Document:

Exhibit 10.2

2006 Short-Term Cash Incentive Plan

 

Subject to the
achievement of certain revenue, EBITDA and strategic goals for 2006, the
following sets forth the target cash bonus awards for each of the Company’s
executive officers.

 

	
  Executive Officer

  	
   

  	
  Target Payout as a Percentage of Base Salary

  	
   

  
	
  Caren
  L. Mason

  President and Chief Executive Officer

  	
   

  	
  50%

  	
   

  
	
  Mark
  E. Paiz 

  Chief Operating Officer

  	
   

  	
  40%

  	
   

  
	
  Paul
  E. Landers 

  Senior Vice President, 

  Finance & Administration, 

  Chief Financial Officer and Secretary

  	
   

  	
  40%

  	
   

  
	
  Thomas
  J. Foley 

  Chief Technology Officer

  	
   

  	
  40%

  	
   

  
	
  Robert
  J. Bujarski 

  Vice President and General Counsel

  	
   

  	
  30%Exhibit 10.3

 

2005 Cash Bonus Awards

 

	
  Executive Officer

  	
   

  	
  2005 Cash Bonus

  	
   

  
	
  Caren
  L. Mason

  President and Chief Executive Officer

  	
   

  	
  $

  	
  250,000

  	
   

  
	
  Mark
  E. Paiz 

  Chief Operating Officer

  	
   

  	
  $

  	
  121,600

  	
   

  
	
  Paul
  E. Landers 

  Senior Vice President, 

  Finance & Administration, 

  Chief Financial Officer and Secretary

  	
   

  	
  $

  	
  90,074

  	
   

  
	
  Thomas
  J. Foley 

  Chief Technology Officer

  	
   

  	
  $

  	
  95,250

  	
   

  
	
  Robert
  J. Bujarski 

  Vice President and General Counsel

  	
   

  	
  $

  	
  39,310Exhibit 10.49

 

Confidential Treatment Requested.
Confidential portions of this document have been redacted 

and have been separately filed with the Commission.

 

 

COLLABORATIVE RESEARCH AND LICENSE AGREEMENT

 

 

Between

 

INCYTE CORPORATION

 

 

and

 

 

PFIZER INC.

 

Dated as of November 18, 2005

 

 

TABLE OF CONTENTS

 

	
  1.

  	
  DEFINITIONS

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  MANAGEMENT OF
  THE RESEARCH PROGRAM

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  JOINT RESEARCH
  COMMITTEE

  	
   

  	
  17

  
	
  2.2

  	
   

  	
  MEETINGS

  	
   

  	
  18

  
	
  2.3

  	
   

  	
  MINUTES

  	
   

  	
  18

  
	
  2.4

  	
   

  	
  JRC FUNCTIONS AND POWERS

  	
   

  	
  18

  
	
  2.5

  	
   

  	
  INDEPENDENCE

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  CONDUCT OF THE
  RESEARCH PROGRAM

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  RESEARCH PLAN

  	
   

  	
  19

  
	
  3.2

  	
   

  	
  CONDUCT OF RESEARCH

  	
   

  	
  19

  
	
  3.3

  	
   

  	
  RESEARCH COSTS

  	
   

  	
  19

  
	
  3.4

  	
   

  	
  RECORDS

  	
   

  	
  20

  
	
  3.6

  	
   

  	
  TERMINATION OF RESEARCH PROGRAM

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  HSR

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  HSR

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  DEVELOPMENT AND
  COMMERCIALIZATION

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  TRANSITION PLAN

  	
   

  	
  21

  
	
  5.2

  	
   

  	
  DEVELOPMENT PLAN

  	
   

  	
  21

  
	
  5.3

  	
   

  	
  DEVELOPMENT INFORMATION EXCHANGE

  	
   

  	
  21

  
	
  5.4

  	
   

  	
  DILIGENCE

  	
   

  	
  22

  
	
  5.5

  	
   

  	
  REGULATORY AFFAIRS

  	
   

  	
  22

  
	
  5.6

  	
   

  	
  MANUFACTURE AND SUPPLY

  	
   

  	
  22

  
	
  5.7

  	
   

  	
  COSTS

  	
   

  	
  23

  
	
  5.8

  	
   

  	
  TRADEMARKS

  	
   

  	
  23

  
	
  5.9

  	
   

  	
  PRICING

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  INCYTE PRODUCTS

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  DEVELOPMENT PLAN

  	
   

  	
  23

  
	
  6.2

  	
   

  	
  REGULATORY AFFAIRS

  	
   

  	
  23

  
	
  6.3

  	
   

  	
  MANUFACTURE AND SUPPLY

  	
   

  	
  23

  
	
  6.4

  	
   

  	
  COSTS

  	
   

  	
  23

  
	
  6.5

  	
   

  	
  TRADEMARKS

  	
   

  	
  23

  
	
  6.6

  	
   

  	
  PRICING

  	
   

  	
  23

  
	
  6.7

  	
   

  	
  INCYTE COMPOUNDS

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  LICENSES AND
  RELATED RIGHTS

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  LICENSE TO PFIZER

  	
   

  	
  26

  
	
  7.2

  	
   

  	
  SUBLICENSES AND LICENSE TO INCYTE

  	
   

  	
  27

  
	
  7.3

  	
   

  	
  RESEARCH LICENSES

  	
   

  	
  28

  
	
  7.4

  	
   

  	
  NON-COMPETE

  	
   

  	
  29

  
	
  7.5

  	
   

  	
  ACQUISITION OF COMPETING PRODUCT

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  FINANCIAL TERMS

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  8.1

  	
   

  	
  UPFRONT PAYMENT

  	
   

  	
  30

  
	
  8.2

  	
   

  	
  MILESTONE
  PAYMENTS

  	
   

  	
  30

  
	
  8.3

  	
   

  	
  SALES MILESTONE PAYMENTS

  	
   

  	
  34

  
	
  8.4

  	
   

  	
  ROYALTY PAYMENTS

  	
   

  	
  34

  
	
  8.5

  	
   

  	
  PAYMENTS AND PAYMENT REPORTS

  	
   

  	
  36

  
	
  8.6

  	
   

  	
  PAYMENT METHOD

  	
   

  	
  36

  
	
  8.7

  	
   

  	
  TAXES

  	
   

  	
  36

  
	
  8.8

  	
   

  	
  FOREIGN EXCHANGE

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.9

  	
   

  	
  INTEREST

  	
   

  	
  37

  

 

i

 

*** Confidential material redacted and filed separately with the
Commission.

 

	
  8.10

  	
   

  	
  RECORDS; AUDITS

  	
   

  	
  37

  
	
  8.11

  	
   

  	
  INTER-COMPANY SALES

  	
   

  	
  37

  
	
  8.12

  	
   

  	
  ANIMAL PRODUCTS

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  INTELLECTUAL
  PROPERTY

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  
	
  9.1

  	
   

  	
  OWNERSHIP

  	
   

  	
  38

  
	
  9.2

  	
   

  	
  FILING, PROSECUTION AND MAINTENANCE

  	
   

  	
  38

  
	
  9.3

  	
   

  	
  NOTICES, MAINTENANCE AND RESTRICTIONS ON TRANSFER

  	
   

  	
  41

  
	
  9.4

  	
   

  	
  PATENT TERM EXTENSIONS

  	
   

  	
  42

  
	
  9.5

  	
   

  	
  INTERPRETATION OF PATENT JUDGMENTS

  	
   

  	
  42

  
	
  9.6

  	
   

  	
  ANTI-STACKING

  	
   

  	
  42

  
	
  9.7

  	
   

  	
  INFRINGEMENT

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  CONFIDENTIALITY

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  
	
  10.1

  	
   

  	
  TREATMENT OF CONFIDENTIAL INFORMATION

  	
   

  	
  46

  
	
  10.2

  	
   

  	
  AUTHORIZED DISCLOSURE

  	
   

  	
  46

  
	
  10.3

  	
   

  	
  PUBLICITY

  	
   

  	
  47

  
	
  10.4

  	
   

  	
  PUBLICATIONS

  	
   

  	
  48

  
	
  10.5

  	
   

  	
  REGISTRATION AND FILING OF THIS AGREEMENT

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  TERM;
  TERMINATION; CHANGE OF CONTROL

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  
	
  11.1

  	
   

  	
  TERM

  	
   

  	
  49

  
	
  11.2

  	
   

  	
  TERMINATION BY PFIZER

  	
   

  	
  49

  
	
  11.3

  	
   

  	
  MUTUAL TERMINATION RIGHTS

  	
   

  	
  49

  
	
  11.4

  	
   

  	
  TERMINATION BY
  PFIZER OF PFIZER INDICATION

  	
   

  	
  50

  
	
  11.5

  	
   

  	
  TERMINATION BY
  PFIZER OF ***

  	
   

  	
  52

  
	
  11.6

  	
   

  	
  EFFECT OF
  TERMINATION

  	
   

  	
  53

  
	
  11.7

  	
   

  	
  CHANGE OF
  CONTROL

  	
   

  	
  58

  
	
  11.8

  	
   

  	
  BANKRUPTCY

  	
   

  	
  58

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
   

  	
  59

  
	
   

  	
   

  	
   

  	
   

  
	
  12.1

  	
   

  	
  GENERAL REPRESENTATIONS AND WARRANTIES

  	
   

  	
  59

  
	
  12.2

  	
   

  	
  REPRESENTATIONS AND WARRANTIES OF INCYTE

  	
   

  	
  59

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  INDEMNITIES

  	
   

  	
  60

  
	
   

  	
   

  	
   

  	
   

  
	
  13.1

  	
   

  	
  INDEMNIFICATION

  	
   

  	
  60

  
	
  13.2

  	
   

  	
  PRODUCT
  LIABILITY INDEMNIFICATION

  	
   

  	
  61

  
	
  13.3

  	
   

  	
  CONDITIONS TO INDEMNIFICATION

  	
   

  	
  61

  
	
  13.4

  	
   

  	
  EXCLUSION OF DAMAGES

  	
   

  	
  63

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
  DISPUTE
  RESOLUTION

  	
   

  	
  63

  
	
   

  	
   

  	
   

  	
   

  
	
  14.1

  	
   

  	
  DISPUTES

  	
   

  	
  63

  
	
  14.2

  	
   

  	
  GOVERNING LAW; JURISDICTION

  	
   

  	
  63

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
  MISCELLANEOUS

  	
   

  	
  64

  
	
   

  	
   

  	
   

  	
   

  
	
  15.1

  	
   

  	
  ENTIRE AGREEMENT; AMENDMENT

  	
   

  	
  64

  
	
  15.2

  	
   

  	
  FORCE MAJEURE

  	
   

  	
  64

  
	
  15.3

  	
   

  	
  NOTICES

  	
   

  	
  64

  
	
  15.4

  	
   

  	
  UNITED STATES DOLLARS

  	
   

  	
  65

  
	
  15.5

  	
   

  	
  ASSIGNMENT

  	
   

  	
  65

  
	
  15.6

  	
   

  	
  COUNTERPARTS

  	
   

  	
  65

  
	
  15.7

  	
   

  	
  FURTHER ACTIONS

  	
   

  	
  66

  
	
  15.8

  	
   

  	
  SEVERABILITY

  	
   

  	
  66

  
	
  15.9

  	
   

  	
  HEADINGS

  	
   

  	
  66

  
	
  15.10

  	
   

  	
  NO WAIVER

  	
   

  	
  66

  
	
  15.11

  	
   

  	
  NON-SOLICITATION OF EMPLOYEES

  	
   

  	
  66

  
	
  15.12

  	
   

  	
  THIRD-PARTY BENEFICIARIES

  	
   

  	
  66

  
	
  15.13

  	
   

  	
  BINDING EFFECT

  	
   

  	
  66

  

 

ii

 

*** Confidential material redacted and filed separately with the
Commission.

 

EXHIBIT A: INCYTE PATENT RIGHTS

EXHIBIT B: RESEARCH PLAN

EXHIBIT C: TRANSITION PLAN

EXHIBIT D-1: ***

EXHIBIT D-2: ***

EXHIBIT D-3: ***

 

SCHEDULE 1.7(a)-(c): ***

SCHEDULE 1.27: ***

SCHEDULE 1.28: ***

SCHEDULE 1.29: ***

SCHEDULE 1.30: ***

SCHEDULE 1.31: ***

SCHEDULE 1.32: ***

SCHEDULE 1.33: ***

SCHEDULE 1.34: ***

SCHEDULE 1.35: ***

SCHEDULE 1.75: ***

SCHEDULE 6.7(a): ***

SCHEDULE 6.7(b): ***

SCHEDULE 10.3(a): PRESS RELEASE

SCHEDULE 10.3(b): PERMITTED DISCLOSURES

SCHEDULE 10.4 ***

 

iii

 

*** Confidential material redacted and filed separately with the
Commission.

 

COLLABORATIVE RESEARCH AND LICENSE AGREEMENT

 

THIS COLLABORATIVE RESEARCH AND LICENSE AGREEMENT (the “Agreement”) is entered into as of November 18, 2005 by and
between INCYTE CORPORATION, a Delaware corporation with its offices at
Experimental Station, Route 141 and Henry Clay Road, Building E336, Wilmington,
DE 19880 (“Incyte”), and PFIZER INC., a
Delaware corporation with its offices at 235 East 42nd Street, New
York, New York 10017 (“Pfizer”). Incyte
and Pfizer may be referred to herein individually as a “Party”
or collectively, as the “Parties”.

 

RECITALS

 

WHEREAS, Incyte owns certain patents, patent applications, technology,
know-how and scientific and technical information relating to CCR2 Antagonists;

 

WHEREAS, Pfizer has extensive experience and expertise in the
development and commercialization of pharmaceutical products, and desires to
acquire an exclusive license in the Territory (as defined below) to such
patents, patent applications, technology, know-how and scientific and technical
information;

 

WHEREAS, Incyte desires to grant such license to Pfizer but also
desires to secure a grantback of certain rights and to have a right of
reversion under certain circumstances;

 

NOW, THEREFORE, in consideration of the foregoing and the covenants and
promises contained in this Agreement, the Parties agree as follows:

 

1.                                      DEFINITIONS

 

1.1          “Affiliate”  means a person,
corporation, partnership, or other entity that controls, is controlled by or is
under common control with a Party. For the purposes of this Section 1.1,
the word “control” (including, with correlative meaning, the terms “controlled
by” or “under common control with”) means the actual power, either directly or
indirectly through one or more intermediaries, to direct the management and
policies of such entity, whether by the ownership of at least fifty percent
(50%) of the Voting Stock of such entity, or by contract or otherwise.

 

1.2          “Animal Product” has the meaning assigned to it in Section
8.12.

 

1.3          “API” has the meaning assigned to it in Section 11.5(c)(iii).

 

1.4          *** means,
as diagnosed by a physician or other health care provider, a ***. A drug
developed for the treatment of ***, respectively.

 

1.5          *** means an
inflammatory or autoimmune disease of the *** diagnosed by a physician or other
healthcare provider, *** shall also include ***

 

4

 

*** Confidential material redacted and filed separately with the
Commission.

 

1.6          “Business Day” means a day other than a Saturday, Sunday,
bank or other public holiday in the state of New York.

 

1.7          “CCR2 Antagonist” means a compound of less than 1,000 Daltons
Molecular Weight (MW) as the free base that is an inhibitor of CCR-2 (alpha
and/or beta isoforms) binding and activation by known ligands (Macrophage Chemotactic
Protein (MCP)-1, MCP-2, MCP-3 or MCP-4) with Inhibitory Concentration (IC) 50
potency less than (a) *** as described in Schedule 1.7(b) and (b) *** as
described in Schedule 1.7(c). The Parties agree that the JRC may amend,
modify, replace or delete any of the assays described in Schedules 1.7(a)-(c)
from time to time as it deems appropriate in accordance with Section 2.4(f).

