Exhibit
10.38


Note:  Certain information in this agreement has
been omitted pursuant to a request for confidential treatment that has been
filed separately with the Securities and Exchange Commission.


SETTLEMENT
AGREEMENT


This Settlement Agreement, together with the exhibits
thereto (collectively, the “Agreement”), dated as of July 19, 2006 (the “Effective
Date of Settlement”) is entered into by and between ImClone Systems
Incorporated, a Delaware corporation, having an address at 180 Varick Street,
New York, NY 10014 USA (“ImClone”) and Merck KGaA, a German corporation with
general partners, having an address at Frankfurter Straße, D-64293 Darmstadt,
Germany (“Merck”).  ImClone and Merck are
referred to collectively as the “Parties,” and individually as a “Party”.  (All capitalized terms used in this
Agreement, unless expressly defined herein, shall have the meaning assigned in
the DLA (as referenced below) or the Amendment to the DLA executed concurrently
herewith and attached as Exhibit A.)


WITNESSETH:


WHEREAS, ImClone and Merck entered into the
Development and License Agreement, dated December 14, 1998, that was amended by
the Amendment of Development and License Agreement, dated September 21, 1999,
the first letter agreement of March 1, 1999, the second letter
agreement of March 23, 2001, and the third letter agreement of August 16, 2001,
and as clarified by the fourth letter agreement of November 14, 2005
(collectively, the “DLA”); and


WHEREAS, certain disputes have arisen between the
Parties concerning their rights and obligations under the DLA regarding:


(a) the development, manufacture and commercialization of the ImClone
product known as “IMC-11F8”, as set forth in the claims and defenses asserted
by the Parties in the American Arbitration Association proceeding entitled In the Matter of the Arbitration between Merck 



 1
 






 



KGaA and ImClone Systems
Incorporated, and the
Decision and Award after Hearing of the Honorable George C. Pratt, Arbitrator,
dated March 31, 2006, (collectively, the “11F8 Dispute”), and the appeal and
cross-appeal arising from the 11F8 Dispute entitled Merck KGaA
v. ImClone Systems Incorporated, Civil Action No. 05-7024-CV(L)
currently pending in the United States Court of Appeal for the Second Circuit
(the “Second Circuit Appeal”); and


(b) the development,
manufacture and commercialization of EMD-72000 (a “Merck Product” as defined in
the DLA), as set forth in ImClone’s Notices of Default under the DLA addressed
to Merck dated October 8, 2005, October 28, 2005 and March 21, 2006, and Merck’s
respective responses thereto dated October 12, 2005, March 30, 2006 and April
5, 2006 (the “EMD 72000 Dispute”); and


(c) the effect, if any, on
the DLA of the Development and Commercialization Agreement between Merck and
Takeda Pharmaceuticals Company Ltd. (“Takeda”) (the “Takeda Agreement”); and


WHEREAS, the 11F8 Dispute, the Second
Circuit Appeal, the EMD 72000 Dispute and the Takeda Agreement are referred to
collectively herein as the “Disputes”; and


WHEREAS,
except as otherwise provided herein, the Parties desire to resolve fully and
forever all claims and defenses asserted in the Disputes and continue their
successful relationship and promote the further development and
commercialization of Erbitux®; and


NOW,
THEREFORE, for good and valuable consideration, including, but not
limited to, the mutual covenants exchanged between the Parties hereto, the
adequacy of which is hereby acknowledged, and subject to the terms and
conditions set forth herein, the Parties hereby agree as follows:



 2
 






 



TERMS


1.             This
Agreement represents a negotiated settlement of the Disputes, and the Parties
expressly deny any liability to each other for any claims or defenses arising
from or related to the Disputes.  The
execution of this Agreement shall not be construed as an admission on the part
of any of the Parties hereto in any respect and shall not be used against any
of the Parties.  The Parties hereto agree
to be responsible for and to pay their own attorneys’ fees and costs related to
the Disputes.


