**EXHIBIT 10.2**Execution Copy

 

*Portions of this Exhibit wereomitted and filed separately with the Secretary of the Commission pursuant toan application for confidential treatment filed with the Commission pursuant toRule 24b-2 under the Securities Exchange Act of 1934.** Such omissions are designated as **.*

 

 

 

**LICENSE AGREEMENT**

 

**between**

 

**PHARMACOPEIA DRUG DISCOVERY INC.**

 

**and**

 

**BRISTOL-MYERS SQUIBB COMPANY**

 

 

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**LICENSE AGREEMENT**

 

THIS LICENSE AGREEMENT (this“Agreement”) is made and entered into as of March 27, 2006 (the “EffectiveDate”), by and between **Bristol-MyersSquibb Company**, a Delaware corporation headquartered at 345 ParkAvenue, New York, New York 10154 (“BMS”), and **Pharmacopeia Drug Discovery Inc.**, a Delaware corporation,having its principal office at 3000 Eastpark Boulevard, Cranbury, New Jersey08512 (“Pharmacopeia”).  BMS andPharmacopeia are sometimes referred to herein individually as a “Party”and collectively as the “Parties.”

**RECITALS**

 

WHEREAS, BMS Controls (asdefined below) certain patent rights and know-how rights with respect to theLicensed Compounds (as defined below); and

 

WHEREAS, Pharmacopeiadesires to obtain from BMS the licenses set forth herein, and BMS desires togrant such licenses to Pharmacopeia, all on the terms and conditions set forthin this Agreement;

 

NOW, THEREFORE inconsideration of the foregoing and the mutual agreements set forth below, theParties agree as follows.

 

**ARTICLE 1DEFINITIONS**

 

The terms in this Agreementwith initial letters capitalized, whether used in the singular or the plural,shall have the meaning set forth below or, if not listed below, the meaningdesignated in places throughout this Agreement.

 

1.1           “AAA” has the meaning set forth inSection 14.2.

 

1.2           “Act” means the United States Food,Drug and Cosmetic Act, as amended.

 

1.3           “Active Compound” has the meaning setforth in Appendix 2 hereto.

 

1.4           “Affiliate” of a Person means anyother Person which (directly or indirectly) is controlled by, controls or isunder common control with such Person.  Forthe purposes of this definition, the term “control” (including, withcorrelative meanings, the terms “controlled by” and “under common controlwith”) as used with respect to a Person means (i) in the case of a corporateentity, direct or indirect ownership of voting securities entitled to cast atleast fifty percent (50%) of the votes in the election of directors or (ii) inthe case of a non-corporate entity, direct or indirect ownership of at leastfifty percent (50%) of the voting securities with the power to direct themanagement and policies of such entity.

 

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1.5           “Agreement” means this Agreement,together with all Appendices attached hereto, as the same may be amended orsupplemented from time to time.

 

1.6           “Approval” means, with respect to anyLicensed Product in any regulatory jurisdiction, approval from the applicableRegulatory Authority sufficient for the manufacture, distribution, use and saleof the Licensed Product in such jurisdiction in accordance with applicableLaws.

 

1.7           “BMS Core Patent Rights” means thepatents and patent applications that are listed in Appendix 1 hereto,and (a) **that ** listed in Appendix 1 hereto (**), and ** thereof (butin each case, only with respect to ** listed in Appendix 1 hereto), and(b) all ** on any of the foregoing **, together with all ** thereof, and **thereof (but in each case, only with respect to ** listed in Appendix 1hereto).

 

1.8           “BMS Know-How” means **.  BMS Know-How shall also include the **.  BMS Know-How shall not include **.

 

1.9           “BMS Other Patent Rights” means (i) **(a) ** or (b) ** and (ii) **.

 

1.10         “BMS Patent Rights” means the BMS CorePatent Rights and the BMS Other Patent Rights.

 

1.11         “Board” means Pharmacopeia’sthen-current Board of Directors.

 

1.12         “Business Day” or “business day”means a day other than Saturday, Sunday or any day on which commercial bankslocated in New York, New York are authorized or obligated by applicable Laws toclose.

 

1.13         “Calendar Quarter” means therespective periods of three consecutive calendar months ending on March 31,June 30, September 30 and December 31.

 

1.14         “Calendar Year” means each successiveperiod of 12 months commencing on January 1 and ending on December 31.

 

1.15         “Combination Product” means a **.

 

1.16         “Commercialization” or “Commercialize”means activities directed to commercially manufacturing, obtaining pricing andreimbursement approvals, carrying out Phase 4 Trials for, marketing, promoting,distributing, importing or selling a pharmaceutical product.

 

1.17         “Commercially Reasonable Efforts”means, with respect to Licensed Compounds and Licensed Products, the carryingout of Development or Commercialization activities in a **.  Without limiting the foregoing, CommerciallyReasonable Efforts requires that a Party: (i) **, (ii) **, (iii) **, (iv) **,and (v) **.

 

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1.18         “Competitive Compound” means any **that is not a **, unless BMS has **.  BMSshall not **.

 

1.19         “Compound Library Services” means theservices to be performed by Pharmacopeia for BMS as set forth in Appendix 5and Appendix 6 hereto, for the design, synthesis and delivery to BMS ofthe Libraries.

 

1.20         “Confidential Information” means alltrade secrets, processes, formulae, data, know-how, improvements, inventions,chemical or biological materials, assays, techniques, marketing plans,strategies, customer lists, or other information that has been created,discovered, or developed by a Party, or has otherwise become known to a Party,or to which rights have been assigned to a Party, as well as any otherinformation and materials that are deemed confidential or proprietary to or bya Party (including, without limitation, all information and materials of aParty’s customers and any other Third Party and their consultants), in eachcase that are disclosed by such Party to the other Party, regardless of whetherany of the foregoing are marked “confidential” or “proprietary” or communicatedto the other by the disclosing Party in oral, written, graphic, or electronicform.

 

1.21         “Controlled” or “Controls”,when used in reference to intellectual property, means the legal authority orright of a Party hereto (or any of its Affiliates) to grant a license orsublicense of intellectual property rights to another Party, or to otherwisedisclose proprietary or trade secret information to such other Party, withoutbreaching the terms of any agreement with a Third Party, or misappropriatingthe proprietary or trade secret information of a Third Party.

 

1.22         “Cover,” “Covered” or “Covering”means, with respect to patent rights, that the making, using, importation,offer for sale or sale of an invention claimed in such patent rights or theconducting of an activity that, in the absence of a license under such patentrights, would infringe at least one Valid Claim of such patent rights whetherpresent in an issued patent or in a patent application if it issued as a patentcontaining such claim.

 

1.23         “DARA” means dual acting antagonistsof the angiotensin-II receptor (AT1 receptor) and the endothelin-1 (ETA)receptor.

 

1.24         “Development” means non-clinical andclinical drug development activities reasonably related to the development andsubmission of information to a Regulatory Authority, including, withoutlimitation, toxicology, pharmacology and other discovery and pre-clinicalefforts, test method development and stability testing, manufacturing processdevelopment, formulation development, delivery system development, qualityassurance and quality control development, statistical analysis, clinicalstudies (including, without limitation, pre- and post-approval studies andspecifically excluding regulatory activities directed to obtaining pricing andreimbursement approvals).  When used as averb, “Develop” means to engage in Development.

 

1.25         “Development Plan” means, with respectto any Licensed Product, a comprehensive, multi-year plan specifying theanticipated timing and technical details of Development activities for suchLicensed Product, including without limitation the indications to

 

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be targeted, line of therapy,timelines for completing key activities, phasing of development, primaryendpoints, criteria for continuing activities, study size, comparator drugs,combination drugs, timelines for data preparation and filing of regulatorysubmissions, toxicology and pharmacology studies and manufacturing processdevelopment and scale up.  An outline ofthe initial Development Plan as of the Effective Date is attached hereto as Appendix3.

 

1.26         “Dollar” or “$” means thelawful currency of the United States.

 

1.27         “Effective Date” means the datespecified in the initial paragraph of this Agreement.

 

1.28         “EMEA” means the European Agency forthe Evaluation of Medicinal Products, or any successor agency thereto.

 

1.29         “EU” means the European Union, as itsmembership may be altered from time to time, and any successor thereto, andwhich, as of the Effective Date, consists of Austria, Belgium, Czech Republic,Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy,Latvia, Lithuania, Luxembourg, Malta, The Netherlands, Poland, Portugal,Slovakia, Slovenia, Spain, Sweden and the United Kingdom, and that certainportion of Cyprus included in such organization.

 

1.30         “Europe” means the countriescomprising the European Union as it may be constituted from time to time,together with those additional countries included in the European Economic Areaas it may be constituted from time to time (which as of the Effective Dateincludes Iceland, Liechtenstein and Norway), Albania, Andorra, Belarus, Bosniaand Herzegovina, Bulgaria, Croatia, Holy See (Vatican), Macedonia, Moldova,Monaco, Poland, Romania, Russian Federation, San Marino, Serbia and Montenegro,Switzerland, Turkey, Ukraine, other central and eastern European marketsincluding former Soviet block and USSR countries, and any successors to, or newcountries created from, any of the foregoing.

 

1.31         “FDA” means the U.S. Food and DrugAdministration, or any successor agency thereto.

 

1.32         “Field” means the diagnosis,prevention, treatment or control of any human or animal disease, disorder orcondition.

 

1.33         “First Commercial Sale” means, withrespect to any Licensed Product, the first sale for use or consumption by thegeneral public of such Licensed Product in any country in the Territory afterApproval of such Licensed Product has been granted, or such marketing and saleis otherwise permitted, by the Regulatory Authority of such country.

 

1.34         “GAAP” means generally accepted accountingprinciples in the United States.

 

1.35         “IND” means an Investigational NewDrug Application, as defined in the Act, filed with the FDA or its foreigncounterparts.

 

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1.36         “Indemnification Claim” has themeaning set forth in Section 12.3.

 

1.37         “Indemnitee” has the meaning set forthin Section 12.3.

 

1.38         “Indemnitor” has the meaning set forthin Section 12.3.

 

1.39         “Independent Evaluator” means anindependent certified public accounting firm, a consulting firm in thebiotechnology and/or pharmaceutical sectors or investment bank, in each case ofrecognized standing within such sectors, which is not at the time of theevaluation contemplated in Section 3.1 providing auditing or consultingservices to either Party, and which is selected by Pharmacopeia.

 

1.40         “JNDA” means a New Drug Applicationfiled with the Koseisho required for marketing approval for the applicableLicensed Product in Japan.

 

1.41         “JNDA Approval” means the approval ofa JNDA by the Koseisho for the applicable Licensed Product in Japan.

 

1.42         “JNDA Filing” means the acceptance bythe Koseisho of the filing of a JNDA for the applicable Licensed Product inJapan.

 

1.43         “Koseisho” means the Japanese Ministryof Health and Welfare, or any successor agency thereto.

 

1.44         “Laws” means all laws, statutes,rules, regulations, ordinances and other pronouncements having the effect oflaw of any federal, national, multinational, state, provincial, county, city orother political subdivision, agency or other body, domestic or foreign.

 

1.45         “Library” and “Libraries” havethe meaning set forth in Appendix 5.

 

1.46         “License” means any agreementtransferring rights with respect to any Licensed Compound or any LicensedProduct by Pharmacopeia (or an Affiliate of Pharmacopeia) to any Third Partylicensee, including without limitation any license, sublicense, co-development,co-promotion, distribution, joint venture, development and commercializationcollaboration or similar transaction involving a transfer of rights withrespect to a Licensed Compound or Licensed Product.  “License” shall also include anyfurther transfer of such rights by a Third Party licensee to any other ThirdParty.  “License” also refers tothe corresponding arrangement for the grant by Pharmacopeia of rights back toBMS with respect to one or more Licensed Compound(s) and Licensed Product(s)pursuant to Section 3.1.

 

1.47         “Licensed Compounds” means:

 

(a)           the **;

 

(b)           any **;

 

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(c)           any **; and

 

(d)           any **.

 

1.48         “Licensed Product” means anypharmaceutical product containing a Licensed Compound (alone or with otheractive ingredients), in all forms, presentations, formulations and dosageforms.

 

1.49         “List A Countries” means **.

 

1.50         “Listed Compounds” means thosecompounds identified in Appendix 4.

 

1.51         “Losses and Claims” has the meaningset forth in Section 12.1.

 

1.52         “MAA Approval” means approval by theEMEA of a marketing authorization application (“MAA”) filed with the EMEA forthe applicable Licensed Product under the centralized European procedure.  If the centralized EMEA filing procedure isnot used, MAA Approval shall be achieved upon the first Approval for theapplicable Licensed Product in any two of the following countries:  France, Germany, Italy, Spain or the UnitedKingdom.

 

1.53         “MAA Filing” means filing with theEMEA of a marketing authorization application (“MAA”) for the applicableLicensed Product under the centralized European procedure.  If the centralized EMEA filing procedure isnot used, MAA Filing shall be achieved upon the first filing of a marketingauthorization application for the applicable Licensed Product in any two of thefollowing countries:  France, Germany,Italy, Spain or the United Kingdom.

 

1.54         “Major Market Countries” means the**.  “Major Market Country” meansone of these countries.

 

1.55         “**” has the meaning set forth in **.

 

1.56         “NDA” means a New Drug Applicationfiled with the FDA required for marketing approval for the applicable LicensedProduct in the U.S.

 

1.57         “NDA Approval” means the approval ofan NDA by the FDA for the applicable Licensed Product in the U.S.

 

1.58         “NDA Filing” means the acceptance bythe FDA of the filing of an NDA for the applicable Licensed Product.

 

1.59         “Negotiation Period” has the meaningset forth in Article 3.

 

1.60         “Net Sales” means, with respect to any**:

 

(a)           **; *provided,**however*, that where any such **;

 

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(b)           **;

 

(c)           **; and

 

(d)           **.

 

Net Sales shall be determined**.  In the case of any CombinationProduct sold in the Territory, Net Sales for such Combination Product shall becalculated by **.

 

Net Sales shall not includeany **.

 

1.61         “Notice” has the meaning set forth inSection 3.1.1(a).

 

1.62         “Person” means any individual, firm,corporation, partnership, limited liability company, trust, business trust,joint venture company, governmental authority, association or other entity.

 

1.63         “Phase 1 Trial” means a human clinicaltrial of a Licensed Product, the principal purpose of which is a preliminarydetermination of safety in healthy individuals or patients, as described in 21C.F.R. 312.21(a), or a similar clinical study prescribed by the RegulatoryAuthorities in a foreign country.

 

1.64         “Phase 1b Study” means a Phase 1 Trialbased upon and conducted subsequent to filing an IND in the U.S. for theLicensed Product and **.  The plan forsuch clinical trial for a Licensed Compound (including the clinical end pointsfor the trial) shall be described in the then-applicable Development Plan.  As used herein, “completion of a Phase 1bStudy” shall mean completion of the applicable clinical trial and thesubmission to the FDA (or equivalent Regulatory Authority in the country inwhich the Phase 1b Study is carried out) of the preliminary clinical studiesreport plus the clinical data and tables in anticipation of post-trial meetingwith the relevant Regulatory Authority for such clinical trial.  If the Phase 1b Study described above is notapproved by the relevant Regulatory Authority, then “Phase 1b Study” shall meanthat study that is carried out that most closely approximates the studydescribed above.

 

1.65         “Phase 2 Trial” means a human clinicaltrial of a Licensed Product, the principal purpose of which is a determinationof safety and efficacy in the target patient population, as described in 21C.F.R. 312.21(b), or a similar clinical study prescribed by the RegulatoryAuthorities in a foreign country.

 

1.66         “Phase 2b Trial” means a means a Phase2 Trial of a Licensed Product, the principal purpose of which is a furtherdetermination of efficacy and safety, in the target population, at the intendedclinical dose or doses or range of doses, on a sufficient number of subjectsand for a sufficient period of time to confirm the optimal manner of use of theProduct (dose and dose regimen) to support the initiation, without any furtherPhase 2 Trial, of a pivotal Phase 3 Trial (such Phase 3 Trial may be acontinuation/extension of such Phase 2 Trial).

 

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1.67         “Phase 3 Trial” means a human clinicaltrial of a Licensed Product on a sufficient number of subjects that is designedto establish that a pharmaceutical product is safe and efficacious for itsintended use, and to determine warnings, precautions, and adverse reactionsthat are associated with such pharmaceutical product in the dosage range to beprescribed, which trial is intended to support Approval of a Licensed Product,as described in 21 C.F.R. 312.21(c), or a similar clinical study prescribed bythe Regulatory Authorities in a foreign country.  For purposes of this Agreement, “start ofPhase 3 Trial” for a Licensed Product means the first dosing of such LicensedProduct in a human patient in a Phase 3 Trial.

 

1.68         “Phase 4 Trial” means a human clinicaltrial for a Licensed Product commenced after receipt of Approval in the countryfor which such trial is being conducted and that is conducted within theparameters of the Approval for the Licensed Product.  Phase 4 Trials may include, withoutlimitation, epidemiological studies, modeling and pharmacoeconomic studies,investigator sponsored clinical trials of the Licensed Product andpost-marketing surveillance studies.

 

1.69         “Proprietary Compound of BMS” meansany compound or other agent being developed or sold, as of the Effective Dateor at any time thereafter, by BMS or its Affiliates or their contractors orcollaborators.

 

1.70         Regulatory Authority” means any national or supranationalgovernmental authority, including, without limitation, the FDA, EMEA orKoseisho (i.e., the Japanese Ministry of Health and Welfare, or any successoragency thereto), that has responsibility in countries in the Territory over theDevelopment and/or Commercialization of Licensed Compounds and LicensedProducts.