 

1.8          “Change
of Control” means that any of the following has occurred:

 

(a)           any Person or group that is a ***
becomes the beneficial owner, directly or indirectly, of fifty percent (50%) or
more of the outstanding Voting Stock or voting power over Voting Stock of (i)
Incyte or (ii) any one or more Persons which are direct or indirect
parent holding companies of Incyte or Affiliates controlling Incyte (Incyte,
together with the Persons described in clause (ii), each hereinafter referred
to, individually, as an “Incyte Group Company” and, collectively, as the “Incyte
Group Companies”); or

 

(b)           any Incyte
Group Company enters into an agreement with any Person or group that is a ***
providing for the sale or disposition of all or substantially all of the assets
of the Incyte Group Companies, on a consolidated basis; or

 

(c)           any Incyte Group Company enters
into an agreement with any Person or group providing for a merger,
reorganization, consolidation or other similar transaction (or series of
related transactions) of any Incyte Group Company with such Person or any
Affiliate of such Person, in each case, that is a *** (other than with any of
the Incyte Group Company’s wholly-owned subsidiaries) or with such group that
contains a ***, that results in the shareholders of the applicable Incyte Group
Company immediately before the occurrence of such transaction (or series of
transactions) beneficially owning less than a majority of the outstanding
Voting Stock or voting power over Voting Stock of the surviving or
newly-created entity in such transaction (or series of transactions); or

 

(d)           a
change in the board of directors of any Incyte Group Company in which the
individuals who constituted the board of directors of such Incyte Group Company
at the beginning of the two (2)-year period immediately preceding such change
(together with any other director whose election by the board of directors of
such Incyte Group Company or whose nomination for election by the stockholders
of such Incyte Group Company was approved by a vote of at least a majority of
the directors then in office either who were directors at the beginning of such
period or whose election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the directors then in office. This
subsection (d) shall not apply if a majority of the votes cast in favor of a
majority of directors following such change were cast by a single stockholder
that is a ***; or

 

5

 

*** Confidential material redacted and filed separately with the
Commission.

 

(e)           any Incyte Group Company enters
into an agreement with any Person providing for the matters described in
subsection (a), (b) or (d) above;

 

For purposes of this definition of “Change of Control” only: (A)
references to any Incyte Group Company shall be deemed to include all
successors in any merger, consolidation, reorganization or similar transaction
(or series of related transactions) preceding any transaction (or series of
related transactions) described above; (B) “beneficial ownership” (and other
correlative terms) means beneficial ownership as defined in Rule 13d-3 under
the United States Securities and Exchange Act of 1934, as amended; it being
understood and agreed that “beneficial ownership” shall also include any
securities which any person or any of such person’s Affiliates has the right to
acquire (whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or understanding, or
upon the exercise of conversion rights, exchange rights, rights, warrants or
options, or otherwise; (C) “group” means group as defined in the Securities
Exchange Act of 1934, as amended and the rules of the Securities and Exchange
Commission thereunder as in effect on the date hereof; (D) “control”
(including, with correlative meanings, “controlled by”, “controlling” and “under
common control with”) of an entity means possession, direct or indirect, of (I)
the power to direct or cause direction of the management and policies of such
entity (whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise), or (II) at least fifty percent
(50%) of the voting securities (whether directly or pursuant to any option,
warrant or other similar arrangement) or other comparable equity interests of
such entity; (E) *** means (x) any *** that had ***, (y) any one or more
Persons that are direct or indirect parent holding companies of subsidiaries of
the *** described in clause (x) above, or (z) any Affiliate of the ***
described in clause (x) above; and (F) *** means (x) any *** that had ***, (y)
any one or more Persons that are direct or indirect parent holding companies of
subsidiaries of the *** described in clause (x) above, or (z) any Affiliate of
the *** described in clause (x) above.

 

1.9          “Claim” has the meaning assigned to it in Section 13.1.

 

1.10        “Combination Product” means any human pharmaceutical
product in which one or more active pharmaceutical ingredients are either (i)
physically, chemically or otherwise combined or mixed with a Compound to
produce a single entity for commercial distribution or (ii) packaged together
with a Compound or any Pfizer Product in a single package or unit for
commercial distribution.

 

1.11        “Commence” or “Commencement”
when used to describe a Phase I Trial, Phase II Trial, Phase II(b) Trial or
Phase III Trial, means the first dosing of the first patient for such trial.

 

6

 

*** Confidential material redacted and filed separately with the
Commission.

 

1.12        “Commercially Reasonable Efforts” means those efforts and
resources that Pfizer would use were it developing or commercializing its own
pharmaceutical products that are of similar market potential as the Pfizer
Products, taking into account product labeling or anticipated labeling, present
and future market potential, past performance of Pfizer Products and Pfizer’s
own pharmaceutical products that are of similar market potential, financial
return, medical and clinical considerations, present and future regulatory
environment and competitive market conditions, all as measured by the facts and
circumstances at the time such efforts are due. For the avoidance of doubt, in
evaluating financial return, Pfizer shall not consider any payments due to
Incyte pursuant to Sections 8.1, 8.2, 8.3 and 8.4.

 

1.13        “Competing Product” means any CCR2 Antagonist that ***

 

1.14        “Compound” means any CCR2 Antagonist *** that is covered by a
claim contained in any ***. All salts, prodrugs, esters, metabolites, solvates,
stereoisomers and polymorphs of a given Compound shall be considered to be the
same Compound.

 

1.15        “Control” means, with respect to any intellectual property
right, that a Party or an Affiliate of a Party owns or has a license to such
item or right, and has the ability to grant a license or sublicense in or to
such right without violating the terms of any agreement or other arrangement
with any Third Party.

 

1.16        “Damages” has the meaning assigned to it in Section 13.1.

 

1.17        “Development Plan” has the meaning assigned to it in Section
5.2.

 

1.18        ***
means *** disorders that are diagnosed by a physician or other health care
provider as ***.

 

1.19        “Effective Date” means the later of (i) the date that the
applicable waiting period under the HSR Act shall have expired or been
terminated with respect to this Agreement and (ii) the date on which any
investigations opened by means of a second request or otherwise shall have been
closed.

 

1.20        “FDA” means the United States Food and Drug Administration,
or any successor federal agency thereto.

 

1.21        “FDCA”
means the U.S. Federal Food, Drug and Cosmetic Act, as amended, and the
regulations promulgated thereunder.

 

1.22        “FTE” means the equivalent of one person
working full time for a twelve (12)-month period in a research or other
relevant capacity, with full time being defined as at least 1800 hours per year.
In the interests of clarity, a single individual who works more than 1800 hours
in a single year shall be treated as one FTE regardless of the number of hours
worked.

 

7

 

*** Confidential material redacted and filed separately with the
Commission.

 

1.23        “Generic Market Share” means a fraction (expressed as a
percentage), the numerator of which shall be the aggregate total unit sales of
all Generic Products in a country in the Territory, and the denominator of
which shall be the aggregate total unit sales of all such Generic Products and
the relevant Pfizer Product in such country, based on data provided by IMS
International, or, if such data is not available from IMS International, such
other reliable data source as reasonably determined by Pfizer and reasonably
agreed to by Incyte. In the event IMS International data (or such other data
source) is not sufficient to determine the percentage market share for each
country in the European Union, the average percent market share of the
countries in the European Union for which data is available will be deemed to
be the percent market share for those countries in which the data is not
available.

 

1.24        “Generic Product” means any pharmaceutical product, other
than a Pfizer Product, that (i) is sold under a marketing authorization granted
by a Regulatory Authority to a Third Party (who is not a permitted sublicensee
pursuant to Section 7.1), (ii) contains the same Compound as the relevant
Pfizer Product as its active pharmaceutical ingredient and (iii) can be or is
reasonably used for the same indication or indications as the relevant Pfizer
Product.

 

1.25        “Governmental Authority” means
any court, agency, department or other instrumentality of any foreign, federal,
state, county, city or other political subdivision.

 

1.26        “HSR Act” means the United States Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.

 

1.27        “INCB-3284” means the Compound referred to by Incyte as
INCB-3284 as of the date of this Agreement, which Compound is as described in ***
and as depicted on Schedule 1.27 attached hereto.

 

1.28        ***
means the Compound referred to by Incyte as *** as of the date of this
Agreement, which Compound is as described in *** and as depicted on Schedule
1.28 attached hereto.

 

1.29        ***
means the Compound referred to by Incyte as *** as of the date of this
Agreement, which Compound is as described in *** and as depicted on Schedule
1.29 attached hereto.

 

1.30        ***
means the Compound referred to by Incyte as *** as of the date of this
Agreement, which Compound is as described in *** and as depicted on Schedule
1.30 attached hereto.

 

1.31        ***
means the Compound referred to by Incyte as *** as of the date of this
Agreement, which Compound is as described in *** and as depicted on Schedule
1.31 attached hereto.

 

1.32        ***
means the Compound referred to by Incyte as *** as of the date of this
Agreement, which Compound is as described in *** and as depicted on Schedule
1.32 attached hereto.

 

1.33        ***
means the Compound referred to by Incyte as *** as of the date of this
Agreement, which Compound is as described in *** and as depicted on Schedule
1.33 attached hereto.

 

8

 

*** Confidential material redacted and filed separately with the
Commission.

 

1.34        ***
means the Compound referred to by Incyte as *** as of the date of this
Agreement, which Compound is as described in *** and as depicted on Schedule
1.34 attached hereto.

 

1.35        “Incyte Compound” means (i) *** and as depicted on Schedule
1.35 attached hereto and (ii) ***  Schedule
1.35 shall be updated from time to time, upon the request of either Party,
to reflect additions or deletions that have occurred after the Effective Date.

 

1.36        “Incyte Confidential Information” means all information about
any element of Incyte Technology, as well as any other information regarding
the business and operations of Incyte, that is disclosed (whether orally or in
writing) prior to or after the Effective Date by Incyte to Pfizer or its
Affiliates and (a) in the case of oral information, is outlined in a summary
prepared by Incyte and delivered to Pfizer promptly after such disclosure and
(b) in the case of written information, is designated “Confidential” in writing
by Incyte at the time of disclosure to Pfizer, to the extent that such
information is not (i) as of the date of disclosure to Pfizer, known to Pfizer
other than by virtue of a prior confidential disclosure to Pfizer by Incyte;
(ii) disclosed in published literature, or otherwise generally known to the
public through no fault or omission of Pfizer; (iii) obtained from a Third
Party free from any obligation of confidentiality to Incyte; (iv) independently
developed by Pfizer without access to the Incyte Confidential Information as
shown by competent written proof; or (v) is, in the reasonable opinion of legal
counsel, required to be disclosed under Law or in connection with any legal
proceeding; provided that, in the case of clause (v), Pfizer provides
Incyte sufficient prior notice (to the extent practicable) of such disclosure
and agrees to cooperate, at the request and sole expense of Incyte with Incyte’s
efforts to preserve the confidentiality of such information. All information
about the existence and terms of this Agreement shall be considered both Incyte
Confidential Information and Pfizer Confidential Information.

 

1.37        “Incyte Indication” means the treatment in humans of (i) MS
or, (ii) 

***

 

1.38        “Incyte Key Decision Points” means any of the following: (i)
a decision to progress an Incyte Compound from preclinical to clinical
development in an Incyte Indication or, if applicable, a Reverted Indication,
(ii) with respect to any Incyte Product, a decision with respect to whether
Incyte’s relevant go/no go criteria have been met prior to the Commencement of
any Phase II Trial or Phase III Trial and (iii) a decision to terminate research
and development for any Incyte Compound or Incyte Product or to terminate research
and development for a particular Incyte Indication or, if applicable, a
Reverted Indication.

 

1.39        “Incyte Patent Rights” means the Patent Rights listed in Exhibit
A and all Patent Rights that are Controlled by Incyte or any of its
Affiliates and cover Incyte Technology.

 

1.40        “Incyte Product” means any human or animal pharmaceutical
product, whether commercialized or in development, that contains at least one
Incyte Compound, alone or in combination with one or more active pharmaceutical
ingredients, and developed and indicated solely for the treatment of one or
more Incyte Indications or, if applicable, Reverted Indications.

 

9

 

*** Confidential material redacted and filed separately with the
Commission.

 

1.41        “Incyte Product Patent Rights” means all Incyte Patent Rights
that become Incyte Product Patent Rights pursuant to Sections 9.2(b)(ii) or
9.2(e).

 

1.42        “Incyte Program Patent Rights” means all Program Patent
Rights that become Incyte Program Patent Rights pursuant to Sections 9.2(c)(ii)
or 9.2(e).

 

1.43        “Incyte Technology” means
Technology that is or was (a) invented by officers, employees or agents of, or
consultants to, Incyte or any of its Affiliates, alone or jointly with Third
Parties, at any time outside of the Research Program or (b) acquired by
purchase, license, assignment or other means from Third Parties by Incyte or
any of its Affiliates, alone or jointly with Third Parties, at any time outside
of the Research Program; provided that ***, then *** if (x) Incyte and
all of its Affiliates comply with the provisions of *** and (y) ***.

 

1.44        “IND” means an Investigational New Drug Application filed
with the FDA or the analogous application or filing filed with any analogous
agency or Government Authority outside of the United States (including any
supra-national agency such as in the European Union) necessary to Commence
human clinical trials in such jurisdiction, and including all regulations at 21
CFR § 312 et. seq. and analogous foreign regulations.

 

1.45        “Joint
Research Committee” or “JRC”
has the meaning assigned to it in Section 2.1(a).

 

1.46        “Launch” means, on a country-by-country and Pfizer
Product-by-Pfizer Product basis, the date of the first shipment of a Pfizer
Product for commercial sale (excluding any shipments for clinical trial
purposes, compassionate use programs or other similar programs) by Pfizer, its
Affiliates or its sublicensees to an unaffiliated Third Party in a country
after receipt by Pfizer of the first Regulatory Approval (and, in any country
in which Price Approval is necessary or relevant for a majority of the
population to obtain access to pharmaceutical products, Price Approval) for
such Pfizer Product in such country.

 

1.47        “Law” or “Laws” means all
laws, statutes, rules, regulations, orders, judgments and/or ordinances of any
Governmental Authority.

 

1.48        “Major European Country” means
the United Kingdom, Spain, France, Germany or Italy.

 

1.49        “MS” means a demyelinating disease of the central nervous
system diagnosed by a physician or other health care provider as multiple
sclerosis.  MS includes (i) relapsing-remitting MS (RRMS), (ii) secondary
progressive MS (SPMS), (iii) primary progressive MS (PMS), (iv)
progressive-relapsing MS (PRMS), (v) clinical isolated syndrome (CIS) with MRI
lesions and (vi) optic neuritis due to MS.

 

10

 

1.50        “NDA” means a New Drug Application under the FDCA filed with
the FDA with respect to a pharmaceutical product or the analogous application
or filing filed with any analogous agency or Governmental Authority outside of
the United States (including any supra-national agency such as in the European
Union) necessary for approval of a pharmaceutical product in such jurisdiction.

 

1.51        “Net Sales” means

 

(a)           with
respect to a Pfizer Product (subject to subsection (b) below), the amount
invoiced by a Party or its Affiliate or a Third Party sublicensee for sales of
such Pfizer Product, to Third Parties, less, without duplication, (i) actual
bad debts related to such Pfizer Product and (ii) sales returns and allowances
actually paid, granted or accrued, including trade, quantity and cash discounts
and any other adjustments including those granted on account of billing errors,
rejected goods, damaged or defective goods, recalls, returns, rebates,
chargeback rebates, reimbursements or similar payments granted or given to
wholesalers or other distributors, buying groups, health care insurance
carriers or other institutions, adjustments arising from consumer discount
programs or other similar programs, customs or excise duties, sales tax,
consumption tax, value added tax, and other taxes (except income taxes) or
duties relating to sales, and any payment in respect of sales to the United
States government, any State government or any foreign government, or to any
Governmental Authority, or with respect to any government-subsidized program or
managed care organization; provided that all such deductions for
payments in respect of sales to the United States government, any State
government, any foreign government, any Governmental Authority, any
government-subsidized program or any managed care organization that apply
collectively to multiple pharmaceutical products shall be fairly allocated to
the amounts invoiced for Pfizer Products; and

 

(b)           in
the case of a Combination Product,

 

(i)    if Pfizer and/or its
Affiliates and/or any Third Party separately sells in such country during such
year when it sells such Combination Product both (1) one or more Pfizer
Products as a single chemical entity and (2) other products containing active
pharmaceutical ingredient(s) as a single chemical entity, both of which are
also contained in such Combination Product, then the Net Sales attributable to
such Combination Product during such year shall be calculated by multiplying
actual Net Sales of such Combination Product by the fraction A/(A+B) where: A
is the sum of Pfizer’s (or its Affiliates’ or Third Parties’, as applicable)
average Net Sales prices per daily dose during such year for each Pfizer
Product in such Combination Product as a single chemical entity in such country
and B is the sum of the average of Pfizer’s (or its Affiliates’ or Third
Parties’, as applicable) Net Sales prices per daily dose during such year in
such country, for each product(s) containing the active pharmaceutical
ingredient(s) in such Combination Product (other than the Pfizer Product) as a
single chemical entity;

 

(ii)   if Pfizer and/or its
Affiliates and/or any Third Party separately sells, in such country during such
year when it sells such Combination Product, one or more Pfizer Products as a
single chemical entity but does not separately sell, in such country, other
products containing the active pharmaceutical ingredient(s) that are also
contained in such Combination Product, then the Net Sales attributable to such
Combination Product during such year shall be calculated by multiplying the Net
Sales of such Combination Product by the fraction A/C where: A is the sum of
Pfizer’s (or its Affiliates’ or Third Parties’, as applicable) average Net
Sales prices per daily dose during such year for each Pfizer Product 

 

11

 

in such Combination Product as a single chemical entity in such
country, and C is Pfizer’s (or its Affiliates’ or Third Parties’, as
applicable) average Net Sales price per daily dose during such year for the
Combination Product in such country;

 

(iii)  if Pfizer and/or its
Affiliates and/or Third Parties do not separately sell, in such country during
such year when it sells such Combination Products, each Pfizer Product
contained in the Combination Product, then the Net Sales attributable to such
Combination Product during such year shall be calculated by multiplying the Net
Sales of such Combination Product by the fraction 1/1+D where D is the number
of active pharmaceutical ingredients in such Combination Product other than the
Pfizer Products.

 

In all cases, Net Sales shall be determined from books and records
maintained in accordance with generally acceptable accounting principles in the
United States, consistently applied.

 

1.52        “Non-Proprietary Drug Product” has the meaning assigned to it
in Section 11.5(c)(iii).

 

1.53        “Note Purchase Agreement” means the Note Purchase Agreement,
dated the date hereof, between Pfizer Overseas Pharmaceuticals and Incyte, as
amended from time to time.

 

1.54        “Notes” means has the meaning assigned to it in the Note
Purchase Agreement.

 

1.55        “Patent Rights” means all claims contained in patent
applications and issued or granted patents, whether domestic or foreign,
including continuations, continuations-in-part, divisionals, provisionals and
renewals, and letters of patent granted with respect to any of the foregoing,
patents of addition, supplementary protection certificates, registration or confirmation
patents and all reissues, re-examination and extensions thereof and any patent
restoration or extension period granted by a Governmental Authority, including
compensation for patent term lost during the clinical trial or Regulatory
Approval process. Inventorship of Patent Rights, including sole and joint
inventorship, shall be determined according to applicable United States Law at
the time such determination is made.