2.             The
Parties agree to comply fully with the terms and conditions of this
Agreement.  In addition to other good and
valuable consideration, the consideration for this Agreement shall consist of
the following:


a.             ImClone Consent to Sublicense. 
Pursuant to the provisions of Section 2.2 of the DLA, ImClone shall
consent in writing to a grant by Merck to Takeda of a sublicense under the “Radiotherapy
Patent”, the “Chemotherapy Patent” (each as defined in the DLA and the “ImClone
Confidential Manufacturing Information” (as defined in the July 2006 amendment
to the DLA executed concurrently herewith) to make, use and sell EMD-72000,
within the “Territory” , provided the following: (i) such sublicense
agreement contain terms obligating Takeda (A) to keep and make books and
records available for inspection by an independent certified public accountant
pursuant to Article V of the DLA, (B) to comply with the obligations for
receipt of “Confidential Information” pursuant to Article VI of the DLA, (C) to
comply with the obligations for “arms-length” sales of Merck Products pursuant
to Section 9.7 of the DLA, and (D) to comply with any and all other terms of
the DLA that are applicable to sublicensees ; (ii) such sublicense agreement
shall not contain any terms that could be reasonably interpreted to be
inconsistent with the terms contained in the DLA and with the terms herein; and
(iii) Merck 



 3
 






 



provides
to ImClone for its review and approval a written copy of said sublicense
agreement, with ImClone’s approval not to be unreasonably withheld.


b.             Merck Covenants


(i)            Freedom of ImClone to Conduct Development of
IMC-11F8.  Merck agrees
that it shall not sue or otherwise challenge ImClone, its Affiliates,
sublicensees, successors, assigns, and each of their respective officers,
directors, agents and employees for drug development activities that are
protected under 35 U.S.C. § 271(e)(1)) in the United States of America or
equivalent activities in Canada or the Territory relating to IMC-11F8.


(ii)           Covenant Not to Sue for Use of Merck Confidential
Technical Information. 
Merck agrees that it shall not sue ImClone, its Affiliates,
sublicensees, successors, assigns, and each of their respective officers,
directors, agents and employees for any use by ImClone of Merck Confidential
Technical Information (as defined in
the July 2006 amendment to the DLA executed concurrently herewith) to
develop, manufacture or sell IMC-11F8.


c.             ImClone
Covenants.


(i)            Freedom
of Merck to Conduct Development of Merck Products.  ImClone agrees that it shall not sue or
otherwise challenge Merck, its Affiliates, sublicensees, successors, assigns,
and each of their respective officers, directors, agents and employees for drug
development activities that are protected under 35 U.S.C. § 271(e)(1)) in the
United States of America or equivalent activities in Canada or the Territory
relating to Merck Products.


(ii)           Covenant
Not to Sue for Use of ImClone Confidential Technical Information.  ImClone agrees that it shall not sue Merck,
its Affiliates, sublicensees, successors, assigns, and each of their respective
officers, directors, agents and employees for any 



 4
 






 



use by Merck of ImClone Confidential Technical
Information (as defined
in the July 2006 amendment to the DLA executed concurrently herewith) to
develop, manufacture or sell Merck Products.


d.             Explicit
Reservation of Claims and Defenses Concerning the Merck Products.  Notwithstanding the foregoing, ImClone hereby
reserves all rights to claim that Merck cannot conduct activities (other than
those set forth in sub-paragraph c above) relating to the Merck Products in the
United States or Canada to the extent such activities would infringe the
corresponding US and Canadian counterparts of the “Radiotherapy Patent”, the “Chemotherapy
Patent”, the “Other ImClone Patents”
(as defined in the July 2006 amendment to the DLA executed concurrently
herewith), or any other patent owned by, licensed to, or otherwise
controlled by ImClone to make, use, sell, offer to sell or import Merck
Products therein.  In turn, Merck
reserves all rights to defend against any such claim or action of infringement
asserted by ImClone or its Affiliates. 
The Parties’ explicit reservation of claims and defenses in this regard
shall be specifically excluded from the scope of the releases set forth in
sub-paragraph i below.


e.             Explicit
Reservation of Claims and Defenses Concerning IMC-11F8.  Notwithstanding the foregoing, Merck hereby
reserves all rights to claim that ImClone cannot conduct activities (other than
those set forth in sub-paragraph b above) relating to IMC-11F8 outside the
United States or Canada to the extent such activities would infringe the Merck
Patents (as such term is defined in the July 2006 Amendment to the DLA executed
concurrently herewith), or any other patent owned by, licensed to, or otherwise
controlled by Merck to make, use, sell, offer to sell or import IMC-11F8
therein.  In turn, ImClone reserves all
rights to defend against any such claim or action of infringement asserted by
Merck or its Affiliates.  The Parties’ 



