Document:

Exhibit No. 10.1

 

Confidential
and Proprietary

Execution Version 1-3-03

 

 

Confidential Materials omitted and filed
separately with the

Securities and Exchange Commission.  Asterisks denote omissions.

 

TECHNOLOGY AND DATABASE LICENSE AGREEMENT

 

This Technology
and Database License Agreement (the “Agreement”) dated the 7th day of January
2003 (the “Effective Date”) is by and between Millennium Pharmaceuticals, Inc.,
a corporation organized and existing under the laws of the State of Delaware
and having its principal office at 75 Sidney Street, Cambridge, Massachusetts
02139 (“Millennium”) and Genaissance Pharmaceuticals, Inc., a corporation
organized and existing under the laws of the State of Delaware and having its
principal office at Five Science Park, New Haven, Connecticut 06511
(“Genaissance”).

 

INTRODUCTION

 

1.                                       Genaissance
is in the business of integrating and applying population genomics and
informatics to improve the discovery, development and marketing of drugs.  Genaissance has created a proprietary database
of gene specific haplotypes that define the gene variation that exists in
various populations that represent major and emerging pharmaceutical markets.

 

2.                                       Millennium
applies its comprehensive and integrated science and technology platform for
the discovery, development and utilization of therapeutic, pharmacogenomic and
diagnostic products.

 

3.                                       Genaissance
and Millennium have agreed that Genaissance will license to Millennium certain
Genaissance technology for use in Millennium’s drug discovery and development
efforts subject to certain terms and conditions.

 

NOW,
THEREFORE, Millennium and Genaissance agree as follows:

 

ARTICLE I

DEFINITIONS

 

1.1                                 “Affiliate”
means any corporation, company, partnership, joint venture and/or firm which
controls, is controlled by, or is under common control with, a specified person
or entity.  For purposes of this
definition, “control” shall be presumed to exist if one of the following
conditions is met: (a) in the case of corporate entities, direct or indirect
ownership of at least fifty percent (50%) of the stock or shares having the
right to vote for the election of directors or (b) in the case of non-corporate
entities, direct or indirect ownership of at least fifty percent (50%) of the
equity interest with the power to

 

 

direct the management and
policies of such non-corporate entities. 
The Parties acknowledge that in the case of certain entities organized
under the laws of certain countries outside of the United States, the maximum
percentage ownership permitted by law for a foreign investor may be less than
fifty percent (50%), and that in such case such lower percentage shall be
substituted in the preceding sentence, provided  that such foreign
investor has the power to direct the management and policies of such entity.

 

1.2                                 “Approved
Diagnostic Product” means any Diagnostic Product that has been approved for
marketing or is licensed by the United States FDA or other corresponding
foreign regulatory authority.

 

1.3                                 “Authorized
Personnel” means (i) Millennium and/or its Affiliates’ independent
contractors working on Millennium and/or its Affiliates’ behalf and/or (ii)
on-site Millennium Corporate Partners or Millennium Technology Consultants of
Millennium and/or its Affiliates, in either case, who have executed a written
agreement with Millennium and/or its Affiliates that includes obligations of
confidentiality.

 

1.4                                 “Approved
Pharmacogenomic Product” means any Pharmacogenomic Product that has been
approved for marketing or licensed by the United States FDA or other
corresponding foreign regulatory authority.

 

1.5                                 “Collaboration
Activities” means those activities, if any, expressly agreed upon and set
forth in a separate amendment agreed upon in writing by the Parties in
accordance with Section 2.1(h)(iv).

 

1.6                                 “Collaboration
Marker Association” means a Marker Association identified jointly by both
(i) Millennium, its Affiliates and/or Authorized Personnel and (ii) Genaissance
and/or its Affiliates using the Genaissance HAPTM Technology in the course of
Collaboration Activities.  For the
avoidance of doubt, it is expressly understood that an association invented as
a result of the mere use of the Genaissance HAP Technology by Millennium, its
Affiliates and/or Authorized Personnel outside of Collaboration Activities
shall not result in a Collaboration Marker Association; any such inventions
shall constitute a Millennium Marker Association.

 

1.7                                 “Confidential
Information” means all proprietary materials, scientific, technical, trade
or business information possessed, obtained by, developed for or given to the
disclosing Party which is treated by the disclosing Party as confidential or
proprietary including, without limitation, genes, gene sequences and loci,
formulations, techniques, methodo­logies, assay systems, formulae, procedures,
tests, equipment, data, data structures, algorithms, reports, know-how, sources
of supply, patent positioning, relationships with consultants and employees,
business plans and business developments, information concerning the existence,
scope or activities of any research, development, manufacturing, marketing or
other projects of the disclosing Party, and any other confidential information
about or belonging to the disclosing Party’s suppliers, licensors, licensees,
partners, affiliates, customers, potential customers or

 

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others or other information
(whether or not patentable) regarding a Party’s technology, products, business
information or objectives, that, in each case, is designated as confidential in
writing by the disclosing Party, whether by letter or by the use of an
appropriate stamp or legend, prior to or at the time any such material,
know-how or other information is disclosed by the disclosing Party to the other
Party.  Notwithstanding the foregoing,
materials, know-how or other information which is orally, electronically or
visually disclosed by a Party, or is disclosed in writing without an appropriate
letter, stamp or legend, shall constitute Confidential Information of a Party
if the disclosing Party, within thirty (30) days after such disclosure,
delivers to the other Party a written document or documents describing the
materials, know-how or other information and referencing the place and date of
such oral, visual, electronic or written disclosure and the names of the
persons to whom such disclosure was made.

 

1.8                                 “Controlled”
or “Controls” means possession of the right to assign or grant a license
or sublicense as provided for herein without violating the terms of any
agreement or other arrangement with any Third Party.

 

1.9                                 “DecoGenâ
Informatics System” means the system that permits access to the HAP Database
and includes without limitation DecoGen® DataManager Software
and DecoGenâ
Browser Software.  It consists of a set
of tools for assembling, processing, searching, manipulating and analyzing
information.  The DecoGen Informatics System
shall include all software (executable only), documentation and other tools
reasonably necessary to utilize, support and maintain the DecoGen Informatics System,
existing as of the Effective Date and/or added to the DecoGen Informatics System
thereafter and provided to Genaissance’s other commercial customers, except for
the commercially available Third Party operating system software and hardware
specified in Exhibit C.  For the avoidance of doubt, the DecoGen
Informatics System does not include any source code.

 

1.10                           “Diagnostic
Product” means any product, service or test, other than a Pharmacogenomic
Product, that is at any stage of discovery, development, research, manufacture
or commercialization and which (a) is intended for use in diagnosing the
presence of, or a susceptibility for, any disease or condition in humans and
(b) detects directly or indirectly (i) one or more Polymorphisms or Haplotype
Markers in a Marker Association or (ii) one or more Surrogate Markers of such
Polymorphisms or Haplotype Markers in a Marker Association.

 

1.11                           “Drug
Class” means (i) a therapeutic or prophylactic molecule (including small
molecules, vaccines and biologics)  that is the subject of a Collaboration
Marker Association or Millennium Marker Association and which is covered by a
Valid Claim within Patent Rights owned by or exclusively licensed to Millennium,
its Affiliates and/or a Millennium Product Corporate Partner and/or (ii) any
other therapeutic or prophylactic molecule (including small molecules, vaccines
and biologics)  covered by a Valid Claim within said Patent Rights claiming
the molecule referred to in subsection (i). 
For the avoidance of doubt, this definition as used in Section 2.2(d),
permits Millennium and its

 

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Affiliates to obtain an
exclusive license to the Genaissance HAP Markers in a Millennium Marker
Association or a Collaboration Marker Association with the right to sublicense
any of such rights, to a Millennium Product Corporate Partner who has an
exclusive, non-exclusive or co-exclusive license to the corresponding
Millennium Product provided that
all rights to such Millennium Product are held by any combination of
Millennium, the Millennium Product Corporate Partner and any sublicensees of
Millennium or the Millennium Product Corporate Partner.

 

1.12                           “Escrow
Agent” shall mean DSI Technology Escrow Services or any successor
depositary party to the Escrow Agreement that has been mutually agreed upon by
the Parties in writing.

 

1.13                           “Escrow
Agreement” shall mean the Escrow Agreement among Genaissance, Millennium
and DSI Technology Escrow Services, a true and accurate copy of which shall be
attached as Exhibit E hereto, and executed by the Parties in accordance with
Section 7 hereof.  No other Third
Parties shall be added to the Escrow Agreement without written agreement
between Genaissance and Millennium.

 

1.14                           “Genaissance
Gene Queue” means the list of Genes that Genaissance plans to add to the
HAP Database as of the Effective Date, which list shall be updated solely by
Genaissance from time to time during the term of the Agreement.

 

1.15                           “Genaissance
HAPTM
Marker” means a Genaissance SNP or a Genaissance Haplotype Marker.

 

1.16                           “Genaissance
HAP
Marker Association” means a Marker Association identified solely by
Genaissance and/or its Affiliates between one or more Genaissance HAP
Markers and disease susceptibility and/or drug response including without
limitation drug adverse effects.

 

1.17                           “Genaissance
HAPTM Technology”
or “HAP Technology” means the DecoGen
Informatics System, HAPTM Database and the HAPTM Database Schema
collectively.

 

1.18                           “Genaissance
Haplotype Marker” means a Haplotype Marker that is (i) identified by
Genaissance in a Published Gene in the Index Repository independently of use of
Millennium’s Confidential Information and (ii) in the HAPTM Database.

 

1.19                           “Genaissance
Know-How” means any and all proprietary data, information, know-how,
inventions, trade secrets, copyrights, regulatory submissions or other
intellectual property of any kind, other than Patent Rights, Controlled by
Genaissance as of the Effective Date or during the term of any licenses granted
to Millennium hereunder, including, without limitation, any data on the
sequence, frequency and distribution of HAP Markers and other information
contained in the HAP Database.

 

4

 

1.20                           “Genaissance
Patent Rights” means HAP Marker Patent Rights and HAP
Technology Patent Rights.

 

1.21                           “Genaissance
SNP” means a SNP that is (i) identified by Genaissance in a Published Gene
in the Index Repository independently of use of Millennium’s Confidential
Information and (ii) contained in the HAPTM Database.

 

1.22                           “Gene”
means a nucleic acid sequence (including allelic variations thereof) that (a)
encodes a designated protein, and (b) satisfies the criteria set forth in
Exhibit A hereto.

 

1.23                           “HAPTM
Database” means Genaissance’s proprietary database containing annotated
data on the sequence, frequency and distribution of Polymorphisms and Haplotype
Markers generated by examining genomic DNA from the Index Repository as more
fully described in Exhibit A attached hereto and incorporated herein,
and as may be updated by Genaissance as set forth herein.  Wherever the term HAP Database is used in this
Agreement, it shall be interpreted to include any copy or duplicate of the HAP
Database that is present in the HAP Database Plus.  As of the Effective Date, the HAP
Database will include a minimum of 5083 genes.

 

1.24                           “HAP
Database Plus” means all copies of any database developed by Millennium,
its Affiliates, Millennium Technology Consultants and/or Authorized Personnel
that contains (a) a copy of the HAP Database and any update thereof
delivered by Genaissance to Millennium during the Initial Term and Post Initial
Term, if applicable, (b) Millennium SNPs or Millennium Haplotype Markers that
are added by Genaissance pursuant to Section 2.1(h)(i), and (c) content added
by Millennium, its Affiliates, Authorized Personnel or a Millennium Technology
Consultant.

 

1.25                           “HAPTM
Database Schema” means a machine-readable version of the location and
format of the different types of data that may be stored in the HAP
Database.  No data of any kind is
present in the HAP Database Schema.

 

1.26                           “HAP
Marker Biologic” means (a) an isogene defined by a Genaissance HAP
Marker, or fragments thereof that contain a Genaissance SNP, (b) a novel
protein variant defined by a Genaissance HAP Marker, or fragments thereof that
contain a novel amino acid specified by a Genaissance SNP, and/or (c) any
antibody that is specific for and immunoreactive with such novel protein
variant or protein fragments.

 

1.27                           “HAP
Marker Patent Rights” means Patent Rights Controlled by Genaissance that
contain (a) a specification that discloses one or more Genaissance HAP
Markers for a Gene and corresponding HAP Marker Biologics, but does not
disclose any novel Marker Associations, and (b) (i) a process claim directed to
the detection or use of any of such disclosed Genaissance HAP Marker(s) or (ii) a
composition or process claim directed to a HAP Marker Biologic corresponding to any
of such disclosed Genaissance HAP Marker(s).

 

5

 

1.28                           “HAP
Technology Patent Rights” means Patent Rights Controlled by Genaissance,
other than HAP
Marker Patent Rights, that would block Millennium’s use of the HAP
Technology as authorized hereunder without a license under such Patent Rights,
including but not limited to PCT/US00/17540 and national applications claiming
priority thereto.

 

1.29                           “Haplotype
Marker” means any 5 ́ to 3 ́ sequence of Polymorphisms present at a set of
two or more Polymorphic Sites on a single chromosome.

 

1.30                           “Home-Brew
Test” means any Diagnostic Product or Pharmacogenomic Product that is (a)
an in
vitro process or method, (b) performed solely by laboratories that
are certified under the Clinical Laboratory Improvement Amendments of 1988
(“CLIA”), as subsequently amended, and implementing regulations (or foreign
equivalents thereof) and (c) does not require the approval by the United States
FDA or other regulatory authority (or its foreign equivalent).

 

1.31                           “Index
Repository” means Genaissance’s proprietary collection of immortalized cell
lines established from unrelated individuals from various geographical origins
and from members of extended families.

 

1.32                           “Initial
Term” means the period commencing on the Effective Date and ending on the
second anniversary of the Effective Date.

 

1.33                           “Marker
Association” means an association between any Polymorphism or Haplotype
Marker and disease susceptibility and/or drug response, including without
limitation drug adverse effects.

 

1.34                           “Millennium
Corporate Partners” means Millennium Product Corporate Partners and
Millennium Technology Corporate Partners.

 

1.35                           “Millennium
Marker Association” means a Marker Association identified by Millennium,
its Affiliates, Millennium Corporate Partners and/or Authorized Personnel.

 

1.36                           “Millennium
Haplotype Marker” means any of the following:

 

(a)                                  a
Haplotype Marker identified independently, other than through the use of the HAP
Database or any update thereof, solely by Millennium, its Affiliates,
Millennium Corporate Partners and/or Authorized Personnel;

 

(b)                                 Haplotype
Marker identified through the use of the HAP Database or any update thereof, solely
by Millennium, its Affiliates, Millennium Corporate Partners and/or Authorized
Personnel that contains a Genaissance SNP and/or a Millennium SNP if any of the
following three (3) conditions exist as of the date such Haplotype Marker is
identified by any of the aforesaid entities:

 

(i)                                     a
Millennium SNP is in the Haplotype Marker;

 

6

 

(ii)                                  the
sequence of Polymorphisms in the Haplotype Marker is different than the sequence
of Polymorphisms for the same set of Polymorphic Sites in a Genaissance HAP
Marker; or

 

(iii)                               the Haplotype Marker is
not contained in the HAP Database; or

 

(c)                                  Haplotype
Marker discovered by Genaissance pursuant to Section 2.1(h)(i), 2.1(h)(ii) or
2.1(h)(iii) using any Millennium Proprietary Gene or Millennium Proprietary
Fragment.

 

Notwithstanding Section 1.7, a
Millennium Haplotype Marker will constitute Confidential Information of
Millennium whether or not so marked, provided, however, that Genaissance shall
be free to disclose and use any Haplotype Marker that is identical to any
Millennium Haplotype Marker if Genaissance has identified such Haplotype Marker
independently of any knowledge of the Millennium Haplotype Marker, subject to
Millennium Patent Rights.

 

1.37                           “Millennium
Know-How” means any and all proprietary data, information, know-how,
inventions, trade secrets, copyrights, regulatory submissions or other
intellectual property of any kind, other than Patent Rights, Controlled by
Millennium as of the Effective Date or during the term of any options granted
to Genaissance hereunder.

 

1.38                           “Millennium
Patent Rights” means Patent Rights Controlled by Millennium or its Affiliates.

 

1.39                           “Millennium
Product” means any Product (a) that is [**], (b) for which Millennium
and/or its Affiliates [**] or (c) for which [**].

 

1.40                           “Millennium
Product Corporate Partner” means any Third Party (including without
limitation, commercial companies, universities, hospitals, not-for-profit
organizations and consortiums) with whom Millennium and/or its Affiliates has,
or with whom Millennium and/or its Affiliates enters into, an agreement to
discover, research, develop, manufacture and/or commercialize a Millennium
Product, provided,
however,[**]that such agreement [**], Third Parties with whom
Millennium or its Affiliates have[**]entered or may enter into [**] shall
constitute Millennium Product Corporate Partners.

 

1.41                           “Millennium
Proprietary Fragment” means a genomic region (a) for which Millennium or
its Affiliates requests custom SNP and Haplotype Marker discovery pursuant to
Section 2.1(h)(i) and whose sequence is not contained in the HAP
Database or in the public domain at the time of such request and (b) for which
Millennium, its Affiliates or the Millennium Product Corporate Partner asserts
a proprietary intellectual property position. 
Notwithstanding Section 1.7, a Millennium Proprietary Fragment will
constitute Confidential Information of Millennium whether or not so marked.

 

7

 

1.42                           “Millennium
Proprietary Gene” means a gene (a) for which Millennium or its Affiliates
requests custom SNP and Haplotype Marker discovery pursuant to Section
2.1(h)(i) and there is no genetic structure in the HAPTM Database or in the
public domain at the time of such request and (b) for which Millennium, its
Affiliates or the Millennium Product Corporate Partner asserts a proprietary
intellectual property position. 
Notwithstanding Section 1.7, Millennium Proprietary Genes will
constitute Confidential Information of Millennium whether or not so marked.

 

1.43                           “Millennium
SNP” means a SNP (i) identified by Genaissance in a Millennium Proprietary
Gene or a Millennium Proprietary Fragment or (ii) identified independently by
Millennium, its Affiliates, Millennium Corporate Partners and/or Authorized
Personnel, in any gene or genomic region without use of the HAP
Database or any update thereof, as evidenced by written documentation.  Notwithstanding Section 1.7, a Millennium
SNP will constitute Confidential Information of Millennium whether or not so
marked, provided,
however, that Genaissance shall be free to disclose and use any
Genaissance SNP that is identical to any Millennium SNP if Genaissance has
identified such Genaissance SNP independently of any knowledge of the
Millennium SNP, subject to Millennium Patent Rights.

 

1.44                           “Millennium
Technology Corporate Partner” means any Third Party (including without
limitation, commercial companies, universities, hospitals, not-for-profit
organizations and consortiums) with whom Millennium and/or its Affiliates have
or with whom Millennium and/or its Affiliates enter into an agreement under
which such Third Party receives a license to use all or part of Millennium’s
technology platform at a facility of such Third Party for the benefit of such
Third Party.

 

1.45                           “Millennium
Technology Consultant” means any Third Party (including individual
consultants, universities,
hospitals, not-for-profit organizations, consortiums and commercial
companies), other than a Millennium Technology Corporate Partner, with whom
Millennium has an agreement to develop or improve any aspect of Millennium’s
technology platform.  Millennium
Technology Consultant shall specifically exclude any Third Party with whom
Millennium has an agreement to research or develop a Product.

 

1.46                           “Normal
Business Hours” means the hours between 8:00 A.M. and 6:00 P.M. in the
Eastern Time zone, Monday through Friday and any other day that Genaissance is
open for business, but excluding federal and state holidays.

 

1.47                           “Party”
means Genaissance or Millennium; “Parties” means Genaissance and Millennium.

 

1.48                           “Patent
Rights” means (a) any United States or foreign patent application, (b) any
United States patent or foreign patent issuing from such patent application and
(c) any continuation, continuation-in-part (to the extent the claims in such
continuation-in-part-application are directed to subject matter specifically
described in such prior patent application), divisional, reissue,
re-examination, renewal, substitution, addition,

 

8

 

extension, supplementary protection certificate or
foreign counterpart thereof of any of the foregoing.

 

1.49                           “Patient
Registry” means a collection of biological specimens and clinical data of
patients with a given disease.

 

1.50                           “Patient
Registry Agreement” an agreement between Millennium (or its Affiliates) and
a noncommercial entity or academic institution for using a Patient Registry in
[**].

 

1.51                           “Pharmacogenomic
Product” means any product, service or test, other than a Diagnostic
Product, that is at any stage of discovery, development, research, manufacture
or commercialization and which (a) is intended for use in the clinical
development, marketing or prescription of a Therapeutic Product and (b) detects
directly or indirectly (i) one or more Polymorphisms or Haplotype Markers in a
Marker Association or (ii) one or more Surrogate Markers of such Polymorphisms
or Haplotype Markers in a Marker Association.

 

1.52                           “Polymorphic
Site” or “PS” means a specific position within a chromosome at which at
least two alternative sequences are found in a population.

 

1.53                           “Polymorphism”
means any alternative nucleotide or contiguous sequence of nucleotides found at
a Polymorphic Site in a chromosome within a population including, but not
limited to: (a) SNPs; (b) insertions and deletions of one or more nucleotides;
(c) repeats of one or more nucleotides and (d) restriction fragment length
polymorphisms (RFLPs).

 

1.54                           “Post
Initial Term” means every successive year after the end of the Initial Term
for which Millennium has paid the Post Initial Term Upgrade Fee pursuant to
Section 4.3.

 

1.55                           “Product”
means Diagnostic Products, Approved Diagnostic Products, Pharmacogenomic
Products, Approved Pharmacogenomic Products and Therapeutic Products.

 

1.56                           “Published
Gene” means any gene whose genomic or cDNA sequence is published, e.g., in
the scientific literature, in a publicly available sequence database, or in a
published patent application.

 

1.57                            “SNP”
means a single nucleotide polymorphism.

 

1.58                           “Surrogate
Marker” means any biomolecule (including but not limited to Polymorphisms,
proteins, sugars, and lipids) or chemical compound (including but not limited
to drugs and metabolites thereof), in which the absence, presence, or quantity
of such biomolecule or chemical compound in an individual is measurable and
correlated

 

9

 

to a statistically robust degree with the presence of
one or more Polymorphisms or Haplotype Markers referenced in a Marker
Association.

 

1.59                           “Therapeutic
Product” means any therapeutic or prophylactic molecule (including
vaccines, small molecules and biologics) that is at any stage of discovery, development,
research, manufacture or commercialization.

 

1.60                           “Third
Party” means any person or entity other than a Party or its Affiliates.

 

1.61                           “Valid
Claim” means either (i) a claim of a pending patent application which claim
was filed in good faith and has not been abandoned or finally disallowed
without the possibility of appeal or refiling of said application or (ii) a
claim of an issued and unexpired patent which has not been held permanently
revoked, unenforceable or invalid by a decision of a court or other
governmental agency of competent jurisdiction, unappealable or unappealed
within the time allowed for appeal. 
Notwithstanding the foregoing, if a claim of a pending patent
application has not issued as a claim of an issued patent within the Patent
Rights within five (5) years after the filing date from which such claim takes
priority, such pending claim shall cease to be a Valid Claim for purposes of
this Agreement unless and until such claim becomes an issued claim of an issued
patent within the Patent Rights.

 

1.60                           “Additional
Definitions” Each of the following definitions is set forth in the section
of this Agreement indicated below:

 

	
  Data

  	
   

  	
  Section
  2.1(c)

  
	
  IR Material

  	
   

  	
  Section
  2.1(h)(v)

  
	
  Millennium
  Gene Allocation

  	
   

  	
  Section
  2.1(g)

  
	
  Negotiation
  Period

  	
   

  	
  Section 2.2

  
	
  Notice
  Period

  	
   

  	
  Section 2.2

  
	
  Publishing
  Party

  	
   

  	
  Section 5.7

  

 

ARTICLE II

LICENSE RIGHTS, SERVICES, AND DELIVERABLES

 

2.1.                              Grant
of Rights to Millennium and its Affiliates

 

(a)                                 Non-exclusive Research and
Development Use of Genaissance HAPTM Technology.

 

(i)             Use of the HAP Database
Schema and the DecoGen Informatics System by Millennium and its Affiliates.  Subject to Section 2.1(c) below, Genaissance
grants to Millennium and its Affiliates, under Genaissance Patent Rights and
Genaissance Know-How, a worldwide, perpetual non-exclusive license to use,
without the right to permit Third Parties (other than Authorized Personnel) to
use the HAP
Database

 

10

 

Schema and the
DecoGen
Informatics System, solely for internal research and development purposes.  As used in this subsection 2.1(a)(i) of the
Agreement, “internal research and development” includes research and
development performed by (a) Millennium, its Affiliates or Authorized Personnel
at Millennium’s facilities that[**]is sponsored by, or for the benefit of,
Millennium, its Affiliates or Millennium’s Product Corporate Partners or (b) a
Millennium Technology Corporate Partner or Authorized Personnel on the premises
of the Millennium Technology Corporate Partner for the benefit of, Millennium,
its Affiliates or Millennium’s Product Corporate Partners provided that the Millennium
Technology Corporate Partner has obtained a license from Genaissance pursuant
to Section 2.1(a)(iii) and further provided that the Millennium Technology
Corporate Partner does not make use of the HAP Database Schema and the DecoGen
Informatics System for any other purpose.

 

(ii)          Use of the HAP
Database by Millennium and its Affiliates. 
Subject to Section 2.1(c) below, Genaissance grants Millennium and its
Affiliates, under Genaissance Patent Rights and Genaissance Know-how,  a
worldwide non-exclusive license to use, without the right to permit Third
Parties (other than Authorized Personnel) to use the HAP Database, solely for
internal research and development purposes for the Initial Term (or as extended
under the perpetual access rights granted pursuant to Section 2.1(f)).  As used in this subsection 2.1(a)(ii) of the
Agreement, “internal research and development” includes research performed by
Millennium, its Affiliates or Authorized Personnel at Millennium’s facilities
that is sponsored by, or for the benefit of, Millennium, its Affiliates or
Millennium’s Product Corporate Partners.

 

(iii)       Use of the Genaissance HAP
Technology by Millennium Technology Corporate Partners.  Upon Millennium’s request, Genaissance will
negotiate in good faith with any Millennium Technology Corporate Partner to
grant such partner a license on commercially reasonable terms to use all or
part of the Genaissance HAP Technology.  In the event such Millennium Technology Corporate Partner obtains
such license, Millennium and/or its Affiliates shall have the right to transfer
such licensed Genaissance HAPTM Technology as integrated into the
Millennium technology platform, to such Millennium Technology Corporate
Partner’s site.

 

(iv)      Use of the Genaissance HAP
Technology by Millennium Technology Consultants.  Millennium may transfer part or all of the Genaissance HAP
Technology to the facility of a Millennium Technology Consultant solely for the
purposes of integrating the HAP Technology into Millennium’s
technology platform and modifying or improving Millennium’s technology platform
which has any portion of the HAP Technology integrated therein, provided
that such Millennium Technology Consultant has agreed to (1) only
use the HAP
Technology for the purposes set forth in this subsection 2.1(a)(iv), (2)
maintain all portions of the HAP Technology as Millennium’s
Confidential Information under terms no less stringent than the confidentiality
obligations imposed under the Agreement and (3) return to Millennium all such HAP
Technology promptly upon completion of the authorized purpose.  Except for the foregoing, nothing herein
shall be construed as granting any

 

11

 

Millennium
Technology Consultant any license to use the Genaissance HAP Technology, HAP Markers,
or any corresponding HAP Marker Biologics.

 

(v)         Modifications;
Additional Content.  Use of the
Genaissance HAP
Technology includes (i) the right to make modifications and
enhancements thereto solely for purposes of interoperability with Millennium’s
and its Affiliates’ technology platform and (ii) the right to add additional
content to the HAP Database installed at Millennium to generate the HAP
Database Plus.

 

(vi)      Installation.  Genaissance will provide on-site
installation of the Genaissance HAPTM Technology on one dedicated server at
a central site selected by Millennium. 
Millennium may then install the Genaissance HAP Technology on additional
servers for testing, disaster recovery, operability and/or performance
purposes.  During the Initial Term, and
Post Initial Term, if applicable, Genaissance shall install in the HAP
Database Plus at the central site selected by Millennium an updated version of
the Genaissance HAP Database  each quarter.  During the Initial Term, and Post Initial Term, if applicable,
Genaissance shall deliver to Millennium new versions of the DecoGen
Informatics System and HAP Database Schema as they are released
for use by other HAP Technology customers.

 

(vii)                                                   Training.  Genaissance will provide an [**] on-site
training session on the use of the HAPTM Technology, and a [**] additional
on-site training session [**] during the Initial Term.  Such training will [**].

 

(viii)                                                Project
Manager.  Genaissance will provide
Millennium with a project manager to support the business relationship,
including without limitation deployment, installation, training and roll-out of
the HAP
Technology.  This individual will
facilitate regular communication between Millennium and Genaissance.

 

(ix)                                                        Initial
Term and Post-Initial Term Support. 
During the Initial Term, and any Post-Initial Term for which Millennium
has purchased the right to obtain support pursuant to Section 2.1(e),
Genaissance will provide software and database support for the maintenance and
upgrades of the HAP Technology (including the prior two commercial versions
of any such upgrades).  At a minimum,
Genaissance will provide the response times and escalation processes for minor,
serious and mission critical problems described in Exhibit B attached
hereto and incorporated herein by reference. 
Genaissance shall not be responsible for providing any maintenance or
support of any of the HAP Technology that has been modified by
Millennium, its Affiliates, Authorized Personnel, or Millennium Technology
Consultants using any software or method that is not developed by or authorized
in writing by Genaissance, unless such maintenance or support need is also
present in the unmodified HAP
Technology.

 

(x)                                                           Acceptance.  Genaissance shall install the Genaissance HAP
Technology at Millennium’s site within [**] days of the Effective Date.  Millennium will have [**]

 

12

 

days from the
completion of installation to perform acceptance testing to determine whether
the Genaissance HAP Technology meets the specifications set forth and
incorporated herein by reference in Exhibit C.  In the event the Genaissance HAP Technology fails to meet the
specifications, Millennium will notify Genaissance that such Genaissance HAP
Technology does not meet the specifications and provide reasonable detail
describing such failure.  Genaissance
will have [**] days to remedy such failure.

 

(b)                                  Non-exclusive Use of Genaissance HAP
Markers.

 

(i)             Non-exclusive
Research Use of Genaissance HAP Markers.  Subject to the specific exceptions set forth in Section 2.1(c)
below, Genaissance grants Millennium and its Affiliates a worldwide
non-exclusive license, without the right to grant sublicenses, under
Genaissance Patent Rights and Genaissance Know-How to detect and use the Genaissance
HAP
Markers, and to make and use any corresponding HAP Marker Biologics, solely
for internal research and development purposes, during the Initial Term (or as
extended under the perpetual access rights granted pursuant to Section
2.1(f)).  As used in this subsection
2.1(b)(i) of the Agreement, “internal research and development” includes
research performed by Millennium, its Affiliates or Authorized Personnel at
Millennium’s facilities that is sponsored by, or for the benefit of,
Millennium, its Affiliates or Millennium’s Product Corporate Partners, subject
to Section 2.1(c) below.

 

(ii)          Non-exclusive
Commercial Use of Genaissance HAP Markers in Millennium Haplotype
Associations and Collaboration Marker Associations.  Genaissance grants Millennium a worldwide
non-exclusive license, with the right to grant sublicenses, under Genaissance
Patent Rights and Genaissance Know-How to use and detect the Genaissance HAP Markers
in Millennium Marker Associations and Collaboration Marker Associations, and
any corresponding Genaissance HAP Marker Biologics, solely for the
commercial development, manufacture, sale, distribution and use of Millennium
Products during the Initial Term (or as extended under the perpetual access
rights granted pursuant to Section 2.1(f)). 
Except as otherwise set forth in this Agreement, [**].  For the avoidance of doubt, no license shall
be required from Genaissance for commercial use by Millennium, its Affiliates
or Millennium Product Corporate Partners of any Genaissance HAP
Marker in a Millennium Marker Association, or its corresponding HAP
Marker Biologic, that at the time of such use is [**] generally known in the
genomics industry, unless such commercial use is covered by an issued patent
Controlled by Genaissance.

 

(c)          Limited Rights of Millennium Product Corporate Partners.

 

(i)  For purposes of this Section 2.1(c) and
Sections 5.4 and 5.6, “Data” shall mean Genaissance HAP Markers, Genaissance
SNPs, biological data, results and information and/or annotation related
thereto including information relating to their sequence, frequency and
distribution obtained directly from the HAP Database that

 

13

 

fall within
the definition of Confidential Information set forth in Section 1.7.  Millennium, its Affiliates, Authorized
Personnel, Millennium Corporate Partners and Millennium Technology Consultants
shall be free to disclose and use any Haplotype Markers, SNPs, biological data,
results and information and/or annotation that is identical to any Data if
Millennium has identified such Haplotype Markers, SNPs, biological data,
results and information and/or annotation independently of any knowledge of
such Data, subject to any issued patents Controlled by Genaissance.

 

(ii)          Notwithstanding the foregoing
subsections in this Section 2, Millennium and its Affiliates may grant to any
of their Millennium Product Corporate Partners a sublicense, with the right to
further sublicense, to use, any Data accessed, identified or obtained, in whole
or in part, through the authorized use of the Genaissance HAP Technology, including
without limitation, Genaissance HAP Markers, that are directly relevant to
the agreement between Millennium and such Millennium Product Corporate Partner
for research purposes and commercial development, manufacture, sale,
distribution and use of the Millennium Products developed thereunder, provided
that no Millennium Product Corporate Partner will have direct access
to the Genaissance HAP Technology except through Millennium
computer systems (i.e., the Genaissance suite of software and tools may not be
loaded on a computer owned by a Millennium Product Corporate Partner but may be
accessed via Millennium’s computer systems only).

 

(iii)       Millennium and its
Affiliates may only disclose the Data described in subsection 2.2(c)(i) if the
receiving party agrees to maintain such Data as confidential information under
terms no less stringent than the confidentiality obligations imposed under the
Agreement.  Except for the foregoing,
nothing herein shall be construed as granting any Millennium Product Corporate
Partner any license to use the Genaissance HAP Technology, HAP Markers, or any
corresponding HAP Marker Biologics.

 

(d)          Options for Exclusive Commercial Licenses.

 

(i)             Collaboration Marker
Associations.  Genaissance grants Millennium and/or its
Affiliates an option to obtain, in addition to the existing nonexclusive
license rights granted in Section 2.1(b), a worldwide exclusive license, with
the right to grant sublicenses, under Genaissance Patent Rights, Genaissance’s
interest in any Patent Rights to Collaboration Marker Associations, and
Genaissance Know-How; to use a specific Collaboration Marker Association and
the Genaissance HAP Markers in such specific Collaboration Marker Association,
and any HAP
Marker Biologics corresponding to such HAP Markers, to develop,
make, have made, use, sell, have sold, offer to sell, import and have imported,
for a specific disease indication, any Pharmacogenomic Product for a Millennium
Therapeutic Product within a Drug Class for the life of such Patent Rights and
as to Genaissance Know-How, perpetually.

 

14

 

(ii)          HAP Markers in
Millennium Marker Associations. 
Genaissance grants Millennium and/or its Affiliates an option to obtain,
in addition to the existing nonexclusive license rights granted in Section
2.1(b), a worldwide exclusive license, with the right to grant sublicenses,
under Genaissance Patent Rights and Genaissance Know-How; to use the Genaissance
HAP
Markers in a specific Millennium Marker Association, and any HAP Marker
Biologics corresponding to such HAP Markers, to develop, make, have made,
use, sell, have sold, offer to sell, import and have imported, for a specific
disease indication, any Pharmacogenomic Product for a Millennium Therapeutic
Product within a Drug Class for the life of such Genaissance Patent Rights and
as to Genaissance Know-How, perpetually.

 

(iii)       Millennium may exercise the
options set forth in subsections (i) and (ii) above for a specific disease
indication and a specific Collaboration Marker Association or Millennium Marker
Association by giving written notice to Genaissance and paying the license
issue fee set forth in Section 4.4. 
Upon Millennium exercising its option for the second disease indication,
Millennium’s exclusive license will automatically extend to all disease
indications.  Other terms of any license
granted pursuant to this Section will be commercially reasonable and negotiated
in good faith.

 

(iv)      The options set forth in
subsection (i) and (ii) above will not be applicable if, as evidenced by prior
written documentation, the desired combination of Drug Class, disease
indication and Genaissance HAP Marker(s) (or HAP Marker Biologic(s)
corresponding thereto) has been previously exclusively optioned or licensed by
Genaissance to a Third Party pursuant to an independent research program
carried out by or for the Third Party or is the subject of a bona fide
Genaissance internal research program that resulted in the filing of patent
application(s) related thereto.  Either
option must be exercised by Millennium prior to (a) the termination or
expiration of the Initial Term or (b) if Millennium has obtained a perpetual research
license to Genaissance HAP Markers pursuant to Section 2.1(f),
then within [**] years of the initial filing of a patent application covering
the specific Marker Association for which the exclusive license to its
component HAP Markers is desired.

 

(e)          Option for Post Initial Term Upgrades.

 

Subject to
Millennium exercising its option for perpetual maintenance of rights pursuant
to Section 2.1(f), Genaissance grants Millennium an option to extend its right
to receive upgrades beyond the Initial Term for successive one year periods up
to [**] additional one-year periods under all the same terms stated herein,
except that Millennium must provide written notice of its desire to extend to
Genaissance at least [**] days prior to the termination or expiration of the
Initial Term and at least [**] days prior to the end of each year thereafter
and pay the annual upgrade fee set forth in Section 4.2.  For the avoidance of doubt, Millennium must
have paid the annual upgrade fee in the previous year to be able to purchase an
upgrade in any subsequent year. 
Upgrades for each year of such Post Initial Term shall include:

 

15

 

i.                  Genaissance
HAP
Markers and related data from the HAP Database for [**] additional Published
Genes [**], including all public database SNPs that are in the HAP
Database for such Genes;

 

ii.               SNPs,
Haplotype Marker and related data discovered in the Index Repository for [**]
Millennium Proprietary Genes using the standard processes described in Exhibit
A and Genaissance’s proprietary HAP Builder technology (or any successor
technology);

 

iii.            updates
to data for Published Genes already present in the HAP Database Plus as of the
end of the Initial Term and to data for Published Genes that are added during
each year of the Post Initial Term, including any additional public database
SNPs that are added to the HAP Database;

 

iv.           upgrades
to the DecoGen Informatics System and the HAP Database Schema; and

 

v.              support
and training as provided during the Initial Term.

 

(f)            Maintenance of Rights Post Initial Term.

 

Genaissance
grants Millennium and its Affiliates the rights granted under Sections 2.1(a),
(b), (c) and (d) as further described in Section 4.2 to be maintained in
perpetuity after the termination of the Agreement, provided that Millennium
pays the perpetual license conversion fee set forth in Section 4.2, and further
provided that any provisions within such Section 2.1(a), (b), (c) and (d) that
involve Millennium Technology Corporate Partners are only applicable in
perpetuity to those Millennium Technology Corporate Partners who have obtained
an appropriate perpetual license from Genaissance.  During this period, no new upgrades to the HAP Database will be
provided to Millennium unless Millennium elects the option set forth in Section
2.1(e) above.  Any rights granted under
this subsection 2.1(f) do not include support or maintenance of the HAP
Database Schema and the DecoGen Informatics System, except as
otherwise provided pursuant to Section 2.1(e) above.

 

(g)                                 Millennium’s Selection of Genes for Inclusion in the HAP
Database

 

During each
year of the Initial Term, Genaissance will add Genaissance HAPTM Markers for at least
[**] additional Published Genes to the HAP Database, [**] of which may be
selected by Millennium and for which Millennium may provide
[**] (the “Millennium Gene Allocation”).  Millennium may select up to [**] of the Genes in the Millennium
Gene Allocation in any calendar quarter by providing Genaissance with written
notice of such selected Genes prior to the first day of such calendar
quarter.  Genaissance will include
Genaissance HAP
Markers for such selected Genes in the quarterly release of the HAP
Database for that calendar quarter.  If
Genaissance

 

16

 

fails to add
Genaissance HAP
Markers for all of the selected Genes in a particular calendar quarter, then
Genaissance shall have until the end of the subsequent calendar quarter to cure
such deficiency without penalty.  If
Genaissance fails to cure such deficiency by the end of such subsequent
calendar quarter, then Millennium shall be entitled to withhold payment of [**]
U.S. dollars[**]($[**]) per non-included Gene from the next quarterly
installment of the HAP Database license fee, but shall pay
any withheld amounts relating to a previously non-included Gene within [**]
business days following Millennium’s receipt of an updated HAP Database containing HAP
Markers for such previously non-included Gene.

 

(h)                                 Additional Services/Reserved Capacity.

 

During the
Initial Term, Genaissance shall make available to Millennium and its
Affiliates, the following additional services:

 

(i)                                                            Custom
SNP and Haplotype Marker Discovery in the Index Repository.  Reserved capacity in the HAPTM
Factory for generating SNP and Haplotype Marker data in the Index Repository
for up to [**] Millennium Proprietary Genes, [**] Millennium Proprietary
Fragments or a combination of Millennium Proprietary Genes and Millennium
Proprietary Fragments (assuming one Millennium Proprietary Gene is equivalent
to [**] fragments) per year, subject to an additional cost for such services on
a per Gene or per fragment basis as described in Section 4.5(a) below.  Millennium shall provide Genaissance with
sufficient sequence information for Genaissance to amplify and sequence the
desired regions of each Millennium Proprietary Gene or each Millennium
Proprietary Fragment.

