Document:

exv10w23

 

Exhibit 10.23

AMENDED AND RESTATED

COLLABORATION AGREEMENT

by and among

GENETICS INSTITUTE, INC.

and

THE JOHNS HOPKINS UNIVERSITY

and

METAMORPHIX, INC.

January 26, 1999

 

 

TABLE OF CONTENTS.

	 	 	 	 	 
	1.1 “Additional BMPs
	 	 	2	 
	1.2 “Additional Factors”
	 	 	2	 
	1.3 Additional Factors”
	 	 	2	 
	1.4 “Additional Factor Joint Know, How
	 	 	2	 
	1.5 “Additional Factor Joint Patent Rights”
	 	 	2	 
	1.6 “Additional Factor Joint”
	 	 	 	 
	1.7 “Additional Factor Know_How
	 	 	3	 
	1.8 “Additional Factor Patent Rights”
	 	 	 	 
	1.9 “Additional Factor Rights”
	 	 	3	 
	1.10 “Additional GDFs”
	 	 	 	 
	1.11 “Affiliate”
	 	 	 	 
	1.12 “Available Factors”
	 	 	4	 
	1.13 “Baylor”
	 	 	4	 
	1.14 “Baylor Agreement”
	 	 	4	 
	1.15 “Bone Morphogenetic Proteins” or “BMTa”
	 	 	4	 
	1.16 “Collaborative Factors”
	 	 	4	 
	1.17 “Collaborative Research”
	 	 	5	 
	1.18 “Commercially Reasonable Efforts”
	 	 	5	 
	1.19 “Collaborative Research Term”
	 	 	5	 
	1.20 “Confidential Information”
	 	 	5	 
	1.21 “Control=or °Controlled
	 	 	6	 
	1.22 “Data°
	 	 	6	 
	1.23 “Discover”, “Discovered” and “Discovery”
	 	 	 	 
	1.24 “Effective Date”
	 	 	7	 
	1.25 “Evaluation Period”
	 	 	7	 
	1.26
°Factor =
	 	 	7	 
	1.27 “Factor Know-How”
	 	 	7	 
	1.28 “Factor Patent Rights”
	 	 	7	 
	1.30 “FDA”
	 	 	 	 
	1.31 “GDF-8 Derivative Product
	 	 	 	 
	1.32
GDD-16=
	 	 	 	 
	1.33
GDF-16Product(s)°–
	 	 	 	 
	134
	 	 	8	 
	1.35 “GDF47Product(s)
	 	 	8	 
	1.36 “GI Additional Factor(s)”
	 	 	9	 
	1.37 “GI Additional Factor Know-How”
	 	 	9	 
	1.38 “GI Additional Factor Patent Rights”
	 	 	 	 

ii 

 

	 	 	 	 	 
	1.39 “GI Factors”
	 	 	9	 
	1.40 “GI Field”
	 	 	9	 
	1.41 “GI Know-How,”
	 	 	9	 
	1.42 “GI Patent Rights”
	 	 	9	 
	1.43 “GI Products”
	 	 	10	 
	1.44 “GI Type A Product”
	 	 	10	 
	1.45 “GI Type B Product”
	 	 	10	 
	1.46 “GI Type C Product”
	 	 	11	 
	1.47“GI Rights”
	 	 	11	 
	1.48 “Growth and Differentiation Factors” or “GDFs”
	 	 	11	 
	1.50 “INAD”
	 	 	12	 
	1.51 “IND”
	 	 	12	 
	1.52 “Invention and Disclosure Agreement”
	 	 	12	 
	1.53 “JHU Additional Factor Know-How”
	 	 	12	 
	1.54 “JHU Additional Factor Patent Rights”
	 	 	12	 
	1.55 “JHU Know-How”

1.56 “JHU Patent Rights”
	 	 	 	 
	1.57 “JHU Rights”
	 	 	14	 
	1.58 “Joint Know-How”
	 	 	14	 
	1.59 “Joint Patent Rights”
	 	 	15	 
	1.60 “Joint Rights”
	 	 	16	 
	1.61 “Letter of Intent”
	 	 	16	 
	1.62 “MetaMorphix Factors”
	 	 	16	 
	1.63 “MetaMorphix Field”
	 	 	17	 
	1.64 “MetaMorphix Know-How”
	 	 	17	 
	1.65 “MetaMorphix Patent Rights”
	 	 	17	 
	1.66 “MetaMorphix Product”
	 	 	18	 
	1.67 “MetaMorphix Rights”
	 	 	18	 
	1.68 “Net Sales”
	 	 	18	 
	1.69 “Original Research”
	 	 	20	 
	1.70 “Other TGF-f3 Factors”
	 	 	20	 
	1.71 “Other TGF Q Products”
	 	 	20	 
	1.72 “Patents”
	 	 	20	 
	1.73 “PLA”

1.74 “Product(s)”
	 	 	21	 
	1.75 “Promissory Note”
	 	 	21	 
	1.76 “Research Management Committee” or “RMC”
	 	 	21	 
	1.77 “Sponsored Research”
	 	 	21	 
	1.78 “Sponsored Research Term”
	 	 	21	 
	1.79 “TGF-43 Additional Factor Class”
	 	 	21	 
	1.80 “TGF-f3 Class”
	 	 	22	 
	1.81 “TGF-f3 Factor Class”
	 	 	22	 
	1.82 “TGF-1i Factors”
	 	 	22	 
	1.83 “TGF-f3 Superfamily”
	 	 	22	 
	1.84 “Third Party(ies)”
	 	 	22	 
	1.85 “Use Patent”
	 	 	22	 
	1.86 “Valid Claim”
	 	 	22	 
	 
	2. CONDITIONS PRECEDENT; THE CLOSING
	 	 	23	 

ii 

 

	 	 	 	 	 
	2.1 Government Approvals
	 	 	23	 
	2.1.1 The Parties’ Obligations
	 	 	23	 
	2.1.2 Additional Approvals
	 	 	23	 
	2.2 Corporate Approvals
	 	 	 	 
	2.2.1 MetaMorphix Director and Shareholder Approval
	 	 	23	 
	2.2.2 Genetics Institute Approval
	 	 	23	 
	2.3 The Closing
	 	 	 	 
	2.3.1 Time and Place
	 	 	24	 
	2.3.2 GI Deliverables
	 	 	24	 
	2.3.3 MetaMorphix Deliverables
	 	 	24	 
	2.3.4 JHU Deliverables
	 	 	25	 

ii 

 

	 	 	 	 	 
	2.3.5 Dr. Lee Deliverables
	 	 	25	 
	3. THE RESEARCH
	 	 	25	 
	3.1 Background and Goals
	 	 	25	 
	3.2 The Original Research
	 	 	26	 
	3.2.1 Funding
	 	 	26	 
	3.2.2 Disclosure of Information
	 	 	26	 
	3.2.2.1 Disclosure of Sequences
	 	 	26	 
	3.2.2.2 Disclosure of Other Information
	 	 	26	 
	3.3 The Sponsored Research
	 	 	27	 
	3.3.1 Sponsored Research Term
	 	 	27	 
	3.3.2 Funding
	 	 	27	 
	3.3.3 Use of Funds; Budgets
	 	 	28	 
	3.3.4 Sponsored Research Plan
	 	 	28	 
	3.3.5 Sponsored Research Activities
	 	 	29	 
	3.3.6 Invention and Disclosure Agreement
	 	 	29	 
	3.3.7 Disclosure of Information
	 	 	30	 
	3.3.7.1 Disclosure of Sequences
	 	 	30	 
	3.3.7.2 Disclosure of Other Information
	 	 	30	 
	3.3.7.3 Mandatory Disclosure of Other Information
	 	 	31	 
	3.3.8 Annual Reports
	 	 	31	 
	33.9 Equipment
	 	 	31	 
	33.10 Exclusivity of Research
	 	 	32	 
	3.4 The Collaborative Research
	 	 	32	 
	3.4.1 The Collaborative Research Term
	 	 	32	 
	3.4.2 Collaborative Research Plan
	 	 	33	 
	3.4.3 Research Management Committee
	 	 	33	 
	3.4.4 Collaborative Research Activities
	 	 	34	 
	3.4.5 Dispute Resolution
	 	 	34	 
	3.4.6 Disclosure of Information
	 	 	34	 
	3.4.6.1 Disclosure of Sequences
	 	 	34	 
	3.4.6.2 Discretionary Disclosure of Other Information
	 	 	34	 
	3.4.6.3 Mandatory Disclosure of Other Information
	 	 	35	 
	3.4.7 Annual Reports
	 	 	35	 
	3.5 Disclosure of Information by and to JHU
	 	 	36	 
	3.5.1 JHU Disclosures
	 	 	36	 
	3.5.2 GI and MetaMorphix Disclosures
	 	 	36	 
	3.6 Ownership of Results
	 	 	36	 
	3.7 Research License
	 	 	36	 
	3.8 Acknowledgement
	 	 	37	 
	3.9 MetaMorphix Sponsored Research
	 	 	37	 
	3.10 Dr. Lee as Consultant to MetaMorphix
	 	 	38	 
	 
	4. SUPPLY OF MATERIALS
	 	 	38	 
	4.1 Supply of Materials in Connection with the Sponsored Research
	 	 	38	 
	4.2 Supply of Materials to MetaMorphix
	 	 	39	 
	4.2.1 Unassigned BMPs, GDFs and Collaborative Factors
	 	 	39	 
	4.2.2 MetaMorphix Factors
	 	 	39	 
	4.2.3 Supply of Reagents and Antibodies
	 	 	40	 
	4.2.4 Supply of Factors, Reagents and Antibodies after Collaborative Research Term
	 	 	41	 
	4.3 Supply of Materials by MetaMorphix
	 	 	41	 
	4.4 Supply of Certain Materials to Dr. Lee
	 	 	42	 
	4.5 Limitations on Use of Factors
	 	 	42	 

iii 

 

	 	 	 	 	 
	5. EVALUATION AND SELECTION OF FACTORS 
	 	 	42	 
	5.1 Evaluation 
	 	 	42	 
	5.2 Available Factors
	 	 	43	 
	5.3 Selection of Available Factors 
	 	 	43	 
	5.3.1 Order of Selection» 
	 	 	43	 
	5.3.1.1 MetaMorphix Has First Selection 
	 	 	43	 
	5.3.1.2 GI Has Next Selection 
	 	 	44	 
	5.3.1.3 Alternating Selections 
	 	 	44	 
	5.3.2 Triggering a Selection 
	 	 	44	 
	5.3.2.1 GI’s Right to Trigger a Selection 
	 	 	44	 
	5.3.2.2 MetaMorphix’ Right to Trigger a Selection 
	 	 	45	 
	5.3.2.3 Limitation on Right to Trigger a Selection 
	 	 	45	 
	5.3.3 Completion of Selection Process 
	 	 	45	 
	6. LICENSES 
	 	 	45	 
	6.1 Restatement of Rights 
	 	 	45	 
	6.2 Licenses from JHU to MetaMorphix 
	 	 	46	 
	6.3 Licenses from JHU to GI 
	 	 	46	 
	6.3.1 GI Type A Products 
	 	 	46	 
	6.3.2 GI Type B Products 
	 	 	47	 
	633 GI Type C Products 
	 	 	48	 
	6.4 Licenses from MetaMorphix to GI
: 
	 	 	48	 
	6.4.1 GI Type A Products 
	 	 	48	 
	6.4.2 GI Type B Products 
	 	 	49	 
	6.5 Licenses from GI to MetaMorphix 
	 	 	49	 
	6.6 Reservation of Rights 
	 	 	50	 
	6.7 Factor Rights Licensed from Third Parties

	 	 	51	 
	
6.8 Non compete
	 	 	51	 
	6.8.1 By MetaMorphix 
	 	 	51	 
	6.8.2 By GI 
	 	 	52	 
	6.9 Option to Certain GDF-8 Derivative Products 
	 	 	52	 
	7. CONSIDERATION 
	 	 	53	 
	7.1 License Fees 
	 	 	53	 
	7.1.1 Initial License Processing Fee 
	 	 	53	 
	7.1.2 Additional License Processing Fees 
	 	 	53	 
	7.1.3 License Maintenance Fees 
	 	 	53	 
	7.2 Additional License Fees 
	 	 	53	 
	7.3 Royalties 
	 	 	54	 
	7.3.1 MetaMorphix Products 
	 	 	54	 
	7.3.1.1 Payable by MetaMorphiz to JHL 
	 	 	54	 
	7.3.1.2 Payable by MetaMorphix to GI 
	 	 	55	 
	7.3.2 GI Type A Products 
	 	 	56	 
	7.3.2.1 Payable by GI to MetaMorphix 
	 	 	56	 
	7.3.2.2 Payable by GI to JHLL 
	 	 	58	 
	7.3.3 GI Type B Products 
	 	 	59	 
	7.3.3.1 Payable by GI to MetaMorphix 
	 	 	59	 
	7.3.3.2 Payable by GI to JHL’ 
	 	 	60	 
	7.3.4 GI Type C Products 
	 	 	61	 
	7.3.5 Other TGF-R Factors 
	 	 	62	 
	7.3.5.1 Payable by MetaMorphix to JHLi 
	 	 	62	 
	7.3.5.2 Payable by MetaMorphix to GI 
	 	 	63	 
	7.3.5.3 Payable by GI to JHU 
	 	 	64	 
	7.3.5.4 Payable by CI to MetaMorphix 
	 	 	66	 

iv 

 

	 	 	 	 	 
	7.3.5.5 Patent Interference
	 	 	6	 
	7.4 Royalty Calculations
	 	 	68	 
	7.4.1 Country-by-Country Basis
	 	 	68	 
	7.4.2 Advanced Products
	 	 	68	 
	7.4.3 .Third Party Royalties
	 	 	68	 
	7.4.4 Limitation on Royalty Deductions
	 	 	69	 
	7.5 Reports and Payment
	 	 	69	 
	7.6 Foreign Royalties
	 	 	69	 
	7.7 Taxes
	 	 	69	 
	7.8 Records
	 	 	70	 
	 
	8. ADDITIONAL CONSIDERATION 
	 	 	70	 
	8.1 Assignment of MetaMorphix Stock 
	 	 	70	 
	8.2 Amendment of Promissory Note 
	 	 	70	 
	8.3 Put Option 
	 	 	71	 
	8.4 Purchase of Equipment 
	 	 	72	 
	8.5 Baylor Agreement 
	 	 	73	 
	8.6 Shareholder Agreements 
	 	 	73	 
	 
	9. PRODUCT DEVELOPMENT AND COMMERCIALIZATION 
	 	 	73	 
	9.1 MetaMorphix’s Obligations 
	 	 	73	 
	9.1.1 General Diligence Obligation 
	 	 	73	 
	9.1.2Development Milestones 
	 	 	74	 
	9.1.3 Satisfaction of Diligence and Development Milestone Obligations 
	 	 	74	 
	9.1.4 Failure to Achieve Development Milestones 
	 	 	75	 
	9.2 GI’s Diligence Obligations 
	 	 	75	 
	9.2.1 General Diligence Obligation 
	 	 	75	 
	9.2.2 Milestones 
	 	 	76	 
	9.2.3 Satisfaction of Diligence and Development Milestone Obligations 
	 	 	77	 
	9.2.4 Failure to Achieve Development Milestones 
	 	 	77	 
	9.3 Right of First Refusal 
	 	 	78	 
	 
	10. PATENT PROSECUTION AND INFRINGEMENT 
	 	 	78	 
	10.1 Responsibility for Patenting Factor Rights 
	 	 	78	 
	10.1.1 GI Patent Rights and Certain Joint Patent Rights 
	 	 	78	 
	10.1.2 MetaMorphix Patent Rights 
	 	 	78	 
	10.1.3 JHU Patent Rights and Certain Joint Patent Rights 
	 	 	79	 
	10.1.4 Patent Cooperation 
	 	 	79	 
	10.1.5 Use of Information 
	 	 	80	 
	10.1.6 Division of Claims 
	 	 	80	 
	10.1.7 Interferences 
	 	 	80	 
	10.2 Expenses 
	 	 	80	 
	10.2.1 Previously Incurred Expenses — GI Factors 
	 	 	80	 
	10.2.2 Previously Incurred Expensed — MetaMorphix Factors and Unassigned Factors 
	 	 	81	 
	10.2.3 Continuing Expenses — GI Factors and Additional Factors 
	 	 	81	 
	10.2.4 Continuing Expenses — MetaMorphix Factors 
	 	 	81	 
	10.2.5 Continuing Expenses — Unassigned Factors 
	 	 	82	 
	10.2.5 Continuing Expenses — GDF-16 and GDF-17 
	 	 	82	 
	10.3 Infringement 
	 	 	82	 
	   10.3.1 Notice 
	 	 	82	 
	10.3.2 First Right to Initiate Suits — GI Factors and Additional Factors 
	 	 	83	 
	10.3.3 First Right to Initiate Suits — MetaMorphix Factors, GDF-16 and GDF-17 
	 	 	83	 
	10.3.4 First Right to Initiate Suits — Unassigned Factors 
	 	 	84	 

v 

 

	 	 	 	 	 
	10.3.5 Determination of Right to Participate in, and Second Right to Initiate, Suits 
	 	 	84	 
	10.3.6 Right to Participate in Suit 
	 	 	84	 
	10.3.7 Second Right to Initiate Suit 
	 	 	85	 
	10.3.8 Royalty Deduction 
	 	 	86	 
	10.4 Claimed Infringement 
	 	 	 	 
	10.4.1 Notice; Cooperation
	 	 	87	 
	10.4.2 LIMITATION OF LIABILITY
	 	 	 	 
	 
	 	 	 	 
	11. CONFIDENTIAL INFORMATION
	 	 	87	 
	11.1 Nondisclosure of Confidential Information
	 	 	87	 
	11.2 Use of Confidential Information
	 	 	88	 
	11.3 Agreements with Personnel and Third Parties
	 	 	88	 
	11.4 Publications
	 	 	88	 
	11.4.1 Right to Publish
	 	 	88	 
	11.4.2 Notice and Review
	 	 	88	 
	11.4.3 Deletion of Confidential Information; Patent Protection
	 	 	89	 
	11.4.4 GDFs Discovered by JHU
	 	 	89	 
	11.5 Non-Use of Certain Confidential Information
	 	 	89	 
	 
	 	 	 	 
	12. REPRESENTATION AND WARRANTIES
	 	 	89	 
	 
	 	 	 	 
	12.1 Representations and Warranties of GI and MetaMorphix

	 	 	 	 
	12.2 Additional Representations and Warranties of GI
	 	 	90	 
	12.2.1 Patent Rights and Know-How
	 	 	90	 
	12.2.2 No Conflicting Agreements
	 	 	90	 
	12.3 Additional Representations and Warranties of MetaMorphix
	 	 	91	 
	12.3.1
Patent Rights and Know-How 
	 	 	91	 
	
12.3.2 No Conflicting Agreements
	 	 	91	 
	12.3.3 Equipment
	 	 	91	 
	12.4 Representations and Warranties of JHU
	 	 	91	 
	12.4.1Authority
	 	 	91	 
	12 .4.2 Compliance with Laws and Organizational Documents
	 	 	92	 
	12 .4.3 Patent Rights and Know-How
	 	 	92	 
	12 .4.4 No Conflicting Agreements
	 	 	92	 
	12 .5 Representation by Legal Counsel
	 	 	92	 
	12 .6 Materiality
	 	 	92	 
	12.7 Disclaimer
	 	 	93	 
	 
	 	 	 	 
	13. PRODUCT LIABILITY INDEMNIFICATION
	 	 	93	 
	13.1 MetaMorphix Indemnification
	 	 	93	 
	13.2 GI Indemnification
	 	 	93	 
	13.3 Notice; Cooperation
	 	 	93	 
	13.4 Liability Limitation
	 	 	94	 
	13.5 Insurance
	 	 	94	 
	14. TERM AND TERMINATION
	 	 	94	 
	14.1 Term
	 	 	94	 
	14.2 Termination for Breach
	 	 	94	 
	14.3 Breach of or Withdrawal from Agreement
	 	 	95	 
	14.3.1 By MetaMorphix
	 	 	95	 
	14.3.2 By GI
	 	 	95	 
	14.4 Survival of Obligations; Return of Confidential Information
	 	 	96	 
	12.7 Disclaimer
	 	 	93	 
	15. MISCELLANEOUS 
	 	 	96	 
	 
	 	 	 	 

vi

 

	 	 	 	 	 
	15.1 No Assumption of Obligations
	 	 	96	 
	15.2 Publicity
	 	 	96	 
	15.3 Export Control
	 	 	96	 
	15.4 Conduct of’ Studies
	 	 	97	 
	15.5 No Implied Licenses
	 	 	97	 
	15.6 No Agency
	 	 	97	 
	15.7 Notice
	 	 	97	 
	15.8 Assignment
	 	 	98	 
	15.9 Entire Agreement
	 	 	99	 
	15.10 No Modification
	 	 	99	 
	15.11 Headings
	 	 	99	 
	15.12 Waiver
	 	 	99	 
	15.13 Severability
	 	 	100	 
	15.14 Successors and Assigns
	 	 	100	 
	15.15 Counterparts
	 	 	100	 
	15.16 Applicable Law
	 	 	100	 

viii 

 

viii 

 

AMENDED AND RESTATED COLLABORATION AGREEMENT

     THIS AMENDED AND RESTATED COLLABORATION AGREEMENT (together with
the attached Schedules, the “Agreement”) is entered into as of January
26, 1999 by and among Genetics Institute, Inc., a Delaware corporation
with a business address at 87 CambridgePark Drive, Cambridge,
Massachusetts 02140 (“GI”), The Johns Hopkins University, a non-profit
educational institution with a business address at 720 Rutland Avenue,
Baltimore, Maryland 21205 (“JHU”) and MetaMorphix, Inc.. a Delaware
corporation with a business address at 1450 South Rolling Road,
Baltimore, Maryland 21227 (“MetaMorphix”). GI, JHU and MetaMorphix may
each be referred to herein individually as a “Party” and collectively
as the “Parties”.

     WHEREAS, JHU, as a center for research and education, is
interested in licensing discoveries made by JHU researchers in a manner
that will benefit the public by facilitating the commercialization of
useful products, but is without capacity to commercially develop,
manufacture and sell any such products;

     WHEREAS, MetaMorphix was formed in 1994 for the purposes,
inter alia, of funding research at JHU under the direction
of Se-Jin Lee, M.D., Ph.D. (“Dr. Lee”) to characterize certain
previously-discovered factors, and discover and characterize new
factors, in the TGF-p Superfamily (referred to by JHU as “GDFs”, as
more fully defined below) and commercializing such GDFs, either on its
own, or by sublicense to GI and other Third Parties;

     WHEREAS, GI also has ongoing research to discover, characterize
and develop factors in the TGF- Superfamily (referred to by GI as
“BMPs”, as more fully defined below);

     WHEREAS, on December 1, 1994, the Parties entered into a
Collaboration Agreement (the “1994 Collaboration Agreement”) pursuant
to which, during the Research Term (as such term is defined in the
1994 Collaboration Agreement) thereof, which Research Term is now
expired, they collaborated on the characterization of theretofore
previously discovered GDFs and BMPs and the discovery and
characterization of new GDFs and BMPs;

     WHEREAS, pursuant to the 1994 Collaboration Agreement, JHU agreed
to license to MetaMorphix certain GDFs discovered by JHU; GI agreed to
license to MetaMorphix certain BMPs discovered by GI; and MetaMorphix
agreed to license and/or sublicense to GI certain GDFs discovered by
MetaMorphix:

     WHEREAS, MetaMorphix desires to restructure its business to
focus on the development and commercialization of products for
agricultural and veterinary uses;

     WHEREAS, in order to facilitate MetaMorphix’ desire to so
restructure its business, and to further development and
commercialization of those BMPs, GDFs and Collaborative Factors that
were discovered pursuant to or which are otherwise subject to the 1994

 

 

Collaboration Agreement, the Parties have agreed to amend. restate
and replace the 1994 Collaboration Agreement as set forth herein:

     NOW THEREFORE in consideration of the foregoing
premises and the mutual promises, covenants and conditions set
forth below the Parties, intending to be legally bound, hereby
agree as follows:

1. DEFINITIONS.

	 	1.1  	“Additional BMPs” shall mean the
Factors in the TGF-P Superfamily Discovered solely by GI
after May 31, 1998, which Factors include, without
limitation, those Factors identified in Schedule 1.1,
attached hereto. Notwithstanding the foregoing, Additional
BMPs shall exclude (i) the BMPs and (ii) the GPDC Factors.
	 
	 	1.2  	“Additional Collaborative Factors”
shall mean the Factors in the TGF-13 Superfamily Discovered
by JHU jointly with GI after May 31, 1998 and on or before
the end of the six (6) month period which begins on the day
after the end of the Sponsored Research Term. The Additional
Collaborative Factors shall not include BMPs. GDFs,
Collaborative Factors, Additional BMPs, Additional GDFs or
Other TGF-J3 Factors. For JHU, Additional Collaborative
Factors shall be restricted to those Factors Discovered
after May 31, 1998 in Dr. Lee’s JHU laboratory jointly by
(i) Dr. Lee and/or other JHU faculty students, fellows
and/or employees who have signed an Invention and Disclosure
Agreement and (ii) employees of GI.
	 
	 	1.3  	“Additional Factors” shall mean
the Additional BMPs, the Additional GDFs and the
Additional Collaborative Factors.
	 
	 	1.4  	“Additional Factor Joint Know-How”
shall mean any tmpatented information specifically relating
to any Additional BMP, Additional GDF or Additional
Collaborative Factor produced by GI and JHU after May 31,
1998 and on or before the end of the six (6) month period
which begins on the day after the end of the Sponsored
Research Term, and for which each named Party has a
licensable interest which information is reasonably useful,
necessary or required for GI and/or its Affiliates, to
manufacture, use and/or sell GI Products. For JHU the Joint
Know-How shall be restricted to the information produced by
Dr. Lee and other JHU faculty, students, fellows, and
employees who have signed an Invention and Disclosure
Agreement.
	 
	 	1.5  	“Additional Factor Joint Patent
Rights” shall mean with respect to each Additional BMP.
Additional GDF or Additional Collaborative Factor, (a) all
Patents covering inventions (as such term is defined under
United States Patent Law) made by GI and JHU jointly, after
May 31, 1998 and on or before the end of the six (6) month
period which begins on the day after the

2

 

end of the Sponsored Research Tefm. which inventions or
Patents are reasonably useful, necessary or required for GI
and/or its Affiliates. to manufacture, use and/or sell GI
Products for any use and (b) all Patents Controlled by or
coming into the Control of GI and JHU jointly during the
term of this Agreement and for which each named Party has
a licensable interest, which, but for the inclusion of such
acquired Patents under this clause (b), would prevent GI
and/or its Affiliates, from practicing under one or more of
the Patents under clause (a), above. The Additional Factor
Joint Patent Rights believed by the Parties to be existing
as of the Effective Date are listed in Schedule 1.5
attached hereto. For JHU, the Joint Patent Rights shall be
restricted to the Patents covering inventions made by Dr.
Lee and other JHU faculty, students, fellows. and employees
who have signed an Invention and Disclosure Agreement.

	 	1.6  	“Additional Factor Joint
Rights”-shall mean the Additional Factor Joint Know-How
and the Additional Factor Joint Patent Rights.
	 
	 	1.7  	“Additional Factor Know-How”
shall mean the GI Additional Factor Know-How, the JHU
Additional Factor Know-How and the Additional Factor
Joint Know-How.
	 
	 	1.8  	“Additional Factor Patent Rights”
shall mean the GI Additional Factor Patent Rights the JHU
Additional Factor Patent Rights and the Additional. Factor
Joint Patent Rights.
	 
	 	1.9  	“Additional Factor Rights” shall
mean the Additional Factor Know-How and the Additional
Factor Patent Rights.
	 
	 	1.10  	“Additional GDFs” shall mean the
Factors in the TGF-j3 Superfamily Discovered by JHU solely
after May 31, 1998 and on or before the end of the six (6)
month period which begins on the day after the end of the
Sponsored Research Term. The Additional GDFs shall not
include BMPs, GDFs, Collaborative Factors, Additional BMPs,
Additional Collaborative Factors or Other TGF-(3 Factors.
For JHU, Additional GDFs shall be restricted to those
Factors listed on Schedule 1.10, together with any
additional Factors Discovered after May 31, 1998, in (or in
collaboration with) Dr. Lees JHU laboratory by Dr. Lee and
other JHU faculty, students, fellows, and employees who have
signed an Invention and Disclosure Agreement.
	 
	 	1.11  	“Affiliate” shall mean any
corporation, company, partnership, joint venture and/or firm
which controls. is controlled by or is under common control
with a Party. For purposes of this Section 1.11, “control”
means (a) in the case of corporate entities. direct or
indirect ownership of at least fifty percent (50%) of the
stock or shares entitled to vote for the election of
directors; and (b) in the case of non-corporate entities.
direct or indirect ownership of at least fifty

3

 

percent (50%) of the equity interest with the power to
direct the management and policies of such
noncorporate entities. Notwithstanding the foregoing, (a)
the term “Affiliate” shall not include subsidiaries in which
a Party or its Affiliates owns a majority of the ordinary
voting power to elect a majority of the board of directors
but is restricted from electing such majority by contract or
otherwise, until such time as such restrictions are no
longer in effect; (b) only upon designation by GI and
written notice to the other Parties shall American Home
Products Corporation and/or any of its affiliates be
Affiliates of GI for purposes of this Agreement; and (c)
unless the context expressly provides otherwise, a Party
shall not be treated as an Affiliate of the another Party or
another Party’s Affiliates for purposes of this Agreement.

	 	   	1’.12 “Available Factors” shall mean those
BMPs, GDFs and Collaborative Factors that have been
determined to be available for selection by GI or MetaMorphix
pursuant to the Factor selection process described Article 5
of this Agreement.
	 
	 	1.13  	“Baylor” shall mean the Baylor College of Medicine.
	 
	 	1.14  	“Baylor Agreement” shall mean that
certain Research Collaboration Agreement entered into on
February 1, 1998, by and between MetaMorphix and Baylor,
pursuant to which MetaMorphix sponsored research relating
to GDF-9 in the laboratory of Dr. Martin Matzuk for a term
of three (3) years.
	 
	 	1.15  	“Bone Morphogenetic Proteins” or
“BMPs” shall mean the Factors in the TGF-13
Superfamily Discovered solely by GI on or before May 31,
1998, which Factors include, without limitation, those
Factors identified in Schedule 1.15 which is attached
hereto. Notwithstanding the foregoing, BMPs shall exclude
(a) the GPDC Factors and (b) any Factors in the TGF-33
Superfamily, the sequences for which are identified solely
by GI using research strategies that do not use sequence
homology with previously sequenced TGF-P Factors. The BMPs
may be assigned to or selected by either GI (as a GI Factor)
or MetaMorphix (as a MetaMorphix Factor) under this
Agreement. BMPs shall not include Additional BMPs, GDFs,
Additional GDFs, Collaborative Factors, Additional
Collaborative Factors or Other TGF-P Factors.
	 
	 	1.16  	“Collaborative Factors” shall mean
the Factors in the TGF-P Superfamily Discovered by (a) GI
and MetaMorphix jointly or (b) GI and.IHU jointly or (c)
JHU and MetaMorphix jointly, as the case may be, on or
before May 31, 1998, including, without limitation, those
Factors identified on Schedule 1.16
attached hereto. The Collaborative Factors may be
assigned to or selected by either GI (as a GI Factor) or
MetaMorphix (as a MetaMorphix Factor) under this
Agreement. Collaborative Factors shall not include

4

 

BMPs, GDFs. Additional BMPs. Additional GDFs, Additional
Collaborative Factors or Other TGF-3 Factors. For
JHLT. Collaborative Factors shall be restricted to
those Factors Discovered on or_before May 31, 1998 in Dr.
Lee’s JHU laboratory jointly by (i) Dr. Lee and/or other JHU
faculty. students, fellows and/or employees who have signed
an Invention and Disclosure Agreement and (ii) employees of
GI and/or MetaMorphix.