 5
 






 



explicit reservation of claims and defenses in this
regard shall be specifically excluded from the scope of the releases set forth
in sub-paragraph i below.


f.              Settlement
Payments to ImClone. 
Merck shall pay to ImClone by wire transfer of immediately available
funds to an account set forth on Exhibit B hereto two million five hundred
thousand Euro and zero cents (€2,500,000.00), which wire transfer shall be
initiated within thirty (30) days of the Effective Date of Settlement.  In addition, Merck shall pay to ImClone by
wire transfer of immediately available funds to such account an additional five
million Euro and zero cents (€5,000,000.00), which wire transfer shall be
initiated within thirty (30) days of the date ImClone executes its written
consent to the sublicense agreement between Merck and Takeda described in
sub-paragraph a above.


g.             Voluntary Dismissal of the Second Circuit Appeal
with Prejudice:  The
Parties agree to dismiss with prejudice all claims or defenses asserted, or
which could have been asserted, in the Second Circuit Appeal.  The Parties shall execute simultaneously
herewith the Stipulation of Voluntary Dismissal with Prejudice in the form
attached hereto as Exhibit C.  Within two (2) business days of the Effective Date
of Settlement, Merck shall file the fully-executed Voluntary Dismissal with
Prejudice with the Court.  It is further
understood and agreed that upon such filing with the Court, the Parties shall
deem the Decision and Award after Hearing of the Honorable George C. Pratt,
Arbitrator, dated March 31, 2006, as “confirmed” under the Federal Arbitration
Act, and that no further judicial action shall be necessary to effectuate the
terms of such award.


h.             ImClone Withdrawal of Default Notice ImClone withdraws the Default Notices described
in sub-clause (b) of the second “Whereas”-clause as of the Effective Date of
Settlement.



 6
 






 



i.              Mutual Releases.
Each Party fully and forever releases and fully discharges the other
Party, as well as the other Party’s Affiliates (as defined in the DLA),
divisions, subsidiaries, successors, assigns, and officers, directors, agents,
and employees thereof from any and all liability for any and all causes of
action, claims, counterclaims, defenses, damages and judgments, in law and in
equity, arising out of or related to the Disputes as defined herein, up to and
including the Effective Date of Settlement. 
This paragraph shall not be construed as a release of any kind regarding
any other claims raised or that could be raised between the Parties which are
unrelated to the Disputes.  In addition, the Parties’ explicit reservation of claims
and defenses concerning the Merck Products and IMC-11F8 as more fully described
in sub-paragraphs d and e above shall be specifically excluded from the scope
of this mutual release.  These
releases shall be deemed effective upon receipt by ImClone of the settlement
payments described in subparagraph f above.


j.              July 2006 Amendment of the DLA: In order to effectuate this Agreement, the
Parties agree to further amend the DLA as set forth in Exhibit C hereto.  Except as specifically set forth therein, the
Parties acknowledge and agree that there are no other amendments, waivers or
modifications being made, or intended to be made, to the DLA by virtue of this
Agreement.


k.             Publicity.  Within two (2) business days of the Effective
Date of Settlement, ImClone and Merck shall issue a press release(s) to be
agreed by the Parties. In addition, either Party may make such announcements
of, and/or provide publicity concerning, the existence and terms of this
Agreement and the transactions contemplated hereby as is reasonably necessary
or advisable, in the opinion of such Party’s counsel, to comply with the
provisions of any applicable law or regulation, including but not limited to
filings with the U.S.



 7
 






 



Securities and Exchange
Commission or any other governmental authority or with the National Association
of Securities Dealers; provided, however,
that to the extent practical each Party shall give the other Party prior notice
of any such announcement or publicity.


3.             No Admission of
Wrongdoing.  The Parties expressly
acknowledge that this Agreement represents a resolution of the Disputes as
defined herein.  Nothing in the terms of
this Settlement Agreement or in its execution shall be construed as an
admission of liability or wrongdoing by any Party concerning the Disputes as
defined herein.