 

(ii)                                                         Molecular
Haplotyping Services.  Reserved
capacity in the HAPTM Factory for performing molecular haplotyping on up to
[**] Genes (or equivalent fragments or a combination thereof) per year from
individual subjects identified from the Index Repository or provided by
Millennium and/or its Affiliates, subject to an additional cost for such
services on a per Gene per individual basis that will be determined by mutual
agreement.

 

(iii)                                                      Clinical
Sample HAPTM
Typing Services.  Reserved capacity
in the HAPTM
Typing Facility for HAPTM Typing of clinical samples, subject
to an additional cost for such services on a per sample per Polymorphic Site
basis.

 

(iv)                                                     Collaboration
Activities.  In the event the Parties elect to pursue
any Collaboration Activities, prior to commencing each Collaboration Activity,
Genaissance and Millennium shall enter into a separate written amendment which
shall be subject to the terms of any agreement or other arrangement with a
Third Party existing prior to such separate amendment and will address, at a
minimum (a) the scope of work, (b) responsibilities of the respective Parties,
(c) payment, (d) schedule, (e) deliverables, and (f) any ownership, licensing,
publication and intellectual property issues.

 

17

 

(v)                                                        Materials/Reagents
from the Index Repository.  Subject
to payment of the fee set forth in Section 4.5(e), Genaissance will deliver to
Millennium a [**] sample of total genomic and or cDNA isolated from any
individual in the Index Repository that is requested by Millennium (hereinafter
“IR Materials”) solely for use by Millennium, its Affiliates, and Authorized
Personnel at Millennium’s or its Affiliate facilities.  The genomic DNA will have passed quality
control tests for [**], and the cDNA will have passed quality control tests for
[**].  Millennium, its Affiliates, and
Authorized Personnel may only use the IR Materials to isolate genomic DNA
and/or cDNA clones corresponding to the alleles computed for any gene that is
in the HAP
Database (or HAP Database Plus) from such specified individual(s) in order
to perform functional studies on the isolated variants (“authorized use”).  Millennium, its Affiliates, and Authorized
Personnel shall not make any replicates, progeny, or variants of the IR
Materials, except as necessary to facilitate the authorized use, and shall not
use the IR Materials for any other noncommercial or commercial purpose,
provided however, that Millennium, its Affiliates, and Authorized Personnel
will be free to use any resulting data. 
Millennium, its Affiliates, and Authorized Personnel shall not transfer
the IR Materials to any Third Party. 
Millennium, its Affiliates, and Authorized Personnel shall destroy or
return all unused IR Materials to Genaissance, at the sole option of
Genaissance, within [**] days following termination of this Agreement.

 

2.2                                 Grant
of Rights to Genaissance and its Affiliates.

 

(a)                                 Right of First Negotiation for
Clinical Trial Genotyping Services.

 

(i)             During the Initial
Term, and subject to the terms of any agreement or other arrangement between
Millennium or its Affiliates and a Third Party existing on or before the
Effective Date, if Millennium (or an Affiliate) decides to outsource to a
non-Affiliate the genotyping work for any clinical trial or research and
development registry study for which Millennium (or an Affiliate) has the sole
right to decide the outsource vendor, and the genotyping work is material
([**]), then Millennium shall provide Genaissance with written notice of such
decision.  If Genaissance notifies
Millennium in writing within [**] days of notice of Millennium’s decision (“Notice
Period”) that it wishes to exercise its right of first negotiation, then
Genaissance and Millennium shall negotiate in good faith for a period of up to
[**] days commencing with the date of Genaissance’s notice (the “Negotiation
Period”), a commercially reasonable term sheet for the performance by
Genaissance or its Affiliates of genotyping services for all Polymorphisms and
Haplotype Markers included in the clinical trial plan for such clinical trial
or research plan for such research and development registry study. The term
sheet shall include, in addition to other commercially reasonable terms,
compensation [**].   If
Genaissance fails to exercise its right of first negotiation within the Notice
Period, Genaissance informs Millennium that it is not interested in exercising
its right of first negotiation under this Section

 

18

 

2.2(a)(i) or
the Parties do not agree on commercially reasonable terms within the Negotiation
Period, then Millennium shall be free to negotiate with Third Parties for such
genotyping services.

 

(ii)          For [**] years after the
Initial Term, and subject to the terms of any agreement or other arrangement
between Millennium or its Affiliates and a Third Party existing on or before
the Effective Date, if Millennium (or an Affiliate) decides to outsource to a
non-Affiliate the genotyping work in any clinical trial or research and
development registry study (A) whose clinical trial plan or research plan, as
applicable, includes the detection of at least one Genaissance HAP
Marker and (B) for which Millennium (or an Affiliate) has the sole right to
decide the outsource vendor, then Millennium shall provide Genaissance with
written notice of such decision.  If
Genaissance notifies Millennium in writing within [**] days of notice of
Millennium’s decision (“Notice Period”) that it wishes to exercise its
right of first negotiation, then Genaissance and Millennium shall negotiate in
good faith for a period of up to [**] days commencing with the date of
Genaissance’s notice (the “Negotiation Period”), a commercially
reasonable term sheet for the performance by Genaissance or its Affiliates of
genotyping services for all Polymorphisms and Haplotype Markers included in the
clinical trial plan for such clinical trial or the research plan for such
research and development registry study. The term sheet shall include, in
addition to other commercially reasonable terms, compensation [**].  If Genaissance fails to exercise its right
of first negotiation within the Notice Period, Genaissance informs Millennium
that it is not interested in exercising its right of first negotiation under
this Section 2.2(a)(i), or the Parties do not agree on commercially reasonable
terms within the Negotiation Period, then Millennium shall be free to negotiate
with Third Parties for such genotyping services.  As used in this subsection 2.2(a)(ii), the term “Genaissance HAP
Marker” shall not include any Polymorphism or Haplotype Marker that at the time
of Millennium’s initial notice to Genaissance is [**] generally known in the
genomics industry, unless the detection of such Polymorphism or Haplotype
Marker is covered by a Valid Claim within Patent Rights Controlled by
Genaissance.

 

(iii)       If, due to the terms of an
existing agreement or other arrangement between Millennium or its Affiliates
and a Third Party existing on or before the Effective Date, Millennium does not
solely control such genotyping decisions, then Millennium shall use commercially
reasonable efforts to introduce Genaissance to such Third Party.

 

(b)                                 Right of First Negotiation for
License to Provide Home-Brew Test.

 

As used in this subsection
2.2(b), the term “Genaissance HAP Marker” shall not include any
Polymorphism or Haplotype Marker that at the time of the applicable clinical
trial is (1) known to Millennium, its Affiliates, or Millennium Product
Corporate Partners independently of use of the HAP Database or (2)
generally known in the genomics industry, unless the detection of such
Polymorphism or Haplotype Marker is covered by a Valid Claim within Patent
Rights Controlled by Genaissance.

 

19

 

(i)             During the Initial
Term of Millennium’s license to Genaissance HAP Markers pursuant to Section 2.1(b) and
for [**] years thereafter, and subject to the terms of any agreement or other
arrangement between Millennium or its Affiliates and a Third Party existing on
or before the Effective Date, in the event Millennium (or an Affiliate) decides
to commercialize a Home-Brew Test that is intended to detect at least one
Genaissance HAP
Marker, then Millennium shall provide Genaissance with written notice of such
decision.  If Genaissance notifies
Millennium in writing within [**] days of notice of Millennium’s decision (“Notice
Period”) that it wishes to exercise its right of first negotiation, then
Genaissance and Millennium shall negotiate in good faith for a period of up to
[**] days commencing with the date of Genaissance’s notice (the “Negotiation
Period”) a commercially reasonable term sheet for (i) an exclusive license
to Genaissance and its Affiliates under Millennium Patent Rights and Know-How
to perform such Home-Brew Test in the Northeastern region of the United States
(Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York,
Pennsylvania, Rhode Island and Vermont) and (ii) a nonexclusive license to
Genaissance and its Affiliates under Millennium Patent Rights and Know-How to
perform such Home-Brew Test in the rest of the United States.  Such term sheet shall include, in addition
to other commercially reasonable terms: (A) the right for [**]for such
Home-Brew Test and (B) commercially reasonable financial terms [**]for each
Home-Brew Test[**]commercially reasonable[**]such commercially reasonable
terms[**] of the Home-Brew Test.  If
Genaissance fails to exercise its right of first negotiation within the Notice
Period or Genaissance informs Millennium that it is not interested in exercising
its right of first negotiation under this Section 2.2(b), then Millennium shall
be free to negotiate with Third Parties for performing such Home-Brew
Test.  If the Parties do not agree on a
commercially reasonable term sheet within the Negotiation Period, then
Millennium shall be free to negotiate with Third Parties.  In the event Millennium subsequently
negotiates and is prepared to accept a term sheet with a Third Party and
such Third Party term sheet provides financial terms less advantageous to
Millennium than the last offer proposed by Genaissance during the Negotiation
Period, then prior to entering into a definitive agreement with such Third
Party, Millennium shall, on a nonexclusive basis, negotiate in good faith with
Genaissance for one additional [**] day period, but shall have no obligation to
conclude a new term sheet nor enter into a definitive agreement with
Genaissance or such Third Party.   If a
substantial portion of the [**] then the additional negotiation period shall
not apply.

 

(ii)          This Section 2.2(b) does
not grant Genaissance a right of first negotiation if:  (a) Millennium (and/or its Affiliates) in
their sole discretion, elect not to commercialize (i.e. offer for sale) a
Home-Brew Test for the applicable Collaboration Marker Association or
Millennium Marker Association, (b) Millennium or its Affiliates, in their sole
discretion, elect in good faith to pursue, with a Third Party, an Approved
Diagnostic Product and/or Approved Pharmacogenomic Product that reasonably
necessitates a period of time of a Home Brew and such Third Party has internal
Home Brew resources or (c) the Home-Brew Test is designed to detect a Surrogate

 

20

 

Marker of such
Genaissance HAP
Marker if the Surrogate Marker was discovered by Millennium and/or its
Affiliates independent of use of the Genaissance HAP Marker and such
Surrogate Marker was used as the starting point for the Millennium Marker
Association.

 

(iii)       If due to the terms of an
existing agreement or other arrangement between Millennium or its Affiliates
and a Third Party existing on or before the Effective Date, Millennium does not
solely control the ability to license the applicable Home-Brew Test, then
Millennium shall use commercially reasonable efforts to introduce Genaissance
to such Third Party.

 

(c)                                  Right of First Negotiation for
Development and Commercialization of Approved Diagnostic and Pharmacogenomic
Products.

 

As used in
this subsection 2.2(c), the term “Genaissance HAP Marker” shall not
include any Polymorphism or Haplotype Marker that at the time of the applicable
clinical trial is [**] generally known in the genomics industry, unless the
detection of such Polymorphism or Haplotype Marker is covered by a Valid Claim
within Patent Rights Controlled by Genaissance.

 

(i)             For a period of [**]
years from the Effective Date, and subject to the terms of any agreement or
other arrangement between Millennium or its Affiliates and a Third Party
existing on or before the Effective Date, in the event Millennium decides to
commercialize an Approved Diagnostic Product or Approved Pharmacogenomic
Product that (i) arises out of a Collaboration Marker Association and (ii) for
which Genaissance performed clinical genotyping services or obtained a
Home-Brew Test license pursuant to Sections 2.2(a) and 2.2(b), respectively,
then Millennium shall provide Genaissance with written notice of such
decision.  If Genaissance notifies
Millennium in writing within [**] days of notice of Millennium’s decision (“Notice
Period”) that it wishes to exercise its right of first negotiation, then
Genaissance and Millennium shall negotiate in good faith for a period of up to
[**] days commencing with the date of Genaissance’s notice (“Negotiation
Period”), a commercially reasonable term sheet for partnering with Millennium
to develop and commercialize such Approved Diagnostic Product or Approved
Pharmacogenomic Product.  All of the
terms for the development and commercialization of such product shall be
commercially reasonable and negotiated in good faith.  If Genaissance fails to exercise its right of first negotiation
within the Notice Period or Genaissance informs Millennium that it is not
interested in exercising its right of first negotiation under this Section
2.2(c), then Millennium shall be free to negotiate with Third Parties for such
Approved Diagnostic Product or Approved Pharmacogenomic Product.  If the Parties do not agree on a
commercially reasonable term sheet within the Negotiation Period, then
Millennium shall be free to negotiate with Third Parties for such Approved
Diagnostic Product or Approved Pharmacogenomic Product.  In the event Millennium subsequently
negotiates and is prepared to accept a term sheet with a Third Party and
such Third Party term sheet provides financial terms less

 

21

 

advantageous
to Millennium than the last offer proposed by Genaissance during the
Negotiation Period, then prior to entering into a definitive agreement with
such Third Party, Millennium shall, on a nonexclusive basis, negotiate in good
faith with Genaissance for one additional [**] day period, but shall have no
obligation to conclude a new term sheet nor enter into a definitive agreement
with Genaissance or such Third Party. 
If a substantial portion of [**] then the additional negotiation period
shall not apply.

 

(ii)          If due to the terms of
an existing agreement or other arrangement between Millennium or its Affiliates
and a Third Party existing on or before the Effective Date, Millennium does not
solely control the ability to partner the applicable Approved Diagnostic
Product or Approved Pharmacogenomic Product, then Millennium shall use
commercially reasonable efforts to introduce Genaissance to such Third Party.

 

(d)                                 Applicability to Sublicenses.

 

To the extent
a sublicense [**] under Section 2.1(c) [**] in the specific sublicense [**] of
this Section 2.2 [**].

 

(e)                                  Right of First Negotiation
Clarifications.

 

For the
purposes of clarity, the term “right of first negotiation” as used in this
Agreement means that the Parties shall negotiate in good faith the commercially
reasonable terms for a term sheet within the applicable Negotiation Period, but
does not mean that Millennium is required to enter into a definitive
agreement.  Failure to agree upon
commercially reasonable terms for a term sheet shall include[**].  It is agreed that prior to or during any
applicable Negotiation Period, Millennium may not, directly or indirectly,
obtain or solicit bids or clarifying information in connection therewith from
Third Parties.  The rights of first
negotiation set forth in Section 2.2 (a), (b), (c) and (d) shall be void in the
event Millennium terminates this Agreement pursuant to Section 6.2 because of
material breach by Genaissance.

 

2.3                                 Non-Asserts

 

(a)                                 Non-Assert for Certain New
Millennium Patent Rights.

 

For a period
of[**] from the Effective Date, [**], Millennium will [**] Millennium patent
rights [**] this Section 2.3(a) [**] [**] set forth in this Subsection 2.3 (a)
[**].  [**] under this Section 2.3(a).

 

(b)                                  Non-assert to Certain Millennium
Gene Patent Rights.

 

For a period
of [**] from the Effective Date, [**] Millennium will, [**] under this Section
2.3(b) [**] in this Section 2.3(b) [**].

 

22

 

ARTICLE III

INTELLECTUAL PROPERTY OWNERSHIP RIGHTS

 

3.1         Ownership
of Intellectual Property

 

(a)          Millennium SNPs:  Millennium will own the Millennium SNPs.  Genaissance will not place in the HAP Database or disclose to
a Third Party any Millennium SNPs generated pursuant to Section 2.1(h)(i) for
any Millennium Proprietary Gene or Millennium Proprietary Fragment, unless and
until a public disclosure of such SNPs occurs (i) with authorization by
Millennium or (ii) without authorization by Millennium and through no fault of
Genaissance and Millennium fails to achieve retraction of such SNPs from
generally known and used publicly accessible databases within [**] months of
such unauthorized disclosure.  In such
event, upon expiration of such [**] month period, Genaissance, at its sole
discretion, may place such Millennium SNPs in the HAPTM Database with a
notation that a party other than Genaissance has ownership rights in these
SNPs, provided, however, that Millennium and/or its Affiliates shall not be
referenced in such notation.

 

(b)          Genaissance HAP  Markers:  Genaissance will own the Genaissance HAP
Markers and will own and file, in its discretion and at its expense, patent
applications having method claims covering the detection of Genaissance HAP Markers
as well as composition of matter claims covering HAP Marker Biologics.   

 

(c)          Millennium Haplotype Markers:  Millennium will own the Millennium Haplotype
Markers.  Genaissance will not place in
the HAP
Database or disclose to a Third Party those Millennium Haplotype Markers that
are generated pursuant to Section 2.1(h)(i) for any Millennium Proprietary Gene
or Millennium Proprietary Fragment, unless and until a public disclosure of
such Millennium Haplotype Markers occurs (i) with authorization by Millennium
or (ii) without authorization by Millennium and through no fault of Genaissance
and Millennium fails to achieve retraction of such Millennium Haplotype Markers
from generally known and used publicly accessible databases within [**] months
of such unauthorized disclosure through no fault of Genaissance.  In such event, upon expiration of such [**]
month period, Genaissance, at its sole discretion, may place such Millennium
Haplotype Markers in the HAP Database with a notation that a party
other than Genaissance has ownership rights in these Haplotype Markers.  For the avoidance of doubt,
(i) although Genaissance will own Genaissance HAP Markers, any Millennium
Marker Association that references a Genaissance HAP Marker will be owned by
Millennium and (ii) Genaissance will own any Haplotype Marker identified by
Millennium that is only different from a Genaissance HAP Marker that is in the HAP
Database at the time of such identification as a result of [**].  If, however, the [**], then [**] such
Haplotype Marker will be owned by Millennium. 

 

23

 

(d)          Genaissance HAP Marker Associations:  Genaissance will own the Genaissance HAP Marker Associations and
shall be responsible for filing any patents thereon.  

 

(e)          Millennium Marker Associations:  Millennium will own the Millennium Marker Associations and
Millennium will, at Millennium’s option, be responsible for filing any patents
thereon.  Prior to filing any patent
application claiming a Millennium Marker Association involving Genaissance HAP
Markers, Millennium shall notify Genaissance and provide Genaissance with
reasonable opportunity to file patents claiming such HAP Markers that are not yet
the subject of a Genaissance patent filing. 
For the avoidance of doubt, the ownership of a Millennium Marker
Association does not include the ownership of its constituent Genaissance HAP
Markers.  

 

(f)            Collaboration Marker Associations:  Genaissance and Millennium will jointly own the Collaboration
Marker Associations, will be jointly responsible for filing any patents
thereon, and may each exploit and license such Collaboration Marker
Associations worldwide without obtaining the permission of or accounting to,
the other Party.  In the event that
either Party chooses to not pay the patent fees associated with any
Collaboration Marker Association in any jurisdiction, then the other Party
shall have the right to pay the entire cost of the patent filings and the
non-paying Party will assign its interest in the Collaboration Marker
Association and any patents thereon to the other Party.  For the avoidance of doubt, Millennium’s
ownership interest in a Collaboration Marker Association does not include the
ownership of its constituent Genaissance HAP Markers.

 

ARTICLE IV

PAYMENT

 

4.1                                 Fees
for Licenses and Deliverables Per Section 2.1

 

In consideration of the rights,
licenses and deliverables granted pursuant to Section 2.1, Millennium agrees to
pay Genaissance, license fees in the amount of [**] dollars ($[**]) during the
Initial Term.  These license fees are
calculated on the following basis:

 

(a)          Total
of [**] U.S. dollars ($[**]) for a perpetual multi-site license to the DecoGen
Informatics System and the HAP Database Schema, which shall be due
and payable as follows:

 

(1)          [**] U.S. dollars
($[**]) to be paid upon [**];

 

(2)          [**] U.S. dollars
($[**]) to be paid upon [**]; and

 

(3)          [**] U.S. dollars
($[**]) to be paid on [**].

 

24

 

(b)                                 Total
of [**] U.S. dollars ($[**]) for Initial Term license to the HAP
Database, which shall be due and payable as follows:

 

(1)          [**] U.S. dollars
($[**]) to be paid on [**]; and

 

(2)          [**] U.S. dollars
($[**]) to be paid in installments of [**] U.S. dollars ($[**]) [**].

 

4.2                                 Optional
Fee for Maintenance of Rights Post Initial Term.

 

At any time during the Initial
Term or within [**] days thereafter, Millennium may give Genaissance written
notice of its intent to exercise rights to convert the licenses for the HAP
Database and Genaissance HAP Markers granted in Section 2.1 to a
perpetual license, with no right to receive any upgrades to the HAP
Database beyond the Initial Term, unless the Post Initial Upgrade Fee has been
paid pursuant to Section 4.3.  Such
license will automatically be granted upon payment to Genaissance of [**] U.S.
dollars ($[**]).

 

4.3                                 Optional
Fee for Post Initial Term Upgrades to the HAP Database.

 

Millennium shall receive
upgrades to the HAP Database as described in Section 2.1(e) for each year
following the end of the Initial Term, up to a total of [**] years, upon payment
to Genaissance by the end of the Initial Term and each year of the Post Initial
Term, a Post Initial Term Upgrade Fee of [**] U.S. Dollars ($[**]) per year.

 

4.4                                 Fees
for Commercial License per Section 2.1(d)

 

Upon Millennium exercising its
option to a worldwide exclusive commercial license as described in Section
2.1(d) above, Millennium will pay to Genaissance a fee of [**] U.S. dollars
($[**]) for each license granted for the first specific disease indication for
a specific Marker Association.  Millennium
may add all other disease indications to any such license for a specific Marker
Association by paying Genaissance an additional fee of [**] U.S. dollars
($[**]).

 

4.5                                 Additional
Services

 

(a)                                  Custom
SNP and Haplotype Marker Discovery

 

The fee schedule
for Custom SNP and Haplotype Marker Discovery on Millennium Proprietary Genes
and Millennium Proprietary Fragments pursuant to Section 2.1(h)(i) is as
follows:

 

	
  Genes 1-[**]

  	
   

  	
  $[**] per
  gene

  
	
  Genes [**]

  	
   

  	
  $[**] per
  gene

  
	
  Genes [**]

  	
   

  	
  $[**] per
  gene

  
	
  Fragments

  	
   

  	
  $[**] per
  fragment

  

 

25

 

(b)                                 Molecular
Haplotyping Services

 

The fee for
provision of molecular haplotyping services pursuant to Section 2.1(h)(ii) will
be commercially reasonable and agreed upon between the Parties in a separate
written amendment hereto.

 

(c)                                  Clinical
Sample HAPTM
Typing Services

 

Fees for
provision of Clinical Sample HAPTM Typing Services shall be commercially
reasonable and mutually agreed upon between the Parties in a separate written
amendment hereto.

 

(d)                                 Collaboration
Activities.

 

Any fees for
Collaboration Activities shall be as mutually agreed upon between the Parties
in a separate written amendment hereto.

 

(e)                                  Material
from the Index Repository

 

Should
Millennium request genomic DNA and/or cDNA samples from the Index Repository
pursuant to Section 2.1(h)(v), then Millennium shall pay Genaissance a fee of
[**] U.S. dollars ($[**]) per [**] of isolated genomic DNA per individual from
the Index Repository, and a fee of [**] U.S. dollars ($[**]) per [**] of total
cDNA per individual from the Index Repository.

 

4.6                                 Payment
Terms.

 

Subject to the payment
schedules above, all payments will be paid [**] days after Millennium’s receipt
of an invoice.  All payments shall
include any shipping costs on the invoice, shall be in U.S. Dollars and shall
be paid by bank wire transfer in immediately available funds to such bank
account as is designated in writing by Genaissance from time to time.  Any payments by Millennium to Genaissance
that are not paid on or before [**] days after the date such payments are due
under this Agreement shall bear interest, to the extent permitted by applicable
law, at [**] percent ([**]%) per [**], calculated on [**]; provided, however, that
interest shall not accrue pursuant to this Section 4.5 on any amounts payable
under this Agreement with respect to which payment is disputed in good faith; provided,
further that interest shall accrue pursuant to this Section 4.5 once
such dispute has been resolved if payment is not made promptly thereafter.

 

26

 

ARTICLE V

CONFIDENTIALITY

 

5.1                                 Confidential
Information.  Any Confidential
Information disclosed by a Party to the other Party during the term of this
Agreement shall not be used by the receiving Party except in connection with
the activities contemplated by this Agreement, shall be maintained in
confidence by the receiving Party, and shall not otherwise be disclosed by the
receiving Party to any Third Party, without the prior written consent of the
disclosing Party, except to the extent that the Confidential Information (as
determined by competent documentation):

 

(a)  was known by the receiving Party or its
Affiliates prior to its date of disclosure to the receiving Party;

 

(b)  either before or after the date of the
disclosure to the receiving Party or its Affiliates is lawfully disclosed to
the receiving Party or its Affiliates by sources other than the disclosing
Party rightfully in possession of the Confidential Information;

 

(c) either
before or after the date of the disclosure to the receiving Party or its
Affiliates becomes published or generally known to the public (including
information known to the public through the sale of products in the ordinary
course of business) through no fault or omission on the part of the receiving
Party, its Affiliates;

 

(d) is
independently developed by or for the receiving Party or its Affiliates without
use, reference to or reliance upon the Confidential Information;

 

in any of which cases (a), (b),
(c) or (d), such information will not be Confidential Information under this
Agreement.

 

5.2                                 Required
Disclosures.  The provisions of
Section 5.1 shall not preclude the receiving Party or its Affiliates from
disclosing Confidential Information to the extent such Confidential Information
is required to be disclosed by the receiving Party or its Affiliates to comply
with applicable laws, to defend or prosecute litigation or to comply with
governmental regulations or judicial or administrative decrees or orders, provided
that the receiving Party provides prior written notice of such
disclosure to the disclosing Party and takes reasonable and lawful actions to
endeavor to avoid and/or minimize the degree of such disclosure.  Specific information shall not be deemed to
be within any of the foregoing exclusions merely because it is embraced by more
general information falling within these exclusions.

 

5.3                                 Employee
and Advisor Obligations.  Millennium
and Genaissance each agree that they shall provide Confidential Information
received from the other Party only to their respective employees, consultants
and advisors, and to the employees, consultants and advisors of such Party’s
Affiliates, who have a need-to-know for the sole purpose of performing such
Party’s obligations or exercising such Party’s rights under this Agreement and
have a written obligation to treat such information and materials as
confidential in accordance with such Party’s confidentiality obligations under
this Agreement.  Any Genaissance
representatives that will be on-site at Millennium and/or its Affiliates site
shall be required to enter into an agreement with

 

27

 

Millennium that is consistent
with this Agreement that addresses, among other confidentiality issues, the
inadvertent disclosure of confidential information of Millennium unrelated to
the performance of, and not intended for use in, the performance of this
Agreement.

 

5.4                                 Term.  All obligations of confidentiality imposed under
this Article V shall expire [**] years following the termination or expiration
of this Agreement, except that the obligations of confidentiality imposed under
this Article V with respect to Data disclosed by Genaissance to Millennium
shall continue in perpetuity and shall survive any termination or expiration of
this Agreement.

 

5.5                                 Terms
and Conditions.  Neither Millennium
nor Genaissance shall disclose to the public or any Third Party the terms and
conditions of this Agreement except with the prior written consent of the other
or as required by law.

 

5.6                                 Use
of Data.  The provisions of this
Article V shall not preclude Millennium, its Affiliates, Authorized Personnel
and/or Millennium Product Corporate Partners from disclosing any Data, which
constitutes Confidential Information of Genaissance and which is licensed or
sublicensed to it under Section 2.1 (and such entities shall not be required to
obtain written consent from Genaissance for such use), where such disclosure is
(a) reasonably necessary for the development and commercialization of
Millennium Products, (b) limited to only the employees, consultants and
advisors of such entities who have a need-to-know such Data for the sole
purpose of developing and commercializing such Millennium Products, and (c)
subject to confidentiality obligations no less stringent than the
confidentiality obligations under this Agreement.

 

5.7                                 Publication.  Millennium, its Affiliates, Authorized
Personnel, Millennium Corporate Partners and/or Millennium Technology Consultants
(each a “Publishing Party”) shall have the right to publish or present any
information, data or results generated through the use of the Genaissance HAP
Technology, subject to the terms of this Section 5.7.  In the event a publication or presentation contains Confidential
Information of Genaissance, the Publishing Party shall furnish Genaissance with
a copy of any such proposed publication or presentation at least [**] days in
advance of the submission for publication or presentation for review by Genaissance.  Upon the expiration of such [**] day period,
the Publishing Party may proceed with submission for publication or
presentation; provided, however, that upon written notice by Genaissance during
such [**] day period, to the Publishing Party that such proposed publication or
presentation contains Confidential Information of Genaissance that Genaissance
does not want published or presented, the Publishing Party [**].

 

28

 

ARTICLE VI

TERM AND TERMINATION

 

6.1.                              Term.  Unless sooner terminated in accordance with
the terms of this Article VI, the term of the Agreement shall commence on the
Effective Date and, unless extended by the mutual agreement of the Parties,
shall continue until the end of the Initial Term or the Post Initial Term, if
any is elected by Millennium.  The term
of any commercial license granted to Millennium pursuant to Section 2.1(b)(ii)
shall remain in effect on a country-by-country basis until expiration of the
last-to-expire patent under the license, subject to the continued payment of
amounts, if any, owed to Genaissance.

 

6.2                                 Material
Breach.  Upon any material breach of
this Agreement by Genaissance or Millennium (in such capacity, the “Breaching
Party”), the other Party (in such capacity, the “Non-Breaching Party”) may
terminate this Agreement by [**] days’ written notice to the Breaching Party,
specifying the material breach.  The
termination becomes effective at the end of the [**] day period unless (i) the
Breaching Party cures such breach during such [**] day period, or (ii) if such
breach is not susceptible to cure within such [**] day period, the Breaching
Party is diligently pursuing a cure (unless such breach, by its nature, is
incurable, in which case the Agreement may be terminated immediately).  The Parties will use reasonable efforts to
work together to cure any breach.

 

6.3                                 Effect
of Expiration or Termination.  In
the event of the expiration of this Agreement or the termination of this
Agreement pursuant to Section 6.1 above, then:

 

(a) the licenses granted under
Section 2.1(a)(i) survive,

 

(b) the licenses granted under
Sections 2.1(a)(ii) and 2.1(b)(i) shall terminate unless extended under the
perpetual access rights granted pursuant to Section 2.1(f) in which case they
survive,

 

(c) the rights granted under
Sections 2.1(a)(iii), 2.1(a)(iv) and 2.1(a)(v) shall survive solely with
respect to the DecoGen
Informatics System and the HAP Database Schema,

 

(d) Sections 2.1(c)(i) and
2.1(c)(iii) shall survive and the rights granted under Section 2.1(c)(ii) shall
terminate unless extended under the perpetual access rights granted pursuant to
Section 2.1(f) in which case they survive;

 

(e) the options granted under
Section 2.1(d) shall terminate unless Millennium has obtained a perpetual
research license under Section 2.1(b)(i) pursuant to Section 2.1(f) in which
case Section 2.1(d) survives,

 

(f) the rights of first
negotiation granted under Section 2.2 shall survive,

 

(g) the non-asserts provided in
Section 2.3 shall  survive,

 

(h) the commercial license
granted to Millennium pursuant to Sections 2.1(b)(ii) shall survive,

 

29

 

(i) any license agreement
executed by the Parties pursuant to Section 2.1(d) shall survive in accordance
with its terms,

 

(j) any written amendment
executed by the Parties for Collaboration Activities pursuant to Section
2.1(h)(iv) shall survive in accordance with its terms,

 

(k) any agreement executed by
the Parties pursuant to Section 2.2 shall survive in accordance with its terms;
and

 

(l) Articles I, III, IV, V, VI,
VII, VIII, IX, X, and XI shall survive.

 

6.4                                 Effect
of Termination For Material Breach.

 

(a)                                  Termination
by Genaissance.  In the event of
termination of this Agreement by Genaissance pursuant to Section 6.3 above due
to material breach by Millennium, then (i) the licenses granted under Sections
2.1(a), 2.1(b) and 2.1(c) shall terminate, (ii) the options granted under
Section 2.1(d) shall terminate, (iii) the rights of first negotiation granted
under Section 2.2 shall survive, and (iv) the non-asserts provided in Section
2.3 shall survive.

 

(b)                                 Termination
by Millennium.  In the event of
termination of this Agreement by Millennium pursuant to Section 6.3 above due
to material breach by Genaissance, then (i) the licenses granted under Sections
2.1(a), 2.1(b) and 2.1(c) shall survive subject to the continued payment of any
undisputed amounts, if any, owed to Genaissance, (ii) the options granted under
Section 2.1(d) shall survive, (iii) the rights of first negotiation granted
under Section 2.2 shall terminate, and (iv) the non-asserts provided in Section
2.3 shall terminate.

 

6.5                                 Return
of Materials.  Upon termination of
the Agreement, and if Millennium has not elected extended maintenance rights
pursuant to Section 2.1(f), Millennium shall return to Genaissance all
proprietary information and material received in the course of the Agreement
including any unused IR Materials (which may, in lieu of return, be destroyed),
the HAP Database and the HAP Database portion of HAP Database Plus (but
excluding the DecoGen Informatics System and the HAP Database Schema) and shall
cease all uses of such proprietary information and material and the HAP
Database and HAP Database portion of HAP Database Plus.  Millennium may keep one full copy of all
such proprietary information and material for archival purposes.  Notwithstanding the preceding sentence, it
is expressly understood that while Millennium shall make commercially reasonable
efforts to remove electronic versions of the HAP Database, Millennium shall not
be required to purge any minor portions thereof from Millennium’s notebooks,
electronic files, records, and other mediums in which Millennium and/or its
Affiliates store results and analyses.

 

 

30

 

6.6                                 Termination of
Licenses to Affiliates and Millennium Corporate Partners.

 

(a)                                  Affiliates.  Unless otherwise approved by Genaissance, any license to an
Affiliate of Millennium shall terminate [**]months after such Affiliate ceases
to be an Affiliate as defined in Section 1.1 hereof.  Millennium will use commercially reasonable efforts to provide
Genaissance with written notice of such event within a reasonable period of
time.  Genaissance will, upon request of
such former-Affiliate, negotiate in good faith with any such former-Affiliate
to grant such former-Affiliate a license to use all or part of the Genaissance
HAP Technology on commercially reasonable terms.

 

(b)                                 Millennium Corporate Partners.  Unless otherwise approved by Genaissance,
any license or sublicense to any MillenniCum Product Corporate Partner pursuant
to Section 2.1(c) shall terminate [**] months after such Corporate Partner
ceases to be a Millennium Product Corporate Partner as defined in Section 1.39
hereof, provided, however, that
any such license or sublicense that covers a Genaissance HAP Marker that, as of the end of such
[**] month period, can be reasonably demonstrated to have a correlation with
(i) a response to a Therapeutic Product or (ii) risk or susceptibility for, the
presence of the progression of or the age of onset of any disease, shall
survive any such change in status of a Millennium Product Corporate Partner,
and any expiration or termination of this Agreement.

 

ARTICLE VII

ESCROW

 

7.1                                 Escrow
Agreement.  Genaissance and
Millennium agree to establish and maintain an escrow account with the Escrow
Agent for so long as Millennium and/or its Affiliates maintain a license to the
DecoGen Informatics System and HAP Database
Schema under Section 2.1(a) hereof. 
Such escrow account will contain a copy of all source code (inclusive of
any interpretive code), standard operating procedures and documentation
reasonably necessary to utilize, support and maintain the DecoGen Informatics System and HAP
Database Schema (collectively the “Deposit Materials”).  Within [**] days after the Effective Date,
the Parties and the Escrow Agent shall enter into an Escrow Agreement
substantially in the form of the agreement attached hereto as Exhibit D.  Upon execution, a true and accurate copy of
the Escrow Agreement shall be attached hereto as Exhibit E.

 

7.2                                 Updates
to Deposit Materials.  From time to
time during the Initial Term (or any longer period mutually agreed by the
Parties during which Genaissance is providing support and maintenance of the DecoGen Informatics System and HAP Database Schema), Genaissance shall
provide updates to the Deposit Materials to the Escrow Agent within [**] days
of any material change in the Deposit Material.

 

7.3                                 Release
of Deposit Materials.  In the event
of the occurrence of any Release Condition (as defined below), the Deposit
Materials in the escrow account shall be released to Millennium solely and
exclusively for use by Millennium pursuant to Section

 

31

 

7.4  below.  As used in this
Agreement, “Release Conditions” shall mean the existence of any one or more of
the following circumstances:

 

a.                                       [**]
the DecoGen Informatics System
and HAP Database Schema
[**]pursuant to Section 4.3[**]set forth in the Agreement;

 

b.                                      The
[**]or upon an [**] which is [**];

 

c.                                       The
[**]; or

 

d.                                      [**]
Genaissance [**] for the purpose of [**].

 

7.4                                 Self-Help
License.  Genaissance shall grant,
and hereby grants, to Millennium, its Affiliates, Authorized Personnel and
Technology Consultants, a worldwide, perpetual, non-exclusive, royalty-free
license, without a right to grant sublicenses, under Genaissance Patent Rights
and Genaissance Know-how to use the Deposit Materials, to use, copy, create
derivative works of and modify the intellectual property embodied in the
Deposit Materials solely to utilize, support and maintain the DecoGen Informatics System and HAP Database Schema in the event of a
release of the Deposit Materials pursuant to Section 7.3 above (the “Self-Help
License”).  Millennium shall not
practice the Self-Help License unless and until the Deposit Materials are
released pursuant to Section 7.3 above.

 

7.5                                 Change
in Escrow Agent.  In the event of
any change to the Escrow Agent, the terms and conditions of the escrow
agreement with any successor Escrow Agent shall contain terms and conditions no
less favorable to Millennium as the terms and conditions in the initial escrow
agreement entered into by Genaissance pursuant to this Agreement including, but
not limited to, release of the Deposit Materials to Millennium upon occurrence
of any Release Condition. Genaissance shall promptly notify Millennium in
writing of any change to the Escrow Agent and, after any change to the escrow
agent, shall promptly furnish a copy of the new escrow agreement to Millennium.

 

7.6                                 Escrow
Fees.  All fees related to the
escrow agreement and Millennium’s participation as a beneficiary under the
escrow agreement shall be borne [**].

 

7.7                                 Termination
of Escrow.  Millennium may notify
Genaissance in writing of Millennium’s desire to terminate the Escrow
Agreement, in which case the obligations set forth in this Article 7 shall
terminate, provided however that if a Release Condition has occurred prior to
such notice, the provisions of Section 7.3 shall remain in effect.

 

32

 

ARTICLE VIII

REPRESENTATIONS
AND WARRANTIES

 

8.1                                 Representation
of Authority; Consents.  Millennium
and Genaissance each represents and warrants to the other Party that as of the
Effective Date it has full right, power and authority to enter into this
Agreement, this Agreement has been duly executed by such Party and constitutes
a legal, valid and binding obligation of such Party, enforceable in accordance
with its terms.

 

8.2                                 No
Conflict.  Each Party represents to
the other Party that the execution and delivery of this Agreement and the
performance of such Party’s obligations hereunder (a) do not conflict with or
violate such Party’s corporate charter and bylaws or any requirement of
applicable laws of regulations and (b) do not and shall not conflict with,
violate or breach or constitute a default or require any consent under any
contractual obligation of such Party.

 

8.3                                 Knowledge
of Pending or Threatened Litigation. 
Each Party represents and warrants to the other Party that there is no
claim, investigation, suit, action or proceeding pending or, to the knowledge
of such Party, expressly threatened, against such Party before or by any
governmental entity or arbitrator that, individually or in the aggregate, could
reasonably be expected to (a) materially impair the ability of such Party to
perform any obligation under this Agreement or (b) prevent or materially delay
or alter the consummation of any or all of the transactions contemplated
hereby.

 

8.4                                 Employee
and Consultant Obligations.  Each
Party represents and warrants that all of its employees, officers, and
consultants that are supporting the performance of such Party’s obligations
under this Agreement shall have executed agreements or have existing
obligations under law requiring assignment to such Party of all inventions made
during the course of and as the result of their association with such Party and
obligating the individual to maintain as confidential such Party’s Confidential
Information as well as confidential information of the other Party or any Third
Party which such Party may receive, to the extent required to support such
Party’s obligations under this Agreement.

 

8.5                                 Millennium
Representations.  Millennium
covenants that Millennium and its Affiliates shall comply in all respects with
all applicable state and federal laws and regulations (including HIPAA) and any
foreign equivalents thereof to the extent necessary for Millennium to comply
with its obligations hereunder and for Genaissance and its Affiliates to have
the rights and benefits contemplated by this Agreement.