 

1.56        “Person”
means an individual, corporation, partnership, company, joint venture,
unincorporated organization, limited liability company or partnership, sole
proprietorship, association, bank, trust company or trust, whether or not legal
entities, or any Governmental Authority.

 

1.57        “Pfizer Confidential Information” means all information about
any element of Pfizer Technology, as well as any other information regarding
the business and operations of Pfizer, that is disclosed (whether orally or in
writing) prior to or after the Effective Date by Pfizer to Incyte or its
Affiliates and (a) in the case of oral information, is outlined in a summary
prepared by Pfizer and delivered to Incyte promptly after such disclosure and
(b) in the case of written information, is designated “Confidential” in writing
by Pfizer at the time of disclosure to Incyte, to the extent that such
information is not (i) as of the date of disclosure to Incyte, known to Incyte
other than by virtue of a prior confidential disclosure to Incyte by Pfizer;
(ii) disclosed in published literature, or otherwise generally known to the
public through no fault or omission of Incyte; (iii) obtained from a Third
Party free from any obligation of confidentiality to Pfizer; (iv) independently
developed by Incyte without access to the Pfizer Confidential Information as
shown by competent written proof; or (v) is, in the reasonable opinion of legal
counsel, required to be disclosed under Law or in connection with a legal
proceeding; provided that, in the case of 

 

12

 

clause (v), Incyte provides Pfizer sufficient prior notice (to the
extent practicable) of such disclosure and agrees to cooperate, at the request
and sole expense of Pfizer with Pfizer’s efforts to preserve the
confidentiality of such information. All information about the existence and
terms of this Agreement shall be considered both Incyte Confidential
Information and Pfizer Confidential Information.

 

1.58        “Pfizer Indication” means any indication that is not an
Incyte Indication or, if applicable, a Reverted Indication.

 

1.59        “Pfizer Key Decision Points” means any of the following: (i)
with respect to any Pfizer Product, a decision with respect to whether Pfizer’s
relevant go/no go criteria have been met prior to the Commencement of any Phase
II Trial or Phase III Trial and (ii) a decision to terminate research and development
for any Pfizer Product or to terminate research and development for a
particular Pfizer Indication.

 

1.60        “Pfizer Patent Rights” means all Patent Rights that are
Controlled by Pfizer or any of its Affiliates, claim any CCR2 Antagonist (or any
salt, prodrug, ester, metabolite, solvate, stereoisomer or polymorph of any such
CCR2 Antagonist) as a composition of matter and are (a) invented by officers,
employees or agents of, or consultants to, Pfizer or any of its Affiliates,
alone or jointly with Third Parties, (b) invented by officers, employees or
agents of, or consultants to, a Third Party or (c) jointly invented by
officers, employees or agents of, or consultants to, both Incyte and Pfizer or
any of their respective Affiliates, in each case, alone or jointly with Third
Parties; provided that, in the case of each of clauses (a), (b) and (c),
such CCR2 Antagonist (or any salt, prodrug, ester, metabolite, solvate,
stereoisomer or polymorph of any such CCR2 Antagonist) covered by such claim
was invented in a research program directed toward the identification of CCR2
Antagonists during the period beginning on the first day after the expiration
of the Research Term and ending on the one (1) year anniversary of such day.

 

1.61        “Pfizer Process Patent Claims” means any claim contained in a
Patent Right that is Controlled by Pfizer or any of its Affiliates, the subject
matter of which (i) was invented by either (a) officers, employees or agents
of, or consultants to, Pfizer or any of its Affiliates, alone or jointly with
Third Parties, or (b) officers, employees or agents of, or consultants to, a
Third Party, in the case of each of clauses (a) and (b), during the Term in a
program directed toward the development of CCR2 Antagonists (other than the
Research Program) and (ii) is directed to a manufacturing process (including
synthesis, purification, formulation or analytical methods or intermediates)
that was actually used by Pfizer or any of its Affiliates in the manufacturing
or processing of active pharmaceutical ingredient for a Compound or a Pfizer
Product that contains a Compound as the sole active pharmaceutical ingredient.

 

1.62        “Pfizer Product” means any human pharmaceutical product
(including any Combination Product), whether commercialized or in development,
in all dosage forms and formulations that contains a Compound.

 

1.63        “Pfizer Proprietary Process Patent Claims” means any claim contained
in a Patent Right that is Controlled by Pfizer or any of its Affiliates, the
subject matter of which (i) was invented by either (a) officers, employees or
agents of, or consultants to, Pfizer or any of its Affiliates, alone or jointly
with Third Parties, or (b) officers, employees, or agents of, or consultants
to, a Third Party, in the case of each of clauses (a) and (b), at any time
outside of a program directed toward the development of CCR2 Antagonists and
(ii) is directed to a manufacturing process (including purification, formulation
or analytical methods) that was 

 

13

 

actually used by Pfizer or any of its Affiliates in the manufacturing
or processing of an applicable Pfizer Product that contains a Compound as the
sole active pharmaceutical ingredient, which process was used to manufacture
the formulated Pfizer Product from active pharmaceutical ingredient. For
clarity, Pfizer Proprietary Process Patent Claims do not include claims to the
extent they cover a process for manufacturing bulk active pharmaceutical ingredient.

 

1.64        “Pfizer Quarter” means (i) in the United States, each of the
four (4) thirteen (13)-week periods used by Pfizer in its audited financial
reports, the first such period commencing on January 1 of any year and (ii) in
any country in the Territory other than the United States, each of the four (4)
thirteen (13)-week periods used by Pfizer in its audited financial reports, the
first such period commencing on December 1 of any year.

 

1.65        “Pfizer Technology” means Technology that is or was (a) invented
by officers, employees or agents of, or consultants to, Pfizer or any of its
Affiliates, alone or jointly with Third Parties, at any time outside of the
Research Program or (b) acquired by purchase, license, assignment or other
means from Third Parties by Pfizer or any of its Affiliates, alone or jointly
with Third Parties, at any time outside of the Research Program; provided
that such Technology was (i) disclosed to Incyte during the Term or in the course
of Pfizer’s performance of its obligations pursuant to Section 11.6(b)(ii) and (ii)
actually used in connection with the discovery or development of any Compound,
Incyte Compound or Pfizer Product.

 

1.66        “Pfizer Use Patent Claims” means any claim contained in a
Patent Right that is Controlled by Pfizer or any of its Affiliates, the subject
matter of which (i) was invented by (a) officers, employees or agents of, or
consultants to, Pfizer or any of its Affiliates, alone or jointly with Third
Parties, or (b) officers, employees or agents of, or consultants to, a Third
Party, in the case of each of clauses (a) and (b), during the Term in a program
directed toward the development of CCR2 Antagonists (other than the Research
Program) and (ii) is directed to the therapeutic use of a Compound or an Incyte
Compound or Incyte Product for an Incyte Indication or, if applicable, a
Reverted Indication or, in the case of Section 11.6(b)(ii)(E) only, any
indication.

 

1.67        “Phase I Trial” means a clinical trial that is the first
introduction into humans of a Pfizer Product.

 

1.68        “Phase II Trial” means a clinical trial, other than a Phase
III Trial, that is intended to test the effectiveness of a Pfizer Product, or
an Incyte Product, as the case may be, for a specific indication in patients
with the disease or condition under study.

 

1.69        “Phase II(b) Trial” means a Phase II Trial that is intended to
establish the dosing regimen for use in a Phase III Trial of a Pfizer Product
or an Incyte Product, as the case may be, for a specific indication.

 

1.70        “Phase III Trial” means a clinical trial that is intended to
form the primary basis of an effectiveness claim in approved product labeling
for a Pfizer Product or an Incyte Product, as the case may be.

 

1.71        “Price Approval” means, in countries where Governmental
Authorities or Regulatory Authorities authorize for reimbursement, or approve
or determine pricing for pharmaceutical products for reimbursement or
otherwise, receipt (or, if required to make such 

 

14

 

*** Confidential material redacted and filed separately with the
Commission.

 

authorization, approval or
determination effective, publication) of such reimbursement authorization or
pricing approval or determination.

 

1.72        “Program Patent Rights” means all Patent Rights that are
Controlled by Pfizer or any of its Affiliates and cover Program Technology.

 

1.73        “Program Technology” means Technology that is or was (a)
invented by officers, employees or agents of, or consultants to, Incyte or any
of its Affiliates, alone or jointly with Third Parties, in the course of
performing the Research Plan during the Research Term, (b) jointly invented by
officers, employees or agents of, or consultants to, both Incyte and Pfizer or
any of their respective Affiliates, in each case, alone or jointly with Third
Parties, in the course of performing the Research Plan during the Research
Term, (c) invented by officers, employees or agents of, or consultants to,
Pfizer or any of its Affiliates, alone or jointly with Third Parties, in the course
of performing the Research Plan during the Research Term or (d) acquired by
purchase, license, assignment or other means from Third Parties by Incyte or
any of its Affiliates, by Incyte and Pfizer or any of their respective
Affiliates or by Pfizer or any of its Affiliates, in each case, alone or
jointly with Third Parties, in order for such Party (or Parties) to perform the
Research Plan during the Research Term; provided that ***, then *** if (x)
Incyte and all of its Affiliates comply with the provisions of *** and (y) ***.

 

1.74        ***
means an *** disease that is characterized by ***. A patient is diagnosed with ***.

 

1.75        ***
means the indications set forth on Schedule 1.75 attached hereto.

 

1.76        “Regulatory Approval” means any and all approvals, excluding
any INDs, but including supplements and amendments, licenses, registrations or
authorizations (other than Price Approvals) of any national, supra-national
(e.g., the European Commission or the Council of the European Union), regional,
state or local regulatory agency, department, bureau, 

 

15

 

*** Confidential material redacted and filed separately with the
Commission.

 

commission, council or other Governmental Authority, that are necessary
for the manufacture, distribution, use, marketing or sale of a pharmaceutical
product in a regulatory jurisdiction.

 

1.77        “Regulatory Authority” means
any Governmental Authority with responsibility for granting any Regulatory
Approval or with whom an IND is filed, including the FDA and any drug
regulatory authority of countries of the European Union and Japan, and, where
applicable, any ethics committee or any equivalent review board.

 

1.78        “Regulatory Filing” means
any NDA, IND, or any foreign counterparts thereof and any other filings
required by Regulatory Authorities relating to the study, manufacture or
commercialization of a pharmaceutical product.

 

1.79        “Representatives” has the meaning assigned to it in Section
13.1.

 

1.80        “Research Plan” has the meaning assigned to it in Section
3.1.

 

1.81        “Research Program” means the research program established
by the Parties pursuant to Article 3.

 

1.82        “Research Term” means the period beginning on the Effective
Date and ending on ***.

 

1.83        “Reverted Indication” means any Pfizer Indication that has
been reverted to Incyte pursuant to Section 11.4.

 

1.84        “Royalty Term Expiration Date” means on a country-by-country
and Pfizer Product-by-Pfizer Product basis, the later to occur of:  (A) the date on which the manufacture, use,
sale, offer for sale or importation of such Pfizer Product (i) ceases to be
covered by a Valid Claim under any ***, (ii) ceases to be covered by a Valid
Claim under any *** and (iii) ceases to be covered by a Valid Claim under any ***,
as applicable, or (B) the *** year
anniversary of the Launch of such Pfizer Product in such country.

 

1.85        “Security Agreement”
means the Security Agreement, dated the date hereof, between Pfizer and Incyte.

 

1.86        “Technology” means all scientific and technical
information and data, including know-how, trade secrets and technology related
thereto, that are or were used in connection with the discovery, development or
commercialization of any CCR2 Antagonist. Technology does not include any
Patent Rights.

 

1.87        “Term” has the meaning assigned to it in Section 11.1.

 

1.88        “Territory” means worldwide.

 

1.89        “Third Party” means a Person other than (a) Pfizer, (b)
Incyte or (c) an Affiliate of either of them.

 

1.90        “Transition Plan” has the meaning assigned to it in Section 5.1.

 

16

 

*** Confidential material redacted and filed separately with the
Commission.

 

1.91        “Valid Claim” means a claim of any issued, unexpired United
States or granted foreign patent included within the patents under the ***, as
the case may be, that has not been revoked, dedicated to the public,
disclaimed, abandoned or held invalid or unenforceable by a court or other
Governmental Authority of competent jurisdiction in an unappealed or
unappealable decision, and that has not been explicitly disclaimed, or admitted
by Incyte with respect to ***, as the case may be, in writing to be invalid or
unenforceable or of a scope not covering Pfizer Products through reissue,
disclaimer or otherwise.

 

1.92        “Voting Stock”
means securities of any class or series of a corporation, association or other
entity, the holders of which are ordinarily, in the absence of contingencies,
entitled to vote generally in matters put before the shareholders or members of
such corporation, association or other entity.

 

1.93        Construction.
Except where expressly stated otherwise in this Agreement, the following rules
of interpretation apply to this Agreement: (i) “include”, “includes” and “including”
are not limiting; (ii) definitions contained in this Agreement are applicable
to the singular as well as the plural forms of such terms; (iii) references to
an agreement or instrument mean such agreement or instrument as from time to
time amended, modified or supplemented; (iv) references to a Person are also to
its permitted successors and assigns; (v) references to an “Article”, “Section”,
“Exhibit” or “Schedule” refer to an Article or Section of, or any Exhibit or
Schedule to, this Agreement unless otherwise indicated; (vi) the word “will”
shall be construed to have the same meaning and effect as the word “shall”; and
(vii) the word “any” shall mean “any and all” unless otherwise indicated by
context. In the event an ambiguity or a question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the Parties,
and no presumption or burden of proof shall arise favoring or disfavoring any
Party by virtue of the authorship of any provisions of this Agreement.

 

2.                                      MANAGEMENT OF THE RESEARCH PROGRAM

 

2.1          Joint
Research Committee.

 

(a)           The
Research Program established by this Agreement shall be overseen by a joint
research committee composed of three (3) representatives from each Party (the “Joint Research Committee” or “JRC”).
The Parties shall designate their JRC representatives within ten (10) Business
Days after the Effective Date. An alternate member designated by a Party may
serve temporarily in the absence of a permanent member of the JRC for such
Party. Each Party shall designate one of its representatives as a co-chair of
the JRC. The co-chairs of the JRC shall be jointly responsible for setting the
agenda for each meeting, and each co-chair will be responsible for chairing
alternating JRC meetings. From time to time, the JRC may establish
subcommittees or subordinate committees (that may or may not include members of
the JRC itself) to oversee particular projects or activities, and such
subcommittees or subordinate committees shall be constituted and shall operate
as the JRC agrees. After the end of the Research Term, the JRC shall only meet
if necessary to fulfill its duties under Sections 2.4(f) and 2.4(g).

 

(b)           All
decisions of the JRC made pursuant to this Agreement shall be made by
consensus; provided, however, that in the event of a disagreement
between Pfizer and Incyte, 

 

17

 

subject to Sections 2.1(c) and
2.1(d) below, the Pfizer co-chair of the JRC shall have the final
decision-making authority.

 

(c)           Any
changes to the Research Plan that materially expand Incyte’s obligations or
require Incyte to materially increase its efforts or materially alter the
nature of the services provided by Incyte shall require the unanimous consent
of the JRC. If the JRC fails to reach unanimous consent regarding any such
change to the Research Plan, then the obligations of Incyte shall not be
increased and the nature of the services provided by Incyte shall not be
altered.

 

(d)           Any
changes to the assays used to define CCR2 Antagonists that are described in Schedules
1.7(a)-(c) shall require the unanimous consent of the JRC. If the JRC fails
to reach unanimous consent regarding any such change to such assays, then such
assays shall not be changed.

 

2.2          Meetings. The JRC shall hold meetings at such
times and places as shall be determined by the JRC (it being expected that any
in-person meetings will alternate between the appropriate offices of each
Party), but in no event shall such meetings be held less frequently than once
every calendar quarter during the Research Term; and the JRC may:

 

(a)           conduct
meetings in person, by videoconference or by telephone conference;

 

(b)           invite
other personnel of the Parties to attend meetings of the JRC as appropriate to
the agenda for such meeting, after giving advance notice to the other Party;

 

(c)           act
without a meeting if, prior to such action, a consent thereto is signed by the
co-chairs of the JRC; and

 

(d)           by
unanimous consent, amend or expand upon the foregoing procedures for its
internal operation.

 

2.3          Minutes. At each meeting, the
JRC shall elect a secretary who will prepare minutes after each meeting,
reporting in reasonable detail the actions taken by the JRC during such
meeting, issues requiring resolution, and resolutions of previously reported
issues. Such minutes are to be reviewed and, if reasonably complete and
accurate, signed by one JRC member from each Party. The secretary shall revise
such minutes as necessary to obtain such signatures.