4.             Representations
and Warranties of the Parties.  The
Parties hereby represent, warrant and agree as of the Effective Date of
Settlement as follows:


a.             Each Party represents
and warrants that it neither knows of, nor believes there are, any claims or
bases for claims by it or its Affiliates against the other Party or the other
Party’s Affiliates, other than ordinary course business debts; and


b.             Each Party represents
and warrants that it has relied upon its own judgment and that of its own legal
counsel regarding the proper, complete, and agreed-upon consideration for, and
the terms and provisions of, this Settlement Agreement.  The Parties to this Agreement represent and
warrant that their respective attorneys have fully explained the meaning and
effect of this Agreement.  The Parties to
this Agreement further represent and warrant that they have read and understand
this Agreement, and have not relied upon any other statements or
representations regarding this matter other than those expressly stated
herein.  The Parties to this Agreement
further represent and warrant that they have signed this Agreement without
duress, coercion, or undue influence by anyone or anything.


c.             ImClone and Merck
represent and warrant that they are the sole owner of any claims or defenses asserted in the Disputes, (and which are released herewith)
and that no 



 8
 






 



portion of such claims or defenses is owned by any
third party, or has been sold, assigned, pledged, or hypothecated to any third
party.


d.             To induce Merck to
enter into this Agreement, ImClone hereby represents and warrants that it has
full and absolute right, power, authority and ability to enter into this
Agreement and perform all of its obligations hereunder.  To induce ImClone to enter into this
Agreement, Merck hereby represents and warrants that it has full and absolute
right, power, authority and ability to enter into this Agreement and perform
its obligations hereunder.


5.             Successors and
Third Parties.  This Settlement
Agreement is binding upon, and shall inure to the benefit of, the Parties and
their respective Affiliates, subsidiaries and each of their employees,
officers, directors, agents, successors and assigns.


6.             Merger,
Integration and Modification.  This
Agreement constitutes the entire, complete and integrated agreement made
between the Parties regarding the subject matter hereof, is not subject to any
conditions not expressly provided for herein, and cancels and supersedes all
earlier agreements, written or oral, between the Parties regarding the subject
matter hereof.  No variation or
modification of this Agreement, or waiver of any of the terms or provisions
thereof, shall be deemed valid unless in writing as an amendment hereto, signed
by both Parties.


7.             No
Waiver.  The failure, or partial
failure, of any of the Parties to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way affect the validity of this Agreement or any part thereof or the right of
any Party thereafter to enforce each and every provision.  No waiver of any breach of this Agreement
shall be held to constitute a waiver of any other breach.


8.             No
Third-Party Beneficiaries.  This
Agreement is solely for the benefit of the named Parties hereto and there are
no third-party beneficiaries of this Agreement.



 9
 






 



9.             Survival.  The provisions of this Agreement, where
applicable, shall survive any termination or expiration of this Agreement and
shall remain in full force and effect.


10.           Construction.  Neither this Agreement nor any provision thereof
shall be construed for or against any Party because the Agreement as a whole,
or any provision of this Agreement, was requested or drafted by such
Party.  Neither this Agreement nor any
provision in this Agreement nor evidence of any negotiations in connection with
it or them shall be offered or received in evidence or used in any way in any
action or proceeding between the Parties except to enforce the terms and
provisions hereof.  The captions herein
are included for convenience of reference only and shall be ignored in the
construction or interpretation of this Agreement.


11.           Default.  If either party materially defaults in the
performance of any material agreement, condition or covenant of this Agreement
and such default or non-compliance shall not have been remedied, or steps
initiated to remedy the same to the other party’s satisfaction, within thirty
(30) calendar days after receipt by the defaulting party of a notice thereof
from the other party, the other party may pursue all available remedies in law
and in equity.


12.           Notices.  Any notice expressly provided for under this
Agreement shall be in writing, shall be given either by hand, express courier,
or by facsimile and shall be deemed sufficiently given if and when received by
the party to be notified as follows:


To
Merck:


Frankfurter
Straße


D-64293
Darmstadt


Germany


Attention:  Jens Eckhardt, Legal Counsel


Facsimile: +49-6151-72-2373


To
ImClone:


180
Varick Street


New
York, NY 10014 USA


Attention:  Erik Ramanathan, General Counsel


Facsimile: +1-(212)-645-2770



 10
 






 



13.           Applicable Law.  This Settlement Agreement shall be governed
by and construed in accordance with the laws of the State of New York without
regard to its conflicts-of-law principles.


IN WITNESS WHEREOF, the
Parties have caused this Agreement to be executed by their duly authorized
representatives in a manner legally binding upon their respective corporations
as of the Effective Date of Settlement.


