Revenues received by theCompany and its Affiliates, net of certain costs, as represented by thefollowing formula, and as further defined below:

 

**Pass-Through Payment = ** * {**},**

 

**where****“*” means “multiplied by.”**

 

“ECLiPS-enabled Revenues” means any payments,royalties, milestones, or other consideration of any kind (collectively, “revenues”),recognized by the Company and its Affiliates, from a Third Party with respectto any ** by, or on behalf of, the Company **. If the Company recognizesnon-cash ECLiPS-enabled Revenues, at the Company’soption, but such option to be available only if such non-cash ECLiPS-enabled Revenues have been recognized pursuant to abona fide transaction negotiated at arm’s length, the Company may **. “ECLiPS-enabled Revenues” also means any revenues recognizedby the Company and its Affiliates with respect to the **. For example, butwithout limitation, the following would constitute categories of ECLiPS-enabled Revenues: (I) revenues resulting from **using Licensed Subject Matter; (II) subject to the immediately followingparagraph, revenues associated with any ** involved the use of Licensed SubjectMatter; (III) revenues resulting from the ** using Licensed Subject

 

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Matter; or (IV) revenues resulting from the Company’s**. “ECLiPS-enabled Revenues” shall exclude payments to **,except (a) to the extent that such ** and (b) to the extent, if any,by which the **.

 

For purposes of explanation and clarification of the definition of “ECLiPS-enabled Revenues,” when the Company enters into acollaborative agreement with a Third Party involving the use of both (i) Licensed Subject Matter and (ii) any othertechnology, ** of such collaborative agreement. Notwithstanding the precedingsentence, in the event that an **. For purposes of the preceding sentence, toenable the Licensor to verify non-use of Licensed Subject Matter, the Companyshall allow the Licensor to conduct appropriate personnel interviews andprovide to the Licensor the Company’s written records, including withoutlimitation laboratory notebooks, publications and presentations and otherrelevant materials, as provided under Section 4(e).

 

“Corporate R&D Costs” and “Corporate ITDCosts” mean (I) the Company’s **; and (II) other ** the Company’s drugdiscovery, drug optimization and drug development business. The distinctionbetween “Corporate R&D Costs” and “Corporate ITDCosts” is that the former are attributable to a ** or program, while the latterare **. Categories of Corporate R&D Costs and Corporate ITDCosts include, but are not limited to, **

 

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**Corporate R&D Costs and Corporate ITD Costs donot include any ** costs accounted for as such in the Company’s financialstatements.

 

“Collaboration R&D Costs” are those Corporate R&D Costs chargeddirectly or apportioned (for example, **) to **. Such “Collaboration R&DCosts” shall include those expenses normally included as ** for the time periodin which the applicable ECLiPS-enabled Revenues wererecognized. “Collaboration R&D Costs” may also include amounts which wereincluded as ** for a time period during which, or before, the applicable ECLiPS-enabled Revenues were recognized.

 

In the event that certain Corporate R&D Costs are apportioned to aresearch program of the Company that is not currently generating ECLiPS-enabled Revenues, such R&D Costs may be ** andshall not **. For example, if the Company identifies an active compound duringthe course of a research program that is conducted without sponsorship by aThird Party, the Corporate R&D Costs apportioned to such program ** in theabove formula unless and until the Company has ** pursuant to the aboveformula. Whenever any such accrued Corporate R&D Costs become CollaborationR&D Costs, in no event shall such Collaboration R&D Costs be appliedretroactively to reduce prior ECLIPS-enabledRevenues.

 

“Pro Rata ITD Costs” are those Corporate ITD Costs apportioned to **. The aggregate percentage ofCorporate ITD Costs apportioned to suchcollaborations, products or programs shall be equal to the percentage of **. Inthe event that certain Corporate ITD Costs areapportioned to a collaboration, product or program of the Company that is notcurrently generating ECLiPS-enabled Revenues, such ITD Costs may be ** pursuant to the above formula. Wheneverany such accrued ITD Costs become Pro Rata ITD Costs, in no event shall such Pro Rata ITD Costs be applied **. The Company’s internal accountingsystem will track and measure Corporate ITD Costs andPro Rata ITD Costs. For the avoidance of doubt, ProRata ITD Costs shall not include any ITD Costs related to Company **; provided, however, that inthe

 

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event that any such Company research and development program or projectreaches the ** pursuant to the above formula.