 

1.71         “Sublicensee” means any Third Party towhom rights are transferred with respect to any Licensed Compound or LicensedProduct, including through any license, sublicense, co-development, codiscovery, co-promotion, distribution, joint venture, Development andCommercialization collaboration or similar transaction between a Party (or anAffiliate of a Party) and a Third Party. “Sublicensee” shall also include any Third Party to whom suchrights are transferred through further sublicense by a Sublicensee.  “Sublicensee” shall include any ThirdParty that is a party to a License agreement.

 

1.72         “Territory” means any country in theworld.

 

1.73         “Third Party” means any Person otherthan Pharmacopeia, BMS and their respective Affiliates.

 

1.74         “Third Party Term Sheet” has themeaning set forth in Section 3.1.2(b).

 

1.75         “Title 11” has the meaning set forthin Section 13.8.

 

1.76         “United States” or “U.S.” meansthe United States of America and its territories and possessions (including,without limitation, Puerto Rico).

 

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1.77         “Valid Claim” means a claim of (i) anissued and unexpired patent or a supplementary protection certificate, whichclaim has not been held invalid or unenforceable by a court or other governmentagency of competent jurisdiction from which no appeal can be or has been takenand has not been held or admitted to be invalid or unenforceable throughre-examination or disclaimer, opposition procedure, nullity suit or otherwise,or (ii) a pending patent application; *provided,however*, that if a claim of a pending patent application shall nothave issued within five (5) years (or in Japan, seven (7) years) after theearliest filing date from which such claim takes priority, such claim shall notconstitute a Valid Claim for the purposes of this Agreement unless and until apatent issues with such claim.

 

**ARTICLE 2LICENSE GRANTS**

 

2.1           BMS Patent Rights and BMS Know-How.

 

2.1.1.             BMS Core Patent Rights and BMS Know-How. Subject to the terms and conditions set forth in this Agreement(including, without limitation, the reservation of rights in Section 2.5), BMShereby grants to Pharmacopeia a non-transferable (except in accordance withSection 15.4), exclusive license, with the right to sublicense in accordancewith Section 2.2, under the BMS Core Patent Rights and BMS Know-How to theextent reasonably necessary to, make, use (including in activities directed atthe research and Development of Licensed Compounds), have made, sell, havesold, offer to sell, export, import and otherwise exploit or CommercializeLicensed Compounds and Licensed Products in the Field in the Territory.

 

2.1.2.             BMS Other Patent Rights. Subject to the terms and conditions set forth in this Agreement (including,without limitation, the reservation of rights in Section 2.5), BMS herebygrants to Pharmacopeia a non-transferable (except in accordance with Section15.4), non-exclusive (subject to conversion to exclusivity pursuant to Section2.6 below) license, with the right to sublicense in accordance with Section2.2, under the BMS Other Patent Rights solely to the extent reasonablynecessary or useful to make, use (including in activities directed at theresearch and Development of Licensed Compounds), have made, sell, offer tosell, export and import and otherwise exploit or Commercialize LicensedCompounds and Licensed Products in the Field in the Territory, *provided, however*, that no rights aregranted under this Section 2.1.2 (or otherwise under this Agreement) withrespect to any Proprietary Compound of BMS. For clarification, no rights are granted under this Section 2.1.2 (orotherwise under this Agreement) to co-formulate or use in combination aLicensed Compound with any Proprietary Compound of BMS.  The rights granted by BMS to Pharmacopeiaunder this Section 2.1.2 include the right to make, have made, use (includingin activities directed at the research and Development of Licensed Compounds),export and import intermediates and starting materials reasonably necessary forthe manufacture of Licensed Compounds, and to practice methods reasonablynecessary for the manufacture of Licensed Compounds, and to practice methodsreasonably necessary for manufacturing such intermediates and startingmaterials, but only for the purposes of manufacturing, using, importing orexporting Licensed Compounds in the Field in the

 

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Territory.  For clarification, no rights are granted tosell or offer to sell any such intermediates or starting materials, or use suchintermediates or starting materials for any purpose other than for the purposesof manufacturing Licensed Compounds.

 

2.2           Sublicenses.  Pharmacopeia shall have theright to grant sublicenses with respect to the rights licensed to Pharmacopeiaunder Sections 2.1.1 and 2.1.2 to any Affiliate of Pharmacopeia for so long assuch Affiliate remains an Affiliate of Pharmacopeia, *provided* that (i) such Affiliate shall agree in writing tobe bound by and subject to the terms and conditions of this Agreement in thesame manner and to the same extent as Pharmacopeia, and (ii) Pharmacopeia shallremain responsible for the performance of this Agreement and shall cause suchAffiliate to comply with the terms and conditions of this Agreement.  In addition, Pharmacopeia shall have theright to grant sublicenses with respect to the rights licensed to Pharmacopeiaunder Sections 2.1.1 and 2.1.2 to Third Parties.

 

(a)           Other than a permitted assignment of thisAgreement in accordance with Section 15.4.1, ** then only in accordance withthis Section 2.2 and Article 3.  Theforegoing ** shall not limit Pharmacopeia’s ability to engage Third Partycontractors in the Development, manufacture and/or shipping/warehousing of anyLicensed Compound or any Licensed Product, *provided*that such engagement is essentially a fee-for-service or similar purchasearrangement and does not grant the Third Party contractor the right to sell orpromote such Licensed Compound or Licensed Product.

 

(b)           **, Pharmacopeia shall have the right to enterinto a License agreement with a Third Party, *provided*that, to the extent any such License agreement grants rights with respect toany Licensed Compound:

 

(i)            such License agreement shall be consistentwith the terms and conditions of this Agreement, and shall not limit (A)Pharmacopeia’s ability to perform its obligations under this Agreement or (B)BMS’ rights under this Agreement;

 

(ii)           in such License agreement, the Sublicenseeshall agree in writing to be bound to Pharmacopeia by terms and conditions thatare substantially similar to, or less favorable to the Sublicensee than, orotherwise allow Pharmacopeia to fully perform the corresponding terms andconditions of this Agreement, *provided*that Section 3.1.2 of Section 3.1 shall not apply to a Sublicensee;

 

(iii)          promptly after the execution of such Licenseagreement, Pharmacopeia shall provide a copy of such License agreement to BMS,with financial and other confidential or proprietary commercial terms redactedconsistent with the public filing of such license agreement with the Securitiesand Exchange Commission (“SEC”), or, if not filed with the SEC, then withfinancial and other confidential or proprietary commercial terms redacted (tothe extent that such other commercial terms are not reasonably necessary forBMS to determine Pharmacopeia’s compliance with this Agreement);

 

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(iv)          Pharmacopeia shall remain responsible for theperformance of this Agreement (including, without limitation, its obligationsunder Sections 5.1(a) and 6.1), the payment of all payments due, and makingreports and keeping books and records, and shall use commercially reasonableefforts to monitor such Sublicensee’s compliance with the terms of suchLicense;

 

(v)           any sublicense rights granted by Pharmacopeiain a License (to the extent such sublicensed rights are granted to Pharmacopeiain this Agreement) shall terminate on a country-by-country and LicensedProduct-by-Licensed Product basis effective upon the termination under Section13.2 of the license from BMS to Pharmacopeia with respect to such sublicensedrights, *provided* that suchsublicensed rights shall not terminate if, as of the effective date of suchtermination by BMS under Section 13.2, the Sublicensee is not in materialbreach of its obligations to Pharmacopeia under its License agreement, andwithin sixty (60) days of such termination the Sublicensee agrees in writing tobe bound directly to BMS under a license agreement substantially similar tothis Agreement with respect to the rights sublicensed hereunder, substitutingsuch Sublicensee (a “Surviving Sublicensee”) for Pharmacopeia; and

 

(vii)         such Sublicensees shall have the right togrant further sublicenses with respect to the Development or Commercializationof Licensed Products, *provided*that such further sublicenses shall be in accordance with and subject to all ofthe terms and conditions of this Section 2.2.

 

For purposes ofclarification, the preceding provisions of this Section 2.2(b) shall not applyto Licensed Compounds with respect to which Pharmacopeia grants BMS a License.

 

(c)           In accordance with the foregoing, unless BMSagrees otherwise in writing, any License shall **.

 

(d)           For clarity, where provisions of thisAgreement provide that Pharmacopeia shall be “solely” responsible or the likewith respect to a matter (for example, Sections 5.4, 5.5, or 7.1), it isunderstood that such responsibilities may be carried out or borne onPharmacopeia’s behalf by a Pharmacopeia Affiliate, permitted Sublicensee orcontractor of Pharmacopeia.

 

(e)           It shall be a **.

 

2.3           No Trademark License.  Noright or license, express or implied, is granted to Pharmacopeia to use anytrademark, trade name, trade dress or service mark owned or Controlled by BMSor any of its Affiliates.  Pharmacopeia,at its sole cost and expense, shall be responsible for the selection,registration and maintenance of all trademarks which it employs in connectionwith its activities conducted pursuant to this Agreement, if any, and shall ownand control such trademarks.

 

2.4           No Implied Licenses.  Nolicense or other right is or shall be created or granted hereunder byimplication, estoppel or otherwise.  Allsuch licenses and rights are or shall be granted only as expressly provided inthis Agreement.

 

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2.5           Retained Rights.

 

2.5.1.             All rights not expressly granted underSection 2.1 are reserved by BMS and may be used by BMS for any purpose.  Without limiting the foregoing, BMS retainsany and all rights under the BMS Patent Rights and BMS Know-How to make, havemade, use, sell, have sold, export or import any compounds, *provided* that such compounds are notLicensed Compounds or products containing any Licensed Compounds.  For clarification, BMS retains the exclusiveright under the BMS Patent Rights to develop and commercialize compounds withinthe BMS Patent Rights which are not Licensed Compounds.  BMS also expressly reserves and retains theright (i) to make, have made and use Licensed Compounds for any internalresearch purposes (including but not limited to for purposes of screening insupport of BMS’ internal research programs), (ii) to support the filing andprosecution of patent applications, and (iii) to make, have made and use anyLicensed Compound solely for use as an intermediate or starting material in themanufacture of any compound which is not a Licensed Compound.

 

2.5.2.             Subject to the exclusive rights granted toPharmacopeia under this Article 2 and subject to the restrictions on use ofPharmacopeia’s Confidential Information under Article 11, **.  For clarification, the foregoing restrictionon BMS shall not apply to any Active Compound that is acquired from or througha Third Party after the Effective Date, for example, through in-license,acquisition or merger.  For purposes ofclarity, nothing in the foregoing shall be construed to reserve to BMS theright to engage in the discovery, Development and/or Commercialization ofActive Compounds Covered by the BMS Core Patent Rights exclusively licensed toPharmacopeia hereunder.

 

2.6           Conversion to Exclusive License.  BMSshall have the right at its sole discretion to convert the license granted toPharmacopeia under Section 2.1.2 to be an exclusive license upon notice toPharmacopeia specifying the patents to be so converted.  The BMS patent rights so exclusively licensedto Pharmacopeia pursuant to this Section 2.6 shall thereafter be deemed to beBMS Core Patent Rights.

 

**ARTICLE 3BMS RIGHT OF FIRST NEGOTIATION**

 

3.1           BMS Right of First Negotiation.

 

3.1.1.             BMS shall have a limited right of firstnegotiation with respect to Licensed Compounds as follows (the “Right ofFirst Negotiation”).

 

(a)           In the event that Pharmacopeia desires toenter into a License arrangement with respect to any Licensed Compound, beforeentering into negotiations with any Third Party with respect to such License,Pharmacopeia will notify BMS of its desire and provide BMS with information inPharmacopeia’s possession and control that is reasonably necessary for BMS toperform its due diligence with respect to such Licensed Compound (including butnot limited to information from or relating to clinical studies, correspondencewith FDA, information regarding

 

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Third Party patents, andinformation regarding the manufacture, sourcing and cost of goods for theLicensed Compound) (the “Notice”). Pharmacopeia shall provide to BMS a proposal of terms and conditionswith respect to such a License at the time of such Notice.  If BMS notifies Pharmacopeia in writing ofits election to pursue a License for such Licensed Compound within ** (**) daysafter BMS’ receipt of such Notice, Pharmacopeia shall enter into good faithnegotiations with BMS with respect to such License for a period of ** (**) days(the “Negotiation Period”) following receipt of such election fromBMS.  **.

 

(b)           During the Negotiation Period, Pharmacopeiawill provide BMS with an opportunity to make a written proposal of terms andconditions with respect to such a License and Pharmacopeia will either acceptthe proposal or provide a counter offer to BMS (i.e., in addition to theproposal provided to BMS at the time of the Notice).  If BMS has not provided Pharmacopeia with sucha written proposal regarding all principal financial terms of such a Licensewithin the first ** (**) days of the Negotiation Period, the Negotiation Periodwill terminate.  If Pharmacopeia and BMSare able to conclude an agreement in principle within the Negotiation Period asset forth in a mutually satisfactory term sheet with respect to such License(being demonstrated by BMS obtaining internal BMS Executive Committee, andPharmacopeia obtaining Board approval, to proceed with completing a definitiveagreement based on such term sheet), the Parties shall negotiate a definitiveagreement in good faith with the goal of executing such agreement within **(**) days thereafter.

 

(c)           If BMS does not elect through the writtennotification described above to pursue a License with respect to such LicensedCompounds within the ** (**) day period set forth above, Pharmacopeia will thenbe free to enter into negotiations with any Third Party regarding a License forsuch Licensed Compounds and free to enter into any such License, but onlysubject to the provisions set forth in this Article 3 below.

 

(d)           Following Notice, if BMS does so elect topursue a License with respect to the Licensed Compounds within the ** (**) dayperiod set forth above, but Pharmacopeia and BMS do not conclude an agreementin principle (being demonstrated by BMS obtaining internal BMS ExecutiveCommittee, and Pharmacopeia obtaining Board approval, to proceed withcompleting a definitive agreement based on such term sheet) with respect to suchLicense within the Negotiation Period as described above, Pharmacopeia willthen be free to enter into negotiations with any Third Party regarding aLicense for such Licensed Compounds, and free to enter into any such License,subject to the provisions set forth in Article 3 below.

 

3.1.2.             Pharmacopeia shall not enter into anagreement with any Third Party with respect to such License for a LicensedCompound except in accordance with the provisions of this Article 3, includingthe provisions set forth below.

 

(a)           In the event that Pharmacopeia intends toenter into a License agreement with a Third Party (based on *bona fide* arm’s-length negotiations withan unaffiliated Third Party) after following the procedure set forth in thisArticle 3, **.

 

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(b)           **. For this purpose, ** at that time. Such determination by the **.  **will consider **.  Such determination bythe Board shall be **.

 

(c)           If the **.

 

(d)           If the **. In the event that Pharmacopeia makes **. If Pharmacopeia offers **.  **.

 

3.1.3.             **.

 

3.1.4.             Upon the initiation of any such NegotiationPeriod, Pharmacopeia shall **.

 

3.1.5.             Any License agreement entered into byPharmacopeia with a Third Party in accordance with the foregoing procedure shallbe consistent with the terms and conditions of this Agreement and shall fullyenable Pharmacopeia to fully perform all of its obligations under the Agreementwhich will continue in effect.  As setforth in Section 2.2, any Sublicensee shall be bound by the terms andconditions of this Agreement in the same manner as Pharmacopeia, *provided* that Section 3.1.2 of Section 3.1shall not apply to a Sublicensee.

 

3.1.6.             Certain Definitions.  Forthe purposes of this Article 3, the following capitalized terms shall have thefollowing meanings:

 

(a)           “**” means, with respect to a **,compared to a ** under the terms and conditions set forth in the **, that the**, based on the **, including without limitation, **.

 

(b)           “**” means any **.

 

**ARTICLE 4TRANSFER OF KNOW-HOW**

 

4.1           Documentation. Prior to the Effective Date BMS shall provide to Pharmacopeia one (1)electronic or paper copy of all documents, data or other information Controlledby BMS as of the Effective Date to the extent that such documents, data andinformation are (i) reasonably necessary for the manufacture, Development orCommercialization of the Listed Compounds (including SAR information) andsubject to the BMS Know-How license under Section 2.1, and (ii) are reasonablyavailable to BMS without undue searching; *provided**however*, that subject to the lastsentence of this Section 4.1, the foregoing shall in no event require BMS toprovide copies of manufacturing run records or laboratory notebookrecords.  Such documentation isConfidential Information of BMS (subject to Article 11) and shall not be usedby Pharmacopeia for any purpose other than Development, manufacture orCommercialization of Licensed Compounds and Licensed Products in accordancewith this Agreement.  Pharmacopeiaacknowledges that it has received from BMS such documents, data and informationprior to the Effective Date.  BMS shallbe responsible for the cost of providing

 

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one (1) set of copiesonly.  BMS shall have no obligation to reformator otherwise alter or modify any such materials, or to create materials inelectronic form, in order to provide them to Pharmacopeia.  Any and all such materials delivered toPharmacopeia pursuant to this Section 4.1 are and shall remain the sole propertyof BMS.  Notwithstanding the foregoing,if at any time during the term of this Agreement Pharmacopeia identifiesparticular documents, data or information (including laboratory notebookrecords) that are within the BMS Know-How, but were not previously delivered toPharmacopeia, and that are reasonably necessary for the continued manufacture,Development or Commercialization of a Licensed Compound or Licensed Product(including without limitation materials requested in connection with an auditor other inquiry by a Regulatory Authority), or are reasonably necessary tosupport the filing and/or prosecution of patent rights Covering the LicensedCompounds or Licensed Products, BMS shall promptly provide such material toPharmacopeia upon request to the extent that such items are in BMS’ possessionand are available without undue searching.