	
  IMCLONE SYSTEMS INCORPORATED

  	
   

  	
  MERCK KGaA

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Joseph L. Fischer

  	
   

  	
   

  	
  By:

  	
  /s/ Dr. Tilman Schmidt-Lorenz

  	
   

  
	
  Name:

  	
  Joseph L. Fischer

  	
   

  	
  Name:

  	
  Dr. Tilman Schmidt-Lorenz

  
	
  Title:

  	
  Interim Chief Executive Officer

  	
   

  	
  Title:

  	
  General Counsel

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice
  President Corporate

  
	
   

  	
   

  	
   

  	
   

  	
  Legal &
  Intellectual Property

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  i.V.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Jens Eckhardt

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Jens Eckhardt

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  Legal Counsel

  
									



 



 11














 


 


	
  CORPORATE ACKNOWLEDGEMENT

  For ImClone Systems Incorporated

  	
   

  	
  CORPORATE ACKNOWLEDGEMENT

  For Merck KGaA

  
	
   

  	
   

  	
   

  
	
  STATE OF NEW YORK        )

  	
   

  	
  REPUBLIC OF GERMANY)

  
	
  ) ss:

  	
   

  	
  ) ss:

  
	
   

  	
   

  	
   

  
	
  COUNTY OF NEW
  YORK  )

  	
   

  	
  CITY OF
  DARMSTADT   )

  
	
   

  	
   

  	
   

  
	
  On this 19th day of July 2006, before me personally
  came Joseph L. Fischer, to me known to be the individual described in, and
  who executed the foregoing Settlement Agreement, and duly acknowledged to me
  that he executed the same.

  	
   

  	
  On this 24th day of July 2006, before me personally
  came Dr. Tilman Schmidt-Lorenz, to me known to be the individual described
  in, and who executed the foregoing Settlement Agreement, and duly
  acknowledged to me that he executed the same.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Angela Sacca

  	
   

  	
   

  	
  /s/ Alexander Pfeiffer

  	
   

  
	
  Notary Public

  	
   

  	
  Notary Public

  
					



 



 1
 






 



EXHIBIT A


JULY
2006 AMENDMENT TO DEVELOPMENT AND LICENSE AGREEMENT


WHEREAS, ImClone and Merck entered into the
Development and License Agreement, dated December 14, 1998, that has been
subsequently amended by (a) the Amendment of Development and License Agreement,
dated September 21, 1999; (b) the first letter agreement dated March 1, 1999;
(c) the second letter agreement dated March 23, 2001; (d) the third letter
agreement dated August 16, 2001; and (e) the fourth letter agreement dated
November 14, 2005 (collectively, the “DLA”);


WHEREAS, Merck desires to
sublicense to Takeda certain rights licensed to Merck under the DLA pertaining
to EMD-72000 (a “Merck Product” as defined in the DLA) in the Territory; and


WHEREAS, the Parties desire
to continue to promote the development and commercialization of Licensed
Products in the Territory and to settle the Disputes between them; and


WHEREAS, the Parties have agreed to terms of
settlement embodied in a Settlement Agreement to be executed concurrently
herewith (the “Agreement”) and wish to further amend the DLA in order to
effectuate the Agreement; and


NOW, THEREFORE, in
consideration of the foregoing and the mutual promises made herein, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Parties hereby agree to amend the DLA as follows:


1.             Definitions.  All capitalized terms used herein but not
specifically defined herein shall have the meanings ascribed to them in the DLA:



 2
 






 



a.             “ImClone Confidential
Manufacturing Information” shall mean any and all ImClone information that is
reasonably useful for the production, manufacture, processing, filling,
finishing, packaging, labeling, shipping, and storage of Merck Product that
lawfully comes into Merck’s possession after the Effective Date of Settlement,
including, but not limited to, process development, process qualification and
process validation, manufacturing scale-up, pre-clinical, clinical and
commercial manufacture and analytical development, product characterization,
quality assurance and quality control.


b.             “ImClone Confidential
Technical Information” shall mean any and all ImClone confidential technical
information that is in Merck’s possession as of the Effective Date of
Settlement and is useful in the manufacture or sale of Merck Product.