 

For the avoidance of doubt, neither Collaboration R&D Costs nor ProRata ITD Costs shall include any ** accounted for assuch in the Company’s financial statements. Further, neither CollaborationR&D Costs nor Pro Rata ITD costs shall includeany costs or expenses of any kind incurred by the Company in connection withany **.

 

Each Payment Report pursuant to Section 4 below shall specify theamounts of ECLiPS-enabled Revenues recognized by theCompany and its Affiliates during the applicable period, along with the amountsof Collaboration R&D Costs and Pro Rata ITDCosts, and shall be certified by an officer of the Company, and the calculationthereof shall be subject to the review contemplated by Section 4d. EachPayment Report shall specify the total amount of ECLiPS-enabledRevenues recognized by the Company and its Affiliates during the applicableperiod, along with the total amounts of Collaboration R&D Costs and ProRata ITD Costs. Further, each Payment Report shallspecify the amount of ECLiPS-enabled Revenues,Collaboration R&D Costs and Pro Rata ITD Costsrecognized or incurred (as the case may be) by the Company with respect to eachpertinent Third Party.

 

(iv)                              Company shall be obligated upon the terms andconditions specified to make either a Direct Payment (Section 3(a)(ii)) or a Pass-Through Payment (Section 3(a)(iii)),as the case may be, with respect to all transactions involving Licensed SubjectMatter as contemplated by Sections 3(a)(ii) and (iii), but not both aDirect Payment and a Pass-Through Payment. If it is not clear whether a DirectPayment or a Pass-Through Payment is appropriate in a particular circumstance,the parties shall negotiate in good faith to resolve the matter.

 

(v)                                 In order to resolve any disagreement amongthe parties concerning the amounts of the royalties and/or payments owed by theCompany to the Licensor pursuant to Sections 3 and 4 for the period from theOriginal Effective Date until the Second Amendment Date, the Company agrees topay the Licensor the amount of one million dollars ($1,000,000) (the “AdditionalPayment”). The Additional Payment shall be paid in two installments: a firstinstallment of five-hundred thousand dollars ($500,000) payable by June 15,2005, and a second installment of five-hundred thousand dollars ($500,000)payable by June 15, 2006. The parties agree that the Additional Payment,in view of the payments already made by the Company under this Agreement, fullysatisfies any and all amounts owed by the Company to the Licensor under thisAgreement for the period from the Original Effective Date until the SecondAmendment Date. In addition, in consideration of the Additional Payment andother good and valuable consideration, receipt of which is hereby acknowledged,each of Columbia and Cold Spring, for itself and for its affiliates andsuccessors, hereby releases, quitclaims, and forever discharges the Company,its Affiliates and successors (collectively, the “Company Released Parties”),from any and all claims, losses, demands, or causes of action of any type ornature whatsoever, known or unknown, suspected or unsuspected, and whether ornot heretofore asserted which either Columbia or Cold Spring ever had, now hasor may hereafter have against the Company

 

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Released Parties or any of them with respect to thisAgreement for the period from the Original Effective Date until the SecondAmendment Date.The parties agree that the payment by the Company of the Additional Paymentdoes not constitute an admission or acknowledgement by the Company of anyincorrect conduct or practice by the Company with respect to this Agreement.Further, in consideration of the release provided to the Company ReleasedParties by Columbia and Cold Spring, and other good and valuable consideration,receipt of which is hereby acknowledged, each of the Company Released Parties,for itself and for its affiliates and successors, hereby releases, quitclaims,and forever discharges Columbia, Cold Spring and the Affiliates and successorsof each of them (collectively, the “Licensor Released Parties”), from any andall claims, losses, demands, or causes of action of any type or naturewhatsoever, known or unknown, suspected or unsuspected, and whether or notheretofore asserted which any Company Released Party ever had, now has or mayhereafter have against the Licensor Released Parties or any of them withrespect to this Agreement for the period from the Original Effective Date untilthe Second Amendment Date.

 

b.                                      Company shall provide to Licensor copies ofany (i) sublicenses hereunder and (ii) documentsdefining or governing Third Party relationships that are expected to or dogenerate ECLiPS-enabled Revenues, in conjunction withthe Payment Report referred to in Section 4 below. Licensor shall holdsuch copies in strict confidence and use them solely to ensure compliance byCompany with the terms of this Agreement.