 

2.4          JRC Functions and Powers. The
research activities of the Parties under the Research Plan shall be managed by
the JRC only to the extent set forth herein (unless otherwise mutually agreed
in writing by the Parties). The JRC shall foster the collaborative relationship
between the Parties in order to assist each Party in fulfilling its obligations
under the Research Plan, and shall in particular:

 

(a)           encourage
and facilitate ongoing cooperation and information exchange between the
Parties;

 

(b)           monitor
the progress of the Research Program and the Parties’ diligence in carrying out
their responsibilities thereunder;

 

18

 

*** Confidential material redacted and filed separately with the
Commission.

 

(c)           subject
to Section 2.1 (c), prepare any amendments to the Research Plan, if the JRC
should determine that any such amendments are necessary;

 

(d)           set
priorities, allocate tasks and coordinate activities between the Parties, in
each case as required to perform the Research Program;

 

(e)           perform
such other functions as appropriate to further the purposes of the Research
Plan as mutually determined by the Parties;

 

(f)            subject
to Section 2.1(d), amend, modify, replace or delete any of the assays used to
define CCR2 Antagonists, as described in Schedules 1.7(a)-(c), if the
JRC should determine that any such change is necessary; and

 

(g)           discuss
issues relating to the ***, including if *** from the ***, the *** and ***

 

Except as set forth in Sections 2.4(c) and 2.4(f), the JRC shall have
no power to amend this Agreement and shall have only such powers as are specifically
delegated to it in this Agreement.

 

2.5          Independence. Subject
to the terms of this Agreement, the activities and resources of each Party
shall be managed by such Party, acting independently and in its individual
capacity. The relationship between Incyte and Pfizer is that of independent
contractors and neither Party shall have the power to bind or obligate the
other Party in any manner, other than as is expressly set forth in this
Agreement. Incyte and Pfizer are not joint venturers, partners, principal and
agent, employer and employee, and have no other relationship other than
independent contracting parties.

 

3.                                      CONDUCT OF THE RESEARCH PROGRAM

 

3.1          Research Plan. The
Parties shall conduct the Research Program according to the research plan (as
amended from time to time, the “Research Plan”).
The initial Research Plan has been approved by the Parties concurrent with the
execution of this Agreement and is attached hereto as Exhibit B. The Research Plan may be amended from
time to time by the JRC during the Research Term based upon the data obtained
in the Research Program and in accordance with Sections 2.1(c) and 2.4(c); provided
that such amendments (i) are in writing and signed by both Parties if required
by Section 2.1(c) and (ii) do not violate or contradict any provision of this
Agreement. In the event of an inconsistency or disagreement between the
Research Plan and this Agreement, the terms of this Agreement shall prevail.

 

3.2          Conduct of Research. The
Parties shall conduct the Research Program in compliance in all material
respects with the requirements of applicable Laws and use reasonably diligent
efforts to achieve the objectives of the Research Program and the Research Plan
efficiently and expeditiously. Each Party shall promptly inform the other about
all inventions within Program Technology that are made in the performance of
the Research Program or the Research Plan.

 

3.3          Research Costs. Except
as provided in this Section 3.3, each Party shall bear its own internal costs
and any external payments to Third Parties that it incurs in the course of the 

 

19

 

*** Confidential material redacted and filed separately with the
Commission.

 

Research Program unless otherwise agreed by the JRC. Pfizer shall
reimburse Incyte for the number of FTEs specified in the Research Plan at a
rate equal to (i) *** and *** and (ii) *** for *** and ***. Incyte shall bill
Pfizer for such FTE costs at the beginning of each calendar quarter, and Pfizer
shall make all such payments by wire transfer, in accordance with the wire
instructions set forth in Section 8.6, within thirty (30) days after its
receipt of each such invoice from Incyte.

 

3.4          Records. Each
Party shall maintain complete and accurate records of all work conducted under
the Research Program and all results, data and developments made pursuant to
its efforts under the Research Program. Such records shall reflect work done
and results achieved in the performance of the Research Program in sufficient
detail and in a manner appropriate for patent and regulatory purposes. Subject
to bona fide confidentiality obligations to a Third Party, each Party shall
have the right to request copies of such records of the other Party at
reasonable times and upon reasonable notice to the extent necessary or useful
for such Party to conduct its research or perform its other obligations under
this Agreement, or to secure or enforce patents licensed under this Agreement.

 

3.5          Reports. During the Research Term, each Party shall report
to the JRC no less than once per calendar quarter, and such reports shall
consist of a written progress report summarizing the work performed under the
Research Plan since the previous report. The JRC shall define the format and
the nature of the content of such quarterly reports, which format and nature
shall be adopted by both Parties.

 

3.6          Termination of Research Program. The
Research Program and the Research Plan shall automatically terminate on the
effective date of any termination of this Agreement pursuant to Section 11.2 or
11.3. In addition, Pfizer may terminate the Research Program and the Research
Plan if Incyte has materially breached its obligations under Article 3 of this
Agreement or under the Research Plan, such termination to be effective thirty
(30) days after Incyte’s receipt of a notice from Pfizer to such effect in
accordance with Section 15.3; provided that if Incyte has cured such
breach prior to the expiration of such thirty (30)-day period, then the
Research Program and Research Plan shall remain in effect pursuant to the terms
thereof. As a result of any termination in accordance with this Section 3.6, Article
2 (other than Sections 2.4(f) and 2.4(g)), Article 3, the Research Program and
the Research Plan shall cease to be in effect and neither Party shall have any
further obligations with respect thereto.

 

4.                                      HSR.

 

4.1          HSR. Pfizer (or its Affiliate) and Incyte
(or its Affiliate) shall take (or shall cause such Affiliate to take, if
applicable) (i) all actions necessary at the earliest practicable date to make
the filing required under the HSR Act and (ii) reply at the earliest
practicable date with any requests for information received from the United
States Federal Trade Commission (“FTC”) or
Antitrust Division of the United States Department of Justice (“DoJ”) pursuant to the HSR
Act. The Parties shall, to the extent reasonably practicable, consult with one
another prior to making any filings, responses to inquiries or other contacts
with the FTC or DoJ concerning the transactions contemplated hereby. Pfizer
shall pay any fees in connection in with the HSR filing, other than any Incyte
legal fees or expenses.

 

20

 

*** Confidential material redacted and filed separately with the Commission.

 

5.                                      DEVELOPMENT AND COMMERCIALIZATION

 

5.1          Transition Plan. In order to ensure the smooth transition of
ongoing development activities for the Compounds that Incyte has licensed to
Pfizer pursuant to Section 7.1 and to facilitate the transfer of the Incyte
Technology to Pfizer, the Parties hereby agree to comply with the provisions of
the transition plan (the “Transition Plan”),
which is attached hereto as Exhibit C. In the event of an inconsistency
or disagreement between the Transition Plan and this Agreement, the terms of
this Agreement shall prevail.

 

5.2          Development Plan. The
development of each Pfizer Product shall be governed by a development plan that
describes the proposed overall program of development (the “Development Plan”). The
initial Development Plans for *** and *** are attached hereto as Exhibits
D-1, D-2 and D-3, respectively (collectively, the “Initial Development Plan”).
Pfizer shall have the sole right and responsibility for preparing the
Development Plan for each Pfizer Product. All decisions with respect to the
creation, modification and implementation of the Initial Development Plan, all
other such Development Plans and all development activities shall be made by
Pfizer in its sole discretion; provided that Pfizer will present a draft
Development Plan for each Pfizer Product and any material changes to the
Initial Development Plan to the Development Committee and will give due
consideration to any comments of Incyte thereto.

 

5.3          Development Information Exchange.

 

(a)           Development
Committee. The Parties shall establish a development committee (the “Development Committee”) for the sole purpose of reviewing
and discussing (i) past and current material development activities and (ii) as
appropriate, future material development activities for Pfizer Products and
Incyte Products. The Development Committee shall have no decision-making
authority.

 

(b)           Members.
The Development Committee shall consist of no more than four (4) representatives
of Incyte and no less than four (4) representatives of Pfizer. Depending on the
number of Pfizer Products in development at any given time, Pfizer shall have
the flexibility to add additional members to the Development Committee, as
appropriate. The Development Committee shall be chaired by one of the Pfizer
representatives (the “Committee Chair”).

 

(c)           Meetings.
During the period beginning on the Effective Date and ending, on a Pfizer
Product-by-Pfizer Product basis, after the first Launch of such Pfizer Product
(the “Meeting Period”), the Development Committee
shall meet quarterly (each such meeting, a “Development
Committee Meeting”). The Parties agree that the ***. The Parties
further agree that a Development Committee Meeting will be ***; provided
that in no event will the Parties be required to meet more than four (4) times
in any calendar year as a result of such scheduling. All Development Committee
Meetings may be conducted in person, by videoconference or by teleconference at
such times and such Pfizer or Incyte locations as shall be determined by the
Development Committee. In-person meetings of the Development Committee will
alternate between appropriate offices of each Party. The Parties shall each
bear all expenses of their respective representatives relating to their
participation on the Development Committee.

 

21

 

*** Confidential material redacted and filed separately with the
Commission.

 

(d)           Reports.
During the Meeting Period, (i) Pfizer shall provide quarterly written reports (“Pfizer Development Reports”) to the Incyte representatives
on the Development Committee, which contain (x) a summary of material
development activities with respect to Pfizer Products since the last Pfizer
Development Report and (y) if applicable, draft Development Plans for Pfizer
Products and (ii) Incyte shall provide quarterly written reports (“Incyte Development Reports” and, together with Pfizer
Development Reports, “Development Reports”)
to the Pfizer representatives on the Development Committee, which contain (x) a
summary of material development activities with respect to Incyte Products
since the last Incyte Development Report and (y) if applicable, draft
development plans for Incyte Products. The Parties will use reasonable efforts
to provide their respective Development Reports to the Development Committee
representatives at least five (5) Business Days before the next Development
Committee Meeting. All Pfizer Development Reports and Development Plans for
Pfizer Products shall be deemed Pfizer Confidential Information. All Incyte
Development Reports and development plans for Incyte Products shall be deemed
Incyte Confidential Information.

 

(e)           Notices.
Each Party shall deliver to the other Party the following notices: (i) prior to
any decision being made by a Party with respect to a Pfizer Key Decision Point
or an Incyte Key Decision Point, as the case may be, such Party shall notify
the other Party that such Pfizer Key Decision Point or Incyte Key Decision
Point is under consideration; provided that Pfizer will use reasonable
efforts to deliver any such notice sufficiently in advance of a decision being
made with respect to a Pfizer Key Decision Point ***, (ii) no later than ten
(10) Business Days after a Party has made a final decision with respect to a Pfizer
Key Decision Point or an Incyte Key Decision Point, as the case may be, such
Party shall notify the other Party of such decision, (iii) no later than ten
(10) Business Days (x) after a Party receives Regulatory Approval of an NDA in
the United States for a Pfizer Product or an Incyte Product, as the case may
be, or (y) after the Launch of a Pfizer Product or an Incyte Product, as the
case may be, in a Major European Country or Japan, the Party receiving such
Regulatory Approval or Launching such Pfizer Product or Incyte Product, as the
case may be, shall notify the other Party of the receipt of such Regulatory
Approval or such Launch, as the case may be.

 

5.4          Diligence.

 

(a)           Pfizer
will use Commercially Reasonable Efforts to carry out the Initial Development
Plan, as it may be amended in accordance with Section 5.2.

 

(b)           Pfizer
will use Commercially Reasonable Efforts to develop, seek Regulatory Approval
for and commercialize Pfizer Products on a country-by-country and Pfizer
Product-by-Pfizer Product basis.

 

5.5          Regulatory Affairs. Pfizer shall own and be
responsible for preparing and submitting all Regulatory Filings and seeking and
maintaining all Regulatory Approvals for all Pfizer Products, including
preparing all reports necessary as part of a Regulatory Filing or Regulatory
Approval.

 

5.6          Manufacture and Supply. Pfizer
shall be responsible for the manufacture of all preclinical and clinical
materials for each Pfizer Product, for the commercial supply of each Pfizer
Product and for all costs associated therewith.

 

22

 

*** Confidential material redacted and filed separately with the
Commission.

 

5.7          Costs. Pfizer
shall be responsible for all costs associated with the development and
commercialization of Pfizer Products that are incurred by it after the
Effective Date. In addition, Pfizer agrees to pay the costs that are specified in
the Transition Plan.

 

5.8          Trademarks. Pfizer
shall select all trademarks for all Pfizer Products and shall own all such
trademarks.

 

5.9          Pricing. Pfizer
shall be solely responsible for the pricing and other terms of sale for all
Pfizer Products.

 

6.                                      INCYTE PRODUCTS

 

6.1          Development Plan. The
development of each Incyte Product shall be governed by a development plan that
describes the proposed overall program of development. Incyte shall have the
sole right and responsibility for preparing the development plan for each
Incyte Product. All decisions with respect to the creation, modification and
implementation of such development plans and all development activities shall
be made by Incyte in its sole discretion; provided that Incyte will
present a draft development plan for each Incyte Product and any material
changes thereto to the Development Committee and will give due consideration to
any comments of Pfizer thereto.

 

6.2          Regulatory Affairs. Incyte
shall own and be responsible for preparing and submitting all Regulatory
Filings and seeking and maintaining all Regulatory Approvals for all Incyte
Products, including preparing all reports necessary as part of a Regulatory
Filing or Regulatory Approval.

 

6.3          Manufacture and Supply. Incyte
shall be responsible for the manufacture of all preclinical and clinical
materials for each Incyte Product, for the commercial supply of each Incyte Product
and for all costs associated therewith.

 

6.4          Costs. Incyte
shall be responsible for all costs associated with the development and
commercialization of Incyte Products.

 

6.5          Trademarks. Incyte
shall select all trademarks for all Incyte Products and shall own all such
trademarks.

 

6.6          Pricing. Incyte shall be
solely responsible for the pricing and other terms of sale for all Incyte
Products.

 

6.7          Incyte
Compounds.

 

(a)           Designation
of Initial Back-Up Incyte Compound. The Parties agree that Incyte shall choose
the first back-up Incyte Compound only in accordance with the procedures set
forth below:

 

(i)            Incyte shall run the studies set
forth on Schedule 6.7(a) under the heading ***, in parallel and at Incyte’s
sole expense, on the following *** Compounds: *** (each, individually, a “Test Compound” and,

 

23

 

*** Confidential material redacted and filed separately with the
Commission.

 

collectively, and together with the additional Compounds permitted to
be designated by Incyte as Test Compounds pursuant to Section 6.7(a)(v), the “Test Compounds”). Promptly after completion of such ***,
Incyte shall provide Pfizer with a copy of all information, data and test
results of such *** for each of the Test Compounds.

 

(ii)           If any of the Test Compounds
successfully completes the *** and meets Incyte’s criteria for advancement, as
determined by Incyte in its sole discretion, then Incyte shall select one of
such Test Compounds and shall analyze such Test Compound, at Incyte’s sole
expense, by ***. Promptly after completion of such ***, Incyte shall provide
Pfizer with a copy of all information, data and test results of such *** for
such Test Compound. If any of the Test Compounds do not successfully complete
the *** or do not meet Incyte’s criteria for advancement, then (x) *** and (y)
***.

 

(iii)         If the first Test Compound selected by
Incyte pursuant to Section 6.7(a)(ii) successfully completes the *** and meets
Incyte’s criteria for advancement, as determined by Incyte in its sole
discretion, then Incyte shall promptly notify Pfizer that it would like to
designate such Test Compound as an Incyte Compound. Effective upon Pfizer’s
receipt of such notice pursuant to Section 15.3, (x) ***, (y) *** and (z) ***.

 

(iv)          If the first Test Compound selected by
Incyte pursuant to Section 6.7(a)(ii) does not successfully complete the ** or
does not meet Incyte’s criteria for advancement, then (x) ***, (y) ***. Promptly
after completion of such ***, Incyte shall provide Pfizer with a copy of all
information, data and test results of such *** for such Test Compound. If the
*** Test Compound successfully completes the *** and meets Incyte’s criteria
for advancement, then Section 6.7(a)(iii) shall apply with respect to such Test
Compound and the other Test Compounds. If the *** Test Compound does not
successfully complete the *** or does not meet Incyte’s criteria for
advancement, then this Section 6.7(a)(iv) shall apply with respect to such Test
Compound and the other Test Compounds. Sections 6.7(a)(iii) and (iv) shall
continue to be applied until Incyte either designates an Incyte Compound from
the Test Compounds or notifies Pfizer that it will not designate any of the
Test Compounds as an Incyte Compound, in which case ***.

 

24

 

*** Confidential material redacted and filed separately with the
Commission.

 

(v)            If Incyte notifies Pfizer that it
will not designate any of the Test Compounds listed in Section 6.7(a)(i) as
an Incyte Compound because none of the Test Compounds successfully completed
both the *** and the *** and met Incyte’s criteria for advancement, then Incyte
may designate up to an additional *** Compounds as Test Compounds under the
following circumstances: (A) ***, (B) *** and (C) ***.  After Incyte and Pfizer have agreed which
Compounds will be designated as additional Test Compounds, Incyte shall follow
the procedures set forth in this Section 6.7(a) with respect to such
additional Test Compounds until Incyte either designates an Incyte Compound
from such additional Test Compounds or notifies Pfizer that it will not
designate any of the additional Test Compounds as an Incyte Compound, in which
case ***.

 

(b)           Designation of Future Incyte Compounds.  If Incyte does not *** either because such
Incyte Compounds have not yet been selected or because Incyte has notified
Pfizer pursuant to Section 5.3(e) that it is not going to pursue any
further research or development of an Incyte Compound that is either a lead or
a back-up compound for an Incyte Indication, then (x) *** or ***, (I) *** (II)
*** to *** (y) ***.