c.             “Merck Confidential
Manufacturing Information” shall mean any and all Merck information that is
reasonably useful for the production, manufacture, processing, filling,
finishing, packaging, labeling, shipping, and storage of IMC-11F8 that lawfully
comes into ImClone’s possession after the Effective Date of Settlement,
including, but not limited to, process development, process qualification and
process validation, manufacturing scale-up, pre-clinical, clinical and
commercial manufacture and analytical development, product characterization,
quality assurance and quality control.


d.             “Merck Confidential
Technical Information” shall mean any and all Merck confidential technical
information that is in ImClone’s possession as of the Effective Date of
Settlement and is useful in the manufacture or sale of IMC-11F8.


e.             “Merck Patents” shall
mean all issued patents or patents issuing from an application pending as of
the date of this amendment which are owned or exclusively licensed by Merck
that are required or that Merck alleges are required to make, use, sell, offer
to sell, or 



 3
 






 



import IMC-11F8 in
the United States of America and its territories or Canada, and all issued
patents or patents issuing from an application pending as of the date of this
amendment which are owned or exclusively licensed by Merck that are required or
that Merck alleges are required to make, use, sell, offer to sell, or import
Licensed Products in the United States of America and its territories, Canada
or Japan, including, but not limited to those patents listed in Annex A hereto


f.              “Other ImClone
Patents” shall mean all issued patents or patents issuing from an application
pending as of the date of this amendment which are owned or exclusively
licensed by ImClone that are required or that ImClone alleges are required to
make, use, sell, offer to sell or import Merck Products in the Territory,
including, but not limited to those patents listed in Annex B hereto.


2.             Grant of Rights.  Article II of
the DLA shall be amended to also include the following:


a.             In consideration of
the licenses and approvals granted herein, and subject to the other provisions
of this amendment and the DLA, Merck grants ImClone an irrevocable, fully
paid-up, royalty-free non-exclusive worldwide license to use the Merck
Confidential Manufacturing Information to manufacture IMC-11F8.  This license shall survive termination of the
DLA.


b.             In consideration of
the licenses, royalties and payments herein, and subject to the other
provisions of this amendment and the DLA, ImClone grants Merck an irrevocable,
fully paid-up, royalty-free non-exclusive worldwide license to use the ImClone
Confidential Manufacturing Information to manufacture Merck Products.  This license shall survive termination of the
DLA. 



 4
 






 



3.             Limited Covenant
Not to Sue for Infringement.  Article VIII of the DLA shall be
amended to also include the following:


a.             During the term of
the DLA, Merck will not bring any claim of infringement under any of the Merck
Patents against ImClone, ImClone’s Affiliates, ImClone’s approved sublicensees,
and their respective successors and assigns due to any sales or other
activities related to Licensed Products or IMC-11F8 in the United States or
Canada.


b.             During the term of
the DLA, ImClone will not to bring any claim of infringement in the Territory
under any of the Other ImClone Patents against Merck, Merck’s Affiliates or
Merck’s approved sublicensees, and their respective successors and assigns due
to any sales or other activities related to Merck Products.  ImClone acknowledges that, upon ImClone’s
consent to sublicense as set forth in Section 2.a. of the Settlement Agreement,
Takeda Pharmaceuticals Company Ltd. and its Affiliates shall be “approved
sublicensees” as used in the foregoing sentence.


4.             Development and
Commercialization of Erbitux® in Japan. 
The DLA as it pertains to Japan shall be amended to also include the
following:


a.             Merck shall use its
best reasonable efforts to negotiate and enter into as soon as practicable an
agreement with Bristol-Myers Squibb Company (“BMS”) for the co-development and
co-commercialization of Erbitux® in Japan, which, (i) but for the removal of
ImClone (except as a Net Sales royalty collector), are consistent with the
terms set forth in [*], a copy of






Pursuant
to a request for confidential treatment submitted to the Securities and
Exchange Commission, redacted information has been replaced with “[*]”.



 5
 






 



which is attached hereto
as Annex C; and (ii) is acceptable to Merck and ImClone and executed by BMS,
Merck and ImClone.


b.             Unless and until such
an agreement is executed by BMS, Merck and ImClone, Merck and ImClone
acknowledge that all applicable provisions of the DLA pertaining to development
and commercialization of Erbitux® in Japan shall continue to define the rights
and obligations of ImClone and Merck with respect to such development and
commercialization.