 

8.6                                 Genaissance
Representations.  Genaissance
represents and warrants that:

 

(a)           the Genaissance HAP Technology
and any updates thereto will perform in accordance with the specifications set
forth in Exhibit C;

 

(b)         Genaissance owns or
Controls the Genaissance HAP Technology (including without
limitation, any Third Party software embedded or included with the Genaissance HAP Technology),
and that Genaissance has the right to grant the licenses and sublicenses set
forth herein, except to the extent that the HAP

 

33

 

Technology
incorporates or requires the use of commercially available operating system
software or hardware as described in Exhibit C;

 

(c) to the
best of Genaissance’s knowledge, there are no Third Party restrictions and
payments that will be imposed on Millennium, its Affiliates, any Authorized
Personnel, Millennium Corporate Partners or Millennium Technology Consultants
as a result of their use of the HAP Technology under this Agreement, provided, however, that Genaissance makes
no such representation or warranty with respect to use of any commercially
available operating system software or hardware as described in Exhibit C or
any non-in-silico
use of data in the HAP Database;

 

(d) (i)
Genaissance and its Affiliates’ privacy and informed consent processes and
procedures provide Millennium, its Affiliates, Millennium Corporate Partners,
Millennium Technology Consultants and Authorized Personnel with the right to
freely use all data in the HAP Database, and (ii) Genaissance and its
Affiliates shall comply in all respects with all applicable state and federal
laws and regulations (including HIPAA) and any foreign equivalents thereof to
the extent necessary for Genaissance to comply with its obligations hereunder
and for Millennium and its Affiliates to use the Genaissance HAP
Technology, fully enjoy the licenses granted hereunder and have the rights and
benefits contemplated by this Agreement.

 

ARTICLE
IX

INDEMNIFICATION

 

9.1                                 Genaissance’s
Obligations.  Genaissance agrees to
defend Millennium and its Affiliates, at Genaissance’s cost and expense, and
will indemnify and hold Millennium and its Affiliates and their respective
directors, officers, employees and agents (the “Millennium Indemnified
Parties”) harmless from and against any losses, costs, damages, fees or
expenses arising out of any Third Party claim relating to (i) any breach by
Genaissance of any of its representations, confidentiality or intellectual
property obligations, or warranties pursuant to this Agreement or (ii) any
personal injury resulting from the development, manufacture, use, sale or other
disposition of any product or service offered by Genaissance and/or its
Affiliates and licensees to the extent such injury is alleged to be the result
of the practice or use by Genaissance and/or its Affiliates of any Millennium
patent rights or know-how licensed by Millennium to Genaissance and/or its
Affiliates under this Agreement.  In the
event of any such claim against the Millennium Indemnified Parties by any Third
Party, Millennium shall promptly notify Genaissance in writing of the claim and
Genaissance shall manage and control, at its sole expense, the defense of the
claim and its settlement.  The
Millennium Indemnified Parties shall cooperate with Genaissance and may, at
their option and expense, be represented in any such action or proceeding.  Genaissance shall not be liable for any
litigation costs or expenses incurred by the Millennium Indemnified Parties
without Genaissance’s prior written authorization.  In addition, Genaissance shall not be responsible for the indemnification
of any Millennium Indemnified Party arising from any

 

34

 

negligent or intentional acts
by such party, or any claims compromised or settled without its prior written
consent.

 

9.2                                 Millennium’s
Obligations.  Millennium agrees to
defend Genaissance and its Affiliates, at Millennium’s cost and expense, and
will indemnify and hold Genaissance and its Affiliates and their respective
directors, officers, employees and agents (the “Genaissance Indemnified
Parties”) harmless from and against any losses, costs, damages, fees or
expenses arising out of any Third Party claim relating to (i) any breach
by Millennium of any of its representations, confidentiality or intellectual
property obligations, or warranties pursuant to this Agreement, or (ii)  any personal injury resulting from the
development, manufacture, use, sale or other disposition of any product or
service offered by Millennium and/or its Affiliates and licensees to the extent
such injury is alleged to be the result of the use by Millennium and/or its
Affiliates and licensees of the HAPTM Technology.  In the event of any such claim against the
Genaissance Indemnified Parties by any Third Party, Genaissance shall promptly
notify Millennium in writing of the claim and Millennium shall manage and
control, at its sole expense, the defense of the claim and its settlement.  The Genaissance Indemnified Parties shall
cooperate with Millennium and may, at their option and expense, be represented
in any such action or proceeding. 
Millennium shall not be liable for any litigation costs or expenses incurred
by the Genaissance Indemnified Parties without Millennium’s prior written
authorization.  In addition, Millennium
shall not be responsible for the indemnification of any Genaissance Indemnified
Party arising from any negligent or intentional acts by such party, or any
claims compromised or settled without its prior written consent.

 

ARTICLE X

DISPUTE
RESOLUTION

 

10.1                           Referral
of Unresolved Matters to Executive Officers.  As used herein, the term “Executive Officers” shall mean the
Chief Executive Officer (CEO) of Genaissance, or a delegate of such CEO, and
the Chief Operating Officer (COO) of Millennium, or a delegate of such COO,
provided that such delegate of Genaissance’s CEO or Millennium’s COO is at
least a Vice President or higher.  In
the event the Parties are unable to resolve a dispute arising under this
Agreement within [**] days, the matter shall be referred to the Executive
Officers to be resolved by negotiation in good faith as soon as is practicable
but in no event later than [**] days after referral.  Such resolution, if any, of a referred issue by the Executive
Officers shall be final and binding on the Parties.  In the event the Executive Officers are unable to resolve a
dispute with such [**] day period, then Parties may assert any remedy available
at law or in equity to enforce its rights under this Agreement.

 

10.2                           Independent
Experts.  Each Executive Officer
shall have the right to engage, at its sole discretion and expense, the
services of any number of independent experts in the field in question (the
individual(s) so engaged by each Executive Officer to be engaged under mutually
agreed obligations of confidentiality) to assist the Executive Officer in
making a determination on the unresolved matter, and each Executive Officer

 

35

 

shall be obligated to consider
in good faith the analyses and opinions of any such independent experts engaged
by either of them in making a determination.

 

10.3                           Injunctive
Relief.  Notwithstanding anything
contained in this Article X, any Party may seek injunctive relief at law or
equity with respect to any matter that gives rise to a substantial threat of
imminent harm to such Party.

 

ARTICLE XI

MISCELLANEOUS

 

11.1                           Governing
Law.  This Agreement shall be construed
and the respective rights of the Parties determined according to the
substantive laws of the Commonwealth of Massachusetts notwithstanding the
provisions governing conflict of laws under such Massachusetts law to the
contrary, except matters of intellectual property law which shall be determined
in accordance with the intellectual property laws relevant to the intellectual
property in question; and provided, further, that the U.N.
Convention on the International Sale of Goods shall not apply.  English shall be the governing language for
the construction and interpretation of this Agreement.

 

11.2                           Assignment.  Neither Party may assign or otherwise
transfer any of its rights and interests, nor delegate any of its respective
obligations hereunder, without the prior written consent of the other Party,
which consent shall not be unreasonably withheld or delayed; provided, however,
that either Party may, without such consent, assign its rights and interest
hereunder, effective upon written notice to the other Party, to its Affiliate
or in connection with the transfer or sale of all or substantially all of the
portion of its business to which this Agreement relates, or in the event of its
merger or consolidation or change in control or similar transaction.  Notwithstanding the preceding sentence, any
assignment of this Agreement by Genaissance to [**] or any successor thereof
shall require Millennium’s prior written consent which consent shall be at
Millennium’s sole discretion.  This
Agreement shall be binding upon and inure to the benefit of the successors and
permitted assigns of the Parties.  Any
attempted assignment not in accordance with this Section 11.2 shall be void.

 

11.3                           Entire
Agreement.  This Agreement, and the
Exhibits referred to in this Agreement constitute the entire agreement between
the Parties with respect to the subject matter hereof, and supersede all
previous arrangements with respect to the subject matter hereof, whether
written or oral, with the exception of the Confidential Disclosure Agreements
dated [**], and [**], [**] between the Parties which shall govern disclosures
prior to this Agreement.

 

11.4                           Amendments.  Any amendment or modification to this
Agreement shall be made in writing signed by both Parties.

 

11.5                           Notices.

 

36

 

(a)                                  Notices
to Genaissance shall be addressed to:

 

Genaissance
Pharmaceuticals, Inc.

Five Science Park

New Haven, CT 06511

Attention:  Chief Executive Officer

 

(b)                                 Notices
to Millennium shall be addressed to:

 

Millennium
Pharmaceuticals, Inc.

75 Sidney Street

Cambridge,
Massachusetts 02139

Attention:  Chief Executive Officer

 

With a copy
to:

 

Millennium
Pharmaceuticals, Inc.

75 Sidney Street

Cambridge, Massachusetts 02139

Attention General Counsel, Legal Department

 

Either Party may change its
address to which notices shall be sent by giving notice to the other Party in
the manner herein provided.  Any notice
required or provided for by the terms of this Agreement shall be in writing and
shall be (a) sent by registered or certified mail, return receipt requested,
postage prepaid, (b) sent via a reputable overnight courier service, or (c)
sent by facsimile transmission, in each case properly addressed in accordance
with the paragraph above.  The effective
date of notice shall be the actual date of receipt by the Party receiving the
same.

 

11.6                           Force
Majeure.  No failure or omission by
either Party in the performance of any obligation of this Agreement shall be
deemed a breach of this Agreement or create any liability if the same shall
arise from any cause or causes beyond the reasonable control of such Party,
including, but not limited to, the following: 
acts of gods; acts or omissions of any government; any rules,
regulations or orders issued by any governmental authority or by any officer,
department, agency or instrumentality thereof; fire; storm; flood; earthquake;
accident; war; terrorist act; rebellion; insurrection; riot; and invasion; provided
that such failure or omission resulting from one of the above causes is
cured as soon as is practicable after the occurrence of one or more of the
above mentioned causes.

 

11.7                           Compliance
with Export Regulations.  Each Party
shall comply with all applicable U.S. and other applicable export laws and
regulations, including without limitation, the Export Administration
Regulations and the International Traffic in Arms Regulations.

 

37

 

11.8                           Public
Announcements.  On the Effective
Date or soon after, the Parties may issue one or more press release(s).  Any announcements or similar publicity with
respect to the execution of this Agreement shall be agreed upon between the
Parties in advance of such announcement. 
The Parties agree that any such announcement will not contain confidential
business or technical information and, if disclosure of confidential business
or technical information is required by law or regulation, will make
commercially reasonable efforts to minimize such disclosure and obtain
confidential treatment for any such information which is disclosed to a
governmental agency or group.  Each
Party agrees to provide to the other Party a copy of any public announcement as
soon as reasonably practicable under the circumstances prior to its scheduled
release.  Except under extraordinary
circumstances, each Party shall provide the other with an advance copy of any
press release at least [**] business days prior to the scheduled
disclosure.  Each Party shall have the
right to expeditiously review and recommend changes to any announcement
regarding this Agreement or the subject matter of this Agreement.  Except as otherwise required by law, the
Party whose press release has been reviewed shall remove any information the
reviewing Party reasonably deems to be inappropriate for disclosure.  The contents of any such announcement or
similar publicity, which has been reviewed and approved by the reviewing Party,
can be re-released by either Party without a requirement for re-approval.  Furthermore, each Party shall give the other
Party a reasonable opportunity to review all filings with the United States
Securities and Exchange Commission describing the terms of this Agreement prior
to submission of such filings, and shall give due consideration to any
reasonable comments by the non-filing Party relating to such filing, including
without limitation the provisions of this Agreement for which confidential
treatment should be sought.

 

11.9                           Independent
Contractors.  It is understood and
agreed that the relationship between the Parties is that of independent
contractors and that nothing in this Agreement shall be construed as
authorization for either Millennium or Genaissance to act as agent for the
other.

 

11.10                     Section
365(n) of the Bankruptcy Code.  All
rights and licenses granted under or pursuant to any section of this Agreement
are, and shall otherwise be, deemed to be, for purposes of Section 365(n) of
the Bankruptcy Code, licenses of rights to “intellectual property” as defined
under Section 101(35A) of the Bankruptcy Code. 
The Parties shall retain and may fully exercise all of their respective
rights and elections under the Bankruptcy Code

 

11.11                     No Strict
Construction.  This Agreement has
been prepared jointly and shall not be strictly construed against either Party.

 

11.12                     Headings.
 The captions or headings of the
sections or other subdivisions hereof are inserted only as a matter of
convenience or for reference and shall have no effect on the meaning of the
provisions hereof.

 

38

 

11.13                     No Implied
Waivers; Rights Cumulative.  No
failure on the part of Millennium or Genaissance to exercise, and no delay in
exercising, any right, power, remedy or privilege under this Agreement, or
provided by statute or at law or in equity or otherwise, shall impair,
prejudice or constitute a waiver of any such right, power, remedy or privilege
or be construed as a waiver of any breach of this Agreement or as an
acquiescence therein, nor shall any single or partial exercise of any such
right, power, remedy or privilege preclude any other or further exercise
thereof or the exercise of any other right, power, remedy or privilege.

 

11.14                     Execution
in Counterparts.  This Agreement may
be executed in counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original, and all of which counterparts,
taken together, shall constitute one and the same instrument.

 

[Remainder of page intentionally left blank.]

 

39

 

IN WITNESS WHEREOF,
the Parties have executed this Agreement as of the date first set forth above.

 

 

	
   

  	
  MILLENNIUM
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  [Illegible]

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GENAISSANCE
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Krishnan
  Nandabalan

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President, Business

  Development

  	
   

  

 

40

 

Exhibit A

 

The HAPTM
Database shall consist of Genaissance’s proprietary information and publicly
available information.  The genes
selected for HAPTM Marker discovery include the vast array of drug targets
such as receptors, signal transduction proteins, metabolizing enzymes and
immunomodulators.  In addition,
Genaissance currently adds annotations from publicly available databases, such
as HGVBase and dbSNP.  An individual
investigator can quickly relate Genaissance’s proprietary information to
existing public domain data and place the information in a biological context
that is useful for discovery and pharmacogenetic applications.

 

The current procedure
for discovering HAPM Markers for a Gene is to sequence, from the
Index Repository, ninety-three (93) individual samples of human genomic DNA,
one sample of chimpanzee genomic DNA and one sample of gorilla genomic
DNA.  The genomic regions of each Gene,
which are targeted for sequencing, are as follows.

 

(i) “Exons”
shall mean the genomic DNA segments of a Gene whose sequence information is
translated into the protein product of that Gene.  The goal is to obtain sequence information for all Exons of a
Gene.

 

(ii)
“Exon/Intron Junction” shall mean the junctions between the Exons and the
Introns in genomic DNA.  Beginning with
the initiation codon at one end of a Gene and ending with the termination codon
at the other end of a Gene, the goal is to obtain sequence information for each
Exon/Intron Junction within this genomic region.

 

(iii)
“Introns” shall mean the genomic DNA segments of a Gene, which are located
between Exons.  Beginning with the
initiation codon at one end of a Gene and ending with the termination codon at
the other end of a Gene, the goal is to obtain a minimum of ten (10) to twenty
(20) bases and a maximum of one hundred (100) bases of sequence information
from the Exon/Intron Junction into the Intron for every Intron within this genomic
region.

 

(iv)
“Promoter” shall mean the genomic region that is immediately upstream of the
transcription start site of the Gene. 
The goal is to obtain sequence information for up to one (1) thousand
bases of the Promoter.

 

(v)
“Three-Prime Untranslated Region” shall mean the genomic region immediately
downstream from the termination codon of a Gene.  The goal is to obtain sequence information for at least one
hundred (100) bases of the Three-Prime Untranslated Region downstream of the
termination codon.

 

Specific
genomic sequence information is required to meet the goals outlined in (i)
through (v) above.  If genomic sequence
information is available for a majority of these regions, even if the available
genomic sequence information is not sufficient to meet all of the goals in (i)
through (v) above, a Gene will still be queued for HAPTM Marker
discovery.

 

41

 

Once a Gene is
completely sequenced, HAPTM Markers will be
constructed for that Gene and placed into the HAPTM
Database.  A Gene shall be considered
completely sequenced if sequence information is obtained for at least [**] of
the regions targeted for sequencing.  A
specific region targeted for sequencing within a Gene shall be considered
completely sequenced if sequence information is obtained for at least [**].

 

If a Gene is
not completely sequenced after each fragment targeted for sequencing has been
attempted once, each of the failed fragments will be resequenced using
redesigned amplification/sequencing primers. 
However, the presence of runs of guanine and cytosine, secondary
structure or errors in publicly available sequence information may prevent the
generation of sufficient sequence information for that Gene to be considered
completely sequenced.  Thus, if the Gene
does not meet the completely sequenced criteria after the above resequencing
step, [**].

 

Genaissance
shall use commercially reasonable efforts to incorporate into the HAP
Database other information about Genes, including: (i) genomic structure; (ii)
cDNA and protein sequences; (iii) publicly available Polymorphisms and
Haplotype Markers from high through-put databases such as dbSNP; and (iv)
location of these publicly available Polymorphisms within the genomic structure
and also in the messenger RNA if these Polymorphisms cause coding changes.

 

42

 

EXHIBIT B

 

Error Classification & Response Time

 

Genaissance shall respond to
Millennium’s inquiries regarding errors within [**] of receipt of Millennium’s
inquiry and to use best efforts to correct errors with a level of effort
(including dedication of more senior level personnel) commensurate with
Millennium’s classification of the error as follows:

 

	
  Severity
  Level

  	
   

  	
  Criteria

  	
   

  	
  Required Genaissance Response

  
	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  

 

On-Site
Support: Notwithstanding anything to the contrary
contained herein, [**].

 

43

 

Exhibit
C

Specifications

 

Genaissance HAP  Technology
Technical Specification

 

1                       The
key components of the Genaissance HAP Technology are the:

•                                       DecoGen
Informatics System (defined in Section 1.9 of the Agreement)

•                                       HAP
Database (defined in Section 1.22 of the Agreement), and

•                                       HAP
Database Schema (defined in Section 1.24 of the Agreement)

 

2                       Detailed
Technical Specifications

 

2.1                               HAP DATABASE

 

Installation and
Operating Requirements

 

The HAPTM Database
is an Oracle database which requires the following minimum configuration:

 

2.1.1                        Database
Configuration

Software:                                              Oracle
[**] Edition.

 

2.1.2                        Hardware
Requirements

	
  Server:

  	
   

  	
  [**]

  
	
  Memory:

  	
   

  	
  [**] GB,
  depending on number of users

  
	
  SWAP Space:

  	
   

  	
  [**]

  
	
  CD-ROM
  Device:

  	
   

  	
  [**]

  
	
  CPU:

  	
   

  	
  [**]

  
	
  Tape Device:

  	
   

  	
  [**]

  

 

2.1.3                        Disk
Space Requirements:

	
  Oracle
  Software:

  	
  ~ 

  	
  [**]GB
  ([**]Edition)

  
	
  Database:

  	
   

  	
  [**]

  

 

2.1.4                        Operating
System Software Requirements

Operating System:                    [**].

 

2.2                               THE DECOGEN INFORMATICS SYSTEM

 

Cross-platform
application, built on top of the HAP Database.  The client application resides on a shared drive and is invoked
by running a batch initialization file from the client machine.

 

44

 

Installation and
Operating Requirements

 

2.2.1                        DecoGen® Client

Minimum
recommended client configuration:

CPU: [**]

Memory: [**]

Hard disk: [**]

Operating System: Window [**]

Java Runtime version: [**]

 

2.2.2                        SAS Server

 

•                  SAS Software 8.2
release on NT or Windows 2000 server (Service Pack 2)

•                  [**] memory[**]
Drives for OS and Data

•                  [**]CD-Rom

•                  SAS Software 8.2
required components must include SAS/BASE, SAS/STAT, SAS/CONNECT, SAS/IntrNet,
and SAS/Graph.

 

Upon
Millennium’s written request, Genaissance will use commercially reasonable
efforts to [**].

 

45

 

DecoGen Informatics
System

Features, Capabilities and Performance Requirements

 

1.              OVERVIEW

 

Genaissance
Pharmaceuticals provides software tools for the storage and analysis of
clinical and genetic information.  The
information that is required to associate genetic and clinical data are the
polymorphisms, HAP Markers, and the information that is specific to the
clinical cohort under investigation, namely the individual to HAP
Marker assignments and the clinical responses of each individual.

 

2.              DECOGEN
DATAMANAGER SOFTWARE

 

The DecoGen DataManager Software functions as
a data entry tool, and as a browser that provides tools for viewing and mining
genomic features.  The following types
of data can be entered and are available for browsing, mining and export from
the DataManager program:

•                  New or
proprietary Polymorphisms can be mapped to the genomic structure stored in the HAP
Database

•                  HAP
Locus and Markers

•                  Clinical cohort
organization

•                  Individual
genotype and HAP Marker assignments

•                  Functional
information about the genes and markers

 

3.              DECOGEN BROWSER SOFTWARE

 

The DecoGen Browser program functions as a
browser, and as a tool for statistical analysis of clinical and genetic
information.

•                  Clinical
responses can be imported for the clinical cohort

•                  Genomic
information can be browsed and exported

•                  Linkage
Disequilibrium analyses can be performed

•                  Minimal SNP
selection can be performed

•                  Haplotypes can
be clustered

•                  Phylogenetic
studies can be performed

•                  Correlations
between either full or sub-HAPTM Markers and clinical responses can
be identified

 

4.              SYSTEM PERFORMANCE

 

The system
will demonstrate the ability to, at a minimum, perform the operations provided
in the user manuals listed below:

•                  DecoGen® DataManager Mini Reference
Version 4 – dated February 1, 2002.

 

46

 

•                  DecoGen® Informatics System Users Manual
Version 4.1, Revision 3.0 – dated June 1, 2002

 

In addition,
system performance will be measured on its ability to demonstrate the
following:

 

a.               External
data import and merging into the HAP Database Plus

i.         Genaissance will initially load the gene
structure for genes that Millennium wants to import into the HAP Database Plus.

ii.      The existence and integrity of all information
concerning these genes will persist through Genaissance scheduled HAP Database
updates.

 

b.              Adding
raw data (SNPs, alleles, positions, genotypes in discovery panel) and derived
data haplotypes, HAP Markers, calculated from raw data) via the DataManager
software for those genes whose structures have been loaded into the HAP
Database Plus.

 

c.               The
software allows adding/importing Millennium’s own set of cohorts.

 

d.              Genaissance
will provide Millennium with the capability to create the gene structure
internally by [**].

 

e.               SAS
integration – The current system provides integration with SAS on a Windows
platform, through a server license. Genaissance will use commercially
reasonable efforts to [**].

 

f.                 General
performance requirements

 

i.         It is expected that the system, when installed
with the minimum configuration as specified in the Technical Specification,
will perform user functions within response parameters reasonably acceptable to
Millennium.

ii.      Further expected that the system will perform
operations without database corruption or loss of database integrity.

 

In the event of a corruption or
loss of integrity, it is expected that procedures and tools exist, operate
correctly and have been delivered to Millennium to permit recovery to the point
of failure within a period of time reasonably acceptable to Millennium.

 

47

 

Exhibit D

Form of
Escrow Agreement

 

	
  Account
  Number

  	
   

  	
   

  

 

This agreement (“Agreement”) is
effective           , 2003
among DSI Technology Escrow Services, Inc. (“DSI”), Genaissance
Pharmaceuticals, Inc., a corporation organized and existing under the laws of
the State of Delaware and having its principal office at Five Science Park, New
Haven, Connecticut 06511 (“Depositor”), and Millennium Pharmaceuticals, Inc., a
corporation organized and existing under the laws of the State of Delaware and
having its principal office at 75 Sidney Street, Cambridge, Massachusetts 02139
(“Preferred Beneficiary”), who collectively may be referred to in this
Agreement as the parties (“Parties”).

 

A.                                   Depositor
and Preferred Beneficiary have entered into a separate agreement regarding a
certain proprietary database and informatics system of Depositor (referred to
in this Agreement as the “License Agreement”).

 

B.                                     Depositor
desires to avoid disclosure of its proprietary technology except under certain
limited circumstances.

 

C.                                     The
availability of the proprietary technology of Depositor is critical to Preferred
Beneficiary in the conduct of its business and, therefore, Preferred
Beneficiary needs access to the proprietary technology under certain limited
circumstances.

 

D.                                    Depositor
and Preferred Beneficiary desire to establish an escrow with DSI to provide for
the retention, administration and controlled access of certain proprietary
technology materials of Depositor.

 

E.                                      The
parties desire this Agreement to be supplementary to the License Agreement
pursuant to 11 United States Code, Section 365(n).

 

ARTICLE 1  — 
DEPOSITS

 

1.1                                 Obligation
to Make Deposit.  Upon the signing
of this Agreement by the Parties, Depositor shall deliver to DSI the Deposit
Materials (as defined in Section 7.1 of the License Agreement) required to be
deposited pursuant to Section 7 of the License Agreement.

 

1.2                                 Identification
of Tangible Media.  Prior to the
delivery of the Deposit Materials to DSI, Depositor shall conspicuously label
for identification each document, magnetic tape, disk, or other tangible media
upon which the Deposit Materials are written or stored.  Additionally, Depositor shall complete
Attachment A to this Agreement by listing each such tangible media by the item
label description, the type of media and the quantity.  Attachment A shall be signed by Depositor and
delivered to DSI with the Deposit Materials. 
Unless and until Depositor makes the initial deposit with DSI, DSI

 

48

 

shall have no obligation with
respect to this Agreement, except the obligation to notify the Parties
regarding the status of the account as required in Section 2.2 below.

 

1.3                                 Deposit
Inspection.  When DSI receives the
Deposit Materials and the Attachment A, DSI will conduct a deposit inspection
by visually matching the labeling of the tangible media containing the Deposit
Materials to the item descriptions and quantity listed on the Attachment A.

 

1.4                                 Acceptance
of Deposit.  At completion of the
deposit inspection, if DSI determines that the labeling of the tangible media
matches the item descriptions and quantity on Attachment A, DSI will date and
sign Attachment A and mail a copy thereof to Depositor and Preferred
Beneficiary.  If DSI determines that the
labeling does not match the item descriptions or quantity on Attachment A, DSI
will (a) note the discrepancies in writing on Attachment A; (b) date and sign
Attachment A with the exceptions noted; and (c) mail a copy of Attachment A to
Depositor and Preferred Beneficiary. 
DSI’s acceptance of the deposit occurs upon the signing of Attachment A
by DSI.  Delivery of the signed
Attachment A to Preferred Beneficiary is Preferred Beneficiary’s notice that
the Deposit Materials have been received and accepted by DSI.

 

1.5                                 Depositor’s
Representations.  With respect to
the Deposit Materials and each update to the Deposit Materials, Depositor
represents as follows:

 

(a)                                  Depositor
lawfully possesses all of the Deposit Materials deposited with DSI;

 

(b)                                 With
respect to all of the Deposit Materials, Depositor has the right and authority
to grant to DSI and Preferred Beneficiary the rights as provided in this
Agreement;

 

(c)                                  The
Deposit Materials are not subject to any lien or other encumbrance;

 

(d)                                 The
Deposit Materials consist of the proprietary information identified in Section
7.1 of the License Agreement; and

 

(e)                                  The
Deposit Materials are readable and useable in their current form or, if any
portion of the Deposit Materials is encrypted, the decryption tools and
decryption keys have also been deposited.

 

1.6                                 Deposit
Updates.  Unless otherwise provided
by the License Agreement, Depositor shall update the Deposit Materials within
[**] of any material change in the Deposit Material.  Such updates will be added to the existing deposit.  All deposit updates shall be listed on a new
Attachment A and the new Attachment A shall be signed by Depositor.  Each Attachment A will be held and
maintained separately within the escrow account.  An independent record will be created which will document the
activity for each Attachment A. The processing of all deposit updates shall be
in

 

49

 

accordance with Sections 1.2
through 1.5 above.  All references in
this Agreement to the Deposit Materials shall include the initial Deposit
Materials and any updates.

 

1.7                                 Removal
of Deposit Materials.  The Deposit
Materials may be removed and/or exchanged only on written instructions signed
by Depositor and Preferred Beneficiary, or as otherwise provided in this
Agreement.

 

ARTICLE 2  — CONFIDENTIALITY AND RECORD KEEPING

 

2.1                                 Confidentiality.  DSI shall maintain the Deposit Materials in
a secure, environmentally safe, locked facility which is accessible only to
authorized representatives of DSI.  DSI
shall have the obligation to reasonably protect the confidentiality of the
Deposit Materials.  Except as provided
in this Agreement, DSI shall not disclose, transfer, make available, or use the
Deposit Materials.  DSI shall not
disclose the content of this Agreement to any third party.  If DSI receives a subpoena or any other
order from a court or other judicial tribunal pertaining to the disclosure or
release of the Deposit Materials, DSI will immediately notify the Parties to
this Agreement unless prohibited by law. 
It shall be the responsibility of Depositor and/or Preferred Beneficiary
to challenge any such order; provided, however, that DSI does not waive its
rights to present its position with respect to any such order.  DSI will not be required to disobey any
order from a court or other judicial tribunal. (See Section 7.5 below for notices
of requested orders.)

 

2.2                                 Status
Reports.  DSI will issue to
Depositor and Preferred Beneficiary a report profiling the account history at
least semi-annually. DSI may provide copies of the account history pertaining
to this Agreement upon the request of any party to this Agreement.

 

2.3                                 Audit
Rights.  During the term of this
Agreement, Depositor and Preferred Beneficiary shall each have the right to
inspect the written records of DSI pertaining to this Agreement. Any inspection
shall be held during normal business hours and following reasonable prior
notice.

 

ARTICLE 3  — 
GRANT OF RIGHTS TO DSI

 

3.1                                 Title
to Media.  Depositor hereby
transfers to DSI the title to the media upon which the proprietary technology
and materials are written or stored. However, this transfer does not include
the ownership of the proprietary technology and materials contained on the
media such as any copyright, trade secret, patent or other intellectual
property rights.

 

3.2                                 Right
to Make Copies.  DSI shall have the
right to make copies of the Deposit Materials as reasonably necessary to
perform this Agreement.  DSI shall copy
all copyright, nondisclosure, and other proprietary notices and titles
contained on the Deposit Materials onto any copies made by DSI.  With all Deposit Materials submitted to DSI,
Depositor shall provide any and all instructions as may be necessary to
duplicate the Deposit Materials including but not limited to the hardware
and/or software needed.

 

50

 

3.3                                 Right
to Transfer Upon Release.  Depositor
hereby grants to DSI the right to transfer Deposit Materials to Preferred
Beneficiary upon any release of the Deposit Materials for use by Preferred
Beneficiary in accordance with Section 4.5. 
Except upon such a release or as otherwise provided in this Agreement,
DSI shall not transfer the Deposit Materials.

 

ARTICLE 4  — RELEASE OF DEPOSIT

 

4.1                                 Release
Conditions.  As used in this
Agreement, “Release Conditions” shall mean the existence of any one or more of
the following circumstances:

 

a.                                       [**]
the Genaissance HAP Technology (as defined in the
License Agreement) in accordance with the License Agreement[**]

 

b.                                      The
[**]or upon an [**]which is [**]

 

c.                                       The
[**] or

 

d.                                      [**]
Depositor [**] for the purpose of [**]

 

4.2                                 Filing
for Release.  If Preferred
Beneficiary believes in good faith that a Release Condition has occurred,
Preferred Beneficiary may provide to DSI written notice of the occurrence of
the Release Condition and a request for the release of the Deposit Materials.  Upon receipt of such notice, DSI shall
provide a copy of the notice to Depositor by commercial express mail.

 

4.3                                 Contrary
Instructions.  From the date DSI
mails the notice requesting release of the Deposit Materials, Depositor shall
have [**] days to deliver to DSI contrary instructions (“Contrary
Instructions”).  Contrary Instructions
shall mean the written representation by Depositor that a Release Condition has
not occurred or has been cured.  Upon
receipt of Contrary Instructions, DSI shall send a copy to Preferred
Beneficiary by commercial express mail. 
Additionally, DSI shall notify both Depositor and Preferred Beneficiary
that there is a dispute to be resolved pursuant to Section 7.3 of this Agreement.  Subject to Section 5.2 of this Agreement,
DSI will continue to store the Deposit Materials without release pending (a)
joint instructions from Depositor and Preferred Beneficiary; (b) dispute
resolution pursuant to Section 7.3; or (c) order of a court.

 

4.4                                 Release
of Deposit.  If DSI does not receive
Contrary Instructions from the Depositor, DSI is authorized to release the
Deposit Materials to the Preferred Beneficiary.  However, DSI is entitled to receive any fees due DSI before
making the release.  Any copying expense
in excess of $300 will be chargeable to Preferred Beneficiary.  This Agreement will terminate upon the
release of the Deposit Materials held by DSI.

 

51

 

4.5                                 Right
to Use Following Release.  Unless
otherwise agreed by Depositor and Preferred Beneficiary, upon release of the
Deposit Materials in accordance with this Article 4, Preferred Beneficiary
shall have the right to use the Deposit Materials for the sole purpose set
forth in Section 7.4 of the License Agreement. 
Preferred Beneficiary shall be obligated to maintain the confidentiality
of the released Deposit Materials in accordance with the License Agreement.

 

ARTICLE 5  — 
TERM AND TERMINATION

 

5.1                                 Term
of Agreement.  The initial term of
this Agreement is for a period of one year. 
Thereafter, this Agreement shall automatically renew from year-to-year
unless (a) Depositor and Preferred Beneficiary jointly instruct DSI in writing
that the Agreement is terminated; or (b) DSI instructs Depositor and Preferred
Beneficiary in writing that the Agreement is terminated for nonpayment in
accordance with Section 5.2 or by resignation in accordance with Section
5.3.  If the Deposit Materials are
subject to another escrow agreement with DSI, DSI reserves the right, after the
initial one year term, to adjust the anniversary date of this Agreement to
match the then prevailing anniversary date of such other escrow arrangements.

 

5.2                                 Termination
for Nonpayment.  In the event of the
nonpayment of fees owed to DSI by Preferred Beneficiary, DSI shall provide
written notice of delinquency to all Parties to this Agreement.  Any party to this Agreement shall have the
right to make the payment to DSI to cure the default.  If the past due payment is not received in full by DSI within one
month of the date of such notice, then DSI shall have the right to terminate
this Agreement at any time thereafter. 
DSI shall have no obligation to take any action under this Agreement so
long as any payment due to DSI remains unpaid.

 

5.3                                 Termination
By Resignation.  DSI reserves the
right to terminate this Agreement, for any reason, by providing Depositor and
Preferred Beneficiary with 60-days’ written notice of its intent to terminate
this Agreement.  Within the 60-day
period, the Depositor and Preferred Beneficiary may provide DSI with joint
written instructions authorizing DSI to forward the Deposit Materials to
another escrow company and/or agent or other designated recipient.  If DSI does not receive said joint written
instructions within 60 days of the date of DSI’s written termination notice,
then DSI shall destroy, return or otherwise deliver the Deposit Materials in
accordance with Section 5.4.

 

5.4                                 Disposition
of Deposit Materials Upon Termination. 
Subject to the foregoing termination provisions, and upon termination of
this Agreement, DSI shall destroy, return, or otherwise deliver the Deposit
Materials in accordance with instructions from Depositor.  If there are no instructions, DSI may, at
its sole discretion, destroy the Deposit Materials or return them to
Depositor.  DSI shall have no obligation
to destroy or return the Deposit Materials if the Deposit Materials are subject
to another escrow agreement with DSI or have been released to the Preferred
Beneficiary in accordance with Section 4.4.

 

52

 

5.5                                 Survival
of Terms Following Termination. 
Upon termination of this Agreement, the following provisions of this
Agreement shall survive:

 

a.                        Depositor’s
Representations (Section 1.5);

 

b.                       The
obligations of confidentiality with respect to the Deposit Materials;

 

c.                        The rights
granted in the sections entitled Right to Transfer Upon Release (Section 3.3)
and Right to Use Following Release (Section 4.5), if a release of the Deposit
Materials has occurred prior to termination;

 

d.                       The
obligation to pay DSI any fees and expenses due;

 

e.                        The
provisions of Article 7; and

 

f.                          Any
provisions in this Agreement which specifically state they survive the
termination of this Agreement.

 

ARTICLE 6  — 
DSI’S FEES

 

6.1                                 Fee
Schedule.  DSI is entitled to be
paid its standard fees and expenses applicable to the services provided. Unless
otherwise stated in this Agreement or agreed in a writing signed by DSI, [**].  DSI shall notify Depositor and Preferred
Beneficiary at least sixty (60) days prior to any increase in fees.  For any service not listed on DSI’s standard
fee schedule, DSI will provide a quote prior to rendering the service, if
requested.

 

6.2                                 Payment
Terms.  DSI shall not be required to
perform any service unless the payment for such service and any outstanding
balances owed to DSI are paid in full. Initial fees are due upon receipt of a
signed contract or receipt of the Deposit Materials whichever is earliest.  All other fees are due within thirty (30)
days of receipt of an invoice.  If
invoiced fees are not paid, DSI may terminate this Agreement in accordance with
Section 5.2.

 

ARTICLE 7  — 
LIABILITY AND DISPUTES

 

7.1                                 Right
to Rely on Instructions.  DSI may
act in reliance upon any instruction, instrument, or signature reasonably
believed by DSI to be genuine.  DSI may
assume that any employee of a party to this Agreement who gives any written
notice, request, or instruction has the authority to do so.  DSI shall not be required to inquire into
the truth or evaluate the merit of any statement or representation contained in
any notice or document.  DSI shall not
be responsible for failure to act as a result of causes beyond the reasonable
control of DSI.

 

7.2                                 Indemnification.  The party on whose behalf, or pursuant to
whose direction, DSI acts agrees to indemnify, defend and hold harmless DSI
from any and all claims,

 

53

 

actions, damages, arbitration
fees and expenses, costs, attorney’s fees and other liabilities (“Liabilities”)
incurred by DSI as a result of taking such action unless such Liabilities were
caused by the adjudged negligence or willful misconduct of DSI.

 

7.3                                 Dispute
Resolution.  The Depositor and
Preferred Beneficiary shall attempt in good faith to resolve any dispute
arising out of or relating to this Agreement promptly by negotiation between
executives who have authority to settle the controversy.  If such dispute is not resolved within [**]
after commencement of such negotiations, any party may elect to resolve the
dispute by arbitration under the Commercial Rules of the American Arbitration
Association.  Three arbitrators shall be
selected. The Depositor and Preferred Beneficiary shall each select one
arbitrator and the two chosen arbitrators shall select the third arbitrator, or
failing agreement on the selection of the third arbitrator, the American
Arbitration Association shall select the third arbitrator.  However, if DSI is a party to the
arbitration, DSI shall select the third arbitrator.  Unless otherwise agreed by Depositor and Preferred Beneficiary,
arbitration will take place in Boston, Massachusetts, USA.  Any court having jurisdiction over the
matter may enter judgment on the award of the arbitrators.  Service of a petition to confirm the
arbitration award may be made by First Class mail or by commercial express
mail, to the attorney for the party or, if unrepresented, to the party at the
last known business address.

 

7.4                                 Controlling
Law.  This Agreement is to be
governed and construed in accordance with the laws of Massachusetts, without
regard to its conflict of law provisions.

 

7.5                                 Notice
of Requested Order.  If any party
intends to obtain an order from the arbitrator or any court of competent
jurisdiction which may direct DSI to take, or refrain from taking any action,
that party shall:

 

a.                                       Give
DSI at least two business days’ prior notice of the hearing;

 

b.                                      Include
in any such order that, as a precondition to DSI’s obligation, DSI be paid in
full for any past due fees and be paid for the reasonable value of the services
to be rendered pursuant to such order; and

 

c.                                       Ensure
that DSI not be required to deliver the original (as opposed to a copy) of the
Deposit Materials if DSI may need to retain the original in its possession to
fulfill any of its other escrow duties.

 

ARTICLE 8  — 
GENERAL PROVISIONS

 

8.1                                 Entire
Agreement.  This Agreement, which
includes Attachments described herein, embodies the entire understanding among
the parties with respect to its subject matter and supersedes all previous communications,
representations or understandings, either oral or written.  DSI is not a party to the License Agreement
between Depositor and Preferred Beneficiary and has no knowledge of any of the
terms or provisions of any such License Agreement.  DSI’s only obligations to Depositor or Preferred Beneficiary are
as set forth in this Agreement.  No
amendment or modification

 

54

 

 

of this Agreement shall be
valid or binding unless signed by all the parties hereto, except that
Attachment A need not be signed by Preferred Beneficiary and Attachment B need
not be signed.

 

8.2                                 Notices.  All notices, invoices, payments, deposits
and other documents and communications shall be given to the parties at the
addresses specified in the attached Attachment B. It shall be the
responsibility of the parties to notify each other as provided in this Section
in the event of a change of address. The parties shall have the right to rely
on the last known address of the other parties. Unless otherwise provided in
this Agreement, all documents and communications may be delivered by First
Class mail.

 

8.3                                 Severability.  In the event any provision of this Agreement
is found to be invalid, voidable or unenforceable, the parties agree that
unless it materially affects the entire intent and purpose of this Agreement,
such invalidity, voidability or unenforceability shall affect neither the
validity of this Agreement nor the remaining provisions herein, and the
provision in question shall be deemed to be replaced with a valid and
enforceable provision most closely reflecting the intent and purpose of the
original provision.

 

8.4                                 Successors.  This Agreement shall be binding upon and
shall inure to the benefit of the successors and assigns of the parties.
However, DSI shall have no obligation in performing this Agreement to recognize
any successor or assign of Depositor or Preferred Beneficiary unless DSI
receives clear, authoritative and conclusive written evidence of the change of
parties.