 

4.                                       Reports and Payments.

 

a.                                       On or before the last business day ofFebruary, May, August, and November of each year of this Agreement, theCompany shall submit to Licensor a written report with respect to the precedingcalendar quarter (the “Payment Report”) stating:

 

(i)                                     Net Sales made by the Company and anyAffiliate during such quarter for Licensed Products;

 

(ii)                                  In the case of transfers or sales of LicensedProducts by the Company to an Affiliate for sale by the Affiliate, Net Salesmade by the Company from the Affiliate and by the Affiliate from its customersduring such quarter;

 

(iii)                               Amounts accruing to the Company from its Sublicensees during such quarter;

 

(iv)                              Net sales made bySublicensees during such quarter; and

 

(v)                                A calculation under Section 3 of theamounts due to Licensor, making reference to each subsection.

 

b.                                      Simultaneously with the submission of eachPayment Report, the Company shall make payments to Licensor of the amounts duefor the calendar quarter covered by the Payment Report; provided, however, thatany amount due to the Licensor from the Company under this Agreement for theperiod beginning on July 2, 2003 and ending on December 31, 2004, andnot

 

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yet paid, shall be paid by the Company to the Licensor no later than tendays after execution of this Agreement by the Licensor.

 

c.                                       Within sixty (60) days following June 30of each year of this Agreement, the Company shall submit to the Licensor awritten report with respect to the preceding year under this Agreement (the “ReconciliationReport”) detailing: (i) the expenditures by theCompany during such year in connection with the development andcommercialization of the Licensed Subject Matter; (ii) the Company’sactivities during such year and the progress toward commercialization of theLicensed Subject Matter and (iii) a reconciliation of the (1) revenues,(2) collaborative research and development costs and (3) ITD Costs set forth in the Payment Reports to thecorresponding data set forth in the Company’s financial statements included inits reports filed with the U.S. Securities and Exchange Commission.  The Company and Licensor will schedule anannual meeting to be held among them within thirty (30) days following the above-mentionedsixty (60) day period to discuss the Reconciliation Report.

 

d.                                      Annual Reconciliation.  Afterthe conclusion of each year of this Agreement, the Company shall, actingreasonably and in good faith, determine whether it has made any overpayment orunderpayment of amounts due under Section 3 during the course of suchyear. Within sixty (60) days after conclusion of such year, the Company shallnotify Licensor accordingly, and, subject to prior verification by the Licensorof the claimed overpayment or underpayment (the Company to cooperate reasonablywith the Licensor in making such prior verification), shall add the applicableamount to, or deduct the applicable amount from, any payment due with a PaymentReport during the following calendar quarter. If the amount of such an overpayment exceeds the amount owed by theCompany during the following calendar quarter (such excess, the “Excess Amount”),the Company shall credit this unapplied overpayment, plus interest as providedbelow, against future royalty payments until such time as the total overpaymenthas been applied.

 

e.                                       The Company shall maintain usual books of accountand records and other relevant materials (including, without limitation,laboratory notebooks, publications, and presentations) showing its actionsunder this Agreement, such as the Company’s use or non-use of Licensed SubjectMatter. Once per calendar year, upon reasonable notice, such books, records andmaterials shall be open to inspection and copying, along with access tosupervisory and/or other knowledgeable personnel, during usual business hours,by an independent certified public accountant to whom the Company has noreasonable objection, for two years after the calendar quarter to which theypertain, for purposes of verifying the accuracy of the amounts paid to Licensorby the Company under this Agreement. The accounting firm shall report to Licensoronly whether there is an error with regard to the royalty payments made by theCompany hereunder and, if so, the amount thereof.

 

f.                                         Notwithstanding anything to the contrary inthis Agreement, and without limiting any of the Company’s or the Licensor’srights and remedies hereunder, any payment required hereunder that is made late(including unpaid portions of amounts due) shall bear simple interest at therate of prime plus one percent (1%) per annum, as the prime rate is reported inThe Wall Street Journal from time to time.  Any interest charged or paid in excess of themaximum rate permitted by applicable law shall be deemed the result of amistake, and interest paid in excess of

 

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the maximum rate shall be credited or refunded (at the payor’soption) to the Company or the Licensor, as applicable.