5.             Royalty Payments
to ImClone.  Section 4.2 of the DLA
is restated and amended in its entirety as follows:


“4.2           Merck shall pay ImClone royalties quarterly
on (i) sales in the Territory by Merck and its Affiliates of (A) Licensed
Products and (B) Alternative Products developed and/or acquired by ImClone or
any of its Affiliates and (ii) sales in the Territory, subject to Section 2.2
of the DLA, by Merck and its Affiliates and sublicensees of Merck Products as
follows:


a.             Merck shall pay
ImClone a royalty of nine and one-half percent (9.5%) of Net Sales of all
Licensed Products sold in the Territory, which shall be paid from July 1, 2006
(and thereafter);


b.             Merck shall pay
ImClone [*], on sales in the Territory of Alternative Products developed and/or
acquired by ImClone or any of its Affiliates; provided, however, that such
amount shall not exceed [*] of [*];


c.             Merck shall pay
ImClone a royalty of [*] of [*] in the Territory.  This






Pursuant
to a request for confidential treatment submitted to the Securities and
Exchange Commission, redacted information has been replaced with “[*]”.



 6
 






 



d.             royalty is due on all
Merck Products sold, whether sold as a mono-therapy, combination therapy, or in
some other form.  Royalties on Merck
Products shall be reported and paid on a country by country basis for each
country in which patent protection exists, shall be reported and paid on a
product-by-product basis.  Royalties
shall be paid from the Effective Date of Settlement until any expiration or
final, non-appealable judgment of invalidity of both ImClone’s Chemotherapy
Patent and its Radiotherapy Patent in such country; and


e.             Notwithstanding
Section 4.8 of the DLA, in the event of expiration or entry of a final
non-appealable judgment of invalidity of both the Chemotherapy Patent and the
Radiotherapy Patent in a certain country in the Territory (where once patent protection
existed) occurring at any time during a period commencing on the date of first
commercial sale in such country of Merck Product and ending [*] years
thereafter, a reduced royalty of [*] of [*] shall be paid from the date of such
expiration or final, non-appealable judgment of invalidity of both the
Chemotherapy Patent and the Radiotherapy Patent in said country (where once
patent protection existed) until [*] years from the first commercial sale of
Merck Product in said country provided that such country belongs to the
European Union (as the European Union exists on the date of such first
commercial sale) or is Japan.”






Pursuant
to a request for confidential treatment submitted to the Securities and
Exchange Commission, redacted information has been replaced with “[*]”.



 7
 






 



6.             Merck
Indemnification.  Section 10.5 (Survival)
of the DLA shall be renumbered as “Section 10.6” and a new Section 10.5 of the
DLA shall read as follows:


“10.5       Merck shall indemnify, hold
harmless and defend ImClone, ImClone’s Affiliates, and ImClone’s successors and
assigns, and each of their respective agents employees, officers and directors
(the “Indemnitees”) from any and all Losses resulting from any claims or
actions by Takeda (or its Affiliates) arising out of or relating to: (i) the
Development and Commercialization Agreement between Merck and Takeda dated
September 29, 2005 (the “Merck/Takeda Agreement”); or (ii) the Settlement
Agreement between Merck and ImClone executed herewith.  Upon assertion of any claim or suit for
indemnification, the Indemnitees shall (i) promptly notify Merck thereof, (ii)
permit Merck to assume direction and control of the defense of the claim
(including the reasonable selection of counsel and the right to reasonably
settle it at the sole discretion of Merck), provided that such settlement does
not impose any obligation on, otherwise adversely affect the interests of, or
involve any admission of fault or guilt by Indemnitees, and (iii) reasonably
cooperate as requested (at the expense of Merck) in the defense of such
claim.  This section 10.5 shall not apply
if ImClone or its Affiliates has commenced a claim or action without Merck’s
approval (including any counter-claim, cross-claim or third party claim)
against Takeda arising out of or relating to the Merck/Takeda Agreement or the
Settlement Agreement between Merck and ImClone executed herewith.”



 8
 






 



7.             Continuing
Effect of DLA.  To the extent the [*]
year period specified in Section 4.2(d) of the DLA as hereby amended extends
beyond the expiration of the term of the license set forth in Sections 2.5 and
11.1 of the DLA, the term of the DLA shall be automatically extended to the end
of such [*] year period.  Except as
specifically set forth in this amendment or in the Settlement Agreement, the
DLA shall remain unchanged and in full force and effect.  The Parties hereby acknowledge and agree that
there are no amendments, modifications or waivers of the DLA other than those
specifically referenced or set forth in this Amendment.