	 	1.17  	“Collaborative Research” shall mean the
collaborative research activities conducted by the GI and
MetaMorphix, from June 1. 1998 through the end of the
Collaborative Research Term, to rapidly characterize and
evaluate, for commercial development, those BMPs, GDFs and
Collaborative Factors that have not yet been selected or
designated as either GI Factors or
MetaMorphix Factors. Collaborative Research shall not
include the Sponsored Research or internal or collaborative
research conducted by GI or MetaMorphix on matters other
than BMPs, GDFs or Collaborative Factors that have not yet
been selected or designated as GI Factors or MetaMorphix
Factors.
	 
	 	1.18  	“Commercially Reasonable Efforts”
shall mean efforts and resources normally used by a Party
for a product owned by it or to which it has rights, which
is of similar market potential at a similar stage in its
development or product life, taking into account issues of
safety and efficacy, product profile. the competitiveness
of the marketplace, the proprietary position of the
compound or product. the regulatory structure involved, the
profitability of the applicable products. and other
relevant factors.
	 
	 	1.19  	“Collaborative Research Term”
shall have the meaning set forth in Section 3.4.1
hereof.
	 
	 	1.20  	“Confidential Information” includes,
without limitation, any scientific, technical, trade or
business information disclosed by one Party to one or more of
the other Parties which is (a) disclosed in writing or other
tangible form and labeled or otherwise identified in writing
as “CONFIDENTIAL” at the time of disclosure or (h) disclosed
verbally and identified as “CONFIDENTIAL” at the time of
disclosure and subsequently reduced to writing or other
tangible form labeled or otherwise identified in writing as
“CONFIDENTIAL” and delivered to the receiving Party within
thirty (30) days of verbal disclosure. Notwithstanding the
foregoing, “Confidential Information” does not include
information which (a) was known to the receiving Pam’ at the
time it was disclosed. other than by previous disclosure by
the disclosing Party, as evidenced by written records at the
time of disclosure; (b) is at the time of disclosure or later
becomes publicly known under circumstances involving no
breach of this Agreement; (c) is lawfully and in good faith
made available to the receiving Party by a Third Party who
did not derive it from the disclosing Party and who imposes
no obligation of

5

 

confidence on the receiving Party: or (d) is developed by
the receiving Party independent of any disclosure by the
disclosing Party. as evidenced by written records.

	1.21  	“Control” or “Controlled” shall
mean with respect to any (i) item of information,
including, without limitation, any Factor Know-How or
Additional Factor-Know-How, or (ii) intellectual property
right, the possession (whether by purchase. assignment or
license) by a Party of the ability to grant to one or both
of the other Parties access and/or a license as provided
herein under such item or right without violating the terms
of any agreement or other arrangements with any Third
Party.

	1.22  	“Data” with respect to any Party,
shall mean any and all laboratory, animal and other
scientific data (including, without limitation, cloning,
expression, purification, refolding, analysis of bioactivity
in vitro and in vivo, physical characterization and
formulation, in situ hybridization and genetic mapping) in
that Party’s Control arising either (a) from the Original
Research on or before May 31, 1998, (b) from the
Collaborative Research during the Collaborative Research
Term and/or (c) from the Sponsored Research during the
Sponsored Research Term, as applicable.

	1.23  	“Discover”, “Discovered” and
“Discovery” (and any other variations thereof) shall mean
with respect to a BMP a GDF, a Collaborative Factor, an
Additional BMP, an Additional GDF or an Additional
Collaborative Factor the first sequencing by a Party’s
employees or agents of the mature protein coding region of
that BMP, GDF. Collaborative Factor, Additional BMP,
Additional GDF or Additional Collaborative Factor. A Party
shall be deemed to have Discovered a Factor hereunder
regardless of whether such Party’s employees or agents
Discovered such Factor solely or jointly with a Third
Party. In the event that prior to the end of (i) the term
of the Original Research, with respect to BMPs. GDFs or
Collaborative Factors, or (ii) the Sponsored Research Term,
with respect to Additional BMPs, Additional GDFs or
Additional Collaborative Factors, one Party Discovers a
Factor within twenty (20) days following Discovery of the
same Factor by another Party, such Factor shall be deemed
to be a Collaborative Factor or an Additional Collaborative
Factor, as the case may be, jointly Discovered by the first
and second Discovering Parties for purposes of this
Agreement Determination of the utility or activity of a
Factor is not relevant in identifying the Party which
Discovered that Factor under this Agreement. Similarly,
inventorship on a Patent claiming a Factor may include a
Party which provided utility or other data without
changing the identity of the Party which Discovered that
Factor for purposes of this Agreement. Under this
Agreement the identity of the Party (or Parties) which
Discovered a Factor determines (a) whether that Factor will
be classified as a BMP (under Section 1.15), a GDF (under
Section 1.49) or a Collaborative Factor (under Section
1.16) an Additional BMP (under Section 1.1), an Additional
GDF

6

 

(under Section 1.10) or an Additional Collaborative Factor
(under Section 1.2); (b) the Party (or Parties) to which
additional license fees will be made under Section
7.2; (c) the Paty (or Parties) to which license
maintenance ‘fees would be owed in the event a Party fails
to meet a Milestone under Article 9; and (d) royalties
payable among the Parties under Section 7.3 of this
Agreement.

	 	1.24  	“Effective Date” shall mean the next
business day after the Closing occurs in accordance with
Section 2.3 hereof.
	 
	 	1.25  	“Evaluation Period” shall have the
meaning set forth in Section 5.1 of this Agreement.
	 
	 	1.26  	“Factor” shall mean (a) the
proteins, peptides or polypeptides corresponding to a
molecule within the TGF-ß Superfamily; (b) the
polynucleotides which encode those proteins, peptides or
polypeptides, and any sub-sequences thereof; (c) any
modified form of those proteins, peptides or polypeptides:
or (d) variant or mutant forms of those proteins, peptides
or polypeptides. or of the polynucleotides encoding such
variant or mutant forms.
	 
	 	1.27  	“Factor Know-How” shall mean the GI
Know-How, the JHU Know-How, the MetaMorphix Know-How and the
Joint Know-How.
	 
	 	1.28  	“Factor Patent Rights” shall mean the GI Patent Rights, the JHU Patent
Rights, the Metamorphix Patent Rights and the Joint Patent Rights.
	 
	 	1.29  	“Factor Rights” shall mean the
Factor Patent Rights and the Factor Know-How.
	 
	 	1.30  	“FDA” shall mean the United States Food and Drug Administration.
	 
	 	1.31  	“GDF-8 Derivative Product” shall
mean any pharmaceutical product which primarily acts as

(i) an antagonist or agonist of GDF-8 or the GDF-8 receptor,

(ii) a vaccine against GDF-8,

(iii) a modifier of GDF-8 synthesis, or

(iv) a modulator of the GDF-8 signal transduction pathway,

only to the extent that such pharmaceutical product is
developed or sold for the purposes of modulating the
effects of GDF-8.

7

 

1.32 “GDF-16” shall mean the TGF-ß Factor known to MetaMorphix and JHU as GDF-16,
provided, however, that GDF-16 shall not include any TGF-ß Factor which
is owned or Controlled by GI.

1.33 “GDF-16 Product(s)” shall mean GDF-16, including any and all

	 	(i)  	formulations, mixtures or compositions of GDF-16,
	 
	 	(ii)  	antibodies targeted against GDF-16,
	 
	 	(iii)  	receptors for which GDF-16 is a ligand,
	 
	 	(iv)  	antisense molecules or ribozymes that modulate the in vivo production of GDF-16, and
	 
	 	(v)  	other products for research, diagnostic or
therapeutic use containing GDF- 16 or any of (i) through (iv)
above,

which, or which the manufacture use-Or sale of which, is covered by a Valid Claim
included within JHU’s or MetaMorphix‘ interest in the Factor Patent
Rights.

1.34. “GDF-17” shall mean the TGF-ß Factor known to MetaMorphix and JHU as GDF-17,
provided. however, that GDF-17 shall not include any TGF-ß Factor which
is owned or Controlled by GI.

1.35 “GDF-17 Product(s)” shall mean GDF-17, including any and all

	 	(i)  	formulations, mixtures or compositions of GDF-17,
	 
	 	(ii)  	antibodies targeted against GDF-17,
	 
	 	(iii)  	receptors for which GDF-17 is a ligand,
	 
	 	(iv)  	antisense
molecules or ribozymes that modulate the
in vivo production of GDF-17 and
	 
	 	(v)  	other
products for research, diagnostic or
therapeutic use containing GDF-17 or any of
(i) through (iv) above,

which, or which the manufacture use or sale of which, is
covered by a Valid Claim included within JHU’s or
MetaMorphix’ interest in the Factor Patent Rights.

8

 

	 	1.36  	“GI Additional Factor(s)” shall mean each Additional
BMP. Additional GDF or Additional Collaborative Factor.
provided, however, that GI Additional Factors
shall not include any GPDC Factors or any GI Factors.
	 
	 	1.37  	“GI Additional Factor Know-How”
shall mean any unpatented information specifically relating
to any GI Additional Factor produced by or on behalf of GI.
	 
	 	1.38  	“GI Additional Factor Patent Rights”
shall mean with respect to each GI Additional Factor, all
Patents covering inventions (as such term is defined under
United States Patent Law) made solely by GI which are
reasonably useful, necessary or required for GI and its
Affiliates to manufacture, use and/or sell GI Type C
Products.
	 
	 	1.39  	“GI Factors” shall mean (a) each GDF
listed on Schedule 1.39 as of the Effective Date; (b) each
BMP, GDF or Collaborative Factor subsequently selected by GI
and added to Schedule 1.39; (c) each BMP, GDF or
Collaborative Factor belonging to a TGF-13 Class which
includes one or more of the BMPs, GDFs or Collaborative
Factors identified in clauses (a) or (b) of this Section; and
(d) each BMP, GDF or Collaborative Factor belonging to a
TGF-ß Class which includes the Factors known to GI as BMPs 2
and 4, BMPs 5.6. and 7, BMP 9, or BMP 12; provided, however
the specific Factors themselves which are listed in this
clause (d) shall not be considered GI Factors for purposes of
this Agreement. BMPs, GDFs and Collaborative Factors which
would belong to both (x) a TGF-ß Factor Class which includes
a GI Factor and (y) a TGF-ß Factor Class which includes a
MetaMorphix Factor based on the definition of TGF-ß Factor
Class set forth in this Agreement are classified
pursuant to Section 1.80, below.
	 
	 	1.40  	“GI Field” shall mean all potential
uses in humans, including, without limitation, the
diagnosis and/or the prophylactic or therapeutic treatment
of diseases or disorders in humans.
	 
	 	1.41   	“GI Know-How” shall mean any
unpatented information specifically relating to a BMP. GDF
or Collaborative Factor produced by GI (i) on or before May
31, 1998 in performing the Original Research or (ii) during
the Collaborative Research Term with respect only to those
BMPs, GDFs and Collaborative Factors that have not yet been
selected or designated as either a GI Factor or a
MetaMorphix Factor, and for which GI has a licensable
interest, which is reasonably useful, necessary or required
for MetaMorphix and its Affiliates to manufacture, use
and/or sell MetaMorphix Products for use in the MetaMorphix
Field under this Agreement.
	 
	 	1.42  	“GI Patent Rights” shall mean
with respect to each BMP, GDF or Collaborative Factor,
(a) all Patents covering inventions (as such term is
defined under United States Patent Law) made solely by GI

9

 

	 	(i)  	on or before May 31, 1998 in
performing the Original Research or
	 
	 	(ii)  	during the
Collaborative Research Term with respect only to
those BMPs. GDFs and Collaborative Factors which
have not yet been selected or designated as GI
Factors or
MetaMorphix Factors.

which inventions or Patents are reasonably useful, necessary
or required for MetaMorphix and its Affiliates to
manufacture, use and/or sell MetaMorphix Products for use in
the MetaMorphix Field and (b) all Patents coming into the
Control of GI during the term of this Agreement, which, but
for the inclusion of such acquired Patents under this clause
(b), would prevent MetaMorphix and its Affiliates from
practicing under one or more of the Patents included under
clause (a), above. The GI Patent Rights believed to be
existing by the Parties as of the Effective Date are listed
on Schedule 1.42 to this Agreement.

	 	1.43  	“GI Products” shall mean GI Type A
Products, GI Type B Products and GI Type C Products.
	 
	 	1.44  	“GI Type A Product” shall mean each GI Factor, including any and all

	 	(i)  	formulations, mixtures or compositions of such GI Factor,
	 
	 	(ii)  	antibodies targeted against such GI Factor,
	 
	 	(iii)  	receptors for which such GI Factor is a ligand,
	 
	 	(iv)  	antisense
molecules or ribozymes that modulate the in
vivo production of such GI Factor, and
	 
	 	(v)  	other
products for research, diagnostic or
therapeutic use containing such GI Factor or
any of (i) through (iv) above,

which, or which the manufacture use or sale of which, is
covered by a Valid Claim included within the Factor Patent
Rights.

	 	1.45  	“GI Type B Product” shall mean each
MetaMorphix Factor, including any and all

	 	(i)  	formulations, mixtures or
compositions of such MetaMorphix
Factor,
	 
	 	(ii)  	antibodies targeted against such MetaMorphix Factor,

10

 

	 	(iii)  	receptors for such MetaMorphix Factor is a
ligand.
	 
	 	(iv)  	antisense
molecules or ribozymes that modulate the in
vivo production of such MetaMorphix
Factor and
	 
	 	(v)  	other
products for research diagnostic or
therapeutic use containing such MetaMorphix
Factor or any of (i) through (iv) above,

which, or which the manufacture use or sale of which, is
covered by a Valid Claim included within the Factor Patent
Rights.

	 	1.46  	“GI Type C Product” shall mean
each Additional GDF or each Additional Collaborative
Factor, including any and all

	 	(i)  	formulations, mixtures or compositions of such
Additional GDF Factor or Additional
Collaborative Factor.
	 
	 	(ii)  	antibodies
targeted against such Additional GDF Factor or
Additional Collaborative Factor,
	 
	 	(iii)  	receptors for which such Additional GDF or
Additional Collaborative Factor is a ligand,
	 
	 	(iv)  	antisense
molecules or ribozymes that modulate the
in vivo production of such Additional
GDF or Additional Collaborative Factor, and
	 
	 	(v)  	other
products for research, diagnostic or therapeutic
use containing such Additional GDF or Additional
Collaborative Factor or any of (i) through (iv)
above,

which, or which the manufacture use or sale of which, is
covered by a Valid Claim included within the Factor Patent
Rights.

	 	1.47  	“GI Rights” shall mean the GI
Know-How, the GI Patent Rights, the GI Additional Factor
Know-How, and the GI Additional Factor Patent Rights.
	 
	 	1.48  	“GPDC Factors” shall mean the
Factors identified on Schedule 1.48 attached hereto.
	 
	 	1.49  	“Growth and Differentiation
Factors” or “GDFs” shall mean the Factors in the TGF-fl
Superfamily Discovered by (a) JHU solely or (b)
MetaMorphix solely on or before May 31, 1998 in
performing the Original Research, including, without
limitation, those Factors listed on Schedule
1.49 attached hereto. The GDFs shall not include GDF-16, GDF-17, BMPs,

11

 

Collaborative Factors. Additional BMPs, Additional GDFs.
Additional Collaborative Factors or Other TGF-13 Factors.
The GDFs may be assigned to or selected by either GI (as a
GI Factor) or MetaMorphix (as a MetaMorphix Factor) under
this Agreement. For JHU, GDFs shall be restricted to those
Factors listed on Schedule 1.49, together with any
additional Factors Discovered, on or before May 31, 1998.
in (or in collaboration with) Dr.’Lee’s JHU laboratory by
Dr. Lee and/or other JHU faculty, students, fellows. and/or
employees who have signed an Invention and Disclosure
Agreement.

	 	1.50  	“INAD” shall mean an
Investigational New Animal Drug application or its
equivalent for initiating clinical trials of a product in
non-human animals in the United States or any corresponding
or equivalent foreign application. registration or
certification.
	 
	 	1.51  	“IND” shall mean a Investigational
New Drug application or its equivalent for initiating
clinical trials of a product in humans in the United States
or any corresponding or equivalent foreign application,
registration or certification.
	 
	 	1.52  	“Invention and Disclosure
Agreement” shall mean the form agreement attached hereto
as Schedule 1.52.
	 
	 	1.53  	“JHU Additional Factor Know-How”
shall mean any unpatented information specifically relating
to any Additional BMP, Additional GDF or Additional
Collaborative Factor produced in Dr. Lee’s JHU laboratory
after May 31, 1998. and on or before the end of the six (6)
month period which begins on the day after the end of the
Sponsored Research Term, and for which JHU has a licensable
interest, which is reasonably useful, necessary or required
for GI, and its Affiliates, to manufacture, use and/or sell
GI Products as permitted under this Agreement. For JHU, the
JHU Know-How shall be restricted to the information produced
by Dr. Lee and other JHU faculty, students, fellows, and
employees who have signed an Invention and Disclosure
Agreement.
	 
	 	1.54  	“JHU Additional Factor Patent
Rights” shall mean, with respect to each Additional BMP.
Additional GDF or Additional Collaborative Factor, (a) all
Patents covering inventions (as such term is defined under
United States Patent Law) made solely by JHU after May 31,
1998 and on or before the end of the six (6) month period
which begins on the day after the end of the Sponsored
Research Term, which inventions or Patents are reasonably
useful, necessary or required for GI and its Affiliates, to
manufacture, use and/or sell GI Products as permitted
hereunder and (b) all Patents Controlled by or coming into
the Control of JHU (other than those Patents assigned to JHU
by faculty, students. fellows or employees who are not
working in (or in support of) Dr. Lee’s JHU
laboratory) during the term of this Agreement,
which, but for the inclusion of such acquired Patents under
this clause (b),

12

 

would prevent GI and/or any of its Affiliates, from
practicing under one or more of the Patents under clause
(a) above. The JHU Additional Factor Patent Rights
believed by the Parties to be existing as of the Effective
Date are listed on Schedule 1.54 to this Agreement. The
JHU Additional Factor Patent Rights shall be restricted to
the Patents covering inventions made by Dr. Lee and/or
other JHU faculty, students, fellows, and/or employees who
have signed an Invention and Disclosure Agreement.

	 	1.55  	“JHU Know-How” shall mean any
unpatented information specifically relating to a BMP, GDF,
Collaborative Factor, GDF-16 or GDF-17. which information
is produced in Dr. Lee’s JHU laboratory

	 	(i)  	on or
before May 31, 1998 in performing the
Original Research, or
	 
	 	(ii)  	with respect to the license granted by JHU to

	 	(x)  	GI hereunder, during the Sponsored
Research Term in performing the Sponsored
Research (except to the extent that such
information relates specifically to GDF-16
or GDF-17), or
	 
	 	(y)   	 MetaMorphix hereunder, during
the Collaborative Research Term in
performing the Sponsored Research, only
to the extent that such information
relates directly to those BMPs, GDFs or
Collaborative Factors that have not
been selected or designated as either
GI Factors or MetaMorphix Factors.

and for which JHU has a licensable interest, which is
reasonably useful, necessary or required for MetaMorphix or
GI, and their respective Affiliates, to manufacture use
and/or sell their respective Products under this Agreement.
For JHU the JHU Know-How shall be restricted to the
information produced by Dr. Lee and/or other JHU faculty,
students, fellows, and/or employees who have signed an
Invention and Disclosure. Notwithstanding the
foregoing the JHU Know-How shall also include
any data and information deemed to be included within this
definition pursuant to Sections 3.9 and/or 3.10 hereof.

	 	1.56  	“JHU Patent Rights” shall mean with
respect to each BMP, GDF, Collaborative Factor GDF-16 or
GDF-17, (a) all Patents covering inventions (as such term is
defined under United States Patent Law) made solely by JHU

13

 

	 	(i)  	on or before May 31, 1998 in performing the
Original Research, or
	 
	 	(ii)  	with respect to the licensed granted by JHU to

	 	(x) GI hereunder, during the Sponsored
Research Term in performing the Sponsored
Research (except to the extent that such
inventions relate specifically to GDF16 or
GDF-17) or
	 
	 	(y) MetaMorphix hereunder, during the
Collaborative Research Term in performing
the Sponsored Research, only to the extent
that such information relates directly to
those BMPs, GDFs or Collaborative Factors
that have not been selected or designated as
either GI Factors or MetaMorphix Factors,

which inventions or Patents are reasonably useful,
necessary or required for GI or MetaMorphix. and their
respective Affiliates, to manufacture use and/or sell
their Products as permitted hereunder and (b) all Patents
coming into the Control of JHU (other than those Patents
assigned to JHU by faculty, students, fellows or employees
who are not working in (or in support of) Dr. Lee’s JHU
laboratory) during the term of this Agreement, which, but
for the inclusion of such acquired Patents under this
clause (b), would prevent GI or MetaMorphix, and their
respective Affiliates, from practicing under one or more
of the Patents under clause (a). above. The JHU Patent
Rights believed by the Parties to be existing as of the
Effective Date are listed on Schedule 1.56 to this
Agreement. The JHU Patent Rights shall be restricted to
the Patents covering inventions made by Dr. Lee and/or
other JHU faculty, students, fellows and/or employees who
have signed an Invention and Disclosure Agreement.

	 	1.57  	“JHU Rights” shall mean the JHU Know-How and JHU Patent Rights.
	 
	 	1.58  	“Joint Know-How” shall mean any
unpatented information specifically relating to a BMP, GDF
or Collaborative Factor (and in the case where such
unpatented information was produced by JHU and
MetaMorphix, GDF-16 or GDF-17) which information is
produced by

	 	(i)  	GI and
MetaMorphix or GI and JHU, or JHU and
MetaMorphix as the case may be, on or before
May 31, 1998 in performing the Original
Research,
	 
	 	(ii)  	GI and
MetaMorphix, during the Collaborative Research
Term in performing the Collaborative
Research, only to the

14

 

	 	   	extent that such information relates to
those BMPs GDFs or Collaborative Factors that
have not yet been selected or designated as
either a GI Factor or a MetaMorphix Factor.
	 
	 	   	GI and JHU., during the Sponsored Research
Term in performing the Sponsored Research
only to the extent that with respect to the
licenses granted by

	 	(x)   	
JHU or GI to MetaMorphix hereunder such
information relates to those BMPs, GDFs or
Collaborative Factors that have not yet
been selected or designated as either a GI
Factor or a MetaMorphix Factor, or
	 
	 	(y)  	JHU to GI hereunder, such information
relates to any BMP, GDF or Collaborative
Factor, or

	 	(iv)  	 JHU and
MetaMorphix, during the Sponsored Research Term,
in performing any collaborative or sponsored
research (as permitted in accordance with Section
3.9 hereof),

and for which each named Party has a licensable interest,
which is reasonably useful necessary or required for GI or
MetaMorphix, and their respective Affiliates to
manufacture use and/or sell their Products under this
Agreement. For JHU the Joint Know-How shall be restricted
to the information produced by Dr. Lee and/or other JHU
faculty, students, fellows. and/or employees who have
signed an Invention and Disclosure Agreement.

	 	1.59  	“Joint Patent Rights” shall mean,
with respect to each BMP, GDF or Collaborative Factor (arid
in the case of inventions made jointly by JHU and
MetaMorphix. GDF-16 or GDF-17), (a) all Patents covering
inventions (as such term is defined under United States
Patent Law) made by

	 	(i)  	GI and
MetaMorphix jointly, or GI and JHU jointly, or
JHU and MetaMorphix jointly, as the case may be,
on or before May 31, 1998 in performing the
Original Research,
	 
	 	(ii)  	GI and
MetaMorphix, during the Collaborative Research
Term in performing the Collaborative Research,
only to the extent that such
inventions relate to those BMPs, GDFs or
Collaborative Factors that have not yet been
selected or designated as either a GI Factor or
a MetaMorphix Factor,
	 
	 	(iii)  	GI and JHU
during the Sponsored Research Term, in
performing the Sponsored Research, only to the
extent that, with respect to the licenses
granted by

15

 

	 	(x)  	JHU or GI to
MetaMorphix hereunder, such
inventions relate to those BMPs,
GDFs or
Collaborative Factors that have not yet
been selected or designated as either a
GI Factor or a MetaMorphix Factor, or
	 
	 	(y)  	JHU to GI hereunder, such inventions
relate to any BMP, GDF or Collaborative
Factor, or

	 	(iv)  	JHU and
MetaMorphix, during the Sponsored Research
Term, in performing any collaborative or
sponsored research (as permitted in accordance
with Section 3.9 hereof),

which inventions or Patents are reasonably useful,
necessary or required for GI or MetaMorphix, and their
respective Affiliates, to manufacture, use and/or sell
their Products for any use and (b) all Patents coming into
the Control of GI and MetaMorphix jointly, or GI and JHU
jointly, or JHU and MetaMorphix jointly, as the case
may-be, during the term of this Agreement, and for which
each named Party has a licensable interest, which, but for
the inclusion of such acquired Patents under this clause
(b), would prevent GI or MetaMorphix. and their respective
Affiliates, from practicing under one or more of the
Patents under clause (a) above. The Joint Patent Rights
believed by the Parties to be existing as of the Effective
Date are listed on Schedule 1.59 to this Agreement. For
JHU, the Joint Patent Rights shall be restricted to the
Patents covering inventions made by Dr. Lee and/or other
JHU faculty, students. fellows, and/or employees who have
signed an Invention and Disclosure Agreement.

	 	1.60  	“Joint Rights” shall mean the Joint Know-How and Joint Patent Rights.
	 
	 	1.61  	“Letter of Intent” shall mean that
certain Letter of Intent entered into by GI, MetaMorphix and
JHU as of January 4, 1999, which Letter of Intent sets
forth, inter alia, the Parties intention to enter
into this Agreement and the obligation of GI to make a
certain payment to JHU.
	 
	 	1.62  	“MetaMorphix Factors” shall mean (a)
each GDF listed on Schedule 1.62 as of the Effective Date:
(b) each BMP, GDF or Collaborative Factor subsequently
selected by MetaMorphix, which upon such selection shall be
listed on Schedule 1.62 and (c) each BMP, GDF or
Collaborative Factor belonging to a TGF-R Class which
includes one or more of the BMPs, GDFs or Collaborative
Factors identified in clauses (a) or (b) BMPs, GDFs and
Collaborative Factors which would belong to both (x) a TGF-ß
Factor Class which includes a MetaMorphix Factor and (y) a
TGF-ß Factor Class which includes a GI Factor, based on the
definition of TGF-ß Factor Class set forth in this
Agreement are classified pursuant to Section 1.81, below.
For the

16

 

sake of clarity MetaMorphix Factors shall not
include GDF-I6 or GDF-1 7 notwithstanding the fact that
JHU is granting to MetaMorphix a license hereunder with
respect to GDF-16 and GDF-17.

	 	1.63  	“MetaMorphix Field” shall mean
all potential uses in non-human animals including,
without limitation, (i) non-human animal health, (ii)
livestock products, (iii) the diagnosis and/or the
prophylactic or therapeutic treatment of diseases or
disorders in non-human animals, and/or (iv) the
development and production of transgenic non-human animals
for use as agricultural products.
	 
	 	1.64  	“MetaMorphix Know-How” shall
mean any unpatented information specifically relating
to a BMP, GDF or Collaborative Factor which
information is (a) produced by MetaMorphix

	 	(i)  	on
or before May 31, 1998 in performing the
Original Research, or
	 
	 	(ii)  	during
the Collaborative Research Term in performing
the Collaborative Research only to the extent
that such information relates to those BMPs,
GDFs or Collaborative Factors which have not
yet been selected or designated as either GI
Factors or MetaMorphix Factors,

and for which MetaMorphix has a licensable interest and
(b) is reasonably useful, necessary or required for GI
and its Affiliates to manufacture, use and/or sell its
Products under this Agreement. Notwithstanding the
foregoing the MetaMorphix Know-How shall also include
any data and information deemed to be included within
this definition pursuant to Sections 3.9 and/or 3.1 0
hereof.

	 	1.65  	“MetaMorphix Patent Rights”
shall mean, with respect to each BMP, GDF or
Collaborative Factor, (a). all Patents
covering inventions (as such term is defined under
United States Patent Law) made solely by MetaMorphix

	 	(i)  	on or
before May 31 , 1998 in performing the
Original Research or
	 
	 	(ii)  	during the
Collaborative Research Term in performing the
Collaborative Research, to the extent such
inventions relate to those BMPs, GDFs or
Collaborative Factors that have not yet been
selected or designated as either GI Factors or
MetaMorphix Factors,

17

 

which inventions are reasonably useful necessary or required for GI and its Affiliates
to manufacture, use and/or sell GI Products for any use and (b) all Patents coming into
the Control of MetaMorphix during the term of this Agreement, which but for the
inclusion of such Patents under this clause (h) would prevent GI and its Affiliates from
practicing under one or more of the Patents under clause (a) above. The
MetaMorphix Patent Rights believed by the Parties to be existing as of the Effective Date
are listed in Schedule 1.65 attached hereto. -

	 	1.66  	“MetaMorphix Product” shall mean each
MetaMorphix Factor, including any and all-

	 	(i)  	formulations, mixtures or
compositions of such MetaMorphix Factor,
	 
	 	(ii)  	antibodies targeted against such MetaMorphix Factor,
	 
	 	(iii)  	receptors for which such MetaMorphix Factor is a
	 
	 	(iv)  	ligand,
	 
	 	(v)  	antisense molecules or ribozymes that modulate the
in vivo production of such MetaMorphix Factor, and
	 
	 	(v)  	other products for research, diagnostic or
therapeutic use containing such MetaMorphix Factor or any of (i)
through (iv) above.

which or which the manufacture use or sale of which, is covered by a Valid Claim
included within the Factor Patent Rights.

	 	1.67  	“MetaMorphix Rights” shall mean the MetaMorphix Know-How and MetaMorphix Patent
Rights.
	 
	 	1.68  	“Net Sales” shall mean, with respect to any Product or Other TGF-ß Product, the
aggregate United States dollar equivalent of gross revenues derived by or payable to a
selling Party, its Affiliates and sublicensees from or on account of the sale or
distribution of such Product or Other TGF-ß Product, as applicable, to Third Parties, less
(a) reasonable credits or allowances, if any actually granted on account of price
adjustments, recalls, rejection or return of items previously sold, (b) excises, sales
taxes, value added taxes, consumption taxes, duties or other taxes imposed upon and paid
with respect to such sales (excluding income or franchise taxes of any kind) and (c)
separately itemized insurance and transportation costs incurred in shipping such Products or
Other TGF-ß Products, as applicable, to such Third Parties. No deduction shall be made for
any item of cost incurred by a selling Parry, its Affiliates or sublicensees in preparing,
manufacturing, shipping or selling Products or Other TGF-P Products, as applicable, except

18

 

as permitted
pursuant to clauses (a), (b) and (c) of the
foregoing sentence. Net Sales shall not include any
transfer between a selling Party and any of its Affiliates
or sublicensees for resale but shall include the resale
price to a Third Party payable to such Affiliates or
sublicensees.