 

4.2           Technical Assistance. During the ** (**) day period following the Effective Date, BMS shallprovide Pharmacopeia with reasonable access by teleconference or in-person atBMS’ facilities (subject to BMS’ customary rules and restrictions with respectto site visits by non-BMS personnel) to BMS personnel reasonably knowledgeablein the research and development of the Licensed Compounds and Licensed Productsfor up to ** hours of consulting advice with respect to the Licensed Compoundsand Licensed Products, *provided*that (i) such access shall be requested and coordinated through a single BMScontact person reasonably knowledgeable with respect to the BMS DARA program,with such person to be designated by BMS, (ii) BMS makes no warranty, expressor implied, that Pharmacopeia shall be able to successfully implement and usethe BMS Know-How, (iii) BMS shall not be obligated to provide more than ** (**)hours of consulting advice in such period, and (iv) BMS will use reasonableefforts to provide such consulting advice promptly.  If Pharmacopeia requests further consultingadvice related to Licensed Compounds and Licensed Products in excess of the **(**) hour amount referenced above, BMS may at its sole discretion provide suchconsulting advice and, if BMS elects to provide such consulting advice,Pharmacopeia shall reimburse BMS for its time incurred in connection therewithat a rate of $** per hour, plus any reasonable out-of-pocket expenses incurredby BMS in providing such consulting advice requested by Pharmacopeia.  Such reimbursement shall be made to BMSwithin thirty (30) days after receipt by Pharmacopeia of a BMS invoice reasonablydetailing BMS’ time expended, together with documentation substantiating anyout-of-pocket expenses incurred.

 

4.3           Materials.  BMS shall have no obligationto provide Pharmacopeia with samples of any compounds or other materials (otherthan the information provided under Section 4.1) under this Agreement, *provided* that upon written request byPharmacopeia, BMS will authorize in writing the transfer to Pharmacopeia of thecompound ** for BMS.  Pharmacopeia shallbe responsible for any and all fees charged by **.  Any such compounds or other materials(including **) that may be provided by or for BMS to Pharmacopeia pursuant tothis Agreement (the “Transferred Materials”) are provided “AS IS”.  Pharmacopeia shall be fully responsible forits and its Affiliates’, Sublicensees’ and contractors’ use, storage, handlingand disposition of the Transferred Materials. Under no circumstances shall BMS be liable or responsible for

 

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Pharmacopeia’s or itsAffiliates’, Sublicensees’ and contractors’ use, storage, handling ordisposition of the Transferred Materials, and Pharmacopeia assumes soleresponsibility for any claims, liabilities, damages and losses that might ariseas a result of Pharmacopeia’s and its Affiliates’, Sublicensees’ andcontractors’ use, storage, handling or disposition of any Transferred Material.Pharmacopeia shall indemnify, defend and hold harmless BMS and its Affiliates,and their respective officers, directors, employees, agents, licensors, andtheir respective successors, heirs and assigns and representatives, from andagainst any and all damages, liabilities, losses, costs and expenses(including, without limitation, reasonable legal expenses, costs of litigationand reasonable attorney’s fees) arising in connection with any claims, suits,proceedings, whether for money damages or equitable relief, of any kind,arising out of or relating, directly or indirectly, to Pharmacopeia’s, or anyof its Affiliates’, Sublicensees’ or contractors’ use, storage, handling ordisposition of any Transferred Material. Transferred Materials may only be provided to Pharmacopeia, itsAffiliates, Sublicensees and contractors. The Transferred Materials shall be used by Pharmacopeia solely forpurposes of supporting the Development of the Licensed Compounds and LicensedProducts.

 

**ARTICLE 5DEVELOPMENT**

 

5.1           Development and Development Plan.

 

(a)           Commercially Reasonable Efforts. Pharmacopeia (or its Sublicensees, as applicable) shall use sustainedCommercially Reasonable Efforts to Develop at least one Licensed Compound andLicensed Product, including but not limited to using Commercially ReasonableEfforts to expeditiously carry out the pre-clinical and clinical developmentfor the Licensed Compounds and Licensed Products (including expeditiously pursuingregulatory filings and Approvals and marketing authorizations for at least oneLicensed Compound and Licensed Product) in accordance with the DevelopmentPlan.

 

(b)           Development Plan.  Anoutline of the initial Development Plan is attached hereto as Appendix 3to the Agreement.  The complete initialDevelopment Plan through Phase I Trials will be provided to BMS by Pharmacopeiawithin ** (**) days after the Effective Date.

 

5.2           Development Reports. Pharmacopeia will provide BMS with ** written development reports withinthirty (30) days following ** presenting a summary of the Developmentactivities accomplished by Pharmacopeia during the just ended ** (**) months,including as applicable updates to the Development Plan, and significantresults, information and data generated with respect to Licensed Compounds andLicensed Products.  Upon reasonablerequest by BMS, Pharmacopeia shall also meet in-person with BMS to reviewPharmacopeia’s Development activities for the Licensed Compounds and LicensedProducts.  In addition, prior toPharmacopeia entering into a License agreement with a Third Party, uponreasonable request by BMS, but no more than once per Calendar Year,Pharmacopeia shall present to BMS, at Pharmacopeia’s facilities, summaries of(and, at the request of BMS, with copies of) clinical protocols, investigatorbrochures, regulatory submissions and correspondence from regulatory

 

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agencies with respect toLicensed Compound and Licensed Product that have been prepared or received byPharmacopeia as of the date of such request by BMS.

 

5.3           Records.  Pharmacopeia shall maintaincomplete and accurate records of all work conducted in furtherance of theDevelopment and Commercialization of the Licensed Compounds and LicensedProducts and all material results, data and developments made in conductingsuch activities.  Such records shall bemaintained sufficient detail and in good scientific manner appropriate for patentand regulatory purposes.  If BMS believesin good faith that Pharmacopeia may not be complying with its obligations underthis Section 5.3, BMS shall provide written notice thereof to Pharmacopeiaidentifying the basis for BMS’ good faith belief, and Pharmacopeia shall allowan independent Third Party as to which Pharmacopeia has no reasonable objectionto review such records on behalf of BMS to verify that Pharmacopeia iscomplying with this Section 5.3.  Suchreview shall be conducted no more frequently than once per year, at BMS’ cost, andupon reasonable advance notice at mutually agreed upon times during normalbusiness hours.

 

5.4           Development Responsibilities and Costs. Pharmacopeia shall have sole responsibility for, and shall bear the costof conducting, all Development with respect to the Licensed Compounds andLicensed Products.

 

5.5           Regulatory Responsibilities and Costs. Pharmacopeia shall have sole responsibility for, and shall bear the costof preparing, all regulatory filings and related submissions with respect tothe Licensed Compounds and Licensed Products. Pharmacopeia shall be responsible for meeting the requirements of allpre-approval inspections required by any Regulatory Authorities.  Except as set forth in Section 13.4,Pharmacopeia or its Affiliate or Sublicensee shall own all INDs, NDAs,Approvals and submissions in connection therewith and all Approvals shall beobtained by and in the name of Pharmacopeia or its Affiliate or Sublicensee.

 

5.6           Subcontracting. Subject to and without limiting Section 2.2, Pharmacopeia may performany activities in support of its Development or Commercialization of LicensedCompounds and Licensed Products through subcontracting to a Third Partycontractor or contract service organization, *provided*that: (a) Pharmacopeia shall enter into an appropriate written agreement withany such Third Party subcontractor such that the subcontractor shall be boundby all applicable provisions of this Agreement to the same extent asPharmacopeia and such that BMS’ rights under this Agreement are not adverselyeffected; (b) any such Third Party subcontractor to whom Pharmacopeia disclosesConfidential Information of BMS shall enter into an appropriate writtenagreement obligating such Third Party to be bound by obligations ofconfidentiality and restrictions on use of such BMS Confidential Informationthat are no less restrictive than the obligations in this Agreement; (c)Pharmacopeia will obligate such Third Party to agree in writing to assign orlicense (with the right to grant sublicenses) to Pharmacopeia any inventions(and any patent rights covering such inventions) made by such Third Party inperforming such services for Pharmacopeia; and (d) Pharmacopeia shall at alltimes be responsible for the performance of such subcontractor.

 

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**ARTICLE 6COMMERCIALIZATION**

 

6.1           Pharmacopeia Obligations. Pharmacopeia (or its Sublicensees, as applicable) shall use sustainedCommercially Reasonable Efforts to Commercialize at least one (1) LicensedProduct in the Territory, including but not limited to the Major MarketCountries.  Without limiting theforegoing, Pharmacopeia shall use Commercially Reasonable Efforts to obtainApprovals in such countries with respect to at least one (1) Licensed Productand to effect the First Commercial Sale thereof in such countries as soon asreasonably practicable after receipt of such Approvals.

 

6.2           Continued Availability. Following the First Commercial Sale of a Licensed Product in a MajorMarket Country in the Territory and until the expiration or termination of thisAgreement, Pharmacopeia shall use Commercially Reasonable Efforts to supply andkeep such Licensed Product reasonably available to the public in such country.

 

6.3           Marking.  Each Licensed ProductCommercialized by Pharmacopeia under this Agreement shall be marked (to theextent not prohibited by applicable Laws): (i) with a notice that such LicensedProduct is sold under a license from BMS and (ii) with applicable patent andother intellectual property notices relating to the BMS Core Patent Rights insuch a manner as may be required by applicable Law.

 

6.4           Reports.  Pharmacopeia shall provide BMSwith ** written reports within ** (**) days following the end of ** summarizingsignificant commercial activities and events with respect to Licensed Productsduring the just ended ** period.

 

**ARTICLE 7MANUFACTURE AND SUPPLY**

 

7.1           Manufacture and Supply. Pharmacopeia shall be solely responsible at its expense for making orhaving made all of its requirements of the Licensed Compounds and LicensedProducts.

 

**ARTICLE 8FINANCIAL TERMS**

 

8.1           In partial consideration of the rightsgranted by BMS to Pharmacopeia pursuant to this Agreement, Pharmacopeia shallmake the payments to BMS as provided for in this Article 8.

 

8.2           Development Milestone Payments.

 

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8.2.1.             Development Milestone Payments. Pharmacopeia shall make milestone payments to BMS upon achievement ofeach of the milestones events in the amounts as set forth below in Table1.  Subject to Section 8.2.2, themilestone payments set forth below will be payable by Pharmacopeia to BMSwithin ten (10) days of the achievement of the specified milestone event withrespect to each Licensed Compound.  Suchmilestone payment shall not be refundable or returnable in any event, nor shallit be creditable against royalties or other payments.

Table1

 
| **Milestone Event** | ** ** | **Milestone Payment** | ** ** |
|---------------------|------------|-----------------------|------------|
| **                  |       | $                     | **         |   |
| **                  |       | $                     | **         |   |
| **                  |       | $                     | **         |   |
| **                  |       | $                     | **         |   |
| **                  |       | $                     | **         |   |
| **                  |       | $                     | **         |   |
| **                  |       | $                     | **         |   |
| **                  |       | $                     | **         |   |
| **                  |       | $                     | **         |   |

 

In the event that amilestone event is achieved that triggers a development milestone payment asset forth above, if the **.  For example,**.

 

8.2.2.             Milestone Payments for Follow-on Compounds.  Only**.  Each such milestone payment shall be**.

 

8.3           Royalty Payments.

 

8.3.1.             Pharmacopeia shall pay to BMS in cash thefollowing royalty payments on the total aggregate annual Net Sales in theTerritory of all Licensed Products in a particular Calendar Year byPharmacopeia, its Affiliates, and Sublicensees in the Territory:

 
| **Aggregate  Annual Worldwide Net Sales of All  Licensed Products in a Calendar Year** | ** ** | **Royalty Rate** | ** ** |
|----------------------------------------------------------------------------------------|------------|------------------|------------|
| **                                                                                     |       | **               | %          |
| **                                                                                     |       | **               | %          |

 

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By way of example, in agiven Calendar Year, if the aggregate annual worldwide Net Sales for allLicensed Products is $**, the following royalty payment would be payable underthis Section 8.3.1: **.

 

8.3.2.             Royalty Term. Royalties shall be payable on a **of (i) ** or (ii)  the** or (iii) thef**.

 

8.3.3.             **.  If Pharmacopeia or itsSublicensee, **.  Prior to Pharmacopeiaor its Sublicensee exercising its ** under this Section 8.3.3, Pharmacopeiashall provide BMS with **.  The Partiesshall discuss the best course of action to resolve such potential **, *provided* that such discussions shall notlimit or delay Pharmacopeia’s or its Sublicensee’s right to **.

 

Except as set forthabove,**.

 

8.3.4.             Royalty Conditions.  Theroyalties under Section 8.3.1 shall be subject to the following conditions:

 

(a)           that only one royalty shall be due withrespect to the same unit of Licensed Product;

 

(b)           that no royalties shall be due upon the saleor other transfer among Pharmacopeia, its Affiliates, or Sublicensees, but insuch cases the royalty shall be due and calculated upon Pharmacopeia’s or itsAffiliate’s or Sublicensee’s Net Sales of Licensed Product to the firstindependent Third Party; and

 

(c)           no royalties shall accrue on the dispositionof Licensed Product in reasonable quantities by Pharmacopeia, its Affiliates orSublicensees as part of an expanded access program, as *bona fide* samples, as part of Phase 4Trials or as donations to non-profit institutions or government agencies fornon-commercial purposes, *provided*,in each case, that neither Pharmacopeia, its Affiliate or Sublicensees receivesany payment for such Licensed Product.

 

8.4           Manner of Payment.  Allpayments to be made by Pharmacopeia hereunder shall be made in Dollars by wiretransfer of immediately available funds to such United States bank account asshall be designated by BMS.  Latepayments shall bear interest at the rate provided in Section 8.9.

 

8.5           Sales Reports and Royalty Payments. After the First Commercial Sale of a Licensed Product and during theterm of this Agreement, Pharmacopeia shall furnish to BMS a written report,within ** (**) days after the end of each ** (or portion thereof, if thisAgreement terminates during a **), showing the amount of royalty due for such** (or portion thereof).  Royalty paymentsfor each ** shall be due at the same time as such written report for the**.  With each ** payment, Pharmacopeiashall deliver to BMS a full and accurate accounting to include at least thefollowing information:

 

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(a)           the quantity of each Licensed Product sold(by country) by Pharmacopeia, its Affiliates, and Sublicensees;

 

(b)           the calculation of Net Sales from such grosssales (by country);

 

(c)           the royalties payable in Dollars which shallhave accrued hereunder in respect of such Net Sales;

 

(d)           withholding taxes, if any, required byapplicable Law to be deducted in respect of such royalties; and

 

(e)           the dates of the First Commercial Sales ofLicensed Products in any country during the reporting period.

 

If no royalty or payment isdue for any royalty period hereunder, Pharmacopeia shall so report.

 

8.6           Sales Record Audit. Pharmacopeia shall keep, and shall cause each of its Affiliates, andSublicensees, if any, to keep, full and accurate books of accounting inaccordance with GAAP as may be reasonably necessary for the purpose ofcalculating the royalties payable to BMS. Such books of accounting (including, without limitation, those ofPharmacopeia’s Affiliates, and Sublicensees, if any) shall be kept at theirprincipal place of business and, with all necessary supporting data, shallduring all reasonable times for the ** (**) years next following the end of theCalendar Year to which each shall pertain, be open for inspection at reasonabletimes upon written notice by BMS and at BMS’ sole cost, no more than once peryear, by an independent certified accountant selected by BMS as to whichPharmacopeia has no reasonable objection, for the purpose of verifying royaltystatements for compliance with this Agreement. Such accountant must have agreed in writing to maintain all informationlearned in confidence, except as necessary to disclose to BMS such complianceor noncompliance by Pharmacopeia.  Theresults of each inspection, if any, shall be**. BMS shall pay for such inspections, except that in the event thereis**.  Any underpayments shall be paid byPharmacopeia within ten (10) Business Days of notification of the results ofsuch inspection.  Any overpayments shallbe fully creditable against amounts payable in subsequent payment periods or,if no such amounts become payable within ninety (90) days after notification ofsuch results, shall be refunded.

 

8.7           Currency Exchange. With respect to Net Sales invoiced inDollars, the Net Sales and the amounts due to BMS hereunder shall be expressedin Dollars.  With respect to Net Salesinvoiced in a currency other than Dollars, the Net Sales shall be expressed inthe domestic currency of the entity making the sale, together with the Dollarequivalent, calculated using the arithmetic average of the spot rates on theclose of business on the last Business Day of each month of the CalendarQuarter in which the Net Sales were made. The “closing mid-point rates” found in the “dollar spot forward againstthe dollar” table published by The Financial Times or any other publication asagreed to by the Parties shall be used as the source of spot rates to calculatethe average as defined in the preceding sentence.  All payments shall be made in Dollars.

 

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8.8           Tax Withholding.  Inthe event that any withholding taxes or similar charges are levied or assessedby any taxing authority in the Territory with respect to payments made byPharmacopeia to BMS under this Agreement, Pharmacopeia shall pay such taxes orsimilar charges to the proper taxing authority. Pharmacopeia may deduct the amount of such taxes or similar charges paidby Pharmacopeia to such taxing authority from the applicable royalties or otherpayment otherwise payable to BMS, subject to the following.  Pharmacopeia shall promptly provide BMS withevidence of such tax payment obligation together with an original receipt forsuch tax payments (or a certified copy, if the original is not available) andother documentation as BMS reasonably determines is required for the purpose ofBMS’ tax returns.  Pharmacopeia, itsAffiliates and Sublicensees shall cooperate with BMS to enable the claiming ofa reduction or exemption from withholding taxes on payments under anyapplicable convention on the avoidance of double taxation or similar agreementin force and shall provide to BMS proper evidence of payments of withholdingtax and assist BMS by obtaining or providing in as far as possible the requireddocumentation for the purpose of BMS’ tax returns.  Pharmacopeia’s obligation vis-à-vis the taxauthorities shall remain unaffected by the provisions of this Section.