 

8.5                                 Regulations.
Depositor and Preferred Beneficiary are responsible for and warrant compliance
with all applicable laws, rules and regulations, including but not limited to
customs laws, import, export, and re-export laws and government regulations of
any country from or to which the Deposit Materials may be delivered in
accordance with the provisions of this Agreement.

 

	
  Genaissance
  Pharmaceuticals, Inc.

  	
  DSI
  Technology Escrow Services, Inc.

  	
   

  	 

	
   

  	
   

  
	
  By: 

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
  Millennium
  Pharmaceuticals, Inc.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  
									

 

55

 

Attachment A

DESCRIPTION OF DEPOSIT MATERIALS

 

 

	
  Depositor
  Company Name:

  	
   

  	
  Genaissance
  Pharmaceuticals, Inc.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Account
  Number:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Product
  Name:

  	
   

  	
   

  	
   

  	
  Version:

  	
   

  	
   

  

 

 

DEPOSIT MATERIAL DESCRIPTION:

Quantity                          Media
Type & Size Label Description of Each Separate Item

 

	
   

  	
   

  	
  Disk
  3.5" or

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DAT
  tape 

  	
   

  	
   

  	
   

  	
  mm

  
	
   

  	
   

  	
  CD-ROM

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Data
  cartridge tape

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TK 70
  or  

  	
   

  	
   

  	
   

  	
  tape

  
	
   

  	
   

  	
  Magnetic
  tape

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Documentation

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Other

  	
   

  	
   

  	
   

  	
   

  

 

PRODUCT DESCRIPTION:

Environment: 

 

 

DEPOSIT MATERIAL INFORMATION:

Is the media or are any of the
files encrypted?  Yes / No       If yes, please include any passwords
and the decryption tools.

	
  Encryption
  tool name

  	
   

  	
   

  	
   

  	
  Version:

  	
   

  	
   

  

 

Hardware required:

 

 

Software required:

 

 

	
  Other
  required information:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

I certify for Depositor that
the above described Deposit Materials have been transmitted to DSI:

 

	
  Signature:

  	
   

  	
   

  
	
  Print Name:

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  

 

56

 

DSI has inspected and accepted
the above materials (any exceptions are noted above):

 

	
  Signature:

  	
   

  	
   

  
	
  Print Name:

  	
   

  	
   

  
	
  Date
  Accepted:

  	
   

  	
   

  
	
  Attachment
  A#:

  	
   

  	
   

  

Send materials to: DSI, 9265
Sky Park Ct., Suite 202, San Diego, CA 92123 (858) 499-1600

 

57

 

Attachment B

DESIGNATED CONTACT

 

	
  Account
  Number:

  	
   

  	
   

  

 

Notices and communications

should be addressed to
Depositor:

 

	
  Company
  Name: 

  	
   

  	
  Genaissance
  Pharmaceuticals, Inc.

  
	
  Address:

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
	
  Designated
  Contact:

  	
   

  	
   

  
	
  Tel:

  	
   

  	
   

  
	
  Fax:

  	
   

  	
   

  
	
  Email:

  	
   

  	
   

  

 

 

	
  Notices and
  communications to

  	
   

  	
  Invoices to
  Preferred Beneficiary

  
	
  Preferred
  Beneficiary should

  	
   

  	
  should be
  addressed to:

  
	
  be addressed
  to:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Company
  Name: 

  	
   

  	
  Millennium
  Pharmaceuticals, Inc.

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  	
  Address:

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  	
  Address:

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  	
  Address:

  	
   

  	
   

  
	
  Designated
  Contact:

  	
   

  	
   

  	
   

  	
  Contact:

  	
   

  	
   

  
	
  Tel:

  	
   

  	
   

  	
   

  	
  Tel:

  	
   

  	
   

  
	
  Fax:

  	
   

  	
   

  	
   

  	
  P.O.# if
  req’rd:

  	
   

  	
   

  
	
  Email:

  	
   

  	
   

  	
   

  	
  Email:

  	
   

  	
   

  

 

Requests from Depositor or
Preferred Beneficiary to change the designated contact should be given in
writing by the designated contact or an authorized employee of Depositor or
Preferred Beneficiary.

 

	
  Contracts,
  Deposit Materials and

  notices to DSI should be addressed:

  	
   

  	
  Invoice
  inquiries and fee

  remittances addressed to:

  
	
   

  	
   

  	
   

  
	
  DSI
  Technology Escrow Services, Inc.

  	
   

  	
  DSI
  Technology Escrow Services, Inc.

  
	
  Contract
  Administration

  	
   

  	
  Accounts
  Receivable

  
	
  Suite 202

  	
   

  	
  P.O. Box
  45156

  
	
  9265 Sky
  Park Court

  	
   

  	
  San
  Francisco, CA 94145-0156

  
	
  San Diego,
  CA 92123

  	
   

  	
   

  
	
  Tel: (858)499-1600

  	
   

  	
  Tel: (858)
  499-1636

  
	
  Fax:
  (858)694-1919

  	
   

  	
  Fax: (858)
  499-1637

  
	
  Email:
  ca@dsiescrow.com

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  	
   

  
					

 

58Exhibit
No. 10.2

 

CONFIDENTIAL

 

 

Confidential Materials omitted and filed separately with the

Securities
and Exchange Commission.  Asterisks
denote omissions.

 

 

RESEARCH
COLLABORATION AND LICENSE AGREEMENT

 

among

 

GENAISSANCE
PHARMACEUTICALS, INC.,

 

BAYER AG

 

and

 

BAYER
HEALTHCARE LLC

 

dated as
of January 15, 2003

 

 

Table of Contents

 

	
   

  	
   

  	
  Page

  
	
  ARTICLE
  I

  	
  DEFINITIONS

  	
   

  
	
   

  	
  1.1

  	
  “Affiliate”

  	
  1

  
	
   

  	
  1.2

  	
  “Approved Diagnostic
  Product”

  	
  1

  
	
   

  	
  1.3

  	
  “ASR Product”

  	
  2

  
	
   

  	
  1.4

  	
  “Bayer
  Genetically-Targeted [**] Drug Product”

  	
  2

  
	
   

  	
  1.5

  	
  “Bayer IP Rights”

  	
  2

  
	
   

  	
  1.6

  	
  “Bayer Know-How”

  	
  2

  
	
   

  	
  1.7

  	
  “Bayer Non-[**] Drug
  Product”

  	
  2

  
	
   

  	
  1.8

  	
  “Bayer Other [**] Drug
  Product”

  	
  2

  
	
   

  	
  1.9

  	
  “Bayer Patent Rights”

  	
  2

  
	
   

  	
  1.10

  	
  “Bayer Polymorphism”

  	
  2

  
	
   

  	
  1.11

  	
  “Bayer Prior IP”

  	
  2

  
	
   

  	
  1.12

  	
  “Bayer Resulting IP”

  	
  2

  
	
   

  	
  1.13

  	
  “Bayer SADR
  Polymorphism Association”

  	
  3

  
	
   

  	
  1.14

  	
  “Bayer SER
  Polymorphism Association”

  	
  3

  
	
   

  	
  1.15

  	
  “Calendar Quarter”

  	
  3

  
	
   

  	
  1.16

  	
  “Candidate Genes”

  	
  3

  
	
   

  	
  1.17

  	
  “Clinical Phenotype”

  	
  3

  
	
   

  	
  1.18

  	
  “Collaboration”

  	
  3

  
	
   

  	
  1.19

  	
  “Collaboration
  Marker Association”

  	
  3

  
	
   

  	
  1.20

  	
  “Collaboration Period”

  	
  3

  
	
   

  	
  1.21

  	
  “Collaboration Plan”

  	
  3

  
	
   

  	
  1.22

  	
  “Collaboration [**]
  Haplotype “

  	
  4

  
	
   

  	
  1.23

  	
  “Collaboration
  SADR Haplotype Association”

  	
  4

  
	
   

  	
  1.24

  	
  “Collaboration
  SER HAPTM
  Marker Association”

  	
  4

  
	
   

  	
  1.25

  	
  “Confidential Information”

  	
  4

  
	
   

  	
  1.26

  	
  “Control” or “Controlled”

  	
  4

  
	
   

  	
  1.27

  	
  “European Union
  Country(ies)”

  	
  4

  
	
   

  	
  1.28

  	
  “First Commercial Use”

  	
  4

  
	
   

  	
  1.29

  	
  “FTE”

  	
  5

  
	
   

  	
  1.30

  	
  “Genaissance Collaborator”

  	
  5

  
	
   

  	
  1.31

  	
  “Genaissance
  Genetically-Targeted [**] Drug Product”

  	
  5

  
	
   

  	
  1.32

  	
  “Genaissance IP Rights”

  	
  5

  
	
   

  	
  1.33

  	
  “Genaissance Know-How”

  	
  5

  
	
   

  	
  1.34

  	
  “Genaissance
  Non-[**] Drug Product”

  	
  5

  
	
   

  	
  1.35

  	
  “Genaissance
  Other [**] Drug Product”

  	
  5

  
	
   

  	
  1.36

  	
  “Genaissance Patent Rights”

  	
  5

  
	
   

  	
  1.37

  	
  “Genaissance Prior IP”

  	
  5

  
	
   

  	
  1.38

  	
  “Genaissance Resulting IP”

  	
  6

  
	
   

  	
  1.39

  	
  Genaissance SADR
  Diagnostic Product”

  	
  6

  
	
   

  	
  1.40

  	
  Genaissance SER
  Diagnostic Product”

  	
  6

  
	
   

  	
  1.41

  	
  “Gene”

  	
  6

  
	
   

  	
  1.42

  	
  “Genetically-Targeted
  [**] Drug Product”

  	
  6

  

 

i

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
  1.43

  	
  “GNSC SADR HAPTM
  Marker Association”

  	
  6

  
	
   

  	
  1.44

  	
  “GNSC SER HAPTM
  Marker Association”

  	
  6

  
	
   

  	
  1.45

  	
  “HAPTM Builder Software”

  	
  6

  
	
   

  	
  1.46

  	
  “HAPTM Database”

  	
  6

  
	
   

  	
  1.47

  	
  “Haplotype”

  	
  7

  
	
   

  	
  1.48

  	
  “HAPTM Marker”

  	
  7

  
	
   

  	
  1.49

  	
  “HAPTM Marker
  Association”

  	
  7

  
	
   

  	
  1.50

  	
  “HAPTM
  Marker Association Patent Rights”

  	
  7

  
	
   

  	
  1.51

  	
  “HAPTM Marker
  Patent Rights”

  	
  7

  
	
   

  	
  1.52

  	
  “HAPTM Technology”

  	
  7

  
	
   

  	
  1.53

  	
  “HAPTM Typing Processes”

  	
  7

  
	
   

  	
  1.54

  	
  “Home-Brew Product”

  	
  7

  
	
   

  	
  1.55

  	
  “Know-How”

  	
  8

  
	
   

  	
  1.56

  	
  “Locus”

  	
  8

  
	
   

  	
  1.57

  	
  “Marker”

  	
  8

  
	
   

  	
  1.58

  	
  “Marker Association”

  	
  8

  
	
   

  	
  1.59

  	
  “Net
  Sales”

  	
  9

  
	
   

  	
  1.60

  	
  “Non-[**] Drug Product”

  	
  9

  
	
   

  	
  1.61

  	
  “Other Product”

  	
  9

  
	
   

  	
  1.62

  	
  “Party”

  	
  9

  
	
   

  	
  1.63

  	
  “Patent Prosecution”

  	
  9

  
	
   

  	
  1.64

  	
  “Patent Rights”

  	
  10

  
	
   

  	
  1.65

  	
  “Polymorphism”

  	
  10

  
	
   

  	
  1.66

  	
  “Prior
  IP”

  	
  10

  
	
   

  	
  1.67

  	
  “Product”

  	
  10

  
	
   

  	
  1.68

  	
  “Program Manager”

  	
  10

  
	
   

  	
  1.69

  	
  “Regulatory Authority”

  	
  10

  
	
   

  	
  1.70

  	
  “[**]
  Trial”

  	
  10

  
	
   

  	
  1.71

  	
  “Resulting IP”

  	
  10

  
	
   

  	
  1.72

  	
  “Resulting Patent Rights”

  	
  10

  
	
   

  	
  1.73

  	
  “ROW Country(ies)”

  	
  10

  
	
   

  	
  1.74

  	
  “Royalty-Paying Party”

  	
  10

  
	
   

  	
  1.75

  	
  “Royalty-Receiving Party”

  	
  10

  
	
   

  	
  1.76

  	
  “SADR”

  	
  10

  
	
   

  	
  1.77

  	
  “SADR Clinical Phenotype”

  	
  10

  
	
   

  	
  1.78

  	
  “SADR Confirmation Gene”

  	
  10

  
	
   

  	
  1.79

  	
  “SADR Diagnostic Product”

  	
  11

  
	
   

  	
  1.80

  	
  “SADR Expansion Gene”

  	
  11

  
	
   

  	
  1.81

  	
  “SADR
  Plan”

  	
  11

  
	
   

  	
  1.82

  	
  “SADR Study”

  	
  11

  
	
   

  	
  1.83

  	
  “SADR Study Term”

  	
  11

  
	
   

  	
  1.84

  	
  “SER”

  	
  11

  
	
   

  	
  1.85

  	
  “SER Clinical Phenotype”

  	
  11

  

 

ii

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
  1.86

  	
  “SER Confirmation Gene”

  	
  11

  
	
   

  	
  1.87

  	
  “SER Diagnostic Product”

  	
  11

  
	
   

  	
  1.88

  	
  “SER Expansion Gene”

  	
  11

  
	
   

  	
  1.89

  	
  “SER
  Plan”

  	
  11

  
	
   

  	
  1.90

  	
  “SER
  Study”

  	
  12

  
	
   

  	
  1.91

  	
  “SER Study Term”

  	
  12

  
	
   

  	
  1.92

  	
  “[**]”

  	
  12

  
	
   

  	
  1.93

  	
  “[**] Diagnostic Product”

  	
  12

  
	
   

  	
  1.94

  	
  “[**] Drug Product”

  	
  12

  
	
   

  	
  1.95

  	
  “STRENGTH Trial”

  	
  12

  
	
   

  	
  1.96

  	
  “Sublicense Income”

  	
  12

  
	
   

  	
  1.97

  	
  “Surrogate Marker”

  	
  12

  
	
   

  	
  1.98

  	
  “Territory”

  	
  13

  
	
   

  	
  1.99

  	
  “Third Party”

  	
  13

  
	
   

  	
  1.100

  	
  “Valid Claim”

  	
  13

  
	
   

  	
  1.101

  	
  Additional Definitions

  	
  13

  
	
  ARTICLE
  II

  	
  COLLABORATION

  	
  14

  
	
   

  	
  2.1

  	
  SADR Study
  Management and Responsibilities

  	
  14

  
	
   

  	
   

  	
  2.1.1

  	
  SADR Plan

  	
  15

  
	
   

  	
   

  	
  2.1.2

  	
  SADR Study
  Objectives and Responsibilities

  	
  15

  
	
   

  	
  2.2

  	
  SER Study
  Management and Responsibilities

  	
  18

  
	
   

  	
   

  	
  2.2.1

  	
  Notice and Timing

  	
  18

  
	
   

  	
   

  	
  2.2.2

  	
  SER
  Plan

  	
  18

  
	
   

  	
   

  	
  2.2.3

  	
  SER Study
  Objectives and Responsibilities

  	
  18

  
	
   

  	
  2.3

  	
  Steering Committee.

  	
  20

  
	
   

  	
   

  	
  2.3.1

  	
  Formation and Composition

  	
  20

  
	
   

  	
   

  	
  2.3.2

  	
  Steering
  Committee Functions and Powers

  	
  21

  
	
   

  	
   

  	
  2.3.3

  	
  Decisions of the
  Steering Committee

  	
  21

  
	
   

  	
   

  	
  2.3.4

  	
  Minutes and Reports

  	
  21

  
	
   

  	
  2.4

  	
  Program Managers

  	
  21

  
	
   

  	
  2.5

  	
  Regulatory Cooperation

  	
  22

  
	
   

  	
  2.6

  	
  Exchange of Prior IP
  Information

  	
  22

  
	
   

  	
  2.7

  	
  Data Access

  	
  22

  
	
   

  	
  2.8

  	
  Product Labeling

  	
  22

  
	
  ARTICLE III

  	
  GRANTS OF RIGHTS

  	
  23

  
	
   

  	
  3.1

  	
  Research Grants

  	
  23

  
	
   

  	
   

  	
  3.1.1

  	
  Genaissance Research Grant

  	
  23

  
	
   

  	
   

  	
  3.1.2

  	
  Bayer Research Grant

  	
  23

  
	
   

  	
  3.2

  	
  Diagnostic Products Grants

  	
  23

  
	
   

  	
   

  	
  3.2.1

  	
  Bayer Diagnostic
  Products License

  	
  23

  
	
   

  	
   

  	
  3.2.2

  	
  SER Diagnostic
  Products Marketing Rights

  	
  24

  
	
   

  	
   

  	
  3.2.3

  	
  Genaissance
  Diagnostic Products Purchase Rights

  	
  27

  
	
   

  	
   

  	
  3.2.4

  	
  Genaissance
  Diagnostic Products License

  	
  27

  

 

iii

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
  3.3

  	
  Therapeutic Products Grants

  	
  27

  
	
   

  	
   

  	
  3.3.1

  	
  Genaissance [**]
  Drug Products License

  	
  28

  
	
   

  	
   

  	
  3.3.2

  	
  Genaissance
  Non-[**] Drug Products License

  	
  28

  
	
   

  	
   

  	
  3.3.3

  	
  Bayer [**] Drug
  Products License

  	
  28

  
	
   

  	
   

  	
  3.3.4

  	
  Bayer Non-[**]
  Drug Products License

  	
  29

  
	
   

  	
  3.4

  	
  Other Grants

  	
  29

  
	
   

  	
   

  	
  3.4.1

  	
  Bayer Other Products
  License

  	
  29

  
	
   

  	
   

  	
  3.4.2

  	
  Genaissance Other
  Products License

  	
  29

  
	
   

  	
  3.5

  	
  Genaissance
  Right of First Negotiation

  	
  29

  
	
   

  	
  3.6

  	
  Term of Licenses

  	
  30

  
	
   

  	
  3.7

  	
  Special Sublicensing Rights

  	
  30

  
	
   

  	
  3.8

  	
  Non-Suit
  Covenant with Respect to Selected Products

  	
  30

  
	
   

  	
   

  	
  3.8.1

  	
  Genaissance Covenant

  	
  30

  
	
   

  	
   

  	
  3.8.2

  	
  Bayer Covenant

  	
  30

  
	
   

  	
  3.9

  	
  Unitary
  Contract; Rights Upon Rejection

  	
  31

  
	
   

  	
   

  	
  3.9.1

  	
  Unitary Contract

  	
  31

  
	
   

  	
   

  	
  3.9.2

  	
  Rights Upon Rejection

  	
  31

  
	
   

  	
  3.10

  	
  Terms
  of Licenses and Sublicenses Granted by Parties

  	
  31

  
	
  ARTICLE
  IV

  	
  PAYMENTS

  	
  32

  
	
   

  	
  4.1

  	
  HAPTM
  Typing Fee

  	
  32

  
	
   

  	
  4.2

  	
  Sequencing Fee

  	
  32

  
	
   

  	
  4.3

  	
  Bayer Royalties

  	
  32

  
	
   

  	
  4.4

  	
  Genaissance Royalties

  	
  36

  
	
   

  	
  4.5

  	
  Royalty Obligation
  Exception

  	
  39

  
	
   

  	
  4.6

  	
  Royalty Terms

  	
  39

  
	
   

  	
  4.7

  	
  Late Payments

  	
  41

  
	
   

  	
  4.8

  	
  Tax Withholding

  	
  41

  
	
   

  	
  4.9

  	
  Blocked Payments

  	
  41

  
	
   

  	
  4.10

  	
  Right of Recoupment

  	
  42

  
	
  ARTICLE
  V

  	
  INTELLECTUAL
  PROPERTY

  	
  42

  
	
   

  	
  5.1

  	
  Ownership of Inventions

  	
  42

  
	
   

  	
   

  	
  5.1.1

  	
  Genaissance Inventions

  	
  42

  
	
   

  	
   

  	
  5.1.2

  	
  Bayer Inventions

  	
  42

  
	
   

  	
   

  	
  5.1.3

  	
  Joint Inventions

  	
  42

  
	
   

  	
   

  	
  5.1.4

  	
  Assignment

  	
  42

  
	
   

  	
   

  	
  5.1.5

  	
  Inventorship

  	
  43

  
	
   

  	
  5.2

  	
  Patent Prosecution

  	
  43

  
	
   

  	
   

  	
  5.2.1

  	
  General

  	
  43

  
	
   

  	
   

  	
  5.2.2

  	
  Genaissance IP Rights

  	
  43

  
	
   

  	
   

  	
  5.2.3

  	
  Bayer IP Rights

  	
  43

  
	
   

  	
   

  	
  5.2.4

  	
  Costs and Expenses

  	
  43

  
	
   

  	
   

  	
  5.2.5

  	
  Cooperation.

  	
  44

  
	
   

  	
   

  	
  5.2.6

  	
  Patent Interference
  and Opposition

  	
  45

  

 

iv

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
  5.3

  	
  Third Party Infringement

  	
  46

  
	
   

  	
   

  	
  5.3.1

  	
  Notice

  	
  46

  
	
   

  	
   

  	
  5.3.2

  	
  Infringement Action

  	
  46

  
	
   

  	
   

  	
  5.3.3

  	
  Recoveries

  	
  48

  
	
   

  	
   

  	
  5.3.4

  	
  Patent Invalidity Claim

  	
  48

  
	
   

  	
  5.4

  	
  Claimed Infringement

  	
  48

  
	
   

  	
  5.5

  	
  Patent Marking

  	
  48

  
	
  ARTICLE
  VI

  	
  CONFIDENTIALITY

  	
  49

  
	
   

  	
  6.1

  	
  Nondisclosure and
  Non-Use Obligations

  	
  49

  
	
   

  	
   

  	
  6.1.1

  	
  General

  	
  49

  
	
   

  	
   

  	
  6.1.2

  	
  Limitations

  	
  49

  
	
   

  	
  6.2

  	
  Injunctive Relief

  	
  50

  
	
   

  	
  6.3

  	
  Publication

  	
  50

  
	
  ARTICLE VII

  	
  REPRESENTATIONS AND WARRANTIES; LIMITATION
  OF LIABILITY

  	
   

  
	
   

  	
  7.1

  	
  Representations
  and Warranties of Genaissance

  	
  50

  
	
   

  	
  7.2

  	
  Representations
  and Warranties of Bayer

  	
  50

  
	
   

  	
  7.3

  	
  Warranty Disclaimer

  	
  51

  
	
   

  	
  7.4

  	
  Disclaimer of Consequential
  Damages

  	
  53

  
	
  ARTICLE VIII

  	
  INDEMNITY

  	
  53

  
	
   

  	
  8.1

  	
  Bayer Indemnity Obligations

  	
  53

  
	
   

  	
  8.2

  	
  Genaissance Indemnity
  Obligations

  	
  53

  
	
   

  	
  8.3

  	
  Limitation on
  Indemnity Obligations

  	
  53

  
	
   

  	
  8.4

  	
  Procedure

  	
  54

  
	
   

  	
  8.5

  	
  Insurance

  	
  54

  
	
  ARTICLE
  IX

  	
  TERM
  AND TERMINATION

  	
  54

  
	
   

  	
  9.1

  	
  Term of Agreement

  	
  54

  
	
   

  	
  9.2

  	
  Termination for
  Material Breach

  	
  54

  
	
   

  	
  9.3

  	
  Bankruptcy

  	
  55

  
	
   

  	
  9.4

  	
  Effect of Termination

  	
  55

  
	
   

  	
   

  	
  9.4.1

  	
  Effect of
  Termination by Genaissance

  	
  55

  
	
   

  	
   

  	
  9.4.2

  	
  Effect of Termination by
  Bayer

  	
  55

  
	
   

  	
  9.5

  	
  Surviving Provisions

  	
  55

  
	
   

  	
  9.6

  	
  Security Interest

  	
  56

  
	
   

  	
  9.7

  	
  Rights of Secured Party

  	
  56

  
	
   

  	
  9.8

  	
  No Encumbrances

  	
  56

  
	
   

  	
  9.9

  	
  Further Assurances

  	
  57

  
	
  ARTICLE
  X

  	
  MISCELLANEOUS

  	
  57

  
	
   

  	
  10.1

  	
  Force Majeure

  	
  57

  
	
   

  	
  10.2

  	
  Assignment

  	
  57

  
	
   

  	
  10.3

  	
  Severability

  	
  57

  
	
   

  	
  10.4

  	
  Notices

  	
  58

  
	
   

  	
  10.5

  	
  Applicable Law

  	
  59

  

 

v

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
  10.6

  	
  Dispute Resolution

  	
  59

  
	
   

  	
  10.7

  	
  Entire Agreement

  	
  59

  
	
   

  	
  10.8

  	
  Publicity

  	
  59

  
	
   

  	
   

  	
  10.8.1

  	
  Agreement

  	
  59

  
	
   

  	
   

  	
  10.8.2

  	
  Press Release

  	
  60

  
	
   

  	
  10.9

  	
  Headings

  	
  60

  
	
   

  	
  10.10

  	
  No Partnership;
  Independent Contractors

  	
  60

  
	
   

  	
  10.11

  	
  Exports

  	
  60

  
	
   

  	
  10.12

  	
  Waiver

  	
  61

  
	
   

  	
  10.13

  	
  Counterparts

  	
  61

  
	
   

  	
  10.14

  	
  No Strict Construction

  	
  61

  

 

vi

 

	
  Exhibits

  	
   

  
	
  Exhibit
  A

  	
  Gene
  Criteria

  
	
  Exhibit
  B

  	
  [**]
  Trial

  
	
  Exhibit
  C

  	
  SADR
  Clinical Phenotypes

  
	
  Exhibit
  D

  	
  SADR
  Study

  
	
  Exhibit
  E

  	
  SER
  Clinical Phenotypes

  
	
  Exhibit
  F

  	
  SER
  Study

  
	
  Exhibit
  G

  	
  STRENGTH
  Trial

  
	
  Exhibit
  H

  	
  Draft
  Press Release

  

 

vii

 

RESEARCH
DEVELOPMENT COLLABORATION AND LICENSE AGREEMENT

 

THIS RESEARCH COLLABORATION AND LICENSE AGREEMENT
(this “Agreement”) is dated as of January 15, 2003 (the “Effective Date”) and
is made by and among BAYER AG, a German corporation acting through its business
area HealthCare having offices at Bayerwerk, 51368 Leverkusen, Germany, BAYER
HEALTHCARE LLC, a Delaware corporation acting through its Diagnostics Division
having offices at 511 Benedict Avenue, Tarrytown, New York 10591 (collectively,
“Bayer”) and GENAISSANCE PHARMACEUTICALS, INC., a Delaware corporation having
offices at Five Science Park, New Haven, Connecticut 06511 (“Genaissance”).

 

INTRODUCTION

 

1.                                       Genaissance
has expertise in discovering markers of genetic variation and correlating such
markers with drug response, and has conducted the STRENGTH Trial (as that term
is defined below) to identify markers correlated with response to atorvastatin
calcium (Lipitor ®), pravastatin sodium (Pravachol®), simvastatin (Zocor®) and
lovastatin (Mevacor®).

 

2.                                       Bayer
has expertise in discovering, developing and commercializing diagnostic products
and has undertaken the [**] Trial (as that term is defined below), in which
correlations between genetic variation and the response to [**] have been
identified.

 

3.                                       Bayer
and Genaissance wish to collaborate on identifying single nucleotide polymorphisms
and haplotypes for use in developing and marketing [**] Diagnostic Products (as
that term is defined below) and [**] Drug Products (as that term is defined
below) for populations determined by efficacy and safety responses, and
developing other therapeutics for certain disease fields, by using
pharmacogenetic findings of research undertaken by Genaissance and Bayer based
upon the STRENGTH Trial and the [**] Trial.

 

4.                                       Each
of Bayer and Genaissance is willing to grant the other access to such findings,
and to collaborate with the other in analyzing the results of such research,
upon the terms and conditions set forth in this Agreement.

 

NOW THEREFORE, Bayer and Genaissance agree as follows:

 

ARTICLE I

DEFINITIONS

 

For purposes of this Agreement, the terms defined in
this Article I shall have the meanings specified below:

 

1.1                                 “Affiliate”. 
Affiliate means any corporation or other entity which directly or
indirectly controls, is controlled by or is under common control with a
Party.  A corporation or other entity
shall be regarded as in control of another corporation or entity if it owns or
directly or indirectly controls more than fifty percent (50%) of the
outstanding voting stock or other ownership interest of the other corporation
or entity, or if it possesses, directly or indirectly, the power to manage,
direct or cause the direction of the management and policies of the corporation
or other entity or the power to elect or appoint fifty percent (50%) or more of
the members of the

 

1

 

governing body of the corporation or other entity.  Any such other relationship as in fact
results in actual control over the management, business and affairs of a
corporation or other entity shall also be deemed to constitute control.

 

1.2                                 “Approved Diagnostic Product”.  Approved Diagnostic Product means a
diagnostic product that has received market clearance under the 510(k)
pre-market notification process, pre-market approval or an equivalent approval
from a Regulatory Authority.

 

1.3                                 “ASR Product”. 
ASR Product means an in vitro diagnostic product (a) that contains one
or more Analyte Specific Reagents capable of detecting a specific chemical or
biochemical substance in a biological specimen and (b) whose sale, distribution
and use are restricted under 21 CFR 864.4020 or under similar regulations
issued by another Regulatory Authority.

 

1.4                                 “Bayer
Genetically-Targeted [**] Drug Product”.  Bayer Genetically-Targeted [**] Drug Product
means any Genetically-Targeted [**] Drug Product that is (a) discovered or
developed by Bayer; and (b) for which labeling approved by the applicable
Regulatory Authority indicates that such Product is approved for a population
defined by (i) one (1) or more HAPTM Markers or Collaboration
[**] Haplotypes in a Collaboration Marker Association or (ii) one (1) or more
Surrogate Markers of such markers.

 

1.5                                 “Bayer IP Rights”.  Bayer IP Rights means all Bayer Prior IP and Bayer Resulting IP.

 

1.6                                 “Bayer Know-How”. 
Bayer Know-How means Know-How that is developed in the conduct of the
Collaboration for which Bayer is designated as the owner pursuant to the
provisions of this Agreement.

 

1.7                                 “Bayer Non-[**] Drug Product”.  Bayer Non-[**] Drug Product means a Non-[**]
Drug Product that is discovered or developed by Bayer with a demonstrable use
of Resulting IP.

 

1.8                                 “Bayer Other [**] Drug Product”.  Bayer Other [**] Drug Product means a [**]
Drug Product, other than a Bayer Genetically-Targeted [**] Drug Product, that
is discovered or developed by Bayer with a demonstrable use of Resulting IP.

 

1.9                                 “Bayer Patent Rights”.  Bayer Patent Rights means Patent Rights that
claim Bayer Know-How.

 

1.10                           “Bayer Polymorphism”.  Bayer Polymorphism means a Polymorphism
evaluated by Bayer in the [**] Trial independently from the Collaboration and
prior to the end of the Collaboration Period.

 

1.11                           “Bayer Prior IP”. 
Bayer Prior IP means all intellectual property that (a) is
Controlled by Bayer and developed independently from the Collaboration prior to
the end of the Collaboration Period and (b) relates to associations
between Polymorphisms and Clinical Phenotypes discovered in the [**]
Trial.  For purposes of clarity, any
Know-How developed by Bayer as a result of the analysis of genotyping data that
are generated in the conduct of the [**]

 

2

 

Trial prior to the first Steering Committee meeting (and any related
Patent Rights) shall be considered intellectual property arising from the [**]
Trial and, therefore, Bayer Prior IP, irrespective of whether such analysis
occurs prior to or after the first Steering Committee meeting.

 

1.12                           “Bayer Resulting IP”.  Bayer Resulting IP means Bayer Know-How and
Bayer Patent Rights.

 

1.13                           “Bayer SADR Polymorphism Association”.  Bayer SADR Polymorphism Association means a
correlation, identified by Bayer in the [**] Trial independently from the
Collaboration and prior to the end of the Collaboration Period, between (a) a
Bayer Polymorphism or a combination of such Polymorphisms and (b) an SADR
Clinical Phenotype (whether or not such Polymorphism or combination is also
correlated with an SER Clinical Phenotype).

 

1.14                           “Bayer SER Polymorphism Association”.  Bayer SER Polymorphism Association means a
correlation, identified by Bayer in the [**] Trial independently from the
Collaboration and prior to the end of the Collaboration Period, between (a) a
Bayer Polymorphism or a combination of such Polymorphisms and (b) an SER
Clinical Phenotype, but not an SADR Clinical Phenoytype.

 

1.15                           “Calendar Quarter”.  Calendar Quarter means each successive period of three (3) months
beginning on the first day of January, April, July and October.

 

1.16                           “Candidate Genes”.  Candidate Genes means the set of Genes that (a) are selected by
the Steering Committee pursuant to Section 2.1.2(e), (b) are to be analyzed by
a Party or by both Parties in the SADR Study; and (c) are not either SADR
Confirmation Genes or SADR Expansion Genes.

 

1.17                           “Clinical Phenotype”.  Clinical Phenotype means an SADR Clinical
Phenotype or an SER Clinical Phenotype, or both.

 

1.18                           “Collaboration”. 
Collaboration means those activities to be undertaken by the Parties in
the conduct of the SADR Study and the SER Study.

 

1.19                           “Collaboration Marker Association”.  Collaboration Marker Association means a
Collaboration SADR Haplotype Association or a Collaboration SER HAPTM
Marker Association or any combination of such Associations.

 

1.20                           “Collaboration Period”.  Collaboration Period means the period of
time beginning with the Effective Date until the later of (a) the end of the
SADR Study Term, or (b) the end of the SER Study Term, in each case unless
earlier terminated as provided in Article IX.

 

1.21                           “Collaboration Plan”.  Collaboration Plan means the SADR Plan and
the SER Plan.

 

1.22                           “Collaboration [**] Haplotype ”.  Collaboration [**] Haplotype means a
Haplotype discovered by a Party or by both Parties by means of the custom
sequencing work

 

3

 

performed pursuant to this Agreement using DNA from patients that
participated in the [**] Trial.

 

1.23                           “Collaboration SADR Haplotype
Association”.  Collaboration
SADR Haplotype Association means a statistically significant (i.e. p=or <
0.05) correlation, identified by a Party or by both Parties in the conduct of
the SADR Study, between (a)(i) a HAPTM Marker in an SADR
Expansion Gene or a Candidate Gene or a combination of such HAP
Markers or (ii) a Collaboration [**] Haplotype or a combination of such
Haplotypes and (b) an SADR Clinical Phenotype (whether or not such
Polymorphism(s) is also correlated with an SER Clinical Phenotype).

 

1.24                           “Collaboration SER HAPTM
Marker Association”. 
Collaboration SER HAPTM Marker Association means a
statistically significant (i.e. p = or < 0.05) correlation, identified by a
Party or by both Parties in the conduct of the SER Study, between (a) a HAPTM
Marker, a Collaboration [**] Haplotype or a combination of such markers and (b)
an SER Clinical Phenotype, but not an SADR Clinical Phenotype.  For purposes of clarity, a Collaboration SER
HAPTM
Marker Association shall not include any GNSC SER HAPTM Marker
Association that is confirmed in the SER Study.

 

1.25                           “Confidential Information”.  Confidential Information means any
information, inventions, copyrights, trade secrets, data or materials, whether
patentable or not, received by a Party from the other Party in connection with
the performance of this Agreement.  All
Bayer Know-How and Genaissance Know-How shall be considered Confidential
Information of both Parties.

 

1.26                           “Control” or “Controlled”.  Control or Controlled means with respect to
any compound, biomaterial, information or intellectual property right, that the
applicable party, in whole or in part, owns or has a license to such compound,
biomaterial, information or intellectual property right and, if applicable, has
the ability to grant access, covenant against suit, or a license (or a
sublicense) without violating the terms of any agreement or other arrangements
with any Third Party existing at the time such party would be first required to
grant such access, covenant, license or sublicense.

 

1.27                           “European Union Country(ies)”.  European Union Country(ies) shall mean any
member state of the European Union as of the Effective Date.

 

1.28                           “First Commercial Use”.  First Commercial Use shall mean with respect
to a Product the first use or consumption for the benefit of the general public
of a Product in a country; provided, however, that use related to
test marketing, sampling and promotional uses, clinical trial or other research
purposes or compassionate or similar use shall not be considered or constitute
a First Commercial Use, except in the case of research use of a diagnostic
Product or test results obtained therefrom by a Third Party after purchase of
such Product or test results in an arm’s length transaction from a Party or one
of its licensees or distributors.

 

1.29                           “FTE”.  FTE shall
mean a full time equivalent person year (consisting of a total of 1,880 hours
per year) of scientific, technical or managerial work undertaken by a Party
with respect to a Product.

 

4

 

1.30                           “Genaissance Collaborator”.  Genaissance Collaborator means any party
that is seeking or has obtained a license from Genaissance to develop a
Genetically-Targeted [**] Drug Product.

 

1.31                           “Genaissance
Genetically-Targeted [**] Drug Product”.  Genaissance Genetically-Targeted [**] Drug
Product means a Genetically-Targeted [**] Drug Product that is (a) discovered
or developed by Genaissance and (b) for which labeling approved by the
applicable Regulatory Authority indicates that such Product is approved for a
population defined by (i) one (1) or more HAPTM Markers or Collaboration
[**] Haplotypes in a Collaboration Marker Association or one (1) or more
Surrogate Markers of such markers or (ii) one (1) or more Bayer Polymorphisms
in a Bayer SER Polymorphism Association or a Bayer SADR Polymorphism
Association or one (1) or more Surrogate Markers of such markers.

 

1.32                           “Genaissance IP Rights”.  Genaissance IP Rights means all Genaissance
Prior IP and Genaissance Resulting IP.

 

1.33                           “Genaissance Know-How”.  Genaissance Know-How means Know-How that is
developed in the conduct of the Collaboration for which Genaissance is
designated as the owner pursuant to the provisions of this Agreement.

 

1.34                           “Genaissance Non-[**] Drug Product”.  Genaissance Non-[**] Drug Product means a
Non-[**] Drug Product that is discovered or developed by Genaissance with a
demonstrable use of Resulting IP.

 

1.35                           “Genaissance Other [**] Drug Product”.  Genaissance Other [**] Drug Product means a
[**] Drug Product, other than a Genaissance Genetically-Targeted [**] Drug
Product, that is discovered or developed by Genaissance with a demonstrable use
of (a) a Collaboration Marker Association, a Bayer SER Polymorphism
Association or a Bayer SADR Polymorphism Assocation or (b) a HAP Marker,
Collaboration [**] Haplotype or Bayer Polymorphism referenced in such
Association.

 

1.36                           “Genaissance Patent Rights”.  Genaissance Patent Rights means Patent
Rights that claim Genaissance Know-How.

 

1.37                           “Genaissance Prior IP”.  Genaissance Prior IP means all intellectual
property that (a) is Controlled by Genaissance and developed independently
from the Collaboration prior to the end of the Collaboration Period and
(b) relates to associations between Polymorphisms and Clinical Phenotypes
discovered in the STRENGTH Trial or (c) relates to HAPTM Markers referenced in a
HAPTM
Marker Association or in a Collaboration SADR Haplotype Association;  provided,
however, that the term Genaissance Prior IP shall not include
intellectual property related to HAPTM Technology.  For purposes of clarity, any Know-How
developed by Genaissance as a result of the analysis of genotyping data that
are generated in the conduct of the STRENGTH Trial prior to the first Steering
Committee meeting (and any related Patent Rights) shall be considered
intellectual property arising from the STRENGTH Trial and, therefore,
Genaissance Prior IP, irrespective of whether such analysis occurs prior to or
after the first Steering Committee meeting.

 

5

 

1.38                           “Genaissance Resulting IP”.  Genaissance Resulting IP means Genaissance
Know-How and Genaissance Patent Rights.

 

1.39                           Genaissance SADR Diagnostic Product”.  Genaissance SADR Diagnostic Product means an
SADR Diagnostic Product that detects, directly or indirectly, a Marker (or a
Surrogate of such Marker) referenced in a Marker Association for a given SADR
Clinical Phenotype with respect to which the Bayer SADR Diagnostics License has
become non-exclusive pursuant to the terms of Section 3.2.1(b).

 

1.40                           Genaissance SER Diagnostic Product”.  Genaissance SER Diagnostic Product means an
SER Diagnostic Product that detects, directly or indirectly, a Marker (or a
Surrogate of such Marker) referenced in a Marker Association for a given SER
Clinical Phenotype with respect to which the Bayer SER Diagnostics License has
become non-exclusive or has been terminated pursuant to the terms of
Section 3.2.1(b).

 

1.41                           “Gene”.  Gene means
a nucleic acid sequence (including allelic variations thereof) that (a) encodes
a designated protein, and (b) satisfies the criteria set forth in Exhibit A
attached hereto.