Notwithstanding the provisions of the first paragraph
of this Section 1.68. (a) if a selling Party or an Affiliate
or sublicensee sells Products or Other TGF-ß Products, as
applicable, to a distributor which is not an Affiliate the
gross revenues derived by or payable to that selling Party
or the applicable Affiliate or sublicensee on account of
such sale shall be the gross revenues received by the
selling Party and/or the applicable Affiliate or sublicensee
from the sale of such Products or Other TGF-ß Products, as
applicable, to the distributor, and (b) if the distributor
is an Affiliate, then gross revenues derived by or payable
to that selling Party or the applicable Affiliate or
sublicensee shall be those received from the sale to the
first Third Party which is not an Affiliate.

In addition, in order to ensure the full royalty payments
contemplated under this Agreement. in the event any Product
or Other TGF-ß Product, as applicable, is sold to any
corporation, firm or association with which GI or
MetaMorphix, as the case may be, has an agreement,
understanding or other arrangement with respect to other
forms of consideration (for example, an option to purchase
stock or actual stock ownership; an arrangement involving
division of profits or special rebates or allowances)
royalties shall be calculated for sales of such Products or
Other TGF-ß Products, as applicable, based upon the
greatest of (a) the price at which the purchaser of such
Products or Other TGF-ß Products, as applicable, resells
such Products or Other TGF-ß Products to the end user or
(b) the fair market value of such Products or Other TGF-ß
Products. as applicable, or (c) the price of such Products
or Other TGF-ß Products, as applicable, paid by the
purchaser.

In the event that a selling Party or any of its Affiliates
or sublicensees shall make any transfer of Products or
Other TGF-ß Products to Third Parties for other than
monetary value such transfer shall be considered a sale
hereunder for accounting and royalty purposes. Net
Sales for any such transfers shall be determined on a
country-by-country basis and shall be the average price of
“arms length” sales by that selling Party, its Affiliates
or sublicensees in such country during the royalty
reporting period in which such transfer occurs or, if no
such “arms length” sales occurred in such country during
such period, during the last period in which such “arms
length” sales occurred. If no “arms length” sales have
occurred in a particular country, Net Sales for any such
transfer in such country shall be the average price of
“arms length” sales in all countries by that selling Party.

Notwithstanding the foregoing, no transfer of Products
or Other TGF-ß Products for testing, pre-clinical,
clinical or developmental purposes or as

19

 

samples shall be considered a sale hereunder for
accounting and royalty purposes.

	 	1.69  	“Original Research” shall mean the
research activities conducted, pursuant to the 1994
Collaboration Agreement by the Parties prior to June 1,
1998 to rapidly Discover, characterize and evaluate the
BMPs, GDFs and Collaborative Factors for commercial
development. For JHU, the Original Research was restricted
-to the research sponsored by MetaMorphix under Section 6.1
of the 1994 Collaboration Agreement and conducted in (or in
collaboration with) Dr. Lee’s JHU laboratory by Dr. Lee and
other JHU faculty, students, fellows, and employees who had
signed an Invention and Disclosure Agreement.
	 
	 	1.70  	“Other TGF-ß Factors” shall mean the Factors in the TGF-ß Superfamily which are not BMPs,
GDFs, Collaborative Factors, Additional BMPs, Additional GDFs
or Additional Collaborative Factors. Other TGF-ß Factors
shall include, without limitation, (a) Factors acquired by a
Party from a Third Party; (b) Factors first sequenced by a
Party (either solely or jointly) pursuant to a preexisting
collaboration with a Third Party (for example, without
limitation, the GPDC Factors, which were first
sequenced by GI pursuant to a preexisting collaboration
with its Japanese partner, Yamanouchi Pharmaceutical Company
Ltd., and any Factors first identified by GI using “gene
chip” technology developed pursuant to an agreement with
Affymetrix. Inc.): (c) with respect to MetaMorphix only for
determining royalties that may be payable by MetaMorphix to
GI, the TGFß Factors known to JHU and MetaMorphix as GDF-16
or GDF-17; and (d) Factors first sequenced by a Party (either
solely or jointly) pursuant to any future collaborations with
Third Parties.
	 
	 	1.71  	“Other TGF-ß Products” shall mean each Other TGF-ß Factor,
including any and all

	 	(i)  	formulations, mixtures or compositions of such
Other TGF-ß Factor,
	 
	 	(ii)  	antibodies targeted against such Other TGF-ß Factor,
	 
	 	(iii)  	antisense
molecules or ribozymes that modulate the
in vivo production of such Other
TGF-ß Factor, and
	 
	 	(iv)  	other
products for research, diagnostic or
therapeutic use containing such Other TGF-ß
Factor or any of (i) through (iii) above.

	 	1.72  	“Patents” shall mean all patents
and patent applications and foreign counterparts thereof
(which for all purposes of this Agreement shall be

20

 

deemed to include certificates of invention and applications
for certificates of invention and priority rights), together
with any reissues extensions or other governmental acts which
effectively extend the period of exclusivity by the patent
holder substitutions, confirmations, registrations
revalidations additions, continuations,
continuations-in-part, or divisions of or to any of the
foregoing.

	 	1.73  	“PLA” shall mean a Product License
Application or its equivalent in the United States or any
corresponding foreign application. registration, or
certification.
	 
	 	1.74  	“Product(s)” shall mean the
MetaMorphix Products, the GI Type A Products, the GI
Type B Products, and/or the GI Type C Products, as
applicable.
	 
	 	1.75  	“Promissory Note” shall mean that
certain promissory note dated February 9, 1998, executed by
MetaMorphix as the maker, where GI is the lender, together
with the First Allonge (dated August 18, 1998) and the Second
Allonge (dated October 30, 1998) thereto.
	 
	 	1.76  	“Research Management Committee” or
“RMC” is defined in Section 3.4.3 of this Agreement.
	 
	 	1.77  	“Sponsored Research” shall mean the
research activities conducted, pursuant to this Agreement,
(i) by JHU, to rapidly characterize and evaluate the BMPs.
GDFs and Collaborative Factors for commercial development by
GI and/or MetaMorphix and (ii) by JHU and GI to rapidly
Discover characterize and evaluate the Additional BMPs,
Additional GDFs and Additional Collaborative Factors for
commercial development by GI. For JHU, the Sponsored Research
to be conducted hereunder shall be limited to the research
sponsored by GI under Section 3.3 hereof and conducted in (or
in collaboration with) Dr. Lee’s JHU laboratory by Dr. Lee
and/or other JHU faculty, students, fellows and/or employees
who have signed an Invention and Disclosure Agreement.
	 
	 	1.78  	“Sponsored Research Term” shall have
the meaning set forth in Section 3.3.1 hereof.
	 
	 	1.79  	“TGF-ß Additional Factor Class” shall
mean all Additional Factors and Other TGF-ß Factors which
share eighty percent (80%) amino acid sequence identity within
their mature protein coding regions. The first Additional BMP,
Additional GDF or Additional Collaborative Factor in a TGF-ß
Class Discovered by a GI and/or JHU is the “First Member”; any
other Factors Discovered by GI and/or JHU in that TGF-ß Class
are “Subsequent Members.”

21

 

	 	1.80  	“TGF-ß Class” shall mean a TGF-ß Factor Class or a
TGF-ß Additional Factor Class as applicable.
	 
	 	1.81  	“TGF-ß Factor Class” shall mean all
BMPs. GDFs. Collaborative Factors. Other TGF-ß Factors and,
as between JHU and MetaMorphix only. GDF-I6 and GDF-17, which
share eighty percent (80%) amino acid sequence identity
within their mature protein coding regions. The first BMP
GDF or Collaborative Factor in a TGF-ß Class
Discovered by a Party (or Parties) is the “First Member”; any
other Factors Discovered by a Party (or Parties) in that
TGF-ß Class are “Subsequent Members.” However, any
BMP, GDF or Collaborative Factor which shares eighty percent
(80%) amino acid sequence identity within its mature protein
coding region with both (a) a previously classified GI Factor
and (b) a previously classified MetaMorphix Factor shall be
classified, at the RMC’s discretion after consultation with
JHU, as (x) a Subsequent Member of the TGF-ß Class containing
the GI Factor referred to in Subsection (a) of this Section
or (y) a Subsequent Member of the TGF-ß Class containing the
MetaMorphix Factor referred to in Subsection (b) of this
Section or (z) the First Member of a new TGF-ß Class for
purposes of this Agreement.
	 
	 	1.82  	“TGF-ß Factors” shall mean the
BMPs, the GDFs, the Collaborative Factors, the
Additional BMPs the Additional GDFs, the Additional
Collaborative Factors GDF-16 GDF-17 and the Other
TGF-13 Factors, being all of the Factors in the TGF-f3
Superfamily.
	 
	 	1.83  	“TGF-ß Superfamily” shall mean (a)
all of the molecules containing the amino acid pattern
which reflects the conserved cysteine structure
CX{24,29}CX{3}CX{25.38}CX{30.35}CXC and (b) any other
molecules which the RMC after consultation with JHU,
reasonably determines are properly considered members of
the TGF-ß Superfamily.
	 
	 	1.84  	“Third Party(ies)” shall mean any
person(s) or entity(ies) other than JHU, MetaMorphix GI
and their respective Affiliates.
	 
	 	1.85  	“Use Patent” shall mean with
respect to GI a Patent within the GI Patent Rights or the
Joint Patent Rights and with respect to MetaMorphix, a
Patent within the MetaMorphix Patent Rights or Joint Patent
Rights, and with respect to JHU, a Patent within the JHU
Patent Rights or the Joint Patent Rights, which Patent
contains claims directed to a use of, or method of treatment
using, a Product and which does not contain composition
claims directed to such Product.
	 
	 	1.86  	“Valid Claim” shall mean. with
respect to the manufacture, use or sale of a Product, (a) a
claim of an unexpired patent which shall not have been
withdrawn, canceled or disclaimed nor held invalid or
unenforceable by a court of competent jurisdiction in an
unappealed or unappealable decision or

22

 

(b) a claim of a patent application which is either
(i) the subject of a pending patent interference
proceeding or (ii) supported by the disclosure of such
application or any prior filed patent application for a
cumulative period not exceeding seven (7) years from the
earliest date of such supporting disclosure for such claim
in any such patent application.

	2.  	CONDITIONS PRECEDENT; THE CLOSING.

	 	2.1  	Government Approvals.

	 	2.1.1  	The Parties’ Obligations. Each Party shall use its good faith
efforts to eliminate any concern on the part of any
court or government authority regarding the legality
of the proposed transaction, including, if required by
federal or state antitrust authorities, promptly
taking all steps to secure government antitrust
clearance, including, without limitation, cooperating
in good faith with any government investigation
including the prompt production of documents and
information demanded by a second request for documents
and of witnesses if requested.
	 
	 	2.1.2  	Additional Approvals. Each Party will cooperate and use respectively all
reasonable efforts to make all other registrations,
filings and applications, to give all notices and to
obtain as soon as practicable all governmental or
other consents, transfers, approvals, orders,
qualifications authorizations, permits and waivers. if
any, and to do. all other things necessary or
desirable for the consummation of the transactions as
contemplated hereby. Neither Party shall be required,
however, to divest products or assets or materially
change its business if doing so is a condition of
obtaining any governmental approvals of the
transactions contemplated by this Agreement.

	 	2.2  	Corporate Approvals.

	 	2.2.1  	MetaMorphix Director
and Shareholder Approval. MetaMorphix represents and
warrants to GI that each member of its board of
directors (excluding those Directors who are employed
by GI and, for such reason, recuse themselves from
voting on this transaction) and each of its
shareholders that hold twenty-five thousand (25,000)
or more shares of MetaMorphix common or preferred
stock of any series or class has approved MetaMorphix
entering into this Agreement, performing its
obligations hereunder and consummating the
transactions contemplated hereby.
	 
	 	2.2.2  	Genetics Institute Approval. GI represents and warrants that it
has obtained all necessary management approvals to enter into this

23

 

	 	   	Agreement, including, without limitation, any
approvals from GI’s parent company. American Home
Products Corporation.

	 	2.3  	The Closing.

	 	2.3.1  	Time and Place. The Closing of the transactions
contemplated hereby shall take place at the offices of the
Wyeth-Ayerst
Laboratories Division of American Home Products
Corporation. St. Davids, Pennsylvania, at 10:00 A.M.
(local time) on a date to be mutually agreed upon by
the Parties, which date shall be within three (3)
business days after the execution of this Agreement by
each of the Parties and the delivery of such fully
executed Agreement to each of the Parties.

	 	2.3.2  	GI Deliverables. At the Closing, GI shall

	 	(I)  	pay to MetaMorphix the amounts set
forth in Sections 8.4, 10.2.1 and 10.2.2
hereof, to the extent such amounts have-not
been paid by GI prior to the Closing;
	 
	 	(ii)  	in accordance with Section 8.1 hereof, deliver
to MetaMorphix an executed Assignment
Agreement (substantially in the form of
Schedule 8.IA hereof) and an executed Stock
Power (substantially in the form of
Schedule 8.IB attached hereto) for each
MetaMorphix stock certificate, along with
the original stock certificate, held by GI,
for the assignment to MetaMorphix of two
million seven hundred thousand (2,700,000) shares of its MetaMorphix Series A
Convertible Preferred Stock and nine
hundred thousand shares (900,000) shares
(i.e.. all) of its MetaMorphix Series B
Convertible Preferred Stock, each of which
are owned by GI as of the date this
Agreement was signed by the Parties;
	 
	 	(iii)  	in accordance with Section 8.2 hereof,
sign the Third Allonge to the Promissory
Note (substantially in the form of
Schedule 8.2 hereof); and
	 
	 	(iv)  	in accordance with Section 8.6 hereof,
sign and deliver to MetaMorphix, JHU and
Dr. Lee, the Termination Agreement
(substantially in the form of Schedule 8.6
hereof)

	 	2.3.3  	MetaMorphix Deliverables. At the Closing, MetaMorphix shall

24

 

	 	(i)  	in accordance with Section 8.2
hereof, sign and deliver to GI the
Third Allonge to the Promissory Note
(substantially in the form of Schedule
8.2 hereof:
	 
	 	(ii)  	in accordance with Section 8.1 hereof and the
Assignment Agreement to be signed at the Closing,
after receipt of the Assignment Agreement. the Stock
Power and the original MetaMorphix stock
certificates, a new original stock
certificate in GI’s name representing
the two hundred thousand (200,000) shares of the MetaMorphix Series A
Convertible Preferred Stock to be
retained by GI:
	 
	 	(iii)  	in accordance with Section 8.6 hereof,
sign and deliver to GI, JHU and Dr. Lee,
the Termination Agreement (substantially
in the form of Schedule 8.6 hereof);
deliver to GI a written opinion of
MetaMorphix’ legal counsel that (a) this
Agreement and the transactions
contemplated hereby have been unanimously
approved by (x) MetaMorphix’ Board of
Directors and (y) those MetaMorphix
shareholders that own twenty-five
thousand (25,000) or more shares of
MetaMorphix stock of any class or series and (b) MetaMorphix has the requisite
authority and right to enter into this
Agreement and perform all of its
obligations hereunder, which opinion
shall be in a form customary in like
transactions.

	 	2.3.4  	JHU Deliverables. At
the Closing, JHU shall in accordance with Section
8.6 hereof sign and deliver to GI, MetaMorphix and
Dr. Lee the Termination Agreement (substantially
in the form of Schedule 8.6 hereof).
	 
	 	2.3.5  	Dr. Lee Deliverables.
At the Closing, Dr. Lee shall in accordance with
Section 8.6 hereof sign and deliver to GI,
MetaMorphix and JHU the Termination Agreement
(substantially in the form of Schedule 8.6 hereof).

	3.  	THE RESEARCH.

	 	3.1  	Background and Goals. In conducting
the Original Research in accordance with the 1994
Collaboration Agreement, a number of GDFs, BMPs and/or
Collaborative Factors were Discovered by the Parties. The
Parties desire to continue their efforts to evaluate and
characterize such Factors and any other

25

 

	 	   	  Factors that were otherwise subject to the terms and
conditions of the 1994 Collaboration Agreement, but wish to
conduct such activities under a restructured relationship.
Under such restructured relationship. GI-and JHU
hereby form a sponsored research relationship whereby GI
will provided certain sponsored research funding to JHU for
use by JHU in evaluating and characterizing the GDFs, BMPs
and Collaborative Factors and in Discovering, evaluating and
characterizing Additional Factors. Additionally, until the
expiration of the Collaborative Research Term, GI and
MetaMorphix will continue to collaborate with respect to the
evaluation and characterization of the GDFs, BMPs and
Collaborative Factors which have not yet been selected or
designated as either GI Factors or MetaMorphix Factors so
that GI and MetaMorphix may utilize such information in
selecting such Factors as either GI Factors or MetaMorphix
Factors. As part of such collaboration GI will make
available to MetaMorphix relevant information it receives
from JHU under the Sponsored Research regarding such GDFs,
BMPs and Collaborative Factors.
	 
	 	3.2  	The Original Research.

	 	3.2.1  	Funding. JHU
acknowledges and agrees that it has received all
payments due to it from MetaMorphix and/or GI with
respect to its conduct of the Original Research.
	 
	 	3.2.2  	Disclosure of Information.

	 	3.2.2.1  	Disclosure of Sequences. Each Party
represents and warrants to the other Parties
that, prior to the Effective Date, it has
reported and disclosed to the other Parties the
cDNA sequence(s) encoding the mature/processed
protein region of any BMPs, GDFs or
Collaborative Factors Discovered by that Party
in conducting the Original Research on or
before May 31, 1998.
	 
	 	3.2.2.2  	Disclosure of Other Information. Each Party
shall promptly report and disclose to the other
Parties, in writing, the applicable (x) Factor
Rights developed in conducting the Original
Research and (y) Data developed in conducting the
Original Research as follows:

	 	   	in connection with the preparation,
filing and maintenance by a Party of
a Patent covering such Factor
Rights, or a review of
information by the Parties prior
to public disclosure, the
disclosure of such Factor Rights
and Data may be limited to that
Factor (or those Factors) which is
(are) the

26

 

	 	   	subject of the Patent action or
public disclosure: and
	 
	 	ii.  	in connection with notice by GI or
MetaMorphix of its intention to select, or
trigger the selection of, any Available
Factor under Article 5, below, the
disclosure of such Factor Rights and Data
shall not be limited to a particular
Factor, but shall include information on
all then-Available Factors which
the disclosing Party, acting in good
faith, determines is likely to be material
to the selecting Party in making its
selection decision, all according to the
procedures set forth in Article 5 of this
Agreement.

	 	3.3  	The Sponsored Research.

	 	3.3.1  	Sponsored Research Term.
The Sponsored Research shall be conducted by JHU as set
forth herein beginning on June 1, 1998 and shall continue
through November 30, 1999 or until such later date as JHU
and GI may mutually agree in writing (the “Sponsored
Research Term”). Any such extension of the Sponsored
Research Term shall have no effect upon the length of the
Collaborative Research Term, and shall not be considered to
be an extension of the Original Research Term.
	 
	 	3.3.2  	Funding. GI shall provide
to JHU a total of one million one hundred eighty-two thousand
four hundred sixty two dollars ($1,182,462) in sponsored
research funding, four hundred fifty six thousand one hundred
thirty eight dollars ($456,138) of which was paid to JHU on
or about January 7, 1999 pursuant to the Letter of Intent.
The remaining seven hundred twenty six thousand
three hundred twenty four dollars ($726,324) will be provided
to JHU in installments as follows:

	 	 	 
	Amount of Payment	 	Date Payment Is Due
	$181,581
	 	within ten (10) days after the Effective Date
	 
	 	 
	$181,581
	 	March 1, 1999
	 
	 	 
	$181,581
	 	June 1, 1999
	 
	 	 
	$181,581
	 	September 1, 1999

27

 

	 	   	Additionally, MetaMorphix had agreed to purchase and
donate to JHU for use by Dr. Lee’s laboratory in
carrying out research activities that MetaMorphix had
agreed to sponsor at JHU during the period commencing
on December 1, 1997 and ending on November 30, 1998.
up to two hundred fifty thousand dollars (5250,000)
worth of equipment and supplies. GI agrees to
partially reimburse MetaMorphix for such supply
purchased by paying to MetaMorphix thirty seven
thousand four hundred ninety dollars ($37,490) which
amount will be paid on the Effective Date. Each of
GI, JHU and MetaMorphix acknowledge and agree that
the payment (in the amount of $456,138) made to JHU
pursuant to the Letter of Intent and the thirty seven
thousand four hundred ninety dollars ($37,490)
payment to be made to MetaMorphix are being made by
GI to assume previously unpaid sponsored research
funding obligations of MetaMorphix to JHU and that,
inconsideration of GI’s assuming such obligations.
MetaMorphix relinquishes all rights and licenses to
any inventions. discoveries, Patents and know-how
relating to any Additional GDFs or Additional
Collaborative Factors Discovered by JHU on or after
June 1, 1998. ‘MetaMorphix further acknowledges that,
as provided in Section 6.3.3 below, JHU has the right
to grant and is granting to GI an exclusive license
with respect to any such Additional Factors.
	 
	 	3.3.3  	Use of Funds; Budgets.
JHU shall use the funds provided under Section 3.3.2
solely in support of activities in Dr. Lee’s JHU
laboratory, or in such other JHU laboratories or core
facilities which are supporting Dr. Lee’s laboratory,
under the Sponsored Research to (i) characterize GDFs
and Collaborative Factors for commercialization by GI
and/or MetaMorphix and their respective sublicensees,
and (ii) to Discover and characterize Additional GDFs
and Additional Collaborative Factors for
commercialization by GI and its sublicensees, as
provided herein. During the Sponsored Research Term.
JHU, except as expressly permitted under Section 3.9
hereof shall not use funds provided by a commercial
entity, other than GI to support Dr. Lee‘s
activities under the Sponsored Research. JHU, acting
through Dr. Lee, has prepared an initial budget to
guide JHU’s expenditures for its Sponsored Research
activities during the Sponsored Research Term, a copy
of which is attached hereto as Schedule 3.3.3. The
Sponsored Research funding may be increased only by
written agreement of GI and JHU. In the event that GI
and JHU agree to extend the Sponsored Research Term,
any unexpended funds will be carried over for use in
the following year.
	 
	 	3.3.4  	Sponsored Research
Plan. A Sponsored Research Plan, which
sets forth JHU’s specific activities under the
Sponsored Research and

28

 

	 	   	coordinates JHU’s and GI’s respective activities
under the Sponsored Research is attached hereto as
Schedule 3.3.4. With respect to JHU’s activities under
the Sponsored Research the Sponsored Research Plan
sets forth Dr. Lee’s research activities for the full
Sponsored Research Term: this portion of the Sponsored
Research Plan has been reviewed and approved by GI
and shall be updated on an as needed basis as agreed
in writing by Dr. Lee and GI. With respect to
coordination of the Parties’ activities under the
Sponsored Research, the Sponsored Plan shall be
reviewed each calendar quarter by the Dr. Lee and GI
JHU and GI each shall endeavor to carry out their
portion of the Sponsored Research Plan consistent with
the descriptions of Schedule 3.3.4.
	 
	 	33.5  	Sponsored Research
Activities. For JHU, the Sponsored Research shall be
conducted in Dr. Lee’s JHU laboratory, only by Dr. Lee
and other JHU faculty, students, fellows and employees
who have signed an Invention and Disclosure Agreement,
using Sponsored Research funding provided by GI under
this Section 3.3; provided, however, that (i) JHU may
utilize its genetics core sequencing facility and
other core facilities in support of its Sponsored
Research activities under this Agreement and (ii) Dr.
Lee may collaborate with other JHU laboratories in
performing the Sponsored Research, provided that
(x) such collaboration is consistent with both
the Sponsored Research Plan and JHU’s representations
and warranties set forth in Section 12.4 of this
Agreement and (y) prior to commencement of such
collaboration, JHU, acting through Dr. Lee, gives GI
written notice of such proposed collaboration and (z)
the JHU faculty, students, fellows and employees
working in such other JHU laboratory have signed an
Invention and Disclosure Agreement. GI shall review
JHU’s activities under the Sponsored Research. During
the Sponsored Research Term and any extension of the
Sponsored Research Term that JHU and GI may
agree upon and for a period of six (6)
months thereafter. JHU shall not collaborate or
otherwise, directly or indirectly, work with
MetaMorphix or any Third Party with respect to the
Discovery of any Factor or characterization of any
Additional Factor.
	 
	 	3.3.6  	Invention and
Disclosure Agreement. JHU, acting through Dr. Lee,
shall require all JHU faculty, students, fellows and
employees working in Dr. Lee’s JHU laboratory or in
any other JHU laboratory with which Dr. Lee
collaborates, as provided in Section 3.3.4. above,
who are engaged in the Discovery, evaluation and/or
characterization of TGF-R Factors to sign an
Invention and Disclosure Agreement. In the event Dr.
Lee desires to disclose

29

 

	 	   	specific GI and/or MetaMorphix Confidential
Information to any such JHU faculty, students, fellows
or employees, prior to such disclosure JHU acting
through Dr. Lee. shall require such JHU faculty,
students, fellows and employees to sign a
Confidentiality Agreement in the form appearing as
Schedule 3.3.6 to this Agreement covering such
specific Confidential Information. JHU agrees to
promptly provide to GI a copy of each such Invention
and Disclosure Agreement and Confidentiality Agreement
that is entered into in accordance with this Section
3.3.5 or any other provision of this Agreement.
Additionally, within thirty (30) days after the
Closing; JHU shall provide to GI a copy of each
Invention and Disclosure Agreement and Confidentiality
Agreement that had been entered into prior to the
Closing.
	 
	 	3.3.7  	Disclosure of Information.

	 	3.3.7.1  	Disclosure of Sequences. JHU agrees to promptly
(within twenty-five (25) days after Discovery)
report and disclose to GI the cDNA sequence(s)
encoding the mature/processed protein region of
any Additional GDFs or Additional Collaborative
Factors Discovered by JHU during the Sponsored
Research Term or the six (6) month period
following the end of the Sponsored Research Term.
	 
	 	3.3.7.2  	Disclosure of Other Information. Subject to
Section 3.3.7.3, below, JHU, from time to time,
but no less often than once each Calendar
Quarter, during the Sponsored Research Term
(including any extensions thereof), shall
disclose to GI (x) any Factor Rights (other than
the cDNA sequences promptly disclosed under
Section 3.3.7.1, above) and (y) any Data which
relates to the Sponsored Research. GI may, at
its sole option, either (i) disclose to
MetaMorphix or (ii) require JHU to disclose to
MetaMorphix, any such Factor Rights and Data
which relates to one or more of the BMPs, GDFs
or Collaborative Factors that have not yet
become either a GI Factor or a MetaMorphix
Factor in accordance with the selection process
set forth in Article 5 below, provided, however,
that JHU shall not disclose any such Factor
Rights or Data to MetaMorphix without GI’s prior
consent, which consent shall not be unreasonably
withheld. Notwithstanding the foregoing, upon
GI’s request, which request may be made from
time to time, JHU shall promptly (within
fourteen (14) days of such request) disclose to
GI all such Factor Rights and Data which JHU has
not previously disclosed to GI.

30

 

	 	   	Notwithstanding the foregoing. JHU agrees that
it will not disclose to MetaMorphix any Factor
Rights or Data pertaining to any GI Factor
(after such Factor has been selected by GI in
accordance with Article 5 hereof) or to any
Additional Factor without GI’s prior written
consent which consent may be provided or
withheld in GI’s sole discretion.
	 
	 	3.3.7.3  	Mandatory Disclosure of Other Information.
	 
	 	   	Notwithstanding Section 3.3.7.2, above, JHU
shall promptly report and disclose to GI and,
if GI requests JHU to do so, to MetaMorphix, in
writing, the applicable (x) Factor Rights and
(y) Data, as follows:

i. in connection with the
preparation, filing and maintenance by JHU of a
Patent covering the Factor Patent Rights, or a
review of information by the Parties prior to
public disclosure, the disclosure of such
Factor Rights and Data may be limited to that
Factor (or those Factors) which is (are) the
subject of the Patent action or public
disclosure;

ii. in connection with notice by GI or MetaMorphix of its intention to select, or
trigger the selection of, any Available Factor under Section 5, below, the disclosure of
such Factor Rights and Data shall not be limited to a particular Factor, but shall
include information on all then-Available Factors which the disclosing Party, acting in
good faith, determines is likely to be material to the selecting Party in making its
selection decision, all according to the procedures set forth in Section 5 of this
Agreement; and

iii.
in connection with submission of
JHU’s annual report, as provided in
Subsection 3.3.8, below.

	 	3.3.8  	Annual Reports. Each of
GI and JHU shall prepare and submit to the other,
within thirty (30) days of the end of the Sponsored
Research Term and within thirty (30) days of the end
of each year of any extension of the Sponsored
Research Term, a report summarizing that Party’s
activities under the Sponsored Research during the
preceding year.
	 
	 	3.3.9  	Equipment Pursuant
to the 1994 Collaboration Agreement, JHU, utilizing
a portion of the funds it received from MetaMorphix,

31

 

	 	   	purchased tissue culture equipment, molecular
biology equipment and protein test equipment
identified in Schedule 3.3.9 attached hereto. In
accordance with the terms of the 1994 Collaboration
Agreement JHU owns such equipment and shall
continue to own such equipment. JHU agrees that
during the Sponsored Research Term, such equipment
will be located in Dr. Lee’s JHU laboratory and will
be used primarily by JHU personnel engaged in the
Sponsored Research under this Agreement.
	 
	 	3.3.10  	Exclusivity of Research. During the Sponsored
Research Term and for a period of six (6) months
following the expiration of the Sponsored Research
Term, Dr. Lee, except as expressly permitted under
Sections 3.9 and/or 3.10 hereof, will not participate
(as a researcher, consultant or advisor) in any
research sponsored or otherwise funded by a commercial
entity (except a Party) which is intended to
characterize previously-Discovered TGF-ß Factors
(except for GDF 1), and Discover and characterize new
Factors, in the TGF-ß Superfamily. During the Sponsored
Research Term and for such time as they are engaged in
the Discovery and characterization of TGF-ß Factors in
(or in collaboration with) Dr. Lee’s JHU laboratory,
the JHU faculty, students, fellows and employees who
have signed an Invention and Disclosure Agreement shall
give JHU immediate notice of any formal affiliations
they are negotiating or may have (as researchers,
consultants or advisors) with a commercial entity
(except GI) which is intended to discover, identify
and/or characterize Factors in the TGF-ß Superfamily.
JHU, acting through Dr. Lee, shall describe to GI any
such notice its receives under an Invention and
Disclosure Agreement, and thereafter, JHU shall have no
further obligation, provided that such Invention and
Disclosure Agreement remains in effect, and further
provided, that JHU, acting through Dr. Lee, notifies
such commercial entity of the existence of such
Invention and Disclosure Agreement between JHU and such
JHU faculty, student, fellow or employee.

	 	3.4  	The Collaborative Research.

	 	3.4.1  	The Collaborative Research Term. The Collaborative
Research began as of June 1, 1998 and shall be
conducted by GI and MetaMorphix through November 30,
1999 or such later date as may be mutually agreed upon
in writing by the Parties (the “Collaborative Research
Term”). Any such extension of the Collaborative
Research Term shall have no effect on the length of the
Sponsored Research Term.

32

 

	 	3.4.2  	Collaborative Research Plan. A Collaborative
Research Plan which sets forth GI’s and
MetaMorphix’s specific activities under the
Collaborative Research and coordinates the Gi’s and
MetaMorphix’s respective activities under the
Collaborative Research, is attached hereto as
Schedule 3.4.2. With respect to coordination of the
GI’s and MetaMorphix’s activities under the
Collaborative Research, the Collaborative Research
Plan shall be reviewed each calendar quarter by the
RMC. The Parties shall endeavor to carry out their
portion of the Collaborative Research Plan consistent
with the descriptions of Schedule 3.4.2.
	 