 

(i)            *** “Incyte Pool
Compounds”; provided that ***. 
If Pfizer wishes to designate a Compound as an Incyte Pool Compound and
any of the assays set forth on Schedule 6.7(b) under the heading “Assays”
(the “Assays”) has been conducted with
respect to such Compound, Pfizer will only be permitted to designate such
Compound as an Incyte Pool Compound, if such Compound meets the guidelines set
forth on Schedule 6.7(b) under the heading “Requirement for
Designation” for each Assay that has been conducted or if Incyte agrees that
Pfizer may designate such Compound as an Incyte Pool

 

25

 

*** Confidential material redacted and filed separately with the
Commission.

 

Compound.  The Parties agree that Pfizer will not be
obligated to perform any Assays with respect to any Compound, other than
pursuant to the Research Plan.

 

(ii)           *** Incyte Pool Compound, Pfizer will
provide Incyte with a list of the then current Incyte Pool Compounds and a copy
of all information, data and test results that Pfizer has with respect to such
Incyte Pool Compounds that have not been previously provided to Incyte.  When Pfizer provides Incyte with such
information, data and test results, Pfizer may ***. 
All information, data or test results, whether or not so marked, will be
Pfizer Confidential Information, and Incyte shall treat such information, data
or test results in accordance with the provisions of Sections 10.2 and
10.4.  After its receipt of
such information, data and test results, Incyte, in its sole discretion, may
conduct additional Assays, *** or *** with respect to any or all Incyte Pool
Compounds, in each case, at Incyte’s sole expense, but in no event may
***.  Promptly after completion of any
such Assays, *** or ***, Incyte shall provide Pfizer with a copy of all
information, data and test results with respect to each applicable Incyte Pool
Compound.

 

(iii)         After Incyte has notified Pfizer that
it would like to designate an Incyte Pool Compound as an Incyte Compound then,
effective upon Pfizer’s receipt of such notice pursuant to Section 15.3,
such Incyte Pool Compound shall be deemed an Incyte Compound and added to Schedule 1.35.

 

(iv)          ***

 

(c)           Designation of an Incyte Compound due to Reverted
Indication.  If a Pfizer
Indication becomes a Reverted Indication pursuant to Section 11.4 and
Pfizer decides not to revert a Compound to Incyte with such Reverted
Indication, then Incyte shall have the right but not the obligation to
designate an additional Incyte Compound ***

 

7.                                      LICENSES AND RELATED RIGHTS

 

7.1          License to
Pfizer.  Subject to the terms of this Agreement,
Incyte grants, and shall cause its Affiliates to grant, to Pfizer the
following:

 

(a)           an exclusive (even as to Incyte and its Affiliates)
license, with the right to sublicense, to use the Incyte Technology, Incyte
Confidential Information and Program Technology to the extent necessary or
useful, to make, have made, use, import, offer for sale or sell Compounds,
Incyte Compounds, Pfizer Products, Animal Products or Incyte Products for the

 

26

 

treatment,
control or prevention of the Pfizer Indications or the Incyte Indications in
the Territory;

 

(b)           an exclusive (even as to Incyte and its
Affiliates) license, with the right to sublicense, under the Incyte Patent
Rights, Incyte Product Patent Rights and Incyte Program Patent Rights to the
extent necessary or useful to make, have made, use, import, offer for sale or
sell Compounds, Incyte Compounds, Pfizer Products, Animal Products or Incyte
Products for the treatment, control or prevention of the Pfizer Indications or
the Incyte Indications in the Territory; and

 

(c)           a non-exclusive, irrevocable, worldwide,
royalty-free, perpetual license, with the right to sublicense, under the Incyte
Program Patent Rights for any and all purposes.

 

Notwithstanding the foregoing, with respect
to any Incyte Technology, Incyte Patent Rights or Incyte Product Patent Rights,
that Incyte acquires by purchase, license, assignment or other means from a
Third Party, Incyte shall only be required to grant to Pfizer a license to such
Incyte Technology, Incyte Patent Rights or Incyte Product Patent Rights (x) to
the extent permitted under its agreement with such Third Party and (y) if
Pfizer agrees to be responsible for all payments to such Third Party under such
Third Party agreement that may be incurred as a result of such sublicense to
Pfizer and executes documentation reasonably satisfactory to Incyte to such effect.

 

7.2          Sublicenses
and License to Incyte.  Subject to the terms of this
Agreement, Pfizer grants, and shall cause its Affiliates to grant, to Incyte
the following fully paid, royalty-free, worldwide sublicenses and licenses:

 

(a)           an exclusive (even as to Pfizer and its
Affiliates) sublicense, with the right to further sublicense, to use the Incyte
Technology, Incyte Confidential Information, Pfizer Technology, Pfizer
Confidential Information and Program Technology to the extent necessary or
useful to make, have made, use, import, offer for sale or sell Incyte Compounds
or Incyte Products for the treatment, control or prevention of the Incyte
Indications in the Territory for the sole purpose of making, having made,
using, importing, offering for sale or selling Incyte Compounds or Incyte
Products for the treatment, control or prevention of the Incyte Indications in
the Territory;

 

(b)           an exclusive (even as to Pfizer and its
Affiliates) sublicense, with the right to further sublicense, under the Incyte
Patent Rights, Incyte Product Patent Rights and Incyte Program Patent Rights to
the extent necessary or useful to make, have made, use, import, offer for sale
or sell Incyte Compounds or Incyte Products for the treatment, control or
prevention of the Incyte Indications in the Territory for the sole purpose of
making, having made, using, importing, offering for sale or selling Incyte Compounds
or Incyte Products for the treatment, control or prevention of the Incyte
Indications in the Territory;

 

(c)           an exclusive (even as to Pfizer and its
Affiliates) license, with the right to sublicense, under the Program Patent
Rights and Pfizer Use Patent Claims to the extent necessary to make, have made,
use, import, offer for sale or sell Incyte Compounds or Incyte Products for the
treatment, control or prevention of the Incyte Indications in the Territory for
the sole purpose of making, having made, using, importing, offering for sale or
selling Incyte Compounds or Incyte Products for the treatment, control or
prevention of the Incyte Indications in the Territory;

 

27

 

(d)           an exclusive (even as to Pfizer and its
Affiliates) license, with the right to sublicense, under the Pfizer Process
Patent Claims to the extent necessary to manufacture Incyte Compounds or Incyte
Products for the treatment, control or prevention of the Incyte Indications in
the Territory for the sole purpose of making, having made, using, importing,
offering for sale or selling Incyte Compounds or Incyte Products for the
treatment, control or prevention of the Incyte Indications in the Territory;
and

 

(e)           a non-exclusive license, with the right to
sublicense, under the Program Patent Rights for any and all purposes, except to
make, have made, use, import, offer for sale or sell Compounds, Incyte
Compounds, Pfizer Products, Animal Products or Incyte Products (other than as
permitted under Sections 7.2 and 11.4).

 

Notwithstanding the foregoing, with respect
to any Pfizer Technology, Pfizer Use Patent Claims or Pfizer Process Patent
Claims, that Pfizer acquires by purchase, license, assignment or other means
from a Third Party, Pfizer shall only be required to grant to Incyte a license
to such Pfizer Technology, Pfizer Use Patent Claims or Pfizer Process Patent
Claims (x) to the extent permitted under its agreement with such Third Party
and (y) if Incyte agrees to be responsible for all payments to such Third Party
under such Third Party agreement that may be incurred as a result of such
sublicense to Incyte and executes documentation reasonably satisfactory to
Pfizer to such effect.

 

7.3          Research
Licenses.

 

(a)           Subject to Section 7.4(a), and without limiting any
of the licenses granted in Section 7.1, Incyte grants, and shall cause its
Affiliates to grant, to Pfizer a nonexclusive, irrevocable, worldwide,
royalty-free, perpetual license, with the right to sublicense to Affiliates, to
use for all research purposes the Incyte Technology, Incyte Confidential
Information and Program Technology disclosed to Pfizer during the Term; provided
that Pfizer shall not have any right to use the Incyte Technology, Incyte
Confidential Information or Program Technology for the sale or manufacture for
sale of pharmaceutical products or processes. 
Subject to Section 7.4(a), without limiting any of the sublicenses or
licenses granted in Section 7.2, Pfizer grants, and shall cause its
Affiliates to grant, to Incyte a nonexclusive, irrevocable, worldwide,
royalty-free, perpetual license, with the right to sublicense to Affiliates, to
use for all research purposes (i) the Incyte Technology, Incyte
Confidential Information and Program Technology and (ii) the Pfizer
Technology and Pfizer Confidential Information disclosed to Incyte during the
Term; provided that Incyte shall not have any right to use the Pfizer
Technology, Pfizer Confidential Information or Program Technology for the sale
or manufacture for sale of pharmaceutical products or processes.

 

(b)           Subject to Section 7.4(a), and without limiting any of the
licenses granted in Section 7.1, Incyte grants, and shall
cause its Affiliates to grant, to Pfizer a non-exclusive, irrevocable,
worldwide, royalty-free, perpetual license, with the right to sublicense to
Affiliates, under the Incyte Product Patent Rights to use for all research
purposes; provided that Pfizer shall not have any right to use the
Incyte Product Patent Rights for the sale or manufacture for sale of
pharmaceutical products or processes.

 

28

 

*** Confidential material redacted and filed separately with the
Commission.

 

7.4          Non-Compete.

 

(a)           Research Non-Compete.  During the Research Term, except pursuant to
this Agreement or the Research Plan, the Parties will not, and will cause their
respective Affiliates not to, directly or indirectly, by itself (or themselves)
or with any Third Party, conduct research on or develop any CCR2 Antagonist in
the Territory; provided that this Section shall not ***.

 

(b)           Commercial
Non-Compete.  Subject to Section 7.5, during the Term,
except for Pfizer Products, Animal Products and Incyte Products, the Parties
will not, and will cause their respective Affiliates not to, directly or
indirectly, by itself (or themselves) or with any Third Party, market, sell,
detail, promote or distribute any human or animal pharmaceutical product that
contains any CCR2 Antagonist in the Territory; provided that this Section 7.4(b) (x)
shall not apply to Pfizer (i) with respect to any Reverted Indication and (ii) after
the Royalty Term Expiration Date for a given Pfizer Product in a country in the
Territory, with respect to the Pfizer Indication (or Pfizer Indications) for
which such Pfizer Product received Regulatory Approval in such country and (y) shall
not ***.

 

(c)           Indication
Non-Compete.  During the Term (i) Pfizer will not, and
will cause its Affiliates not to, develop, market, detail or promote any human
or animal pharmaceutical product that contains a CCR2 Antagonist for an
indication that is an Incyte Indication, (ii) Pfizer will not, and will
cause its Affiliates not to, develop, market, detail or promote any human or
animal pharmaceutical product that contains a Compound for a Reverted
Indication and (iii) Incyte will not, and will cause its Affiliates not
to, develop, market, detail or promote any human or animal pharmaceutical
product that contains a CCR2 Antagonist for a Pfizer Indication; provided
that this Section 7.4(c) shall not ***.

 

7.5          Acquisition
of Competing Product.  Notwithstanding the provisions of Section 7.4,
which provisions shall not be deemed breached as a result of an acquisition or
merger described in this Section 7.5 (unless such acquisition or merger
involves a Third Party whose sole pharmaceutical product is a Competing
Product), if Pfizer acquires a Competing Product through an acquisition of the
whole or substantially the whole of the business or assets of another Person or
through a merger with another Person (each, an “Acquisition
Transaction”), then Pfizer shall, within sixty (60) days from the
date of Pfizer’s board approval of such Acquisition Transaction, notify Incyte
of such Acquisition Transaction and as to whether Pfizer (i) is required
by a Governmental Authority to, or elects to, divest its interest in such
Competing Product or (ii) elects to retain such Competing Product.  If Pfizer is required or elects to divest its
interest in such Competing Product, then Pfizer shall use reasonable efforts to
identify a Third Party purchaser to whom Pfizer will divest its interest in
such Competing Product and to enter into a definitive agreement with such Third
Party for such divestiture as soon as reasonably practicable under the
circumstances (which may be subject to the terms of a Hold Separate

 

29

 

*** Confidential material redacted and filed separately with the
Commission.

 

Transaction
(as defined below) as applicable).  If
Pfizer fails to enter into a definitive agreement with a Third Party to divest
such Competing Products (other than as part of any Hold Separate Transaction)
within six (6) months after the closing of the acquisition or merger for
which Pfizer has provided Incyte with notice, or if such divestiture is subject
to the terms of a Hold Separate Transaction, within twelve (12) months after
the closing of the acquisition or merger for which Pfizer has provided Incyte
with notice, then Pfizer will ***.  If
Pfizer elects to retain such Competing Product, then Pfizer will ***.

 

As used herein, a “Hold
Separate Transaction” shall mean any “hold separate” transaction
(whether through the establishment of a trust or otherwise) involving the
proposed sale of the applicable Competing Product pursuant to an agreement with
any Governmental Authority responsible for antitrust laws.

 

8.                                      FINANCIAL TERMS

 

8.1          Upfront
Payment.  Pfizer shall pay to Incyte an upfront,
non-creditable, non-refundable, payment of forty million dollars ($40,000,000)
payable within fifteen (15) Business Days after the Effective Date.

 

8.2          Milestone Payments.

 

(a)           Pfizer shall pay Incyte, a non-creditable
(except as set forth in this Section 8.2), non-refundable, milestone
payment (each, an “Event Milestone Payment”)
for Pfizer Products in respect of each of the following events (each, an “Event Milestone”) in the particular amounts specified below
within twenty (20) Business Days after the occurrence of the relevant Event
Milestone.

 

	
  Event
  Milestone

  “M” means million

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  

 

30

 

*** Confidential material redacted and filed separately with the Commission.

 

	
  Event
  Milestone

  “M” means million

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  

 

31

 

*** Confidential material redacted and filed separately with the
Commission.

 

	
  Event
  Milestone

  “M” means million

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  
	
  TOTAL

  	
   

  	
  ***

  

 

*The Event Milestone Payments in this column
shall only apply if the Compound that Pfizer develops for any Pfizer Indication
in the *** is ***.

** The Event Milestone Payments in this
column shall apply to any Compound that Pfizer develops for any Pfizer
Indication in the ***, other than ***.

 

(b)           All Event Milestone Payments set forth in
this Section 8.2 shall be paid ***.  For purposes of this Section 8.2, ***.

 

(c)           *** if a Phase II(b) Trial or a Phase III
Trial of a Pfizer Product Commences, or a Pfizer Product is the subject of an
NDA that has been filed or accepted for filing, such Pfizer Product shall be
deemed to have achieved all the Event Milestones prior to that stage of
development, and if the related Event Milestone Payment for any of such earlier
Event Milestones has not been previously paid and would otherwise be due under
this Section 8.2, it shall then be paid. 
*** within *** Business Days after the occurrence of the earlier of (i) the
*** or (ii) the ***.

 

(d)           Notwithstanding anything to the contrary in
this Section 8.2, ***.  The Parties
agree that for purposes of determining the Event Milestone Payments payable
under this Section 8.2, ***.

 

32

 

*** Confidential material redacted and filed separately with the
Commission.

 

***

 

The examples below are for illustrative purposes only.

 

Example 1:                                    ***

 

Example 2:                                    ***

 

Example 3:                                    ***

 

Example 4:                                    *** 

 

33

 

*** Confidential material redacted and filed separately with the
Commission.

 

***

 

(e)           In the event that a Party has given the other
Party any notice of termination of this Agreement under Section 11, no
further Event Milestone Payments shall become due during such notice
period.  If such notice of termination is
the subject of a dispute, such dispute shall be resolved in accordance with Section 11.3(d) and
Article 14.

 

8.3          Sales
Milestone Payments.  In addition to the Event Milestone Payments,
in consideration of the rights granted hereunder, and subject to the terms and
conditions of this Agreement, Pfizer shall make the following non-creditable,
non-refundable, one-time payments to Incyte (collectively, the “Sales Milestone Payments”) when aggregate Net Sales of all
Pfizer Products in a calendar year in the Territory first reach the respective
thresholds indicated below: 

 

	
  Worldwide Annual Net Sales

  	
   

  	
  Sales
  Milestone Payment

  
	
   

  	
   

  	
   

  
	
  Net Sales in a calendar year exceed ***

  	
   

  	
  ***

  
	
   

  	
   

  	
   

  
	
  Net Sales in a calendar year exceed ***

  	
   

  	
  ***

  
	
   

  	
   

  	
   

  
	
  Net Sales in a calendar year exceed ***

  	
   

  	
  ***

  

 

Pfizer shall make any Sales Milestone Payment payable with respect to a
calendar year within sixty (60) days after the end of such calendar year, and
such payment shall be accompanied by a report identifying the Pfizer Products,
the relevant countries, Net Sales of each Pfizer Product for each such country,
and the amount payable to Incyte.

 

8.4          Royalty
Payments.

 

(a)           U.S. Royalty Payments. Until the
Royalty Term Expiration Date for a given Pfizer Product, Pfizer shall pay
Incyte the following non-creditable, non-refundable royalty payments based on
the following increments of Net Sales in the United States of each such Pfizer
Product that contains a given Compound:

 

(i)            *** percent (***%) for Net Sales in
a calendar year up to ***;

 

34

 

*** Confidential material redacted and filed separately with the
Commission.

 

(ii)           *** percent (***%) for Net Sales in a
calendar year over *** and up to ***; and

 

(iii)         ***
percent (***%) for Net Sales in a calendar year over ***.

 

(b)           Ex-U.S. Royalty Payments.   Until the Royalty Term Expiration Date for a
given Pfizer Product, Pfizer shall pay Incyte the following non-creditable,
non-refundable royalty payments based on the following increments of Net Sales
in all countries in the Territory other than the United States of each such Pfizer
Product that contains a given Compound:

 

(i)            *** percent (***%) for Net Sales in
a calendar year up to ***;

 

(ii)           *** percent (***%) for Net Sales in a
calendar year over *** and up to ***; and

 

(iii)         *** percent (***%) for Net Sales in a
calendar year over ***.