 

1.42                           “Genetically-Targeted [**]
Drug Product”. 
Genetically-Targeted [**] Drug Product means a [**] Drug Product for
which labeling approved by the applicable Regulatory Authority indicates that
such Product is approved for a population defined by Haplotypes or other
Polymorphisms in a Haplotype association or other Polymorphism association.

 

1.43                           “GNSC SADR HAPTM Marker
Association”.  GNSC SADR HAPTM
Marker Association means a statistically significant (i.e. p = or < 0.05)
correlation, identified by Genaissance in the STRENGTH Trial, independently
from the Collaboration and prior to the end of the Collaboration Period,
between (a) a HAPTM Marker or a combination of such markers and
(b) a SADR Clinical Phenotype (whether or not such Polymorphism(s) is also
correlated with an SER Clinical Phenotype).

 

1.44                           “GNSC SER HAPTM Marker
Association”.  GNSC SER HAPTM
Marker Association means a statistically significant (i.e. p = or < 0.05)
correlation, identified by Genaissance in the STRENGTH Trial, independently
from the Collaboration and prior to the end of the Collaboration Period,
between (a) a HAPTM Marker or a combination of such markers and
(b) an SER Clinical Phenotype, but not an SADR Clinical Phenotype.

 

1.45                           “HAPTM Builder Software”.  HAPTM Builder Software means the suite of
proprietary algorithms used by Genaissance for (a) deriving the presence and
frequency of HAPTM Markers or Haplotypes from a collection of
genotypes of several individual Polymorphisms in a Gene of interest, and (b)
assigning to an individual a pair of the derived HAPTM Markers or
Haplotypes for the Gene.

 

1.46                           “HAPTM Database”.  HAPTM Database means the HAPTM
Markers database maintained by Genaissance.

 

6

 

1.47                           “Haplotype”. 
Haplotype means a type of Polymorphism that consists of an ordered
combination of two (2) or more Polymorphisms present at a Locus on a single
chromosome.

 

1.48                           “HAPTM Marker”.  HAPTM Marker means any
Polymorphism or Haplotype that is (a) contained in the HAPTM Database at
the time of exchange of Prior IP pursuant to Section 2.6 or (b) discovered,
pursuant to Article II, in a SADR Expansion Gene, a SER Expansion Gene or a
Candidate Gene, using DNA samples from the Index Repository or from patients
that participated in the STRENGTH Trial.

 

1.49                           “HAPTM Marker Association”.  HAPTM Marker Association means
a GNSC SADR HAPTM
Marker Association, a GNSC SER HAPTM Marker Association, a
Collaboration SER HAPTM Marker Association, or any combination of such Marker
Associations.

 

1.50                           “HAPTM Marker Association
Patent Rights”.  HAPTM
Marker Association Patent Rights means Patent Rights that claim a HAPTM
Marker Association or the use thereof.

 

1.51                           “HAPTM Marker Patent
Rights”.  HAPTM Marker
Patent Rights means Patent Rights that claim a HAPTM Marker or
the use thereof.

 

1.52                           “HAPTM Technology”.  HAPTM Technology means the
technology used by Genaissance for the identification or confirmation of
associations between HAPTM Markers and other generic
markers and patient response to a [**] Drug Product.

 

1.53                           “HAPTM Typing Processes”.  HAPTM Typing Processes means the processes
used by Genaissance to assign to an individual a pair of previously-derived HAPTM
Markers or Haplotypes for a Gene of interest; the processes including (a)
selecting a set of informative polymorphic sites from the total number of sites
in a set of previously derived HAPTM Markers or Haplotypes for
that Gene using Genaissance’s proprietary software and Know-How, (b) genotyping
a genomic DNA sample from an individual at the set of informative polymorphic
sites using sequencing or other genotyping platforms installed at Genaissance
(including but not limited to MassARRAY, TaqMan and Pyrosequencing) and (c)
assigning to the individual a pair of HAPTM Markers or Haplotypes
from the genotype for informative polymorphic sites, where the set of
informative polymorphic sites defines (i) the minimal number of polymorphic
sites needed to deduce which of the previously-derived HAPTM Markers or
Haplotypes is present in the individual or (ii) a desired level of genetic
diversity in a patient cohort.

 

1.54                           “Home-Brew Product”.  Home Brew Product means components of an in vitro diagnostic
product or test that (a) are sold or licensed solely to individual
laboratories that are certified under the Clinical Laboratory Improvement
Amendments of 1988, as subsequently amended, and implementing regulations, or
their foreign equivalent, if any, for internal use by such laboratories and
(b) have not been approved by applicable Regulatory Authorities.

 

1.55                           “Know-How”.  Know-How
means any information, inventions, copyrights, trade secrets, regulatory
submissions, data or materials, whether patentable or not, including, without
limitation, biological materials (such as cell lines, DNA, DNA fragments, RNA,
RNA fragments, organisms, proteins, polypeptides, plasmids, vectors, fragments
of such proteins, polypeptides,

 

7

 

plasmids and vectors, and
derivatives, progeny and variants of all of the foregoing) and intellectual
property of any kind, other than Patent Rights.

 

1.56                           “Locus”.  Locus
means a location on a chromosome corresponding to a Gene or a
genetically-controlled physical or phenotypic feature of a human individual.

 

1.57                           “Marker”.  Marker
means a HAPTM Marker or a Collaboration [**] Haplotype referenced in a Marker
Association.

 

1.58                           “Marker Association”.  Marker Association means a HAPTM
Marker Association or a Collaboration SADR Haplotype Association, or any
combination of such Marker Associations.

 

1.59                           “Net Sales”. 
Net Sales means, with respect to a Product, the gross amount invoiced by
the Royalty-Paying Party, its Affiliates and/or its sublicensees on sales or
other dispositions of Products to Third Parties, less the following deductions:

 

(a)                                  Trade,
cash and/or quantity discounts actually allowed and taken directly with respect
to such sales;

 

(b)                                 Tariffs,
duties, excises, sales taxes or other taxes imposed upon and paid directly by a
Party with respect to the production, sale, delivery or use of the Product
(excluding national, state or local taxes based on income), as reflected in the
amount invoiced;

 

(c)                                  Amounts
repaid or credited by reason of rejections, defects, recalls or returns or
because of chargebacks, refunds, rebates or retroactive price reductions; and

 

(d)                                 Freight,
insurance and other transportation charges incurred in shipping a Product to
Third Parties, as reflected in the amount invoiced.

 

Such amounts shall
be determined from the books and records of the Royalty-Paying Party, its
Affiliates and/or its sublicensees, maintained in accordance with generally
accepted accounting principles, consistently applied.  In the case of any sale of Products for consideration other than
cash, such as barter or countertrade, Net Sales shall be calculated on the fair
market value of the consideration received. 
In the event the Product is sold as part of a Combination Product, the
Net Sales from the Combination Product, for the purposes of determining royalty
payments, shall be determined by multiplying the Net Sales of the Combination
Product during the applicable royalty reporting period, by the fraction, A/A+B,
where A is the average sale price of the Product when sold separately in
finished form and B is the average sale price of the other product(s) included
in the Combination Product when sold separately in finished form, in each case
during the applicable royalty reporting period or, if sales of both the Product
and the other product(s) did not occur in such period, then in the most recent
royalty reporting period in which sales of both occurred.  In the event that such average sale price
cannot be determined for both the Product and all other products(s) included in
the Combination Product, Net Sales for the purposes of determining royalty payments
shall be calculated by multiplying the Net Sales of the Combination Product by
the fraction of C/C+D where C is the fair market value of the Product and D is
the fair market value of all other product(s) included in the Combination
Product.  In such event, the
Royalty-Paying Party shall in good faith make a determination of the respective

 

8

 

fair market values
of the Product and all other products included in the Combination Product, and
shall notify the Royalty-Receiving Party of such determination and provide the
Royalty-Receiving Party with data to support such determination.  The Royalty-Receiving Party shall have the
right to review such determination and supporting data, and to notify the Royalty-Paying
Party if it disagrees with such determination. 
If the Royalty-Receiving Party does not agree with such determination
and if the Parties are unable to agree in good faith as to such respective fair
market values, then such matter shall be referred to the Executive
Officers.  As used above, the term
“Combination Product” means, in the case of pharmaceutical products, any
pharmaceutical product that consists of a Product and other active compounds
and/or active ingredients and in the case of diagnostic products, a Product
that is sold in combination with one or more of the following:  instrumentation, financing for
instrumentation, instrument service and other diagnostic products.  With respect to diagnostic products that are
Combination Products and are sold or otherwise disposed of outside of the
United States, for any such Combination Product for which the Royalty-Paying
Party as a matter of established policy does not maintain accounting records to
permit the Royalty-Paying Party to determine the allocation of revenue among
such Product and related instrumentation, financing and/or service, the
Royalty-Paying Party shall have the right to deduct [**] percent ([**]%) of
gross revenue with respect to such Product to reflect costs of such instrumentation,
financing and/or service.

 

1.60                           “Non-[**] Drug Product”.  Non-[**] Drug Product means a therapeutic
drug product that is not a [**] Drug Product.

 

1.61                           “Other Product”. 
Other Product means any product developed with a demonstrable use of
Resulting IP, other than a Bayer Genetically-Targeted [**] Drug Product, a
Bayer Other [**] Drug Product, a Bayer Non-[**] Drug Product, a Genaissance
Genetically-Targeted [**] Drug Product, a Genaissance Other [**] Drug Product,
a Genaissance Non-[**] Drug Product, a SADR Diagnostic Product, a SER
Diagnostic Product, a Genaissance SADR Diagnostic Product or a Genaissance SER
Diagnostic Product.

 

1.62                           “Party”.  Party
means Bayer or Genaissance; “Parties” means Bayer and Genaissance.

 

1.63                           “Patent Prosecution”.  Patent Prosecution means any or all of the
activities related to the filing, prosecution, maintenance and extension of
Patent Rights in one or more countries.

 

1.64                           “Patent Rights”. 
Patent Rights means (a) any United States or foreign patent application,
(b) any United States patent or foreign patent issuing from such patent
application and (c) any continuation, continuation-in-part (to the extent the
claims in such continuation-in-part-application are directed to subject matter
specifically described in such prior patent application), divisional, reissue,
re-examination, renewal, substitution, addition, extension, supplementary
protection certificate or foreign counterpart thereof of any of the foregoing.

 

1.65                           “Polymorphism”. 
Polymorphism means any alternative sequence found at a given position in
a chromosome within a population including, but not limited to:  (a) single nucleotide polymorphisms
(“SNPs”); (b) insertions and deletions of one or more nucleotides; (c) repeats
of one or more nucleotides; (d) restriction fragment length polymorphisms and
(e) an ordered combination of two or more of such polymorphisms, e.g.,
Haplotype.

 

9

 

1.66                           “Prior IP”. 
Prior IP means either Bayer Prior IP or Genaissance Prior IP, or both.

 

1.67                           “Product”. 
Product means a Bayer Genetically-Targeted [**] Drug Product, a Bayer
Other [**] Drug Product, a Bayer Non-[**] Drug Product, a Genaissance
Genetically-Targeted [**] Drug Product, a Genaissance Other [**] Drug Product,
a Genaissance Non-[**] Drug Product, a SADR Diagnostic Product, a SER
Diagnostic Product, a Genaissance SADR Diagnostic Product, a Genaissance SER
Diagnostic Product and/or an Other Product.

 

1.68                           “Program Manager”.  Program Manager means the research scientist appointed by a Party
to serve as such Party’s principal coordinator and liaison for the
Collaboration.

 

1.69                           “Regulatory Authority”.  Regulatory Authority means (a) the United
States Food and Drug Administration or any successor agency with
responsibilities comparable to those of the United States Food and Drug
Administration, or (b) a regulatory authority or agency of a country other than
the United States with responsibilities comparable to those of the United
States Food and Drug Administration.

 

1.70                           “[**] Trial”. 
[**] Trial means the study undertaken by Bayer as described in Exhibit
B to this Agreement.

 

1.71                           “Resulting IP”. 
Resulting IP means the Bayer Resulting IP and the Genaissance Resulting
IP.

 

1.72                           “Resulting Patent Rights”.  Resulting Patent Rights means Bayer Patent
Rights and Genaissance Patent Rights.

 

1.73                           “ROW Country(ies)”.  ROW Country(ies) means a country other than [**].

 

1.74                           “Royalty-Paying Party”.  Royalty-Paying Party means the Party paying
royalties pursuant to Section 4.3 or Section 4.4.

 

1.75                           “Royalty-Receiving Party”.  Royalty-Receiving Party means the party to
whom royalties are paid pursuant to Section 4.3 or Section 4.4.

 

1.76                           “SADR”.  SADR means
a [**] adverse drug reaction.

 

1.77                           “SADR Clinical Phenotype”.  SADR Clinical Phenotype means a type of
adverse event following the administration of a [**] Drug Product, as selected
from the types listed on Exhibit C.

 

1.78                           “SADR Confirmation Gene”.  SADR Confirmation Gene means a Gene in the
set of Genes to be analyzed by a Party or by both Parties in the SADR Study
that contains (a) a HAPTM Marker that is a part of
a GNSC SADR HAPTM
Marker Association, and (b) is not a SADR Expansion Gene.

 

1.79                           “SADR Diagnostic Product”.  SADR Diagnostic Product means a [**]
Diagnostic Product that detects directly or indirectly (a) one (1) or more HAPTM
Markers or Collaboration [**] Haplotypes referenced in a GNSC SADR HAPTM
Marker Association or a Collaboration

 

10

 

SADR Haplotype
Association or (b) one (1) or more Surrogate Markers of the markers referenced
in subsection (a), whether or not such SADR Diagnostic Product also detects
directly or indirectly (i) one (1) or more HAPTM Markers referenced in a GNSC SER HAPTM
Marker Association or a Collaboration SER HAPTM Marker Association or (ii) one (1) or
more Surrogate Markers of the markers referenced in subsection (i).

 

1.80                           “SADR Expansion Gene”.  SADR Expansion Gene means a Gene in the set
of Genes to be analyzed by a Party or by both Parties in the SADR Study that
contains a Bayer Polymorphism that is a part of a Bayer SADR Polymorphism
Association.

 

1.81                           “SADR Plan”. 
SADR Plan means the plan for the SADR Study set forth on Exhibit D
to this Agreement, as such plan may be modified from time to time pursuant to
Section 2.1.1.

 

1.82                           “SADR Study”. 
SADR Study means the study to be undertaken by the Parties pursuant to
Section 2.1.

 

1.83                           “SADR Study Term”.  SADR Study Term means the period commencing upon the Effective
Date and ending on the earlier of (a) delivery of the Final SADR Study Report
pursuant to Section 2.1.2(g) or (b) the termination of this Agreement pursuant
to Article IX.

 

1.84                           “SER”.  SER means a
[**] efficacy response.

 

1.85                           “SER Clinical Phenotype”.   SER Clinical Phenotype means a type of
efficacy endpoint following the administration of a [**] Drug Product, as
selected from the types listed on Exhibit E.

 

1.86                           “SER Confirmation Gene”.  SER Confirmation Gene means a Gene in the
set of Genes to be analyzed by a Party or by both Parties in the SER Study,
that contains a HAPTM Marker that is a part of a GNSC SER HAPTM
Marker Association.

 

1.87                           “SER Diagnostic Product”.  SER Diagnostic Product means a [**]
Diagnostic Product that detects directly or indirectly (a) one (1) or more HAPTM
Markers referenced in a GNSC SER HAPTM Marker Association or a
Collaboration SER HAPTM Marker Association or (b) one (1) or more Surrogate
Markers of the markers referenced in subsection (a), but does not detect (i)
one (1) or more HAPTM Markers or Collaboration [**] Haplotypes referenced in
a GNSC SADR HAPTM
Marker Association or a Collaboration SADR Haplotype Association or (ii) one
(1) or more Surrogate Markers of the markers referenced in subsection (i).

 

1.88                           “SER Expansion Gene”.  SER Expansion Gene means a Gene in the set
of Genes to be analyzed by a Party or by both Parties in the SER Study, that
(a) contains a Bayer Polymorphism that is a part of a Bayer SER Polymorphism
Association, and (b) is not an SER Confirmation Gene.

 

1.89                           “SER Plan”.  SER
Plan means the plan for the SER Study set forth in Exhibit F to this
Agreement, as such Plan may be modified from time to time pursuant to Section
2.2.2.

 

11

 

1.90                           “SER Study”. 
SER Study means the study to be undertaken by the Parties pursuant to
Section 2.2.

 

1.91                           “SER Study Term”. 
SER Study Term means the period commencing upon the giving of notice by
the Steering Committee pursuant to Section 2.2.1 and ending on the earlier of
(a) delivery of the Final SER Study Report pursuant to Section 2.2.3(e) or (b)
the termination of this Agreement pursuant to Article IX.

 

1.92                           “[**]”.  [**] means a
therapeutic compound that [**].

 

1.93                           “[**] Diagnostic Product”.  [**] Diagnostic Product means any product or
service that is intended for use in the prognosis of an individual’s response
to a [**] Drug Product.

 

1.94                           “[**] Drug Product”.  [**] Drug Product means a therapeutic drug product that
(a) comprises a [**] and (b) is approved for treating individuals
with [**].

 

1.95                           “STRENGTH Trial”.  STRENGTH Trial means the study undertaken by Genaissance as described
in Exhibit G to this Agreement.

 

1.96                           “Sublicense Income”.  Sublicense Income means [**] received from sublicensees of a
Party in connection with a grant of rights pursuant to Article III by such
Party, excluding (a) [**], (b) [**], (c) [**], and (d) [**].  If non-monetary consideration is so
received, then [**].

 

1.97                           “Surrogate Marker”.  Surrogate Marker means any biomolecule (including but not limited
to Polymorphisms, proteins, sugars and lipids) or chemical compound (including
but not limited to drugs and metabolites thereof), where the absence, presence
or quantity of such biomolecule or chemical compound in an individual is
measurable or correlated to a statistically robust degree with one or more HAPTM
Markers, Collaboration [**] Haplotypes or Bayer Polymorphisms referenced in a
GNSC SADR HAPTM
Marker Association, Collaboration SADR Haplotype Association, GNSC SER HAPTM
Marker Association, Collaboration SER HAPTM Marker Association, Bayer SER
Polymorphism Association or Bayer SADR Polymorphism Association, unless such
biomolecule was independently identified as being correlated with the
underlying Clinical Phenotype without use of information relating to such HAPTM
Markers or Collaboration [**] Haplotypes or the related Marker Associations.

 

1.98                           “Territory”. 
Territory means all countries of the world.

 

1.99                           “Third Party”. 
Third Party means any entity other than the Parties or their respective
Affiliates.

 

1.100                     “Valid Claim”. 
Valid Claim means either (a) a claim of a pending patent application
which claim was filed in good faith and has not been abandoned or finally
disallowed without the possibility of appeal or re-filing of said patent
application or (b) a claim of an issued and unexpired patent which has not been
held permanently revoked, unenforceable or invalid by a decision of a court or
other governmental agency of competent jurisdiction, unappealable or unappealed
within the time allowed for appeal. 
Notwithstanding the foregoing, if a claim of a patent application has
not issued as a claim of an issued patent within the Patent Rights within [**]
([**]) years after the filing date from which such claim takes priority, such
pending claim

 

12

 

shall cease to be a Valid
Claim for purposes of this Agreement unless and until such claim becomes an
issued claim of an issued patent within the Patent Rights.

 

1.101                     Additional Definitions.  Each of the following definitions is set
forth in the Section of this Agreement indicated below:

 

	
  Defined
  Term

  	
   

  	
  Section

  
	
  Agreement

  	
   

  	
  Preamble

  
	
  Average Selling
  Price

  	
   

  	
  3.2.2(c)

  
	
  Bankruptcy Code

  	
   

  	
  3.9.1

  
	
  Bayer

  	
   

  	
  Preamble

  
	
  Bayer Inventions

  	
   

  	
  5.1.2

  
	
  Bayer SADR
  Diagnostic License

  	
   

  	
  3.2.1(a)

  
	
  Bayer SER
  Diagnostic License

  	
   

  	
  3.2.1(a)

  
	
  Blocking IP

  	
   

  	
  4.6(b)

  
	
  Breaching Party

  	
   

  	
  9.2.

  
	
  Collateral

  	
   

  	
  9.6

  
	
  Combination
  Product

  	
   

  	
  1.59

  
	
  Contract Year

  	
   

  	
  3.2.2(b)

  
	
  Effective Date

  	
   

  	
  Preamble

  
	
  Excluded Bayer
  Obligations

  	
   

  	
  3.10

  
	
  Excluded
  Genaissance Obligations

  	
   

  	
  3.10

  
	
  Exons

  	
   

  	
  Exhibit A

  
	
  Exon/Intron
  Junction

  	
   

  	
  Exhibit A

  
	
  Filings

  	
   

  	
  9.6

  
	
  Final SADR Study
  Report

  	
   

  	
  2.1.2(g)

  
	
  Final SER Study
  Report

  	
   

  	
  2.2.3(e)

  
	
  Genaissance
  Inventions

  	
   

  	
  5.1.1

  
	
  Genaissance

  	
   

  	
  Preamble

  
	
  Genaissance SADR
  Diagnostic License

  	
   

  	
  3.2.4(a)

  
	
  Genaissance SER
  Diagnostic License

  	
   

  	
  3.2.4(a)

  
	
  HAPTM Typing Fee

  	
   

  	
  4.1

  
	
  Indemnitee

  	
   

  	
  8.4

  
	
  Indemnitor

  	
   

  	
  8.4

  
	
  Index Repository

  	
   

  	
  Exhibit A

  
	
  Introns

  	
   

  	
  Exhibit A

  
	
  Invalidity Claim

  	
   

  	
  5.3.4

  
	
  Joint Inventions

  	
   

  	
  5.1.3

  
	
  List of
  Candidate Diagnostic Polymorphisms

  	
   

  	
  3.2.1©

  
	
  Manufacturing
  Fee

  	
   

  	
  3.2.2(b)

  
	
  Non-Breaching
  Party

  	
   

  	
  9.2.2

  
	
  Obligations

  	
   

  	
  9.6

  
	
  Party
  Representatives

  	
   

  	
  10.6

  
	
  Preliminary SADR
  Study Report

  	
   

  	
  2.1.2(g)

  
	
  Preliminary SER
  Study Report

  	
   

  	
  2.2.3(e0

  

 

13

 

	
  Defined
  Term

  	
   

  	
  Section

  
	
  Projected Test
  Quantity N1

  	
   

  	
  3.2.2(b)

  
	
  Projected Test
  Quantity N2

  	
   

  	
  3.2.2(b)

  
	
  Promoter

  	
   

  	
  Exhibit A

  
	
  Purchase Price

  	
   

  	
  3.2.2(a)

  
	
  Purchase
  Shortfall Payment

  	
   

  	
  3.2.2(b)

  
	
  Quantity Sold

  	
   

  	
  3.2.2(c)

  
	
  Royalty Payment

  	
   

  	
  3.2.2(a)

  
	
  Royalty
  Shortfall Payment

  	
   

  	
  3.2.2(b)

  
	
  Royalty Term

  	
   

  	
  4.6(a)

  
	
  SEC

  	
   

  	
  10.8.1

  
	
  SNPs

  	
   

  	
  1.65

  
	
  SADR Discovery Cohort

  	
   

  	
  2.1.2(c)(i)

  
	
  SADR Validation Cohort

  	
   

  	
  2.1.2(c)(i)

  
	
  SER Discovery Cohort

  	
   

  	
  2.2.3(c)(i)

  
	
  SER Validation Cohort

  	
   

  	
  2.2.3(c)(i)

  
	
  Start Date

  	
   

  	
  3.2.2(b)

  
	
  [**]–Specific
  SER Diagnostic Product

  	
   

  	
  3.2.2(a)

  
	
  Steering
  Committee

  	
   

  	
  2.3.1

  
	
  Test Fee

  	
   

  	
  3.2.2(b)

  
	
  Third Party Claim

  	
   

  	
  5.4

  
	
  Third Party
  Payments

  	
   

  	
  4.6(b)

  
	
  Three-Prime
  Untranslated Region

  	
   

  	
  Exhibit A

  

 

ARTICLE II

COLLABORATION

 

2.1                                 SADR Study Management and
Responsibilities.

 

2.1.1                        SADR Plan. 
The Parties shall undertake the SADR Study in accordance with this
Article II and the SADR Plan, which the Steering Committee shall provide to the
Parties within sixty (60) days after the Effective Date, such plan to be
appended hereto as Exhibit D.  The
Program Managers shall review the SADR Plan on at least a monthly basis and
submit any proposed updates or amendments to the Steering Committee for its
approval, as well as proposed revised research goals.  Any such updates or amendments or revised research goals shall
not become effective until approved by the Steering Committee.  The Steering Committee shall review and
consider any such proposed updates or amendments or revised research goals on a
reasonably expeditious basis.  Once the
Steering Committee decides that the SADR Study has been completed and no
additional work is to be scheduled, the Parties shall execute the final data
transfer according to Section 2.1.2(f) and prepare the Preliminary SADR Study
Report in accordance with Section 2.1.2(g).

 

2.1.2                        SADR Study Objectives and
Responsibilities.

 

(a)                                  General.  The objectives of the SADR Study are to (i)
confirm GNSC SADR HAPTM Marker Associations; (ii) expand the Bayer
SADR Polymorphism

 

14

 

Associations to
Collaboration SADR Haplotype Associations; and (iii) discover Collaboration
SADR Haplotype Associations for Candidate Genes.  Each Party agrees to use commercially reasonable efforts to (A)
undertake the responsibilities assigned to such Party in this Article II and
the SADR Plan, including, but not limited to, the dedication of laboratory
facilities, equipment and personnel appropriate to such efforts, (B) perform
its obligations hereunder in good faith in a scientific and workmanlike manner,
(C) as appropriate, make available to the other Party those resources set forth
in Article II and the SADR Plan, and (D) carry out all work done in the course
of the SADR Study in material compliance with all applicable federal, state or
local laws, regulations and guidelines governing the conduct of such work.

 

(b)                                 Confirmation
of GNSC SADR HAPTM Marker Associations.  As part of the SADR Study, the Parties shall
undertake a case/control study to confirm GNSC SADR HAPTM Marker
Associations by analyzing SADR Confirmation Genes in DNA samples from
appropriate patients from the [**] Trial selected by the Steering
Committee.  Bayer shall deliver to
Genaissance the DNA samples for each patient to be analyzed by Genaissance to
determine the suitability of each such sample for use in one of Genaissance’s
standard HAPTM
Typing Processes that is chosen by Genaissance in consultation with the
Steering Committee for each SADR Confirmation Gene.  If Genaissance reasonably determines that any such DNA sample is
unsuitable for use in such processes, Genaissance shall provide written notice
to Bayer of such determination and the Steering Committee shall determine in
good faith a proper course of action. 
All HAPTM
Typing Processes and expenses incurred by Genaissance pursuant to this
subsection (b) shall be borne by Genaissance.

 

(c)                                  Expansion
of Bayer SADR Polymorphism Associations to Collaboration SADR Haplotype
Associations.  As part of the SADR
Study, the Parties shall undertake a case/control study of SADR Expansion Genes
in accordance with this subsection (c). 
Each SADR Expansion Gene shall preferably have a known genomic
structure; however, if an SADR Expansion Gene does not have a known genomic
structure, the Steering Committee shall decide whether to proceed with a HAPTM
Marker discovery effort for such Gene or whether additional measures, such as
cloning, should be undertaken to acquire the genomic sequence information.  The costs of acquiring such information
shall be borne by Bayer.

 

(i)                                     Patient
Selection.  The Steering Committee
shall select [**] adverse event cases, and [**] matched controls from
[**].  The case definition used for this
study shall be defined by the Steering Committee.  [**] cases and controls will be used for the discovery of
Collaboration SADR Haplotype Associations (the “SADR Discovery Cohort”), and
[**]cases and controls will be used for the validation of these Marker
Associations (the “SADR Validation Cohort”). 
Bayer shall send DNA samples from the selected [**] Trial patients to
Genaissance to analyze their suitability for use in one of Genaissance’s
standard HAPTM  Typing
Processes chosen by Genaissance, with the written approval by the Steering
Committee, for each SADR Expansion Gene. 
If Genaissance reasonably determines that any such DNA sample is
unsuitable for use in such processes, Genaissance shall provide written notice
to Bayer of such determination and the Steering Committee shall determine in
good faith a proper course of action.

 

15

 

(ii)                                  HAPTM
Marker Discovery.  For any SADR
Expansion Gene that does not have HAPTM  Markers in the HAPTM
Database upon commencement of the Collaboration, Genaissance shall use its
standard operating procedure and HAPTM Builder Software to discover HAPTM
Markers in its Index Repository, [**]. Any HAPTM  Markers so discovered shall
become part of the HAPTM Database.

 

(iii)                               HAPTM
Marker Assignment.  Using
information in the HAPTM Database and
Genaissance’s proprietary algorithms, Genaissance shall select a minimal number
of SNPs needed for assigning HAPTM Marker pairs for each of
the SADR Expansion Genes to the patients in the SADR Discovery Cohort and the
patients in the SADR Validation Cohort. 
The Steering Committee shall review and approve such selected SNPs.

 

(iv)                              Discovery
of Collaboration SADR Haplotype Associations.  Genaissance shall genotype the selected SNPs
from the SADR Expansion Genes in samples from the SADR Discovery Cohort by
using standard HAPTM Typing Processes chosen by Genaissance in
consultation with the Steering Committee pursuant to Section 2.1.2 (c)(i).  Genaissance shall use the genotyping data
and its HAPTM
Builder Software to assign a HAPTM Marker pair for each SADR
Expansion Gene to each patient in the SADR Discovery Cohort.  Bayer shall pay Genaissance the HAPTM
Typing Fee as set forth in Section 4.1 for analysis of each SADR
Expansion Gene in each patient in the SADR Discovery Cohort.

 

(v)                                 Validation
of Collaboration SADR Haplotype Associations.  For each SADR Expansion Gene that has a HAPTM
Marker in a Collaboration SADR Haplotype Association discovered hereunder,
Genaissance shall genotype the previously-selected SNPs in samples from
patients in the SADR Validation Cohort. 
Genaissance shall use the genotyping data and its HAPTM Builder
Software to assign a HAPTM Marker pair to each
patient in the SADR Validation Cohort. 
Bayer shall pay Genaissance the HAPTM Typing Fee as set forth
in Section 4.1 for analysis of each SADR Expansion Gene in each patient in the
SADR Validation Cohort.

 

(d)                                 Discovery
of Haplotypes in [**] Trial Patients.  Genaissance shall sequence certain SADR Expansion Genes in DNA
samples from certain [**] Trial patients that displayed an adverse response or
adverse response related endpoint.  The
Steering Committee shall select the SADR Expansion Genes and [**] Trial
patients.  Bayer shall pay Genaissance
the Sequencing Fee as set forth in Section 4.2 for this sequencing
service.  Genaissance shall, [**] use
the Polymorphism data from the selected [**] Trial patients and its HAPTM
Builder Software to determine the Collaboration [**] Haplotypes present in such
patients and shall disclose such Collaboration [**] Haplotypes to Bayer.

 

(e)                                  Discovery
of Collaboration SADR Haplotype Association Using Candidate Genes.  The Parties shall analyze Candidate Genes to
discover Collaboration SADR

 

16

 

Haplotype Associations as
described in Sections 2.1.2 (c)(i) through (v).  The Parties agree that the Steering Committee shall select no
more than [**] Candidate Genes for analysis. 
Additional selection criteria for Candidate Genes will be agreed upon by
the Steering Committee.  Bayer will pay
Genaissance [**] the HAPTM Typing Fee as set forth
in Section 4.1 for each Candidate Gene and each patient in the SADR Discovery
Cohort and SADR Validation Cohort.

 

(f)                                    Data
Analysis.  Genaissance and Bayer
shall provide to each other all clinical and HAPTM Marker data generated or
used in the SADR Study on a regular basis so that each Party may perform its
own association analyses.  In performing
such analyses, each Party may also include any relevant data present in [**]
[**] by means of the on-site access provided to the Steering Committee pursuant
to Section 2.7.

 

(g)                                 SADR
Study Report.  Within sixty (60)
days after the final data exchange pursuant to Section 2.1.2 (f), each Party
shall provide to the other Party a written summary report in a mutually-agreed
format setting forth in reasonable detail such Party’s results with respect to
any GNSC SADR HAPTM Marker Associations that are confirmed and
any Collaboration SADR Haplotype Associations that are discovered in the SADR
Study (each, a “Preliminary SADR Study Report”).  Within thirty (30) days thereafter each Party shall provide to
the other Party comments on the other Party’s Preliminary SADR Study
Report.  If a Party receiving comments
disagrees with such comments, it shall notify the commenting Party within
fifteen (15) days after receipt of the comments, following which the Steering
Committee shall meet to resolve any issues and agree upon a final version of
both Preliminary SADR Study Reports (the “Final SADR Study Report”).

 

2.2                                 SER Study Management and
Responsibilities.

 

2.2.1                        Notice and Timing.  At the first Steering Committee meeting, the Steering Committee
shall determine the appropriate magnitude of the SER Study based on the target
gene information provided by both parties, or a portion thereof, and shall
notify the Parties in writing of such decision.  Such study shall proceed contemporaneously with the SADR Study.

 

2.2.2                        SER Plan. 
The Parties shall undertake the SER Study in accordance with this
Article II and the SER Plan, which the Steering Committee shall provide to the
Parties within thirty (30) days after the Steering Committee provides notice as
set forth in Section 2.2.1 that the Steering Committee has determined the
appropriate magnitude of the SER Study. 
The SER Plan will be appended hereto as Exhibit F. The Program Managers
shall review the SER Plan on at least a monthly basis and submit any proposed
updates or amendments to the Steering Committee for its review.  Any such updates or amendments shall not
become effective until approved by the Steering Committee.  The Steering Committee shall review and
consider any such proposed updates or amendments or revised research goals on a
reasonably expeditious basis.  Once the
Steering Committee decides that the SER Study has been completed and no additional
work is to be scheduled, the Parties shall execute the final data transfer
according to Section 2.2.3(d) and prepare the Preliminary SER Study Report in
accordance with Section 2.2.3(e).

 

17

 

2.2.3                        SER Study Objectives and
Responsibilities.

 

(a)                                  General.  The objectives of the SER Study are to (i)
confirm GNSC SER HAPTM Marker Associations, and (ii) expand Bayer
SER Polymorphism Associations to Collaboration SER HAPTM Marker
Associations.  Each Party agrees to use
commercially reasonable efforts to (A) undertake the responsibilities assigned
to such Party in this Article II and the SER Plan, including, but not limited
to, the dedication of laboratory facilities, equipment and personnel
appropriate to such efforts; (B) perform its obligations hereunder in good
faith in a scientific and workmanlike manner; (C) as appropriate, make
available to the other Party those resources set forth in the SER Plan; and (D)
carry out all work done in the course of the SER Study in material compliance
with all applicable federal, state or local laws, regulations and guidelines
governing the conduct of such work. 
[**]shall bear[**] costs in performing [**]obligations set forth in the
SER Plan.

 

(b)                                 Confirmation
of GNSC SER HAPTM
Marker Associations.  As part of the
SER Study, the Parties shall undertake a case/control study to confirm GNSC SER
HAPTM
Marker Associations by analyzing SER Confirmation Genes in DNA samples from
[**] [**] patients selected by the Steering Committee.  Bayer shall deliver to Genaissance the DNA
samples for each selected [**] Trial patient to be analyzed by Genaissance to determine
the suitability of each such sample for use in one of Genaissance’s standard HAPTM
Typing Processes that is chosen by Genaissance in consultation with the
Steering Committee for each SER Confirmation Gene.  If Genaissance reasonably determines that any such DNA sample is
unsuitable for use in such processes, Genaissance shall provide written notice
to Bayer of such determination and the Steering Committee shall determine in
good faith a proper course of action.

 

(c)                                  Expansion
of Bayer SER Polymorphism Associations to Collaboration SER HAPTM
Marker Associations.  As part
of the SER Study, the Parties shall undertake a case/control study of SER
Expansion Genes in accordance with this subsection (c).  Each SER Expansion Gene shall preferably
have a known genomic structure; however, if an SER Expansion Gene does not have
a known genomic structure, the Steering Committee will decide whether to
proceed with a HAPTM Marker discovery effort for such Gene or
whether additional measures such as cloning should be undertaken to acquire the
genomic sequence information.

 

(i)                                     Patient
Selection.  The Steering Committee
shall select [**] sets of [**] patients from the [**] and assign patients from
each set into various response categories [**] that will be defined by the
Steering Committee based upon results from the [**] Trial.  [**]of patients will be used for the
discovery of Collaboration SER HAPTM  Marker Associations (the
“SER Discovery Cohort”), and [**]of patients will be used for validation of
these Marker Associations (the “SER Validation Cohort”).  Bayer shall send DNA samples from the
selected [**] Trial patients to Genaissance to analyze their suitability for
use in one of Genaissance’s standard HAPTM  Typing Processes that is
chosen by Genaissance in consultation with the Steering Committee for each SER
Expansion Gene.  If Genaissance
reasonably determines that any such DNA Sample is

 

18

 

unsuitable for use in such processes, Genaissance
shall provide written notice to Bayer of such determination and the Steering
Committee shall determine in good faith a proper course of action.

 

(ii)                                  HAPTM
Marker Discovery.  For any SER
Expansion Gene that does not have HAPTM  Markers in the HAPTM
Database upon the commencement of the Collaboration, Genaissance shall use its
standard operating procedure and HAPTM Builder Software to discover HAPTM
Markers in its Index Repository, [**]. 
Any HAPTM  Markers
so discovered shall become part of the HAPTM Database.

 

(iii)                               HAPTM Marker
Assignment.  Using information in
the HAPTM
Database and Genaissance’s proprietary algorithms, Genaissance shall select a
minimal number of SNPs needed for assigning HAPTM Marker pairs for each of
the SER Expansion Genes to the patients in the SER Discovery Cohort and the
patients in the SER Validation Cohort. 
The Steering Committee shall review and approve such selected SNPs.

 

(iv)                              Discovery
of Collaboration SER HAPTM Marker Associations.  Genaissance shall genotype the selected SNPs
from the SER Expansion Genes in samples from the SER Discovery Cohort by using
standard HAPTM
Typing Processes chosen by Genaissance. 
Genaissance shall use the genotyping data and its HAPTM Builder
Software to assign a HAPTM Marker pair to each
patient in the SER Discovery Cohort.

 

(v)                                 Validation
of Collaboration SER HAPTM Marker Associations.  For each SER Expansion Gene that has a HAPTM
Marker in a Collaboration SER HAPTM Marker Association
discovered hereunder, Genaissance shall genotype the previously-selected SNPs
in samples from patients in the SER Validation Cohort.  Genaissance shall use the genotyping data
and its HAPTM
Builder Software to assign a HAPTM Marker pair to each
patient in the SER Validation Cohort.

 

(d)                                 Data
Analysis.  Genaissance and Bayer
will provide to each other all clinical and HAPTM Marker data used in the
SER Study on a regular basis so that each Party may perform its own association
analyses.  In performing such analyses,
each Party may also include any relevant data present in the [**] by means of
the on-site access provided to the Steering Committee pursuant to Section 2.7.

 

(e)                                  SER
Study Report.  Within [**] days
after the final data exchange pursuant to Section 2.2.3(d), each Party shall
provide to the other Party a written summary report in a mutually-agreed format
setting forth in reasonable detail such Party’s results with respect to any
GNSC SER HAPTM
Marker Associations that are confirmed and any Collaboration SER HAPTM
Marker Associations that are discovered in the SER Study (each, a
“Preliminary SER Study Report”).  Within
[**] thereafter each Party shall provide to the other Party comments on the
other Party’s Preliminary SER Study Report. 
If a Party receiving comments disagrees with

 

19

 

such comments, it shall
notify the commenting Party within [**] days after receipt of the comments,
following which the Steering Committee shall meet to resolve any issues and
agree upon a final version of both Preliminary SER Study Reports (the “Final
SER Study Report”).

 

2.3                                 Steering Committee.

 

2.3.1                        Formation and Composition.  A joint committee (the “Steering Committee”)
comprised of an equal number of representatives of each of Bayer and
Genaissance, one to be the Program Manager and at least one to be [**], shall
be appointed by the Parties within thirty (30) days after the Effective
Date.  Each Party shall also designate a
co-chair of its representatives to the Steering Committee within such 30-day
period.  The Steering Committee shall
meet as needed, but not less frequently than once each Calendar Quarter during
the Collaboration Period.  The Steering
Committee shall, if requested by a Party, meet within thirty (30) days after
the request of such Party to act upon any matter requiring action by the
Steering Committee for approval. 
Meetings shall be at such times agreed to by Bayer and Genaissance and
shall alternate between [**], unless the Parties otherwise agree or shall be in
such other form (e.g., telephone or video conference) as the members of the
Steering Committee shall agree.  Each Party
shall bear any and all expenses of its representatives in connection with
Steering Committee participation.  The
Steering Committee shall remain in operation during the Collaboration Period
unless otherwise agreed by the Parties. 
A Party may change one or more of its representatives to the Steering
Committee and/or its designated co-chair at any time upon written notice to the
other Party.  The Parties may mutually
agree to change the number of representatives which comprises the Steering
Committee.  Either Party may permit
additional employees and consultants to attend and participate (on a non-voting
basis) in the Steering Committee meetings, subject to the confidentiality
provisions of Article VI.