	 	3.4.3  	Research Management Committee. Pursuant to the
1994 Collaboration Agreement, GI and MetaMorphix
formed a Research Management Committee (the “RMC”)
which committee shall continue to exist during the
Collaborative Research Term of this Agreement. The
function of the RMC shall be to (i) advise GI and
MetaMorphix on the direction of the Collaborative
Research, (ii) coordinate GI’s and MetaMorphix’s
activities under the Collaborative Research, (iii)
facilitate the exchange of ideas and information by GI
and MetaMorphix under this Agreement and (iv) mediate
any disputes between GI and MetaMorphix, as provided
in Sections 1.81 and Article S. The RMC shall consist
of four (4) members, two (2) of whom shall be
designated by GI and two (2) of whom shall be
designated by MetaMorphix (with only the nonGI
representatives on the MetaMorphix board of directors
voting in the selection of such.
representatives). Communications between GI and
MetaMorphix with respect to the Discovery,
characterization, evaluation and selection of BMPs,
GDFs and Collaborative Factors shall be directed to
each of GI’s and MetaMorphix’s respective RMC members
and confirmed with copies to each of GI’s and
MetaMorphix’s respective RMC members, subject to
Section 3.4.6, below, GI and MetaMorphix may assign
its members to the RMC as it deems appropriate, and
designated substitutes may represent RMC members at
regularly scheduled meetings at the
discretion of the substituting Party. The RMC will
meet at least once per calendar quarter during the
Collaborative Research Term, alternating between GI
and MetaMorphix locations, to review their progress
under the Collaborative Research and other activities
under this Agreement subject to Section 3.4.6, below.
Actions by and decisions of the RMC shall require the
affirmative vote of at least three (3) RMC members. GI
and MetaMorphix shall each designate an overall
project manager to coordinate preparation of short
written reports summarizing each of GI’s and
MetaMorphix’s Collaborative Research efforts, to be
provided to each of the RMC members in advance of each
quarterly RMC meeting, subject to

33

 

	 	   	Section 3.4.6, below. It is contemplated that, in
addition to reports to, and meetings of the RMC there will
be frequent communications among the scientists and project
managers to keep GI and MetaMorphix advised of current
Collaborative Research activities, subject to Section 3.4.6,
below.
	 
	 	3.4.4  	Collaborative Research
Activities. In conducting its activities under the
Collaborative Research, GI, at its own expense, shall allocate
at least one (1) full time equivalent scientist to the
Collaborative Research, together with such technical staff,
equipment and supplies as are reasonably necessary to support
those GI scientists. In conducting its activities under the
Collaborative Research, MetaMorphix, at its own expense, shall
allocate at least one (1) full time equivalent scientist to
the Collaborative Research, together with such technical
staff, equipment and supplies as are reasonably necessary to
support such MetaMorphix scientist. During the Collaborative
Research Term and any extension of the Sponsored Research Term
that JHU and GI may agree upon and for a period of six (6)
months thereafter. MetaMorphix shall not collaborate or
otherwise, directly or indirectly, except through the
Collaborative Research or as otherwise expressly permitted
under Sections 3.9 and/or 3.10 hereof work with JHU with
respect to the Discovery or characterization of any
Factor.
	 
	 	3.4.5  	Dispute Resolution. In
the event the RMC is unable to resolve any issue which
properly comes before it within sixty (60) days, senior
executives from each of GI and MetaMorphix shall meet
promptly following a notice from either such Party in order
to discuss and
resolve, within sixty (60) days, the outstanding issues
facing the RMC.

	 	3.4.6  	Disclosure of Information.

	 	3.4.6.1  	Disclosure of Sequences. Each of GI and
MetaMorphix represents and warrants to the other
Parties that, on or before the Effective Date, it
has reported and disclosed to the other Parties the
cDNA sequence(s) encoding the mature/processed
protein region of any BMPs, GDFs or Collaborative
Factors Discovered by that Party.
	 
	 	3.4.6.2  	Discretionary Disclosure of Other Information.
Subject to Section 3.3:6.3, below, each of GI and
MetaMorphix may, at its discretion, from time to time
disclose to the other Parties during the
Collaborative Research Term (x) any Factor Rights
(other than the cDNA sequences

34

 

	 	   	promptly disclosed under Section 3.4.6.1, above)
and (y) any Data which relates to the Collaborative
Research.
	 
	 	3.4.6.3  	Mandatory Disclosure of Other Information.
Notwithstanding Section 3.4.6.2. above, each of GI and
MetaMorphix shall promptly report and disclose to the
other Parties, in writing, the applicable (x) Factor
Rights and (y) Data, (in each case, including any Data
received from JHU) as follows:

	 	i.  	in connection with the preparation, filing and
maintenance by such Party of a Patent covering
the Factor Patent Rights, or a review of
information by the Parties prior to public
disclosure, the disclosure of such Factor
Rights and Data may be limited to that Factor
(or those Factors) which: is (are)
the subject of the Patent action or public
disclosure;
	 
	 	ii.  	in connection with notice by GI or MetaMorphix
of its intention to select, or trigger the
selection of, any Available Factor under
Article 5, below, the disclosure of such Factor
Rights and Data shall not be limited to a
particular Factor, but shall include
information on all then-Available
Factors which the disclosing Party, acting in
good faith, determines is likely to be material
to the selecting Party in making its selection
decision, all according to the procedures set
forth in Article 5 of this Agreement; and
	 
	 	iii.  	in connection with submission of each Party’s
annual report, as provided in Section 3.4.7,
below.

	 	3.4.7  	Annual Reports. Each of GI
and MetaMorphix shall prepare and submit to the other, within
thirty (30) days of the end of the Collaborative Research
Term, and if the Collaborative Research Term is extended in
accordance with Section 3.4.1 hereof, within thirty (30) days
after the end of each year of such extension of the
Collaborative Research Term, a report summarizing that
Party’s activities under the Collaborative Research during
the preceding year. No such annual___reports are due by GI or
by MetaMorphix with respect to the Original Research.

35

 

	 	3.5  	Disclosure of Information by and to JHU.

	 	3.5.1  	JHU Disclosures. For JHU the information and data it discloses to GI
and/or MetaMorphix shall be limited to information and data developed in Dr. Lee’s
JHU laboratory by Dr. Lee and other JHU faculty, students, fellows and employees who
are conducting the
Sponsored Research under this Agreement.
	 
	 	3.5.2  	GI and MetaMorphix Disclosures. Any Confidential Information which GI or
MetaMorphix desires to disclose to JHU shall be disclosed to (and only to) Dr. Lee.
As provided in Section 3.3.6, above, JHU, acting through Dr. Lee, shall require all
JHU faculty, students, fellows and employees to whom specific GI and/or MetaMorphix
Confidential Information is to be disclosed to first sign a Confidentiality Agreement
in the form appearing as Schedule 3.3.6 to this Agreement covering such specific
Confidential Information.

	 	3.6  	Ownership of Results. GI shall own all GI Rights resulting from the conduct of the
Original Research, the Collaborative Research and/or the Sponsored Research, even though use
of MetaMorphix’ and/or JHU’s Confidential Information may have been incidental to the
development of such GI Rights. MetaMorphix shall own all MetaMorphix Rights resulting from
the conduct of the Original Research and/or the Collaborative Research, even though use of
GI’s and/or JHU’s Confidential Information may have been incidental to the development of
such MetaMorphix Rights. JHU shall own all JHU Rights resulting from the conduct of the
Original Research, the Collaborative Research and/or the Sponsored Research even though use
of GI’s and/or MetaMorphix’ Confidential Information may have been incidental to the
development of such JHU Rights. GI and MetaMorphix, or GI and JHU, or JHU and MetaMorphix,
as applicable, — shall jointly own all Joint Rights or Additional Factor Joint Rights
resulting from the conduct of the Collaborative Research, Should any issue of inventorship
of a BMP. GDF or Collaborative Factor arise among the Parties regarding inventions made
prior to June 1, 1998, the chief patent counsel or other designee of each Party shall
attempt to resolve such issue. Failing resolution, the inventorship issue shall be referred
to an independent, outside patent expert, mutually acceptable to all Parties, whose
determination of inventorship shall be binding on GI and MetaMorphix, or GI and JHU, or JHU
and MetaMorphix, as applicable. The costs of such outside patent expert shall be shared
equally by the Parties involved in the dispute.
	 
	 	3.7  	Research License. During the Collaborative Research Term, each Party grants to
the other Parties a royalty-free, non-exclusive license under their

36

 

	 	   	respective interests in the Factor Rights solely for the purposes
of performing their Collaborative Research activities under this
Agreement. During the Sponsored Research Term, GI and JHU grant to
each other a royalty-free, non-exclusive license under their
respective interests in the Factor Rights and the Additional Factor
Rights, solely for the purposes of performing the Sponsored Research
activities under this Agreement. At the end of the Collaborative
Research Term JHU shall have a royalty-free, non-exclusive,
non-transferable, perpetual license under the Factor Rights existing
as of the end of the Collaborative Research Term, without the right
to grant sublicenses except as provided in Section 6.6, below,
solely for academic, non-commercial research purposes. At the end of
the Sponsored Research Term, JHU shall have a royalty-free,
non-exclusive, nontransferable license under the Additional Factor
Rights existing as of the end of the Sponsored Research Term,
without the right to grant sublicenses except as provided in Section
6.6, below, solely for academic, noncommercial research purposes.
	 
	 	3.8  	Acknowledgement. Each Party acknowledges
that its promise to fully disclose in a timely manner information
to the other Parties related to the Collaborative Research and/or
the Sponsored Research, as provided in this Article 3,
was material to the other Parties’ decisions to enter this
Agreement and is crucial to the Parties’ success hereunder.
	 
	 	3.9  	MetaMorphix Sponsored Research. So long
as the confidentiality requirements and other restrictions and
obligations (including, without limitation, the obligation to
disclose and license to GI certain intellectual property relating
to Additional Factors and BMPs, GDFs and Collaborative Factors as
set forth in this Article 3 and in Article 6 hereof) of the JHU/GI
Sponsored Research relationship are recognized and adhered to
MetaMorphix may sponsor research in Dr. Lee’s laboratory at JHU,
which research may relate to the characterization of MetaMorphix
Factors, GDF-16. GDF-17 and unassigned BMPs, GDFs and Collaborative
Factors but may not relate to any GI Factor, any Additional
Factor, or the Discovery, evaluation or characterization of any
other TGFß Factor, provided. however, that (i) any and
all information or data developed or generated by Dr. Lee. JHU or
MetaMorphix in performing such sponsored research, which
information or data relates to any TGF-ß Factor or the
Collaborative Research or Sponsored Research activities conducted
by the Parties under this Agreement, shall be disclosed to GI as if
such information and data were developed or generated by Dr. Lee of
JHU as part of or in connection with the GI/JHU Sponsored Research
relationship and (ii) all such data and information shall be
deemed to be included within the definition of the JHU Know-How or
the MetaMorphix Know-How as applicable. and GI and MetaMorphix
shall each have the

37

 

	 	   	right and license to use all such data and information in
accordance with and subject to the terms and conditions of
this Agreement.
	 
	 	3.10  	Dr. Lee as Consultant to MetaMorphix.
During the Sponsored Research Term, Dr. Lee shall be
permitted to continue to serve as a consultant to MetaMorphix
should Dr. Lee and MetaMorphix agree to continue such
relationship, provided, however, that, upon and after the
execution of this Agreement, (i) the confidentiality
requirements and other restrictions and obligations
(including, without limitation, the obligation to disclose
and license to GI certain intellectual property relating to
Additional Factors and BMPs, GDFs and Collaborative Factors
as set forth in this Article 3 and in Article 6 hereof) of
the JHU/GI Sponsored Research relationship are recognized and
adhered to, (ii) such consulting services shall not relate to
the Discovery of any TGF-ß Factor, to any GI Factor or to any
Additional Factors, (iii) any information, data, or
inventions, made or developed by Dr. Lee or MetaMorphix in
connection with such consulting services, shall be
deemed to be included within the JHU Know-How or the
MetaMorphix Know-How as applicable, would be included in the
rights licensed by MetaMorphix or JHU, as applicable, and, to
the extent such information, data or inventions relate to
the Collaborative Research, GI shall have the right to use
all such data and information in accordance with and subject
to the terms and conditions of this Agreement.

	4.  	SUPPLY OF MATERIALS.

	 	4.1  	Supply of Materials in Connection with
the Sponsored Research. Except as otherwise expressly
provided by this Agreement, during the Sponsored Research
Term, each of JHU and GI shall, at its respective sole cost
and expense, use reasonable and diligent efforts
to supply to the other such reasonable quantities and types
of GDFs, Collaborative Factors, Additional GDFs or Additional
Collaborative Factors (or cell lines that express such GDFs,
Collaborative Factors, Additional GDFs and/or Additional
Collaborative Factors) and other materials in that Party’s
possession and control as GI and JHU may agree are reasonably
required to carry out their respective obligations under this
Agreement. GI, in turn, shall have the right to supply any
such GDFs or Collaborative Factors (or cell lines that
express such GDFs or Collaborative Factors) received from JHU
hereunder to MetaMorphix in accordance with Section 4.2
hereof, or, alternatively, to require JHU to supply any such
GDFs or Collaborative Factors (or cell lines that express
such GDFs or Collaborative Factors) directly to MetaMorphix.
GI shall permit two (2) JHU students, working under Dr. Lee’s
supervision, to visit GI facilities during the Sponsored
Research Term (subject to those students signing appropriate
confidentiality agreements required by GI) for the sole
purpose of expressing and purifying proteins expressed from
unassigned GDFs and Collaborative

38

 

	 	   	Factors and from Additional GDFs and Additional Collaborative Factors for
subsequent evaluation and characterization at JHU in accordance with the Sponsored
Research Plan. Any GDFs, Collaborative Factors, Additional GDFs, Additional
Collaborative Factors and other materials delivered to a Party in accordance with
this Section 3.1 shall remain the property of the furnishing Party.
	 
	 	4.2  	Supply of Materials to MetaMorphix.

	 	4.2.1  	Unassigned BMPs, GDFs and Collaborative Factors. During the
Collaborative Research Term, GI shall, at its sole cost and expense, use
commercially reasonable and diligent efforts to supply MetaMorphix with
reasonable quantities of protein expressed from unassigned BMPs, GDFs and
Collaborative Factors which GI has elected to evaluate, for MetaMorphix to
perform its own evaluations. The quantity (which, subject to the limitations set
forth below, shall be no less than 50% of the amount GI produces for its own use
in evaluating such Factors), quality and purity of any protein so provided to
MetaMorphix under this Section 4.2.1 shall be substantially equivalent to the
quantity (if any), quality and purity of such protein GI produces for its own use
in its evaluation of such unassigned BMPs, GDFs and Collaborative Factors,
provided, however, that in no event shall GI be obligated to supply to
MetaMorphix more than two (2) milligrams of protein for each
such BMP, GDF or
Collaborative Factor. In addition, GI may, but shall not be obligated, to supply
MetaMorphix, at MetaMorphix’s cost and expense with protein expressed from
unassigned BMPs, GDFs and Collaborative Factors which GI has not yet elected to
evaluate, for MetaMorphix to perform its evaluations in accordance with the
Collaborative Research Plan and Section 5.1 of this Agreement. MetaMorphix agrees
to make no other use of any protein supplied to it under this Section 4.2.1
(unless and until MetaMorphix may select such Factor as a MetaMorphix Factor, in
which event MetaMorphix may use any remaining stocks of such protein supplied to
MetaMorphix hereunder for the continued research and development of such
MetaMorphix Factor. Any BMPs, GDFs Collaborative Factors and other materials
delivered to MetaMorphix in accordance with this Section 4.2.1 shall remain the
property of the furnishing Party (GI or .THU, as applicable).
	 
	 	4.2.2  	MetaMorphix Factors. During the Collaborative Research Term, GI,
subject to GI’s manufacturing capabilities, limitations, schedules and
priorities, will use its Commercially Reasonable Efforts to supply MetaMorphix,
at GI’s cost, with reasonable quantities of protein expressed from GDF-8,
GDF-11 and GDF-12

39

 

	 	   	for use by MetaMorphix in developing MetaMorphix Products based on such MetaMorphix
Factors for use in the MetaMorphix Field. The quantity (which subject to the limitation
set forth below, shall be no less than 50% of the amount GI produces for its own use),
quality and purity of any protein so provided to MetaMorphix under this Section 4.2.1
shall be substantially equivalent to the quantity (if any), quality and purity of such
protein GI produces for its own use in the research and development of GI Type B Products
based on such Factors, provided, however, that in no event shall GI be obligated to supply
to MetaMorphix more than two (2) milligrams of protein for each such MetaMorphix Factor.
MetaMorphix shall not request unreasonable quantities of any such MetaMorphix Factor or
impose unreasonable time or other constraints on GI, it being understood that GI has and
will have other products which place demands on its protein expression capacity and that
GI will endeavor to supply such protein to MetaMorphix during the six (6) month period
following the Effective Date. GI shall consider, in good faith, MetaMorphix’ requests for
such MetaMorphix Factors at the time GI is evaluating its other protein expression
priorities. In the event GI is unable or unwilling to supply MetaMorphix with such
quantities of such MetaMorphix Factors for such development purposes as required above in
this Section 4.2.2, GI will use its Commercially Reasonable Efforts to provide
MetaMorphix, at GI’s cost and expense, with vectors and/or cell Lines, if available, which
are necessary for MetaMorphix to express, or have expressed, such MetaMorphix Factors for
use by MetaMorphix in developing MetaMorphix Products based on such MetaMorphix Factors in
the MetaMorphix Field. Any BMPs, GDFs, Collaborative Factors, vectors, cell lines and
other materials delivered to MetaMorphix in accordance with this Section 4.2.2 shall
remain the property of GI, provided, however, that GI shall have no right or
license to any intellectual property right arising from MetaMorphix’ use of such BMPs.
GDFs. Collaborative Factors, vectors, cell lines and other materials, except as expressly
provided in this Agreement.
	 
	 	4.2.3  	Supply of Reagents and Antibodies. During the Collaborative Research Term GI, subject
to GI’s manufacturing capabilities, limitations, schedules and priorities, shall use its
Commercially Reasonable Efforts to supply, at its expense, MetaMorphix with up to thirty
(30) liters of GDF-8 conditioned media, up to ten (10) liters of GDF-9 conditioned media,
up to ten (10) liters of GDF-11 conditioned media, up to ten (10) liters of GDF-12
conditioned media, up to five (5) milligrams of monoclonal antibodies targeted against
GDF-8, up to five (5) milligrams of monoclonal antibodies

40

 

	 	   	targeted against GDF-9 up to five (5) milligrams of monoclonal antibodies
targeted against GDF-11 and up to two (2) milliliters of polyclonal antibodies
targeted against GDF-12 GI will endeavor to supply such reagents and antibodies
to MetaMorphix during the six (6) month period following the Effective Date,
provided, however that any failure to supply such quantities of reagents and/or
antibodies to MetaMorphix shall not be considered to be a material breach of GI’s
obligations under this Agreement. Any reagents and antibodies delivered to
MetaMorphix in accordance with this Section 4.2.2 shall remain the property of
GI, provided, however, that GI shall have no right or license to any intellectual
property rights arising from MetaMorphix’ use of such reagents and antibodies,
except as expressly provided in this Agreement.
	 
	 	4.2.4  	Supply of Factors, Reagents and Antibodies after Collaborative Research Term.
GI shall have no obligation to supply any Factors, reagents or antibodies to
MetaMorphix after the expiration or earlier termination of the Collaborative
Research Term. In the event that, after the expiration or earlier termination of
the Collaborative Research Term, MetaMorphix desires to continue purchasing
MetaMorphix Factors, related reagents and/or antibodies from GI for use in the
development and commercialization of MetaMorphix Factors for use in the MetaMorphix
Field and GI, in its sole discretion, is willing to continue supplying MetaMorphix
with such MetaMorphix Factors, reagents and/or antibodies for such purpose, GI and
MetaMorphix, with no obligation as to outcome, will each use its respective good
faith efforts to negotiate a supply agreement pursuant to which GI would
manufacture and MetaMorphix would purchase from GI such MetaMorphix Factors,
reagents and/or antibodies.

	 	4.3  	Supply of Materials by MetaMorphix. In the event that, during the Collaborative Research
Term, MetaMorphix expresses or otherwise has obtained (other than from GI) or has excess
quantities of any BMP, GDF or Collaborative Factor that has not yet been selected, in
accordance with Article 5 hereof, as either a MetaMorphix Factor or a GI Factor,
MetaMorphix, upon GI’s request shall supply to GI a reasonable quantity of such Factors
(or, if available, cell lines expressing such Factors), for use by GI in conducting its
evaluation of such Factors in accordance with the Collaborative Research Plan and Section
5.1 hereof. The quantity, quality and purity of any protein so provided to GI under this
Section 4.3 shall be substantially equivalent to the quantity, quality and purity of such
protein MetaMorphix produces or obtains for its own use in its evaluation of such Factors.
GI will, in turn, have the right to supply to JHU any such Factors (or cell lines expressing
such Factors) received from MetaMorphix in

41

 

	 	   	accordance with this Section 4.3 or alternatively.
MetaMorphix upon GI’s request, shall supply such Factors (or
cell lines expressing such Factors) directly to JHU for
subsequent evaluation and characterization of such Factors in
accordance with the Sponsored Research Plan. Any BMPs. GDFs,
Collaborative Factors and other materials delivered by
MetaMorphix to GI or JHU in accordance with this Section 4.3
shall remain the property of MetaMorphix, unless such Factors
or materials were previously provided to MetaMorphix by GI or
JHU in accordance with Sections 4.2 hereof, in which case,
such Factors or Materials shall remain the property of the
Party that supplied such Factors or materials to MetaMorphix.

	 	4.4  	Supply of Certain Materials to Dr.
Lee. During the term of this Agreement, each of GI and
MetaMorphix shall provide reasonable quantities of GDFs
Discovered by JHU, if available in excess of such Party’s
own needs, to Dr. Lee (whether or not Dr. Lee is then
affiliated with JHU) solely for academic, non-commercial
research purposes, pursuant to GI’s or MetaMorphix’s
standard material transfer agreement, as applicable.
Additionally, during the term of this Agreement, GI shall
have a continuing obligation to provide reasonable
quantities of Additional GDFs Discovered by JHU, if
available, to Dr. Lee (whether or not Dr. Lee is then
affiliated with JHU) solely for academic, non-commercial
research purposes, pursuant to GI’s standard material
transfer agreement.
	 
	 	4.5  	Limitations on Use of Factors. Unless
the furnishing Party shall otherwise give its prior written
consent, the receiving Party shall not use the BMPs, GDFs,
Collaborative Factors, Additional GDFs, Additional
Collaborative Factors or other materials provided to it
under this Article 4 for any purposes other than to conduct
(a) the Sponsored Research during the Sponsored Research
Term or the Collaborative Research during the Collaborative
Research Term, as applicable, and (b) following the
Sponsored Research Term or the Collaborative Research Term,
as applicable, such other activities as are expressly
permitted under this Article 4, including, without
limitation, JHU’s continuing right to use such Factors
solely for academic, non-commercial research. Any other uses
of the BMPs, GDFs, Collaborative Factors, Additional GDFs or
Additional Collaborative Factors or other materials by a
receiving Party shall be governed by the terms of separate
material transfer agreements, if any, executed by the
furnishing Party and the receiving Party.

	5.  	EVALUATION AND SELECTION OF FACTORS.

	 	5.1  	Evaluation. During the Collaborative
Research Term, GI and MetaMorphix each shall evaluate those
BMPs, GDFs and Collaborative Factors which, it, in its sole
discretion chooses to evaluate, for purposes of ascertaining
which

42

 

	 	   	Factors such Party desires to select in accordance with
Section 5.3 below. The RMC shall determine when sufficient
quantities of protein are available for GI and MetaMorphix
to evaluate a particular BMP, GDF or
Collaborative Factor. The Parties shall have up to six
(6) months or such shorter period of time as the RMC may
determine (the —Evaluation Period to perform
their evaluations of such Factors. The RMC’s determination
that sufficient quantities of a particular Factor are
available may be made at any time during the term of this
Agreement and need not be made at a bi-annual meeting of
the RMC.
	 
	 	5.2  	Available Factors. As of the Effective
Date, the BMPs, GDFs and Collaborative Factors listed on
Schedule 5.2 are available for selection by GI or MetaMorphix
in accordance with the selection procedures set forth in
Section 5.3 hereof (each, an “Available Factor”). Upon
completion of the Evaluation Period described in Section 5.1
hereof with respect to any BMP, GDF or Collaborative Factor
that has not yet been selected by GI as a GI Factor or
MetaMorphix as a MetaMorphix Factor or which has not yet been
included on the list of Available Factors referenced in the
preceding sentence, such Factor shall, at such time, become
an Available Factor and shall be added to the list of
Available Factors appearing in Schedule 5.2. Notwithstanding
the foregoing, any BMP, GDF or Collaborative Factor
that has not yet been selected by GI as a GI Factor or
MetaMorphix as a MetaMorphix Factor and which has not become
an Available Factor as of November 30, 1999. or such later
date as GI and MetaMorphix may mutually agree upon in
writing, shall, as of such date, be deemed to be an Available
Factor and added to the list of Available Factors appearing
in Schedule 5.2.
	 
	 	5.3  	Selection of Available
Factors.

	 	5.3.1  	Order of Selection.

	 	5.3.1.1  	MetaMorphix Has First Selection. MetaMorphix
shall be the first Party to select an Available
Factor from among the then-Available Factors, by
giving written notice to the other Parties of
its intention to make a selection. Following
receipt of such notice, the other Parties
shall promptly disclose Factor Rights and
Data to MetaMorphix, as provided in Section
3.4.6, above, and thereafter, MetaMorphix shall promptly (within thirty (30)
days) make its selection. Upon its selection by
MetaMorphix, that Available Factor shall be
designated a MetaMorphix Factor by deleting it
from Schedule 5.2 and listing it on Schedule
1.62. The Parties acknowledge that on September
28, 1998 MetaMorphix provided written notice to
the other Parties of its intention to make the
first selection of an Available

43

 

	 	   	Factor. and agree. that, to the extent the Factor
Rights and Data required to be disclosed by each
Party to the other Parties in response to such
notice has not been disclosed to such other
Parties as of the Effective Date, such
undisclosed Factor Rights and Data shall be
disclosed to MetaMorphix and GI as soon as
practicable after the Effective Date..
	 
	 	5.3.1.2	GI Has Next Selection. GI shall be the second
Party to select an Available Factor from among
the then-Available Factors, by giving written
notice to the other Parties of its intention to
make a selection. Following receipt of such
notice, the other Parties shall promptly disclose
Factor Rights and Data to GI, as provided in
Sections 3.3.7 and 3.4.6, above, and thereafter,
GI shall promptly (within thirty (30) days) make
its selection. Upon its selection by GI, that
Available Factor shall be designated a GI Factor
by deleting it from Schedule 5.2 and listing
it on Schedule 1.39.
	 
	 	5.3.1.3  	Alternating Selections. Thereafter, MetaMorphix
and GI shall alternate in their selections from
the Available Factors. If it is a Party’s turn to
select an Available Factor, it may do so at any
time subject to the other Party’s right to
trigger the selection procedure, as set forth in
Section 5.3.2, below.

	 	5.3.2  	Triggering a Selection.

	 	5.3.2.1  	GI’s Right to Trigger a Selection. Where
MetaMorphix has the next selection, GI can trigger
the selection procedure for an Available Factor by
giving MetaMorphix written notice of GI’s desire to
select from among the then Available Factors.
Following receipt of such notice, the Parties shall
promptly disclose to one another Factor Rights and
Data, as provided in Sections 3.3.7 and 3.4.6,
above. Following such disclosure, MetaMorphix shall
have thirty (30) days to exercise its turn to
select an Available Factor from among the
then-Available Factors. If MetaMorphix selects an
Available Factor, then the selection procedure
continues, on an alternating basis, with GI having
the right to make the next selection. If, at the
end of the thirty (30) day period. MetaMorphix has
not exercised its turn to select an Available
Factor, then GI shall have the right to select from
among the then-Available Factors, and the selection
process continues, on an alternating basis, with
MetaMorphix having the right to make the next selection.

44

 

	 	5.3.2.2  	MetaMorphix’ Right to Trigger a Selection. Where GI has
the next selection. MetaMorphix can trigger the selection
procedure for an Available Factor, by giving GI written notice of
MetaMorphix’s desire to select from among the then-Available
Factors. Following receipt of such notice, the Parties shall
promptly disclose to one another Factor Rights and Data, as
provided in Section 3.4.6, above. Following such disclosure, GI
shall have thirty (30) days to exercise its turn to select an
Available Factor from among the then-Available Factors. If GI
selects an Available Factor, then the selection procedure
continues, on an alternating basis, with MetaMorphix having the
right to make the next selection: If, at the end of the thirty
(30) day period, GI has not exercised its turn to select an
Available Factor, then MetaMorphix shall have the right to select
from among the then-Available Factors, and the selection process
continues, on an alternating: basis, with GI having the right to
make the next selection.
	 
	 	5.3.2.3  	Limitation on Right to Trigger a Selection. A Party which
triggers a selection under Sections 5.3.2.1 or 5.3.2.2
may not trigger a subsequent selection until three (3) months has
lapsed from the date it triggered the prior selection, unless the
other Party has made an intervening selection (including a
selection made as a result of the triggering of a selection under
this Section 5.3.2.

	 	5.3.3  	Completion of Selection
Process. During the thirty (30) day period following
the expiration of the Collaborative Research Term
(i.e., on or before December 30, 1999 if the
Collaborative Research Term is not extended past
November 30, 1999 in accordance with Section 3.4.1
hereof) GI and MetaMorphix shall meet, at a time and
location to be mutually agreed upon by GI and
MetaMorphix to select GI Factors and MetaMorphix
Factors from the then Available Factors, with such
selections alternating between GI and MetaMorphix
until all such Factors have been selected. The first
selection during such meeting will be made by GI if
MetaMorphix had made the most recent selection prior
to such meeting or by MetaMorphix if GI had made the
most recent selection prior to such meeting.

	6.  	LICENSES.

	 	6.1  	Restatement of Rights. GI. MetaMorphix and JHU hereby restate all obligations
assumed by each such Party and all rights and licenses

45

 

	 	   	previously granted to any of them whether under the 1994
Collaboration Agreement or otherwise by JHU. MetaMorphix
or GI with respect to any MetaMorphix Factors, MetaMorphix Products, GI Factors. Additional Factors, GI
Products, GDF-16, GDF-17, GDF-16 Products and GDF-17
Products so that each Party as of the Effective Date is
able to grant the licenses to MetaMorphix and GI as set
forth below in this Article 6.
	 