 

g.                                      All reports and payments provided pursuant tothis Section 4 shall be kept in confidence by Licensor except fordisclosures required by law and made after notice to the other party and afterrequesting confidential treatment and a protective order, if available.

 

5.                                       Use for Research Purpose of Licensed SubjectMatter.  Licensor reserves the right to use theLicensed Subject Matter for non-commercial research purposes and to permitother entities or individuals to use same for non-commercial research purposes.Licensor shall obtain from all such entities or individuals an agreement inwriting not to use the Licensed Subject Matter for any commercial purposes andshall inform the Company of the identity of all such entities or individualsand the manner of their use of the Licensed Subject Matter.

 

6.                                       Due Diligence.

 

Licensor and the Company confirm that all the due diligencerequirements of Section 6 of the prior versions of this Agreement havebeen fulfilled in their entirety.

 

7.                                       Infringement.

 

a.                                       Licensor will protect Licensed Patents frominfringement and prosecute infringers at its own expense when in its solejudgment such action may be reasonably necessary, proper and justified.

 

b.                                      If the Company shall have supplied Licensorwith written evidence demonstrating prima facie infringement of a claim of aLicensed Patent, the Company may by notice request Licensor to take steps toprotect the Licensed Patent. Unless Licensor shall within three months of thereceipt of such notice either (i) causesuch infringement to terminate or (ii) initiate legal proceedings againstthe infringer, the Company may upon notice to Licensor initiate legal proceedingsagainst the infringer at the Company’s expense. In such event the Company may deduct from payments due hereunder toLicensor its reasonable costs and expenses, including without limitation legaland experts fees incurred to conduct such proceedings, but in no event shallany such payments be reduced by more than ** percent of the amount otherwisedue to Licensor hereunder. Any recovery by the Company in such proceedingsshall first be used to reimburse the Company for its reasonable costs andexpenses incurred to conduct such proceedings and next to pay any amountswithheld from Licensor by the Company under this Section 7 during the pendency of the proceedings. Any remaining balance shall be**. Any other provision of this Agreement notwithstanding, other than asprovided in this Section 7b, no amounts payable by the Company pursuant tothis Section 7b shall be recoverable by the Company from the Licensor.

 

c.                                       In the event the Licensor or the Companyshall initiate or carry on legal proceedings to enforce any Licensed Patentagainst an alleged infringer, the other parties to this Agreement shall usetheir best efforts to cooperate fully with and shall supply all assistance reasonablyrequested by the party initiating or carrying on such proceedings.  The party that

 

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institutes any proceeding to protect or enforce aLicensed Patent shall have sole control of that proceeding and shall bear thereasonable expenses incurred by said other parties in providing such assistanceand cooperation as is requested pursuant to this paragraph.

 

8.                                       Patents.

 

a.                                       Licensor will be responsible for preparing,filing, prosecution and maintaining all Licensed Patents and shall use patentcounsel acceptable to the Company.  Allreasonable expenses relating to the preparation, filing, prosecution andmaintenance of Licensed Patents will be paid by the Company except that theCompany may upon sixty (60) days advance written notice advise Licensor that itno longer wishes to pay such expenses, whereupon the Licensed Patents for whichthe Company has given Licensor such notice shall no longer be Licensed Patentswithin the scope of this Agreement and Licensor at its option may either paysuch expenses or permit such Licensed Patents to become abandoned or lapse. Anyother provision of this Agreement notwithstanding, no amounts payable by theCompany pursuant to this Section 8a shall be recoverable by the Companyfrom the Licensor.

 

b.                                      Licensor shall consult with the Companyregarding all activities with respect to prosecution and maintenance ofLicensed Patents, shall provide the Company copies of any documents relating tothe Licensed Patents which will be filed in any patent office for review and commentat least thirty (30) days prior to the filing of such documents, shall obtainthe Company’s approval with respect to any action concerning the LicensedPatents, which approval shall not unreasonably be withheld, and shall provideto the company copies of all office actions and other communications concerningthe Licensed Patents within three (3) weeks after receipt thereof.

 

c.                                       The Company will provide all reasonablecooperation required by Licensor in the preparation, prosecution andmaintenance of Licensed Patents.