 

8.9           Interest Due. Without limiting any other rights or remedies available to BMS,Pharmacopeia shall pay BMS interest on any payments that are not paid on orbefore the date thirty (30) days after the date such payments are due underthis Agreement at a rate of one and one-half percent (1.5%) per month or themaximum applicable legal rate, if less, calculated on the total number of dayspayment is delinquent.

 

8.10         **.  In addition to the abovemilestone and royalty payments, Pharmacopeia shall pay to BMS the following **:

 

(a)           **; or

 

(b)           **.

 

Such**.  Such ** to BMS shall be due within thirty(30) days following **.

 

For purposes of this Section8.10, “**” means **, but does not include (i) **, (ii)**, or (iii) **.

 

**ARTICLE 9REPRESENTATIONS AND WARRANTIES; DISCLAIMER;LIMITATION OF LIABILITY**

 

9.1           Mutual Representations and Warranties.  EachParty represents and warrants to the other Party that (i) it has all requisitecorporate power and authority to enter into this Agreement and to perform itsobligations under this Agreement, (ii) execution of this Agreement and theperformance by such Party of its obligations hereunder have been duly authorized,(iii) this Agreement is legally binding and enforceable on such Party inaccordance with its terms,

 

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and (iv) the performance ofthis Agreement by it does not create a material breach or material defaultunder any other agreement to which it is a Party.

 

9.2           Representations and Warranties of BMS.

 

9.2.1.             BMS represents and warrants to Pharmacopeiathat as of the Effective Date, to the actual knowledge of BMS: (i) there is nopending litigation which alleges, or any written communication alleging, thatBMS’ activities with respect to the BMS Core Patent Rights or the LicensedCompounds have infringed or misappropriated any of the intellectual propertyrights of any Third Party, and (ii) all fees (including legal fees) required tobe paid by BMS in order to maintain the BMS Core Patent Rights have been paidto date.

 

9.2.2.             BMS represents and warrants that it has notpreviously assigned, transferred, conveyed or licensed (or granted an option toassign, transfer, convey or license) its right, title and interest in the BMSCore Patent Rights or the BMS Know-How.

 

9.2.3.                       BMS represents and warrants to Pharmacopeiathat as of the Effective Date, it has discontinued its internal drug discoveryand development programs for DARA compounds and that it has no active internalprograms for the discovery or development of DARA compounds as of the EffectiveDate.

 

9.2.4.             BMS represents and warrants to Pharmacopeiathat as of the Effective Date, to the actual knowledge of its in-house patentcounsel, other than the BMS Core Patent Rights, BMS does not Control anypatent(s) or patent application(s) that is reasonably necessary for theDevelopment or Commercialization of any Listed Compound and that claims thecomposition of matter of any Listed Compound or a method of manufacture or useof any Listed Compound.

 

9.3           Representations and Warranties ofPharmacopeia.  Pharmacopeia represents, warrants andcovenants that (i) all of its activities related to its use of the BMS PatentRights and BMS Know-How, and the Development and Commercialization of theLicensed Compounds and Licensed Products, pursuant to this Agreement shallcomply with all applicable legal and regulatory requirements and (ii) it shallnot knowingly engage in any activities (A) that use the BMS Patent Rightsand/or BMS Know-How in a manner that is outside the scope of the license rightsgranted to it hereunder or (B) that infringe the intellectual property rightsof any Third Party.

 

9.4           Disclaimer.  EXCEPT AS EXPRESSLY SET FORTHIN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES OF ANYKIND, EITHER EXPRESS OR IMPLIED, INCLUDING ANY EXPRESS OR IMPLIED WARRANTIES OFMERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO ANY PATENTRIGHTS, CONFIDENTIAL INFORMATION OR KNOW-HOW OF SUCH PARTY OR ANY LICENSEGRANTED BY SUCH PARTY HEREUNDER, OR WITH RESPECT TO ANY COMPOUNDS, INCLUDINGBUT NOT LIMITED TO THE TRANSFERRED MATERIALS, OR PRODUCTS.  FURTHERMORE,

 

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EXCEPT AS EXPRESSLY SET FORTHIN THIS AGREEMENT, NEITHER MAKES ANY REPRESENTATIONS OR WARRANTIES THAT ANYPATENT, PATENT APPLICATION, OR OTHER PROPRIETARY RIGHTS INCLUDED IN PATENTRIGHTS, CONFIDENTIAL INFORMATION OR KNOW-HOW LICENSED BY SUCH PARTY TO THEOTHER PARTY HEREUNDER ARE VALID OR ENFORCEABLE OR THAT USE OF SUCH PATENTRIGHTS, CONFIDENTIAL INFORMATION OR KNOW-HOW CONTEMPLATED HEREUNDER DOES NOTINFRINGE ANY PATENT RIGHTS OR OTHER INTELLECTUAL PROPERTY RIGHTS OF ANY THIRDPARTY.

 

9.5           Limitation of Liability. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT OR OTHERWISE, NEITHER PARTYSHALL BE LIABLE TO THE OTHER WITH RESPECT TO ANY SUBJECT MATTER OF THISAGREEMENT, WHETHER UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHERLEGAL OR EQUITABLE THEORY, FOR ANY INCIDENTAL, INDIRECT, SPECIAL, EXEMPLARY,PUNITIVE, MULTIPLE, OR CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT LIMITATION,CONSEQUENTIAL DAMAGES CONSISTING OF LOST PROFITS, LOSS OF USE, DAMAGE TOGOODWILL, OR LOSS OF BUSINESS) AND, IN ANY CASE, BMS SHALL NOT BE LIABLE IN ANAMOUNT GREATER THAN THE AMOUNTS PAID BY PHARMACOPEIA TO BMS UNDER ARTICLE 8 OFTHIS AGREEMENT; *PROVIDED, HOWEVER*,THAT THE FOREGOING SHALL NOT APPLY TO ANY BREACH BY PHARMACOPEIA OF THELICENSES GRANTED TO IT UNDER THIS AGREEMENT THAT IS AN INFRINGEMENT OF BMSPATENT RIGHTS NOT INCLUDED IN THE PATENT RIGHTS LICENSED TO PHARMACOPEIAHEREUNDER, OR ANY BREACH BY EITHER PARTY OF ARTICLE 11 HEREOF.

 

**ARTICLE 10PATENT MAINTENANCE; INFRINGEMENT; EXTENSIONS**

 

10.1         Ownership of Inventions. Inventorship of inventions conceived or reduced to practice in thecourse of activities performed under or contemplated by this Agreement shall bedetermined by application of United States patent Laws pertaining toinventorship.  If such inventions arejointly invented by one or more employees, consultants or contractors of eachParty, such inventions shall be jointly owned (“Joint Invention”), andif one or more claims included in an issued patent or pending patentapplication which is filed in a patent office in the Territory claim such JointInvention, such claims shall be jointly owned (“Joint Patent Rights”).  If such an invention is solely invented by anemployee, consultant or contractor of a Party, such invention shall be owned bysuch Party, and any patent filed claiming such solely owned invention shallalso be owned by such Party.  Subject toSection 5.6 with respect to contractors, each Party shall enter into bindingagreements obligating all employees, consultants and contractors performingactivities under or contemplated by this Agreement, including activitiesrelated to the BMS Patent Rights, Licensed Compounds or Licensed Products, toassign his/her interest in any invention conceived or reduced to practice inthe course of such activities to the Party for which such employee, consultantor contractor is providing its services. This

 

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Agreement shall be understoodto be a joint research agreement in accordance with 35 U.S.C. § 103(c)(3) todevelop the Licensed Compounds and Licensed Products, as well as to perform theCompound Library Services in accordance with Section 15.17.  The filing, prosecution, maintenance andenforcement of Joint Patent Rights which are BMS Core Patent Rights shall behandled in accordance with this Article 10.

 

10.2         Filing, Prosecution and Maintenance of BMSCore Patent Rights.  Pharmacopeia shall be responsible, usingoutside patent counsel selected by Pharmacopeia and acceptable to BMS, such acceptancenot to be unreasonably withheld, for the preparation, prosecution (including,without limitation, any interferences, reissue proceedings and reexaminations)and maintenance of BMS Core Patent Rights. Promptly following the Effective Date, the Parties shall cooperate toexpeditiously transfer such responsibility for the further preparation,prosecution and maintenance of BMS Core Patent Rights to such outside patentcounsel.  Pharmacopeia shall beresponsible for all costs incurred by Pharmacopeia with respect to suchpreparation, prosecution and maintenance of BMS Core Patent Rights so long asPharmacopeia remains responsible for such preparation, prosecution andmaintenance.  Upon request by BMS,Pharmacopeia (or its patent counsel) shall provide BMS with an update of thefiling, prosecution and maintenance status for each of the BMS Core PatentRights.  Each Party shall reasonablyconsult with and cooperate with the other Party with respect to the preparation,prosecution and maintenance of the BMS Core Patent Rights reasonably prior toany deadline or action with the U.S. Patent & Trademark Office or anyforeign patent office, and Pharmacopeia (or its patent counsel) shall furnishto BMS copies of all relevant documents reasonably in advance of suchconsultation.  Pharmacopeia (or itspatent counsel) shall provide to BMS copies of any papers relating to thefiling, prosecution or maintenance of the BMS Core Patent Rights promptly upontheir being filed or received. Pharmacopeia shall not knowingly take any action during prosecution andmaintenance of the BMS Core Patent Rights that would materially adverselyaffect them (including any reduction in claim scope), without BMS’ priorconsent, such consent not to be unreasonably withheld, conditioned or delayed.

 

10.3         Patent Abandonment.

 

10.3.1.           Generally.  In no event will Pharmacopeiaknowingly permit any of the BMS Core Patent Rights to be abandoned in anycountry in the Territory, or elect not to file a new patent applicationclaiming priority to a patent application within the BMS Core Patent Rightseither before such patent application’s issuance or within the time periodrequired for the filing of an international (i.e., Patent Cooperation Treaty),regional (including European Patent Office) or national application, withoutBMS first being given an opportunity to assume full responsibility for thecontinued prosecution and maintenance of such BMS Core Patent Rights, or thefiling of such new patent application. Accordingly, Pharmacopeia (or its patent counsel) shall provide BMS withnotice of the allowance and expected issuance date of any patent within the BMSCore Patent Rights, or any of the aforementioned filing deadlines, and BMSshall provide Pharmacopeia with prompt notice as to whether BMS desiresPharmacopeia to file such new patent application.  In the event that Pharmacopeia decides either(i) not to continue the prosecution or maintenance of a patent application orpatent within BMS Core Patent Rights in

 

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any country or (ii) not to filesuch new patent application requested to be filed by BMS, Pharmacopeia shallprovide BMS with notice of this decision at least sixty (60) days prior to anypending lapse or abandonment thereof.

 

10.3.2.           BMS Option to Assume Responsibility.  BMSshall thereupon have the right, but not the obligation, to assumeresponsibility for all reasonably documented external costs (subject to Section10.3.3) thereafter incurred associated with the filing and/or further prosecutionand maintenance of such patents and patent applications, on a patent-by-patentand country-by-country basis.  Theoutside patent counsel selected by Pharmacopeia shall proceed with such filingand/or further prosecution and maintenance promptly upon receipt of writtennotice from BMS of its election to assume such responsibility, with such filingto occur prior to the issuance of the patent to which the application claimspriority or expiration of the applicable filing deadline, as set forth above.  In the event that BMS assumes suchresponsibility for such filing, prosecution and maintenance costs (subject toSection 10.3.3), upon the reasonable request by BMS, Pharmacopeia shalltransfer the responsibility for such filing, prosecution and maintenance ofsuch patent applications and patents to BMS’ in-house patent counsel or outsidepatent counsel selected by BMS, *provided*that Pharmacopeia shall (i) provide sufficient written notice to BMS of anysuch election such that the relevant transfer shall not prejudice the filing,prosecution and/or maintenance of patent rights (where possible, such noticeshall be provided at least sixty (60) days prior to any pending lapse orabandonment thereof); (ii) transfer or cause to be transferred to BMS or its patentcounsel the complete prosecution file for the relevant patents and patentapplications, including all correspondence and filings with patent authoritieswith respect thereto; and (iii) at the reasonable request of BMS and withoutdemanding any further consideration therefore, do all things necessary, properor advisable, including without limitation the execution, acknowledgment andrecordation of specific assignments, oaths, declarations and other documents ona country-by-country basis, to assist BMS in obtaining, perfecting, sustainingand/or enforcing such patent(s).  Suchpatent applications and patents shall otherwise continue to be subject to allof the terms and conditions of the Agreement in the same way as the other BMSCore Patent Rights, as applicable.

 

10.3.3.           Pharmacopeia Responsibility for Patent Costs.

 

(a)             Notwithstanding anything to the contraryunder this Section 10.2 or Section 10.3, unless the Parties otherwise agree inwriting, Pharmacopeia shall remain responsible for all costs incurred after theEffective Date with respect to preparation, prosecution and maintenance of theBMS Core Patent Rights covering Licensed Compounds in the List A Countries.

 

(b)             Pharmacopeia shall reimburse BMS for thedocumented external costs incurred by BMS in prosecuting and maintaining theBMS Core Patent Rights, as requested by Pharmacopeia during the time periodfrom December 1, 2005 to the Effective Date, which reimbursement will becomepayable and due within five (5) business days following Pharmacopeia’s receiptof an invoice from BMS for such external costs.

 

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10.4         Enforcement of BMS Core Patent Rights AgainstInfringers.

 

10.4.1.           Enforcement by Pharmacopeia.

 

(a)             In the event that BMS or Pharmacopeia becomesaware of a suspected infringement of any BMS Core Patent Right exclusivelylicensed to Pharmacopeia under this Agreement, such Party shall notify theother Party promptly, and following such notification, the Parties shallconfer.  Pharmacopeia shall have theright, but shall not be obligated, to bring an infringement action with respectto such infringement at its own expense, in its own name and entirely under itsown direction and control, subject to the following.  BMS shall reasonably assist Pharmacopeia (atPharmacopeia’s expense) in any action or proceeding being prosecuted if sorequested, and shall lend its name to and join as a nominal party in suchactions or proceedings if reasonably requested by Pharmacopeia or required byapplicable Laws.  BMS shall have theright to participate and be represented in any such suit by its own counsel atits own expense.  No settlement of anysuch action or proceeding which restricts the scope, or adversely affects theenforceability, of a BMS Core Patent Right may be entered into by Pharmacopeiawithout the prior written consent of BMS, which consent shall not beunreasonably withheld, delayed or conditioned.

 

(b)             BMS shall have the right at its discretion togrant to Pharmacopeia such rights (including assignment of the applicable BMSCore Patent Rights) as may be necessary for Pharmacopeia to exercise its rightsunder this Section 10.4 (including defending or enforcing any BMS Core PatentRights) without BMS’ involvement.  In theevent of such grant of rights (including assignment) with respect to any BMSCore Patent Rights, such BMS Core Patent Rights shall continue to be treated asBMS Core Patent Rights and shall otherwise continue to be subject to all of theterms and conditions of the Agreement in the same way as the other applicableBMS Core Patent Rights.  For purposes ofclarity, election or non-election by BMS to grant or assign rights toPharmacopeia under this Section 10.4.1(b) shall not limit BMS’ obligationsunder Section 10.4.1(a) to reasonably assist Pharmacopeia in any action orproceeding, or to join in such action or proceeding upon request byPharmacopeia if such joinder is necessary under applicable Laws forPharmacopeia to exercise its rights under this Section 10.4.

 

10.4.2.           Enforcement by BMS.  IfPharmacopeia elects not to bring any action for infringement described inSection 10.4.1 and so notifies BMS, then BMS may bring such action at its ownexpense, in its own name and entirely under its own direction and control,subject to the following.  Pharmacopeiashall reasonably assist BMS (at BMS’ expense) in any action or proceeding beingprosecuted if so requested, and shall lend its name to such actions orproceedings if requested by BMS or required by applicable Laws.  Pharmacopeia shall have the right toparticipate and be represented in any such suit by its own counsel at its ownexpense.  No settlement of any suchaction or proceeding which restricts the scope, or adversely affects the enforceability,of a BMS Core Patent Right may be entered into by BMS without the prior writtenconsent of Pharmacopeia, which consent shall not be unreasonably withheld,delayed or conditioned.

 

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10.4.3.           Withdrawal.  If either Party brings anaction or proceeding under this Section 10.4 and subsequently ceases to pursueor withdraws from such action or proceeding, it shall promptly notify the otherParty and the other Party may substitute itself for the withdrawing Party underthe terms of this Section 10.4.

 

10.4.4.           Damages.  In the event that either Partyexercises the rights conferred in this Section 10.4 and recovers any damages orother sums in such action, suit or proceeding or in settlement thereof, suchdamages or other sums recovered shall **. If such recovery is insufficient to **. If after such ** any funds shall remain from such damages or other sumsrecovered, such funds shall be ** under this Section 10.4; *provided, however*, that if **.