	 	6.2  	Licenses from JHU to MetaMorphix.
Subject to (i) the terms and conditions of this Agreement (ii) the licenses granted by JHU to GI under Section 6.3
hereof, (iii) the reservation of rights set forth in Section
6.6 of this Agreement, and (iv) any rights retained by the
United States government in accordance with P.L. 96-517, as
amended by P.L. 98-620, JHU grants to MetaMorphix and its
designated Affiliates which agree in writing to comply with
the terms and conditions of this Agreement (with a copy of
such written agreement being provided to JHU):

	 	a.  	an exclusive,
royalty-bearing license to JHU’s interest under
the Factor Patent Rights; and
	 
	 	b.  	a
non-exclusive, perpetual, royalty-free license to
use JHU’s interest in the Factor Know-How
relating to the subject matter disclosed or
claimed in such Factor Patent Rights,

	 	   	including the right to grant sublicenses, (i) to make, have
made, use, import, market, offer for sale and sell
MetaMorphix Products in the Territory, in each case only for
use in the MetaMorphix Field, (ii) to make, have made and
use MetaMorphix Products for MetaMorphix’s and/or its
designated Affiliates’ internal research and development
purposes and (iii) to make, have made, use, import, market,
offer for sale and sell GDF-16 Products and GDF-17 Products
in the Territory. The license granted pursuant to Section
6.2(a) shall continue in effect until the expiration of the
last patent licensed to MetaMorphix under this Section 6.2.
	 
	 	6.3  	Licenses from JHU to GL

	 	6.3.1  	GI Type A Products. Subject to (i) the terms and conditions of this
Agreement, (ii) the reservation of rights set forth in
Section 6.6 of this Agreement, and (iii) any rights
retained by the United States government in accordance
with P.L. 96-517, as amended by P.L. 98-620, JHU grants
to GI and its designated Affiliates which agree in
writing to comply with the terms and conditions of this
Agreement (with a copy of such written agreement being
provided to JHU):

46

 

	 	a.  	an exclusive
royalty-bearing license to JHU‘s
interest under the Factor Patent
Rights and the Additional
Factor Patent Rights; and
	 
	 	b.  	a non-exclusive, perpetual, royalty-free
license to use JHU’s interest in the
Factor Know-How and the Additional Factor
Know-How relating to the subject matter
disclosed or claimed in such Factor Patent
Rights and/or Additional Factor Patent
Rights,

	 	   	including the right to grant sublicenses, to make,
have made, import, market, use, offer for sale and
sell GI Type A Products in the Territory. The license
granted pursuant to Section 6.3.1(a) shall continue
in effect until the expiration of the last patent
licensed to GI under this Section 6.3.1.
	 
	 	6.3.2.  	GI Type B Products. Subject to (i) the terms and
conditions of this Agreement, (ii) the licenses
granted by JHU to MetaMorphix under Section 6.2
hereof, (iii) the reservation of rights set forth in
Section 6.6 of this Agreement, and (iv) any rights
retained by the United States government in accordance with P.L. 96-517, as
amended by P.L. 98-620, JHU grants to GI and its
designated Affiliates which agree in writing to
comply with the terms and conditions of this
Agreement (with a copy of such written agreement
being provided to JHU):

	 	a.  	an exclusive, royalty-bearing license
to JHU’s interest under the
Factor Patent Rights and the
Additional Factor Patent Rights; and
	 
	 	b.  	a non-exclusive, perpetual, royalty-free
license to use JHU’s interest in the Factor
Know-How and Additional Factor Know-How
relating to the subject matter disclosed or
claimed in such Factor Patent Rights and/or
Additional Factor Patent Rights,

	 	   	including the right to grant sublicenses, (i) to
make, have made, use, import, market, offer for sale
and sell GI Type B Products in the Territory, in each
case only for use in the GI Field and (ii) to make,
have made and-use GI Type B Products for GI’s and/or
its designated Affiliates’ internal research and
development purposes. The license granted pursuant to
Section 6.3.2(a) shall continue in effect until the
expiration of the last patent licensed to GI under
this Section 6.3.2.

47

 

	 	6.3.3  	GI Type C Products. Subject to (i) the terms
and conditions of this Agreement, (ii) the
reservation of rights set forth in Section 6.6 of
this Agreement, and (iii) any rights retained by the
United States government in accordance with P.L.
96-517, as amended by P.L. 98-620, JHU grants to GI
and its designated Affiliates which agree
in writing to comply with the terms and conditions of
this Agreement (with a copy of such written agreement
being provided to JHU):

	 	a.  	an exclusive, royalty-bearing license
to JHU’s interest under the Factor
Patent Rights and Additional Factor
Patent Rights; and
	 
	 	b.  	a non-exclusive, perpetual, royalty-free
license to use JHU’s interest in the Factor
Know-How and Additional Factor Know-How
relating to the subject matter disclosed or
claimed in such Factor Patent Rights
and/or-Additional Factor Patent Rights,

	 	   	including the right to grant sublicenses, (i) to make,
have made, import, market use, offer for sale and
sell GI Type C Products in the Territory. The license
granted pursuant to Section 6.3.3(a) shall continue in
effect until the expiration of the last patent
licensed to GI under this Section 6.3.3.

	 	6.4  	Licenses from MetaMorphix to GL

	 	6.4.1  	GI Type A Products Subject to (i) the terms and conditions of this
Agreement, (ii) the reservation of rights set forth in
Section 6.6 of this Agreement and (iii) any rights
retained by the United States government in accordance
with P.L. 96-517, as amended by P.L. 98-620,
MetaMorphix grants to GI and its designated Affiliates
which agree in writing to comply with the terms and
conditions of this Agreement (with a copy of such
written agreement being provided to MetaMorphix):

	 	a.  	an exclusive, royalty-bearing license
to MetaMorphix’s interest under the
Factor Patent Rights;
	 
	 	b.  	a non-exclusive, perpetual, royalty-free
license to use MetaMorphix’s interest in
the Factor Know-How relating to the subject
matter disclosed or claimed in such Factor
Patent Rights;

48

 

	 	   	including the right to grant sublicenses, to
make, have made, import, market, use, offer for sale
and sell GI Type A Products in the Territory. The
license granted pursuant to Section 6.4.1(a) shall
continue in effect until the expiration of the last
patent licensed to GI under this Section 6.4.1.
	 
	 	6.4.2  	GI Type B Products Subject to
(i) the terms and conditions of this Agreement, (ii)
the reservation of rights set forth in Section 6.6 of
this Agreement and (iii) any rights retained by the
United States government in accordance with P.L.
96-517, as amended by P.L. 98-620, MetaMorphix grants
to GI and its designated Affiliates which agree in
writing to comply with the terms and conditions of
this Agreement (with a copy of such written agreement
being provided to MetaMorphix):

	 	a.  	an exclusive, royalty-bearing license to MetaMorphix’s
interest under the Factor Patent Rights;

	 	b.  	a non-exclusive, perpetual, royalty-free license to use
MetaMorphix’s interest in the Factor Know-How relating to the subject
matter disclosed or claimed in such Factor Patent Rights;

	 	   	including the right to grant sublicenses, (i) to make, have
made, use, import, market, offer for sale and sell GI Type
B Products in the Territory, in each case only for use in
the GI Field and (ii) to make, have made and use GI Type B
Products for GI‘s and/or its designated Affiliates’
internal research and development purposes. The license
granted pursuant to Section 6.4.2(a) shall continue in
effect until the expiration of the last patent licensed to
GI under this Section 6.4.2.

	 	6.5  	Licenses from GI to MetaMorphix.
Subject to (i) the terms and conditions of this Agreement
and (ii) the reservation of rights set forth in Section 6.6
of this Agreement, GI grants to MetaMorphix and its
designated Affiliates which agree in writing to comply with
the terms and conditions of this Agreement (with a copy of
such written agreement being provided to GI):

	 	a.  	an exclusive, royalty-bearing license to
GI’s interest under the Factor
Patent Rights; and
	 
	 	b.  	a non-exclusive, perpetual, royalty-free license
to use GI’s interest in the Factor Know-How
relating to the subject matter disclosed or
claimed in such Factor Patent Rights,

49

 

	 	   	including the right to grant sublicenses. (i) to make, have made, use import
market offer for sale and sell MetaMorphix Products in the Territory, in each case only
for use in the MetaMorphix Field and (ii) to make, have made and use MetaMorphix Products
for MetaMorphix’s and/or its designated Affiliates’ internal research and development
purposes. The license granted pursuant to Section 6.5(a) shall continue in effect until
the expiration of the last patent licensed to MetaMorphix under this Section 6.5.
Notwithstanding the foregoing, nothing in this Agreement shall constitute a grant by GI to
MetaMorphix of any right or license under GI’s interest in any Joint Factor Rights
Additional Joint Factor Rights. or any Factor Patent Rights, Factor Know-How, Additional
Factor Patent Rights, Additional Factor Know-How or any other intellectual property that
GI may own, Control or otherwise have rights to which relate to GDF-16 and/or GDF-17.
	 
	 	6.6  	Reservation of Rights. Each Party retains the right under its interest in the Factor Rights
to use all BMPs, GDFs, and Collaborative Factors in its internal research. In addition, each
of GI and JHU retains the right under its interest in the Additional Factor Rights to use all
Additional BMPs, Additional GDFs and Additional Collaborative Factors in its internal
research. Further, JHU, for itself and The Johns Hopkins Health System, retains the right
under its interest in the Factor Rights and its interest in the Additional Factor Rights to
use, and sublicense the use of, all GDFs and Additional GDFs solely for academic, non-profit
purposes; provided, however, neither JHU nor any of its sublicensees shall have any right to
(a) sell Products or (b) make, have made or use Products for (i) toxicology or other in
vivo studies in non-human primates or (ii) administration to human subjects (in clinical
trials or otherwise) without the prior written consent of MetaMorphix, for Products licensed
to MetaMorphix under this Agreement and/or GI. for Products licensed to GI under this
Agreement, which consent shall be forthcoming unless the Party from which consent is required
has determined that use of such Products for (x) toxicology or other in vivo studies
in non-human primates could interfere with that Party’s existing or planned
clinical trials or commercialization of that Product or (y) administration to human subjects
raises regulatory or health and safety concerns JHU acting through Dr. Lee, shall use
reasonable efforts to promptly notify GI, in writing, of any proposed and permitted JHU
preclinical studies in non-human primates JHU retains the right under the applicable Factor
Rights to distribute the GDFs Discovered by JHU and under the applicable ‘Additional Factor
Rights to distribute the Additional GDFs Discovered by JHU, each under JHU’s standard
Material Transfer Agreement, a copy of which is attached hereto as Schedule 6.6A; and GI and
MetaMorphix shall have no rights, absent JHU’s prior written consent, to distribute such GDFs
or Additional GDFs Notwithstanding

50

 

	 	   	the foregoing, (i) commencing six (6) months after the date
such GDF becomes a GI Factor or such Additional GDF is Discovered
by JHI:. GI shall have the right to distribute such GI Factor or
Additional GDF under a standard material transfer
agreement which is reasonably acceptable to JHU or MetaMorphix
shall’ have the right to distribute such GI Factor or MetaMorphix
Factor, under a standard material transfer agreement which is
reasonably acceptable to JHU and (ii) commencing six (6) months
after the date such GDF becomes a MetaMorphix Factor, GI and
MetaMorphix each shall have the right to distribute such
MetaMorphix Factor under a standard material transfer agreement
which is reasonably acceptable to JHU GI retains the right
under its interest in the Factor Rights to distribute the BMPs and
the Additional BMPs under GI’s standard Material Transfer
Agreement, a copy of which is attached hereto as Schedule 6.6B to
this Agreement; and JHU and MetaMorphix shall have no rights,
absent GI’s prior written consent, to distribute such BMPs or
Additional BMPs.
	 
	 	6.7  	Factor Rights Licensed from Third
Parties. In the event that the license to MetaMorphix or GI under
Sections 6.2, 6.3, 6.4 or 6.5 includes rights acquired by the
licensor Party from a Third Party which involve the payment of
royalties. fees or other payments to such Third Party, the licensor
Parry shall notify the licensee Party of the obligation to make
such payment(s) prior to (a) the selection of a GI Factor or a
MetaMorphix Factor, as the case may be or (b) a subsequent
acquisition of such rights by the licensor Party. The licensee
Party promptly shall elect in writing whether to exclude such Third
Party rights from the licenses under this Agreement, and if the
licensee Party fails to exclude such rights, it shall be fully
responsible for the payment of any such royalties, fees and other
payments to such Third Party.
	 
	 	6.8  	Noncompete.

	 	6.8.1  	By MetaMorphix. MetaMorphix
and GI agree that, for so long as the licenses granted to GI
under Sections 6.3.2(a) and 6.4.2(a), with respect to the
development and commercialization of Products based on GDF-8 remain in effect, MetaMorphix will not sell or otherwise
distribute any GDF-8 Derivative Product for use in the GI
Field (only to the extent that the intended goal of such GDF-8
Derivative Product is to modulate the effects of GDF-8). The
preceding sentence shall not apply to any products that
MetaMorphix obtains from a Third Party who has developed (or
obtained from another Third Party who has developed) such
products without infringing issued patents of another Party
included within such other Party’s Patent Rights under this
Agreement, which products were fully developed by or on behalf
of such Third Parry without the use of any of the JHU
Know-How, the GI Know-

51

 

	 	   	How or any Confidential Information of JHU or GI GI’s right to enforce this
Section 6.8.1 shall not be assignable except to its Affiliates.
	 
	 	6.8.2  	By GI. GI and MetaMorphix agree that, for so long as the licenses
granted to MetaMorphix, under Sections 6.2(a) and 6.5(a), with respect to the
development and commercialization of Products based on GDF-8, remain in effect, GI
will not sell or otherwise distribute any GDF-8 Derivative Product for use in the
MetaMorphix Field (only to the extent that the intended goal of such GDF-8
Derivative Product is to modulate the effects of GDF8). The preceding sentence shall
not apply to any products that GI obtains from a Third Party who has developed (or
obtained from another Third Party who has developed) such products without
infringing issued patents of another Party included within such other Party’s Patent
Rights under this Agreement, which products were fully developed by or on behalf of
such Third Party without the use of any of the IHU Know-How, the MetaMorphix KnowHow
or any Confidential Information of JHU or MetaMorphix. MetaMorphix’s right to
enforce this Section 6.8.2 shall not be assignable, except to its Affiliates.

	 	6.9  	Option to Certain GDF-8 Derivative Products. In the event that either GI or MetaMorphix
develops or otherwise acquires rights to any GDF-8 Derivative Products and such Party
determines, in its sole reasonable discretion that the grant by it of rights to
confidential data, know-how and/or Patents owned or Controlled by it covering or relating to
such GDF-8 Derivative Product would not interfere with its development and/or
commercialization of its own Products based on GDF-8 or GDF-8 Derivative Products such
Party (the “Offering Party”) agrees to extend to the other Party by written notice the
opportunity to negotiate a royaltybearing license to some or all of such GDF-8 Derivative
Product rights, which license would he restricted to the GI Field or the MetaMorphix Field
as applicable Within thirty (30) days of receiving such notice, such other Party may elect
to negotiate such an agreement by providing the Offering Party written notice of such
election, in which event the Parties would promptly commence good
faith negotiations of. the
license terms (including, without limitation royalty rates and other financial terms). If
MetaMorphix and G1 are unable to agree on the terms and conditions of such a license within
ninety (90) days after the Offering Party receives such notice from the other Party the
Offering Party shall thereafter be free to grant such rights and licenses to any Third
Party.

52

 

	7.  	CONSIDERATION.

	 	7.1  	License Fees.

	 	7.1.1  	Initial License
Processing Fee. JHU acknowledges and agrees that, as
required by the 1994 Collaboration Agreement, it has
received from MetaMorphix a Forty Thousand Dollar
($40,000) non-refundable, non-deductible license
processing fee, as required by JHU policies for JHU
licenses to stare-up companies.
	 
	 	7.1.2  	Additional License
Processing Fees. JHU acknowledges and agrees that,
as required by the 1994 Collaboration Agreement and
except as provided in this Section 7.1.2, it has
received from
	 
	 	   	MetaMorphix all additional license processing
fees required to be paid thereunder, which additional
license processing fees were in the amount of Two
Thousand Dollars ($2,000) for each Patent
filed by JHU claiming a new GDF Discovered by JHU
following the effective date of the 1994 Collaboration
Agreement, which Patents were licensed to MetaMorphix
thereunder. MetaMorphix shall pay to JHU the remaining
eighteen thousand dollars ($18,000.00) due for such
fees within ninety (90) days of the Effective Date.
	 
	 	7.1.3  	License Maintenance
Fees. JHU acknowledges and agrees that it has
received from MetaMorphix all annual license
maintenance fees due under the 1994 Collaboration
Agreement prior to the Effective Date of this
Agreement. The Parties agree that during the term of
this Agreement, as required by JHU policies for its
licensees,

	 	(i)  	in partial consideration for the JHU’s
grant of licenses to MetaMorphix under
Section 6.2 hereof, MetaMorphix shall pay
JHU an annual license maintenance fee of
Two Thousand Five Hundred Dollars
($2,500), which payment shall be made
within thirty (30) days of each December
1 during the term of this Agreement.
	 
	 	(ii)  	in partial consideration for the JHU’s grant
of licenses to GI under Section 6.3 hereof,
GI shall pay JHU an annual license
maintenance fee of Seven Thousand Five
Hundred Dollars ($7,500), which payment
shall be made within thirty (30) days of
each December 1 during the term of this
Agreement.

	 	7.2  	Additional License Fees.
In addition to any Sponsored Research payments payable
by GI under Sections 3.3 above and any royalties

53

 

	 	   	payable by GI under Sections 7.3.2, 7.3.3. and 7.3.4 below. GI shall, with
respect to its development of GI Factors or Additional Factors, pay to MetaMorphix
or JHU, as applicable, the amounts set forth in Schedule 7.2A and with respect to
its development of MetaMorphix Factors, pay to MetaMorphix or JHU, as applicable
the amounts set forth in Schedule 7.2B. Payments to JHU and/or MetaMorphix under
this Section 7.2 shall be (i) fully creditable against royalty payments by GI to
JHU and/or MetaMorphix, as applicable under Section 7.3 and (ii) paid within
thirty (30) days following occurrence of the applicable benchmark, by check
payable to, in the case of payments to JHU, The Johns Hopkins University and sent
to the Director of the Office for Technology Licensing, The Johns Hopkins
University School of Medicine, 2024 East Monument Street, Suite 2-100, Baltimore,
Maryland 21205 and shall be labeled “Additional License Fees” and in the case of
payments to MetaMorphix, MetaMorphix, Inc. 1450 South Rolling Road,
Baltimore, Maryland 21227.

	 	7.3  	Royalties.

	 	7.3.1  	MetaMorphix Products.

	 	7.3.1.1  	Payable by MetaMorphix to JHU. MetaMorphix shall pay to JHU a royalty on
sales made by MetaMorphix, its Affiliates or sublicensees of each MetaMorphix
Product, the manufacture. use or sale of which is covered by a Valid Claim
under applicable Factor Patent Rights, which royalty shall be calculated
using the following formula:

	 	   	royalty=A+B+C+D+E

	 	   	where

	 	   	A equals either (i) three and one-half percent
(3 1/2%) of Net Sales obtained from such sales of such
MetaMorphix Product, if the First Member of such MetaMorphix
Product’s TGF-ß Class is a GDF Discovered by JHU; or
(ii) one and three quarters percent (1 3/4%) of
MetaMorphix’s Net Sales of such MetaMorphix Product, if the
First Member of such MetaMorphix Product’s TGF-ß Class is a
Collaborative Factor Discovered jointly by JHU and MetaMorphix
or a Collaborative Factor Discovered jointly by JHU and GI;

54

 

	 	   	B equals seven-eighths percent
(7/8%) of Net Sales obtained from such sales
of such MetaMorphix Product, multiplied by the
number (if any) of Subsequent Members in such
MetaMorphix Product’s TGF-ß Class (not to
exceed three (3)) which are GDFs Discovered by
JHU:
	 
	 	   	C equals seven-sixteenths percent (7/16%)
of Net Sales obtained from such sales of such
MetaMorphix Product, multiplied by the number
(if any) of Subsequent Members in such
MetaMorphix Product’s TGF-ß Class (not to exceed
three (3)) which are either Collaborative
Factors Discovered jointly by JHU and
MetaMorphix or Collaborative Factors Discovered
jointly by JHU and GI;
	 
	 	   	D equals seven-eighths percent (7/8%) of Net
Sales obtained from such sales of such
MetaMorphix Product, if such MetaMorphix Product
is labeled for an indication which is covered by
a Valid Claim of a Use Patent within the JHU
Patent Rights;
	 
	 	   	E equals seven-sixteenths percent (7/16%) of Net
Sales obtained from such sales of such
MetaMorphix Product, if such MetaMorphix Product
is labeled for an indication which is covered by
a Valid Claim of a Use Patent within the Joint
Patent Rights of JHU and MetaMorphix, or JHU and
GI;

	 	   	provided, however, that in no event shall the sum
of A, B and C exceed six percent (6%).

	 	7.3.1.2  	Payable by MetaMorphix to GI MetaMorphix shall pay
to GI royalties on sales made by MetaMorphix, its
Affiliates or sublicensees, of each MetaMorphix
Product, the manufacture, use or sale of which is
covered by a Valid Claim under the applicable Factor
Patent Rights, which royalty shall be calculated using
the following formula:

	 	   	royalty 7= A+B+C+D+E

	 	   	where

	 	   	A equals either (i) four percent (4%) of Net
Sales obtained from such sales of such
MetaMorphix Product, if the First Member of
that Product’s TGF-

55

 

	 	   	ß Class is a BMP: or (ii) two
percent (2%) of Net Sales obtained from such
sale of such MetaMorphix Product, if the First
Member of that Product’s TGFß Class is a
Collaborative Factor of GI and JHlU
or a Collaborative Factor of GI and MetaMorphix;
	 
	 	   	B equals one percent (1 %) of the Net Sales
obtained from such sales of such MetaMorphix
Product, multiplied by the number (if any) of
Subsequent Members in such MetaMorphix Product’s
TGF-ß Class (not to exceed three (3)) which are
BMPs;
	 
	 	   	C equals one-half percent (1/2%) of Net Sales
obtained from such sales of such MetaMorphix
Product, multiplied by the number (if any) of
Subsequent Members in that MetaMorphix Product’s
TGF-ß Class (not to exceed three (3)) which are
either Collaborative Factors of GI and JHU or
Collaborative Factors of GI and MetaMorphix;
	 
	 	   	D equals one percent (1 %) of Net Sales
obtained from such sales of such MetaMorphix
Product, if such MetaMorphix Product is
labeled for an indication which is covered
by a Valid Claim of a Use Patent within the
GI Patent Rights; and
	 
	 	   	E equals one-half percent (1/2%) of Net Sales
obtained from such sales of such MetaMorphix
Product, if such MetaMorphix Product is labeled
for an indication which is covered by a Valid
Claim of a Use Patent within the Joint Patent
Rights of GI and JHU or GI and MetaMorphix;

	 	   	provided, however, that In no event
shall the sum of A, B and C exceed seven percent
(7%).

	 	7.3.2  	GI Type A Products.

	 	7.3.2.1  	Payable by GI to MetaMorphix. GI shall pay to
MetaMorphix a royalty on sales made by GI, its
Affiliates or sublicensees of each GI Type A Product,
the manufacture, use or sale of which is
covered by a Valid Claim under the applicable Factor
Patent Rights, which royalty shall be calculated using
the following formula:.

56

 

	 	   	(AFB±C–D=E)-F where
	 
	 	   	A equals either (i) four percent (4%) of
the Net Sales obtained from such sales of
such GI Type A Product. if the First
Member of such GI Type A Product’s TGF-ß
Class is a GDF or a Collaborative Factor
of JHU and MetaMorphix, or (ii) two
percent (2%) of Net Sales of such GI Type
A Product, if the First Member of such GI
Type A Product’s TGF-ß Class is a
Collaborative Factor of GI and JHU or GI
and MetaMorphix;
	 
	 	   	B equals one percent (1%) of Net Sales
obtained from such sales of such GI Type A
Product, multiplied by the number (if any)
of Subsequent Members in that GI Type A
Product’s TGF-ß Class (not to. exceed
three (3)) which are GDFs or Collaborative
Factors of JHU and-MetaMorphix;
	 
	 	   	C equals one-half percent (1/2%) of Net
Sales obtained from such sales of such
GI Type A Product, multiplied by the
number (if any) of Subsequent Members in
that Product’s TGF-ß Class
(not to exceed three (3)) which are
Collaborative Factors of GI and JHU or
GI and MetaMorphix;
	 
	 	   	D equals one percent (1%) of Net Sales
obtained from such sales of such GI Type
A Product, if that GI Type A Product is
labeled for an indication which is
covered by a Valid Claim of a Use Patent
within the MetaMorphix Patent Rights, the
JHU Patent Rights or the Joint Patent
Rights of JHU and MetaMorphix;
	 
	 	   	E equals one-half percent (1/2%) of the
Net Sales obtained from such sales of
such GI Type A Product, if that Product
is labeled for an indication which is
covered by a Valid Claim of a Use Patent
within the Joint Patent Rights of GI and
JHU or GI and MetaMorphix: and
	 
	 	   	F equals the royalty payable by GI to
JHU under Section 7.3.2.2 below,

57

 

	 	   	provided however, that In no event shall
the sum of A, B and C exceed. seven percent (7%).,

	 	7.3.2.2  	Payable by GI to JHU, GI shall pay to JHU
a royalty on sales made by GI, its Affiliates or
sublicensees of each GI Type A Product. the
manufacture, use or sale of which is covered by a
Valid Claim under applicable Factor Patent Rights
which royalty shall be calculated using the following
formula:

	 	   	A+B+C+D+E

	 	   	where

	 	   	A equals either (i) three and one-half
percent (3 1/2%) of the Net Sales obtained from
such sales of such GI Type A Product, if the
First Member of such GI Type A Product’s TGF-ß
Class is a GDF Discovered by JHU; or (ii) one
and three quarters percent (1 3/4%) of GI’s Net
Sales of such GI Type
	 
	 	   	A Product, if the First Member of such GI
Type A Product’s TGF-13 Class is a
Collaborative Factor Discovered jointly by
JHU and MetaMorphix or a Collaborative Factor
Discovered jointly by JHU and GI;
	 
	 	   	B equals seven-eighths percent (7/8%) of the
Net Sales obtained from such sales of such
GI Type A Product, multiplied by the number
(if any) of Subsequent Members in such GI
Type A Product’s TGF-ß Class (not to exceed
three (3)) which are GDFs Discovered by JHU;
	 
	 	   	C equals seven-sixteenths percent (7/16%) of
the Net Sales obtained from such sales of
such GI Type A Product, multiplied by the
number (if any) of Subsequent Members in such
GI Type A Product’s TGF-ß Class (not to
exceed three (3)) which are either
Collaborative Factors Discovered jointly by
JHU and MetaMorphix or Collaborative Factors
Discovered jointly by JHU and GI;
	 
	 	   	D equals seven-eighths percent (7/8%) of the
Net Sales obtained from such sales of such GI
Type A Product, if such GI Type A Product is
labeled for an

58

 

	 	   	indication which is covered by a Valid Claim
of a Use Patent within the JHU Patent Rights:
	 
	 	   	E equals seven-sixteenths percent (7/16%) of the
Net Sales obtained from such sales of such GI
Type A Product, if such GI Type A Product is
labeled for an indication which is covered by a
Valid Claim of a Use Patent within the Joint
Patent Rights of JHU and MetaMorphix, or JHU and
GI;

	 	   	provided, however, that in no event shall the sum of
A, B and C exceed six percent (6%).

	 	7.3.3  	GI Type B Products.

	 	7.3.3.1  	Payable by GI to MetaMorphix. GI shall pay to
MetaMorphix a royalty on sales made by GI, its
Affiliates or sublicensees of each GI Type B Product,
the manufacture, use or sale of which is covered by a
Valid Claim under the applicable Factor Patent Rights,
which royalty shall be calculated using the following
formula:

	 	   	royalty =A-(B+C+D+E+F+G)

	 	   	where
	 
	 	   	A equals eight percent (8%) of the Net Sales
obtained from such sales of such GI Type B Product;
	 
	 	   	B equals the royalty payable by GI to JHU under
Section 7.3.3.2 below;
	 
	 	   	C equals either (i) four percent (4%) of Net Sales
obtained from such sales of such GI Type B Product,
if the First Member of that Product’s TGF-ß Class is
a BMP; or (ii) two percent (2%) of Net Sales
obtained from such sale of such MetaMorphix Product,
if the First Member of that Product’s TGF-(3 Class
is a Collaborative Factor of GI and JHU or a
Collaborative Factor of GI and MetaMorphix;
	 
	 	   	D equals one percent (1%) of the Net Sales obtained
from such sales of such GI Type B Product, multiplied
by the number (if any) of Subsequent Members in such
GI Type B Product’s TGF-ß Class (not to exceed three
(3)) which are BMPs;

59

 

	 	   	E equals one-half percent (1/2%) of Net Sales obtained from such sales of such GI Type
B Product, multiplied by the number (if any) of Subsequent Members in that GI Type B
Product’s TGF-ß Class (not to exceed three (3)) which are either Collaborative Factors
of GI and JHU or Collaborative Factors of GI and MetaMorphix:
	 
	 	   	F equals one percent (1%) of Net Sales obtained from such sales of such GI Type
B Product, if such GI Type B Product is labeled for an indication which is covered by a
Valid Claim of a Use Patent within the GI Patent Rights; and
	 
	 	   	G equals one-half percent (1/2%) of Net Sales obtained
from such sales of such GI Type B Product, if such GI Type B Product is labeled
for an indication which is covered by a Valid Claim of a Use Patent within the
Joint Patent Rights of GI and JHU, or GI, and MetaMorphix;
	 
	 	   	provided however, that in no event shall the sum of C, D and E exceed six percent
(6%) or shall the sum of B, C, D, E, F and G exceed seven percent (7%).

	 	7.3.3.2  	Payable by GI to JHU. GI shall pay to JHU a royalty on sales made by GI, its
Affiliates or sublicensees of each GI Type B Product, the manufacture, use or sale of
which is covered by a Valid Claim under the applicable Factor Patent Rights, which royalty
shall be calculated using the following formula:

	 	   	royalty =A+B+C+D+E

	 	   	where

	 	   	A equals either (i) three and one-half percent (3 1/2%) of the Net Sales
obtained from such sales of such GI Type B Product, if the First
Member of such GI Type B Product’s TGF-13 Class is a GDF Discovered by JHU;
or (ii) one and three quarters percent (1 3/4%) of GI’s Net Sales
of such GI Type
	 
	 	   	B Product, if the First Member of such GI Type A Product’s TGF-13 Class is
a Collaborative Factor Discovered jointly by JHU and MetaMorphix or a
Collaborative Factor Discovered jointly by JHU and GI;

60

 

	 	   	B equals seven-eighths percent (7/8%) of the
Net Sales obtained from such sales of such GI
Type B Product, multiplied by the number (if
any) of Subsequent Members in such GI Type B
Product’s TGF-ß Class (not to exceed three
(3)) which are GDFs Discovered by JHU;
	 
	 	   	C equals seven-sixteenths percent (7/16%)
of the, Net Sales obtained from such sales of
such GI Type B Product, multiplied by the number
(if any) of Subsequent Members in such GI Type B
Product’s TGF-J3 Class (not to exceed three (3))
which are either Collaborative Factors
Discovered jointly by JHU and MetaMorphix or
Collaborative Factors Discovered jointly by JHU
and GI;
	 
	 	   	D equals seven-eighths percent (7/8%) of the
Net Sales obtained from such sales of such GI
Type A Product, if such GI Type B Product is
labeled for an indication which is covered by a
Valid Claim of a Use Patent within the JHU
Patent Rights;
	 
	 	   	E equals seven-sixteenths percent- (7/16%) of
the Net Sales obtained from such sales of such
GI Type B Product, if such GI Type B Product is
labeled for an indication which is covered by a
Valid Claim of a Use Patent within the Joint
Patent Rights of JHU and MetaMorphix or JHU and
GI;

	 	   	provided, however, that in no event shall the sum of
A, B and C exceed six percent (6%).