 

(c)           Royalty Calculations. Royalty
payments due pursuant to Sections 8.4(a) and 8.4(b) shall be
calculated ***.  Therefore, ***

 

The example below is for illustrative purposes only.

 

Example:                                              ***

 

(d)           Royalty
Reductions.  Notwithstanding anything to the contrary in
this Section 8.4, (i) for Net Sales based on sales of a Pfizer
Product in the United States, any payments owed with respect to such Pfizer
Product pursuant to this Section 8.4 shall be reduced

 

35

 

*** Confidential material redacted and filed separately with the
Commission.

 

(x) by *** percent (***%) for *** and (y) by *** percent
(***%) if ***; provided that in no event shall such payments be reduced
by more than *** percent (***%) as a result of the events described in clauses
(x) and (y) above occurring; and (ii) for Net Sales based on sales of a
Pfizer Product in a country in the Territory other than the United States, any
payments owed with respect to such Pfizer Product pursuant to this Section 8.4
shall be reduced by *** percent (***%) in the relevant country if ***

 

8.5          Payments
and Payment Reports.  All royalties due under Section 8.4
shall be paid within sixty (60) days of the end of the relevant Pfizer Quarter
for which such royalties are due.  Each
royalty payment shall be accompanied by a statement identifying the Pfizer
Product, the relevant countries, Net Sales for each Pfizer Product for each
such country, the amount payable to Incyte, and the computation thereof, which
computation will include all the itemized deductions subtracted from gross
sales to arrive at Net Sales.  All such
statements shall be kept confidential by Incyte and not disclosed to any Third
Party other than Incyte’s accountants who Incyte shall cause to be obligated to
keep such information confidential, and such information and statements shall
only be used for purposes of this Agreement.

 

8.6          Payment
Method. 
All payments due under this Agreement to Incyte
shall be made by electronic transfer in immediately available funds via either
a bank wire transfer, an ACH (automated clearing house) mechanism, or any other
means of electronic funds transfer, at Pfizer’s election, to ***, For credit
to: *** or to such other bank accounts as Incyte shall designate in writing at
least five (5) Business Days before the payment is due.  All payments hereunder shall be made in the
legal currency of the United States of America.

 

8.7          Taxes. It is understood and agreed
between the Parties that any payments made under Sections 8.1, 8.2 or 8.3 of
this Agreement are inclusive of any value added or similar tax imposed upon
such payments.  In addition, in the event
any of the payments made by Pfizer pursuant to Article 8 become subject to
withholding taxes under the laws of any jurisdiction, Pfizer shall deduct and
withhold the amount of such taxes for the account of Incyte to the extent
required by Law, such amounts payable to Incyte shall be reduced by the amount
of taxes deducted and withheld, and Pfizer shall pay the amounts of such taxes
to the proper Governmental Authority in a timely manner and promptly transmit
to Incyte an official tax certificate or other evidence of such tax obligations
together with proof of payment from the relevant Governmental Authority of all
amounts deducted and withheld sufficient to enable Incyte to claim such payment
of taxes. Any such withholding taxes
required under applicable Law to be paid or withheld shall be an expense of,
and borne solely by, Incyte.  Pfizer
will provide Incyte with reasonable assistance to enable Incyte to recover such
taxes as permitted by Law.

 

36

 

8.8          Foreign
Exchange.  Conversion of sales recorded in local
currencies to U.S. dollars for the purpose of calculating the Sales Milestone
Payments or royalty payments will be performed in a manner consistent with
Pfizer’s normal practices used to prepare its audited financial reports; provided
that such practices use a widely accepted source of published exchange rates.

 

8.9          Interest.  If Pfizer fails to make any payment due to
Incyte under this Agreement, then interest shall accrue on a daily basis at a
rate equal to the thirty (30)-day U.S. dollar LIBOR rate effective for the date
that payment was due, as published by The Wall Street Journal.

 

8.10        Records; Audits.  Pfizer shall, and shall cause its Affiliates
and sublicensees to, keep accurate books and records setting forth gross sales
of each Pfizer Product, Net Sales of each Pfizer Product, and amounts payable
hereunder to Incyte for each such Pfizer Product.  Pfizer shall permit Incyte, by independent qualified
public accountants employed by Incyte and reasonably acceptable to Pfizer, to
examine such books and records at any reasonable time, but not later than two (2) years
following the rendering of any corresponding reports, accountings and payments
pursuant to Section 8.4.  The
foregoing right of examination may be exercised only once during each twelve
(12)-month period.  Such accountants may
be required by Pfizer to enter into a reasonably acceptable confidentiality
agreement, and in no event shall such accountants disclose to Incyte any information
other than such as relates to the accuracy of reports and payments made or due
hereunder.  The opinion of such
accountants regarding such reports, accountings and payments shall be binding
on the Parties, other than in the case of manifest error.  Incyte shall bear the cost of any such
examination; provided that if such examination shows an underpayment of
royalty payments of more than five percent (5%) of the amount due for the
applicable period, then Pfizer shall promptly reimburse Incyte for all costs
incurred in connection with such examination. 
Pfizer shall promptly pay to Incyte the amount of any underpayment of
royalties revealed by an examination, including interest payable in accordance
with Section 8.9.  Any overpayment
of royalties by Pfizer revealed by an examination shall be fully-creditable
against future royalty payments payable to Incyte under Section 8.4.

 

8.11        Inter-Company Sales.  Sales between or among Pfizer, its Affiliates
or sublicensees shall not be subject to royalty payments.  Royalty payments shall only be calculated
upon Net Sales to a Third Party.  Pfizer
shall be responsible for payments on Net Sales by its Affiliates and
sublicensees.

 

8.12        Animal Products.  If at any time Pfizer wishes to develop a
Compound or a Pfizer Product for a therapeutic use for animals, other than
humans (an “Animal Product”), then Pfizer and
Incyte agree to negotiate in good faith to determine appropriate commercial
terms for such Animal Product prior to the commencement of any study that is intended
to form the primary basis of an effectiveness claim in approved product
labeling for the Animal Product.  For the
avoidance of doubt, Pfizer shall not be obligated to negotiate commercial terms
for an Animal Product until after the FDA renders a binding decision regarding
the investigational requirements for any such Animal Product in accordance with
Section 512(b)(3) of the FDCA. 
The Parties agree that Pfizer shall have no obligation whatsoever to
research, develop or commercialize an Animal Product.

 

37

 

9.                                      INTELLECTUAL PROPERTY

 

9.1          Ownership.

 

(a)           Incyte Technology and Patent Rights.  Incyte or its
Affiliates shall Control all Incyte Confidential Information and Incyte
Technology and, in compliance with Section 9.3(b), all Incyte Patent
Rights.

 

(b)           Pfizer Technology and Patent Rights.  Pfizer or its
Affiliates shall Control all Pfizer Confidential Information, Pfizer
Technology, Pfizer Process Patent Claims, Pfizer Proprietary Process Patent Claims,
Pfizer Use Patent Claims and Pfizer Patent Rights.

 

(c)           Program Technology and Patent Rights.  In the course of
performing the Research Plan during the Research Term, Incyte and Pfizer
contemplate the invention of Program Technology and Program Patent Rights.  Incyte and Pfizer (or their respective
Affiliates) shall have joint Control of any and all Program Technology.  Pfizer or its Affiliates shall Control any and
all Program Patent Rights.  Accordingly,
Incyte assigns and transfers, and shall cause its Representatives and the
relevant inventors to assign and transfer, to Pfizer all of its and their rights,
title and interest in and to any and all Program Patent Rights, free and clear
of all liens, encumbrances, charges, security interests, mortgages or other
similar restrictions.  Incyte shall, and
shall cause its Representatives and the relevant inventors to, execute and
deliver such documents, agreements and instruments of assignment and transfer
as Pfizer reasonably requests in order to give effect to this Section 9.1(c).

 

9.2          Filing, Prosecution and Maintenance.

 

(a)           Cooperation. Incyte and Pfizer shall
cooperate and assist one another in connection with the filing, prosecution and
maintenance of the Incyte Patent Rights and the Program Patent Rights,
including by jointly discussing strategies, providing relevant information,
data and files, as appropriate, and timely executing powers of attorney,
assignments and other relevant documents and transferring files, in each case
as shall be reasonably requested in order to implement the provisions of this Article 9.  Incyte shall have reasonable access to all
material documentation, filings and substantive communications to or from the
respective patent offices and Pfizer shall use reasonable efforts to keep
Incyte advised in a timely manner as to the status of all pending applications
to the extent pertaining to any Compound, Incyte Compound, Pfizer Product or
Incyte Product.  Whenever possible, Pfizer
and Incyte agree that patent claims covering Incyte Compounds or Incyte
Products should be split from pending patent applications that cover Compounds
or Pfizer Products in all countries in the Territory in which such patent
applications have been filed.  The
Parties shall work cooperatively to attempt to cover Incyte Compounds and
Incyte Products in patent applications with claims that are as broad as is
reasonable, taking into account relevant patent laws and, where appropriate to
the filing strategy, taking into account a desire not to cover, generically or
specifically, Pfizer Products or Compounds that may be used in Pfizer
Products.  The Parties recognize that
both designations of Incyte Compounds and selections by Pfizer of Compounds for
use in Pfizer Products can change during the Term and that patent filing
strategies (including altering claim scope or re-assigning filing, prosecution
or maintenance responsibility and costs from time to time as warranted) that
take this fact into account may need to be developed.  The Parties agree that all costs associated
with any such re-assignment of filing, prosecution or maintenance
responsibility and costs shall be borne solely by the Party that will bear such
responsibility and costs after such re-assignment takes effect.

 

38

 

(b)           Incyte Patent Rights.

 

(i)            Pfizer shall have the first right,
but not the obligation, to file, prosecute and maintain all Incyte Patent
Rights that are necessary or useful, as determined by Pfizer in its sole
discretion, to make, have made, use, import, offer for sale or sell any
Compound or Pfizer Product, including any of the foregoing that are also
necessary or useful to make, have made, use, import, offer for sale, or sell
any Incyte Compound or Incyte Product, in each case, in all countries in the
Territory.  If Pfizer files, prosecutes
or maintains any such Incyte Patent Rights, then Pfizer shall be responsible
for all costs associated with such filings, prosecutions and maintenance.  As soon as practicable after the Effective
Date, Incyte shall, and shall cause its Representatives and the relevant
inventors to, (A) grant Pfizer a power of attorney that allows Pfizer to
file, prosecute and maintain all Incyte Patent Rights, such power of attorney
to be in a form that is reasonably acceptable to Pfizer and to Incyte and (B) sign
such further instruments, affidavits or other documentation as shall be
reasonably requested by Pfizer to implement the foregoing provisions of this Section 9.2(b).  Pfizer, its agents and attorneys shall give
Incyte at least thirty (30) days to comment on the filings and prosecution of
such Incyte Patent Rights and shall give due consideration to all Incyte
comments, but Pfizer’s decisions with respect to such filings and prosecution
shall be final.  No later than thirty
(30) days prior to the applicable Paris Convention date or PCT nationalization
date, as the case may be, for a given Incyte Patent Right, Pfizer shall provide
Incyte with a list of the countries in which Pfizer has decided to file or
prosecute such Incyte Patent Right. 
Incyte agrees that, so long as Pfizer has acted in good faith in
connection with the filing, prosecution and maintenance of the Incyte Patent
Rights that Pfizer has chosen, in its sole discretion, to file, prosecute and
maintain, neither Pfizer nor any of its Representatives shall be liable for any
act or omission with respect to any such Incyte Patent Rights or the filing,
prosecution or maintenance thereof.  If
Pfizer decides not to file or prosecute a patent application containing an Incyte
Patent Right, then the provisions of Section 9.2(e) shall apply with
respect to such patent application.

 

(ii)           Incyte shall have the first right,
but not the obligation, to file and prosecute any patent application and, if
granted, maintain any patent containing an Incyte Patent Right that is not
necessary or useful, as determined by Pfizer, in its sole discretion, to make,
have made, use, import, offer for sale or sell any Compound or Pfizer Product.  If Incyte files, prosecutes or maintains any
such Incyte Patent Rights, then (x) Incyte shall be responsible for all costs
associated with such filings, prosecutions and maintenance and (y) all such
Incyte Patent Rights shall thereafter cease to be “Incyte Patent Rights” and become
“Incyte Product Patent Rights”.

 

(c)           Program Patent Rights.

 

(i)            Pfizer
shall have the first right but not the obligation to file, prosecute and
maintain all Program Patent Rights, except as provided in Section 9.2(c)(ii) below.  If Pfizer files, prosecutes and maintains any
Program Patent Rights, then Pfizer shall be responsible for all costs
associated with such filings, prosecutions, and maintenance.  Pfizer, its agents and attorneys shall give
Incyte at least thirty (30) days to comment on the filings and prosecution of
such Program Patent Rights and shall give due consideration to all Incyte
comments, but Pfizer’s decisions with respect to such filings and prosecutions
shall be final.  No later than thirty
(30) days prior to the applicable Paris

 

39

 

Convention date or
PCT nationalization date, as the case may be, for a given Program Patent Right,
Pfizer shall provide Incyte with a list of the countries in which Pfizer has
decided to file or prosecute such Program Patent Right.  Incyte agrees that, so long as Pfizer has
acted in good faith in connection with the filing, prosecution and maintenance
of the Program Patent Rights that it has chosen, in its sole discretion, to
file, prosecute and maintain, neither Pfizer nor any of its Representatives
shall be liable for any act or omission with respect to any such Program Patent
Rights or the filing, prosecution or maintenance thereof.  If Pfizer has decided not to file or
prosecute a patent application containing a Program Patent Right, then the
provisions of Section 9.2(e) shall apply with respect to such patent
application.

 

(ii)           Incyte
shall have the first right, but not the obligation, to file and prosecute any
patent application and, if granted, maintain any patent containing a Program
Patent Right that is not necessary or useful as determined by Pfizer, in its
sole discretion, to make, have made, use, import, offer for sale or sell any
Compound or Pfizer Product.  If Incyte
files, prosecutes, or maintains any such Program Patent Rights, then (x) Incyte
shall be responsible for all costs associated with such filings, prosecutions
and maintenance and (y) all such Program Patent Rights shall thereafter cease
to be “Program Patent Rights” and become “Incyte Program Patent Rights”.

 

(d)           Pfizer Patent Rights.  Except as set forth in Section 9.2(e), Pfizer
shall have the only right, but not the obligation, to file, prosecute and
maintain all Pfizer Patent Rights, Pfizer Process Patent Claims and Pfizer Use
Patent Claims.  If Pfizer files,
prosecutes or maintains any such Pfizer Patent Rights, Pfizer Process Patent
Claims or Pfizer Use Patent Claims, then Pfizer shall be responsible for all
costs associated with such filings, prosecutions and maintenance.

 

(e)           Abandonment.  Pfizer shall not abandon any patent
application or patent containing a (i) Pfizer Process Patent Claim or
Pfizer Use Patent Claim that (x) solely covers Incyte Compounds or Incyte
Products or (y) covers both (I) Incyte Compounds or Incyte Products and (II)
Compounds or Pfizer Products or (ii) an Incyte Patent Right or Program
Patent Right, in the case of each of clauses (i) and (ii), without at least
ninety (90) days’ prior notice to Incyte. 
If Pfizer decides to abandon any such patent applications or patents referred
to in the previous sentence of this Section 9.2(e) in any country,
then (A) subject to Pfizer’s consent (which consent shall not be
unreasonably withheld), Incyte shall have the option to obtain ownership of
such patent applications and patents free of charge (other than any costs
associated with the transfer of ownership from Pfizer to Incyte) and to
continue the prosecution of such patent applications and maintenance of such
patents in such country in Incyte’s name, (B) if Incyte elects to obtain
ownership and continue the prosecution of any patent applications or
maintenance of any patents referred to in clause (A) of this Section 9.2(e),
then (I) Incyte shall be responsible for all costs associated with such
prosecution and maintenance, and (II) all such Patent Rights that were
previously designated Incyte Patent Rights shall thereafter cease to be “Incyte
Patent Rights” and become “Incyte Product Patent Rights” and those that were
previously designated Program Patent Rights, Pfizer Process Patent Claims or
Pfizer Use Patent Claims shall thereafter cease to be “Program Patent Rights”, “Pfizer
Process Patent Claims” or “Pfizer Use Patent Claims”, as applicable, and become
“Incyte Program Patent Rights”.  The
Parties acknowledge and agree that a terminal disclaimer with respect to an
Incyte Patent Right, or a Program Patent Right, Pfizer Process Patent Claim or
a Pfizer Use Patent Claim could

 

40

 

*** Confidential material redacted and filed separately with the Commission.

 

adversely
affect Pfizer and would be a valid reason for Pfizer to withhold its consent
pursuant to clause (A) of this Section 9.2(e).

 

9.3          Notices,
Maintenance and Restrictions on Transfer.

 

(a)           Each Party agrees that it will, and will
cause its Representatives to execute and file those notices and other filings
as the other Party shall reasonably request be made from time to time with the
United States Patent and Trademark Office (or any successor agency) or any
other patent office in the Territory with respect to the rights granted under
this Agreement in connection with Incyte Patent Rights, Incyte Product Patent
Rights, Incyte Program Patent Rights, Program Patent Rights, Pfizer Patent
Rights, Pfizer Process Patent Claims and Pfizer Use Patent Claims.  Each Party will be responsible (at its own
cost and expense) for any recordings with relevant Governmental Authorities in
the Territory of licenses granted to it under this Agreement that are necessary
in order to initiate patent infringement actions in accordance with this
Agreement.