 

10.5         Patent Term Extension.  BMSand Pharmacopeia shall each cooperate with one another and shall usecommercially reasonable efforts in obtaining patent term extension (includingwithout limitation, any pediatric exclusivity extensions as may be available)or supplemental protection certificates or their equivalents in any countrywith respect to patent rights covering the Licensed Products.  If elections with respect to obtaining suchpatent term extensions are to be made, Pharmacopeia shall have the right tomake the election to seek patent term extension or supplemental protection, *provided* that such election will be madeso as to maximize the period of marketing exclusivity for the LicensedProduct.  For such purpose, for allApprovals Pharmacopeia shall provide BMS with written notice of any expectedApproval at least thirty (30) days prior to the expected date of Approval, aswell as notice within five (5) business days of receiving each Approvalconfirming the date of such Approval. Notification of the receipt of an Approval shall be in accordance withSection 15.2 except that the notification shall be sent to:

 

Bristol-Myers Squibb Company

**

 

10.6         Data Exclusivity and Orange Book Listings.

 

10.6.1.           With respect to data exclusivity periods(such as those periods listed in the FDA’s Orange Book (including withoutlimitation any available pediatric extensions) or periods under nationalimplementations of Article 10.1(a)(iii) of Directive 2001/EC/83, and allinternational equivalents), Pharmacopeia shall use commercially reasonableefforts consistent with its obligations under applicable Law to seek, maintainand enforce all such data exclusivity periods available for the LicensedProducts.  With respect to filings in theFDA Orange Book (and foreign equivalents) for issued patents for a LicensedProduct, Pharmacopeia shall, consistent with its obligations under applicableLaw, list in a timely manner and maintain all applicable BMS Core Patent Rightsand other patents Controlled by Pharmacopeia required to be filed by it, orthat it is permitted to file, under applicable Law.  At least ** (**) days prior to an anticipateddeadline for the filing of patent listing information for BMS Core PatentRights, Pharmacopeia will consult with BMS regarding the content of suchfiling.  In the event of a disputebetween the Parties as to whether a BMS Core Patent Right can be filed and/orthe content of such filing, the Parties will take expedited steps to resolvethe dispute as promptly as 

 

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possible, including seekingadvice of an independent legal counsel to guide their decision.  BMS shall use commercially reasonable effortsconsistent with its obligations under applicable Law to provide reasonable cooperationto Pharmacopeia in filing and maintaining such Orange Book (and foreignequivalent) listings.

 

10.6.2.           Without limiting the foregoing, BMS shallhave the right at its discretion to grant to Pharmacopeia such rights(including assignment of the applicable BMS Core Patent Rights) as may benecessary for Pharmacopeia to exercise its rights under this Section 10.6(including seeking, maintaining and enforcing all data exclusivity periods)without BMS’ involvement.  In the eventof such grant of rights (including assignment) with respect to any BMS CorePatent Rights, such BMS Core Patent Rights shall continue to be treated as BMSCore Patent Rights and shall otherwise continue to be subject to all of theterms and conditions of the Agreement in the same way as the other applicableBMS Core Patent Rights.  For purposes ofclarity, election by BMS to grant or assign rights to Pharmacopeia under thisSection 10.6.2 shall not limit BMS’ obligation under Section 10.6.1 to providereasonable cooperation to Pharmacopeia to the extent such cooperation isreasonably necessary for Pharmacopeia in filing and maintaining such OrangeBook (and foreign equivalent) listings.

 

10.7         Notification of Patent Certification.  EachParty shall notify and provide the other Party with copies of any allegationsof alleged patent invalidity, unenforceability or non-infringement of a BMSCore Patent Right pursuant to a Paragraph IV Patent Certification by a ThirdParty filing an Abbreviated New Drug Application, an application under §505(b)(2)or other similar patent certification by a Third Party, and any foreignequivalent thereof.  Such notificationand copies shall be provided to the other Party within ** (**) days after suchParty receives such certification, and shall be sent to the address set forthin Section 10.5 in the case of notifications to BMS or the address set forth inSection 15.2 in the case of notifications to Pharmacopeia.  In addition, upon request by BMS,Pharmacopeia shall provide reasonable assistance and cooperation (including,without limitation, making available to BMS documents possessed by Pharmacopeiathat are reasonably required by BMS and making available personnel forinterviews and testimony) in any actions reasonably undertaken by BMS tocontest any such patent certification.

 

10.8         Limitation on Patent Actions. Neither Party shall be required to take any action pursuant to Sections10.4, 10.5, 10.6 or 10.7 that such Party reasonably determines in its solejudgment and discretion conflicts with or violates any court or governmentorder or decree that such Party is then subject to or otherwise may createlegal liability on the part of such Party.

 

**ARTICLE 11NONDISCLOSURE OF CONFIDENTIAL INFORMATION**

 

11.1         Nondisclosure.  EachParty agrees that, for so long as this Agreement is in effect and for a periodof ** (**) years thereafter, a Party (the “Receiving Party”) receivingor possessing Confidential Information of the other Party (the “DisclosingParty”) (or that has received any such Confidential Information from theother Party prior to the Effective Date) shall

 

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(i) maintain in confidence suchConfidential Information using not less than the efforts such Receiving Partyuses to maintain in confidence its own proprietary industrial information ofsimilar kind and value, (ii) not disclose such Confidential Information to anyThird Party without the prior written consent of the Disclosing Party, exceptfor disclosures expressly permitted below, and (iii) not use such ConfidentialInformation for any purpose except those permitted by this Agreement (it beingunderstood that this clause (iii) shall not create or imply any rights orlicenses not expressly granted under Article 2 hereof).

 

11.1.1.           Confidentiality of BMS Know-How forDisclosure Purposes.  During such time as the license to the BMSKnow-How granted under Section 2.1.1 is in effect, solely for disclosurepurposes to Third Parties, the BMS Know-How shall be deemed to be ConfidentialInformation of both BMS and Pharmacopeia under Article 11, both BMS andPharmacopeia shall be deemed to be a Disclosing Party of the BMS Know-How underArticle 11, and BMS and its Affiliates shall be deemed not to have known suchBMS Know-How prior to disclosure for the purposes of Section 11.1.2(b).  Other than for disclosure purposes to ThirdParties, the BMS Know-How shall solely be the Confidential Information of BMS.

 

11.1.2.           Exceptions.  The obligations in Section11.1 shall not apply with respect to any portion of the ConfidentialInformation that the Receiving Party can show by competent proof:

 

(a)             is publicly disclosed by the DisclosingParty, either before or after it is disclosed to the Receiving Party hereunder;or

 

(b)             was known to the Receiving Party or any of itsAffiliates, without any obligation to keep it confidential or any restrictionon its use, prior to disclosure by the Disclosing Party; or

 

(c)             is subsequently disclosed to the ReceivingParty or any of its Affiliates by a Third Party lawfully in possession thereofand without any obligation to keep it confidential or any restriction on itsuse; or

 

(d)             is published by a Third Party or otherwisebecomes publicly available or enters the public domain, either before or afterit is disclosed to the Receiving Party; or

 

(e)             has been independently developed afterdisclosure by the Disclosing Party by employees or contractors of the ReceivingParty or any of its Affiliates without the aid, application or use ofConfidential Information of the Disclosing Party.

 

11.2         Authorized Disclosure.  TheReceiving Party may disclose Confidential Information belonging to theDisclosing Party to the extent (and only to the extent) such disclosure isreasonably necessary in the following instances:

 

(a)           filing or prosecuting patents;

 

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(b)           regulatory filings;

 

(c)           prosecuting or defending litigation;

 

(d)           subject to Section 11.4, complying withapplicable governmental Laws and regulations (including, without limitation,the rules and regulations of the Securities and Exchange Commission or anynational securities exchange) and with judicial process, if in the reasonableopinion of the Receiving Party’s counsel, such disclosure is necessary for suchcompliance; and

 

(e)           disclosure (i) in connection with theperformance of this Agreement and solely on a “need to know basis”, toAffiliates; potential or actual collaborators (including potentialSublicensees); or employees, contractors, or agents; or (ii) solely on a “needto know basis” to potential or actual investment bankers, investors, lenders,or acquirers; each of whom in the case of clause (i) or (ii) prior todisclosure must be bound by written obligations of confidentiality and non-useno less restrictive than the obligations set forth in this Article 11; *provided, however*, that the ReceivingParty shall remain responsible for any failure by any Person who receivesConfidential Information pursuant to this Article 11 to treat such ConfidentialInformation as required under this Article 11. Notwithstanding anything in this Agreement to the contrary, Pharmacopeiamay, in its sole discretion, disclose summaries of data or ConfidentialInformation generated by Pharmacopeia in connection with the performance ofthis Agreement in non-confidential corporate presentations.

 

If and whenever anyConfidential Information is disclosed in accordance with this Section 11.2,such disclosure shall not cause any such information to cease to beConfidential Information except to the extent that such disclosure results in apublic disclosure of such information (otherwise than by breach of thisAgreement).  Where reasonably possibleand subject to Section 11.4, the Receiving Party shall notify the DisclosingParty of the Receiving Party’s intent to make such disclosure pursuant toparagraphs (a) through (d) of this Section 11.2 sufficiently prior to makingsuch disclosure so as to allow the Disclosing Party adequate time to takewhatever action it may deem appropriate to protect the confidentiality of theinformation.

 

11.3         Terms of this Agreement.  TheParties acknowledge that the terms of this Agreement shall be treated asConfidential Information of both Parties.

 

11.4         Securities Filings.  Inthe event either Party proposes to file with the Securities and ExchangeCommission or the securities regulators of any state or other jurisdiction aregistration statement or any other disclosure document which describes orrefers to this Agreement under the Securities Act of 1933, as amended, theSecurities Exchange Act, of 1934, as amended, or any other applicable Laws, theParty shall notify the other Party of such intention and shall provide suchother Party with a copy of relevant portions of the proposed filing not lessthan ** (**) business days prior to such filing (and any revisions to suchportions of the proposed filing a reasonable time prior to the filing thereof),including any exhibits thereto relating to this Agreement, and shall usereasonable efforts to obtain confidential treatment of any informationconcerning this Agreement that such other Party requests be kept confidential,

 

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and shall only discloseConfidential Information which it is advised by counsel is legally required tobe disclosed.  No such notice shall berequired under this Section 11.4 if the substance of the description of orreference to this Agreement contained in the proposed filing has been includedin any previous filing made by the other Party hereunder or otherwise approvedby the other Party.

 

11.5         Publication.

 

11.5.1.           Publication by BMS.  BMSmay publish or present data and/or results relating to a Licensed Compound orLicensed Product in scientific journals and/or at scientific conferences,subject to the prior review and comment by Pharmacopeia as follows.  BMS shall provide Pharmacopeia with theopportunity to review any proposed abstract, manuscript or presentation whichdiscloses information relating to a Licensed Compound or Licensed Product bydelivering a copy thereof to Pharmacopeia no less than ** (**) days before itsintended submission for publication or presentation.  Pharmacopeia shall have ** (**) days from itsreceipt of any such abstract, manuscript or presentation in which to notify BMSin writing of any specific objections to the disclosure.  In the event Pharmacopeia objects to thedisclosure in writing within such ** (**) day period, BMS agrees not to submitthe publication or abstract or make the presentation containing the objected-toinformation until the Parties have agreed to the content of the proposeddisclosure, and BMS shall delete from the proposed disclosure any PharmacopeiaConfidential Information or BMS Know-How or the identity of any LicensedCompound or Licensed Product, upon reasonable request by Pharmacopeia.  Once any such abstract or manuscript isaccepted for publication, BMS will provide Pharmacopeia with a copy of thefinal version of the manuscript or abstract. For clarification, this Section 11.5.1 shall not limit or restrict BMS’ability to publish or present publicly information on compounds which are notLicensed Compounds or Licensed Products, *provided*such publication or presentation does not contain Pharmacopeia ConfidentialInformation (including BMS Know-How) or identify any Licensed Compound orLicensed Product.  Notwithstanding theforegoing or any other provision of this Agreement (including but not limitedto Article 11), BMS shall have the right at its sole discretion to publish orotherwise publicly disclose any licensed BMS Know-How at any time after thesecond anniversary of the Effective Date.

 

11.5.2.           Publication by Pharmacopeia. Pharmacopeia may publish or present data and/or results relating to aLicensed Compound or Licensed Product in scientific journals and/or atscientific conferences, subject to the prior review and comment by BMS asfollows.  Pharmacopeia shall provide BMSwith the opportunity to review any proposed abstract, manuscript orpresentation which discloses information relating to a Licensed Compound orLicensed Product by delivering a copy thereof to BMS no less than ** (**) daysbefore its intended submission for publication or presentation.  BMS shall have ** (**) days from its receiptof any such abstract, manuscript or presentation in which to notifyPharmacopeia in writing of any specific objections to the disclosure, suchobjections to be limited to matters involving the disclosure of BMSConfidential Information, or a good faith and documented concern by BMS thatsuch publication would otherwise result in material commercial harm toBMS.  In the event BMS objects to thedisclosure in writing within such ** (**) day period,

 

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Pharmacopeia agrees not tosubmit the publication or abstract or make the presentation containing theobjected-to information until the Parties have agreed to the content of theproposed disclosure, and Pharmacopeia shall delete from the proposed disclosureany BMS Confidential Information upon the reasonable request by BMS.  The Parties agree to take all reasonablesteps to address and resolve a notice of objection by BMS within ** (**) daysof receipt of such notice.  Once any suchabstract or manuscript is accepted for publication, Pharmacopeia will provideBMS with a copy of the final version of the manuscript or abstract.

 

**ARTICLE 12INDEMNITY**

 

12.1         Pharmacopeia Indemnity. Pharmacopeia shall indemnify, defend and hold harmless BMS and itsAffiliates, and their respective officers, directors, employees, agents, licensors,and their respective successors, heirs and assigns and representatives, fromand against any and all claims, damages, losses, suits, proceedings,liabilities, costs (including, without limitation, reasonable legal expenses,costs of litigation and reasonable attorney’s fees) or judgments, whether formoney or equitable relief, of any kind, arising out of any claim, action,lawsuit or other proceeding brought by a Third Party (“Losses and Claims”)arising out of or relating, directly or indirectly, (i) to the research,Development, Commercialization (including, without limitation, promotion,advertising, offering for sale, sale or other disposition), transfer,importation or exportation, manufacture, labeling, handling or storage, or useof, or exposure to, any Licensed Compound and/or any Licensed Product by or forPharmacopeia or any of its Affiliates, Sublicensees, agents and/or contractors,(ii) to Pharmacopeia’s (or its Affiliates’ and/or Sublicensees’) use andpractice otherwise of the BMS Patent Rights and/or BMS Know How, including,without limitation, claims based on (A) product liability, bodily injury, riskof bodily injury, death or property damage, (B) infringement ormisappropriation of Third Party patents, copyrights, trademarks or other intellectualproperty rights, or (C) the failure to comply with applicable Laws related tothe matters referred to in the foregoing clauses (i) and (ii) with respect toany Licensed Compound and/or any Licensed Product, or (iii) Pharmacopeia’sgross negligence, recklessness or willful misconduct or Pharmacopeia’s materialbreach of any representation or warranty set forth in this Agreement; *except* in any such case for Losses andClaims to the extent reasonably attributable to BMS having committed an act or actsof gross negligence, recklessness or willful misconduct or having materiallybreached any representation or warranty set forth in this Agreement.

 

12.2         BMS Indemnity.  BMSshall indemnify, defend and hold harmless Pharmacopeia and its Affiliates, and theirrespective officers, directors, employees, agents, licensors, and theirrespective successors, heirs and assigns and representatives, from and againstany and all Losses and Claims arising out of or relating, directly orindirectly to (i) BMS’ gross negligence, recklessness or willful misconduct or(ii) BMS’ material breach of any representation or warranty set forth in thisAgreement; except in any such case for Losses and Claims to the extentreasonably attributable to Pharmacopeia having committed an act or acts ofgross negligence, 

 

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recklessness or willfulmisconduct or having materially breached any representation or warranty setforth in this Agreement.

 

12.3         Indemnification Procedure.  Aclaim to which indemnification applies under Section 12.1 or Section 12.2 shallbe referred to herein as an “Indemnification Claim”.  If any Person or Persons (collectively, the “Indemnitee”)intends to claim indemnification under this Article 12, the Indemnitee shallnotify the other Party (the “Indemnitor”) in writing promptly uponbecoming aware of any claim that may be an Indemnification Claim (it beingunderstood and agreed, however, that the failure by an Indemnitee to give suchnotice shall not relieve the Indemnitor of its indemnification obligation underthis Agreement except and only to the extent that the Indemnitor is actuallyprejudiced as a result of such failure to give notice).  The Indemnitor shall have the right to assumeand control the defense of the Indemnification Claim at its own expense withcounsel selected by the Indemnitor and reasonably acceptable to the Indemnitee,*provided, however*, that anIndemnitee shall have the right to retain its own counsel, with the fees andexpenses to be paid by the Indemnitee, if representation of such Indemnitee bythe counsel retained by the Indemnitor would be inappropriate due to actual orpotential differing interests between such Indemnitee and any other partyrepresented by such counsel in such proceedings.  If the Indemnitor does not assume the defenseof the Indemnification Claim as aforesaid, the Indemnitee may defend theIndemnification Claim but shall have no obligation to do so.  The Indemnitee shall not settle or compromisethe Indemnification Claim without the prior written consent of the Indemnitor,and the Indemnitor shall not settle or compromise the Indemnification Claim inany manner which would have an adverse effect on the Indemnitee’s interests(including without limitation any rights under this Agreement or the scope orenforceability of the BMS Patents Rights or BMS Know-How), without the priorwritten consent of the Indemnitee, which consent, in each case, shall not beunreasonably withheld or delayed.  TheIndemnitee shall reasonably cooperate with the Indemnitor at the Indemnitor’sexpense and shall make available to the Indemnitor all pertinent informationunder the control of the Indemnitee, which information shall be subject toArticle 11.