	 	7.3.4  	GI Type C Products. GI shall
pay to JHU a royalty on sales made by GI, its Affiliates or
sublicensees of each GI Type C Product, the manufacture, use
or sale of which is covered by a Valid Claim under the JHU
Patent Rights or the Joint Patent Rights of JHU and GI ,
which royalty shall be calculated using the following
formula:

	 	   	royalty =A+B+C+D+E

	 	   	where

	 	   	A equals either (i) three and one-half percent (3
1/2%) of the Net Sales obtained from such sales of
such GI Type C

61

 

	 	   	Product, if the First Member of such GI Type C Product’s TGF-ß Class is a
Additional GDF Discovered by JHU: or (ii) one and three quarters
percent (1 3/4%) of GI’s Net Sales of such GI Type C Product, if the First
Member of such GI Type C Product’s TGF-ß Class is a Additional Collaborative
Factor Discovered jointly by JHU and GI;
	 
	 	   	B equals seven-eighths percent (7/8%) of the Net Sales obtained from such
sales of such GI Type C Product, multiplied by the number (if any) of
Subsequent Members in such GI Type C Product’s TGF-ß Class (not to exceed
three (3)) which are Additional GDFs Discovered by JHU;
	 
	 	   	C equals seven-sixteenths percent (7/16%) of the Net Sales obtained from such
sales of such GI Type C Product, multiplied by the number (if any) of
Subsequent Members in such GI Type C Product’s TGF-ß Class (not to exceed
three (3)) which are Additional Collaborative Factors Discovered jointly by
JHU and GI;
	 
	 	   	D equals seven-eighths percent (7/8%) of the Net Sales obtained from such sales
of such GI Type C Product, if such GI Type C Product is labeled for an
indication which is covered by a Valid Claim of a Use Patent within the JHU
Patent Rights;
	 
	 	   	E equals seven-sixteenths percent (7/16%) of the Net Sales obtained from such
sales of such GI Type A Product, if such GI Type C Product is labeled for an
indication which is covered by a Valid Claim of a Use Patent within the Joint
Patent Rights of JHU and GI;

	 	   	provided, however, that in no event shall the sum of A, B and C exceed six percent
(6%).
	 
	 	7.3.5  	Other TGF-ß Factors.

	 	7.3.5.1  	Payable b}• MetaMorphix to JHU. MetaMorphix shall pay to JHU a royalty on the
sales, made by MetaMorphix, its Affiliates or sublicensees, of each Other TGF-ß
Product, which royalty shall be calculated using the following formula:

	 	   	royalty = A + B

62

 

	 	   	where

	 	   	A equals one percent (1%) of the Net Sales obtained from such sales of such
Other TGF-ß Product, multiplied by the number (if any) of GDFs of JHU (not to
exceed three (3) for each TGF-ß Class), the manufacture, use or sale of which
is covered by a Valid Claim under the applicable Factor Patent Rights, which
GDFs belong to the TGF-ß Class containing the Other TGF-ß Factor that such
Other TGF-ß Product is based on; and
	 
	 	   	B equals one-half percent (1/2%) of the Net Sales obtained from such
sales of such Other TGF-ß Product, multiplied by the number (if any) of
Collaborative Factors of JHU and GI, or JHU and MetaMorphix (not to exceed
three (3) for each TGFß Class), the manufacture, use or sale of
which is covered by a Valid Claim under the applicable Factor Patent Rights,
which Collaborative Factors belong to a TGF-ß Class containing the Other TGFß
Factor that such Other TGF-ß Product is based on.

	 	73.5.2  	Payable by MetaMorphix to GI. MetaMorphix shall pay to GI royalties on the sales made
by MetaMorphix, its Affiliates or sublicensees of each Other TGF-ß Product, which royalty
shall be calculated using the following formula:

	 	   	royalty = A + B

	 	   	where

	 	   	A equals one percent (1%) of the Net Sales obtained from the sale of such
Other TGF-ß Product, multiplied by the number (if any) of BMPs (not to
exceed three (3) for each TGF-ß Class), the manufacture, use or sale of
which is covered by a Valid Claim under the applicable Factor Patent
Rights. which BMPs belong to a TGF-ß Class containing the Other TGF-ß
Factor that such Other TGF-ß Product is based on; and

63

 

	 	   	B equals one-half percent (1/2%) of the Net Sales obtained from the sale of
such Other TGF-ß Product multiplied by the number (if any) of Collaborative
Factors of GI and JHU or GI and MetaMorphix (not to exceed three (3) for each
TGFß Class), the manufacture, use or sale of which is covered by a Valid Claim
under the applicable Factor Patent Rights, which Collaborative Factors belong
to a TGF-ß Class containing the Other TGFß Factor that such Other TGF-ß
Product is based on.

	 	7.3.5.3  	Payable by GI to JHU. GI shall pay to JHU a royalty on the sales by GI, its
Affiliates or sublicensees of Other TGFß Products, which royalty shall be calculated by
using the formula:

	 	   	royalty = A+ B+ C+ D

	 	   	where

	 	   	A equals (i) seven-sixteenths percent (7/16%) of the Net Sales obtained from
such sales made in North America of any Other TGF-ß Product based on a
Factor known to GI as BMPs 2, 4, 5, 6, 7, 9 or 12, multiplied by
the number (if any) of GDFs Discovered by JHU which belong to a TGF-ß Class containing the Other TGF-ß
Factor on which the Other TGF-ß Product being sold is based, plus (ii)
seven-thirty-seconds percent (7/32%) of the Net Sales obtained from such
sales made in North America of any Other TGF-ß Product based on a Factor
known to GI as BMPs 2, 4, 5, 6, 7, 9 or 12, multiplied by the number (if
any) of Collaborative Factors of JHU and MetaMorphix which belong to a TGF-ß
Class containing the Other TGF-ß Factor on which the Other TGF-ß Product
being sold is based, in each case only where the manufacture, use or sale of
such GDFs or Collaborative Factors is covered by a Valid Claim under the
applicable Factor Patent Rights, provided, however, that the aggregate
number of such GDFs and Collaborative Factors considered in making such
calculation shall not exceed three (3) and, provided further, that
if more

64

 

	 	   	than three (3) of such GDFs and Collaborative Factors that exist in the aggregate, each such GDF
shall be considered in making such calculation prior to the consideration of any Collaborative
Factor in making such calculation;
	 
	 	   	B equals seven-thirty seconds percent (7/32%) of the Net Sales obtained from such sales made in
North America of Other TGF-ß Products based on any Factor known to GI as BMPs 2, 4, 5, 6, 7, 9 and
12, multiplied by the number (if any) of Collaborative Factors of GI and JHU (not to exceed three
(3) for each TGF-ß Class) which belong to a TGF-ß Class containing the Other TGF-ß Factor on which
the Other TGF-ß Product being sold is based, where the manufacture, use or sale: of such
Collaborative Factors is covered by a Valid Claim under the applicable Factor Patent Rights;
	 
	 	   	C equals (i) seven-eighths percent (7/8%) of the Net Sales obtained from such sales of any Other
TGF-ß Product (excluding Other TGF-ß Products based on the Factors known to GI as BMPs 2, 4, 5,
6, 7, 9 and 12), multiplied by the number (if any) of GDFs Discovered by JHU which belong to a
TGF-ß Class containing the Other TGF-ß Factor on which such Other TGF-R Product is based, plus
(ii) seven sixteenths percent (7/16%) of the Net Sales obtained from such sales of any Other TGF-ß
Product (excluding Other TGF-ß Products based on the Factors known to GI as BMPs 2, 4, 5, 6, 7, 9
and 12), multiplied by the number (if any) of Collaborative Factors of JHU and MetaMorphix which
belong to a TGF-ß Class containing the Other TGF-ß Factor on which such Other TGF-ß Product is
based, in each case only where the manufacture, use or sale of such GDFs or Collaborative Factors
is covered by a Valid Claim under the applicable Factor Patent Rights, provided, however, that
the aggregate number of such GDFs and Collaborative Factors considered in making such calculation
shall not exceed three (3) and, provided further, that if more than three (3) of such GDFs and
Collaborative Factors that exist, in the aggregate, each such GDF

65

 

	 	   	shall be considered in making such calculation prior to the consideration
of any Collaborative Factor in making such calculation: and
	 
	 	   	D equals seven-sixteenths percent (7/16%) of the
 Net Sales obtained from the sales of any Other TGFß Product (excluding Other
TGF-ß Products based on the Factors known to GI as BMPs 2, 4, 5, 6, 7, 9 and
12), multiplied by the number (if any) of Collaborative Factors of GI and JHU
(not to exceed three (3) for each TGF-ß Class) which belong to a TGF-ß Class
containing the Other TGF-ß Factor on which such Other TGF-ß Product is based,
where the manufacture, use or sale of such Collaborative Factor is covered by
a Valid Claim under the applicable Factor Patent Rights.

	 	7.3.5.4  	Payable by GI to MetaMorphix. GI shall pay to MetaMorphix a royalty on the sales made
by GI, its Affiliates or sublicensees of Other TGF-ß Products, which royalty shall be
calculated using the formula:

	 	   	royalty = ( A+ B+ C+ D) - E

	 	   	where

	 	   	A equals one-half percent (1/2%) of the Net Sales obtained from sales made in
North America of any Other TGF-ß Product based on a Factor known to GI as
BMPs 2, 4, 5, 6, 7, 9 or 12, multiplied by the number (if any) of GDFs or
Collaborative Factors of JHU and MetaMorphix (not to exceed three (3) for
each TGF-13 Class), the manufacture, use or sale of which is covered by a
Valid Claim under the applicable Factor Patent Rights, which belong to a
TGF-ß Class containing the Factor on which the Other TGF-ß Product being sold
is based;
	 
	 	   	B equals one-quarter percent (1/4%) of the Net Sales obtained from sales
made in North America of any Other TGF-ß Product based on a Factor known to
GI as BMPs 2, 4, 5, 6, 7, 9 and 12, multiplied by the number (if any) of
Collaborative Factors of GI and JHU, or GI and MetaMorphix (not to exceed

66

 

	 	   	three (3) for each TGF-ß Class), the manufacture use or sale of which is
covered by a Valid Claim under the applicable Factor Patent Rights which
belong to a TGF-ß Class containing the Other TGFß Factor on which the Other
TGF-ß Product being sold is based:
	 
	 	   	C equals one percent (1 %) of the Net Sales obtained from the sale of any
Other TGF-ß Product (excluding Other TGF-P Products based on the Factors known to GI as BMPs
2, 4, 5, 6, 7, 9 and 12), multiplied by the number (if any) of GDFs and
Collaborative Factors of JHU and MetaMorphix (not to exceed three (3) for each
TGF-3 Class), the manufacture, use or sale of which is covered by a Valid
Claim under the applicable Factor Patent Rights, which belong to a TGF-ß Class
containing the Other TGF-ß Factor on which the Other TGF-ß Product being sold
is based;
	 
	 	   	D equals one-half percent (1/2%) of the Net Sales obtained from the sale of
any Other TGF-ß Product (excluding Other TGF-ß Products based on the Factors
known to GI as BMPs 2, 4, 5, 6, 7, 9 and 12), multiplied by the number (if
any) of Collaborative Factors of GI and JHU, or GI and MetaMorphix (not to
exceed three (3) for each TGFß Class), the manufacture, use or sale of which
is covered by a Valid Claim under the applicable Factor Patent Rights, which
belong to a TGF-ß Class containing the Other TGF-ß Factor on which the Other
TGF-ß Product being sold is based; and
	 
	 	   	E equals the royalty payable by GI to JHU under Section 7.3.5.3 above.

	 	7.3.5.5  	Patent Interference. The Parties acknowledge that an interference proceeding has been
declared and is currently pending in the United States Patent and Trademark Office with
respect to patent applications filed by GI claiming BMP12 and patent applications filed by
JHU claiming GDF-7. In the event that it is finally determined that the inventions claimed
in the GDF-7 patent applications have priority (i.e., were invented prior to) the inventions
claimed in the BMP-12

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	 	   	patent applications and a patent is issued from the GDF-7 patent
applications, then this Agreement thereupon shall be deemed to be
automatically amended such that all references to BMP-12 in Sections
7.3.5.3 and 7.3.5.4 shall be deleted.

	 	7.4  	Royalty Calculations.

	 	7.4.1  	Country-by-Country Basis. For each Product, royalties shall be payable by a
Party on a country-by-country basis solely with respect to Net Sales for any country
where such Product is manufactured or sold in which there is a Valid Claim under the
applicable Factor Patent Rights or Additional Factor Patent Rights. However, for sales
of a Product which is manufactured in a country in which there is a Valid Claim under
the applicable Factor Patent Rights or Additional Factor Patent Rights, but sold in a
country where the applicable Factor Patent Rights or Additional Factor Patent Rights do not exist, the royalties payable by the Parties
for sales in that country shall be reduced by fifty percent (50%) if products
are being sold in that country which directly compete with such Product.
	 
	 	7.4.2  	Advanced Products. For Products which are not finished formulations, mixtures
or compositions of a Factor (that is, for Products which could not have been developed
by a Party but for the application of substantial advanced technologies developed by
that Party (e.g., without limitation, Products which are antibodies,
antisense molecules or ribozymes to, a Factor)), the royalty payable by that
developing Party on Net Sales of that Product shall be reduced to reflect the fair
market value contribution of that advanced technology to the Product, as determined by
mutual agreement of the Parties. In the event that the Parties are unable to calculate
or agree Upon the fair market value contribution of the advanced technology to the
Product, then the royalty payable by the developing Party on Net Sales of that Product
shall be reduced by fifty percent (50%)-
	 
	 	7.4.3  	Third Party Royalties If it becomes necessary, in order for a Party or
its Affiliates or sublicensees to make, use or sell Products or products based
upon Other TGF-p Factors, to pay royalties under a Third Party’s patent rights
(including amounts, if any, payable to Third Parties, under Section 6.7, above;
and with respect to MetaMorphix excluding amount payable by MetaMorphix to JHU
and/or GI under this Agreement; and with respect to GI, excluding amount payable
by GI to MetaMorphix under this Agreement), then the licensee Party shall have
the right to deduct

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fifty percent (50%) of the amounts so paid to Third Parties up to a total of
fifty percent (50%) of the amount due the licensor Party on account of such
particular Products or products based on Other TGF-ß Factors.

	 	7.4.4  	Limitation on Royalty Deductions. Total royalty deductions under this
Section 7.4 shall not exceed fifty percent (50%) of the amount due the licensor
Party on account of Net Sales of the Product or Other TGF-ß Product, for which
royalty payments are owed.

	 	7.5  	Reports and Payment. Each Party shall deliver to the Party to which royalties are owed,
within sixty (60) days after the end of each calendar quarter, a written report showing its
computation of royalties due ‘under this Agreement upon Net Sales by such Party,
its Affiliates and sublicensees during such calendar quarter. All Net Sales shall be
segmented in each such report according to sales by such Party, each Affiliate
and each sublicensee, as well as on a country-by-country basis, including the rates of
exchange used to convert such royalties to United States Dollars from the currency in which
such sales were made. Subject to the provisions of Sections 7.6 and 7.7 of this Agreement,
simultaneously with the delivery of each such report, the paying Party‘shall
tender payment in United States Dollars of all royalties shown to be due therein.

     For purposes hereof, the rates of exchange to be used for convening royalties
hereunder to United States Dollars shall be the closing price published for the purchase
of United States Dollars in the East Coast Edition of the Wall Street Journal for the
last business day of the calendar quarter for which payment is due.

	 	7.6  	Foreign Royalties. Where royalties are due hereunder for sales of Products or products
based on Other TGF-ß Factors in a country where, by reason of currency regulations or taxes
of any kind, it is impossible or illegal for such Party. any Affiliate or sublicensee to
transfer royalty payments to the licensor Party for Net Sales in that country, such
royalties shall be deposited in whatever currency is allowable by the person or entity not
able to make the transfer for the benefit or credit of the licensor Party in an accredited
bank in that country that is reasonably acceptable to the licensor Party.
	 
	 	7.7  	Taxes. Any and all income or’similar taxes imposed or levied on account of the receipt
of royalties payable under this Agreement which are required to be withheld by a Party
shall be paid by such Party, its Affiliates or sublicensees on behalf of the licensor Party
and shall be paid to the proper

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	 	   	taxing authority. Proof of payment shall be secured and sent to the
licensor Party by such Party, its Affiliates or sublicensees as
evidence of such payment in such form as required by the tax authorities having
jurisdiction over such Party, its Affiliates or sublicensees. Such taxes shall be
deducted from the royalty that would otherwise be remittable by the Parry, its
Affiliates or sublicensees.

	 	7.8  	Records. Each Party shall keep, and shall require all Affiliates and
sublicensees to keep, for a period of at least two (2) years, full, true and accurate
books of accounts and other records containing all information and data which may be
necessary to ascertain and verify the royalties payable hereunder. During the term of
this Agreement and for a period of two (2) years following its termination, each Party
shall have the right from time to time (not to exceed once during each calendar year)
to inspect in confidence, or have an agent, accountant or other representative inspect
in confidence, such books, records and supporting data.

8. ADDITIONAL CONSIDERATION.

	 	8.1  	Assignment of MetaMorphix Stock. At the Closing, GI would assign to
MetaMorphix two million seven hundred thousand (2.700,000) shares of the
MetaMorphix Series A Convertible Preferred Stock and nine hundred thousand
(900.000) shares of the MetaMorphix Series B Convertible Preferred Stock, currently owned by GI, which assignment will be substantially in
the form as the assignment form attached hereto as Schedule 8.1A. At the Closing.
GI also will deliver to MetaMorphix an executed Stock Power. substantially
in the form as attached hereto as Schedule 8.1 B, for each MetaMorphix stock certificate held by GI for the purpose of effecting such
assignment. After making such assignment, GI would still own two hundred thousand
(200,000) shares of MetaMorphix Series A Convertible Preferred Stock and, at the
Closing, MetaMorphix shall, upon receiving the executed Assignment Agreement
and Stock Powers, issue to GI a new stock certificate representing
such shares. Upon making such assignment, in accordance with Section 8.6 hereof GI
(i) shall acknowledge that it no longer owns the minimum number of shares of
MetaMorphix Stock such that the MetaMorphix shareholders would be required to
elect 2 or 3 persons designated by GI to serve as Directors on the MetaMorphix
Board of Directors, and (ii) would irrevocably waive its right to exercise its
purchase options under the April 18, 1995 Stock Restriction Agreement and each of
the April 18, 1995 Right of First Refusal Agreements to which it. MetaMorphix and
JHU are parties.
	 
	 	8.2  	Amendment of Promissory Note. At the Closing, GI and MetaMorphix would
execute a Third Allonge to the Promissory Note, which shall be substantially in
the form as the Third Allonge appearing in Schedule 8.2 attached hereto. Such
Third Allonge shall provide, inter alia, (i) for an

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	 	   	extension of the due date for the payment of the note until January 1. 2005, (ii) that
MetaMorphix will he permitted to repay the principal and interest at any time. (iii)
that. at the end of the loan term. if MetaMorphix‘s stock is publicly traded, MetaMorphix will be permitted to pay
off the then outstanding principal and interest with shares of MetaMorphix‘s
stock valued at the then current market price. and (iv) that GI will be permitted, at any
time and at its sole election, to convert the outstanding principle and interest of the
loan to MetaMorphix stock. which stock shall be valued at either (x) 125% of the IPO price
if the stock is then publicly traded or (y) a price to be negotiated in good faith by
MetaMorphix and GI if the stock is not then publicly traded.
	 
	 	8.3  	Put Option. Subject to the terms and conditions of this Agreement, after the Closing, GI
would enter into put option agreements with qualified and accredited Third Party investors,
which put option agreements collectively, would permit such investors to require GI to
purchase up to $2,000,000. in the aggregate, of the MetaMorphix stock purchased by such Third
Party investors. Each such put option agreement shall be substantially in the form as the
sample put option agreement appearing in Schedule 8.3 attached hereto. The per share purchase
price to be paid by GI upon the exercise of such put option shall be the per share price paid
by such Third Party investors to MetaMorphix for the purchase of such stock. Such Third Party
investors would be permitted to exercise such put options between
January 1, 2000 and
December 31, 2001 only if MetaMorphix (i) has voluntarily filed for bankruptcy under Chapter
7 of the U.S. Bankruptcy Code or (ii) is placed into bankruptcy under Chapter 7 of the U.S.
Bankruptcy Code by a petition of a Third Party and such proceeding is not lifted within sixty
(60) days of the filing of such petition for bankruptcy, in either event on or before
December 31, 2001. Notwithstanding the foregoing. each such put option shall automatically
expire if, prior to December 3 I , 2001. MetaMorphix raises an aggregate of eight million
dollars ($8,000,000) or more, in cash and/or non-cash consideration, through financing from
one or more Third Parties and/or the transfer to one or more Third. Parties of any rights
relating to one or more MetaMorphix Factors. MetaMorphix shall promptly notify GI, in
writing, upon entering each such transaction, which notice shall include a copy of the
transaction agreements and a summary of all consideration received or to be received and the
dates on which such consideration was or is to be received. In determining whether such eight
million dollars ($8,000,000) has been raised. only consideration actually received by
MetaMorphix on or before December 31, 2001 shall be counted, provided, however, that. with
respect to any consideration received in a form other than cash, the fair market value, as
determined in good faith by GI and MetaMorphix’ Board of Directors. of such consideration
shall be utilized in calculating whether such eight million dollars ($8,000,000) has been
raised. In the event that MetaMorphix becomes insolvent and desires to

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	 	   	seek protection under U.S. Bankruptcy laws, MetaMorphix shall use its good faith and
diligent efforts to seek such protection under Chapter 1 1 of’ the U.S. Bankruptcy Code
and, if a bankruptcy petition is filed against MetaMorphix by any Third Party. MetaMorphix
shall uses its good faith diligent efforts to have such petition dismissed as soon as
possible. MetaMorphix shall promptly notify. in writing. GI and each such Third Party
investor upon the occurrence of any events which result in the expiration of the put
options, provided, however, that any failure to give or delay in giving such notice shall
have no effect upon the expiration of any such put option. Notwithstanding. the foregoing.
the obligation to grant any put option to any Third Party investor pursuant to this
Section 8.3 shall be subject to GI’s receiving, from MetaMorphix’ legal counsel. a written
opinion (which written opinion shall be prepared’and given at no cost or expense to GI) to
the effect that the sale of the shares of the capital stock of MetaMorphix which are to be
the subject of such put option and the issuance of the put option by GI to such Third
Party Investor, each are exempt from registration under applicable federal and state
securities laws.

	 	8.4  	Purchase of Equipment. At the Closing, GI and MetaMorphix shall enter into an Asset
Purchase Agreement, substantially in the form of the Asset Purchase Agreement attached
hereto as Schedule 8.4A, pursuant to which GI will purchase from MetaMorphix the equipment
identified in Schedule 8.4B attached hereto. Pursuant to such Asset Purchase Agreement, in
consideration of such purchase. GI will pay to MetaMorphix two hundred eighty four thousand
five hundred twenty four dollars ($284,524), such amount payable to MetaMorphix upon Closing
for immediate payment by MetaMorphix to Transamerica Business Credit Corporation (from which
MetaMorphix leases such equipment) as payment in full for the exercise of MetaMorphix’
option to purchase such equipment from Transamerica Business Corporation. Such purchase
price is inclusive of all costs associated with the purchase of such equipment,
provided, however, that GI also shall pay any (i) sales tax. use tax or any other
federal, state of local tax (but not any income tax) measured solely by the equipment price
and required to be paid by MetaMorphix by virtue of the sale and/or delivery of the
equipment to GI and (ii) freight, packing, shipping and insurance costs. GI shall select a
carrier and arrange for such carrier to deliver such equipment to the location(s) designated
by GI within thirty (30) days after the Closing. GI shall (i) prepay all freight, packing,
shipping and insurance costs required for the shipment of the equipment to GI and (ii) bear
the risk of loss until the equipment is safely delivered to GI’s premises. Simultaneously
with the delivery of the equipment to GI, MetaMorphix shall provide to GI all
manuals, documents, specifications, and spare parts that relate to such equipment and are in
MetaMorphix‘ possession GI has had the opportunity, prior to the signing of
this Agreement. to inspect such equipment which shall be delivered to GI in “as is”
condition,provided, however, that until such equipment is

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	 	   	delivered by MetaMorphix to GI’s carrier. MetaMorphix shall use all
reasonable efforts to maintain such equipment in the condition as it was
in at the time of GI’s inspection.

	 	8.5  	Baylor Agreement. As of the date this Agreement was signed by each of the
Parties, MetaMorphix has paid to Baylor forty-eight thousand dollars ($48,000) of
the total amount to be paid by MetaMorphix to Baylor under the Baylor Agreement.
which payments are sufficient to cover the research activities to be performed
thereunder by Baylor during the period commencing on February 1, 1998 and ending on
July 31, 1998. As of the date this Agreement was signed by each of the Parties,
MetaMorphix is in arrears in the additional amount of forty-eight thousand dollars
($48,000) of the payments to be made to Baylor under the Baylor Agreement. GI. on
the Effective Date. shall pay to MetaMorphix, forty-eight thousand dollars ($48,000)
which amount is to be used by MetaMorphix to immediately pay Baylor the past due
amount under the Baylor Agreement, and in consideration therefor, MetaMorphix shall
assign to GI all rights and licenses to any data, information or intellectual
property arising from the Baylor Agreement on or after August 1, 1998 and prior to
February 1, 1999, which assignment shall be represented by an Intellectual Property
Assignment Agreement which is substantially in the form of the Intellectual Property
Assignment Agreement attached hereto as Schedule 8.5. If MetaMorphix elects to
terminate the Baylor Agreement and should Baylor be willing to do so, GI hereby
agrees to enter into good faith negotiations with Baylor for a sponsored research
agreement which agreement would replace the Baylor Agreement.
	 
	 	8.6  	Shareholder Agreements. At the Closing, GI, MetaMorphix, JHU and Dr.
Lee each shall execute and deliver to the others a Termination Agreement, which
shall be substantially in the form of the Termination Agreement appearing in
Schedule 8.6 attached hereto., pursuant to which the 1995 Voting Agreement, the
1995 Stock Restriction Agreements and the 1995 Right of First Refusal Agreements
will be terminated.

9. PRODUCT DEVELOPMENT AND COMMERCIALIZATION.

	 	9.1  	MetaMorphix’s Obligations.

	 	9.1.1  	General Diligence Obligation. MetaMorphix shall use its
Commercially Reasonable Efforts, in its reasonable scientific and business
judgment. as permitted by the licenses granted to it under
Article 6 hereof, to further characterize, evaluate, select, conduct all
necessary and appropriate preclinical and clinical trials and seek
regulatory approvals for at least one (1) product based on each TGF-ß
Factor Class selected by MetaMorphix under Section 5.3 hereof.
Additionally, MetaMorphix shall use its Commercially

 73

 

	 	   	Reasonable Efforts to manufacture or have manufactured, market and sell such products in
those countries of the Territory where MetaMorphix has obtained Regulatory Approval for
such products.

	 	9.1.2  	Development Milestones. As a measure of the diligence obligations set forth in
Section 9.1.1. MetaMorphix shall either (i) spend an average of five hundred thousand
dollars ($500,000) per year over the five (5) year period commencing with the Effective Date
(for a total of two million five hundred thousand dollars ($2,5000,000) in the aggregate
over such five (5) year period) or (ii) meet the following development milestones with
respect to at least one (1) product based on each at least one (1) of the TGF-0 Factor
Classes selected by MetaMorphix under Section 5.3 hereof:

	 	(a)  	within three (3) years from the date all Available
Factors have been selected as MetaMorphix Factors or GI Factors pursuant to
Section 5.3, above, MetaMorphix-shall perform initial pre-clinical
characterization. and demonstrate efficacy in an animal model, for at least
one (1) product based on a Factor from at least one (1) of the TGF-(3
Factor Classes selected by MetaMorphix;
	 
	 	(b)  	within five (5) years from the date set forth in
Section 9.1.2(a), above, MetaMorphix shall submit an INAD for at least
one (1) product based on at least one (I) of the TGF-f3 Factor Classes
selected by MetaMorphix under Section 5.3 hereof; and
	 
	 	(c)  	within seven (7) years from the date set forth in
Section 9.1.2(a), above, MetaMorphix shall apply for approval from the
United States Department of Agriculture and/or the FDA for at least one
(1) product based on at least one (1) of the TGF-J3 Factor Classes
selected by MetaMorphix under Section 5.3 hereof.

	 	9.1.3  	Satisfaction of Diligence and Development Milestone Obligations. MetaMorphix may satisfy
the diligence obligations under Section 9.1.1 hereof and achieve the development milestones
under Section 9.1.2, in. either case, on its own account, or through an Affiliate or
sublicensee, or by forming a partnership or other venture to satisfy such diligence
obligations, all as permitted under the terms and conditions of this Agreement. While
MetaMorphix is

 74

 

	 	   	committed to satisfying such diligence obligations and achieving such
development milestones. MetaMorphix does not represent, warrant or guarantee
that a product based on each TGF-j3 Factor Class selected by MetaMorphix will
or can be successfully developed or that the applicable development milestones
for any product based on such TGF-ß Factor Class can be met.

	 	9.1.4  	Failure to Achieve Development Milestones. Where MetaMorphix fails to both
(i) make the minimum expenditures and (ii) meet a development milestone as required
under Section 9.1.2 hereof, JHU, in its sole discretion and upon thirty (30) days
prior written notice to MetaMorphix and GI, may terminate the licenses granted by it
to MetaMorphix under Section 6.2 hereof, provided, however, in the event MetaMorphix
fails to meet any such Milestone, MetaMorphix may, at its option, retain its licenses
to such Factor Rights if MetaMorphix, thereafter, pays to JHU a license maintenance
fee in the amount of five thousand dollars ($5,000) per calendar quarter, the first
such quarterly payment (which payment shall be prorated based on the number of days
remaining between the end of such thirty (30) day notice period and the end of the
calendar quarter in which such payment becomes due) being due at the end of such
thirty (30) day notice period, and each subsequent payment being due on the last day
of each subsequent calendar quarter.. Notwithstanding the foregoing, MetaMorphix’
obligation to make such payments shall cease if MetaMorphix has either (i) increased
its spending to the minimum levels required under Section 9.1.2 hereof or (ii)
achieved such development milestone. In the event that, pursuant to this Section 9.1,
JHU terminates the licenses granted to MetaMorphix under Section 6.2 hereof. GI. at
its sole option, within sixty (60) days after the end of the thirty (30) day notice
period provided for in this Section 9.1.4, may. by written notice to JHU, assume such
licenses and MetaMorphix’ obligations to JHU with respect to such licenses, provided,
however, that GI’s obligations under the development milestones set forth in Section
9.1.2(a) hereof shall be measured beginning on the date of such assumption of rights
and obligations rather than the date all Available Factors have been selected as
MetaMorphix Factors of GI Factors.

	 	9.2  	GI’s Diligence Obligations.

	 	9.2.1  	General Diligence Obligation. GI shall use its Commercially Reasonable
Efforts, in its reasonable scientific and business judgment. as permitted by the
licenses granted to it under Article 6

 75

 

	 	   	hereof, to further Discover, characterize, evaluate, select, conduct all necessary and
appropriate preclinical and clinical trials and seek regulatory approvals for at least
one (1) product based on each TGF-(3 Factor Class to which GI has received a license from
J IU under Section 6.3 hereof. Additionally, GI shall use its Commercially Reasonable
Efforts to manufacture or have manufactured, market and sell such products in those
countries of the Territory where GI has obtained Regulatory Approval for such products.