Pursuant
to a request for confidential treatment submitted to the Securities and
Exchange Commission, redacted information has been replaced with “[*]”.



 9
 






 



IN
WITNESS WHEREOF, the Parties have caused this amendment to be executed by their
duly authorized representatives in a manner legally binding upon their
respective corporations as of the Effective Date of Settlement.


	
  IMCLONE SYSTEMS INCORPORATED

  	
   

  	
  MERCK KGaA

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Joseph L. Fischer

  	
   

  	
   

  	
  By:

  	
  /s/ Dr. Tilman Schmidt-Lorenz

  	
   

  
	
  Name:

  	
  Joseph L. Fischer

  	
   

  	
  Name:

  	
  Dr. Tilman Schmidt-Lorenz

  
	
  Title:

  	
  Interim Chief Executive Officer

  	
   

  	
  Title:

  	
  General Counsel

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice
  President Corporate

  
	
   

  	
   

  	
   

  	
   

  	
  Legal &
  Intellectual Property

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  i.V.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Jens Eckhardt

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Jens Eckhardt

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  Legal Counsel

  
									



 



 10














 


ANNEX A


MERCK PATENTS


[*]






Pursuant
to a request for confidential treatment submitted to the Securities and
Exchange Commission, redacted information has been replaced with “[*]”.



 1
 






 



ANNEX B


OTHER IMCLONE PATENTS


[*]






Pursuant
to a request for confidential treatment submitted to the Securities and
Exchange Commission, redacted information has been replaced with “[*]”.



 2
 






 



ANNEX C


[*]






Pursuant
to a request for confidential treatment submitted to the Securities and
Exchange Commission, redacted information has been replaced with “[*]”.



 3
 






 



EXHIBIT B


 


Wire
Transfer Instructions


[*]






Pursuant
to a request for confidential treatment submitted to the Securities and
Exchange Commission, redacted information has been replaced with “[*]”.



 4
 






 



EXHIBIT C


IN
THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT


	
  

  	
   

  	
  x

  	
   

  	
   

  
	
    MERCK KGaA, 

  	
   

  	
  :

  	
   

  	
   

  
	
   

  	
   

  	
  :

  	
   

  	
   

  
	
  Appellant,

  	
   

  	
  :

  	
   

  	
   

  
	
   

  	
   

  	
  :

  	
   

  	
  Civil Action No. 05-7024-CV(L) 

  
	
  - against -

  	
   

  	
  :

  	
   

  	
   

  
	
   

  	
   

  	
  :

  	
   

  	
   

  
	
    IMCLONE SYSTEMS INCORPORATED, 

  	
   

  	
  :

  	
   

  	
  STIPULATION OF

  
	
   

  	
   

  	
  :

  	
   

  	
  VOLUNTARY

  
	
  Appellee.

  	
   

  	
  :

  	
   

  	
  DISMISSAL WITH

  
	
   

  	
   

  	
  :

  	
   

  	
  PREJUDICE PURSUANT

  
	
   

  	
   

  	
  :

  	
   

  	
  TO FRAP 42(b)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  x

  	
   

  	
   

  



 


 IT IS HEREBY STIPULATED AND AGREED, pursuant
to Federal Rule of Appellate Procedure 42(b), by and between the undersigned
attorneys for the parties, that the above-captioned appeal is hereby
voluntarily dismissed with prejudice and without costs to any party as against
any other. 


	
   

  	
   

  	
   

  	
   

  
	
  KELLEY DRYE & WARREN

  William R. Golden, Jr.

  101 Park Avenue

  New York, New York 10178

  (212) 808-7800 (Tel)

  (212) 808-7897 (Fax) 

  	
   

  	
  PROSKAUER ROSE LLP

  Louis M. Solomon

  1585 Broadway

  New York, New York 10036

  (212) 969-3000 (Tel)

  (212) 969-2900 (Fax)

  
	
  Attorneys
  for Appellant Merck

  KGaA

  	
   

  	
  Attorneys for Appellee ImClone
  Systems

  Incorporated

  



 


	
   

  	
   

  	
  IT IS SO ORDERED.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Dated: 

  	
   

  	
  , 2006

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  U.S.J.

  	
   

  
						



 



 5