 

12.4         Insurance.  Pharmacopeia shall, beginningwith the initiation of the first clinical trial for a Licensed Product,maintain at all times thereafter during the term of the Agreement, and untilthe later of (i) ** (**) years **or (ii) the date that**, comprehensive generalliability insurance from a recognized, creditworthy insurance company, on aclaims-made basis, with endorsements for contractual liability and productliability, and with coverage limits of not less than **, and which shall**.  The minimum level of insurance setforth herein shall not be construed to create a limit on Pharmacopeia’sliability hereunder.  Within ten (10)days following written request from BMS, Pharmacopeia shall furnish to BMS acertificate of insurance evidencing such coverage as of the date.  Pharmacopeia shall use commerciallyreasonable efforts to cause such certificate of insurance, as well as anycertificates evidencing new coverages of Pharmacopeia, to include a provisionwhereby thirty (30) days’ written notice shall be received by BMS prior tocoverage cancellation by either Pharmacopeia or the insurer and of any newcoverage.  In the case of a cancellationof such coverage, Pharmacopeia shall promptly provide BMS with a newcertificate of insurance evidencing that Pharmacopeia’s coverage meets the requirementsin the first sentence of this Section.

 

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**ARTICLE 13TERM AND TERMINATION**

 

13.1         Term.  This Agreement shall commenceas of the Effective Date and, unless sooner terminated in accordance with the termshereof or by mutual written consent, shall continue until neither Party has anyobligation under this Agreement to make payments to the other Party.

 

13.2         Termination By BMS.

 

13.2.1.           Insolvency.  BMS shall have the right toterminate this Agreement with respect to any or all licenses granted toPharmacopeia pursuant to Article 2 of this Agreement, at BMS’ sole discretion,upon delivery of written notice to Pharmacopeia upon the filing by Pharmacopeiain any court or agency pursuant to any statute or regulation of the UnitedStates or any other jurisdiction a petition in bankruptcy or insolvency or forreorganization or similar arrangement for the benefit of creditors or for theappointment of a receiver or trustee of Pharmacopeia or its assets, or if Pharmacopeiais served with an involuntary petition against it in any insolvency proceeding,upon the ninety-first (91st) day after such service if such involuntarypetition has not previously been stayed or dismissed, or upon the making byPharmacopeia of an assignment of substantially all of its assets for thebenefit of its creditors.

 

13.2.2.           **.

 

(a)             Subject to Section 13.2.5 below, BMS shallhave the right to terminate this Agreement with respect to any or all licensesgranted to Pharmacopeia pursuant to Article 2 of this Agreement, **, upondelivery of written notice to Pharmacopeia in the event of any **, *provided* that such ** has not been curedwithin sixty (60) days after written notice thereof is given by BMS toPharmacopeia specifying the nature of the **, *provided,however*, that to the extent such ** involves the **, such ** must becured within thirty (30) days after written notice thereof is given by BMS toPharmacopeia.

 

(b)             BMS may terminate the Agreement based on amaterial breach of Pharmacopeia’s obligations to provide BMS with ** inaccordance with Section 15.17 and Appendix 5, *provided* that Pharmacopeia may cure such breach by paymentto BMS of a ** (for example, if Pharmacopeia has provided BMS with **).

 

13.2.3.           Failure to **. Subject to Section 13.2.5 below, BMS shall have the right to terminatethis Agreement with respect to any or all licenses granted to Pharmacopeiapursuant to Article 2 of this Agreement on a country-by-country basis (exceptas otherwise set forth in this Section 13.2.3), **, in the event thatPharmacopeia **, *provided* thatPharmacopeia has not **.

 

(a)             Termination under this Section 13.2.3 shall**, *provided however,* that (i)**, and (ii)  if the **.

 

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(b)             For clarity, it is understood andacknowledged that to the extent**.  Forfurther clarity, it is understood and acknowledged that **.

 

13.2.4.           Disputed Breach.  IfPharmacopeia disputes in good faith the existence or materiality of a **specified in a notice provided by BMS pursuant to Section 13.2.2, or a **specified in a notice provided by BMS pursuant to Section 13.2.3, andPharmacopeia provides notice to BMS of such dispute within the applicablethirty (30) day or ninety (90) day period, BMS shall not have the right toterminate this Agreement unless and until the existence of such ** byPharmacopeia has been determined in accordance with Section 14.2 andPharmacopeia fails to cure such breach within ninety (90) days following suchdetermination (except to the extent such breach involves the **, which breachmust be cured within ten (10) days following such determination).  It is understood and acknowledged that duringthe pendency of such a dispute, all of the terms and conditions of thisAgreement shall remain in effect and the Parties shall continue to perform allof their respective obligations hereunder. The Parties further agree that any payments that are made by one Partyto the other Party pursuant to this Agreement pending resolution of the disputeshall be promptly refunded if an arbitrator or court determines pursuant toSection 14.2 that such payments are to be refunded by one Party to the otherParty.

 

13.2.5.           Termination for **. Subject to the terms of this Section 13.2.5, BMS shall have the right toterminate this Agreement (on a *country-by-countryor worldwide* basis, as BMS may elect), **, in the event that (a) **or (b) **.  BMS shall not have theforegoing right to terminate in the case where a Sublicensee is fullyperforming all of Pharmacopeia’s obligations under this Agreement with respectto the Licensed Compounds and Licensed Products, *provided* that, unless otherwise agreed by BMS in writing asset forth in Section 2.2(c), BMS may so terminate where (x) ** or (y) **.  In the event the Parties are unable to reachagreement regarding whether or not a compound is a **, and the Parties have notresolved such dispute through good faith discussions, such dispute will beresolved through **.  The findings of such**.

 

13.2.6.           BMS’ right to terminate the Agreement underthis Section 13.2 shall be subject to Section 2.2(b)(vi).

 

13.3         Termination by Pharmacopeia.

 

13.3.1.           Termination Without Cause.  AtPharmacopeia’s discretion, on a country-by-country and product-by-product basis(including, for example, all Licensed Compounds within specified BMS CorePatent Rights), effective upon ** (**) months prior written notice in the casewhere Approval has not been obtained for the applicable Licensed Product orupon ** (**) months prior written notice in the case where Approval has beenobtained for the applicable Licensed Product, Pharmacopeia may terminate thisAgreement for any reason; *provided, however*,that (i) ** and (ii) **.

 

13.3.2.           Termination For Breach.  Inaddition, Pharmacopeia may terminate this Agreement in the event of materialbreach by BMS, *provided* that suchbreach has not been cured within sixty (60) days after written notice thereofis given by Pharmacopeia to BMS.

 

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Notwithstanding the foregoing,if BMS disputes in good faith the existence or materiality of such breach andprovides notice to Pharmacopeia of such dispute within such sixty (60) dayperiod, Pharmacopeia shall not have the right to terminate this Agreement inaccordance with this Section 13.3.2 unless and until it has been determined inaccordance with Section 14.2 that this Agreement was materially breached by BMSand BMS fails to cure such breach within sixty (60) days following suchdetermination.  It is understood andacknowledged that during the pendency of such a dispute, all of the terms andconditions of this Agreement shall remain in effect and the Parties shallcontinue to perform all of their respective obligations hereunder.  The Parties further agree that any payments thatare made by one Party to the other Party pursuant to this Agreement pendingresolution of the dispute shall be promptly refunded if an arbitrator or courtdetermines pursuant to Section 14.2 that such payments are to be refunded byone Party to the other Party.

 

13.4         Effect of Termination.  Upontermination of this Agreement or any right or license pursuant to Section13.2.1, 13.2.2, 13.2.3 or 13.2.5, the rights and obligations of the Partiesshall be as set forth in this Section 13.4.

 

13.4.1.           Upon termination of this Agreement, either inits entirety or with respect to one or more applicable countries (each, a “TerminatedCountry”) pursuant to Section 13.2.1, 13.2.2, 13.2.4 or 13.2.5 hereof (therights and obligations of the Parties as to the remaining countries of theTerritory in which termination under Section 13.2.3 or 13.2.5 has not occurred,being unaffected by such termination), the following shall apply:

 

(a)             **.

 

(b)             **.

 

(c)             All amounts due or payable to ** additionalamounts shall be payable.

 

(d)             Should Pharmacopeia have **, Pharmacopeiashall **.

 

(e)             Should Pharmacopeia have **.

 

(f)              Pharmacopeia shall **.

 

(g)             If Pharmacopeia has the **.

 

(h)             Pharmacopeia shall **.

 

(i)              Pharmacopeia shall **.

 

(j)              Pharmacopeia hereby **.

 

(k)             Neither Party shall be relieved of anyobligation that accrued prior to the effective date of such termination orexpiration.

 

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(l)              Each Party shall have the right to retain allamounts previously paid to it by the other Party, subject to any applicabledetermination of an arbitrator or court pursuant to Section 14.2.

 

(m)            It is understood and agreed that BMS shall beentitled to ** as a remedy to enforce the provisions of this Section 13.4, **.

 

13.5         Scope of Termination. Except as otherwise expressly provided herein, termination of thisAgreement shall be as to all countries in the Territory and all LicensedCompounds and Licensed Products.

 

13.6         Survival.  The following provisions shallsurvive termination or expiration of this Agreement, as well as any otherprovision which by its terms or by the context thereof, is intended to survivesuch termination: Article 1 (as applicable), Section 2.2(b)(vi), Article 5(with respect to obligations arising prior to expiration or termination of thisAgreement), Article 8 (with respect to obligations arising prior to expirationor termination of this Agreement), Section 9.4, Section 9.5, Section 10.1,Section 10.4.4 (with respect to an action, suit or proceeding commenced prior totermination), Section 10.7, Article 11, Article 12 (with respect to Losses andClaims arising from activities and breaches that take place prior to expirationor termination of this Agreement), this Section 13.6, Section 13.7, Article 14and Article 15.  Termination orexpiration of this Agreement shall not relieve the Parties of any liability orobligation which accrued hereunder prior to the effective date of suchtermination or expiration nor preclude either Party from pursuing all rightsand remedies it may have hereunder or at law or in equity, subject to Section14.2, with respect to any breach of this Agreement nor prejudice either Party’sright to obtain performance of any obligation. All other obligations shall terminate upon expiration of this Agreement.

 

13.7         Bankruptcy.  The Parties agree that in theevent a Party becomes a debtor under Title 11 of the U.S. Code (“Title 11”),this Agreement shall be deemed to be, for purposes of Section 365(n) of Title11, a license to rights to “intellectual property” as defined therein.  Each Party as a licensee hereunder shall havethe rights and elections as specified in Title 11.  Any agreements supplemental hereto shall bedeemed to be “agreements supplementary to” this Agreement for purposes ofSection 365(n) of Title 11.

 

**ARTICLE 14DISPUTE RESOLUTION; ARBITRATION**

 

14.1         Resolution by Senior Executives. Other than (i) determinations made by **, respectively; (ii) pursuit ofequitable relief as provided in Section 14.2(g); and (iii) a dispute governedby expedited arbitration in accordance with Section 14.3 below, in the event ofany dispute between the Parties in connection with this Agreement, theconstruction hereof, or the rights, duties or liabilities of either Partyhereunder, the Parties shall first attempt in good faith to resolve suchdispute by negotiation and consultation between themselves.  In the event that such dispute is notresolved on an informal basis within ** (**) Business Days, either Party may, by

 

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written notice to the otherParty, refer the dispute to the ** and the ** or other designated officer of **for attempted resolution by good faith negotiation within ** (**) days aftersuch notice is received.

 

14.2         Arbitration.  Other than (i) determinationsmade by **, respectively; (ii) pursuit of equitable relief as provided inSection 14.2(g); (iii) disputes regarding the validity, scope or enforceabilityof intellectual property rights or regarding confidentiality obligations and(iv) expedited arbitration in accordance with Section 14.3 below, if anydispute between the Parties relating to or arising out this Agreement cannot beresolved in accordance with Section 14.1, either Party may submit such disputefor resolution through binding arbitration as follows:

 

(a)           A Party may submit such dispute toarbitration by notifying the other Party, in writing, of such dispute.  Within thirty (30) days after receipt of suchnotice, the Parties shall designate in writing a single arbitrator to resolvethe dispute; *provided, however*,that if the Parties cannot agree on an arbitrator within such thirty (30) dayperiod, the arbitrator shall be selected by the New York, NY office of theAmerican Arbitration Association (the “AAA”) or, if such office does notexist or is unable to make a selection, by the office of the AAA nearest to NewYork City.  The arbitrator for anydisputed breach under Section 13.2.5 related to an alleged failure to useCommercially Reasonable Efforts as described in Section 13.2.3 or under Section13.3.4 related to an alleged failure to use Commercially Reasonable Efforts asdescribed in Section 13.3.3 shall be an individual with experience andexpertise in the worldwide Development and Commercialization of pharmaceuticalsand the business, legal and scientific considerations related thereto.  Otherwise, the arbitrator shall be a lawyerknowledgeable and experienced in the applicable Laws concerning the subjectmatter of the dispute.  In any case thearbitrator shall not be an Affiliate, employee, consultant, officer, directoror stockholder of either Party, or otherwise have any current or previousrelationship with either Party or their respective Affiliates.  The governing law in Section 15.7 shallgovern any such proceedings.  Thelanguage of the arbitration shall be English.

 

(b)           Within thirty (30) days after the designationof the arbitrator, the arbitrator and the Parties shall meet, and each Partyshall provide to the arbitrator a written summary of all disputed issues, suchParty’s position on such disputed issues and such Party’s proposed ruling onthe merits of each such issue.

 

(c)           The arbitrator shall set a date for ahearing, which shall be no later than thirty (30) days after the submission ofwritten proposals pursuant to Section 14.2(b), for the presentation of evidenceand legal argument concerning each of the issues identified by theParties.  The Parties shall have theright to be represented by counsel. Except as provided herein, the arbitration shall be governed by theCommercial Arbitration Rules of the AAA applicable at the time of the notice ofarbitration pursuant to Section 14.2(a); *provided,however*, that the Federal Rules of Evidence shall apply with regardto the admissibility of evidence in such hearing.

 

(d)           The arbitrator shall use his or her bestefforts to rule on each disputed issue within thirty (30) days after completionof the hearing described in Section 14.2(c). The

 

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determination of the arbitratoras to the resolution of any dispute shall be binding and conclusive upon allParties.  All rulings of the arbitratorshall be in writing and shall be delivered to the Parties except to the extentthat the Commercial Arbitration Rules of the AAA provide otherwise.  Nothing contained herein shall be construedto permit the arbitrator to award punitive, exemplary or any similar damages.

 

(e)           The (i) attorneys’ fees of the Parties in anyarbitration, (ii) fees of the arbitrator and (iii) costs and expenses of thearbitration shall be borne by the Parties in a proportion determined by thearbitrator.

 

(f)            Any arbitration pursuant to this Section 14.2shall be conducted in Princeton, New Jersey. Any arbitration award may be entered in and enforced by a court inaccordance with Section 15.8.

 

(g)           Notwithstanding anything in this Article 14,each Party shall have the right to seek injunctive or other equitable relieffrom a court of competent jurisdiction pursuant to Section 15.8 that may benecessary to avoid irreparable harm, maintain the status quo or preserve thesubject matter of the arbitration, including any breach or threatened breach ofSection 11.1 or 13.4.

 

14.3         Expedited Arbitration.  TheParties agree that it is important to be able to clarify any disputes regarding** quickly.  Accordingly, if:

 

(i)            BMS **;

 

(ii)           **; or

 

(iii)          **; or

thenthe Parties shall resolve such dispute in accordance with this Section 14.3.

Arbitrationunder this Section 14.3 shall be conducted in the same manner and subject tothe same terms and conditions as arbitration under Section 14.2, *provided* that:

 

(a)           the Parties shall designate in writing asingle arbitrator within fifteen (15) days of written notice of the dispute;

 

(b)           the arbitrator and the Parties shall meet,and each Party shall provide to the arbitrator a written summary of alldisputed issues, such Party’s position on such disputed issues and such Party’sproposed ruling on the merits of each such issue within fifteen (15) days afterthe designation of the arbitrator;

 

(c)           the arbitrator shall use his or her bestefforts to rule on each disputed issue within fifteen (15) days aftercompletion of the hearing described in Section 14.2(c);

 

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(d)           the arbitrator shall select one of therequested positions as his decision, and shall not have the authority to renderany substantive decision other than to so select the position of either BMS orPharmacopeia; and

 

(e)           the Parties shall use good faith efforts tocomplete arbitration under this Section 14.3 within sixty (60) days following arequest by any Party for such arbitration.

 

14.4         In an arbitration procedure under Section14.3, in the event that the arbitrator determines that BMS has failed to act ingood faith with respect to its performance under Section 3.1, the followingshall apply:  (a) the provisions ofSection 3.1 shall terminate and (b) all other provisions of this Agreementshall remain in full force and effect. For purposes of clarity, the foregoing shall be in addition to and shallin no way limit any ruling of the arbitrator in accordance with Section 14.3.

 

**ARTICLE 15MISCELLANEOUS**

 

15.1         Severability.  Ifany one or more of the provisions of this Agreement is held to be invalid orunenforceable, the provision shall be considered severed from this Agreementand shall not serve to invalidate any remaining provisions hereof.  The Parties shall make a good faith effort toreplace any invalid or unenforceable provision with a valid and enforceable onesuch that the objectives contemplated by the Parties when entering thisAgreement may be realized.

 

15.2         Notices.  Any notice required orpermitted to be given by this Agreement shall be in writing and shall bedelivered by hand or overnight courier with tracking capabilities or mailedpostage prepaid by first class, registered or certified mail addressed as setforth below unless changed by notice so given:

 

If to Pharmacopeia:

 

Pharmacopeia Drug DiscoveryInc.