 

2.3.2                        Steering Committee Functions and
Powers.  The Steering Committee
shall be responsible for the overall supervision and management of the
Collaboration.  In particular, the
Steering Committee shall:

 

(a)                                  monitor
and evaluate the status and progress of the Collaboration;

 

(b)                                 approve
any material modifications to the SADR Plan or SER Plan;

 

(c)                                  define
joint processes to manage the Collaboration and the exchange of data pursuant
to Section 2.6 and Section 2.7;

 

(d)                                 determine
appropriate magnitude of the SER Study pursuant to Section 2.2.1

 

(e)                                  perform
such additional tasks assigned to it in this Article II; and

 

(f)                                    resolve
operational disputes between the Parties.

 

2.3.3                        Decisions of the Steering Committee.  All decisions of the Steering Committee
shall be made by unanimous vote of the representatives of the Parties, with
each Party’s representatives collectively having one vote.  If the Steering Committee is unable to reach

 

20

 

agreement on any matter
referred to it for resolution within thirty (30) days after the matter is
referred to it, such matter shall be referred to the Party Representatives and
shall thereafter be subject to Section 10.6. 
Notwithstanding the foregoing, a decision not to approve the inclusion
in the SADR Study or the SER Study of any proposed work, or to remove from the
SADR Study or SER Study work previously agreed to be included, shall be [**].

 

2.3.4                        Minutes and Reports.  The Steering Committee shall be responsible
for keeping accurate minutes of its deliberations which shall record all
proposed decisions and all actions recommended or taken.  Within ten (10) business days after each
meeting, the Party that hosted the meeting shall provide the other Party with
draft minutes of such meeting, including a summary of all actions taken at such
meeting.  Within thirty (30) days after
each meeting, the co-chairs will sign final versions of the meeting minutes and
such minutes shall thereafter be recognized as duly accepted by the
Parties.  All records of the Steering
Committee shall be distributed to and available to both Parties.

 

2.4                                 Program Managers.  Genaissance and Bayer shall each appoint a Program Manager within
thirty (30) days after the Effective Date. 
Each Party shall have the right to designate a different Program Manager
at any time.  The Program Managers shall
jointly oversee the conduct of the SADR Study and SER Study and shall be
responsible for, among other things, recommending to the Steering Committee any
updates and amendments to the SADR Plan and SER Plan.  The Program Managers shall confer with each other on a regular
basis, and each shall keep the other reasonably and candidly informed of all
developments in the conduct of the Collaboration.

 

2.5                                 Regulatory Cooperation.  The Parties intend to obtain regulatory
approval for the Products.  The Party
with the right to commercialize a Product hereunder shall have the sole
discretion in determining the location and timing of any regulatory
filings.  Such Party shall own all such
filings.  Each Party shall reasonably
assist the other Party in making any regulatory approval filings.

 

2.6                                 Exchange of Prior IP Information.  At the first Steering Committee Meeting,
each Party shall provide the other Party with (a) a list of Genes and
Polymorphisms or HAPTM Markers in its GNSC SADR HAPTM
Marker Associations or Bayer SADR Polymorphism Associations, as applicable, (b)
a list of Genes and Polymorphisms or HAPTM Markers in its GNSC SER HAPTM
Associations or Bayer SER Polymorphism Associations, as applicable; and (c) a
list of Genes and Polymorphisms that [**], as applicable.  Additional information with respect to Prior
IP that is developed by a Party prior to the end of the Collaboration Period
shall be provided in writing by such Party to the other Party within twenty
(20) days after the end of the Collaboration Period.

 

2.7                                 Data Access. 
To facilitate patient selection and association analysis pursuant to the
SADR Study and the SER Study, each Party shall share with the other Party
[**].  Bayer shall provide the Steering
Committee with on-site access to [**]data [**].  Genaissance shall provide the Steering Committee with on-site
access to [**]data [**].  The Steering
Committee’s access to [**] shall cease [**] ([**]) days after the later of
receipt of the SADR Study Report by both Parties or the receipt of the SER
Study Report by both Parties.  The data
access also includes [**].

 

21

 

2.8                                 Product Labeling.  In so far as is permitted by the relevant Regulatory Authorities,
the Genaissance name and logo shall each be displayed in the package insert of
any diagnostic Product developed, manufactured or commercialized by Bayer.  In so far as is permitted by the relevant
Regulatory Authorities, all labeling, printed and electronic materials associated
with such Products shall indicate that Products were developed with the use of
Genaissance technology.  Genaissance
shall grant Bayer an appropriate trademark license for such purpose.  The Bayer name and logo shall be displayed
on any Product developed, manufactured or commercialized by Genaissance only if
Genaissance has obtained the prior written consent of Bayer with respect to
such Product.

 

ARTICLE III

GRANTS
OF RIGHTS

3.1                                 Research Grants.

 

3.1.1                        Genaissance Research Grant.  Subject to the terms and conditions of this
Agreement, Bayer hereby grants to Genaissance a non-exclusive,
non-royalty-bearing license in the Territory, without  the right to grant
sublicenses, under the Bayer IP Rights, to practice the Know-How covered by or
included in the Bayer IP Rights, to the extent necessary or useful for
Genaissance to perform those activities to be undertaken by Genaissance in the
conduct of the Collaboration as set forth in this Agreement and in the
Collaboration Plan.

 

3.1.2                        Bayer Research Grant.  Subject to the terms and conditions of this Agreement,
Genaissance hereby grants to Bayer a non-exclusive, non-royalty-bearing license
in the Territory, without  the right to grant sublicenses, under the
Genaissance IP Rights, to practice the Know-How covered by or included in the
Genaissance IP Rights, to the extent necessary or useful for Bayer to perform
those activities to be undertaken by Bayer in the conduct of the Collaboration
as set forth in this Agreement and in the Collaboration Plan.

 

3.2                                 Diagnostic Products Grants.

 

3.2.1                        Bayer Diagnostic Products License.

 

(a)                                  License.  Subject to the terms and conditions of this
Agreement, including, without limitation, the terms of Section 3.2.2,
Genaissance hereby grants to Bayer (i) an exclusive, royalty-bearing (as set
forth in Section 4.3(a)) license in the Territory, with the right to grant
sublicenses, under Genaissance IP Rights, to research, develop, make, have
made, use, import, offer to sell and sell SADR Diagnostic Products (the “Bayer
SADR Diagnostic License”), and (ii) an exclusive, royalty-bearing (as set forth
in Section 4.3(b)) license in the Territory, with the right to grant
sublicenses, under Genaissance IP Rights, to research, develop, make, have
made, use, import, offer to sell and sell SER Diagnostic Products (the “Bayer
SER Diagnostic License”).  For the
purposes of clarity, neither the Bayer SADR Diagnostic License nor the Bayer
SER Diagnostic License shall include a right under Genaissance IP Rights to
research, develop or commercialize therapeutic drug products.

 

(b)                                 Terms.  Bayer shall [**] for any Bayer SER
Diagnostic License or Bayer SADR Diagnostic License.  The Bayer SADR Diagnostic License shall become non-exclusive with
respect to a given Marker Association and its component Markers if Bayer fails
to

 

22

 

meet its diligence
obligations as set forth in this subsection (b), provided, that,
(i) if Bayer [**] or (ii) if [**], then the Bayer SADR Diagnostic License shall
remain exclusive for all Markers in all Marker Associations for such SADR
Clinical Phenotype.  The Bayer SER
Diagnostic License shall become non-exclusive with respect to a given Marker
Association and its component Markers if Bayer fails to meet its diligence
obligations as set forth in this subsection (b), provided, that
(i) if Bayer [**],  or (ii) if [**],
then the Bayer SER Diagnostic License shall remain exclusive for all Markers in
all Marker Associations for such SER Clinical Phenotype.

 

(c)                                  Diligence.  Diligence obligations for diagnostic product
development, on a Clinical Phenotype-by-Clinical Phenotype basis, shall include
four (4) stages spanning no more than [**] ([**]) months.  Stage I diligence shall mean generation of a
product development plan for each Clinical Phenotype within [**] ([**]) months
after the end of the Collaboration Period. 
Notwithstanding any other provision herein to the contrary, Bayer’s SER
Diagnostic License with respect to a GNSC SER HAPTM Marker Association for
a given SER Clinical Phenotype shall terminate if Bayer fails to meet Stage I
diligence for such Clinical Phenotype. 
Stage II diligence shall mean the verification of a diagnostic platform within
[**] ([**]) months after the end of the Collaboration Period.  Stage III diligence shall mean the
completion of technical feasibility, commercial feasibility and final product
design requirements within [**] ([**]) months after completion of Stage II
diligence and receipt from Genaissance of a list of the candidate Polymorphisms
for detecting the Haplotype(s) in each licensed Marker Association (the “List
of Candidate Diagnostic Polymorphisms”). 
Stage IV diligence shall mean the filing of an application for
regulatory approval for marketing of a diagnostic product in [**] within [**]
([**]) months after Stage III completion. 
Bayer shall have the right to extend for a reasonable period, any of the
diligence deadlines set forth above, if unexpected non-technical-, or
technical-related, events or difficulties occur during diagnostic product
development, provided, that such reasonable period for extending any
given diligence deadline for non-technical-related events or difficulties shall
not be longer than [**] percent ([**]%) of the original time period for such
diligence stage (e.g., the reasonable period for extending Stage II diligence
shall not exceed [**] ([**]) months). 
For extensions due to technical-related events or difficulties, Bayer
shall provide Genaissance with a written report every month after the diligence
deadline that states what technical-related events or difficulties are causing
the need for an extension of the diligence period and summarizes what Bayer has
done and plans to do to solve such technical-related events or difficulties.  Genaissance shall receive [**] percent
([**]%) of Sublicense Income received by Bayer in connection with any
sublicenses granted by Bayer pursuant to this Section 3.2.1.

 

3.2.2                        SER Diagnostic Products Marketing
Rights.

 

(a)                                  Right
to Commercialize. At any time during the term of the Bayer SER Diagnostic
License, upon the written request of Genaissance, Bayer shall enter into good
faith negotiations with Genaissance or a Genaissance Collaborator regarding the
right to research, develop and commercialize an SER Diagnostic Product (a
“[**]-Specific SER Diagnostic Product”) that is specifically designed for or
marketed for use with prescribing a Genetically-Targeted [**] Drug Product that
is Controlled by Genaissance or such Genaissance Collaborator.  In such event, Bayer shall enter into with
Genaissance or such Genaissance Collaborator, as the case may be, an agreement
providing that (i) in exchange for a quarterly royalty payment (the “Royalty
Payment”) calculated as set forth in Section 3.2.2(b), Bayer shall

 

23

 

grant to Genaissance or
such Genaissance Collaborator, as the case may be, an exclusive license, with
the right to sublicense, under Bayer IP Rights and any intellectual property
rights granted by Genaissance to Bayer pursuant to Section 3.2.1(a)(ii), to
research, develop, make, have made, use, import, offer to sell and sell such
[**]-Specific SER Diagnostic Product under Genaissance’s or such Genaissance
Collaborator’s label, or (ii) in exchange for the payment of a purchase price
(the “Purchase Price”) calculated as set forth in Section 3.2.2(b), Bayer shall
(A) enter into an exclusive supply agreement with Genaissance or such
Genaissance Collaborator, as the case may be, that obligates Bayer to
exclusively supply to Genaissance or such Genaissance Collaborator, as the case
may be, such [**]-Specific SER Diagnostic Product researched, developed and
manufactured by Bayer for marketing and sale by Genaissance or such Genaissance
Collaborator, as the case may be, under Genaissance’s or such Genaissance
Collaborator’s label, and (B) agree to not market and sell such [**]-Specific
SER Diagnostic Product under Bayer’s own label.  Notwithstanding any other provision herein to the contrary, Bayer
shall retain the right to sell under Bayer’s own label any SER Diagnostic
Product that has uses other than determining whether to prescribe a
Genetically-Targeted [**] Drug Product that is Controlled by Genaissance or a
Genaissance Collaborator, whether or not such SER Diagnostic Product can also
be used to determine whether to prescribe a Genetically-Targeted [**] Drug
Product that is Controlled by Genaissance or a Genaissance Collaborator.

 

(b)                                 Payments.  For any [**]Specific SER Diagnostic Product,
the Royalty Payment, if applicable, shall be equal to the product of the
applicable test fee (the “Test Fee”) multiplied by the actual quantity of tests
performed per quarter, and the Purchase Price, if applicable, shall be equal to
the product of the Test Fee plus a manufacturing fee (the “Manufacturing Fee”)
multiplied by the quantity of tests purchased. 
Failure to pay any required Royalty Payment or Purchase Price if not
cured within [**] ([**]) days after notice of default shall be grounds for
termination of the license or supply agreement.  In the case of a license agreement for a [**]-Specific SER
Diagnostic Product, if the annual quantity of tests performed in any period of
[**] consecutive calendar quarters (a “[**]”) commencing with the first day of
the first calendar quarter after the First Commercial Sale of such
[**]-Specific SER Diagnostic Product (the “Start Date”) or any anniversary of
the Start Date is less than a first projected annual quantity (N1) of tests to
be performed (the “Projected Test Quantity N1”), the licensee shall be required
to make a Royalty Shortfall Payment (the “Royalty Shortfall Payment”) within
[**] ([**]) days after the end of the [**] equal to the difference between the
aggregate Royalty Payments that would have been payable had N1 tests been
performed during the [**] and the aggregate amount of the Royalty Payments
actually made for such [**].   In the
case of a supply agreement for a [**]-Specific SER Diagnostic Product, if the
annual quantity of tests performed in any [**] is less than a second projected
annual quantity (N2) of tests to be performed (the “Projected Test Quantity
N2”), the purchaser shall be required to make a payment (the “Purchase
Shortfall Payment”) within [**] ([**]) days after the end of the [**] equal to the
difference between the aggregate Purchase Price that would have been payable
had N2 tests been purchased during the [**] and the amount of the Purchase
Price actually made for such [**].  If
the [**]-Specific SER Diagnostic Product is on the label of the
Genetically-Targeted [**] Drug, and the applicable Royalty Shortfall Payment or
Purchase Shortfall Payment is not made and such failure is not cured within
[**] days after notice from Bayer requiring that such payment be made in order
to maintain exclusivity, then the applicable license agreement or supply
agreement shall become non-exclusive. 
If the [**]-Specific SER Diagnostic Product is not on the label of the
Genetically-Targeted [**] Drug, and the applicable Royalty Shortfall Payment or
Purchase 

 

24

 

Shortfall Payment is not
made and such failure is not cured within [**] days after notice from Bayer,
then the applicable license agreement or supply agreement shall become
non-exclusive or shall be terminated, as specified in Bayer’s notice.

 

(c)                                  Payment
Values.  Bayer agrees that it will
not refuse to enter into a license agreement or supply agreement solely on the
basis of a dispute with respect to the Test Fee, the Projected Test Quantity N1
and/or the Projected Test Quantity N2 if in such agreement the Test Fee, the
Projected Test Quantity N1 and the Projected Test Quantity N2 have the
following values:

 

(i)                                     the
value for the Test Fee is [**] U.S. dollars ($[**]), subject to annual
adjustment effective January 1 of each year beginning with January 1, 2004 to
reflect changes in the Producer Price Index for Intermediate Goods Less Food
and Energy (“PPI”), as first published by the United States Bureau of Labor
Statistics for the twelve (12) months ending with September of the preceding
year ;

 

(ii)                                  the
value for the Projected Test Quantity N1 is [**] during the [**], and [**]
during [**]; and

 

(iii)                               the value for the
Projected Test Quantity N2 is [**] during the [**], and [**] during [**];

 

provided,
that if any Bayer SER Diagnostic Product has, in any third or subsequent
year of product sales following launch of such product by Bayer, an average
selling price (the “Average Selling Price”) that is at least [**]percent
([**]%) less than the value for the Test Fee or has a quantity sold (the
“Quantity Sold”) that is at least [**] percent ([**]%) less than the value for
the Projected Test Quantity N1 or the Projected Test Quantity N2, as
applicable, then the values for the Test Fee and the Projected Test Quantity N1
or the Projected Test Quantity N2, as applicable, for any [**]-Specific SER
Diagnostic Product sold by Genaissance or such Genaissance Collaborator shall
be reset to equal the Average Selling Price and the Quantity Sold,
respectively, for the third and subsequent [**] for such [**]-Specific SER
Diagnostic Product.  Bayer shall have no
obligation to negotiate with respect to any proposal with respect to the Test
Fee amount, Projected Test Quantity N1 or Projected Test Quantity N2 that
differs from the provisions set forth in the preceding sentence.

 

(d)                                 Terms.  The terms of any exclusive license agreement
or any exclusive supply agreement entered into by Bayer pursuant to Section
3.2.2(a) shall be commercially reasonable and customary in the diagnostics field.  Notwithstanding anything set forth herein to
the contrary, any such license or supply agreement with Genaissance shall
terminate upon the termination of any license granted by Genaissance to Bayer
under this Agreement other than due to a material breach by Bayer or a failure
by Bayer to meet its diligence obligations under such license.  Bayer may terminate any such license or
supply agreement with a collaborator of Genaissance upon termination of any
license granted by Genaissance to Bayer under this Agreement that is required
by Bayer to perform its obligations pursuant to such license or supply
agreement, unless the termination of such license granted by 

 

25

 

Genaissance is due to a
material breach by Bayer or failure by Bayer to meet its diligence obligations
under such license.

 

3.2.3                        Genaissance Diagnostic Products
Purchase Rights.

 

Bayer shall sell
to Genaissance Products (including ASR Products and/or Approved Diagnostic
Products) developed by Bayer under the Bayer SADR Diagnostic License or the
Bayer SER Diagnostic License, for internal use by Genaissance in providing
clinical testing services, on terms no less favorable than those available to
any other customer purchasing such Products; provided, however,
that in comparing prices for reagent Products purchased under arrangements,
where instrumentation, financing and service are included in the price of the
reagents, any increase in the price per test to Genaissance resulting from
amortization of instrumentation, financing and service over lower volumes shall
not be included in such comparison. 
Notwithstanding anything else to the contrary herein, such obligation to
sell shall terminate upon the termination of any license granted by Genaissance
to Bayer under this Agreement other than due to a material breach by Bayer or a
failure by Bayer to meet its diligence obligations under such license.

3.2.4                        Genaissance Diagnostic Products
License.

 

(a)                                  If
Bayer fails to meet its diligence obligations with respect to an SADR Clinical
Phenotype in the Bayer SADR Diagnostic License, then, subject to the terms and
conditions of this Agreement, Bayer shall grant to Genaissance a non-exclusive,
royalty-bearing (as set forth in Section 4.4(a)) license in the Territory, with
the right to grant no more than one sublicense for a specific field of use,
excluding any sublicenses with respect to contract, manufacturing or other
similar services, under Bayer IP Rights, to research, develop, make, use,
import, offer to sell and sell the applicable Genaissance SADR Diagnostic
Product (a “Genaissance SADR Diagnostic License”).  If Bayer fails to meet its diligence obligations with respect to
an SER Clinical Phenotype in the Bayer SER Diagnostic License then, subject to the
terms and conditions of this Agreement, Bayer shall grant to Genaissance a
non-exclusive, royalty-bearing (as set forth in Section 4.4(b)) license in the
Territory, with the right to grant no more than one sublicense in a specific
field of use, excluding any sublicenses with respect to contract, manufacturing
or other similar services, under Bayer IP Rights, to research, develop, make,
use, import, offer to sell and sell the applicable Genaissance SER Diagnostic
Products (a “Genaissance SER Diagnostic License”).  For the purposes of clarity, neither a Genaissance SADR
Diagnostic License nor a Genaissance SER Diagnostic License shall include a
right under Bayer IP Rights to research, develop or commercialize therapeutic
drug products or any other diagnostic products.  Genaissance shall not be obligated to pay a license issue fee for
any Genaissance SADR Diagnostic License and Genaissance SER Diagnostic
License.  Bayer shall receive [**]
percent ([**]%) of Sublicense Income received by Genaissance in connection with
any sublicenses granted by Genaissance pursuant to this Section 3.2.4.

 

3.3                                 Therapeutic Products Grants.

 

3.3.1                        Genaissance [**] Drug Products
License.  Subject to the terms
and conditions of this Agreement, Bayer hereby grants to Genaissance an exclusive,
royalty-bearing (as set forth in Section 4.4(c) and (d)) license in the
Territory, with the right to grant sublicenses,

 

26

 

under Bayer IP Rights, to
use GNSC SADR HAPTM Marker Associations, Collaboration SADR
Haplotype Associations, Bayer SADR Polymorphism Associations, GNSC SER HAPTM
Marker Associations, Collaboration SER HAPTM Marker Associations, Bayer SER
Polymorphism Associations and their component HAPTM Markers
and/or Collaboration [**] Haplotypes and/or Bayer Polymorphisms or any other
Resulting IP to research, develop, make, have made, use, import, offer to sell
and sell any [**] Drug Product, subject to Bayer’s retention of a
royalty-bearing (as set forth in Sections 4.3(c) and (d)) right in the
Territory, without the right to license, to use Bayer SADR Polymorphism
Associations, Bayer SER Polymorphism Associations, Collaboration SADR Haplotype
Associations and their component Bayer Polymorphisms and Collaboration [**]
Haplotypes or any other Bayer Resulting IP to research, develop, make, have
made, use, import, offer to sell and sell any [**] Drug Product.  Genaissance shall not be obligated to pay a
license fee for any such license. 
Within [**] ([**]) months following the end of the Collaboration Period,
the Parties shall negotiate reasonable due diligence obligations with respect
to the development and sales of a [**] Drug Product based, at least in part, on
Bayer IP Rights for Genaissance to maintain the exclusivity of its license.  If the Parties are unable to agree on the
due diligence obligations within such [**] ([**]) month period, either Party
may demand resolution by an independent expert.  Within [**] ([**]) days after the date of such demand, each Party
shall submit its proposal to an independent expert in pharmaceutical licensing
selected jointly by the Parties, and such expert shall accept the proposal of
one Party or the other Party in its entirety. 
Bayer shall receive [**] percent ([**]%) of Sublicense Income received
by Genaissance in connection with any sublicenses granted by Genaissance
pursuant to this Section 3.3.1; provided, however, that if
Genaissance grants sublicenses under Bayer IP solely to use Bayer SADR
Polymorphism Associations and /or Bayer SER Polymorphism Associations and their
component Bayer Polymorphisms, then Bayer shall receive [**] percent ([**]%) of
Sublicense Income received by Genaissance in connection with any such
sublicense granted pursuant to this Section 3.3.1.

 

3.3.2                        Genaissance Non-[**] Drug Products
License.  Subject to the terms
and conditions of this Agreement, Bayer hereby grants to Genaissance a
non-exclusive, royalty-bearing (with terms to be negotiated pursuant to Section
4.4(e)), license in the Territory, with the right to grant sublicenses, under
Bayer IP Rights, to use Collaboration SADR Haplotype Associations,
Collaboration SER HAPTM Marker Associations and their component HAPTM
Markers and/or Collaboration [**] Haplotypes or any other Resulting IP to
research, develop, make, have made, use, import, offer to sell and sell any
Non-[**] Drug Product.  Bayer shall
receive [**] percent ([**]%) of Sublicense Income received by Genaissance in
connection with any sublicenses granted by Genaissance pursuant to this Section
3.3.2.

 

3.3.3                        Bayer [**] Drug Products License.  Subject to the terms and conditions of this
Agreement, Genaissance hereby grants to Bayer a non-exclusive, royalty-bearing
(as set forth in Sections 4.3(c) and (d)) license in the Territory, without the
right to grant sublicenses, under Genaissance IP Rights, to use Collaboration
SADR Haplotype Associations and Collaboration SER HAPTM Marker
Associations and their component HAPTM Markers or any other
Resulting IP to research, develop, make, have made, use, import, offer to sell and
sell any [**] Drug Product.

 

27

 

3.3.4                        Bayer Non-[**] Drug Products License.

 

(a)                                  Subject
to the terms and conditions of this Agreement, Genaissance hereby grants to
Bayer a non-exclusive, royalty-bearing (as set forth in Section 4.3(e)),
license in the Territory, with the right to grant sublicenses, under
Genaissance IP Rights, to use Collaboration SADR Haplotype Associations,
Collaboration SER HAPTM Marker Associations and their component HAPTM
Markers and/or Collaboration [**] Haplotypes and any other Resulting IP to
research, develop, make, have made, use, import, offer to sell and sell any
Non-[**] Drug Product.  Genaissance
shall receive [**] percent ([**]%) of Sublicense Income received by Bayer in connection
with any sublicenses granted by Bayer pursuant to this Section 3.3.4.

 

3.4                                 Other Grants.

 

3.4.1                        Bayer Other Products License.  Subject to the terms and conditions of this
Agreement, Genaissance hereby grants to Bayer a non-exclusive, royalty-bearing
(as set forth in Section 4.3(f)), license in the Territory, with the right to
grant sublicenses, under Genaissance Resulting IP, to use Collaboration SADR
Haplotype Associations, Collaboration SER HAPTM Marker Associations and
their component HAPTM Markers and/or Collaboration [**]
Haplotypes or any other Resulting IP to research, develop, make, have made,
use, import, offer to sell and sell any Other Product.

 

3.4.2                        Genaissance Other Products License.  Subject to the terms and conditions of this
Agreement, Bayer hereby grants to Genaissance a non-exclusive, royalty-bearing
(with terms to be negotiated pursuant to Section 4.4(f)), license in the
Territory, with the right to grant sublicenses, under Bayer Resulting IP, to
use Collaboration SADR Haplotype Associations, Collaboration SER HAPTM
Marker Associations and their component HAPTM Markers and/or
Collaboration [**] Haplotypes or any other Resulting IP to research, develop,
make, have made, use, import, offer to sell and sell any Other Product.

 

3.5                                 Genaissance Right of First
Negotiation.  Bayer hereby
grants to Genaissance a right of first negotiation to perform genotyping and
clinical association analyses with respect to additional pharmacogenomic
studies to be undertaken by Bayer Business Group Diagnostics within five (5)
years after the date of this Agreement to identify correlations between genetic
markers and SADR Clinical Phenotypes and/or SER Clinical Phenotypes for [**] as
a class or for individual [**].  If
Bayer intends to begin negotiations with a Third Party to perform such analyses
(each, an “Opportunity”), Bayer shall provide written notice of such intent to
Genaissance and Genaissance shall notify Bayer in writing within thirty (30)
days (the “Response Period”) as to whether it has a bona fide interest in
discussing such Opportunity.  Such
written notice from Bayer shall include information reasonably necessary to
enable Genaissance to make an informed decision with respect to such
Opportunity.  If, during the Response
Period, Genaissance indicates that it is interested in discussing such
Opportunity, the Parties shall enter into good faith negotiations on such terms
as may be mutually agreeable.  If (a)
Genaissance does not indicate during the Response Period that it is interested
in discussing such Opportunity, (b) Genaissance indicates that it has no
interest in such Opportunity, or (c) Genaissance indicates an interest in such
Opportunity during the Response Period, but the Parties are unable to reach
mutual agreement with respect to the Opportunity within sixty (60) days, Bayer
shall be free to enter into a transaction relating to such Opportunity with a
Third Party or Affiliate. 
Notwithstanding the foregoing, such right of first negotiation (i) shall
be subject to the

 

28

 

terms of the agreement
dated August 31, 1999, between Bayer and the University of Regensburg and (ii)
shall terminate upon a Bayer competitor acquiring a majority of the outstanding
shares of stock of Genaissance or upon a merger, consolidation, or sale of
substantially all the assets of Genaissance with or to a Bayer competitor.

 

3.6                                 Term of Licenses.  Unless earlier terminated in accordance with Article IX hereof,
each license granted hereunder shall continue until the later of (a) the first
date on which all claims of all Patent Rights included in such license have
expired in all countries and no applications for any such Patent Rights are
pending in any country or (b) twenty (20) years from the Effective Date; provided,
that with respect to Know How not covered by any Valid Claim of any Patent
Right, each such license shall be become fully-paid up and perpetual on the
later of such two dates if not terminated pursuant to Article IX prior thereto.

 

3.7                                 Special Sublicensing Rights.  In the event that a Party transfers to a
Third Party its business operations and assets relating to one or more of the
fields in which such Party holds a license without sublicensing rights
hereunder, such Party may grant a sublicense to the transferee covering such
field(s), provided that such Party does not retain any right itself to practice
in the field(s) covered by such license

 

3.8                                 Non-Suit Covenant with Respect to
Selected Products.

 

3.8.1                        Genaissance Covenant.  Genaissance covenants not to sue Bayer (or
its Affiliates, licensees, sublicensees, contractors or authorized purchasers
of Products) under any Patent Rights now or at anytime hereafter owned or
otherwise controlled by Genaissance, other than Genaissance IP Rights, in the
exercise by Bayer (or its licensees or sublicensees) of its rights under the
Bayer SADR Diagnostic License and the Bayer SER Diagnostic License.  Genaissance further covenants that it shall
ensure that neither its licensees nor sublicensees shall sue Bayer (or its
Affiliates, licensees, sublicensees, contractors or authorized purchasers of
Products) under any Patent Rights owned or otherwise controlled by such
licensees or sublicensees of Genaissance that cover any inventions made through
the use of Bayer IP Rights or Genaissance Resulting IP, in the exercise by
Bayer (or its licensees or sublicensees) of its rights under the Bayer SADR
Diagnostic License and the Bayer SER Diagnostic License.

 

3.8.2                        Bayer Covenant. 
Bayer covenants not to sue Genaissance (or its Affiliates, licensees,
sublicensees, contractors or authorized purchasers of Products) under any
Patent Rights now or at anytime hereafter owned or otherwise controlled by
Bayer, other than Bayer IP Rights, in the exercise by Genaissance (or its
licensees or sublicensees) of its rights under the license grant set forth in
Section 3.3.1 to research, develop and commercialize any Genetically-Targeted
[**] Drug Product.  Bayer further
covenants that it shall ensure that neither its licensees nor sublicensees shall
sue Genaissance (or its Affiliates, licensees, sublicensees, contractors or
authorized purchasers of Products) under any Patent Rights owned or otherwise
controlled by such licensees or sublicensees of Bayer that cover any inventions
made through the use of Genaissance IP Rights or Bayer Resulting IP, in the
exercise by Genaissance (or its licensees or sublicensees) of its rights under
the license grant set forth in Section 3.3.1 to research, develop or
commercialize any [**] Drug Product.

 

29

 

3.9                                 Unitary Contract; Rights Upon
Rejection.

 

3.9.1                        Unitary Contract.  The Parties acknowledge and stipulate that this Agreement and the
licenses and other rights granted under this Agreement are an integrated unitary
contract and are part of a single transaction among the Parties.  The Parties further acknowledge and
stipulate that in the event that a Party becomes a debtor in a proceeding under
any Chapter of the United States Bankruptcy Code, 11 U.S.C. §101 et seq., as
amended (the “Bankruptcy Code”), such Party (or any successor in interest,
including any trustee as such term is used within Section 365 of the Bankruptcy
Code) may only assume or reject this Agreement in its entirety.  Notwithstanding the foregoing, that portion
of this Agreement that constitutes a security agreement is non-executory and
shall not be subject to rejection in the event of a bankruptcy.

 

3.9.2                        Rights Upon Rejection.  The Parties acknowledge and stipulate that
this Agreement is intended to and shall be deemed to be a license of rights to
intellectual property within the meaning of Section 365(n) of the Bankruptcy
Code.  In the event that any Party
rejects this Agreement under which such Party is a licensor of such rights to
intellectual property, the other Party shall be entitled to make the election
set forth in Section 365(n)(1)(A) or (B) of the Bankruptcy Code in accordance
therewith.  In the event that the
non-rejecting Party elects to retain its rights, as described in Section
365(n)(1)(B), the non-rejecting Party shall continue to make all royalty
payments due under this Agreement for the duration of the term of this
Agreement, but all such royalty payments shall remain subject to the
Royalty-Paying Party’s right to recoup any damages arising from or relating to
the other Party’s failure to perform its obligations under this Agreement (but
excluding any right to offset damages arising solely from the rejection of this
Agreement) without prejudice to any and all other rights or remedies available
to such Party, whether arising under Section 365(n) of the Bankruptcy Code,
this Agreement, the security interest granted to Bayer hereunder, or at equity
or in law.

 

3.10                           Terms of Licenses and Sublicenses
Granted by Parties.  Each
license of Bayer Resulting IP and each sublicense of Genaissance IP Rights
granted by Bayer to a Third Party shall provide for assignment thereof to
Genaissance as required pursuant to Section 9..4.1, shall require compliance by
the licensee or sublicensee with the terms of this Agreement with respect to
sales of Products by such licensee or sublicensee and shall provide that
Genaissance shall have no liability for any obligations of Bayer under such
license or sublicense (“Excluded Bayer Obligations”) (i) arising prior to the
date that such assignment has been executed by Bayer and acknowledged by the
licensee or sublicensee or (ii) that does not correspond to the obligations
undertaken by Genaissance with respect to the licenses granted by Genaissance
hereunder.  Bayer agrees to indemnify,
defend, and to hold Genaissance harmless of and from any and all liability,
loss or damage that it may or might incur by reason of any claims or demands
against Genaissance based on or arising out of an alleged assumption of any
Bayer Excluded Obligations.  Each
license of Genaissance Resulting IP and each sublicense of Bayer IP Rights
granted by Genaissance to a Third Party shall provide for assignment thereof to
Bayer as required pursuant to Section 9.4.2, shall require compliance by the
licensee or sublicensee with the terms of this Agreement with respect to sales
of Products by such licensee or sublicensee and shall provide that Bayer shall
have no liability for any obligation of Genaissance under such license or
sublicense (“Excluded Genaissance Obligations”) (i) arising prior to the date
that such assignment has been executed by Genaissance and acknowledged by the
licensee or sublicensee or (ii) that does not correspond to the obligations
undertaken by Bayer with respect to the licenses granted by Bayer
hereunder.  Genaissance agrees to
indemnify, defend, and to hold 

 

30

 

Bayer harmless of and
from any and all liability, loss or damage that it may or might incur by reason
of any claims or demands against Bayer based on or arising out of an alleged
assumption of any Genaissance Excluded Obligations.

 

ARTICLE IV

PAYMENTS

 

4.1                                 HAPTM Typing Fee.  Bayer shall pay to Genaissance a
nonrefundable fee (“HAPTM Typing Fee”) calculated
in accordance with this Section 4.1, for assigning a pair of HAPTM
Markers to a patient sample on a per SNP assayed per sample basis, whether or
not successful, in connection with the SADR Study, as specifically set forth in
Section 2.1.  On the Effective Date,
Bayer shall pay to Genaissance [**] Dollars ($[**]) to be credited toward the HAPTM
Typing Fees to be incurred by Bayer during the SADR Study.  Thereafter, Genaissance shall send to Bayer
monthly invoices setting forth the HAPTM Typing Fees for the prior
calendar month.  If the actual amount of
HAPTM
Typing Fees owed by Bayer to Genaissance pursuant to this Agreement is less
than such prepaid amount for any reason, including the termination of this
Agreement, then Genaissance shall return the excess prepayment amount to Bayer.

 

	
  Number of SNPs Assayed

  	
   

  	
  Fee Per
  SNP

  	
   

  
	
  1 – [**]

  	
   

  	
  $

  	
  [**]

  	
   

  
	
  Over [**]

  	
   

  	
  $

  	
  [**]

  	
   

  

 

4.2                                 Sequencing Fee. 
Bayer shall pay to Genaissance a nonrefundable fee (“Sequencing Fee”) of
$[**] for each sequencing run, whether or not successful, performed by
Genaissance in connection with the SADR Study, as specifically set forth in
Section 2.1.2(d).  On the Effective
Date, Bayer shall pay to Genaissance [**] Dollars ($[**]) to be credited toward
the Sequencing Fees to be incurred by Bayer during the SADR Study.  Thereafter, Genaissance shall send to Bayer
monthly invoices setting forth the Sequencing Fees for the prior calendar
month.  If the actual amount of
Sequencing Fees owed by Bayer to Genaissance pursuant to this Agreement is less
than such prepaid amount for any reason, including the termination of this
Agreement, then Genaissance shall return the excess prepayment amount to Bayer.

 

4.3                                 Bayer Royalties.

 

(a)                                  SADR
Diagnostic Product Royalties. 
Subject to Sections 4.5 and 4.6, Bayer shall pay to Genaissance
royalties in an amount equal to the following percentage of the Net Sales of
each SADR Diagnostic Product that (i) is sold or otherwise disposed of by
Bayer, its Affiliates and/or its sublicensees and (ii) (A) covered by a Valid
Claim included within Genaissance IP Rights or Bayer Patent Rights, or (B)
embodies or is discovered or developed using Know-How included within
Genaissance IP Rights or Bayer Know-How:

 

	
  Cumulative Net Sales of such Product

  	
   

  	
  Royalty
  Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  $0 <
  $U.S.[**]

  	
   

  	
  [**]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  $U.S. [**] <
  $U.S. [**]

  	
   

  	
  [**]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  $U.S. [**] <
  $U.S. [**]

  	
   

  	
  [**]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  >
  $U.S. [**]

  	
   

  	
  [**]

  	
  %

  

 

31

 

Notwithstanding the foregoing, if in any [**] ([**]) consecutive
Calendar Quarters the amount of Net Sales of a SADR Diagnostic Product subject
to royalties in accordance with the preceding sentence is more than [**]
percent ([**]%) lower than the amount of Net Sales of such SADR Diagnostic
Product for the corresponding Calendar Quarters of the prior [**], then
commencing with the [**] of such [**] Calendar Quarters, and continuing for the
duration of the Royalty Term for such SADR Diagnostic Product, the applicable
royalty rate shall be the lower of the royalty rate determined in accordance
with the preceding sentence and a royalty rate determined as follows, based on
the Net Sales of such SADR Diagnostic Product to date for the [**] in which
such [**] Calendar Quarter occurs:

 

	
  Annual Net Sales to date of such Product

  	
   

  	
  Royalty
  Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Equal to or
  greater than $U.S. [**]

  	
   

  	
  [**]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Equal to or
  greater than $U.S. [**] but less than $U.S. [**]

  	
   

  	
  [**]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Equal to or
  greater than $U.S. [**] but less than $U.S. [**]

  	
   

  	
  [**]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Less than $U.S.
  [**]

  	
   

  	
  [**]

  	
  %

  

 

(b)                                 SER
Diagnostic Product Royalties.  Subject
to Sections 4.5 and 4.6, Bayer shall pay to Genaissance royalties in an amount
equal to the following percentage of the Net Sales of each SER Diagnostic
Product that (i) is sold or otherwise disposed of by Bayer, its Affiliates
and/or its sublicensees and (ii) (A) covered by a Valid Claim included within
Genaissance IP Rights or Bayer Patent Rights, or (B) embodies or is discovered
or developed using Know-How included within Genaissance IP Rights or Bayer
Know-How:  

 

32

 

	
  Cumulative Net Sales of such Product

  	
   

  	
  Royalty
  Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  $0 < $U.S. [**]

  	
   

  	
  [**]%

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  $U.S. [**] < $U.S.
  [**]

  	
   

  	
  [**]%

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  $U.S. [**] < $U.S.
  [**]

  	
   

  	
  [**]%

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  >
  $U.S. [**]

  	
   

  	
  [**]% (if the [**])

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [**]% (if the [**])

  	
   

  

 

Notwithstanding the foregoing, if in any [**] ([**]) consecutive
Calendar Quarters the amount of Net Sales of a SER Diagnostic Product subject
to royalties in accordance with the preceding sentence is more than [**]
percent ([**]%) lower than the amount of Net Sales of such SER Diagnostic
Product for the corresponding Calendar Quarters of the prior [**], then
commencing with the [**] of such [**] Calendar Quarters, and continuing for the
duration of the Royalty Term for such SER Diagnostic Product, the applicable royalty
rate shall be the lower of the royalty rate determined in accordance with the
preceding sentence and a royalty rate determined as follows, based on the Net
Sales of such SER Diagnostic Product to date for the [**] in which such [**]
Calendar Quarter occurs:

 

	
  Annual Net Sales to date of such Product

  	
   

  	
  Royalty
  Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Equal to or
  greater than $U.S. [**]

  	
   

  	
  [**]% if the [**])

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [**]% if the [**])

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Equal to or
  greater than $U.S. [**] but less than $U.S. [**]

  	
   

  	
  [**]%

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Equal to or
  greater than $U.S. [**] [**] but less than $U.S. [**]

  	
   

  	
  [**]%

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Less than $U.S.
  [**]

  	
   

  	
  [**]%

  	
   

  

 

(c)                                  Bayer
Genetically-Targeted [**] Drug Product Royalties.  Subject to Sections 4.5 and 4.6, Bayer shall
pay to Genaissance royalties in an amount equal to (i) [**] percent ([**]%) of
the Net Sales of each Bayer Genetically-Targeted [**] Drug Product that (A) is
approved for a population defined by one (1) or more HAPTM Markers in a
Collaboration SER HAPTM Marker Association, or one (1) or more Surrogate
Markers of such markers, (B) is covered by a Valid Claim included within
Genaissance IP Rights or Bayer Patent Rights, or (C) embodies or is discovered
or developed using Know-How included within Genaissance IP Rights or Bayer
Know-How, and (ii) one percent (1%) of the Net Sales of each Bayer
Genetically-Targeted [**] Drug Product that (A) is approved for a population
defined by one (1) or more

 

33

 

HAPTM Markers or Collaboration [**]
Haplotypes in a Collaboration SADR Haplotype Association, or one (1) or more
Surrogate Markers of such markers, (B) is covered by a Valid Claim included
within Genaissance IP Rights or Bayer Patent Rights, or (C) embodies or is
discovered or developed using Know-How included within Genaissance IP Rights or
Bayer Know-How.