	 	9.2.2  	Milestones. As a measure of the diligence obligations set forth in Section 9.2.1, GI shall
either (i) spend an average of five hundred thousand dollars ($500,000) per year over the
five (5) year period commencing with the Effective Date (for a total of two million five
hundred thousand dollars ($2,500,000) in the aggregate over such five (5) year
period) or (ii) meet the following development milestones with respect to at least one (1)
product based on at least one (1) of the TGF-(3 Classes to which GI has rights under this
Agreement: _

	 	(a)  	within three (3) years from the date all Available
Factors have been selected as GI Factors or MetaMorphix Factors pursuant to
Section 5.3, above, GI shall perform initial pre-clinical characterization,
and demonstrate efficacy in an animal model, for at least one (1) product
based on a Factor from at least one (1) TGF-ß Class to which GI has rights
under this Agreement;
	 
	 	(b)  	within five (5) years from the date GI achieves the
development milestone set forth in Section 9.2.2(a), above. GI shall
submit an IND for a Phase I clinical study of at least one (1) product
based on a Factor from at least one (1) TGF-ß Class to which GI has rights
under this Agreement; and
	 
	 	(c)  	within seven (7) years from the date GI achieves the
development milestone set forth in Section 9.2.2(b), above. GI shall
submit a PLA seeking commercial approval of at least one (1) product based
on a Factor from at least one (1) TGF-0 Class to which GI has rights under
this Agreement.

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	 	9.2.3  	Satisfaction of Diligence and Development Milestone Obligations. GI may satisfy
the diligence obligations under Section 9.2.1 hereof and achieve the development
milestones under Section 9.2.2, in either case, on its own account. or through an
Affiliate or sublicensee, or by forming a partnership or other venture to satisfy such
diligence obligations, all as permitted under the terms and conditions of this Agreement.
While GI is committed to satisfying such diligence obligations and achieving such
development milestones, GI does not represent, warrant or guarantee that a product based
on each TGF-ß Class selected by GI will or can be successfully developed or that the
applicable development milestones for any product based on such TGF-ß Class can be met.
	 
	 	9.2.4  	Failure to Achieve Development Milestones. Where GI fails to both (i) make the
minimum expenditures and (ii) meet a development milestone as required under Section 9.2.2
hereof, JHU may, in its sole discretion and upon thirty (30) days prior written notice to GL
may terminate the licenses granted by it to GI under Section 6.3 hereof; provided, however,
GI may, at its sole option, retain its licenses to such Factor Rights and Additional Factor
Rights if GI, thereafter, pays to JHU a license maintenance fee in the amount of twenty five
thousand dollars ($25,000) per calendar quarter, the first such quarterly payment (which
payment shall be prorated based on the number of days remaining between the end of such
thirty (30) day notice period and the end of the calendar quarter in which such payment
becomes due) being due at the end of such thirty (30) day notice period, and each subsequent
payment being due on the last day of each subsequent calendar quarter. Notwithstanding the
foregoing, GI’s obligation to make such payments shall cease if GI has either (i) increased
its spending to the minimum levels required under Section 9.2.2 hereof or (ii) achieved such
development milestone. In the event that, pursuant to this Section 9.1, JHU terminates the
licenses granted to GI under Section 6.3 hereof. MetaMorphix, at its sole option, within
sixty (60) days after the end of the thirty (30) day notice period provided for in this
Section 9.2.4, may, by written notice to JHU, assume such licenses and GI’s obligations to
JHU with respect to such licenses, provided, however, that MetaMorphix’ obligations under
the development milestones set forth in Section 9.2.2(a) hereof shall be measured beginning
on the date of such assumption of rights and obligations rather than the date all Available
Factors have been selected as MetaMorphix Factors of GI Factors.

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	 	9.3  	Right of First Refusal. GI. for itself and its parent company. American Home
Products Corporation. hereby waives and shall have no further rights under any
Right of First Refusal Offer made by MetaMorphix pursuant to Section 9.2 of the
1994 Collaboration Agreement prior to the Effective Date, which offer has not yet
been accepted by GI or American Home Products Corporation. Additionally, no right
of first refusal is provided to GI or American Home Products Corporation hereunder
with respect to MetaMorphix’ licensing to any Third Party the right to develop.
make. use and/or sell any MetaMorphix Product for use in the MetaMorphix Field.

10. PATENT PROSECUTION AND INFRINGEMENT. 10.1

	 	   	Responsibility for Patenting Factor Rights.

	 	10.1.1  	GI Patent Rights and Certain Joint Patent Rights. GI shall have the first
right, but not the obligation, to seek or continue to seek or maintain Patent
protection on any GI Patent Rights, any Joint Patent Rights of GI
and MetaMorphix, and any Joint Patent Rights of GI and JHU, any GI Additional
Factor Patent Rights and any Additional Factor Joint Patent Rights, in any
country. If GI elects, in any country not to seek or continue to seek or
maintain Patent protection on any such Factor Patent Rights (but not any GI
Additional Factor Patent Right or Additional Factor Joint Patent Rights), to
the extent the manufacture use or sale of a MetaMorphix Factor would infringe
such Factor Patent Rights Factor in such country, MetaMorphix shall have the
right, but not the obligation, at its expense, to file, procure and maintain
in such countries Patents on such Factor Patent Rights in such country.
	 
	 	10.1.2  	MetaMorphix Patent Rights. MetaMorphix shall have the first right, but not
the obligation, to seek or continue to seek or maintain Patent protection on
any MetaMorphix Patent Rights in any country. If MetaMorphix elects not to
seek or continue to seek or maintain Patent protection on any MetaMorphix
Patent Rights in any country, GI shall have the right, but not the
obligation, at its expense, to file, procure and maintain in such countries
Patents on such MetaMorphix Patent Rights, in which event, MetaMorphix shall
assign its entire right, title and interest in and to those of such
MetaMorphix Patent Right(s) that relate to any of the GI Factors in such
country(ies) to GI and such MetaMorphix Patent Right(s) shall thereafter be
excluded from the definitions of MetaMorphix Patent Right(s) and GI Patent
Rights for all purposes of this Agreement.

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	 	10.1.3  	JHU Patent Rights and Certain Joint Patent Rights. JHU shall have the first right
to seek or continue to seek or maintain Patent protection on any JHU Patent Rights. any Joint
Patent Rights of JHU and MetaMorphix, and any JHU Additional Factor Patent Rights in any
country. If JHU elects not to seek or continue to seek or maintain Patent protection on any
such Factor Patent Rights or Additional Factor Patent Rights in any country. GI shall have the
right, but not the obligation, at its expense, to file, procure and . maintain in such
countries Patents on such Factor Patent Rights or Additional Factor Patent Rights, provided,
however, that if GI does not exercise such right with respect to any Factor Patent Right (but
not with respect to any Additional Factor Patent Right), which, but for this Agreement, would
be infringed by MetaMorphix’ making. using or selling of a MetaMorphix Factor or a MetaMorphix
Product, then MetaMorphix shall have the right, but not the obligation, at its expense, to
file, procure and maintain such Patents in such country(ies).
	 
	 	10.1.4  	Patent Cooperation. Each Party shall advise the other applicable Party of all
decisions taken under this Section in a timely manner in order to allow the other applicable
Party to protect its rights under this Section. Each Party shall provide the other
applicable Party (or Parties) with copies of all substantive communications from all patent
offices regarding Patents on Joint Patent Rights, and Patents on Factors selected or
assigned to the other applicable Party under this Agreement, promptly after the receipt
thereof. Each Party shall provide the other applicable Party with copies of all proposed
substantive communications to such patent offices regarding Patents on any Joint Patent
Rights, and Patents on Factors selected or assigned to the other applicable Party under this
Agreement, in sufficient time before the due date in order to enable the other applicable
Party an opportunity to comment on the content thereof. Each Party shall make available
to.the other applicable Party, or its authorized attorneys. agents or representatives, such
of its employees whom the other applicable Party, in its reasonable judgment, deems
necessary in order to assist it in obtaining Patent protection for the applicable Factor
Patent Rights, in the event the Party with first rights to seek or continue to seek or
maintain Patent protection on any such Factor Patent Rights chooses not to do so. Each Party
shall sign or use its best efforts to have signed all legal documents necessary
to file and prosecute Patents or to obtain or maintain Patents at no cost to the other
Parties. Except as provided in Section 10.2. below, each Party shall bear all costs incurred
by it in exercising the foregoing rights.

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	 	10.1.5  	Use of Information. Information, data and materials resulting from the
Collaborative Research or Sponsored Research disclosed pursuant to this Agreement
or the 1994 Collaboration Agreement. may be used by a receiving Party to support
utility or activity hypothecations made in a Patent application filed by that
Party directed to a BMP, GDF or Collaborative Factor. The Parties shall.
collaborate to assure that relevant data is used to support the Factor Patent
Rights (with a preference for supporting composition of matter claims) through
affidavits and/or continuation applications or continuation-in-part applications.
Inventorship under such Factor Patent Rights or Additional Factor Patent Rights
will be determined according to U.S. patent law. Information and materials
relating to (a) a GDF or Additional GDF Discovered by JHU or (b) a Collaborative
Factor or Additional Collaborative Factor jointly Discovered by JHU and another
Party, as applicable, which are supplied by JHU to GI or MetaMorphix pursuant to
this Agreement, shall not be distributed by GI or MetaMorphix to Third Parties (even
under a duty of confidentiality) without JHU’s written consent, which consent
shall not be unreasonably withheld or delayed, until JHU has had an opportunity
to publish on such GDF, Additional GDF. Collaborative Factor or Additional
Collaborative Factor.
	 
	 	10.1.6  	Division of Claims. With respect to any Patents included within a Party’s ‘Patent
Rights or the Joint Patent Rights, which Patents would, but for this Agreement, be
infringed by either GI’s or MetaMorphix’ making, using or selling of a MetaMorphix
Factor, a MetaMorphix Product or a GI Type B Product, the Parties will use good
faith efforts to take all necessary action, to the extent possible, to file
divisional patent applications that are directed to the manufacture, use or sale of
the MetaMorphix Factors solely in the GI Field and to the manufacture, use or sale
of the MetaMorphix Factors in the MetaMorphix Field.
	 
	 	10.1.7  	Interferences. The Parties shall each, in good faith, use its respective
Commercially Reasonable Efforts to resolve any patent interferences between any of
the Parties relating to Patents directed to any Factor or Additional Factor.

	 	10.2  	Expenses.

	 	10.2.1  	Previously Incurred Expenses – GI Factors. At the Closing, GI will pay to
MetaMorphix one hundred fifty five thousand dollars ($155,000) which amount is
being paid to reimburse MetaMorphix for a portion of the expenses incurred by
MetaMorphix, between

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	 	   	December 1. 1994 and the Effective Date, in the prosecution (whether such prosecution is
conducted by MetaMorphix directly or by JHU and, pursuant to the 1994 Collaboration
Agreement. reimbursed by MetaMorphix) of Patents claiming any Factors that.
prior to the Effective Date. have been selected or otherwise identified as GI Factors.

	 	10.2.2  	Previously Incurred Expensed — MetaMorphix Factors and Unassigned Factors. At the Closing,
GI will pay to MetaMorphix sixty thousand dollars ($60,000), which amount is to be used by
MetaMorphix for out of pocket patent expenses that MetaMorphix incurred, on or after January
1, 1998 and prior to January 4, 1999, but, as of the Closing has not yet paid to either JHU
or any Third Party, for the prosecution of Patents claiming any Factors that, prior to such
date, have not been selected or otherwise identified as GI Factors.
	 
	 	10.2.3  	Continuing Expenses — GI Factors and Additional Factors. With respect to each (i) Factor
that has, prior to the Effective Date been selected as or otherwise identified as a GI
Factor, (ii) Factor that, after the Effective Date, is selected as a GI Factor, (iii)
Factor that, after the Effective Date, becomes an Additional GDF or an Additional
Collaborative Factor. GI shall, as of (x) the Effective Date for Factors that, prior to the
Effective Date, have been selected by GI or otherwise identified as a GI Factor, or (y) the
date such Factor becomes a GI Factor, an Additional GDF or an Additional Collaborative
Factor, and thereafter, reimburse JHU for one hundred (100%) of the expenses incurred by
JHU for the prosecution of Patents claiming such GI Factors, Additional GDFs or Additional
Collaborative Factors. Such reimbursements shall be made by GI. from time to time, within
thirty (30) days after GI receives from JHU an invoice detailing such incurred expenses,
which invoice shall he accompanied by copies of invoices JHU has received from Third
Parties for such Patent prosecution.
	 
	 	10.2.4  	Continuing Expenses — MetaMorphix Factors. With respect to each Factor that (i) has been
identified as a MetaMorphix Factor prior to the Effective Date or (ii) is, after the
Effective Date, selected as a MetaMorphix Factor, GI and MetaMorphix each shall reimburse
JHU for fifty percent (50%) of the out-of-pocket expenses incurred by JHU in prosecuting
Patents claiming such MetaMorphix Factors, which expenses were incurred on or after (i) the
Effective Date for each Factor that has been identified as a MetaMorphix Factor prior to the
Effective Date, or (ii) the date that such Factor becomes a MetaMorphix Factor for those
Factors that,

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	 	   	as of the Effective Date. have not been identified as either a MetaMorphix Factor
or a GI Factor. Notwithstanding the foregoing, if the Parties, after the Effective
Date, are able to divide out the claims of such Patents, as provided in Section
10.1.6 above. such that separate Patents respectively claim such MetaMorphix
Factors for use in the GI Field only and such MetaMorphix Factors for use in the
MetaMorphix Field only, GI, shall reimburse JHU for one hundred percent (100%) of
the out-of-pocket expenses incurred by JHU, after such Patents are so divided, in
prosecuting those Patents which claim such MetaMorphix Factors for use in the GI
Field only and MetaMorphix, shall reimburse JHU for one hundred percent (100%) of
the out-of-pocket expenses incurred by JHU, after such Patents are so divided, in
prosecuting those Patents which claim such MetaMorphix Factors for
use in the
MetaMorphix Field only. Each reimbursement under this Section 10.2.4 shall be
made by GI or MetaMorphix, as applicable, from time to time, within thirty (30)
days after GI or MetaMorphix, as applicable, receives from JHU ‘an invoice
detailing such incurred expenses, which invoice shall be accompanied by copies of
invoices JHU has received from Third Parties for such Patent prosecution.

	 	10.2.5  	Continuing Expenses — Unassigned Factors. GI and
MetaMorphix shall each reimburse JHU for fifty percent (50%) of the out-of-pocket
expenses incurred by JHU after January 4, 1999 in prosecuting any Patents
claiming any Factor that has not yet been identified as either a GI Factor or a
MetaMorphix Factor. Expenses incurred by JHU after the date a Factor is
identified as either a GI Factor or a MetaMorphix Factor shall be reimbursed to
JHU in accordance with the provisions of Sections 10.2.3 or 10.2.4 above, as
applicable.
	 
	 	10.2.5  	Continuing Expenses — GDF-16 and GDF-17. MetaMorphix shall reimburse JHU for one
hundred percent (100%) of the out of pocket expenses incurred by JHU, whether
incurred before or after the Effective Date. in prosecuting any JHU Patent Rights
claiming (i) GDF-16 and/or GDF-17. (ii) any GDF-16 Product and/or GDF17 Product, or
(iii) the-manufacture or use of (i) or (ii).

	 	10.3  	Infringement.

	 	10.3.1  	Notice. With respect to the BMPs, the GDFs and the Collaborative Factors, each
Parry shall promptly report in writing to the other Parties during the term of this
Agreement any (i) known infringement or suspected infringement of any of the Factor Patent Rights or
(ii) unauthorized use or misappropriation of the

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	 	   	Confidential Information by a Third Party of which it becomes aware, and shall
provide the other Parties with all available evidence supporting said
infringement, suspected infringement or unauthorized use or misappropriation.
With respect to the Additional Factors, JHU and GI shall promptly report in writing to
each other during the term of this Agreement any (i) known infringement or suspected
infringement of any of the Additional Factor Patent Rights or (ii) unauthorized use or
misappropriation of the Confidential Information by MetaMorphix or a Third Pam of which
it becomes aware, and shall provide such other Party with all available evidence
supporting said infringement, suspected infringement or unauthorized use or
misappropriation.

	 	10.3.2  	First Right to Initiate Suits — GI Factors and Additional Factors. GI shall have the first
right to initiate an infringement or other appropriate suit against any Third Party who at any
time has infringed, or is suspected of infringing, any Factor Patent Rights or Additional
Factor Patent Rights, as applicable, of using without proper authorization all or any
Confidential Information, where such infringement, suspected infringement or unauthorized use
is determined by GI to have an adverse affect on its ability to make, have made, use and/or
sell products based on any GI Factor or any Additional Factor. GI and MetaMorphix agree to
consult with each other prior to instituting any such suit and to provide the other Party a
reasonable opportunity to participate, at its own expense, in any such suit to protect its
respective interests.
	 
	 	10.3.3  	First Right to Initiate Suits — MetaMorphix Factors, GDF-16 and GDF-17. MetaMorphix shall
have the first right to initiate an infringement or other appropriate suit against any Third
Party who at any time has infringed, or is suspected of infringing, any Factor Patent
Rights or of using without proper authorization all or any Confidential
Information. where such infringement, suspected infringement or unauthorized use is
determined by MetaMorphix to have an adverse affect on its ability to make, have made, use
and/or sell products based on MetaMorphix Factors, GDF-16 Products or GDF-17
Products,provided, however,that GI shall have the first right to initiate such
infringement or other appropriate suit against any such Third Party, where the actual or
suspected infringement is occurring only in the GI Field. GI and MetaMorphix agree to
consult with each other prior to instituting any such suit and to provide the other Party a
reasonable opportunity to participate, at its own expense, in any such suit to protect its
respective interests.

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	 	10.3.4  	First Right to Initiate Suits — Unassigned Factors. With respect to
any BMP. GDF or Collaborative Factor that has not yet been identified as
either a MetaMorphix Factor or a GI Factor, the Parties shall jointly
determine which Party (or Parties) shall have the first right to initiate
an infringement or other appropriate suit against any Third Party who at
any time has infringed, or is suspected of infringing, any Factor Patent
Rights or of using without proper authorization all or any
Confidential Information, in order to preserve GI’s or MetaMorphix’ ability
to make, have made, use and/or sell Products based on GI Factors or
MetaMorphix Factors, as the case may be, following the selection of such
Available Factors pursuant to Article 5 of this Agreement.
	 
	 	10.3.5  	Determination of Right to Participate in, and Second Right to Initiate,
Suits. The Parties shall jointly determine which Party (or Parties) shall have
the right to (i) participate in any infringement or other appropriate suit
brought by a Party against a Third Parry pursuant to Sections 10.3.2, 10.3.3
pr 10.3.4, above, as applicable, by contributing costs and sharing in any
recovery, as provided in Section 10.3.6, below, and (ii) initiate an
infringement or other appropriate suit against a Third Party in the event the
Party with the first right to initiate a suit, as provided in Section 10.3.2,
10.3.3, or 10.3.4, above, as applicable, elects not to do so. In making this .
determination. the Parties shall take into consideration which Party (or
Parties) owns the Factor Patent Rights and/or Confidential Information which
has been, or is suspected of being, infringed or misappropriated by a Third
Party. Notwithstanding the foregoing, MetaMorphix shall have no right to
participate in or initiate any infringement or other suit against any Third
Party who (a) has infringed or is suspected of infringing any Additional
Factor Patent Rights (b) has infringed or is suspected of infringing any GI
Patent . Rights relating to BMPs that have not been selected by
MetaMorphix as a MetaMorphix Factor, or (c) of using, without proper
authorization, any of GI’s or JHU’s Confidential Information which relates solely to one or more Additional Factors or to
any BMPs which have not been selected by MetaMorphix as a MetaMorphix
Factor.
	 
	 	10.3.6  	Right to Participate in Suit. The Party initiating a suit pursuant to
Section 10.3.2. 10.3.3, or 10.3.4, above, as applicable, (the “first Party”)
shall give the Party which has rights to participate in that suit pursuant to
Subsection 10.3.5(i), above (the “second Party”) sufficient advance notice of
its intent to file said suit and the reasons therefor, and shall provide the
second Party with an opportunity to make suggestions and comments regarding
such suit, including,

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	 	   	without limitation, the initiation thereof and the selection of counsel therefor. The
first Party shall keep the second Party promptly informed, and shall from time to time
consult with the second Party regarding the status of any such suit and shall provide the
second Party with copies of all documents filed in, and all written communications
relating to, such suit. Except as provided herein. the first Party shall have the sole and
exclusive right to select counsel for any suit and shall pay all expenses of the suit,
including without limitation attorneys’ fees and court costs. The second Party, in its
sole discretion, may elect, within sixty (60) days after the commencement of such
litigation, to contribute a fixed percentage of up to fifty percent (50%) of the costs
incurred by the first Party in connection with such litigation, including, without
limitation, reimbursement of the first Party’s expenses hereunder. If it so elects, any
damages, royalties, settlement fees or other consideration received by the first Party or
any of its Affiliates for past infringement or misappropriation as a result of such
litigation shall be shared by the first and second Parties pro-rata based on their
respective sharing of the costs of such litigation, subject to Section 10.3.8, below. In
the event that the second Party elects not to contribute to the costs of such litigation,
the first Party and/or its Affiliates shall be entitled to retain any damages, royalties,
settlement fees or other consideration for past infringement or misappropriation resulting
therefrom, subject to Section 10.3.8, below. If necessary or desirable, the second Party
shall join as a party to the suit but shall be under no obligation to participate except
to the extent that such participation is required as the result of being a named parry to
the suit. The second Party shall offer reasonable assistance to the first Party in
connection therewith at no charge to the first Party except for reimbursement of
reasonable out-of-pocket expenses; provided, however, if JHU is joined in the
suit as an indispensable party, any costs incurred by JHU in joining such suit will be
reimbursed by the Party (or Parties) initiating such suit. The second Party shall have the
right to participate and be represented in any such suit by its own counsel at its own
expense. The first Party shall not settle any such suit involving rights of the second
Party without obtaining the prior written consent of the second Parry, which consent shall
not be unreasonably withheld.
	 
	 	10.3.7  	Second Right to Initiate Suit. In the event that the first Party elects not to initiate
an infringement or other appropriate suit pursuant to Sections 10.3.2, 10.3.3, or 10.3.4,
above, as applicable, the first Party shall promptly advise the second Party of its intent
not to initiate such suit, and the second Party shall have the right, at its expense, of
initiating an infringement or other

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	 	   	appropriate suit against any Third Party who at any time has infringed. or is
suspected of infringing. any of the Factor Patent Rights or Additional Factor Patent
Rights or of using without proper authorization all or any portion of the
Confidential Information. In exercising its rights pursuant to this Section 10.3.7, the
second Parry shall have the sole and exclusive right to select counsel and shall,
except as provided below, pay all expenses of the suit including without limitation
attorneys’ fees and court costs. The first Party, in its sole discretion, may elect,
within sixty (60) days after the commencement of such litigation, to contribute a fixed
percentage of up to fifty percent (50%) of the costs incurred by the second Party in
connection with such litigation, including, without limitation, reimbursement of the
second Party’s expenses hereunder. If it so elects, any damages, royalties, settlement
fees or other consideration received by the second Party or any of its Affiliates for
past infringement or misappropriation as a result of such litigation shall be shared by the second and first Parties prorata based on
their respective. sharing of the .costs of such litigation, subject to Section 10.3.8,
below. In the event that the first Party elects not to contribute to the costs of such
litigation, the second Party and/or its Affiliates shall be entitled to retain any
damages, royalties. settlement fees or other consideration for past infringement or
misappropriation resulting therefrom, subject to Section 10.3.8, below If
necessary or desirable, the first Party shall join as a party to the suit but shall be
under no obligation to participate except to the extent that such participation is
required as a result of being a named party to the suit. At the second Party’s request.
the first Party shall offer reasonable assistance to the second Party in connection
therewith at no charge to the second Parry except for reimbursement of
reasonable out-of-pocket expenses: provided. however, if JHU is joined in
the suit as an indispensable parry, any costs incurred by JHU in joining such suit will
be reimbursed by the Party (or Parties) initiating such suit. The first Party shall
have the right to participate and be represented in any such suit by its own counsel at
its own expense.
	 
	 	10.3.8  	Royalty Deduction. Any damages, royalties, settlement fees or other consideration for
past infringement or misappropriation awarded to and/or collected by a Party (or Parties)
resulting from an infringement or other appropriate suit against a Third Party or a
settlement thereof shall: after deduction of all costs and expenses associated with such
suit or settlement, be deemed to reflect a loss of commercial sales, and
royalties shall be payable thereon to the Parry (or Parties) to which royalties would have
been owed under Section 7.3 of this Agreement, provided that such Party (or
Parties)

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	 	   	is not otherwise entitled to receive a portion of any recovery other
than reimbursement of its litigation expenses) obtained from such suit
or settlement pursuant to this Section 10.3.

	 	10.4  	Claimed Infringement.

	 	10.4.1  	Notice; Cooperation. In the event that a Third Party at any time provides
written notice of a claim to, or brings an action. suit or proceeding against,
any Party or any of their respective Affiliates or sublicensees, claiming
infringement of its patent rights or copyrights or unauthorized use or
misappropriation of its Confidential Information, based upon an assertion or
claim arising out of the manufacture, use and/or sale of any Product, such
Party shall promptly notify the other Parties of the claim or the commencement
of such action, suit or proceeding, enclosing a copy of the claim and/or all
papers served, provided, however, that GI and JHU shall have no obligation to
provide such notice to MetaMorphix to the extent that such assertion or claim
arises-out of or relates to the manufacture, use or sale of GI Type
C Products. Each Party agrees to make available to the other Parties its
advice and counsel regarding the technical merits of any such claim at no cost
to the other Party.
	 
	 	10.4.2  	LIMITATION OF LIABILITY. EXCEPT FOR BREACHES OF SECTIONS 12.1, 12.2. 12.3
AND 12.4 OF THIS AGREEMENT, THE FOREGOING STATES THE ENTIRE RESPONSIBILITY
OF THE PARTIES IN THE CASE OF ANY CLAIMED INFRINGEMENT OR VIOLATION OF ANY
THIRD PARTY’S PATENT RIGHTS OR COPYRIGHTS OR UNAUTHORIZED USE OR
MISAPPROPRIATION OF ANY THIRD PARTY’S KNOW-HOW.

11. CONFIDENTIAL INFORMATION.

	 	11.1  	Nondisclosure of Confidential Information. Neither Party may directly or
indirectly publish. disseminate or otherwise disclose, deliver or make available to
any person outside its organization any of the other Parties’ Confidential
Information. Each Party may disclose the other Parties’ Confidential Information to
persons within its organization and to its Affiliates and sublicensees who/which
have a need to receive such Confidential Information in order to further the
purposes of this Agreement and who/which are bound to protect the confidentiality of
such Confidential Information, as set forth in Section 11.3 below. Each Party may
disclose the other Parties’ Confidential Information to a governmental authority or
by order of a court of competent jurisdiction, provided that such disclosure

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	 	   	is subject to all applicable governmental or judicial
protection available for like material and reasonable advance
notice is given to the other Parties.
	 
	 	11.2  	Use of Confidential Information. Each Party shall use the other Parties’
Confidential Information solely for the purposes contemplated in this
Agreement or for such other purposes as may be agreed upon by the
Parties in writing.
	 
	 	11.3  	Agreements with Personnel and Third
Parties. The Parties have or shall obtain agreements with all
personnel and Third Parties who will have access to the other
Parties’ Confidential Information which impose comparable
confidentiality obligations as are set forth in this Agreement on
such personnel and Third Parties.
	 
	 	11.4  	Publications.

	 	11.4.1  	Right to Publish. Any Party may publish any manuscripts or
other scientific papers on work conducted exclusively by that
Party as part of the Original Research or under the
Collaborative Research Plan or the Sponsored Research Plan, as
applicable, without the written consent of the other Parties.
However, a Party may not publish (or permit a Third Party to
publish) any manuscript or other scientific paper that
discloses or uses any Confidential Information of another
Parry without first obtaining that other Party’s written
consent; and a Parry may .not publish any
manuscript or other scientific paper that would prejudice any
Patent rights of another Party (including, without limitation,
prospective Patent rights covering an Available Factor)
without first complying with the provisions of this Section
11.4 and Section 10.1, above.
	 
	 	11.4.2  	Notice and Review. In order to balance the Parties’
interests in securing Patents covering the Factor Rights
with each Party’s right to publish any manuscripts or other
scientific papers on work conducted exclusively by that
Party under the Research Plan, prior to the publication or
other public disclosure of any manuscripts or other form of
disclosure describing the results of its work hereunder, the
publishing Party shall provide (a) the data to be
disclosed in that manuscript or other form of public
disclosure to the other Parties as soon as practicable, but
at least four (4) weeks prior to intended submission for
publication or other method of public disclosure. (b)
a. copy of the draft manuscript to be published,
or a detailed summary of any other public disclosure to the
other Parties as soon as practicable, but at least two (2)
weeks prior to intended submission for publication or other
method of public disclosure, (c) a copy of the completed
manuscript or other

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 form of public disclosure at the time of submission and (d) a
copy of any reviewer’s comments on the manuscript or other form of public
disclosure with a revised copy thereof at least two (2) weeks prior to
publication.

	 	11.4.3  	Deletion of Confidential Information; Patent Protection. A Parry may request
that the publishing Party delete from its manuscripts or other scientific
papers or other forms of public disclosure reference to that Parry’s
Confidential Information. In addition, if a Party notifies another Party that
it desires patent applications to be filed on any Factor Rights to be
disclosed by that other Party in a public forum other than in manuscripts or
other scientific papers, the presenting Party will defer such presentation for
a period, not to exceed thirty (30) additional days, sufficient to permit the
Party with rights to file any desired patent applications to do so.
	 
	 	11.4.4  	GDFs Discovered by JHU..GI and/or MetaMorphix shall not publish a
scientific paper on a GDF Discovered by JHU until JHU has published a
scientific paper on that GDF, unless written permission to so publish has
been given by Dr. Lee. GI acknowledges that providing purified protein to
another Party would not necessarily warrant authorship on a JHU
publication. Authorship on a publication by another Party requires
significant — scientific contributions to that other Party’s research.
Disputes as to the appropriate authorship of papers resulting from the
Original Research, the Collaborative Research or the Sponsored Research will
be referred to (i) the RMC, in the case of disputes between GI and
MetaMorphix, (ii) Dr. Lee and a senior GI scientist to be designated by GI,
in the case of disputes between GI and JHU and (iii) Dr. Lee and a senior
MetaMorphix scientist or scientific advisor, to be designated by
MetaMorphix, in the case of disputes between MetaMorphix and JHU.

	 	11.5  	Non-Use of Certain Confidential Information. GI shall not use information of
which it learned in reviewing (a) JHU’s GDF 12 patent application to support GI’s BMP
14 patent application, (b) JHU’s GDF 11 patent application to support GI’s BMP 11
patent application or (c) JHU’s GDF 3 patent application to support GI’s Vgr 2 patent
application.