3000 Eastpark Boulevard

Cranbury, New Jersey 08512

Attention:  Chief Executive Officer

Telephone:  **

Facsimile:  **

 

With a copy to:

 

Pharmacopeia Drug DiscoveryInc.

3000 Eastpark Boulevard

Cranbury, New Jersey 08512

 

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Attention:  Executive Vice President and General Counsel

Telephone:  **

Facsimile:  **

 

If to BMS:

 

Bristol-Myers Squibb Company

P.O. Box 4000

Route 206 & ProvinceLine Road

Princeton, New Jersey08543-4000

Attention:  Senior Vice President, Corporate and BusinessDevelopment

Telephone:  **

Facsimile:  **

 

With a copy to:

Bristol-Myers Squibb Company

P.O. Box 4000

Route 206 & ProvinceLine Road

Princeton, New Jersey08543-4000

Attention:  Vice President & Senior Counsel,Corporate and Business Development

Telephone:  **

Facsimile:  **

 

Any such notice shall bedeemed given on the date received.  AParty may add, delete, or change the person or address to whom notices shouldbe sent at any time upon written notice delivered to the Party’s notices inaccordance with this Section 15.2.

 

15.3         Force Majeure. Neither Party shall be liable for delay or failure in the performance ofany of its obligations hereunder if such delay or failure is due to causesbeyond its reasonable control, including, without limitation, acts of God,fires, earthquakes, strikes and labor disputes, acts of war, terrorism, civilunrest or intervention of any governmental authority (“Force Majeure”); *provided, however*, that the affected Partypromptly notifies the other Party and *furtherprovided* that the affected Party shall use its commerciallyreasonable efforts to avoid or remove such causes of non-performance and tomitigate the effect of such occurrence, and shall continue performance with theutmost dispatch whenever such causes are removed.  When such circumstances arise, the Partiesshall negotiate in good faith any modifications of the terms of this Agreementthat may be necessary or appropriate in order to arrive at an equitablesolution.

 

15.4         Assignment.

 

15.4.1.           BMS may, without Pharmacopeia’s consent,assign or transfer all of its rights and obligations hereunder, in connectionwith any transfer of all of the BMS Patent Rights

 

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and BMS Know How, to anyAffiliate of BMS or to any Third Party (including, without limitation, asuccessor in interest); *provided, however*,that such assignee or transferee agrees in writing to be bound by the terms ofthis Agreement.

 

15.4.2.           Upon thirty (30) days advance written noticeto BMS and subject to BMS’ approval, such approval not to be unreasonablywithheld, delayed or conditioned, Pharmacopeia may assign or transfer all ofits rights and obligations hereunder to any Third Party, *provided, however,* that, (i)Pharmacopeia’s rights and obligations under this Agreement shall be assumed bythe Third Party assignee, (ii) such assignment includes, without limitation,all Approvals and all rights and obligations under this Agreement, (iii) suchThird Party shall have agreed prior to such assignment or transfer to be boundby the terms of this Agreement in writing, and (iv) Pharmacopeia remains responsible for the performanceof this Agreement.

 

15.4.3.           Notwithstanding the provisions of Section15.4.2 above, Pharmacopeia may assign or transfer all of its rights andobligations hereunder without such consent to an Affiliate of Pharmacopeia orto a successor in interest by reason of merger, consolidation or sale of all orsubstantially all of the assets of Pharmacopeia, *provided, however,* that (i) Pharmacopeia’s rights andobligations under this Agreement shall be assumed by its successor in interestand shall not be transferred separate from all or substantially all of itsother business assets, (ii) such assignment includes, without limitation, allApprovals and all rights and obligations under this Agreement, (iii) suchsuccessor in interest or Affiliate shall have agreed prior to such assignmentor transfer to be bound by the terms of this Agreement in writing, and (iv)where this Agreement is assigned or transferred to an Affiliate, Pharmacopeiaremains responsible for the performance of this Agreement.

 

15.4.4.           Subject to the foregoing, this Agreementshall inure to the benefit of and be binding on the Parties’ successors andassigns.  Any assignment or transfer inviolation of the foregoing shall be null and void and wholly invalid, theassignee or transferee in any such assignment or transfer shall acquire norights whatsoever, and the non-assigning non-transferring Party shall notrecognize, nor shall it be required to recognize, such assignment or transfer.

 

15.5         Further Assurances.  EachParty agrees to do and perform all such further acts and things and shallexecute and deliver such other agreements, certificates, instruments anddocuments necessary or that the other Party may deem advisable in order tocarry out the intent and accomplish the purposes of this Agreement and toevidence, perfect or otherwise confirm its rights hereunder.

 

15.6         Waivers and Modifications.  Thefailure of any Party to insist on the performance of any obligation hereundershall not be deemed to be a waiver of such obligation.  Waiver of any breach of any provision hereofshall not be deemed to be a waiver of any other breach of such provision or anyother provision on such occasion or any succeeding occasion.  No waiver, modification, release or amendmentof any obligation under or provision of this Agreement shall be valid oreffective unless in writing and signed by all Parties hereto.

 

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15.7         Choice of Law.  ThisAgreement shall be governed by, enforced, and shall be construed in accordancewith the laws of the State of Delaware without regard to its conflicts of lawprovisions.

 

15.8         Jurisdiction.

 

15.8.1.           Any suit, action or other proceeding relatingto a dispute regarding the validity, scope or enforceability of intellectualproperty rights or regarding confidentiality obligations shall not be subjectto the provisions of this Section 15.8.1 and Section 15.8.2.  Unless the Parties otherwise agree inwriting, each Party, for the purpose of enforcing an award under Section 14.2or for seeking injunctive or other equitable relief as permitted under Section14.2(g), hereby irrevocably submits to the exclusive jurisdiction of (i) theSupreme Court of the State of New York, New York County or the Supreme Court orChancery Court of the State of Delaware (each a “State Court”), and (ii)the United States District Court for the Southern District of New York or theU.S. District Court for the District of Delaware (each a “District Court”),for the purposes of any suit, action or other proceeding arising out of thisAgreement or out of any transaction contemplated hereby.  Each Party agrees to commence any suchaction, suit or proceeding either in a District Court or if such suit, actionor other proceeding may not be brought in such court for jurisdictionalreasons, in a State Court.

 

Each Party further agreesthat service of any process, summons, notice or document by personal delivery,by registered mail, or by a recognized international express delivery serviceto such Party’s respective address set forth above shall be effective serviceof process for any action, suit or proceeding in the applicable District Courtor State Court with respect to any matters to which it has submitted tojurisdiction in this Section.  Each Partyirrevocably and unconditionally waives any objection to the laying of venue ofany action, suit or proceeding arising out of this Agreement or the transactionscontemplated hereby in the applicable District Court or State Court, and herebyand thereby further irrevocably and unconditionally waives and agrees not toplead or claim in any such court that any such action, suit or proceedingbrought in any such court has been brought in an inconvenient forum.

 

15.8.2.           Each Party hereto hereby waives to thefullest extent permitted by applicable Laws, any right it may have to a trialby jury in respect to any litigation directly or indirectly arising out of,under or in connection with this Agreement. Each Party hereto (i) certifies that no representative, agent orattorney of the other Party has represented, expressly or otherwise, that suchother Party would not, in the event of litigation, seek to enforce thatforegoing waiver and (ii) acknowledges that it and the other Party hereto havebeen induced to enter into this Agreement, as applicable, by, among otherthings, the mutual waivers and certifications in this Section 15.8.

 

15.9         Publicity.  Pharmacopeia shall have theright to issue a press release, and BMS will have the right to make a separatepublic disclosure, regarding the execution of this Agreement in substantiallythe form of the press release agreed to in writing by the Parties prior to theEffective Date.  Subject to theprovisions of Sections 11.2 and 11.5, each Party agrees not to issue any otherpress release or public statement disclosing the existence of this Agreement or

 

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any other information relatingto this Agreement, the other Party, or the transactions contemplated herebywithout the prior written consent of the other Party, *provided, however*, that any disclosurewhich is required by applicable Laws or the rules of a securities exchange, asreasonably advised by the disclosing Party’s counsel, may be made subject tothe following.  The Parties agree thatany such required disclosure will not contain confidential business ortechnical information and, if disclosure of confidential business or technicalinformation is required by applicable Laws, the Parties will use appropriatediligent efforts to minimize such disclosure and obtain confidential treatmentfor any such information which is disclosed to a governmental agency.  Each Party agrees to provide to the otherParty a copy of any public announcement regarding this Agreement or the subjectmatter thereof as soon as reasonably practicable under the circumstances priorto its scheduled release.  Except underextraordinary circumstances, or as otherwise required under applicable Laws orthe rules of a securities exchange, each Party shall provide the other with anadvance copy of any such announcement at least five (5) business days prior toits scheduled release.  Each Party shallhave the right to expeditiously review and recommend changes to any suchannouncement and, except as otherwise required by applicable Laws or the rulesof a securities exchange, the Party whose announcement has been reviewed shallremove any Confidential Information of the reviewing Party that the reviewingParty reasonably deems to be inappropriate for disclosure.  The contents of any announcement or similarpublicity which has been reviewed and approved by the reviewing Party can bere-released by either Party without a requirement for re-approval.  Nothing in this Section 15.9 shall beconstrued to prohibit Pharmacopeia or its Affiliates or Sublicensees frommaking a public announcement or disclosure regarding the stage of developmentof Licensed Products in Pharmacopeia’s (or its Affiliates’ or Sublicensees’)product pipeline or disclosing clinical trial results regarding such LicenseProducts, as may be required by applicable Laws or the rules of a securitiesexchange, as reasonably advised by Pharmacopeia’s (or its Affiliates’ orSublicensees’) counsel.

 

15.10       Relationship of the Parties.  EachParty is an independent contractor under this Agreement.  Nothing contained herein is intended or is tobe construed so as to constitute BMS and Pharmacopeia as partners, agents orjoint venturers.  Neither Party shallhave any express or implied right or authority to assume or create anyobligations on behalf of or in the name of the other Party or to bind the otherParty to any contract, agreement or undertaking with any Third Party.

 

15.11       Headings.  Headings and captions are forconvenience only and are not be used in the interpretation of this Agreement.

 

15.12       Entire Agreement.  ThisAgreement (including all Appendices attached hereto, which are incorporatedherein by reference) (i) sets forth all of the covenants, promises, agreements,warranties, representations, conditions and understandings between the Partieshereto, (ii) constitutes and contains the complete, final and exclusiveunderstanding and agreement of the Parties with respect to the subject matterherein and (iii) cancels, supersedes and terminates all prior agreements andunderstanding between the Parties with respect to the subject matterhereof.  For the avoidance of doubt, theconfidentiality agreements entered into by

 

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BMS and Pharmacopeia onFebruary 18, 2005 and February 12, 2006 (the “Confidentiality Agreements”)shall remain in effect with respect to all Confidential Information (as thatterm is defined in the Confidentiality Agreements) disclosed by the Partiesthat does not pertain to the subject matter of this Agreement.  All Confidential Information (as that term isdefined in the Confidentiality Agreements) pertaining to the subject matter ofthis Agreement disclosed to BMS by Pharmacopeia under the ConfidentialityAgreements shall be considered Confidential Information (as that term isdefined in this Agreement) of Pharmacopeia disclosed under this Agreement andshall be subject to the terms and conditions of this Agreement; and allConfidential Information (as that term is defined in the ConfidentialityAgreements) pertaining to the subject matter of this Agreement disclosed toPharmacopeia by BMS under the Confidentiality Agreements shall be consideredConfidential Information (as that term is defined in this Agreement) of BMSdisclosed under this Agreement and shall be subject to the terms and conditionsof this Agreement.  There are nocovenants, promises, agreements, warranties, representations, conditions orunderstandings, whether oral or written, between the Parties other than as setforth herein.  No subsequent alteration,amendment, change or addition to this Agreement shall be binding upon theParties hereto unless reduced to writing and signed by the respective authorizedofficers of the Parties.

 

15.13       Counterparts.  ThisAgreement may be executed in counter-parts with the same effect as if bothParties had signed the same document. All such counterparts shall be deemed an original, shall be construedtogether and shall constitute one and the same instrument.

 

15.14       Nonsolicitation. During the ** (**) ** following the Effective Date, each Party agreesthat neither it nor any of its Affiliates shall knowingly recruit, solicit orinduce, directly or indirectly, any employee of the other Party or any of itsAffiliates directly involved in the research or Development activities withrespect to Licensed Compounds to terminate his or her employment with the otherParty or such Affiliate and become employed by or consult for such Party or anyof its Affiliates.  For purposes of theforegoing, “recruit”, “solicit” or “induce” shall not be deemed to mean (i)circumstances where an employee of a Party or any of its Affiliates initiatescontact with the other Party or any of its Affiliates with regard to possibleemployment, or (ii) general solicitations of employment not specificallytargeted at employees of the other Party or any of its Affiliates, includingresponses to general advertisements.

 

15.15       Exports.  Pharmacopeia agrees not toexport or re-export, directly or indirectly, any information, technical data,the direct product of such data, samples or equipment received or generatedunder this Agreement in violation of any applicable export control Laws.

 

15.16       Amendment to 1997 Agreement.  Inpartial consideration of the license rights granted by BMS to Pharmacopeiaunder this Agreement, the Parties agree to amend the Collaboration and LicenseAgreement between the Parties dated November 26, 1997 (as previously amendedunder Amendment Nos. 1, 2 and 3; collectively the “1997 Agreement”).  Such amendment shall be entered intoconcurrently with this Agreement.

 

15.17       Compound Library Services to be Performed byPharmacopeia.  In partial consideration of the licenserights granted by BMS to Pharmacopeia under this Agreement,

 

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Pharmacopeia shall perform forBMS the Compound Library Services as set forth in Appendix 5hereto.  The obligations of Pharmacopeiato perform the Compound Library Services under this Section 15.17 shall surviveany termination of this Agreement.

 

15.18       Interpretation.

 

15.18.1.         Each of the Parties acknowledges and agreesthat this Agreement has been diligently reviewed by and negotiated by andbetween them, that in such negotiations each of them has been represented bycompetent counsel and that the final agreement contained herein, including thelanguage whereby it has been expressed, represents the joint efforts of theParties hereto and their counsel.  Accordingly,in interpreting this Agreement or any provision hereof, no presumption shallapply against any Party hereto as being responsible for the wording or draftingof this Agreement or any such provision, and ambiguities, if any, in thisAgreement shall not be construed against any Party, irrespective of which Partymay be deemed to have authored the ambiguous provision.

 

15.18.2.         The definitions of the terms herein shallapply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronounshall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and“including” shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to havethe same meaning and effect as the word “shall”.  The word “any” shall mean “any and all”unless otherwise clearly indicated by context.

 

15.18.3.         Unless the context requires otherwise, (a)any definition of or reference to any agreement, instrument or other documentherein shall be construed as referring to such agreement, instrument or otherdocument as from time to time amended, supplemented or otherwise modified(subject to any restrictions on such amendments, supplements or modificationsset forth herein or therein), (b) any reference to any Laws herein shall beconstrued as referring to such Laws as from time to time enacted, repealed oramended, (c) any reference herein to any person shall be construed to includethe person’s successors and assigns, (d) the words “herein”, “hereof” and“hereunder”, and words of similar import, shall be construed to refer to thisAgreement in its entirety and not to any particular provision hereof, and (e)all references herein to Articles, Sections or Appendices, unless otherwisespecifically provided, shall be construed to refer to Articles, Sections andAppendices of this Agreement.

 

** *

[signaturepage follows]

 

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IN WITNESS WHEREOF, theParties have caused this Agreement to be executed by their respective dulyauthorized officers.

 
|   | **PHARMACOPEIA  DRUG DISCOVERY INC.** |
|--------|---------------------------------------|
|   |                                  |
|   | By:                                   | /s/ Leslie J. Browne |
|   |                                  | (Signature) |
|   |                                  |   |
|   | Name:                                 | Leslie J. Browne, Ph.D. |
|   |                                  |   |
|   | Title:                                | President and Chief  Executive Officer |
|   |                                  |   |
|   |                                  |   |
|   | **BRISTOL-MYERS  SQUIBB COMPANY**     |
|   |                                  |   |
|   | By:                                   | /s/ Tamar Howson |
|   |                                  | (Signature) |
|   |                                  |   |
|   | Name:                                 | Tamar Howson |
|   |                                  |   |
|   | Title:                                | Senior VP, Corporate &  Business Development |

 

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Appendix1

 

BMSCore Patent Rights

 
| **Dkt. No.** | ** ** | **Country** | ** ** | **Type** | ** ** | **Filing  date** | ** ** | **Filing  number** | ** ** | **Pub  date** | ** ** | **Grant  date** | ** ** | **Grant  number** | ** ** | **Status** |
|--------------|------------|-------------|------------|----------|------------|------------------|------------|--------------------|------------|---------------|------------|-----------------|------------|-------------------|------------|------------|
| **           |       | **          |       | **       |       | **               |       | **                 |       | **            |       | **              |       | **                |       | **         |
| **           |       | **          |       | **       |       | **               |       | **                 |       | **            |       | **              |       | **                |       | **         |
| **           |       | **          |       | **       |       | **               |       | **                 |       | **            |       | **              |       | **                |       | **         |
| **           |       | **          |       | **       |       | **               |       | **                 |       | **            |       | **              |       | **                |       | **         |
| **           |       | **          |       | **       |       | **               |       | **                 |       | **            |       | **              |       | **                |       | **         |
| **           |       | **          |       | **       |       | **               |       | **                 |       | **            |       | **              |       | **                |       | **         |
| **           |       | **          |       | **       |       | **               |       | **                 |       | **            |       | **              |       | **                |       | **         |
| **           |       | **          |       | **       |       | **               |       | **                 |       | **            |       | **              |       | **                |       | **         |
| **           |       | **          |       | **       |       | **               |       | **                 |       | **            |       | **              |       | **                |       | **         |
| **           |       | **          |       | **       |       | **               |       | **                 |       | **            |       | **              |       | **                |       | **         |
| **           |       | **          |       | **       |       | **               |       | **                 |       | **            |       | **              |       | **                |       | **         |
| **           |       | **          |       | **       |       | **               |       | **                 |       | **            |       | **              |       | **                |       | **         |
| **           |       | **          |       | **       |       | **               |       | **                 |       | **            |       | **              |       | **                |       | **         |
| **           |       | **          |       | **       |       | **               |       | **                 |       | **            |       | **              |       | **                |       | **         |
| **           |       | **          |       | **       |       | **               |       | **                 |       | **            |       | **              |       | **                |       | **         |
| **           |       | **          |       | **       |       | **               |       | **                 |       | **            |       | **              |       | **                |       | **         |
| **           |       | **          |       | **       |       | **               |       | **                 |       | **            |       | **              |       | **                |       | **         |
| **           |       | **          |       | **       |       | **               |       | **                 |       | **            |       | **              |       | **                |       | **         |
| **           |       | **          |       | **       |       | **               |       | **                 |       | **            |       | **              |       | **                |       | **         |
| **           |       | **          |       | **       |       | **               |       | **                 |       | **            |       | **              |       | **                |       | **         |
| **           |       | **          |       | **       |       | **               |       | **                 |       | **            |       | **              |       | **                |       | **         |
| **           |       | **          |       | **       |       | **               |       | **                 |       | **            |       | **              |       | **                |       | **         |
| **           |       | **          |       | **       |       | **               |       | **                 |       | **            |       | **              |       | **                |       | **         |

 

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Appendix2

 

ActiveCompound

 

“Active Compound”means a compound that **.