 

d.                                      Licensor shall file patent applicationscorresponding to Licensed Patents, or covering subsequent inventions whichbecame part of the Licensed Subject Matter, in such countries as the Company inits sole discretion shall select. Should the Company expressly decline to havepatent applications filed in any country, Licensor, at its discretion andexpense may file, prosecute and maintain such patent applications in suchcountry, which patent application, or patent resulting therefrom,shall not be a Licensed Patent within the scope of this Agreement but shall bethe subject of a separately negotiated License Agreement should the Companydesire rights thereunder.

 

e.                                       In partial consideration for the AdditionalPayment set forth in Section 3.a.(v), Licensor agrees to provide theCompany, on or before June 15, 2005, with a list of all patent applicationscurrently being prosecuted by Licensor pursuant to sub-section 8(d),above. Licensor further agrees to provide written notice to the Company withinthirty (30) days after the issuance of any patent prosecuted by Licensorpursuant to sub-section 8(d), above. In the event Licensor believes thatthe Company requires a license under any such issued patent in order to carryout its business activities, Licensor’s notice to the Company shall state suchbelief and the reasons therefor.  Such notice further shall contain an offer tonegotiate a License Agreement

 

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with the Company with respect to the applicable patent.

 

9.                                       Prohibition AgainstUse of Name.  The Company will not use the name, insignia, orsymbols of Licensor, their faculties or departments, or any variation orcombination thereof, or the name of any trustee, faculty member, otheremployee, or student of Licensor for any purpose whatsoever without Licensor’sprior written consent.

 

10.                                 Compliance with Governmental Obligation.

 

a.                                       Notwithstanding any provisions in thisAgreement,  Licensordisclaims any obligations or liabilities arising under the license provisionsof this Agreement if the Company is charged in a governmental action for notcomplying with or fails to comply with governmental regulations in the courseof developing any Licensed Product.

 

b.                                      The Company shall comply, upon reasonablenotice from Licensor, in all material respects with all governmental requestsdirected to either Licensor or the Company and provide all information andassistance necessary to comply with the governmental requests; provided, however,that the Company shall have the right to contest or defend itself by all lawfulmeans from compliance with any governmental request which it in good faithbelieves is overbroad, improper or injurious to the Company or its business.

 

c.                                       The Company shall insure that research,development, and marketing under this Agreement will comply in all materialrespects with all government regulations in force and effect including, but notlimited to, federal, state, and municipal legislation; provided, however, thatthe Company shall have the right to contest or defend itself by all lawfulmeans from compliance with any governmental request which it in good faithbelieves is overbroad, improper or injurious to the Company or its business.

 

11.                                 Indemnity and Insurance.

 

a.                                       The Company will indemnify and hold Licensorharmless against any and all actions, suits, claims, demands, prosecutions,liabilities, costs, and expenses (including reasonable attorneys’ fees) basedon or arising out of this Agreement, other than those relating to a breach ofthis Agreement by Licensor, including, without limitation, the manufacture, packaging,use, sale, rental, or lease of Licensed Products, even if altered for use for apurpose not intended, or use of Licensed Subject Matter by the Company, itsAffiliates, its Sublicensees or its (or their)customers and any representation made or warranty given by the Company, its Affiliatesor Sublicensees with respect to Licensed Products orLicensed Subject Matter. Licensor shall consult with the Company respecting theconduct of the defense and/or any proposed settlement of any such action, suit,claim, demand, prosecution, liability, cost, and expense (including reasonableattorneys’ fees).

 

b.                                      The Company shall maintain, during the termof this agreement, comprehensive general liability insurance, includingproducts liability insurance, with reputable and financially secure insurancecarriers reasonably acceptable to Licensor to cover the activities of the Company,its Affiliates and its Sublicensees, for minimumlimits of $** combined single

 

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limit for bodily injury and property damage per occurrence and in theaggregate. Such insurance shall **. The Company shall furnish a certificate ofinsurance evidencing such coverage, with thirty days written notice to Licensorof cancellation or material change.

 

The Company’s insurance shall be primary coverage; any insuranceLicensor may purchase shall be excess and noncontributory. Such insurance shallbe written to cover claims incurred, discovered, manifested, or made during orafter the expiration of this Agreement.

 

The Company shall at all times comply with all statutory workers’compensation and employers’ liability requirements covering its employees withrespect to activities performed under this Agreement.