12. REPRESENTATION AND WARRANTIES.

	 	12.1  	Representations and Warranties of GI and MetaMorphix. As of the
Effective Date, each of GI and MetaMorphix hereby represents, warrants and
covenants to the other Parties hereto as follows:

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	 	(a)  	it is a corporation or entity duly
organized and validly existing under the laws of the
state or other jurisdiction of incorporation or
formation:
	 
	 	(b)  	the execution.. delivery
and performance of this Agreement by such Party has
been duly authorized by all requisite corporate action
and do not require any shareholder action or approval:
	 
	 	(c)  	it has the power
and authority to execute and deliver this
Agreement and to perform its obligations
hereunder;
	 
	 	(d)  	the execution, delivery
and performance by such Party of this Agreement and
its compliance with the terms and provisions hereof
does not and will not conflict with or result in a
breach of any of the terms and provisions of or
constitute a default under (i) a loan agreement,
guaranty, financing agreement, agreement affecting a
product or other agreement or instrument binding or
affecting it or its property: (ii) the provisions of
its charter or operative documents or bylaws; or
(iii) any order, writ, injunction or decree of any
court or governmental authority entered against it or
by which any of its property is bound; and
	 
	 	(e)  	it shall at all times comply with all applicable material laws and regulations
relating to its activities under this Agreement.

	 	12.2  	Additional Representations and Warranties of GI.

	 	12.2.1  	Patent Rights and Know-How. To the best of GI’s
knowledge, information and belief, GI represents and
warrants that it owns the GI Patent Rights and GI
Know-How in existence on the Effective Date and/or
has the right to grant the licenses under the GI
Patent Rights and to the GI Know-How in existence on
the Effective Date subject to the terms of this
Agreement. The foregoing
representation and warranty shall not be construed
as a warranty as to the scope and/or validity of any
claims in the GI Patent Rights.
	 
	 	12.2.2  	No Conflicting Agreements. GI represents and
warrants that (a) the execution of, and performance of
the transactions contemplated by, this Agreement will
not conflict with or result in any breach of any of
the terms, conditions or provisions of, or constitute
a default under, any agreement to which GI is a party
or by which GI is bound; and (b) as of the Effective
Date, other than its preexisting collaborations with
Yamanouchi Pharmaceutical Company Ltd. and Affymetrix.
Inc., GI has not entered a collaboration or other

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 arrangement with a commercial Third Party for the
specific purpose of identifying sequences for Factors
in the TGF-ß Superfamily.

	 	12.3  	Additional Representations and Warranties of MetaMorphix.

	 	12.3.1  	Patent Rights and Know-How. To the best of
MetaMorphix’ knowledge, information and belief,
MetaMorphix represents and warrants that it owns the
MetaMorphix Patent Rights and MetaMorphix Know-How in
existence on the Effective Date and/or has the right
to grant the licenses under the MetaMorphix Patent
Rights and to the MetaMorphix Know-How in existence on
the Effective Date subject to the terms of this
Agreement. The foregoing representation and warranty
shall not be construed as a warranty as to the scope
and/or validity of any claims in the MetaMorphix
Patent Rights.
	 
	 	12.3.2  	No Conflicting Agreements. MetaMorphix represents
and warrants that the execution of; and performance
of the transactions contemplated by, this Agreement
will not conflict with or result in any breach of any
of the terms, conditions or provisions of, or
constitute a default under, any agreement to which
MetaMorphix is a party or by which MetaMorphix is
bound.
	 
	 	12.3.3  	Equipment. MetaMorphix represents and warrants to
GI that, as of the Effective Date and the date that
the equipment is delivered to GI in accordance with
Section 8.4 hereof, such equipment shall be in
working order.. merchantable, and fit for the purpose
for which it was intended to be used when
manufactured. MetaMorphix further represents and
warrants to GI that Transamerica Business Credit
Corporation (subject to that certain October 14, 1997
Master Lease Agreement with MetaMorphix) owns such
equipment, that no Third Party has any right, title
or interest in or to such equipment, and that at
Closing. upon GI’s MetaMorphix directed payment to
Transamerica Business Credit Corporation, such
equipment shall be free and clear of such Master
Lease Agreement and any right, title or interest that
Transamerica Business Credit Corporation may have
therein.

	 	12.4  	Representations and Warranties of JHU.

	 	12.4.1  	Authority. JHU represents and warrants to each of
GI and MetaMorphix that it is a university duly
organized and validly existing under the laws of the
state of Maryland and that it has the

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  power and authority to execute and deliver this Agreement
and to perform all of its obligations hereunder.

	 	12.4.2  	Compliance with Laws and Organizational Documents. JHU
represents and warrants to GI and MetaMorphix that (i) it
shall at all times comply with all applicable material laws
and regulations relating to its activities under
this Agreement (ii) the execution. delivery and performance
by JHU of this Agreement and its compliance with the terms
and provisions hereof does not and will not conflict with or
result in a breach of any of the terms and provisions of or
constitute a default under (i) the provisions of its charter
or operative documents or bylaws; or (ii) any order. writ.
injunction or decree of any court or governmental authority
entered against it or by which any of its property is bound
	 
	 	12.4.3  	Patent Rights and Know-How. To the best of JHU’ knowledge,
information and belief, JHU represents and warrants that it
owns the JHU Patent Rights and JHU Know-How, the JHU
Additional Factor Patent Rights and the JHU Additional
Factor Know-How in existence on the Effective Date and/or
has the right to grant the licenses under the JHU Patent
Rights and the JHU Additional Factor Patent Rights, and to
the JHU Know-How and JHU Additional Factor Know-How in
existence on the Effective Date subject to the terms of this
Agreement. The foregoing representation and warranty shall
not be construed as a warranty as to the scope and/or
validity of any claims in the JHU Patent Rights.
	 
	 	12.4.4  	No Conflicting Agreements. JHU further represents and
warrants that the execution of, and performance of the
transactions contemplated by, this Agreement will not
conflict with or result in any breach of any of the terms,
conditions or provisions of, or constitute a default under,
any agreement to which JHU is a party or by which JHU is
bound.

	 	12.5  	Representation by Legal Counsel. Each
Party hereto represents that it has been represented by legal
counsel in connection with this Agreement and acknowledges that
it has participated in the drafting hereof. In interpreting and
applying the terms and provisions of this Agreement, the Parties
agree that no presumption shall exist or be implied against the
Party which drafted such terms and provisions.
	 
	 	12.6  	Materiality. EACH PARTY EXPRESSLY
WAIVES ANY RIGHTS TO SEEK DAMAGES OR OTHER RELIEF FOR BREACH OF
THE REPRESENTATIONS AND WARRANTIES IN SECTIONS 12.1, 12.2

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    AND 12.3 UNLESS SUCH BREACH HAS A MATERIAL AND ADVERSE
EFFECT ON SUCH PARTY.

	 	12.7  	Disclaimer. EXCEPT AS EXPRESSLY SET FORTH
IN THIS AGREEMENT, NO PARTY MAKES ANY WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING BUT NOT LIMITED TO IMPLIED WARRANTIES OR
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR
NON-INFRINGEMENT.

13. PRODUCT LIABILITY INDEMNIFICATION.

	 	13.1  	MetaMorphix Indemnification. MetaMorphix
agrees to defend GI and JHU and their respective Affiliates,
sublicensees, agents, directors, officers, employees, students and
licensees of rights to a Product, as applicable (the
“indemnitees”)(other than in settlement of a claim of
infringement), at MetaMorphix’ cost and expense, and will indemnify
and hold harmless such indemnitees from and against any and all
liabilities, losses, costs, damages, fees, or expenses claimed by
or paid to a Third Party attributable to injury to persons or
damage to property (collectively, “Losses”) arising out of or in
connection with the manufacture, use and/or sale of any MetaMorphix
Product.by MetaMorphix, its Affiliates, or sublicensees
(other than GI); provided that such Losses do not arise out of the
gross negligence or willful misconduct of GI (with respect to
MetaMorphix’ obligations to the GI indemnitees under this Section)
or JHU (with respect to MetaMorphix’ obligations to the JHU
indemnitees under this Section).
	 
	 	13.2  	GI Indemnification. GI agrees to defend
MetaMorphix and JHU and their respective Affiliates, permitted
sublicensees, agents, directors, officers, employees, students and
licensees of rights to a Product, as applicable (the
“indemnitees”)(other than in settlement of a claim of infringement),
at GI’s cost and expense, and will indemnify and hold harmless such
indemnitees from and against any and all Losses arising out of or in
connection with the manufacture, use and/or sale of any GI Product by
GL its Affiliates. or sublicensees (other than MetaMorphix); provided
that such Losses do not arise out of the gross negligence or willful
misconduct of MetaMorphix (with respect to GI’s obligations to the
MetaMorphix indemnitees under this Section) or JHU (with respect to
GI’s obligations to the JHU indemnitees under this Section).
	 
	 	13.3  	Notice; Cooperation. In the event of any
such indemnifiable claim, the indemnified Party shall promptly
notify the indemnifying Party in writing of the claim and the
indemnifying Party shall manage and control, at its sole expense,
the defense of the claim and its settlement. The indemnified Party
shall cooperate with the indemnifying Party and may, at its option
and expense, be represented in any such action or proceeding. The

93

 

    indemnifying Party shall not be liable for any settlements, litigation costs.
or expenses incurred by the indemnified Party without the indemnifying Party’s
written consent, such consent to be promptly given and not unreasonably
withheld.

	 	13.4  	Liability Limitation. Neither GI nor MetaMorphix shall be liable for .
special, incidental or consequential damages or for loss of profit or lost
revenue, even another Party had been advised of the possibility of such
damages.
	 
	 	13.5  	Insurance. Prior to initial human testing or first commercial sale of any
Product in any particular country, GI and MetaMorphix each shall secure and maintain
at its own expense during the term of this Agreement either self insurance or an
insurance policy or policies with an insurer or insurers acceptable to the other
Parties, in either case, protecting the Parties against any and all risks typically
insured against by businesses comparable to the Party,. including without limitation
general and products liability, arising or occurring upon or in connection with-each
Party’s business. Such policy or policies shall include general and products
liability coverage in an amount typically secured by businesses comparable to the
Party. Each Party shall furnish the other Parry and JHU with certificates evidencing
all such insurance. Each Parry shall name the other Party and JHU as additional
insureds in such policy or policies.

14. TERM AND TERMINATION.

	 	14.1  	Term. This Agreement shall remain in effect until terminated in
accordance with the provisions of this Section 14 or until the last to expire of
any of the licenses granted pursuant to this Agreement.
	 
	 	14.2  	Termination for Breach. In the event that a Party shall be in default of
any of its material obligations to another Party hereunder, and shall fail to remedy
any such default within sixty (60) days. after notice thereof by the non-breaching
Pam to whom such obligations are owed, such nonbreaching Party shall, by written
notice to each of the other Parties, be entitled to terminate the rights it
granted to the breaching Party under this Agreement and its obligations
to the breaching Party under this Agreement. Any such notice shall specifically
describe the alleged default and expressly state that the non-breaching Party
intends to terminate the rights it has granted to the breaching Party-under this
Agreement in the event that the breaching Party shall fail to remedy the default.
Notwithstanding anything contained in this Agreement to the contrary, GI, at its
option, shall have the right, but not the obligation, to remedy any default of
MetaMorphix hereunder, as provided in Section 14.3, below. Upon any termination of
this Agreement pursuant to this Section 14.2, none of the Parties shall be

94

 

relieved of any obligations incurred prior to such termination.
Notwithstanding the foregoing. (i) the breach (including,
without limitation, the failure to make any payment when
due) of this Agreement by GI shall not affect the licenses
granted by JHU to MetaMorphix under Article 6 hereof or
result in any right of JHU to take any action, including
without limitation, termination of rights granted by JHU to
MetaMorphix. against MetaMorphix and (ii) the breach
(including, without limitation. the failure to make any
payment when due) of this Agreement by

MetaMorphix shall not affect the licenses granted by JHU to
GI under Article 6 hereof or result in any right of JHU to
take any action, including, without limitation, termination
of rights granted to GI by JHU, against GI.

	 	14.3  	Breach of or Withdrawal from Agreement.

	 	14.3.1  	By MetaMorphix. In the event MetaMorphix breaches and
fails to cure such breach within the sixty (60) day
cure period or otherwise withdraws from, or ceases to
be a Party to, this Agreement, GI, at its option,
within thirty (30) days after the expiration of the
sixty (60) day cure period or GI’s receipt of written
notice that MetaMorphix has ceased to be a Party to
this Agreement, as applicable, may assume MetaMorphix’
rights and obligations under this Agreement, including,
without limitation, MetaMorphix’ rights under the
license from JHU set forth in Section 6.2, above, and
MetaMorphix’s obligation to pay royalties and fees to
JHU, at the rates and in the amounts set forth in this
Agreement, or at such other rates and amounts as JHU
and GI shall agree are appropriate under the
circumstances. An assignment in accordance with Section
15.8 shall not constitute a withdrawal.
	 
	 	14.3.2  	By GI. In the event that, (i) pursuant to Section
14.2 hereof, JHU terminates the licenses it
granted to GI hereunder, or (ii) GI
otherwise withdraws from. or ceases to be a Party to
this Agreement, MetaMorphix, at its option, within
thirty (30) days after the effective date of such
termination or MetaMorphix’s receipt of written notice
that GI has ceased to be a Party to this Agreement, as
applicable, may assume GI’ rights and obligations
under this Agreement. including, without limitation,
GI’s rights under the license from JHU set forth in
Section 6.3, above, and GI’s obligation to pay
royalties and fees to JHU, at the rates and in the
amounts set forth in this Agreement, or at such other
rates and amounts as JHU and MetaMorphix shall agree
are appropriate under the circumstances. An assignment
in accordance with Section 15.8 shall not constitute a
withdrawal.

95

 

	 	14.4  	Survival of Obligations; Return of Confidential
Information. Notwithstanding any termination of this Agreement.
the obligations of the Parties under Sections 3.6, 7.8, 11. 12.
13 and 15.2. as well as under any other provisions which by
their nature are intended to survive any such termination,
shall survive and continue to be enforceable. Upon any
termination of this Agreement pursuant to Section 14.2 hereof,
the breaching Party shall promptly return to the non-breaching
Party all written Confidential Information, and all copies
thereof. of the non-breaching Parry which is not covered by a
license surviving such termination.

15. MISCELLANEOUS.

	 	15.1  	No Assumption of Obligations. Except as
expressly provided in this Agreement, GI is not assuming and
shall have no obligation to assume any preexisting or future
obligations that MetaMorphix has or owes to JHU or to any
Third Party, including, without limitation, Baylor.
	 
	 	15.2  	Publicity. No Party, nor any of its
Affiliates, shall originate any publicity, news release or
other public announcement, written or oral, relating to this
Agreement without the prior written approval of the other
Parties, which approval shall not be unreasonably withheld,
except as otherwise required by law. It is expressly understood
that nothing in this Section 15.1 shall prevent a Party from
making a disclosure in connection with any required filings
with the Securities and Exchange Commission or in connection
with the offering of securities or any financing. In addition,
neither GI nor MetaMorphix shall use the name of The Johns
Hopkins University or The Johns Hopkins Health System or any of
its constituent parts and affiliated hospitals (e.g., The Johns
Hopkins Hospital) or the name of inventors of any Factor Patent
Rights licensed from JHU to MetaMorphix and/or GI in any
advertising, promotional, sales literature or fundraising
documents without the prior written consent from an officer of
JHU. JHU shall have not less than five (5) business days to
review any proposed use of its name(s).
	 
	 	15.3  	Export Control. The Parties acknowledge
that the export of technical data, materials, or products is
subject to the exporting Parry receiving the necessary export
licenses and that the Parties cannot be responsible for any
delays attributable to export controls which are beyond the
reasonable control of either Party. The Parties agree that
regardless of any disclosure made by the Party receiving an
export of an ultimate destination of any technical data,
materials. or products, the receiving Party will not reexport
either directly or indirectly, any technical data, material, or
products without first obtaining the applicable validated or
general license from the United States Department of Commerce,
United States Food and Drug Administration, and/or any other
agency or department of the United States

96

 

Government, as required. The receiving Party shall provide the exporting
Party with any information, materials. certifications. or other documents which may be
reasonably required in connection with such exports under the Export Administration Act
of 1979. as amended, its rules and regulations, the Federal Food, Drug and Cosmetic
Act, and other applicable export laws.

	 	15.4  	Conduct of Studies. All studies, research and testing done by or on behalf of each Party
under this Agreement shall be performed in strict compliance with any applicable federal,
state, or local laws, rules, and regulations governing the conduct of studies, research, and
testing at the site where such studies, research, and testing are being conducted. .
	 
	 	15.5  	No Implied Licenses. Only the licenses granted pursuant to the express terms of this
Agreement shall be of any legal force and effect. No license rights shall be created by
implication or estoppel.
	 
	 	15.6  	No Agency. Nothing herein shall be deemed to constitute any Party as the agent or
representative of the other Parties, or the Parties as joint venturers or partners for any
purpose. Each Party shall be an independent contractor, not an employee or partner of the
other Parties, and the manner in which each Party renders its services under this Agreement
shall be within its sole discretion. No Party shall be responsible for the acts or omissions
of the other Parties, and no Party will have authority to speak for, represent or obligate
the other Parties in any way without prior written authority from the other Party or
Parties.
	 
	 	15.7  	Notice. All notices required under this Agreement to be given by one Party to another
shall be in writing and shall be given by addressing the same to the other at the address
or facsimile number set forth below, or at such other addresses or facsimile numbers as
the Parties may specify in writing. All notices shall become effective when deposited in
the United States Mail with proper postage for first class registered or
certified mail prepaid, return receipt requested, or when delivered personally, or, if
promptly confirmed by mail as provided above, when dispatched by facsimile.

	 	 	 	 	 	 	 
	 

	 	GI:
	 	 Genetics Institute, Inc.	 	 
	

	 	 	 	     87 CambridgePark Drive	 	 
	

	 	 	 	Cambridge, Massachusetts 02140
	 	 
	

	 	 	 	Telecopier (617) 876-5851	 	 
	

	 	 	 	     Attn: Legal Department	 	 

97

 

	 	 	 	 	 	 	 
	JHU:

	 	 	 	          Johns Hopkins University School of Medicine	 	 
	

	 	 	 	Office of Technology Licensing	 	 
	

	 	 	 	     2024 E. Monument Street. Suite 2-100
	 	 
	

	 	 	 	     Baltimore. Maryland 21205	 	 
	

	 	 	 	     Telecopier (410) 955-1245	 	 
	

	 	 	 	     *Ann: Director	 	 

	 	 	 	 	 
	 

	 	MetaMorphix:
	 	MetaMorphix, Inc.
	

	 	 	 	1450 South Rolling Road
	

	 	 	 	Baltimore, Maryland 21227
	

	 	 	 	Telecopier (410) 455-5885
	

	 	 	 	Attn: President
	 
	 	 	 	 
	

	 	with copies to:	 	 
	

	 	 	 	American Home Products Corporation
	

	 	 	 	5 Giralda Farms
	

	 	 	 	Madison, New Jersey 07940
	

	 	 	 	Telecopier (973) 660-7156
	

	 	 	 	  Ann: Senior Vice President and General Counsel
	 
	 	 	 	 
	

	 	 	 	 Johns Hopkins University School. of Medicine
	

	 	 	 	 Office of Technology Licensing
	

	 	 	 	2024 E. Monument Street, Suite 2-100
	

	 	 	 	Baltimore. Maryland 21205
	

	 	 	 	Telecopier (410) 955-1245
	

	 	 	 	  Attn: Director
	 
	 	 	 	 
	

	 	 	 	     Shapiro and Olander
	

	 	 	 	2000 Charles Center South
	

	 	 	 	36 South Charles Street
	

	 	 	 	Baltimore, MD 21201-3147
	

	 	 	 	Telecopier (410) 539-7611 Attn:
	

	 	 	 	William E. Carlson, .Esq.

	 	15.8  	Assignment. This Agreement. and the rights and obligations hereunder, may not be assigned or
transferred, in whole or in part, by any Party without the prior written consent of the other
Parties, except that (a) upon notice to the other Parties. GI may assign this Agreement to an
Affiliate controlled by GI, and MetaMorphix may assign this Agreement to an Affiliate which is
majority controlled by MetaMorphix, provided that each such Party remains primarily liable
and/or responsible for the performance of such obligations and such controlled Affiliate, and
provided further that such controlled Affiliate agrees to be bound to the terms and conditions
of this Agreement and (b) upon notice to the other Parties, GI may assign this Agreement in
connection with the merger, consolidation or sale of all or

98

 

substantially all of GI’s assets and MetaMorphix may assign this Agreement in
connection with the merger. consolidation or sale of all or substantially all of
MetaMorphix’ assets.

	 	15.9  	Entire Agreement. This Agreement. the exhibits and schedules attached hereto, the Promissory
Note (including each of the allonges thereto), and the agreements to be executed and
delivered in accordance with Article 8 hereof, together constitute the entire agreement of
the Parties with regard to its subject matter, and supersedes all previous written or oral
representations, agreements and understandings between the Parties. including, without
limitation, the 1994 Collaboration Agreement and the Letter of Intent. Nothing herein
shall affect the continued effect of that Confidentiality and Non-Disclosure agreement
date September 9, 1998 by and between MetaMorphix and American Home Products Corporation,
acting through its Wyeth-Ayerst Laboratories Division and that Confidentiality Agreement
dated October 13, 1997 by and between MetaMorphix and Fort Dodge Animal Health, a division
of American Home Products Corporation.
	 
	 	15.10  	No Modification. This Agreement may be changed only by a writing signed by the
Parties.
	 
	 	15.11  	Headings. The headings contained in this Agreement are for convenience of reference only
and shall not be considered in construing this Agreement.
	 
	 	15.12  	Waiver. The waiver by any Party of a breach or a default of any provision of this Agreement
by another Party shall not be construed as a waiver of any succeeding breach of the same or
any other provision, nor shall any delay or omission on the part of any Party to exercise or
avail itself of any right, power or privilege that it has or may have hereunder operate as a
waiver of any right. power, or privilege by such Party.

(remainder of page intentionally left blank)

99

 

	 	15.13  	Severability. In the event that any one or more of the provisions contained
in this Agreement shall, for any reason, be held to be invalid. illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability shall
not affect any other provisions of this Agreement, and all other provisions shall
remain in full force and effect. If any of the provisions of this Agreement is held
to be excessively broad or invalid, illegal or unenforceable in any jurisdiction, it
shall be reformed and construed by limiting and reducing it so as to be enforceable
to the maximum extent permitted by law in conformance with its original intent. In
the event that after such reformation, a Party’s rights or obligations are materially
changed, then such Party may terminate this Agreement.
	 
	 	15.14  	Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the Parties hereto and their successors and permitted assigns.
	 
	 	15.15  	Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which together
shall constitute one and the same instrument.
	 
	 	15.16  	Applicable Law. This Agreement shall in all events and for all purposes be
governed by, and construed in accordance with, the law of the State of Maryland
without regard to any choice of law principle that would dictate the application of
the law of another jurisdiction.

                IN WITNESS WHEREOF, duly-authorized representatives of the parties have signed this Agreement
as a document under seal as of the Effective Date.

	 	 	 
	GENETICS INSTITUTE, INC.

	 	METAMORPHIX I C.

	 	 	 	 	 	 	 
	By

	 	/s/ Katherine Turner
	 	By
	 	/s/ Edwin C. Quattlebaum
	

	 	 
	 	 	 	 
	Name:

	 	Katherine Turner
	 	 	 	Edwin C. Quattlebaum, Ph.D.
	Title:

	 	Vice President
	 	 	 	President and Chief Executive Officer

THE JOHNS HOPKINS UNIVERSITY SCHOOL OF MEDICINE

By Name:

Title:

I HAVE READ AND UNDERSTAND, AND AGREE TO COMPLY WITH, THE TERMS OF THIS AGREEMENT:

	 	 	 	 	 
	 

	 	

	 	 
	

	 	Se-Jin Lee, M.D., Ph.D.	 	 

100

 

	 	1.5.13  	Severabiiity. In the event that any one or more of the provisions contained in this
Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability shall not
affect any other provisions of this Agreement, and all other provisions shall remain in
full force and effect. If any of the provisions of this Agreement is held to be
excessively broad or invalid, illegal or unenforceable in any jurisdiction, it
shall be reformed and construed by limiting and reducing it
so as to be enforceable to the maximum extent permitted by law
in conformance with its original intern. In the event that after such
reformation, a Parry’s rights or obligations are materially changed, then such Party
may terminate this Agreement.
	 
	 	15.14  	Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the Parties hereto and their successors and
permitted assigns.
	 
	 	15.15  	Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which together
shall constitute one and. the same instrument.
	 
	 	15.16  	Applicable Law. This Agreement shall in all events and for all purposes be
governed by, and construed in accordance with, the law of the State of Maryland
without regard to any choice of law principle that would dictate the application of
the law of another jurisdiction.

                IN WITNESS WHEREOF, duly-authorized representatives of the parties have signed this
Agreement as a document. under seal as of the Effective Date.

	 	 	 	 	 
	GENETICS INSTITUTE INC.	 	METAMORPHIX,
	 
	By
	 	 	 	 
	

	 	

	 	                    By 
	Name:

	 	 	 	Edwin C. Quattlebaum,Ph.D.
	Title:

	 	 	 	President and Chief
	

	 	 	 	Executive Officer

THE, JOHNS HOPKINS UNIVERSITY SCHOOL OF MEDICINE

	 	 	 	 	 
	BY
	 	 	 	 
	Name:

	 	Ciernow, M.D.	 	 
	Title: Vice Dean for Research and Technology	 	 
	

	 	Professor of Medicine, Anesthesiology and Critical Care
	 	 

I HAVE READ AND UNDERSTAND, AND AGREE TO COMPLY WITH, THE TERMS
OF THIS AGREEMENT:

	 	 	 	 	 
	 

	 	

	 	 
	

	 	Se-Jin Lee, M.D., Ph.D.	 	 

101exv10w24

 

Exhibit 10.24

PROMISSORY NOTE 

	 	 	 
	$2,000,000

	 	February 9, 1998

Cambridge, Massachusetts

     FOR VALUE RECEIVED, MetaMorphix, Inc. (the “Maker”), promises to pay to Genetics
Institute, Inc., or order, at the offices of Genetics Institute, Inc., or at such other place as
the holder of this Note may designate, the principal sum of Two Million Dollars ($2,000,000), on
demand at any time after December 31, 1998, together with interest on the unpaid principal balance
of this Note from time to time outstanding until such principal amount is paid in full, such
interest to be due and payable as of the date such principal amount is paid in full.

     This Note shall bear interest at the rate per annum set by BankBoston, N.A. (or successor
thereto) from time to time as its prime lending rate. Interest on this Note shall be computed on
the basis of a year of 365 days for the actual number of days elapsed. Payment shall be made in
lawful tender of the United States.

     In the event that the Maker closes an equity financing in which it raises at least Two
Million Dollars ($2,000,000) from investors other than the holder of this Note on or before
December 31, 1998 in a transaction approved by the Maker’s Board of Directors, the unpaid
principal balance of this Note, together with all interest accrued and unpaid thereon, shall be
converted into fully paid and non-assessable shares of the capital stock of the Maker issued in
connection with such equity financing (the “Capital Stock”), concurrently with the first closing
of such equity financing, at the same price as is paid by the investors in such equity financing.
Upon such conversion, the holder of this Note shall be entitled to the same rights and benefits as
the other investors purchasing shares of the Capital Stock, shall execute and deliver such
purchase agreement and/or other agreements as may be required as part of such sale of Capital
Stock, and shall make such representations, warranties, agreements and covenants as may be
required as part of such sale of Capital Stock, but only to the extent that such representations,
warranties, agreements and covenants are either substantially similar to those made by the
purchasers of capital stock of the Maker in the April 18, 1995 Preferred Stock Purchase Agreement
of the Maker or the June 28, 1996 Preferred Stock Purchase Agreement of the Maker or are customary
in like transactions (e.g., agreements to sign lock-up letters).

     In the event of an equity financing which meets the conditions of the foregoing paragraph, the
Maker shall notify the holder of this Note at least five (5) business days prior to the date fixed
for conversion of this Note. On or before the date fixed for conversion of this Note, the
holder of this Note shall surrender this Note together with a statement of the name and
address in which the certificate for shares of Capital Stock which shall be issuable upon such
conversion shall be issued. Neither this Note, nor the right to be issued shares of Capital Stock
upon conversion of this Note, shall be assignable by the holder

 

 

of this Note, except that the holder of this Note shall have the right to assign this Note, and
the right to be issued shares of Capital Stock upon conversion of this Note, in connection with
a sale of all or substantially all of its shares of capital stock of the Maker. No fractional shares
of the Capital Stock shall be issuable upon conversion of this Note, but an adjustment
in cash shall be made in respect of any fraction of a share which would otherwise be issuable
upon the surrender of this Note for conversion.

     Every amount overdue under this Note shall bear interest from and after the date
on which such amount first became overdue at an annual rate which is two (2) percentage
points above the rate per year specified in the second paragraph of this Note. Such interest on
overdue amounts under this Note shall be payable on demand and shall accrue and be compounded
monthly until the obligation of the Maker with respect to the payment of such interest has been
discharged (whether before or after judgment).

     In the event of an actual or deemed entry or any order for relief with respect to the Maker
under the Federal Bankruptcy Code, this Note, all interest thereon and all other amounts payable
hereunder shall automatically become due and be payable, without presentment, demand, protest or
any notice of any kind, all of which are hereby expressly waived by the Maker.

     In no event shall any interest charged, collected or reserved under this Note exceed the
maximum rate then permitted by applicable law and if any such payment is paid by the Maker, then
such excess sum shall be credited by the holder as a payment of principal.

     All payments by the Maker under this Note shall be made without set-off or counterclaim and
be free and clear and without deduction or withholding for any taxes or fees of any nature
whatever, unless the obligation to make such deduction or withholding is imposed by law. The
Maker shall pay and save the holder harmless from all liabilities with respect to or resulting
from any delay or omission to make any such deduction or withholding required by law.

     Whenever any amount is paid under this Note, all or part of the amount paid may be applied
to principal or interest in such order and manner as shall be determined by the holder of this
Note in its discretion.

     No reference in this Note to any guaranty or other document shall impair the obligation of
the Maker, which is absolute and unconditional, to pay all amounts under this Note strictly in
accordance with the terms of this Note.

     The Maker agrees to pay on demand all costs of collection, including reasonable attorney’s
fees, incurred by the holder in enforcing the obligations of the Maker under this Note.

     No delay or omission on the part of the holder of this Note in exercising any right under
this Note shall operate as a waiver of such right or of any other right of such
holder, nor shall any delay, omission or waiver on any one occasion be deemed a bar to
or waiver of the same or any other right on any future occasion. The Maker and every endorser or
guarantor of this Note regardless of

- 2 -

 

 

the time, order or place of signing waives presentment, demand, protest and notices of
every kind and assents to any extension or postponement of the time of payment or any
other indulgence, to any substitution, exchange or release of collateral, and to the
addition or release of any other party or person primarily or secondarily liable.

          None of the terms or provisions of this Note may be excluded, modified or amended
except by a written instrument duly executed on behalf of each of the holder of this
Notice and the Maker expressly referring to this Note and setting forth the provisions so
excluded, modified or amended.

          All rights and obligations hereunder shall be governed by the laws of the Commonwealth of
Massachusetts without giving effect to the principals of conflict of law thereof and
this Note is executed as an instrument under seal.

          IN WITNESS THEREOF, Maker has caused this Note to be executed in its corporate name by the
signature of its duly authorized officer or representative on the date first above written.

	 	 	 	 	 	 	 
	[SEAL]	 	 	 	 
	 
	 	 	 	 	 	 
	ATTEST:	 	METAMORPHIX, INC.
	 
	 	 	 	 	 	 
	By:
	 	/s/ Frederick Cobb	 	By:	 	/s/ William E. Carlson
	 	 	 	 	 	 	 
	

	 	Frederick Cobb, Treasurer	 	 	 	William E. Carlson, President

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