 

(d)                                 Bayer
Other [**] Drug Product Royalties. 
Subject to Sections 4.5 and 4.6, Bayer shall pay to Genaissance
royalties in an amount equal to one-half percent (0.5%) of the Net Sales of
each Bayer Other [**] Drug Product that is covered by a Valid Claim included
within Genaissance IP Rights or Bayer Patent Rights, or embodies or is
discovered or developed using Know-How included within Genaissance IP Rights or
Bayer Know-How.

 

(e)                                  Bayer
Non-[**] Drug Product Royalties. Subject to Sections 4.5 and 4.6,
Bayer shall pay to Genaissance royalties on the Net Sales of each Bayer
Non-[**] Drug Product that is covered by a Valid Claim included within
Genaissance IP Rights or Bayer Patent Rights, or embodies or is discovered or
developed using Know-How included within Genaissance IP Rights or Bayer
Know-How, at a royalty rate of not less than [**] percent ([**]%) and not more
than [**] percent ([**]%) to be agreed upon by the Parties as to any class of
Non-[**] Drug Products at any time upon request by Bayer during the term of the
license described in Section 3.3.4. 
If the Parties are unable to agree upon the royalty rate for a class of
Non-[**] Drug Products within [**] ([**]) months after Bayer’s request, then
Bayer may demand resolution by an independent expert.  Within [**] ([**]) days after the date of such demand, each Party
shall submit its proposal to an independent expert in pharmaceutical licensing
selected jointly by the Parties, and such expert shall accept the proposal of
one Party or the other in its entirety. 
Any rate of royalty for a class of Non-[**] Drug Products established
pursuant to this paragraph shall also be deemed established pursuant to paragraph
4.4(e).

 

(f)                                    Bayer
Other Product Royalties.  Subject to
Sections 4.5 and 4.6, Bayer shall pay to Genaissance royalties on the Net Sales
of each Other Product that (a) is sold or otherwise disposed of by Bayer, its
Affiliates and/or its sublicensees, pursuant to the grant set forth in Section
3.4.1, and (b) is covered by a Valid Claim included within the Resulting Patent
Rights, or embodies or is discovered or developed using Know-How included
within the Resulting IP, at a royalty rate of not less than [**] percent
([**]%) and not more than [**] percent ([**]%) for a therapeutic drug Product
and at a royalty rate of not less than [**] percent ([**]%) and not more than
[**] percent ([**]%) for a diagnostic Product. 
The royalty rate shall as to any class of Other Products shall be agreed
upon by the Parties upon request by Bayer at any time during the term of the
license described in Section 3.4.1.  If
the Parties are unable to agree upon the royalty rate for a class of Other
Products within [**] ([**]) months after Bayer’s request, then Bayer may demand
resolution by an independent expert. 
Within [**] ([**]) days after the date of such demand, each Party shall
submit its proposal to an independent expert in licensing in the field at issue
selected jointly by the Parties, and such expert shall accept the proposal of
one Party or the other in its entirety. 
Any rate of royalty for a class of Other Products established pursuant
to this paragraph shall also be deemed established pursuant to paragraph
4.4(f).

 

34

 

4.4                                 Genaissance Royalties.

 

(a)                                  SADR
Diagnostic Product Royalties. 
Subject to Sections 4.5 and 4.6, Genaissance shall pay to Bayer
royalties in an amount equal to the following percentage of the Net Sales of
each Genaissance SADR Diagnostic Product that (i) is sold or otherwise disposed
of by Genaissance, its Affiliates and/or its sublicensees and (ii) (A) is
covered by a Valid Claim included within Bayer IP Rights or Genaissance Patent
Rights or (B) embodies or is discovered or developed using Know-How included
within Bayer IP Rights or Genaissance Know-How.

 

	
  Cumulative Net Sales of such Product

  	
   

  	
  Royalty
  Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  $0 < $U.S.
  [**]

  	
   

  	
  [**]%

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  $U.S. [**] <
  $U.S. [**]

  	
   

  	
  [**]%

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  $U.S. [**] <
  $U.S. [**]

  	
   

  	
  [**]%

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  >
  $U.S. [**]

  	
   

  	
  [**]% (if the [**])

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [**]% (if the [**])

  	
   

  

 

Notwithstanding the foregoing, if in any [**] ([**]) consecutive
Calendar Quarters the amount of Net Sales of a SADR Diagnostic Product subject
to royalties in accordance with the preceding sentence is more than [**]
percent ([**]%) lower than the amount of Net Sales of such SADR Diagnostic
Product for the corresponding Calendar Quarters of the prior [**], then
commencing with the [**] of such [**] Calendar Quarters, and continuing for the
duration of the Royalty Term for such SADR Diagnostic Product, the applicable
royalty rate shall be the lower of the royalty rate determined in accordance
with the preceding sentence and a royalty rate determined as follows, based on
the Net Sales of such SADR Diagnostic Product to date for the [**] in which
such [**] Calendar Quarter occurs:

 

	
  Annual Net Sales to date of such Product

  	
   

  	
  Royalty
  Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Equal to or
  greater than $U.S. [**]

  	
   

  	
  [**]% if the [**])

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [**]% if the [**])

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Equal to or
  greater than $U.S. [**] but less than $U.S. [**]

  	
   

  	
  [**]%

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Equal to or
  greater than $U.S. [**] but less than $U.S. [**]

  	
   

  	
  [**]%

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Less than $U.S.
  [**]

  	
   

  	
  [**]%

  	
   

  

 

(b)                                 SER
Diagnostic Product Royalties. 
Subject to Sections 4.5 and 4.6, Genaissance shall pay to Bayer
royalties in an amount equal to the following percentage of the

 

35

 

Net Sales of each
Genaissance SER Diagnostic Product that (i) is sold or otherwise disposed of by
Genaissance, its Affiliates and/or its sublicensees and (ii) (A) is covered by
a Valid Claim included within Bayer IP Rights or Genaissance Patents Rights or
(B) embodies or is discovered or developed using Know-How included within Bayer
IP Rights or Genaissance Know-How:  

 

	
  Cumulative Net Sales of such Product

  	
   

  	
  Royalty
  Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  $0 < $U.S.
  [**]

  	
   

  	
  [**]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  $U.S. [**] <
  $U.S. [**]

  	
   

  	
  [**]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  $U.S. [**] <
  $U.S. [**]

  	
   

  	
  [**]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  >
  $U.S. [**]

  	
   

  	
  [**]

  	
  %

  

 

Notwithstanding the foregoing, if in any [**] ([**]) consecutive
Calendar Quarters the amount of Net Sales of a SER Diagnostic Product subject
to royalties in accordance with the preceding sentence is more than [**]
percent ([**]%) lower than the amount of Net Sales of such SER Diagnostic
Product for the corresponding Calendar Quarters of the prior [**], then
commencing with the [**] of such [**] Calendar Quarters, and continuing for the
duration of the Royalty Term for such SER Diagnostic Product, the applicable
royalty rate shall be the lower of the royalty rate determined in accordance
with the preceding sentence and a royalty rate determined as follows, based on
the Net Sales of such SER Diagnostic Product to date for the [**] in which such
[**] Calendar Quarter occurs:

 

	
  Annual Net Sales to date of such Product

  	
   

  	
  Royalty
  Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Equal to or
  greater than $U.S. [**]

  	
   

  	
  [**]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Equal to or
  greater than $U.S. [**] but less than $U.S. [**]

  	
   

  	
  [**]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Equal to or
  greater than $U.S. [**] but less than $U.S. [**]

  	
   

  	
  [**]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Less than $U.S.
  [**]

  	
   

  	
  [**]

  	
  %

  

 

(c)                                  Genaissance
Genetically-Targeted [**] Drug Product Royalties.  Subject to Sections 4.5 and 4.6, Genaissance
shall pay to Bayer royalties in an amount equal to [**] percent ([**]%) of the
Net Sales of each Genaissance Genetically-Targeted [**] Drug Product that is
covered by a Valid Claim included within Bayer IP Rights or Genaissance Patent
Rights or embodies or is discovered or developed using Know-How included within
Bayer IP Rights or Genaissance Know-How.

 

36

 

(d)                                 Genaissance
Other [**] Drug Product Royalties. 
Subject to Sections 4.5 and 4.6, Genaissance shall pay to Bayer
royalties in an amount equal to [**] percent ([**]%) of the Net Sales of each
Genaissance Other [**] Drug Product that is covered by a Valid Claim included
within Bayer IP Rights or Genaissance Patent Rights or embodies or is
discovered or developed using Know-How included within Bayer IP Rights or
Genaissance Know-How.

 

(e)                                  Genaissance
Non-[**] Drug Product Royalties. 
Subject to Sections 4.5 and 4.6, Genaissance shall pay to Bayer
royalties on the Net Sales of each Genaissance Non-[**] Drug Product that is
covered by a Valid Claim included within Bayer IP Rights or Genaissance Patent
Rights or embodies or is discovered or developed using Know-How included within
Bayer IP Rights or Genaissance Know-How, at a royalty rate of not less than
[**] percent ([**]%) and not more than [**] percent ([**]%).  The royalty rate as to any class of Non-[**]
Drug Products shall be agreed upon by the Parties upon request by Genaissance
at any time during the term of the license described in Section 3.3.2.  If the Parties are unable to agree upon the
royalty rate for a class of Non-[**] Drug Products within [**] ([**]) months
after Genaissance’s request, then Genaissance may demand resolution by an
independent expert.  Within [**] ([**])
days after the date of such demand, each Party shall submit its proposal to an
independent expert in pharmaceutical licensing selected jointly by the Parties,
and such expert shall accept the proposal of one Party or the other in its
entirety.  Any rate of royalty for a
class of Non-[**] Drug Products established pursuant to this paragraph shall
also be deemed established pursuant to paragraph 4.3(e).

 

(f)                                    Genaissance
Other Product Royalties.  Subject to
Sections 4.5 and 4.6, Genaissance shall pay to Bayer royalties on the Net Sales
of each Other Product that (a) is sold or otherwise disposed of by Genaissance,
its Affiliates and/or its sublicensees, pursuant to the grant set forth in
Section 3.4.2 and (b) is covered by a Valid Claim included within the Resulting
Patent Rights or embodies or is discovered or developed using Know-How included
within the Resulting IP, at a royalty rate of not less than [**] percent
([**]%) and not more than [**] percent ([**]%) for a therapeutic drug Product
and at a royalty rate of not less than [**] percent ([**]%) and not more than
[**] percent ([**]%) for a diagnostic Product. 
The royalty rate as to any class of Other Products shall be agreed upon
by the Parties upon request by Bayer at any time during the term of the license
described in Section 3.4.2.  If the
Parties are unable to agree upon the royalty rate for a class of Other Products
within [**] ([**]) months after Bayer’s request, then Bayer may demand
resolution by an independent expert. 
Within [**] ([**]) days after the date of such demand, each Party shall
submit its proposal to an independent expert in licensing in the field at issue
selected jointly by the Parties, and such expert shall accept the proposal of
one party or the other in its entirety. 
Any rate of royalty for a class of Other Products established pursuant
to this paragraph shall also be deemed established pursuant to paragraph 4.3(f).

 

4.5                                 Royalty Obligation Exception.  Notwithstanding anything in this Agreement
to the contrary, no royalties shall be payable by a Party under this Article IV
with respect to the sale or other disposition of a Product by such Party, its
Affiliates or its sublicensees where such Product (a) is neither covered by a
Valid Claim included within the other Party’s Prior IP or within the Resulting
IP nor discovered or developed using Know-How included within the other Party’s
Prior IP or within the Resulting IP, and (b) can be sold or otherwise disposed
of by such

 

37

 

Party, its Affiliates or
its sublicensees in the absence of any license set forth in Article III without
the misappropriation of any Know-How included within the other Party’s Prior
IP.

 

4.6                                 Royalty Terms.

 

(a)                                  Length
of Royalty Payments; Royalty Reduction. 
The royalties payable under Section 4.3 and Section 4.4 shall be paid on
a country-by-country basis on each Product until the later of (i) the
expiration of the last-to-expire Valid Claim included within the Patent Rights
of the Royalty-Receiving Party or within the Resulting Patent Rights of the
Royalty Paying Party that cover such Product or component thereof in such
country, or (ii) the earlier of (A) ten (10) years after the First Commercial
Use of such Product in such country or (B) twenty (20) years from the Effective
Date (the “Royalty Term”), provided,  however, that at any time
during the Royalty Term, with respect to a Product, when no Valid Claim
included within the Patent Rights of the Royalty-Receiving Party or within the
Resulting Patent Rights of the Royalty-Paying Party covers such Product or any
component thereof within a country, the royalty rate on such Product in such
country shall be reduced to [**] percent ([**]%) of the applicable rate set
forth in Section 4.3 or Section 4.4. 
Notwithstanding the foregoing, (A) the First Commercial Use of a Product
in any European Union Country shall be [**], and the First Commercial Use in any
ROW Country shall be [**], and (B) a diagnostic Product shall not be considered
a new Product having a new date of First Commercial Use unless (1) [**] or (2)
[**].

 

(b)                                 Required
Third Party Payments.  The
Royalty-Paying Party shall be entitled to deduct from the royalty payments
required to be paid pursuant to Section 4.3 or Section 4.4, payments made by
the Royalty-Paying Party to a Third Party with respect to sales of a Product in
a country to license patents that the Royalty-Paying Party reasonably
determines to be required to make, use or sell the Product in such country
(“Third Party Payments”); provided, however, that, (i) no
more than [**] percent ([**]%) of Third Party Payments may be deducted for
licenses under Third Party patents covering [**] (“Blocking IP”), (ii) no
more than [**] percent ([**]%) of Third Party Payments may be deducted for
licenses under Third Party patents covering [**] (“Enabling IP”) and (iii) in
no event shall a deduction under this Section 4.5(b) for Third Party Payments
for either or both of Blocking IP and Enabling IP reduce any royalty payment
otherwise due to the Royalty-Receiving Party in a country in a reporting period
by more than [**] percent ([**]%).  Any
deduction that is not usable in a reporting period pursuant to this
Section 4.5(b) may be carried forward for use in a future reporting
period.

 

(c)                                  Royalties
Payable Only Once.  The obligation
to pay royalties is imposed only once with respect to the same unit of a
Product.  Except as specifically
provided in this Agreement, it is understood and agreed that there shall be no
deductions from the royalties payable under this Agreement.

 

(d)                                 Sales
to Affiliates and Sublicensees. 
Sales of Products between the Royalty-Paying Party and its Affiliates or
permitted sublicensees, or among such Affiliates and permitted sublicensees,
shall not be subject to royalties under Section 4.3 or 4.4, but in such cases
the royalties shall be calculated on the Net Sales by such Affiliates or
sublicensees to a Third Party.

 

38

 

(e)                                  Royalty
Reports and Accounting.

 

(i)                                     Royalty
Reports; Royalty Payments.  The
Royalty-Paying Party shall deliver to the Royalty-Receiving Party, within sixty
(60) days after the end of each Calendar Quarter, reasonably detailed written
accountings of Net Sales of Products that are subject to royalty payments due
to the Royalty-Receiving Party for such Calendar Quarter.  Such quarterly reports shall indicate Net
Sales on a country-by-country and product-by-product basis, and the resulting
calculation of royalties, provided, that where a Party receives reports
of Net Sales from Affiliates or sublicensees on a regional rather than country
basis, reporting hereunder may use such regional Net Sales figures.  When the Royalty-Paying Party delivers such
accountings to the Royalty-Receiving Party, the Royalty-Paying Party shall also
deliver all royalty payments due under Section 4.3 or Section 4.4 to the
Royalty-Receiving Party for the Calendar Quarter, provided that if both Parties
have incurred royalty obligations during a Calendar Quarter, no payments shall
be due with the reports and instead the Royalty-Paying Party owing the greater
amount shall remit a net payment of the difference between the two royalty
amounts within fifteen (15) days after the later of (i) receipt by such Party
of the other Party’s accounting for such Calendar Quarter or (ii) the due date
for such Party’s own accounting for such Calendar quarter.  With respect to sales of Products invoiced
in United States Dollars, the sales and royalties payable shall be expressed in
United States Dollars.  With respect to
sales of Products invoiced in a currency other than United States Dollars, the
sales and royalties payable shall be expressed in their United States Dollar
equivalent, calculated using the applicable conversion rates for buying United
States dollars published by The Wall Street Journal on the last business
day of the Calendar Quarter to which the royalty report relates, provided that
a Party may elect to use the conversion method used generally in its audited
financial statements.

 

(ii)                                  Audits.  The Royalty-Paying Party shall keep, and
shall require its Affiliates and sublicensees to keep, complete and accurate
records of the latest three (3) years of sales to which royalties attach.  For the sole purpose of verifying royalties
payable to the Royalty-Receiving Party, the Royalty-Receiving Party shall have
the right annually at the Royalty-Receiving Party’s expense to retain an
independent certified public accountant selected by the Royalty-Receiving Party
and reasonably acceptable to the Royalty-Paying Party, to review such records
in the location(s) where such records are maintained by the Royalty-Paying
Party, its Affiliates or its sublicensees upon reasonable notice and during
regular business hours and under obligations of confidence.  Results of such review shall be made
available to both the Royalty-Receiving Party and the Royalty-Paying
Party.  If the review reflects an
underpayment of royalties to the Royalty-Receiving Party, such underpayment
shall be promptly remitted to the Royalty-Receiving Party, together with
interest calculated in the manner provided in Section 4.6.  If the underpayment is equal to or greater
than [**] percent ([**]%) of the royalty amount that was otherwise due, the
Royalty-Paying Party shall pay all of the costs of such review.  If the review reflects an overpayment of
royalties to the Royalty-Receiving Party, the amount of such overpayment shall
be credited against future royalties owned by the Royalty-Paying Party to the
Royalty-Receiving Party.

 

4.7                                 Late Payments. 
The Royalty-Paying Party shall pay interest to the Royalty-Receiving
Party on the aggregate amount of any payments that are not paid on or before
the date such payments are due under this Agreement at a rate per annum that is
equal to the lesser of [**] for the applicable period, or the highest rate
permitted by applicable law, calculated on the number of days such payment is
delinquent.

 

39

 

4.8                                 Tax Withholding.  The Parties shall use all reasonable and legal efforts to reduce
tax withholding on payments made to the Royalty-Receiving Party hereunder.  Notwithstanding such efforts, if the
Royalty-Paying Party concludes that tax withholdings under the laws of any
country are required with respect to payments to the Royalty-Receiving Party,
the Royalty-Paying Party shall withhold the required amount and pay it to the
appropriate governmental authority.  In
such a case, the Royalty-Paying Party shall promptly provide the
Royalty-Receiving Party with original receipts or other evidence reasonably
desirable and sufficient to allow the Royalty-Receiving Party to document such
tax withholdings adequately for purposes of claiming foreign tax credits and
similar benefits.

 

4.9                                 Blocked Payments.  In the event that, by reason of applicable laws or regulations in
any country, it becomes impossible or illegal for the Royalty-Paying Party or
its Affiliates or sublicensees, to transfer, or have transferred on its behalf,
royalties or other payments to the Royalty-Receiving Party, such royalties or
other payments shall be deposited in local currency in the relevant country to
the credit of the Royalty-Receiving Party in a recognized banking institution
designated by the Royalty-Receiving Party or, if none is designated by the
Royalty-Receiving Party within a period of thirty (30) days, in a recognized
banking institution selected by the Royalty-Paying Party or its Affiliates or
sublicensees, as the case may be, and identified in a notice in writing given
to the Royalty-Receiving Party.

 

4.10                           Right of Recoupment.  Notwithstanding the royalties payable under
Section 4.3 and Section 4.4, the Royalty-Paying Party shall be entitled to
recoup the amount of any obligation of the Royalty-Receiving Party to the
Royalty-Paying Party arising out of any material breach of this Agreement by
the Royalty-Receiving Party and not otherwise recovered.

 

ARTICLE V

INTELLECTUAL PROPERTY

 

5.1                                 Ownership of Inventions.

 

5.1.1                        Genaissance Inventions.  Subject to Section 5.1.4, Genaissance shall
exclusively own all inventions made solely by its employees, agents and
consultants in the conduct of the Collaboration (“Genaissance Inventions”).

 

5.1.2                        Bayer Inventions.  Subject to Section 5.1.4, Bayer shall exclusively own all
inventions made solely by its employees, agents and consultants in the conduct
of the Collaboration (“Bayer Inventions”).

 

5.1.3                        Joint Inventions.  Subject to Section 5.1.4, all inventions made jointly by
employees, agents and consultants of Bayer and employees, agents and
consultants of Genaissance in the conduct of the Collaboration (“Joint
Inventions”) shall be owned jointly on the basis of each Party having an
undivided interest in the whole.

 

5.1.4                        Assignment. 
Notwithstanding the foregoing, (a) Genaissance hereby assigns to Bayer
all of its right, title and interest in and to Genaissance Inventions and Joint
Inventions each relating exclusively to (i) Collaboration [**] Haplotypes and
(ii) Collaboration SADR Haplotype Associations, excluding, in each of (i) and
(ii), inventions relating exclusively to HAPTM Markers and HAPTM
Marker Associations, (b) Bayer hereby assigns to Genaissance all

 

40

 

of its right, title and
interest in and to Bayer Inventions and Joint Inventions each relating
exclusively to HAPTM Markers and HAPTM Marker
Associations, excluding any inventions relating exclusively to Bayer
Polymorphisms, (c) Genaissance hereby assigns to Bayer all of its right, title
and interest in and to Genaissance Inventions and Joint Inventions not referred
to in (a) or (b) made using samples owned by Bayer, (d) Bayer hereby assigns to
Genaissance all of its right, title and interest in and to Bayer Inventions and
Joint Inventions not referred to in (a) or (b) made using samples owned by
Genaissance, (e) Genaissance hereby assigns to Bayer all of its right, title
and interest in and to Genaissance Inventions and Joint Inventions not referred
to in (a), (b), (c) and (d) for which Bayer owns the most closely related prior
art, (f) Bayer hereby assigns to Genaissance all of its right, title and
interest in and to Bayer Inventions and Joint Inventions not referred to in
(a), (b), (c), (d) or (e),   Each
Genaissance Invention, Bayer Invention or Joint Invention, as applicable,
assigned pursuant to the immediately preceding sentence shall thereby cease to
be a Genaissance Invention, Bayer Invention or Joint Invention, as the case may
be, as originally owned and become a Bayer Invention or Genaissance Invention,
as the case may be, in accordance with the assignment thereof, as set forth
above.

 

5.1.5                        Inventorship. 
The determination of inventorship shall be made in accordance with the
relevant patent law of the country in which the particular invention has been
generated.

 

5.2                                 Patent Prosecution.

 

5.2.1                        General.  The
Parties recognize that a single patent application may disclose and claim more
than one invention, e.g., a Genaissance Invention and a Bayer Invention.  In so far as practicable, the Parties shall
draft their respective patent applications such that assignments made in
accordance with Section 5.1.4 shall result in assignment of the entire right,
title and interest in and to a given patent application.  Furthermore, the Parties agree to file any
continuation or divisional patent applications needed to effect the separate
prosecution of Genaissance Inventions and Bayer Inventions.  If under the circumstances of a given patent
application, such separate prosecution is not practicable or materially
adversely affects patentability, then the Parties shall agree as to which of
them shall be responsible for the Patent Prosecution of such patent application
and any resulting patent, and such Patent Prosecution shall be pursued in
accordance with Sections 5.2.4 and 5.2.5.

 

5.2.2                        Genaissance IP Rights.  Genaissance shall have the exclusive right
and option to pursue the Patent Prosecution of Genaissance IP Rights; provided,
however, that in the event that Genaissance declines to pursue the
Patent Prosecution of (a) any Genaissance IP Rights covering (i) an SADR
Diagnostic Product that is the subject of the Bayer SADR Diagnostic License
and/or (ii) an SER Diagnostic Product that is this subject of the Bayer SER
Diagnostic License as long as any such license remains exclusive, or (b) any
Genaissance Resulting IP, Genaissance shall give Bayer no less than sixty (60)
days written notice to this effect and thereafter Bayer may, upon written
notice to Genaissance, elect to assume sole control over the Patent Prosecution
of such Genaissance IP Rights in Genaissance’s name; provided, further,
that in the event that Bayer ceases to pursue the Patent Prosecution of any
such Genaissance IP Rights, Bayer shall give Genaissance no less than sixty
(60) days written notice to this effect and thereafter Genaissance may, upon
written notice to Bayer, elect to assume sole control over the Patent
Prosecution of such Genaissance IP Rights. 
In the event that the Bayer

 

41

 

SADR Diagnostic License
and/or the Bayer SER Diagnostic License becomes non-exclusive, Bayer’s rights
under this Section 5.2.2 with respect to Genaissance IP Rights other than
Genaissance Resulting IP shall terminate to the extent that Genaissance is
willing to, and does, resume control over the Patent Prosecution of the
relevant Genaissance IP Rights other than Genaissance Resulting IP.

 

5.2.3                        Bayer IP Rights.  Bayer shall have the exclusive right and option to pursue the
Patent Prosecution of the Bayer IP Rights; provided, however,
that in the event that Bayer declines to pursue the Patent Prosecution of (a)
any Bayer IP Rights covering (i) a Genaissance SADR Diagnostic Product and/or
(ii) a Genaissance SER Diagnostic Product and/or (iii) a [**]-Specific SER
Diagnostic Product that is the subject of a license, if any, to Genaissance or
a Genaissance Collaborator pursuant to Section 3.2.2, and/or (iv) a [**] Drug
Product that is the subject of a license to Genaissance pursuant to Section
3.3.1(a), as long as any such license remains exclusive or co-exclusive, as the
case may be, or (b) any Bayer Resulting IP, Bayer shall give Genaissance no
less than sixty (60) days written notice to this effect and thereafter
Genaissance (or, in the case of a [**]-Specific SER Diagnostic Product, a
Genaissance Collaborator, if applicable) may, upon written notice to Bayer,
elect to assume sole control over the Patent Prosecution of such Bayer IP
Rights and maintain such Bayer IP Rights in Bayer’s name; provided, further,
that in the event that Genaissance (or a Genaissance Collaborator, if
applicable) ceases to pursue the Patent Prosecution of any such Bayer IP
Rights, Genaissance (or a Genaissance Collaborator, if applicable) shall give
Bayer no less than sixty (60) days written notice to this effect and thereafter
Bayer may, upon written notice to Genaissance (or a Genaissance Collaborator,
if applicable), elect to assume sole control over the Patent Prosecution of
such Bayer IP Rights.  In the event that
a license described in this Section 5.2.3 becomes non-exclusive, Genaissance’s
(or a Genaissance Collaborator’s, if applicable) rights under this Section
5.2.3 with respect to IP other than Bayer Resulting IP to the extent that Bayer
is willing to, and does, resume control over the Patent Prosecution of the
relevant Bayer IP Rights.

 

5.2.4                        Costs and Expenses.  [**] in accordance with this Section 5.2.

 

5.2.5                        Cooperation.

 

(a)                                  General.  Each Party agrees to cooperate with the
other with respect to Patent Prosecution pursuant to this Section 5.2,
including, without limitation, the execution of all such documents and
instruments and the performance of such acts as may be reasonably necessary in
order to permit the other Party to continue any Patent Prosecution that such
Party has elected not to pursue, as provided for in this Section 5.2.  Each Party shall, on an annual basis,
provide to the other Party a list of all patents and patent applications filed,
prosecuted maintained and/or extended by it pursuant to this Section 5.2, including
the status thereof.

 

(b)                                 Bayer.  Bayer shall have the right to receive,
within ten (10) business days after receipt by Genaissance, copies of all
correspondence to and from patent offices that are related to patent
applications and/or patents within the Genaissance Resulting IP or within the
Bayer IP Rights for which Genaissance has assumed control of the Patent
Prosecution in accordance with Section 5.2.3, and shall further have the right
to review and comment upon such patent applications and/or patents, and the
Patent Prosecution thereof by

 

42

 

Genaissance, including
the right to receive and review drafts of patent applications no less than ten
(10) business days prior to filing with any patent office.  Genaissance shall consider Bayer’s comments
in good faith.

 

(c)                                  Genaissance.  Genaissance shall have the right to receive,
within ten (10) business days after receipt by Bayer, copies of all
correspondence to and from patent offices that are related to patent
applications and/or patents within the Bayer Resulting IP or within the
Genaissance IP Rights for which Bayer has assumed control of the Patent
Prosecution in accordance with Section 5.2.2, and shall further have the right
to review and comment upon such patent applications, and/or patents, and the
Patent Prosecution thereof by Bayer, including the right to receive and review
drafts of patent applications no less than ten (10) business days prior to
filing with any patent office.  Bayer
shall consider Genaissance’s comments in good faith.

 

5.2.6                        Patent Interference and Opposition.

 

(a)                                  Bayer.  Bayer shall have the exclusive right and
option to determine and undertake the course of action required in the event of
the discovery of a request for, or the filing or declaration of any
interference, opposition, or reexamination proceeding (each, an “Interference
Action”) with respect to the Bayer IP Rights; provided, however, that
in the event that Bayer fails to take such appropriate action in connection with
an Interference Action with respect to the Bayer IP Rights for which
Genaissance (or a Genaissance Collaborator, if applicable) has assumed, or has
the right to assume, control of the Patent Prosecution in accordance with
Section 5.2.3 within ninety (90) days after becoming aware of such action, then
Genaissance (or a Genaissance Collaborator, if applicable) may, in its
discretion, as long as Genaissance’s (or a Genaissance Collaborator’s, if
applicable) rights under Section 5.2.3 remain in effect, provide Bayer with
written notice of its intent to take such appropriate action, such notice to be
provided within thirty (30) days after the expiration of such ninety (90) day
period.  If Genaissance (or a
Genaissance Collaborator, if applicable) provides such notice and Bayer fails
to take such appropriate action within thirty (30) days after receipt of such
notice from Genaissance (or a Genaissance Collaborator, if applicable), then
Genaissance (or a Genaissance Collaborator, if applicable) shall have the right
to take appropriate action that it believes is reasonably required to protect
the relevant Bayer IP Rights. 
Genaissance (or a Genaissance Collaborator, if applicable) shall give
Bayer sufficient advance notice of its intent to take any such action and the
reasons therefor, and shall provide Bayer with an opportunity to make
suggestions and comments regarding such action.  The Parties shall cooperate with each other and each shall
provide the other with any information or assistance that the other may reasonably
request with any action so taken.  In
the event that Genaissance (or a Genaissance Collaborator, if applicable) takes
action in connection with an Interference Action with respect to Bayer IP
Rights in accordance with this Section 5.2.6(a), Genaissance (or a Genaissance
Collaborator, if applicable) shall keep Bayer informed of all developments in
such interference, opposition, reexamination or reissue, including to the
extent permissible the status of any settlement negotiations and the terms of any
settlement offer.  Genaissance (or a
Genaissance Collaborator, if applicable) shall provide Bayer with copies of all
submissions or agreements arising in connection with such proceeding
sufficiently in advance of their filing or due date so as to give Bayer
sufficient time to comment thereon. 
Genaissance (or a Genaissance Collaborator, if applicable) shall give
good faith consideration to Bayer’s comments.

 

43

 

Genaissance (or a
Genaissance Collaborator, if applicable) shall not enter into any settlement or
consent decree regarding any Bayer IP Rights with respect to which Genaissance
(or a Genaissance Collaborator, if applicable) has taken action in connection
with an Interference Action in accordance with this Section 5.2.6 or assent to
the grant of any reissued or reexamined patent within the Bayer IP Rights
without the prior written consent of Bayer, which shall not be withheld or
delayed unreasonably.

 

(b)                                 Genaissance.  Genaissance shall have the exclusive right
and option to determine and undertake the course of action required in the
event of any Interference Action with respect to the Genaissance IP Rights; provided,
however, that in the event that Genaissance fails to take such
appropriate action in connection with an Interference Action with respect to
the Genaissance IP Rights for which Bayer has assumed, or has the right to
assume, control of the Patent Prosecution in accordance with Section 5.2.2
within ninety (90) days after becoming aware of such action, then Bayer may, in
its discretion, as long as Bayer’s rights under Section 5.2.2 remain in effect,
provide Genaissance with written notice of its intent to take such appropriate
action, such notice to be provided within thirty (30) days after the expiration
of such ninety (90) day period.  If
Bayer provides such notice and Genaissance fails to take such appropriate
action within thirty (30) days after receipt of such notice from Bayer, then
Bayer shall have the right to take appropriate action that it believes is
reasonably required to protect the relevant Genaissance IP Rights. Bayer shall
give Genaissance sufficient advance notice of its intent to take any such
action and the reasons therefor, and shall provide Genaissance with an
opportunity to make suggestions and comments regarding such action.  The Parties shall cooperate with each other
and each shall provide the other with any information or assistance that the
other may reasonably request with any action so taken.  In the event that Bayer takes action in
connection with an Interference Action with respect to Genaissance IP Rights in
accordance with this Section 5.2.6(b), Bayer shall keep Genaissance informed of
all developments in such interference, opposition, reexamination or reissue,
including to the extent permissible the status of any settlement negotiations
and the terms of any settlement offer. 
Bayer shall provide Genaissance with copies of all submissions or
agreements arising in connection with such proceeding sufficiently in advance
of their filing or due date so as to give Genaissance sufficient time to
comment thereon.  Bayer shall give good
faith consideration to Genaissance’s comments. 
Bayer shall not enter into any settlement or consent decree regarding
any Genaissance IP Rights with respect to which Bayer has taken action in
connection with an Interference Action in accordance with this Section 5.2.6 or
assent to the grant of any reissued or reexamined patent within the Genaissance
IP Rights without the prior written consent of Genaissance, which shall not be
withheld or delayed unreasonably.

 

5.3                                 Third Party Infringement.

 

5.3.1                        Notice.  Each
Party shall promptly report in writing to the other Party during the term of
this Agreement any (a) known or suspected infringement of any of the Patent
Rights of the other Party, or (b) unauthorized use of any of the Know-How of
the other Party, of which such Party becomes aware, and shall provide the other
Party with all available evidence supporting such infringement, suspected
infringement, unauthorized use or suspected unauthorized use.

 

 

44

 

5.3.2                        Infringement Action.

 

(a)                                  Bayer.  Bayer shall have the exclusive right and
option to initiate a suit or take other appropriate action that it believes is
reasonably required to protect the Bayer IP Rights; provided, however,
that in the event that Bayer fails to initiate such suit or take such
other appropriate action within ninety (90) days after becoming aware of the
alleged infringements or unauthorized use of Bayer IP Rights for which
Genaissance (or a Genaissance Collaborator, if applicable) has assumed, or has
the right to assume, control of the Patent Prosecution in accordance with
Section 5.2.3, then Genaissance (or a Genaissance Collaborator, if applicable)
may, in its discretion, as long as Genaissance’s (or a Genaissance
Collaborator’s, if applicable) rights under Section 5.2.3 remain in effect,
provide Bayer with written notice of its intent to initiate such suit or take
such other appropriate action, such notice to be provided within thirty (30)
days after the expiration of such ninety (90) day period.  If Genaissance (or a Genaissance
Collaborator, if applicable) provides such notice and Bayer fails to initiate
such suit or take such other appropriate action within thirty (30) days after
receipt of such notice from Genaissance (or a Genaissance Collaborator, if
applicable), then Genaissance (or a Genaissance Collaborator, if applicable)
shall have the right to initiate a suit or take other appropriate action that
it believes is reasonably required to protect the relevant Bayer IP
Rights.  Genaissance (or a Genaissance
Collaborator, if applicable) shall give Bayer sufficient advance notice of its intent
to file any such suit or take any such action and the reasons therefor, and
shall provide Bayer with an opportunity to make suggestions and comments
regarding such suit or action. 
Genaissance (or a Genaissance Collaborator, if applicable) shall have
the sole and exclusive right to select counsel for any suit initiated by it
pursuant to this subsection, which counsel shall be reasonably acceptable to
Bayer.  If necessary or desirable, Bayer
shall join as a party to the suit. 
Bayer shall have the right to participate in and be represented in any
such suit by its own counsel at its own expense.

 

(b)                                 Genaissance.  Genaissance shall have the exclusive right
and option to initiate a suit or take other appropriate action that it believes
is reasonably required to protect the Genaissance IP Rights provided, however,
that in the event that Genaissance fails to initiate such suit or take
such other appropriate action within ninety (90) days after becoming aware of
the alleged infringements or unauthorized use of Genaissance IP Rights for
which Bayer has assumed, or has the right to assume, control of the Patent
Prosecution in accordance with Section 5.2.2, then Bayer may, in its
discretion, as long as Bayer’s rights under Section 5.2.2 remain in effect,
provide Genaissance with written notice of its intent to initiate such suit or
take such other appropriate action, such notice to be provided within thirty
(30) days after the expiration of such ninety (90) day period.  If Bayer provides such notice and Genaissance
fails to initiate such suit or take such other appropriate action within thirty
(30) days after receipt of such notice from Bayer, then Bayer shall have the
right to initiate a suit or take other appropriate action that it believes is
reasonably required to protect the relevant Genaissance IP Rights.  Bayer shall give Genaissance sufficient
advance notice of its intent to file any such suit or take any such action and
the reasons therefor, and shall provide Genaissance with an opportunity to make
suggestions and comments regarding such suit or action.  Bayer shall have the sole and exclusive
right to select counsel for any suit initiated by it pursuant to this
subsection, which counsel shall be reasonably acceptable to Genaissance.  If necessary or desirable, Genaissance shall
join as a party to the suit. 
Genaissance shall have the right to participate in and be represented in
any such suit by its own counsel at its own expense

 

45

 

(c)                                  Cooperation.
Each Party (or a Genaissance Collaborator, if applicable) shall keep the other
Party (or a Genaissance Collaborator, if applicable) promptly informed, and
shall from time to time consult with the other Party (or a Genaissance
Collaborator, if applicable) regarding the status of any such suit or action undertaken
by such Party (or a Genaissance Collaborator, if applicable) pursuant to this
Section 5.3.2, and shall provide the other Party (or a Genaissance
Collaborator, if applicable) with copies of all material documents (i.e.,
complaints, answers, counterclaims, material motions, orders of the court,
memoranda of law and legal briefs, interrogatory responses, depositions,
material pre-trial filings, expert reports, affidavits filed in court,
transcripts of hearings and trial testimony, trial exhibits and notices of
appeal) filed in, or otherwise relating to, such suit or action.  Each Party (or a Genaissance Collaborator,
if applicable) shall offer reasonable assistance to the Party (or a Genaissance
Collaborator, if applicable) undertaking such suit or action in connection
therewith at no charge to the Party (or a Genaissance Collaborator, if
applicable) undertaking such suit or action except for reimbursement of
reasonable out-of-pocket expenses incurred in rendering such assistance.  The Party (or a Genaissance Collaborator, if
applicable) undertaking any such suit or action shall assume and pay all of its
own out-of-pocket costs incurred in connection with any litigation or
proceedings described in this Section 5.3.2, including, without limitation, the
fees and expenses of the counsel selected by it.  In the event that a Party (or a Genaissance Collaborator, if
applicable) initiates a suit or takes other appropriate action with respect to
the Patent Rights and/or Know-How of the other Party in accordance with this
Section 5.3, the Party (or a Genaissance Collaborator, if applicable)
undertaking such suit or action shall not settle any such suit or action
without obtaining the prior written consent of the other Party, which consent
shall not be unreasonably withheld or delayed.

 

5.3.3                        Recoveries. 
Any recovery obtained as a result of any proceeding described in this
Section 5.3 shall be applied in the following order of priority:

 

(a)                                  first,
the Party initiating the suit or action shall be reimbursed for all costs in
connection with such proceeding paid by such Party and not otherwise recovered;

 

(b)                                 second,
the other Party shall be reimbursed for all costs in connection with such
proceeding paid by the other Party and not otherwise recovered;

 

(c)                                  third,
any remainder shall be paid [**] percent ([**]%) to the Party initiating such
suit or action and [**] percent ([**]%) to the other Party.

 

5.3.4                        Patent Invalidity Claim.  If a Third Party at any time asserts a claim
that any Patent Right is invalid or otherwise unenforceable (an “Invalidity
Claim”), whether as a defense in an infringement action brought by a Party
pursuant to this Section 5.3 or in a Third Party Claim brought against
Genaissance or Bayer, the Parties shall cooperate and shall endeavor to agree
upon an appropriate course of action.