 

12.                                 Marking.  Prior to the issuance ofpatents, the Company and its Affiliates will mark Licensed Products made, sold,or otherwise disposed of by any of them under the license granted in thisAgreement with the words “Patent Pending”, and following the issuance of one ormore patents, with the numbers of such patents. Company shall use reasonablebusiness efforts to require that its Sublicensees similarlymark their Licensed Products.

 

13.                                 Representations and Warranties.

 

a.                                       Licensor Warranties.  Licensor,the Trustees of Columbia University of the City of New York and Cold SpringHarbor Laboratory jointly and severally represent and warrant that to the bestof their knowledge, (i) they have the fullright, power and authority to grant to Company the license granted in theLicense Agreement, (ii) they have not previously granted and shall not grantto any Third Party any rights which are inconsistent with the rights granted toCompany herein or in the License Agreement, (iii) they have full power toenter into this Agreement, to carry out their obligations under this Agreement,and to grant the rights granted to Company herein and in the License Agreement;and (iv) they have fully complied with all requirements of 35 U.S.C. §200 et seq. and all implementing regulationsnecessary to perfect title to the rights and License granted to the Companyherein.

 

b.                                      Company Warranties.  Companywarrants that it has full power to enter into this Agreement and to carry outits obligations under this Agreement.

 

c.                                       Limited Warranty.  Nothingin this Agreement shall be construed as a warranty or representation by anyparty as to the validity of any Licensed Patent. Nothing in this Agreement shallbe construed as a warranty or representation by any party that anything made,used, sold, or otherwise disposed of under any license granted under thisAgreement is or will be free from infringement of domestic or foreign patentsof Third Parties.

 

14.                                 Breach and Cure.

 

a.                                       The Company shall be considered to be inmaterial breach of this Agreement for (i) failureto pay fully and promptly amounts due pursuant to Section 3 and payablepursuant to Section 4 which are material to the transactions and paymentscontemplated by this Agreement

 

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[**]=Certain informationon this page has been omitted and filed separately with the Commission.Confidential treatment has been requested with respect to the omitted portions.

 

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taken as a whole; or (ii) failure of similar materiality to comply withgovernmental requests, subject to Section 10(b).

 

b.                                      Either party shall have the right to cure itsmaterial breach. The cure shall be effected within a reasonable period of timebut in no event later than ninety (90) days after notice of any breach given bythe non-breaching party, unless such default is of such nature that it cannotreasonably be completely cured within ninety (90) days, in which case Companyshall have the right to cure such default within one hundred eighty (180) days,provided that Company commences work to cure such default within the ninety(90) days and thereafter proceeds with reasonable diligence and in good faithto cure such default. If there exists a good faith dispute as to whether amaterial breach has occurred and/or whether a cure has been effected,the parties shall negotiate in good faith to resolve the dispute promptly. Theright to terminate shall be stayed for up to ninety (90) days while the partiesnegotiate to resolve the dispute.

 

15.                               Term of Agreement.

 

a.                                       This Agreement shall be effective as of theOriginal Effective Date and shall continue in full force and effect, unlessterminated in accordance with this Section 15, for the later of twenty(20) years from the Original Effective Date or the expiration of the last toexpire of the Licensed Patents. Thereafter, the Company shall have a paid-uplicense under Licensed Technology and Licensed Materials.

 

b.                                      The license granted under this Agreement maybe terminated by Licensor (i) upon thirty (30)days written notice to the Company for the Company’s material breach of the Agreementand the Company’s failure to cure such material breach in accordance with Section 14(b),or (ii) should the Company commit any act of bankruptcy, become insolvent,file a petition under any bankruptcy or insolvency act or have any suchpetition filed against it which is not dismissed within sixty (60) days.

 

c.                                       Upon any termination of this Agreementpursuant to Section 15(b), all sublicenses granted by the Company under itshall be assigned to Licensor.