 

“**” means the **.

 

“**” means the **.

 

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Appendix3

 

Outlineof Development Plan as of Effective Date

 

**Clinical Development Outline**

 

**

 

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Appendix4

 

ListedCompounds

 

The Listed Compounds arelisted by BMS compound code below:

 

**

 

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Appendix5

 

CompoundLibrary Services

 

Overview.  Aspartial consideration for the exclusive license Pharmacopeia will workcollaboratively with BMS to perform Compound Library Services for BMS asoutlined below.  Such Compound LibraryServices will be performed by Pharmacopeia for BMS **.  The performance of the Compound LibraryServices will be subject to Section 15.17 and 13.2.2(b), and shall be subjectto the terms and conditions of Appendix 6 solely to the extent that suchterms do not conflict with or in any way limit the obligations of Pharmacopeiaunder this Appendix 5 and/or any other applicable provisions of theAgreement.

 

Libraries.  Asdescribed further below, Pharmacopeia will provide services for BMS for thesynthesis and delivery of ** (each such compound library being a “Library”, andsuch compound libraries being individually and collectively the “Libraries”).  The design and synthesis of the Librarieswill be carried out as described further below.

 

JRC.  Forpurposes of the Compound Library Services, the Parties will form a jointresearch committee (the “JRC”).  The JRCshall be formed within thirty (30) days of the Effective Date as the bodyresponsible for communication between BMS and Pharmacopeia for all mattersrelated to the design and synthesis of the Libraries.  The JRC shall be responsible for establishingthe design (including the structural scope) of the Libraries.  Each company will have equal representationon the JRC with all decisions made by unanimous vote.  In the event of a disputed decision, thedecision shall be escalated to each company’s senior management who shallattempt to resolve the dispute through considered discussion and judgment.  In the event that any such disputed decisionis not resolved by senior management within ** (**) days, **.  BMS shall **.

 

Definitions

 

“General Library Design”means the definition of library design that includes the common chemical motifof a chemical Library, the scaffolds and their synthesis (if applicable), thekey chemical reactions to assemble the Library, the approximate number ofreagents at each combinatorial position and a sample of reagents at eachposition.

 

“Detailed Library Design”means the design of a Library that specifies all of the reagents and compoundsthat will be attempted to be made.

 

Initial Library Design

 

As of the Effective Date,BMS will have proposed and the Parties will have agreed upon the GeneralLibrary Design for ** (**) Libraries. The Parties shall agree to an additional ** (**) Libraries within **(**) days of the Effective Date.

 

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Before the **, BMS will proposeto Pharmacopeia the General Library Design for at least ** and before the **,BMS will propose the General Library Design for at least **.

 

In submitting the GeneralLibrary Design, BMS will use commercially reasonable efforts to propose adesign of reasonable complexity and cost. For purposes of this Appendix 5 “reasonable complexity” shallinclude: (a)  **, and (b) **.

 

Upon the receipt of aGeneral Library Design for a Library from BMS, Pharmacopeia will have ** (**)** to (1) designate the General Library Design as acceptable or not acceptable,(2) notify BMS whether structurally similar compounds are in Pharmacopeia’scollection and (3) if acceptable, reach agreement with BMS regarding thepersonnel who will be responsible for preparing the proposed Detailed LibraryDesign for the Library.  If the GeneralLibrary Design is considered by Pharmacopeia not to be acceptable, Pharmacopeiashall also provide a detailed explanation as to why the design is considered notto be acceptable.

 

Within ** (**) ** afterreceiving notice from Pharmacopeia that a General Library Design for a Libraryis not acceptable, BMS will either submit another General Library Design orrefer the matter to senior management representatives of the R&Dorganizations designated by BMS and Pharmacopeia to resolve such matter (the“Management Representatives”).  SuchManagement Representatives will have ** (**) ** to resolve the matter, and ifthe resolution results in rejection of the General Library Design, BMS willhave ** (**) ** following such resolution to propose another General LibraryDesign.

 

Within ** (**) **afterreceiving notice that a proposed General Library Design for a Library isstructurally similar to compounds present in Pharmacopeia’s collection, BMSwill either notify Pharmacopeia to continue with the design or that it wishesto abandon that design.  If a design isabandoned, BMS will have ** (**) ** to submit another General Library Design.

 

Library Feasibility Study

 

Within ** after syntheticstudies have commenced based on a General Library Design for a Library approvedas set forth above, Pharmacopeia will **.

 

If the Library is determinednot to be chemically feasible (i.e., the chemistry cannot deliver thecompounds), BMS will propose another General Library Design within ** (**) **following such determination.

 

In addition, within ** (**)** after communication by Pharmacopeia to BMS of the results of the feasibilitystudy, BMS and/or Pharmacopeia (as decided by BMS) shall complete a DetailedLibrary Design.  Final review andacceptance of all proposed Detailed Library Designs will be made by theJRC.  The Detailed Library Design willcontain **:

 

(1)**; (2) **; and (3) **.

 

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Upon receipt of the finaldesign, Pharmacopeia will have ** (**) ** to accept or reject the DetailedLibrary Design.  If the design isrejected, BMS will have ** (**) ** to amend and resubmit the design or referthe matter to Management Representatives of each Party for resolution.  The Management Representatives will have **(**) ** to resolve the matter.

 

Library Production

 

Once the Detailed LibraryDesign is accepted as set forth above, Pharmacopeia will have ** (**) ** todeliver at least ** that meet the following specifications:

 

•      **.

 

•      **.

 

•      **.

 

Deadline for Delivery ofLibraries to BMS.  Pharmacopeia will use commercially reasonableefforts to deliver the ** no later than the **, the ** no later than ** and the** no later than the **.  Withoutlimiting Pharmacopeia’s obligations and BMS’ rights under this Agreement withrespect to the Compound Library Services, the Parties agree and acknowledgethat the following occurrences shall be considered a **.

 

Ownership; IntellectualProperty Rights.  Physical ownership of the Libraries will betransferred to BMS and the Libraries shall be provided to BMS on a fullypaid-up basis.  Pharmacopeia shall assignto BMS ownership of any patent rights claiming inventions that are conceivedand/or reduced to practice in performing the Compound Library Services thatcover the compounds (specifically and/or generically) in the Libraries.  Pharmacopeia will make no guarantees withrespect to intellectual property exclusivity with respect to the Libraries.

 

Confidentiality;Restrictions on Use.  The chemical structural information disclosedby BMS with respect to the Libraries will be BMS Confidential Information andshall be disclosed and made accessible only to Pharmacopeia personnel (andPharmacopeia’s subcontractor’s personnel, as applicable) having a need-to-knowfor the purpose of performing the synthesis of the Libraries and in no eventwill be used by Pharmacopeia in support of or in connection with Pharmacopeia’sindependent research programs. Pharmacopeia will not provide the same Libraries to Third Parties norutilize the same Libraries in Pharmacopeia internal drug discovery efforts.

 

Subcontracting of Work byPharmacopeia.  Pharmacopeia may subcontract to asubcontractor the synthesis of the Libraries, *provided*that (i) such subcontractor is bound in writing by appropriate confidentialityand other relevant provisions to Pharmacopeia such that the subcontractor shallbe bound by all applicable provisions of this Agreement to the same extent asPharmacopeia and (ii) prior to using such subcontractor, Pharmacopeia willprovide BMS with notice identifying the subcontractor and informing BMS that itwill use such subcontractor.

 

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Breach. Breaches of Pharmacopeia’s obligations to perform the Compound LibraryServices in accordance with this Appendix 5 will be subject to Section13.2.2(b).

 

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Appendix6

 

Termsand Conditions for Compound Library Services

 

The Compound LibraryServices shall be performed as set forth in Appendix 5 and shall besubject to the terms and conditions set forth below in this Appendix 6, *provided* that in the event of any conflictbetween the terms and conditions set forth in this Appendix 6 and theterms and conditions of Appendix 5 and any other applicable provision ofthe Agreement (including but not limited to Section 15.17 and 13.2.2(b)), theterms and conditions of Appendix 5 and any other applicable provision ofthe Agreement (including but not limited to Section 15.17 and 13.2.2(b)) shallgovern.

 

**Terms and Conditions**

 

Subject to the other termsand conditions of the Agreement, these Terms and Conditions (the “Terms andConditions”), shall govern Pharmacopeia’s provision of Libraries to BristolMyers Squibb Company (“Company”).

 

**1.****            ****General**.  For purposes hereof:

 

“**Company**” is defined above.

“**Libraries**” has the meaning set forth in Appendix 5.

 

**2.**             **Obligations of Pharmacopeia**. Pharmacopeia and Company will design the Libraries, and Pharmacopeiawill manufacture or have manufactured, and control the quality of the Librariesand deliver the same to Company, subject to these Terms and Conditions and theother terms and conditions as set forth in Appendix 5 and elsewhere inthe Agreement.  Pharmacopeia shallsupply, at Pharmacopeia’s sole expense, all equipment, tools, materials, and/orsupplies, including solvents, inorganic chemicals and hazardous waste disposalnecessary to accomplish its work under these Terms and Conditions.

 

**3.**             **Delivery and Shipping**. Pharmacopeia will select the method of shipment and will ship theLibraries to Company’s facility in Lawrenceville, New Jersey.  Libraries will be packaged and shipped inaccordance with the specifications set forth in Appendix 5.  Pharmacopeia will use commercially reasonableendeavors to avoid delay in delivery of the Libraries in accordance withdelivery schedule set forth in Appendix 5.  Subject to Section 13.2.2(b) Pharmacopeia beliable for any direct, indirect, consequential or economic loss due to delay indelivery.

 

**4.**             **Inspection and**Acceptance. Company is responsible for inspecting all Libraries prior toacceptance.  If Company does not givePharmacopeia written notice of rejection within thirty (30) days followingreceipt of Libraries by Company, the Libraries will be deemed accepted byCompany, provided that the Libraries conform to the specifications as set forthin Appendix 5.

 

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**5.**             **Limited Warranty**.  With respect to Libraries, Pharmacopeia warrants that Libraries conformto the specifications as set forth in Appendix 5 at the point ofdistribution.  This warranty applies onlyto Company and not to any third parties, including any affiliate or subsidiaryof Company.  This warranty does not applyto deviations from the specifications; use of Libraries for a purpose or in amanner other than that for which they were designed; any defect caused byfailure to provide suitable storage, use or operating environment; use ofnon-recommended reagents or methods; or any other abuse, misuse or neglect ofLibraries.  Company’s exclusive remedyunder Pharmacopeia’s warranty is replacement of the Library that failed toconform to Pharmacopeia’s warranty or payment by Pharmacopeia to BMS in accordancewith Section 13.2.2(b).

 

PHARMACOPEIA AND ITSSUPPLIERS DISCLAIM ALL OTHER WARRANTIES, WHETHER EXPRESSED OR IMPLIED,INCLUDING, WITHOUT LIMITATION, IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESSFOR A PARTICULAR PURPOSE, TITLE, AND NON-INFRINGEMENT.  IN NO EVENT WILL PHARMACOPEIA OR ITSSUPPLIERS BE LIABLE FOR ANY CONSEQUENTIAL, INCIDENTAL, SPECIAL OR INDIRECTDAMAGES, INCLUDING WITHOUT LIMITATION, DAMAGES FOR LOSS OF PROFITS, BUSINESSINTERRUPTION, LOSS OF BUSINESS INFORMATION OR PROPERTY DAMAGE SUSTAINED BYCUSTOMER FROM THE USE OF, OR THE INABILITY TO USE, THE LIBRARIES, EVEN IFPHARMACOPEIA HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.  AS TO ANY PHARMACOPEIA LIABILITY NOT LEGALLYSUBJECT TO THE FOREGOING, PHARMACOPEIA’S MAXIMUM LIABILITY WILL NOT EXCEED ANAGGREGATE ** ($**) DOLLARS.

 

**6.**             **Intellectual Property**. Company represents that to the best of its knowledge any information,technology, supplies, specifications, designs and materials it supplies toPharmacopeia to enable Pharmacopeia to design and manufacture any Libraries onCompany’s behalf will not infringe the intellectual property rights of anythird parties.  The acceptance and use ofLibraries by the Company does not include or carry any right to anyPharmacopeia technology or intellectual property, except and solely to theextent as set forth in Appendix 5. Pharmacopeia shall have no rights to any of Company’s results, data,inventions, or know-how, resulting from Company’s use of any Libraries.  Pharmacopeia will not make use of theLibraries in its internal drug discovery efforts or in collaboration with anythird party.

 

**7.**             **Indemnity**. Except where a claim, loss or liability (collectively, “Losses”)arises as a result of the gross negligence or willful misconduct ofPharmacopeia, Company agrees to indemnify Pharmacopeia, its agents, employees,directors, affiliates and representatives (each an “Indemnified Party”)from and against any Losses that may be incurred by an Indemnified Party as aresult of (i) Company’s use of any Library, (ii) Company’s manufacture, use, orsale of any derivative of any Library, (iii) any alleged infringement of theproprietary rights of a third party resulting from Company’s use of anyLibrary, or (iv) any alleged infringement of the proprietary rights of a thirdparty resulting from Company’s manufacture, use, or sale of any derivative ofany Library.

 

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**8.**             **Force Majeure**.  Ifthe performance of any obligation under these Terms and Conditions, other thanthe payment of money, is prevented, restricted or interfered with by any causenot within the control of the prevented party, and that could not by reasonablediligence have been avoided by the prevented party, the prevented party, upongiving prompt notice to the other party as to the nature and probable durationof the cause, is excused from its performance to the extent and for theduration of the cause, *provided*the prevented party uses reasonable commercial efforts to avoid or remove thecause and continues performance under these Terms and Conditions once the causeis removed.  Without limitation, thefollowing are not within the control of a party: acts of God; compliance with,or acts or omissions of a governmental agency or body; power failures orfluctuations; flood; storm; earthquake; fire; war; insurrection; riot;accidents; quarantine restrictions; labor disputes; embargoes; delays orfailures in transportation; and acts of a similar nature.

 

**9.**             **Modifications, Waiver,Termination**.  These Terms and Conditions may be modified,and any breach thereunder may be waived, only by a writing signed by bothparties.  If any term or provision ofthese Terms and Conditions or the application thereof shall be invalid orunenforceable, the remainder of these Terms and Conditions shall be unaffectedthereby and each remaining term or provision of these Terms and Conditionsshall be valid and be enforceable to the fullest extent permitted by law.

 

**10.**          **Governing Law**.  Thiscontract is governed by and construed in accordance with the laws of the Stateof Delaware, without regard to its conflict of laws provisions.

 

**11.**          **Assignment**. Except in the case of assignment or transfer to a successor in interestby reason of merger, consolidation or sale of all or substantially all of theassets of Company, Company may not assign these Terms and Conditions or any ofits rights to the Libraries hereunder without the prior, express writtenconsent of Pharmacopeia.  Except in thecase of assignment or transfer to a successor in interest by reason of merger,consolidation or sale of all or substantially all of the assets ofPharmacopeia, Pharmacopeia may not assign these Terms and Conditions or any ofits obligations with respect to the performance of the Compound LibraryServices without the prior, express written consent of BMS.  Any assignment in violation hereof isvoid.  Pharmacopeia may subcontractcertain of its obligations with respect to the chemical synthesis of theLibraries to WuXi Pharmatech Company, Ltd. or other third party subcontractorin accordance with Appendix 5, which subcontractor shall agree inwriting by prior separate agreement with Pharmacopeia to be bound by all theapplicable terms and conditions of the Agreement (including but not limited tothese Terms and Conditions) to the same extent as Pharmacopeia.

 

**12.**          **Relationship**. Nothing herein contained shall be deemed to create an agency, jointventure, amalgamation, partnership, or similar relationship betweenPharmacopeia and Company.  The relationshipbetween the parties established by these Terms and Conditions is that ofindependent contractors.

 

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