 

5.4                                 Claimed Infringement.  In the event that a Third Party at any time
provides to a Party written notice of a claim, or brings an action, suit or
proceeding against a Party claiming, that the activities to be performed under
this Agreement by such Party infringe such Third Party’s Patent Rights or make
unauthorized use of such Third Party’s Know-How (a “Third Party Claim”), such
Party shall promptly notify the other Party of the claim or the commencement of

 

46

 

such action, suit or
proceeding, enclosing a copy of the claim and/or all papers served.  The Parties shall cooperate and shall
endeavor to agree upon an appropriate course of action.  Each Party agrees to make available to the
other Party its reasonable advice and counsel regarding the technical merits of
any such claim and to offer reasonable assistance to the other Party.  Such advice, counsel and assistance shall be
provided without charge to the other Party, unless such advice, counsel and
assistance would require such assisting Party to incur material external costs,
in which case the assisting Party shall not be required to provide such advice,
counsel and assistance unless the other Party agrees to reimburse them.

 

5.5                                 Patent Marking. 
The Parties agree to comply with any applicable patent marking statutes
in any country in which any Product is sold by a Party, its Affiliates or its
sublicensees.

 

ARTICLE VI

CONFIDENTIALITY

 

6.1                                 Nondisclosure and Non-Use Obligations.

 

6.1.1                        General. 
Except as otherwise provided in this Article VI, during the term of this
Agreement and for a period of [**] ([**]) years thereafter, each Party shall
maintain the Confidential Information of the other Party in confidence and use
it only for purposes specifically authorized under this Agreement.

 

6.1.2                        Limitations. 
The Parties agree that the receiving Party shall not have any obligation
of confidentiality with respect to such Confidential Information that:

 

(a)                                  is
or becomes part of the public domain other than by unauthorized acts of the
Party obligated not to disclose such Confidential Information;

 

(b)                                 can
be shown by written documents to have been disclosed to the receiving Party by
a Third Party, provided, that such Confidential Information was
not obtained by such Third Party from the other Party to this Agreement
pursuant to a confidentiality agreement;

 

(c)                                  prior
to disclosure under this Agreement, was already in the possession of the
receiving Party, provided, that such Confidential Information was
not obtained from the other Party to this Agreement pursuant to a
confidentiality agreement;

 

(d)                                 can
be shown by written documents to have been independently developed by the
receiving Party without breach of any of the provisions of this Agreement;

 

(e)                                  is
disclosed by the receiving Party pursuant to an order or demand issued by a
court or governmental agency or as otherwise required by law; provided, that
the receiving Party notifies the other Party prior to disclosure, giving such
other Party sufficient advance notice, if possible, to permit it to seek a
protective order or other similar order with respect to such Confidential
Information and provided,  further,  that the receiving
Party furnishes only that portion of the Confidential Information which it is
advised by counsel is legally required whether or not a protective order or
other similar order is obtained by the other Party; or

 

47

 

(f)                                    where
the receiving Party reasonably believes such disclosure is necessary or
appropriate to fulfill its obligations or exercise its rights under this
Agreement, with such disclosure being limited to:

 

(i)                                     actual
or potential licensees or sublicensees, consultants, outside contractors and
clinical investigators, on a need-to-know basis and on condition that such
entities or persons agree to keep the Confidential Information confidential to
the same extent as such Party is required to keep the Confidential Information
confidential for a term not less than [**] ([**]) years from the date of
disclosure to such party; provided, that, Bayer shall not
have the right to disclose any HAP Marker to any external genotyping contractor
hired by Bayer, unless such HAP Marker was known to Bayer prior to the first
Steering Committee meeting, as evidenced by contemporary written documentation;
and

 

(ii)                                  government
or other Regulatory Authorities to the extent that such disclosure is
reasonably necessary to obtain or maintain patents or authorizations to conduct
clinical trials of, and to commercially market, Products pursuant to this
Agreement.

 

6.2                                 Injunctive Relief.  The Parties understand and agree that remedies at law may be
inadequate to protect against any breach of any of the provisions of this
Article VI by either Party or their employees, agents, officers or directors or
any other person acting in concert with it or on its behalf.  Accordingly, each Party shall be entitled to
the granting of injunctive relief by a court of competent jurisdiction against
any action that constitutes any such breach of this Article VI.

 

6.3                                 Publication. 
The Parties agree to use commercially reasonable efforts to monitor
public scientific and other disclosures of the results of the Collaboration to
prevent any premature public disclosure of such results.  The Parties shall establish a procedure for
publication review, which shall include Steering Committee approval, not to be
unreasonably withheld.  Each Party shall
first submit to the other Party an early draft of all such publications,
whether they are to be presented orally or in written form, at least [**]
([**]) days prior to submission (if in written form, including abstracts) or
presentation (if an oral disclosure) to determine (a) whether the proposed
disclosure contains any Confidential Information of the other Party or (b)
whether the information contained in the proposed disclosure should be the
subject of a patent application prior to such disclosure.  The other Party shall have [**] ([**]) days
from its receipt of any such abstract, manuscript or presentation in which to
notify the Party in writing of any specific objections to the disclosure, based
on either the need to seek patent protection or concern regarding the specific
disclosure of the Confidential Information of such Party.  In the event a Party objects to the
disclosure, the other Party agrees not to submit the publication or make the
presentation containing the objected-to information until the Party is given a
reasonable additional period of time (not to exceed an additional [**] ([**])
days) to seek patent protection for any material in the disclosure which it
believes is patentable or, in the case of Confidential Information, to allow
the Party to delete any Confidential Information of the other Party from the
proposed disclosure.  Each Party agrees
to delete from the proposed disclosure any Confidential Information of the
other Party upon request.  The Parties
agree that all publications of results of

 

48

 

the Collaboration shall
acknowledge the contribution of the other Party to such results, which shall be
co-authorship in accordance with accepted practices of authorship
justification.

 

ARTICLE VII

REPRESENTATIONS
AND WARRANTIES; LIMITATION OF LIABILITY

 

7.1                                 Representations and Warranties of
Genaissance.  Genaissance
represents and warrants to Bayer as of the Effective Date that:

 

(a)                                  Genaissance
is a corporation duly organized, validly existing and in corporate good
standing under the laws of Delaware, whose organization number assigned by the
Secretary of State of Delaware is 2288980;

 

(b)                                 Genaissance
has the legal right, authority and power to enter into this Agreement, perform
its obligations under this Agreement, and grant to Bayer the licenses, security
interest and other rights granted pursuant to this Agreement;

 

(c)                                  upon
the execution and delivery of this Agreement, this Agreement shall constitute a
valid and binding obligation of Genaissance enforceable in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’ and
contracting parties’ rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law);

 

(d)                                 all
necessary consents, approvals and authorizations of all government authorities
and other persons required to be obtained by it in connection with the execution,
delivery and performance of this Agreement have been obtained;

 

(e)                                  notwithstanding
anything to the contrary in this Agreement, the execution and delivery of this
Agreement, the performance of Genaissance’s obligations in the conduct of the
Collaboration and the licenses, security interest and other rights granted
pursuant to this Agreement (i) do not conflict with or violate any requirement
of applicable laws or regulations existing as of the Effective Date, and (ii)
do not conflict with, violate, breach or constitute a default under any
contractual obligations of Genaissance existing as of the Effective Date;

 

(f)                                    all
of its employees, officers, consultants and advisors who are or will be
involved in the Collaboration have executed or will have executed agreements or
have existing obligations under law requiring assignment to Genaissance of
inventions made by them in the conduct of the Collaboration, and obligating
such individuals to maintain as confidential Bayer’s Confidential Information,
to the extent required to support Genaissance’s obligations under this
Agreement;

 

(g)                                 to
the knowledge of Genaissance, the Genaissance Prior IP and the Genaissance
Know-How that will be used by the Parties in the Collaboration have not been
developed or obtained by Genaissance in violation of any contractual obligation
to any Third Party nor have they been misappropriated from any Third Party or
obtained without the proper consent of any Third Party;

 

49

 

(h)                                 except
as otherwise disclosed to Bayer by Genaissance as of the Effective Date, there
is no action, suit or proceeding which is pending or, to the knowledge of the
officers of Genaissance, no written claim or demand of any Third Party that has
been received, that challenges or would materially adversely affect (i) the
right of Genaissance to use in the conduct of the Collaboration the Genaissance
Prior IP, the Genaissance Know-How or the Genaissance Patent Rights that are
reasonably expected to be utilized by the Parties to fulfill their duties under
the Collaboration Plan, or (ii) the right of Genaissance to grant to Bayer the
rights and licenses to use such Genaissance Prior IP, Genaissance Know-How or
Genaissance Patent Rights, as contemplated under this Agreement.

 

7.2                                 Representations and Warranties of
Bayer.  Bayer represents and
warrants to Genaissance as of the Effective Date that:

 

(a)                                  (i)
Bayer AG is a corporation duly organized, validly existing and in corporate
good standing under the laws of Germany and (ii) Bayer Corporation is a
corporation duly organized validly existing and in corporate good standing
under the laws of Indiana;

 

(b)                                 Bayer
has the legal right, authority and power to enter into this Agreement, and
perform its obligations under this Agreement, and grant to Genaissance the
licenses and other rights granted pursuant to this Agreement;

 

(c)                                  upon
the execution and delivery of this Agreement, this Agreement shall constitute a
valid and binding obligation of Bayer enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ and contracting
parties’ rights generally and except as enforceability may be subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law);

 

(d)                                 all
necessary consents, approvals and authorizations of all government authorities
and other persons required to be obtained by it in connection with the
execution, delivery and performance of this Agreement have been obtained;

 

(e)                                  notwithstanding
anything to the contrary in this Agreement, the execution and delivery of this
Agreement, the performance of Bayer’s obligations in the conduct of the
Collaboration and the licenses and other rights granted pursuant to this
Agreement (i) do not conflict with or violate any requirement of applicable
laws or regulations existing as of the Effective Date and (ii) do not conflict
with, violate, breach or constitute a default under any contractual obligations
of Bayer existing as of the Effective Date;

(f)                                    all
of its employees, officers, consultants and advisors who are or will be
involved in the Collaboration have executed or will have executed agreements or
have existing obligations under law requiring assignment to Bayer of inventions
made by them in the conduct of the Collaboration, and obligating such
individuals to maintain as confidential Genaissance’s Confidential Information,
to the extent required to support Bayer’s obligations under this Agreement;

 

(g)                                 to
the knowledge of Bayer, the Bayer Prior IP and the Bayer Know-How that will be
used by the Parties in the Collaboration have not been developed or obtained by

 

50

 

Bayer in violation of any
contractual obligation to any Third Party nor have they been misappropriated
from any Third Party or obtained without the proper consent of any Third Party;
and

 

(h)                                 except
as otherwise disclosed to Genaissance by Bayer as of the Effective Date, there
is no action, suit or proceeding which is pending or, to the knowledge of the
officers of Bayer, no written claim or demand of any Third Party that has been
received, that challenges or would materially adversely affect (i) the right of
Bayer to use in the conduct of the Collaboration the Bayer Prior IP, the Bayer
Know-How or the Bayer Patent Rights that are reasonably expected to be utilized
by the Parties to fulfill their duties under the Collaboration Plan, or (ii) the
right of Bayer to grant to Genaissance the rights and licenses to use such
Bayer Prior IP, Bayer Know-How or Bayer Patent Rights, as contemplated under
this Agreement.

 

7.3                                 Warranty Disclaimer.  EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
ARTICLE VII OF THIS AGREEMENT, THE PARTIES MAKE NO REPRESENTATIONS AND EXTEND
NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, STATUTORY OR
OTHERWISE.  THE PARTIES HEREBY DISCLAIM
WARRANTIES OF TITLE, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NONINFRINGEMENT WITH RESPECT TO PRODUCTS, BAYER POLYMORPHISMS, BAYER SADR
POLYMORPHISM ASSOCIATIONS, BAYER SER POLYMORPHISM ASSOCIATIONS, HAPTM
MARKERS, MARKER ASSOCIATIONS AND COLLABORATION [**] HAPLOTYPES.

 

7.4                                 Disclaimer of Consequential Damages.  NEITHER PARTY WILL BE LIABLE FOR SPECIAL,
INCIDENTAL, PUNITIVE, EXEMPLARY, MULTIPLE, CONSEQUENTIAL OR OTHER INDIRECT
DAMAGES ARISING OUT OF THIS AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER,
OR ANY LOST PROFITS, LOST SAVINGS, LOST REVENUES OR LOST DATA, REGARDLESS OF ANY
NOTICE OF SUCH DAMAGES.  NOTHING IN THIS
SECTION 7.4 IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR
OBLIGATIONS OF EITHER PARTY UNDER ARTICLE VIII.

 

ARTICLE VIII

INDEMNITY

 

8.1                                 Bayer Indemnity Obligations.  Bayer agrees to defend, indemnify and hold
Genaissance and its directors, officers, employees and agents harmless from all
losses, damages or expenses (including attorneys’ fees) arising as a result of
any Third Party claims relating to:  (a)
claims for bodily injury, death or property damage attributable to the
development, manufacture, or use of Products developed, manufactured or sold by
Bayer, its Affiliates, or its sublicensees (excluding those claims for which
Genaissance indemnifies Bayer pursuant to Section 8.2); (b) a recall of any
Product developed, marketed, sold or manufactured by Bayer (excluding those
claims for which Genaissance indemnifies Bayer pursuant to Section 8.2) ordered
by a governmental agency or required by a confirmed product failure; (c) a
breach of any of the representations, warranties or material obligations of
Bayer under this Agreement; or (d) performance by Bayer of its obligations
under this Agreement or as a result of Bayer’s use of its

 

51

 

proprietary technology
and/or any Third Party technology including, but not limited to, any claim
that[**].

 

8.2                                 Genaissance Indemnity Obligations.  Genaissance agrees to defend, indemnify and
hold Bayer and its directors, officers, employees and agents harmless from all
losses, damages or expenses (including attorneys’ fees) arising as a result of
any Third Party claims relating to (a) claims for bodily injury, death or
property damage attributable to the development, manufacture, or use of any
Products developed, manufactured or sold by Genaissance, its Affiliates, or its
sublicensees (excluding those claims for which Bayer indemnifies Genaissance
pursuant to Section 8.1); (b) a recall of any Product developed, marketed, sold
or manufactured by Genaissance which is ordered by a governmental agency or
required by a confirmed product failure (excluding those claims for which Bayer
indemnifies Genaissance pursuant to Section 8.1); (c) a breach of any of the
representations, warranties or material obligations of Genaissance under this
Agreement; or (d) performance by Genaissance of its obligations under this
Agreement or as a result of Genaissance’s use of its proprietary technology
and/or any Third Party technology including, but not limited to, any claim
that[**].

 

8.3                                 Limitation on Indemnity Obligations.  Neither Party nor its respective directors,
officers, employees and agents shall be entitled to the indemnities set forth
in Section 8.1 and Section 8.2 where the claim, loss, damage or expense for
which indemnification is sought was caused by a negligent act or omission or
willful misconduct by such Party, its directors, officers, employees or
authorized agents.

 

8.4                                 Procedure.  If
the Party being indemnified hereunder or its respective directors, officers,
employees or agents (the “Indemnitee”) intends to claim indemnification under
this Article VIII, the Indemnitee shall promptly notify the other Party (the
“Indemnitor”) of any loss, claim, damage, liability or action in respect of
which the Indemnitee intends to claim such indemnification, and the Indemnitor
shall manage and control, at its sole expense, the defense of the claim and its
settlement.  The Indemnitee shall
cooperate with the Indemnitor and may, at its option and its own expense, be
represented in any such action or proceeding. 
The Indemnitor shall not be liable for any litigation costs or expenses
incurred by the Indemnitee that have not been approved in advance in writing by
the Indemnitor.  The indemnity
obligations under this Article VIII shall not apply to amounts paid in
settlement of any loss, claim, damage, liability or action if such settlement
is effected without the consent of the Indemnitor.  The Indemnitor may enter into a settlement without the consent of
the Indemnitee unless such settlement (a) does not include a complete release
of the Indemnitee from all liability with respect thereto, or (b) imposes any
restrictions on the Indemnitee.  The
Indemnitee under this Article VIII shall cooperate fully with the Indemnitor
and its legal representatives in the investigation of any action, claim or
liability covered by this indemnification. 
The Indemnitor shall additionally be liable to pay the reasonable legal
costs and attorneys’ fees incurred by the Indemnitee in establishing its claim
for indemnity.

 

8.5                                 Insurance. 
Each Party shall maintain insurance, including product liability
insurance, with respect to its activities hereunder.  Such insurance shall be in such amounts and subject to such
deductibles as the Parties may agree based upon standards prevailing in the
industry at the time, provided  that, as of the First Commercial
Use, each Party shall maintain a minimum of [**] Dollars ($[**]) in product
liability insurance.  Either Party may
satisfy its

 

52

 

obligations under this
Section 8.5 through reasonable self-insurance to the same extent.  A Party shall name the other Party as an
additional insured on any policies it maintains pertaining to the development,
manufacturing, marketing or sale of any Products.

 

ARTICLE IX

TERM AND TERMINATION

 

9.1                                 Term of Agreement.  This Agreement shall become effective as of the Effective Date,
may be terminated as set forth in this Article IX, and shall otherwise remain
in effect until the later of: (i) the expiration of all obligations to make
payments set forth in Article IV, or (ii) the expiration of all licenses and
other rights granted in Article III, other than licenses having a perpetual
term.

 

9.2                                 Termination for Material Breach.  Upon any material breach of a provision of
this Agreement by a Party (the “Breaching Party”), the other Party (the
“Non-Breaching Party”) may terminate this Agreement by providing [**] ([**])
days written notice to the Breaching Party, specifying the material breach.  The termination shall become effective at
the end of the [**] ([**]) day period, or if such breach is not susceptible to
cure within [**] ([**]) days after the receipt of written notice of the breach,
and if the Breaching Party is diligently pursuing a cure, then termination
shall become effective within [**] ([**]) days of the receipt of written notice
of the breach.  Notwithstanding the
foregoing, if such breach, by its nature, is incurable, this Agreement may be
terminated immediately.  The Parties
shall use reasonable efforts to work together to cure any breach.

 

9.3                                 Bankruptcy. 
Each Party may terminate this Agreement if the other Party (i) makes an
assignment for the benefit of creditors; (ii) applies for, seeks, consents to,
acquiesce in, or have appointed for it a receiver, custodian, trustee,
examiner, liquidator or similar official for it or substantially all of its
property; (iii) institutes any proceeding seeking an order for relief under the
Bankruptcy Code or any other proceeding seeking to adjudicate it a bankrupt or
insolvent, or seeking dissolution, winding up, liquidation, or composition of
it or its debts under any law relating to bankruptcy, insolvency, or
reorganization of all or substantially all of its assets; or (iv) has
instituted against it an involuntary proceeding under the Bankruptcy Code or
any bankruptcy, reorganization of all or substantially all of its assets,
arrangement, insolvency or similar proceedings under the laws of any
jurisdiction, if not dismissed or stayed within [**] ([**]) days after such
commencement.

 

9.4                                 Effect of Termination.

 

9.4.1                        Effect of Termination by Genaissance.  If this Agreement is terminated by
Genaissance under Section 9.2 or Section 9.3, then, to the extent permitted
under the Bankruptcy Code or under other applicable law, (a) the license grants
to Bayer under Sections 3.1.2, 3.2.1, 3.3.3, 3.3.4 and 3.4.1 and the other
rights granted to Bayer under Section 3.8.1 shall terminate and all rights
under sublicenses granted by Bayer with respect to Genaissance IP Rights shall
be assigned to Genaissance, (b) subject to Genaissance’s compliance with all
obligations set forth in Section 9.5 and without prejudice to Bayer’s rights to
receive payments under Article IV of this Agreement, net of the amount of any
damages incurred by Genaissance as a result of breach of this Agreement by
Bayer and not otherwise recovered, the license grants to Genaissance under

 

53

 

Sections 3.1.1, 3.2.4, if
any, 3.3.1, 3.3.2 and 3.4.2 and the other rights granted to Genaissance under
Sections 3.2.2, 3.2.3, 3.5 and 3.8.2 shall survive termination of this
Agreement; (c) all Bayer Resulting IP and, all rights under licenses granted
thereunder by Bayer shall be assigned to Genaissance and Bayer’s rights to and
under the Bayer Resulting IP shall immediately and automatically cease, without
prejudice to Bayer’s rights to receive payments under Article IV of this
Agreement, net of the amount of any damages incurred by Genaissance as a result
of breach of this Agreement by Bayer and not otherwise recovered, and (d) any
and all Confidential Information of, and materials provided by the Parties
pursuant to this Agreement, and any copies thereof (including electronic
copies) shall be promptly returned by each Party to the other Party or
destroyed, except to the extent necessary to exercise rights retained pursuant
to this Section.

 

9.4.2                        Effect of Termination by Bayer.  If this Agreement is terminated by Bayer
under Section 9.2. or Section 9.3, then, to the extent permitted under the
Bankruptcy Code or under other applicable law, (a) the license grants to
Genaissance under Section 3.1.1 3.2.4, if any, 3.3.1, 3.3.2 and 3.4.2 and the
other rights granted to Genaissance under Sections 3.2.2, 3.2.3, 3.5 and 3.8.2
shall terminate and all rights under sublicenses granted by Genaissance with
respect to Bayer IP Rights shall be assigned to Bayer; (b) subject to Bayer’s
compliance with all obligations set forth in Section 9.5, and without prejudice
to Genaissance’s right to receive payments under Article IV of this agreement,
net of the amount of any damages incurred by Bayer as a result of breach of
this agreement by Genaissance and not otherwise recovered, the license grants
to Bayer under Sections 3.1.2, 3.2.1, 3.3.3, 3.3.4 and 3.4.1 and the other
rights granted to Bayer under Section 3.8.1 shall survive such termination of
this Agreement; and (c) all Genaissance Resulting IP and all rights under
licenses granted thereunder by Genaissance shall be assigned to Bayer and Genaissance’s
rights to and under the Genaissance Resulting IP shall immediately and
automatically cease, without prejudice to Genaissance’s rights to receive
payments under Article IV of this Agreement, net of the amount of any damages
incurred by Bayer as a result of breach of this Agreement by Genaissance and
not otherwise recovered, and (d) any and all Confidential Information of, and
materials provided by the Parties pursuant to this Agreement, and any copies
thereof (including electronic copies) shall be promptly returned by each Party
to the other Party or destroyed, except to the extent necessary to exercise
rights retained pursuant to this Section.

 

9.5                                 Surviving Provisions.  The expiration or termination of this
Agreement shall not relieve the Parties of any obligation accruing prior to
such expiration or termination.  The
provisions of Articles IV, VI, VIII, IX and X and Sections 5.1, 7.3 and 7.4
hereof shall survive the expiration or termination of this Agreement.

 

9.6                                 Security Interest.  To secure the prompt and complete performance when due of all
obligations of Genaissance under this Agreement (the “Obligations”),
Genaissance hereby grants to Bayer a first priority security interest in all of
Genaissance’s rights, title and interests in and to the Genaissance Resulting
IP (whether now existing or hereafter arising) , all licenses thereof, and all
of the rights and benefits therefrom, including without limitation all license
payments and royalties, the right to sue for past, present and future infringements
and proceeds thereof (the “Collateral”). 
Genaissance hereby authorizes the filing of appropriate UCC Financing
Statements relating thereto and any other federal or state filings that may be
required to perfect or otherwise secure Bayer’s security interest in the
Collateral as granted herein (collectively, “Filings”), and Bayer shall have
the right to file the same in order to secure its 

 

54

 

interests therein.  To the extent permitted by law, Bayer shall
include in the Filings (other than continuation statements) a statement that
the Collateral secures only the Obligations. 
Genaissance’s sole remedy for any breach of Bayer’s obligation under the
preceding sentence shall be to require Bayer to amend, and Bayer shall so
amend, as promptly as is reasonably practicable the relevant Filing to comply
with the foregoing requirement.

 

9.7                                 Rights of Secured Party.  Bayer shall have, in addition to the rights
and remedies given under this Agreement, those rights allowed by law or at
equity and the rights and remedies of a secured party under the Uniform
Commercial Code.  Notwithstanding
anything herein or under any applicable law to the contrary, Bayer shall not
exercise or otherwise enforce its rights to the Collateral as a secured party
until this Agreement is terminated by Bayer under Section 9.2 or until the
occurrence of any event described in Section 9.3 with respect to Genaissance.

 

9.8                                 No Encumbrances.  Genaissance represents, warrants and agrees that neither the
Genaissance Resulting IP nor the licenses, proceeds nor rights to payments
related thereto is, or hereafter shall be, encumbered (by act of Genaissance or
by operation of law) without the prior written consent of Bayer, except for (i)
the security interest in favor of Bayer granted hereunder, (ii) liens arising
in the ordinary course of business for sums not overdue or being contested in
good faith by appropriate proceedings and not involving any borrowed money or
the deferred purchase price of property or services, and in each case, for
which Genaissance maintains adequate reserves; and (iii) licenses permitted by
this Agreement.

 

9.9                                 Further Assurances.  Genaissance shall from time to time promptly execute and deliver
any Filings and such other instruments and documents that comply with the terms
of Section 9.6 as Bayer may reasonably request to evidence Bayer’s security
interest in the Collateral or for Bayer to obtain the full benefits of the
rights granted under Section 9.6.

 

ARTICLE X

MISCELLANEOUS

 

10.1                           Force Majeure. 
Neither Party shall be held liable or responsible to the other Party nor
be deemed to have defaulted under or breached this Agreement for failure or
delay in fulfilling or performing any term of this Agreement when such failure
or delay is caused by or results from causes beyond the reasonable control of
the affected Party, including but not limited to fire, floods, embargoes, war,
acts of war (whether war is declared or not), terrorism, insurrections, riots,
civil commotion, strikes, lockouts or other labor disturbances, acts of God or
acts, omissions or delays in acting by any governmental authority or the other
Party; provided  that the Party so affected shall use reasonable
commercial efforts to avoid or remove such causes of nonperformance, and shall
continue performance hereunder with reasonable dispatch whenever such causes
are removed.  Either Party shall provide
the other Party with prompt written notice of any delay or failure to perform
that occurs by reason of force  majeure. 
The Parties shall mutually seek a resolution of the delay or the failure
to perform as noted above.

 

10.2                           Assignment. 
This Agreement may not be assigned or otherwise transferred by either
Party without the consent of the other Party; provided,  that
either Genaissance or Bayer may, without such consent, assign its rights and
obligations under this Agreement (a) to any

 

55

 

Affiliate, or (b) in
connection with a merger, consolidation or sale of substantially all of such
Party’s assets relating to this Agreement to a Third Party; provided,  further,
that such Party’s rights and obligations under this Agreement shall be
assumed by its successor in interest in any such transaction and shall not be
transferred separate from all or substantially all of its other business assets
relating to this Agreement, including those business assets that are the
subject of this Agreement.  Any
purported assignment in violation of the preceding sentence shall be void.  Any permitted assignee shall assume all
obligations of its assignor under this Agreement.

 

10.3                           Severability.  If any provision hereof should be held invalid, illegal or
unenforceable in any respect in any jurisdiction, then, to the fullest extent
permitted by law, (a) all other provisions hereof shall remain in full
force and effect in such jurisdiction and shall be liberally construed in order
to carry out the intentions of the Parties as nearly as may be possible and (b)
such invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of such provision in any other jurisdiction.

 

10.4                           Notices.  Any
consent, notice or report required or permitted to be given or made under this
Agreement by one of the Parties to the other Party shall be in writing,
delivered personally or by facsimile (and promptly confirmed by telephone,
personal delivery or courier) or courier, postage prepaid (where applicable),
addressed to such other Party at its address indicated below, or to such other
address as the addressee shall have last furnished in writing to the addressor
and shall be effective upon receipt by the addressee.

 

	
  If to
  Genaissance:

  	
  Genaissance
  Pharmaceuticals, Inc.

  Five Science Park

  New Haven, Connecticut 06511

  Attention:  Chief Executive Officer

  Telephone:  (203) 773-1450

  Facsimile:   (203) 562-9377

  
	
   

  	
   

  
	
  With a copy to:

  	
  Hale and Dorr
  LLP

  60 State Street

  Boston, Massachusetts 02109

  Attention:  Steven D. Singer

  Telephone:  (617) 526-6000

  Facsimile:   (617) 526-5000

  

 

56

 

	
  If to Bayer:

  	
  BAYER HEALTHCARE
  LLC, Diagnostics Division

  511 Benedict Avenue

  Tarrytown, New York 10591

  Attention:  President

  Telephone:  914-631-8000

  Facsimile:  914-524-2132

   

   

  And

   

   

  Bayer
  Aktiengesellschaft

  Bayer HealthCare

  Bayerwerk

  51368 Leverkusen

  Germany

  Attention:  CAO

  Telephone: +49-30-76732

  Facsimile: +49-30-52248

  
	
   

  	
   

  
	
  With a copy to:

  	
  BAYER HEALTHCARE
  LLC, Diagnostics Division

  511 Benedict Avenue

  Tarrytown, New York 10591

  Attention:  Law & Patents

  Telephone:   914-631-8000

  Facsimile:  914-524-3594

   

   

  And

   

   

  Bayer
  Aktiengesellschaft

  Bayer HealthCare

  Bayerwerk

  51368 Leverkusen

  Germany

  Attention: General Counsel

  Telephone: +49-30-56247

  Facsimile: +49-30-82986

  

 

10.5                           Applicable Law. 
This Agreement shall be governed by and construed in accordance with the
laws of the State of [**], without giving effect to the choice of laws
provisions thereof.

 

10.6                           Dispute Resolution.  The Parties hereby agree that they will attempt in good faith to
resolve any controversy or claim arising out of or relating to this Agreement
promptly by negotiations.  If a
controversy or claim should arise hereunder, the matter shall be referred to an
individual designated by the Chief Executive Officer (or the equivalent
position) of Genaissance and an individual designated by the head of Bayer’s
Business Group Diagnostics (or the equivalent position) of Bayer (the “Party
Representatives”).  If the matter has
not been resolved within [**] ([**]) days after the first meeting of the Party
Representatives (which period may be

 

57

 

extended by mutual
agreement) concerning such matter, subject to rights to injunctive relief and
specific performance, and unless otherwise specifically provided for herein,
any controversy or claim arising out of or relating to this Agreement, or the
breach thereof, may at the election of either Party be pursued by whatever
other remedies are legally available to resolve the dispute.

 

10.7                           Entire Agreement.  This Agreement, together with the exhibits hereto, contains the
entire understanding of the Parties with respect to the subject matter
hereof.  All express or implied
agreements and understandings, either oral or written, heretofore made are
expressly superseded by this Agreement. 
This Agreement may be amended, or any term hereof modified, only by a
written instrument duly executed by both Parties.

 

10.8                           Publicity.

 

10.8.1                  Agreement. 
Except as required by law, and subject to Section 10.8.2, Genaissance
and Bayer each agree not to disclose the existence or any terms or conditions
of this Agreement to any Third Party without the prior written permission of
the other Party; provided,  that either Party may make such
disclosures to its financial and legal advisers or actual or potential
investors, acquirors, licensees or sublicensees on a need to know basis and
subject to a confidentiality agreement. 
In the event that this Agreement shall be included in any report,
statement or other document filed by either Party or an Affiliate of either
Party with the United States Securities and Exchange Commission (the “SEC”),
such Party shall provide the other Party with reasonable notice and shall use,
or shall cause its Affiliate, as the case may be, to use, reasonable efforts to
obtain confidential treatment from the SEC of any financial information or
other information of a competitive or confidential nature, and shall include in
such confidentiality request such provisions of this Agreement as may be
reasonably requested by the other Party.

 

10.8.2                  Press Release. 
Notwithstanding the foregoing, Genaissance and Bayer agree that a press
release may be issued promptly after execution of this Agreement by either
Party in the form(s) agreed by the Parties and as set forth in Exhibit H
attached hereto.  The Parties agree that
any announcement by either Party will not contain confidential business or
technical information and, if disclosure of confidential business or technical
information is required by law or regulation, will make commercially reasonable
efforts to minimize such disclosure and obtain confidential treatment for any
such information which is disclosed to a governmental agency or group.  Each Party agrees to provide to the other
Party a copy of any public announcement with respect to this Agreement or the
subject matter of this Agreement as soon as reasonably practicable under the
circumstances prior to its scheduled release. 
Except under extraordinary circumstances, each Party shall provide the
other Party with an advance copy of any such press release at least [**] ([**])
business days prior to the scheduled disclosure.  Each Party shall have the right to review and recommend changes
to any announcement regarding this Agreement or the subject matter of this
Agreement.  Except as otherwise required
by law, the Party whose press release has been reviewed shall remove any
information the reviewing Party reasonably deems to be inappropriate for
disclosure and shall use all reasonable efforts to accommodate the reviewing
Party’s other comments.  The contents of
any such announcement or similar publicity which has been reviewed and approved
by the reviewing Party can be re-released by either Party without a requirement
for re-approval.

 

58

 

10.9                           Headings.  The
captions to the several Articles and Sections hereof are not a part of this
Agreement, but are merely guides or labels to assist in locating and reading
the several Articles and Sections hereof.

 

10.10                     No Partnership; Independent
Contractors.  It is expressly
agreed that the relationship between Genaissance and Bayer shall not constitute
a partnership, joint venture or agency. 
Neither Genaissance nor Bayer shall have the authority to make any
statements, representations or commitments of any kind, or to take any action,
which shall be binding on the other, without the prior consent of the other
Party to do so.

 

10.11                     Exports.  The
Parties acknowledge that the export of technical data, materials or products is
subject to the exporting Party receiving any 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.  Genaissance and Bayer agree not to export or
re-export, directly or indirectly, any information, technical data, the direct
product of such data, samples or equipment received or generated under this
Agreement in violation of any applicable export control laws or governmental
regulations.  Genaissance and Bayer
agree to obtain similar covenants from their licensees, sublicensees and
contractors with respect to the subject matter of this Section.

 

10.12                     Waiver.  The
waiver by either Party of any right hereunder or of the failure to perform or
of a breach by the other Party shall not be deemed a waiver of any other right
hereunder or of any other breach or failure by the other Party whether of a
similar nature or otherwise.

 

10.13                     Counterparts. 
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

 

10.14                     No Strict Construction.  This Agreement has been prepared jointly and
shall not be strictly construed against either Party.

 

[Remainder
of page intentionally left blank]

 

59

 

IN
WITNESS WHEREOF, the Parties have caused their duly authorized officers to
execute and deliver this Agreement as of the date first set forth above.

 

BAYER AG

 

	
  By:

  	
  /s/ Dr.
  Jan-Anders Karlsson

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  Dr. Jan-Anders
  Karlsson

  	
   

  
	
   

  	
   

  
	
  Title:

  	
  Executive Vice
  President

  	
   

  
	
   

  	
   

  
	
  And by:

  	
  /s/ [Illegible]

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  [Illegible]

  	
   

  
	
   

  	
   

  
	
  Title:

  	
  Head of
  [Illegible]

  	
   

  
							

 

 

BAYER
HEALTHCARE LLC, Diagnostics Division

 

	
  By:

  	
  /s/ Peter C.
  Knueppel

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  Peter C.
  Knueppel

  	
   

  
	
   

  	
   

  
	
  Title:

  	
  Senior Vice
  President

  	
   

  
					

 

 

GENAISSANCE
PHARMACEUTICALS, INC.

 

	
  By:

  	
  /s/ Kevin Rakin

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  Kevin Rakin

  	
   

  
	
   

  	
   

  
	
  Title:

  	
  President and
  Chief Executive Officer

  	
   

  
					

 

60

 

Exhibit
A

 

Gene Criteria

 

The HAPTM
Database shall consist of Genaissance’s proprietary information and publicly
available information.

 

The current
procedure for discovering HAPTM Markers for a Gene is to
sequence, from Genaissance’s collection of individuals of diverse ancestry (the
“Index Repository”), ninety-three (93) individual samples of human genomic DNA
and one (1) sample of chimpanzee genomic DNA. 
The genomic regions of each Gene, which are targeted for sequencing, are
as follows.

 

(i) “Exons” shall
mean the genomic DNA segments of a Gene whose sequence information is
translated into the protein product of that Gene.  The goal is to obtain sequence information for all Exons of a
Gene.

 

(ii) “Exon/Intron
Junction” shall mean the junctions between the Exons and the Introns in genomic
DNA.  Beginning with the initiation
codon at one end of a Gene and ending with the termination codon at the other
end of a Gene, the goal is to obtain sequence information for each Exon/Intron
Junction within this genomic region.

 

(iii) “Introns”
shall mean the genomic DNA segments of a Gene, which are located between
Exons.  Beginning with the initiation
codon at one end of a Gene and ending with the termination codon at the other
end of a Gene, the goal is to obtain a minimum of ten (10) to twenty (20) bases
and a maximum of one hundred (100) bases of sequence information from the
Exon/Intron Junction into the Intron for every Intron within this genomic
region.

 

(iv) “Promoter”
shall mean the genomic region that is immediately upstream of the transcription
start site of the Gene.  The goal is to
obtain sequence information for up to one (1) thousand bases of the Promoter.

 

(v) “Three-Prime
Untranslated Region” shall mean the genomic region immediately downstream from
the termination codon of a Gene.  The
goal is to obtain sequence information for at least one hundred (100) bases of
the Three-Prime Untranslated Region downstream of the termination codon.

 

Specific genomic
sequence information is required to meet the goals outlined in (i) through (v)
above.  If genomic sequence information
is available for a majority of these regions, even if the available genomic
sequence information is not sufficient to meet all of the goals in (i) through
(v) above, a Gene will still be queued for HAPTM Marker discovery.

 

Once a Gene is
completely sequenced, HAPTM Markers will be
constructed for that Gene and placed into the HAPTM
Database.  A Gene shall be considered
completely sequenced if sequence information is obtained for at least [**] of
the [**].  A specific region

 

1

 

targeted for
sequencing within a Gene shall be considered completely sequenced if sequence
information is obtained for at least [**].

 

If a Gene is not
completely sequenced after each fragment targeted for sequencing has been
attempted once, each of the failed fragments will be resequenced using
redesigned amplification/sequencing primers. 
However, the presence of runs of guanine and cytosine, secondary
structure or errors in publicly available sequence information may prevent the
generation of sufficient sequence information for that Gene to be considered
completely sequenced.  Thus, if the Gene
does not meet the completely sequenced criteria after the above resequencing
step, [**].

 

Genaissance shall
use commercially reasonable efforts to incorporate into the HAPTM
Database other information about Genes, including: (i) genomic structure; (ii)
cDNA and protein sequences; (iii) publicly available Polymorphisms and
Haplotypes; (iv) location of these publicly available polymorphic sites within
the genomic structure and also in the messenger RNA if these Polymorphisms
cause coding changes; (v) publicly available association(s) of Polymorphism(s)
with phenotype(s); and (vi) whether the publicly available Polymorphism(s)
is/are in linkage disequilibrium with any of Genaissance’s proprietary
Polymorphisms.

 

2

 

Exhibit B

 

[**] Trial

 

The [**] Trial was
a [**] trial run in [**] with [**] patients, aged [**].  Of the [**] patients, [**] have signed
informed consents to have their DNA isolated and analyzed for scientific
purposes related to the study.  The
study was designed such that [**]of the patients were given [**] and the other
[**] of the patients was given [**]. 
The purpose of the study was [**]. 
All [**].  The study [**].

Bayer has started
an association study using samples collected from the [**] Trial.  [**] Trial were examined.  The [**] serve as controls.

 

The [**] examined
in the association study [**].  Another
[**].  The rationale for [**].

 

All [**] patients
[**] were genotyped for more than [**] SNPs. 
These SNPs were chosen because they were located within Genes that are
known or believed to play a role in [**]. 
The more than [**] SNPs were identified because [**].  From these more than [**] SNPs, a number of
SNPs were identified as being associated with [**].  In addition, a number of SNPs were found to be associated with an
[**].  Moreover, a further number of
SNPs were identified as being associated with [**] and with [**].

 

1

 

Exhibit C

 

SADR Clinical
Phenotypes

 

[**]

 

Clinical Diagnosis: 
[**]

 

[**]

 

[**]

[**]

 

1

 

Exhibit
D

 

SADR Plan

 

The SADR Study will be conducted as per the SADR
Plan, which will be designed and finalized by the Steering Committee.

 

1

 

Exhibit E

 

SER Clinical
Phenotypes

 

[**] [**]

 

1

 

Exhibit
F

 

SER Plan

 

The SER Study will be conducted as per the SER Plan,
which will be designed and finalized by the Steering Committee.

 

1

 

Exhibit G

 

STRENGTH Trial

 

The STRENGTH Trial
includes both the STRENGTH I trial and the STRENGTH II trial and comprises an
open-label examination of the relationship between treatment response and HAPTM
Markers.  Various efficacy and safety
endpoints were measured before and after treatment of seven hundred ninety-six
(796) patients with one of five (5) statins (Cerivastatin, Pravastatin,
Atorvastatin, Simvastatin, and Lovastatin). 
Subjects were administered the recommended starting dose of one of these
statins for eight (8) weeks and then administered the highest allowed dose,
according to the drug label, for an additional eight (8) weeks.

 

All patients were sequenced for one hundred one (101) genes known or
believed to play a role in lipid metabolism, lipid trafficking, energy
metabolism, and inflammation. 
Additionally,[**]all patients will be genotyped for SNPs from ADME Genes
(some of which are also contained in the set of 101 sequenced Genes).  The genotyping and sequencing information
derived will then be used to assign specific HAPTM Marker
pairs to each of the STRENGTH Trial patients for all of the Genes.

 

1

 

Exhibit H

 

Press Release

 

1

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