 

16.                               Notices.  Any notice required orpermitted to be given under this Agreement shall be sufficient if sent bycertified mail (return receipt requested), postage pre-paid, ifto Licensor, to:

 
|      |   | Columbia  University Science and Technology Ventures  |
|-----------|--------|-------------------------------------------------------|
|      |   | 80  Claremont Ave. #4F (at 120th St.), Mail Code 9606 |
|      |   | New  York, New York 10027                             |
|      |   | Attention:  Executive Director                        |
|      |   |                                                  |
| copy  to: |   | Office  of the General Counsel                        |
|      |   | Columbia  University                                  |
|      |   | 412  Low Memorial Library                             |
|      |   | Mail  Code 4308                                       |
|      |   | 535  West 116th Street                                |

 

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|                    |   | New  York, New York 10027                           |
|-------------------------|--------|-----------------------------------------------------|
|                    |   | Attention:  General Counsel                         |
|                    |   |                                                |
|                    |   | Cold  Spring Harbor Laboratory                      |
|                    |   | P.O. Box  100                                  |
|                    |   | Cold  Spring Harbor, New York 11724                 |
|                    |   | Attention:  Director, Office of Technology Transfer |
|                    |   |                                                |
| if  to the Company, to: |   | Pharmacopeia Drug Discovery, Inc.              |
|                    |   | P.O. Box  5350                                 |
|                    |   | Princeton,  NJ 08543-5350                           |
|                    |   | Attention:  Leslie J. Browne, Ph.D.                 |
|                    |   |                                                |
| copy  to:               |   | James  J. Marino, Esq.                         |
|                    |   | Dechert LLP                                    |
|                    |   | Princeton  Pike Corporate Center                    |
|                    |   | P.O. Box  5218                                 |
|                    |   | Princeton,  NJ 08543-5218                           |

 

or to such other address as a party may specify by notice hereunder.Notices shall be deemed to have been served when delivered.

 

17.                                 Assignment.  This Agreement may not beassigned without the written consent of the other parties except the Companymay assign this Agreement to a successor in business of all or substantiallyall of its assets without the consent of Licensor.

 

18.                                 Governing Law.  ThisAgreement shall be governed by New York law applicable to agreements made andto be performed in New York.

 

19.                                 Severability.  Ifany provision of this Agreement shall be found or be held invalid orunenforceable by any court of competent jurisdiction in any jurisdiction inwhich this Agreement is being performed, the remainder of this Agreement shallbe valid and enforceable, and the parties shall negotiate, in good faith, asubstitute, valid and enforceable provision which most nearly effects theparties’ intent in entering into this Agreement.

 

20.                                 Waiver.  The failure of any party toenforce at any time the provisions of this Agreement shall in no way beconstituted to be a present or future waiver of such provisions, nor in any wayaffect the right of any party to enforce each and every such provisionthereafter.

 

21.                                 Counterparts.  ThisAgreement may be executed in two or more counterparts, all of which togethershall be regarded as one instrument.

 

22.                                 Entire Agreement.  Theterms and conditions contained herein constitute the entire agreement betweenthe parties and supersede all previous agreements and understandings, whetheroral or written, between the parties hereto with respect to the subject matterhereof. No

 

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change, modification, termination or waiver of this Agreement or any or itsprovisions shall be valid unless made in writing and signed by a dulyauthorized representative of each party.

 

IN WITNESS THEREOF, Licensor and the Company have caused this Agreementto be executed by their duly authorized representatives as of the day and yearset forth in Recital 5 above.

 
|   | THE  TRUSTEES OF COLUMBIA UNIVERSITY  IN THE CITY OF NEW YORK |
|--------|---------------------------------------------------------------|
|   |                                                          |
|   |                                                          |
|   | By                                                            | /s/ Scot G. Hamilton |
|   |                                                          | Scot G. Hamilton |
|   |                                                          | Senior Director |
|   |                                                          | Science &  Technology Ventures |
|   |                                                          | Columbia  University Science & Technology Ventures |
|   |                                                          |
|   |                                                          |
|   | COLD  SPRING HARBOR LABORATORY                                |
|   |                                                          |
|   |                                                          |
|   | By                                                            | /s/ John Maroney |
|   |                                                          | John  Maroney |
|   |                                                          | Director,  Office of Technology Transfer |
|   |                                                          | Legal  Counsel |
|   |                                                          |
|   |                                                          |
|   | PHARMACOPEIA DRUG DISCOVERY, INC.                             |
|   |                                                          |
|   |                                                          |
|   | By                                                            | /s/ Brian M. Posner |
|   |                                                          | Brian  M. Posner |
|   |                                                          | Vice-President,  Finance |

 

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