 

(b)           During the Term, ***; provided that ***.
For the avoidance of doubt, a ***

 

(c)           During the Term, Incyte shall, and shall cause
its Affiliates to, maintain at all times sole Control (in compliance with Section 9.3(b))
of the Incyte Patent Rights and Incyte Technology and its or its Affiliates’
share of the Program Technology that is jointly owned with Pfizer, in each
case, free and clear of any and all liens, encumbrances, charges, security
interests, mortgages or other similar restrictions (other than the security
interest created by the Security Agreement).

 

(d)           During the Term, Pfizer shall, and shall
cause its Affiliates to, maintain at all times sole Control of Patent Rights
that are (or, but for an assignment or other grant of rights to a Third Party,
would be) (i) Pfizer Process Patent Claims or Pfizer Use Patent Claims
that (x) solely cover Incyte Compounds or Incyte Products or (y) cover both (I)
Incyte Compounds or Incyte Products and (II) Compounds or Pfizer Products or (ii) Program
Patent Rights.

 

41

*** Confidential material redacted and filed separately with the
Commission.

 

9.4          Patent Term Extensions.  Pfizer shall
have the first right, but not the obligation, to seek patent term extensions,
supplementary protection certificates or the like (each, a “Patent Term Extension”) in any country in the Territory for
a Pfizer Product under the Incyte Patent Rights (except as set forth in the
last sentence of this Section 9.4), Program Patent Rights, Pfizer Patent
Rights, Pfizer Process Patent Claims and Pfizer Use Patent Claims.  If Pfizer decides to seek a Patent Term
Extension under any Incyte Patent Rights, Incyte shall, and shall cause its
Affiliates to, make any filings reasonably requested by Pfizer in order to
implement the provisions of this Section 9.4 and otherwise reasonably
cooperate with Pfizer in seeking such Patent Term Extensions.  If (x) Pfizer has decided not to seek a Patent
Term Extension for a Pfizer Product under a patent that is an Incyte Patent
Right or a Program Patent Right, Pfizer Process Patent Claim or Pfizer Use
Patent Claim in a given country and has so notified Incyte or (y) in
jurisdictions where the same patent can be extended more than once, then, in
the case of each of clauses (x) and (y), Incyte shall have the right, but not
the obligation, to seek a Patent Term Extension in such country for an Incyte
Product under such patent.  At Incyte’s
request, Pfizer shall reasonably cooperate with Incyte in seeking such Patent Term
Extensions.  In addition, Incyte shall
have the first right, but not the obligation, to seek a Patent Term Extension
for an Incyte Product under (i) Incyte Product Patent Rights or Incyte
Program Patent Rights and (ii) Incyte Patent Rights that solely cover an
Incyte Compound or Incyte Product.

 

9.5          Interpretation
of Patent Judgments.  If any claim relating to a patent under the
Incyte Patent Rights becomes the subject of a judgment, decree or decision of a
court, tribunal, or other authority of competent jurisdiction in any country,
which judgment, decree, or decision is or becomes final (there being no further
right of review) and adjudicates the validity, enforceability, scope, or
infringement of the same, the construction of such claim in such judgment,
decree or decision shall be followed thereafter in such country in determining
whether a product is licensed hereunder, not only as to such claim but also as
to all other claims in such country to which such construction reasonably
applies.

 

9.6          Anti-Stacking.

 

(a)           Anti-Stack. 
If Pfizer (i) reasonably determines in good
faith that, in order to avoid infringement of any patent not licensed
hereunder, it is reasonably necessary to obtain a license from a Third Party in
order to make, use, sell, offer for sale or import a Pfizer Product in a
country in the Territory and to pay a royalty under such license (including in
connection with settlement of a patent infringement claim), or (ii) shall
be subject to a final court or other binding order or ruling requiring the
payment of a royalty or other payment to a Third Party patent holder in respect
of sales of any Pfizer Product in a country in the Territory, then the amount
of royalty payments payable by Pfizer to Incyte with respect to Net Sales for
such Pfizer Product in such country shall be reduced by *** percent (***%) of ***
and (y) *** (the amount of such reduction being hereinafter referred to as, the
“Anti-Stack Amount”); provided that in no event shall the royalties payable by
Pfizer to Incyte under this Agreement be reduced to less than *** percent (***%)
of the amounts that would be otherwise payable by Pfizer to Incyte at such time
under Section 8.4.; provided, further, that if the
Anti-Stack Amount is more than *** percent (***%) of the amount payable by
Pfizer to Incyte under Section 8.4 in any given period, the Parties agree
that the balance of any Anti-Stack Amount that has not been deducted from the
royalties payable by Pfizer to Incyte under Section 8.4 due to the first
proviso in this Section 9.6(a) (the “Deferred

 

42

 

*** Confidential material redacted and filed separately with the
Commission.

 

Amount”) shall be carried forward to the succeeding
payment period and deducted from amounts payable by Pfizer to Incyte under Section 8.4
during such succeeding payment period, and, following this, if all or any
portion of the Deferred Amount due in such succeeding payment period would be
more than *** percent (***%) of the amount payable by Pfizer to Incyte under Section 8.4
in such succeeding payment period, then as much of the Deferred Amount shall be
payable as soon as possible thereafter after giving effect to the deferral
provisions contained in this Section 9.6(a) and continuing to carry
forward the Deferred Amount to the next succeeding payment period until the
Deferred Amount equals zero.  Effective
immediately after the expiration of the Term of this Agreement, all Deferred
Amounts shall be deemed to equal zero.  Pfizer
will notify Incyte prior to entering into any license with a Third Party
referred to in clause (i) of this Section 9.6(a) and, to the
extent legally possible, shall give Incyte an opportunity to consult with
Pfizer regarding such license before entering into a binding agreement with any
such Third Party; provided that Pfizer’s decision with respect to all
aspects of any such Third Party license shall be final.

 

(b)           Restrictions on
Anti-Stack.

 

(i)            Notwithstanding
anything to the contrary in Section 9.6(a), the Parties agree that the
amount of royalty payments payable to Incyte with respect to Net Sales for a
Pfizer Product, shall only be reduced by the Anti-Stack Amount arising from
clause (ii) of Section 9.6(a) if such Anti-Stack Amount is the
result of (x) *** and (y) the Third Party’s patent or published patent
application claims (i) ***, (ii) *** or (iii) ***; provided
that, in the case of each of clauses (i), (ii) and (iii), the ***.  For purposes of clause (y) of this Section 9.6(b)(i),
a Third Party shall be any Person that is a Third Party on the date of this
Agreement.

 

(ii)           Pfizer shall be the “Indemnifying Party” solely for purposes of determining which
Party will assume direction and control of any defense, litigation, settlement,
appeal or other disposition arising in connection with this Section 9.6, as
provided in Section 13.3.

 

9.7          Infringement.

 

(a)           Infringement by a Third Party.  Each of the Parties shall promptly notify the
other in the event of any potential infringement by any Third Party of an Incyte
Product Patent Right, Incyte Program Patent Right, Incyte Patent Right, Program
Patent Right, Pfizer Patent Right, Pfizer Process Patent Claim or Pfizer Use
Patent Claim of which it becomes aware. 
Pfizer shall have the only right, but no obligation, to institute
litigation in connection with any potential infringement by any Third Party of
a Pfizer Patent Right, Pfizer Process Patent Claim or Pfizer Use Patent Claim, in
its own name, and any such litigation shall be at Pfizer’s expense and for
Pfizer’s sole benefit.  Incyte, upon
request of Pfizer, shall reasonably cooperate with Pfizer in any such
litigation, at Pfizer’s expense.  Pfizer
shall have the first right, but no obligation, to institute litigation in
connection with any potential infringement by any Third Party of an Incyte
Patent Right or a Program Patent Right, in its own name, and any such
litigation shall be at Pfizer’s expense; provided that Incyte shall be
entitled to receive twenty-five percent

 

43

 

(25%) of any damages or settlements recovered by
Pfizer from such Third Party based upon any such claim for infringement against
such Third Party, but only after deducting all of Pfizer’s out-of-pocket
expenses (including counsel fees and expenses) for pursuing such claim.  Incyte, upon request of Pfizer, agrees to
join in any such litigation at Pfizer’s expense and in any event to cooperate
with Pfizer at Pfizer’s expense.  If
Pfizer institutes any such litigation and requires that Incyte be joined as a
party to such litigation, and there is a counterclaim (other than a
counterclaim whose subject matter is covered by and shall be governed by Section 9.6)
that creates a potential liability for Incyte, then Pfizer shall indemnify and
hold harmless Incyte against Damages that may be awarded as a result of such
counterclaim and shall be the Indemnifying Party solely for purposes of
determining which Party will assume direction and control of any defense,
litigation, settlement, appeal or other disposition in connection therewith, as
provided in Section 13.3.  If Pfizer
fails to institute litigation in connection with any potential infringement by
any Third Party of an Incyte Patent Right or a Program Patent Right within
sixty (60) days of its receipt of notice thereof, then Incyte shall have the
right, but no obligation, upon ten (10) days’ prior notice to Pfizer, at
Incyte’s expense and for Incyte’s sole benefit (with respect to monetary
damages or settlements only), to institute any such litigation, but only if
such litigation (x) involves an Incyte Compound or Incyte Product and (y) does
not involve a Pfizer Product or a Compound that Pfizer has selected for
development.  Pfizer, upon request of
Incyte, shall reasonably cooperate with Incyte in any such litigation at Incyte’s
expense.  Pfizer will not elect to
institute litigation hereunder if the potential infringement by the Third Party
solely involves an Incyte Patent Right, Program Patent Right, Pfizer Process
Patent Claim or Pfizer Use Patent Claim that solely covers an Incyte Compound
or Incyte Product.  Incyte shall have the
only right, but no obligation, to institute litigation in connection with any
potential infringement by any Third Party of an Incyte Product Patent Right or
Incyte Program Patent Right.  Pfizer,
upon request of Incyte, shall reasonably cooperate with Incyte in any such
litigation at Incyte’s expense.

 

(b)           Alleged Infringement by Pfizer or Incyte.  Each of the Parties shall promptly notify the
other in the event of any claims by a Third Party of alleged patent
infringement by Pfizer or Incyte or any of their respective Affiliates with
respect to the manufacture, use, sale, offer for sale or importation of a
Compound, Pfizer Product, Animal Product, Incyte Compound or Incyte
Product.  In the case of any such claim
that relates to a Compound, Pfizer Product or Animal Product, regardless of
whether such claim also relates to an Incyte Compound or Incyte Product, Pfizer
shall be entitled to control the defense of such claim and shall be the
Indemnifying Party solely for purposes of determining which Party will assume
direction and control of any defense, litigation, settlement, appeal or other
disposition arising in connection therewith as provided in Section 13.3.  Incyte, upon request of Pfizer, agrees to
join in any such litigation at Pfizer’s expense and in any event to cooperate
with Pfizer at Pfizer’s expense.  If
Pfizer requires that Incyte be joined as a party to such litigation and there
is a counterclaim (other than a counterclaim whose subject matter is covered by
and shall be governed by Section 9.6,) that creates a potential liability
for Incyte, then Pfizer shall indemnify and hold harmless Incyte against
Damages that may be awarded as a result of such counterclaim and shall be the
Indemnifying Party solely for purposes of determining which Party will assume
direction and control of any defense, litigation, settlement, appeal or other
disposition in connection therewith, as provided in Section 13.3.  In the case of any such claim that solely covers
an Incyte Compound or Incyte Product, Incyte shall be entitled to control the
defense of such claim and shall be the Indemnifying Party solely for purposes
of determining which Party will assume direction and control of any defense,
litigation, settlement, appeal or other disposition in connection therewith as
provided in Section 13.3.  Pfizer,
upon request of Incyte,

 

44

 

agrees
to join in any such litigation at Incyte’s expense and in any event to
cooperate with Incyte at Incyte’s expense. 
If Incyte requires that Pfizer be joined as a party to such litigation
and there is a counterclaim (other than a counterclaim whose subject matter is
covered by and shall be governed by Section 9.6,) that creates a potential
liability for Pfizer,  then Incyte shall
indemnify and hold harmless Pfizer against Damages that may be awarded as a
result of such counterclaim and shall be the Indemnifying Party solely for
purposes of determining which Party will assume direction and control of any
defense, litigation, settlement, appeal or other disposition in connection
therewith, as provided in Section 13.3.

 

(c)           Paragraph IV Notices.  If either Party receives a notice under 21
U.S.C. §355(b)(2)(A)(iv) or 355(j)(2)(A)(vii)(IV) (“Paragraph IV
Notice”) concerning an Incyte Product Patent Right, Incyte Program
Patent Right or Incyte Patent Right or a Program Patent Right, Pfizer Patent
Right, Pfizer Process Patent Claim or Pfizer Use Patent Claim, then it shall
use reasonable efforts to provide a copy of such notice to the other Party
within two (2) Business Days after its receipt thereof and best efforts to
provide such copy as promptly as practicable thereafter.  Pfizer shall have the only right, but no
obligation, to initiate patent infringement litigation based on a Paragraph IV
Notice concerning a Pfizer Patent Right, Pfizer Process Patent Claim or Pfizer
Use Patent Claim, at its own expense. 
Pfizer shall have the first right, but no obligation, to initiate patent
infringement litigation based on a Paragraph IV Notice concerning an Incyte
Patent Right or a Program Patent Right, at its own expense.  If Pfizer fails to initiate such litigation
within thirty (30) days of its receipt of the applicable Paragraph IV Notice,
then Incyte shall have the right, but no obligation, to initiate such
litigation, at Incyte’s expense, but only if such litigation (x) involves an
Incyte Compound or Incyte Product and (y) does not involve a Pfizer Product or
a Compound that Pfizer has selected for development.  Incyte shall have the only right, but no
obligation, to initiate patent infringement litigation based on a Paragraph IV
Notice concerning an Incyte Product Patent Right or Incyte Program Patent Right.  Each Party, upon request of the other Party,
shall reasonably cooperate with the requesting Party in any such litigation at the
requesting Party’s expense.

 

(d)           Actions by a Third Party Against Incyte
Patents or Pfizer Patents.  Each
of the Parties shall promptly notify the other in the event of any legal or
administrative action by any Third Party against an Incyte Product Patent
Right, Incyte Program Patent Right, Incyte Patent Right, Program Patent Right,
Pfizer Patent Right, Pfizer Process Patent Claim or Pfizer Use Patent Claim, of
which it becomes aware, including any nullity, revocation, reexamination, or
compulsory license proceeding but excluding a counterclaim brought in an
infringement proceeding initiated under Section 9.7(a), which shall be
governed by Section 9.7(a).  Pfizer
shall have the only right, but no obligation, to defend against any such action
involving a Pfizer Patent Right, in its own name, and any such defense shall be
at Pfizer’s expense.  Incyte, upon
request of Pfizer, agrees to join in any such action at Pfizer’s expense and in
any event to cooperate with Pfizer at Pfizer’s expense.  Pfizer shall have the first right, but no
obligation, to defend against any such action involving an Incyte Patent Right
or a Program Patent Right, Pfizer Process Patent Claim or Pfizer Use Patent
Claim, in its own name, and any such defense shall be at Pfizer’s expense.  Incyte, upon request of Pfizer, agrees to
join in any such action at Pfizer’s expense and in any event to cooperate with
Pfizer at Pfizer’s expense.  If Pfizer
fails to defend against any such action involving an Incyte Patent Right or a
Program Patent Right, Pfizer Process Patent Claim or Pfizer Use Patent Claim, then
Incyte shall have the right to defend such action, in its own name, and any
such defense shall be at Incyte’s expense. 
Pfizer will not elect to defend an action hereunder if the action by the
Third Party solely involves an Incyte Patent Right, Program Patent Right,
Pfizer Process Patent Claim or Pfizer Use Patent Claim that solely

 

45

 

*** Confidential material redacted and filed separately with the
Commission.

 

covers
an Incyte Compound or an Incyte Product.  Incyte shall have the only right, but no
obligation, to defend against any such action involving an Incyte Product
Patent Right or Incyte Program Patent Right. 
Pfizer, upon request of Incyte, shall reasonably cooperate with Incyte
in any such action at Incyte’s expense.

 

10.                               CONFIDENTIALITY

 

10.1        Treatment of Confidential Information.  The Parties agree that during the Term, and
for a period of three (3) years after the end of the Term but in no event
for less than five (5) years after the Effective Date, each Party will,
and will cause its Affiliates, (a) to maintain in confidence all Incyte
Confidential Information or Pfizer Confidential Information, as the case may
be, to the same extent such Party maintains its own proprietary information of
similar kind and value and (b) not to use such Incyte Confidential Information
or Pfizer Confidential Information, as the case may be, for any purpose except
those permitted by this Agreement. 
Except as permitted by Sections 10.2, 10.3, 10.4 or 10.5 below, Pfizer and
its Affiliates agree not to disclose (i) any Incyte Confidential
Information or (ii) any Pfizer Technology that is Pfizer Confidential
Information, in the case of each of clauses (i) and (ii), that relates
solely to an Incyte Compound or Incyte Product, to any Third Parties under any
circumstance without the prior consent of Incyte.  Except as permitted by Sections 10.2, 10.3,
10.4 or 10.5 below, Incyte and its Affiliates agree not to disclose (A) any
Incyte Technology that is Incyte Confidential Information and that does not relate
solely to (I) an Incyte Compound or Incyte Product or (II) *** or that are
needed to permit an external contractor to ***, or (B) any Pfizer
Confidential Information, to any Third Parties under any circumstance without
the prior consent of Pfizer.  Incyte
further agrees that it will not, and will cause its Representatives not to,
share any Pfizer Confidential Information with (x) any Affiliate that becomes
an Affiliate in connection with a Change of Control (including, for purpose of
this Section 10.1, any Change of Control that does not involve a *** or
does involve a ***) or (y) any Representatives of Incyte who become
Representatives in connection with such Change of Control (including any Change
of Control that does not involve a *** or does involve a ***).  If any Change of Control (including any
Change of Control that does not involve a *** or does involve a ***) of Incyte
occurs, Incyte shall promptly notify Pfizer, share with Pfizer the polices and
procedures it plans to implement in order to protect the confidentiality of
Pfizer Confidential Information prior to such implementation and make any
adjustments to such policies and procedures that are reasonably requested by
Pfizer.

 

10.2        Authorized Disclosure.  Pfizer and Incyte each agree that any
disclosure (i) by Pfizer or any of its Affiliates of Incyte Confidential
Information, or (ii) by Incyte or any of its Affiliates of Pfizer
Confidential Information, to any of their respective officers, employees or
agents shall be made only if and to the extent reasonably necessary to carry
out its rights and obligations under this Agreement and shall be limited to the
maximum extent possible consistent with such rights and obligations.  Incyte and Pfizer each represent that all of
its officers, employees and agents who shall have access to Pfizer Technology,
Incyte Technology, Program Technology, Pfizer Confidential Information or
Incyte Confidential Information are bound by agreement to maintain such
information in confidence. 
Notwithstanding the foregoing, (x) Pfizer may disclose (i) any Incyte
Confidential Information or (ii) any Pfizer Technology that is Pfizer
Confidential Information, in the case of each of clauses (i) and (ii),
that relates solely to an Incyte Compound or Incyte Product, only to the
limited extent such information is relevant to the

 

46

 

research, development or commercialization of
a Compound, Pfizer Product or Animal Product, to (I) Governmental
Authorities (a) to the extent desirable to obtain or maintain INDs or Regulatory
Approvals for any Compound, Pfizer Product or Animal Product and (b) in
order to respond to inquiries, requests or investigations, (II) to outside
consultants, scientific advisory boards, managed care organizations, and
non-clinical and clinical investigators to the extent desirable to patent,
trademark, develop, register or market any Compound, Pfizer Product or Animal
Product and (III) to the extent necessary or desirable in order to enforce
Pfizer’s rights under this Agreement; and (y) Incyte may disclose (i) any
Incyte Technology that is Incyte Confidential Information and that is derived
from the research, development or commercialization of an Incyte Compound or
Incyte Product or (ii) any Pfizer Confidential Information that relates solely to an Incyte
Compound or Incyte Product (other than Pfizer Confidential Information that is
designated by Pfizer as highly proprietary and marked “Not to be Disclosed” in
accordance with Section 6.7(b)(ii)) to (I) Governmental
Authorities (a) to the extent desirable to obtain or maintain INDs or
Regulatory Approvals for any Incyte Compound or Incyte Product and (b) in
order to respond to inquiries, requests or investigations; (II) to outside
consultants, scientific advisory boards, managed care organizations, and
non-clinical and clinical investigators to the extent desirable to patent,
trademark, develop, register or market any Incyte Compound or Incyte Product
and (III) to the extent necessary or desirable in order to enforce Incyte’s
rights under this Agreement; provided that, in each case enumerated in
clauses (x) and (y) of this Section 10.2, the disclosing Party shall
obtain the same confidentiality obligations from such Third Parties as it
obtains with respect to its own proprietary information of similar kind and
value.

 

10.3        Publicity.  The public
announcement of the execution of this Agreement, which Incyte shall be
permitted to make upon execution of this Agreement by both Parties, is set
forth on Schedule 10.3(a) attached hereto.  In addition, notwithstanding anything to the
contrary in Section 10.2, either Party may make a public statement
(written or oral), including in analyst meetings, concerning this Agreement or
the progress of the Compounds or Pfizer Products where such statement: (a) is
required by Law, or legal proceedings, (b) concerns
one of the events described in Schedule 10.3(b); provided that
Incyte may only make a public statement concerning the events described in Schedule 10.3(b) as
follows: (i) jointly with Pfizer, (ii) with Pfizer’s prior approval
of the text of such statement and in compliance with the other provisions of
this Section 10.3, which text shall, at any time that Incyte is a company
that has at least ten percent (10%) of its common stock listed on a United
States national securities exchange or approved for quotation on the Nasdaq
National Market or any similar United States system of automated dissemination
of quotations of securities prices and that has such common stock registered
under the Securities Exchange Act of 1934, as amended, include for milestone
announcements, the Event Milestone and the amount of the applicable Event
Milestone Payment but shall not include the Pfizer Indication for any Event
Milestone that occurs as a result of the development of a Compound for a Pfizer
Indication other than those included in the *** or (iii) after Pfizer has
made a public statement with respect thereto, so long as Incyte’s public
statement is consistent therewith, (c) is contained in Pfizer’s or Incyte’s
financial statements prepared in accordance with generally acceptable
accounting principles in the United States, or (d) has been announced
previously under this Section 10.3, so long as such statement is
consistent with any such previous announcement. 
*** (referred to by Incyte as of the date of this Agreement as ***),
Incyte may (but shall not be obligated to) make a public statement (written or
oral), including in analyst meetings, that discloses *** disclosing *** but
only under the following circumstances: (A) the ***

 

47

 

*** Confidential material redacted and filed separately with the
Commission.

 

***; (B) *** (I) *** (II) ***; and (C) ***
(y) ***.  In all cases, the Party required
to or proposing to make such statement shall (x) endeavor to obtain
confidential treatment of economic and trade secret information and (y) give
the other Party sufficient advance notice of the text of any proposed statement
(written or oral) so that the other Party will have the opportunity to comment
upon the statement, and such comments will be taken into account in the final
statement.  If a Pfizer Indication
becomes a Reverted Indication pursuant to Section 11.4 or if this
Agreement is terminated by either Party pursuant to Sections 11.2 or 11.3, the
Parties will agree on the text of any proposed public statement (written or
oral) in connection therewith.  Pfizer
agrees that it will disclose *** in a manner consistent with its public
statements for its other pharmaceutical products.  Except as provided in this Section 10.3,
neither Party will make any public announcement regarding the terms of, or
events related to, this Agreement without the prior consent of the other
Party.  Notwithstanding anything to the
contrary in this Section 10.3, so long as Incyte complies with Section 10.1
and 10.2, Incyte may make public statements (written or oral), including in
analyst meetings, concerning the progress of the Incyte Compounds or Incyte
Products without being subject to the requirements of this Section 10.3; provided
that if such statement covers information that could be relevant to the filing
or prosecution of any Patent Rights, Incyte will use reasonable efforts to
provide Pfizer with ten (10) Business Days’ notice (or as much advance
notice as is practicable under the circumstances) prior to making any such
written or oral public statement.

 

10.4        Publications.  Pfizer, its Affiliates or any of its or its
Affiliates’ employees, contractors, consultants, licensees or agents may
publish or present any information with respect to a Compound, Pfizer Product
or Animal Product, including the results of the Research Program or preclinical
or clinical studies, without Incyte’s prior consent, but Pfizer shall use
reasonable efforts to provide Incyte with ten (10) Business Days’ notice
(or such shorter notice period as is practicable under the circumstances) prior
to any such publication or presentation. 
Incyte will not, and will cause its
Affiliates and its or its Affiliates’ employees, contractors, consultants,
licensees or agents not to, publish or present any information with respect to
a Compound, Pfizer Product or Animal Product, including the results of the
Research Program or preclinical or clinical studies, without Pfizer’s prior
consent (which may be withheld in its sole and final discretion).  Incyte, its Affiliates or any of its or its
Affiliates’ employees, contractors, consultants, licensees or agents may
publish or present any information with respect to an Incyte Compound or Incyte
Product, including the results of the Research Program or preclinical or
clinical studies (other than Pfizer Confidential Information that is designated by
Pfizer as highly proprietary and marked “Not to be Disclosed” in accordance
with Section 6.7(b)(ii)),
without Pfizer’s prior consent, but Incyte shall use reasonable efforts to
provide Pfizer with ten (10) Business Days’ notice (or such shorter notice
period as is practicable under the circumstances) prior to any publication or
presentation.  Pfizer will not, and will cause
its Affiliates and its or its Affiliates’ employees, contractors, consultants,
licensees or agents not to, publish or present any information with respect to
an Incyte Compound or Incyte Product, including the results of the Research
Program or preclinical or clinical studies, without Incyte’s prior consent
(which may be withheld in its sole and final discretion).  Notwithstanding the foregoing, nothing in Article 10
shall be construed to limit the right of Pfizer’s or Incyte’s clinical
investigators to publish the

 

48

 

results of their studies.  The provisions of this Section 10.4
shall, to the extent applicable, be subject to the terms of the agreements
listed in Schedule 10.4.

 

10.5        Registration and Filing of this Agreement.  To the extent, if any, that a Party concludes
that it is required under applicable Laws to file or register this Agreement or
a notification thereof with any Governmental Authority, including the US
Securities and Exchange Commission, the FTC or the DOJ, such Party may do so; provided
that such Party shall provide the other Party with a written copy of all
proposed filings, registrations or notifications within such time frame as to
allow for a reasonably sufficient time for review and comment by the other
Party prior to the submission of such proposed filing, registration or
notification. The other Party shall cooperate with such filing, registration or
notification and shall execute all documents reasonably required in connection
therewith. To the extent permitted by applicable Law, the Parties will request
confidential treatment of sensitive provisions of this Agreement. The Parties
shall promptly inform each other as to the activities or inquiries of any such
Governmental Authority relating to this Agreement and shall cooperate to
respond to any request for further information therefrom. Each Party shall be
responsible for its own legal and other external costs in connection with any
such filings, registrations or notifications.

 

11.                               TERM; TERMINATION; CHANGE OF CONTROL

 

11.1           Term.

 

(a)        This Agreement shall become effective on the
Effective Date and shall continue until the earlier of (i) the last
Royalty Term Expiration Date for the last Pfizer Product, and (ii) the
effective date of termination pursuant to Section 11.2 or 11.3 (the “Term”).

 

(b)        Prior to the Effective Date, neither Incyte nor
Pfizer shall have any rights or obligations hereunder.  Notwithstanding the foregoing, effective as
of the signing of this Agreement, each of Incyte and Pfizer covenant and agree
that (a) Articles 4 (HSR), 10 (Confidentiality) and 14 (Dispute
Resolution) and this Section 11.1(b) shall be in full force and
effect, (b) Incyte shall not, and shall cause each of its Affiliates not
to, negotiate, engage in or otherwise enter into any transaction involving (i) any
sale or grant of any rights or licenses to the Incyte Patent Rights or the
Incyte Technology in the Territory, or (ii) any joint venture,
co-promotion or similar relationship involving the Incyte Patent Rights or the
Incyte Technology in the Territory and (c) neither Party may terminate
this Agreement prior to the Effective Date, except pursuant to Section 11.3(c).

 

11.2        Termination by Pfizer.  After the
Effective Date, Pfizer may terminate this Agreement at any
time in its sole discretion upon ninety (90) days’ advance notice to Incyte,
with such termination becoming effective at the end of such ninety (90)-day
period.

 

11.3        Mutual Termination Rights.  Either Party may terminate this Agreement if:

 

(a)           it believes that the other Party is in
material breach of this Agreement, in which case the non-breaching Party may
deliver notice of such material breach to the other Party, such notice to
describe in detail the nature of such breach. 
For purposes of this Section 11.3(a), a material breach shall
include a material inaccuracy in any representation or warranty contained
herein. The allegedly breaching Party shall have ninety (90) days from its
receipt of such notice to cure such breach (or, if such breach cannot be cured
within such ninety (90)-day period, the breaching Party must commence and
diligently continue actions to cure such breach during such

 

49

 

***
Confidential material redacted and filed separately with the Commission.

 

ninety (90)-day
period).  Any such termination shall
become effective at the end of such ninety (90)-day period unless the breaching
Party has cured any such breach prior to the expiration of such ninety (90)-day
period (or, if such breach is capable of being cured but cannot be cured within
such ninety (90)-day period, the breaching Party has commenced and diligently
continued actions to cure such breach; provided that, in any such
instance, such cure must have occurred within one hundred eighty (180) days
after notice thereof was provided to the breaching Party by the non-breaching
Party to remedy such breach).  Notwithstanding Incyte’s right of termination
pursuant to this Section 11.3(a), Incyte acknowledges and agrees that it ***;
or

 

(b)           the other Party
is generally unable to meet its debts when due, or makes a general assignment
for the benefit of its creditors, or there shall have been appointed a
receiver, trustee or other custodian for such Party for or a substantial part
of its assets, or any case or proceeding shall have been commenced or other
action taken by or against such Party in bankruptcy or seeking the
reorganization, liquidation, dissolution or winding-up of such Party or any
other relief under any bankruptcy, insolvency, reorganization or other similar
act or law, and any such event shall have continued for sixty (60) days
undismissed, unstayed, unbonded and undischarged.  In such circumstances, the other Party may,
upon notice to such Party, terminate this Agreement, such termination to be
effective upon such Party’s receipt of such notice; or

 

(c)           the Effective
Date has not occurred on or prior to the date that is one hundred eighty (180)
days after the Parties make their respective HSR filings, with such termination
becoming effective upon one Party’s receipt of a notice of termination from the
other Party at any time after the end of such one hundred eighty (180)-day
period.

 

(d)           if a Party
gives notice of termination under this Section 11.3, and the other Party
disputes whether such notice was proper, then the issue of whether or not this
Agreement was properly terminated shall be resolved in accordance with Article
14, and the Agreement shall remain in full force and effect until such dispute
is resolved.  If as a result of such
dispute resolution process it is determined that the notice of termination was
proper, then such termination shall be deemed to be effective on the date on
which such dispute is resolved.  On the
other hand, if as a result of the dispute resolution process it is determined
that the notice of termination was improper, then no termination shall have
occurred, this Agreement shall remain in full force and effect and Pfizer will
pay to Incyte any Event Milestone Payment that became due during the
termination notice period or during the term of the dispute, together with
interest in accordance with Section 8.9.

 

11.4        Termination by Pfizer
of Pfizer Indication.

 

(a)           If, at any
time, Pfizer, in its sole discretion, elects to terminate development for all
Compounds for either ***, then Pfizer will notify Incyte of its intent to
terminate such indications (each such notice being hereinafter referred to as “Reversion Notice”). 
Effective upon the effective date of the Reversion Notice pursuant to
Section 15.3, (x) the indications referred to in such Reversion Notice will
revert to Incyte and become “Reverted Indications”,
(y) Pfizer’s license under Section 7.1 with respect to such Reverted Indications
shall terminate and (z) Section 7.4(b) shall

 

50

 

***
Confidential material redacted and filed separately with the Commission.

 

no longer apply to Pfizer
with respect to such Reverted Indications.  ***

 

(b)           Effective upon
the effective date of the Reversion Notice pursuant to Section 15.3, Pfizer
grants, and shall cause its Affiliates to grant, to Incyte the following fully
paid, royalty-free worldwide sublicenses and licenses:

 

(i)            an
exclusive (even as to Pfizer and its Affiliates), sublicense, with the right to
further sublicense, to use the Incyte Technology, Incyte Confidential
Information, Pfizer Technology, Pfizer Confidential Information and Program
Technology to the extent necessary or useful to make, have made, use, import,
offer for sale or sell Incyte Compounds or Incyte Products for the treatment,
control or prevention of the Reverted Indications that are the subject of such
Reversion Notice in the Territory;

 

(ii)           an
exclusive (even as to Pfizer and its Affiliates), sublicense, with the right to
further sublicense, to use the Incyte Patent Rights, Incyte Product Patent
Rights and Incyte Program Patent Rights to the extent necessary or useful to
make, have made, use, import, offer for sale or sell Incyte Compounds or Incyte
Products for the treatment, control or prevention of the Reverted Indications
that are the subject of such Reversion Notice in the Territory for the sole
purpose of making, having made, using, importing, offering for sale or selling
Incyte Compounds or Incyte Products for the treatment, prevention or control of
the Reverted Indications that are the subject of such Reversion Notice in the
Territory;

 

(iii)         an exclusive
(even as to Pfizer and its Affiliates) license, with the right to sublicense,
under the Program Patent Rights and Pfizer Use Patent Claims to the extent
necessary to make, have made, use, import, offer for sale or sell Incyte
Compounds or Incyte Products for the treatment, control or prevention of the
Reverted Indications that are the subject of such Reversion Notice in the
Territory for the sole purpose of making, having made, using, importing,
offering for sale or selling Incyte Compounds or Incyte Products for the
treatment, control or prevention of the Reverted Indications that are the
subject of such Reversion Notice in the Territory; and

 

(iv)          an exclusive
license (even as to Pfizer and its Affiliates), with the right to sublicense, under
the Pfizer Process Patent Claims to the extent necessary to manufacture Incyte
Compounds or Incyte Products for the treatment, control or prevention of the
Reverted Indications that are the subject of such Reversion Notice in the
Territory for the sole purpose of making, having made, using, importing,
offering for sale or selling Incyte Compounds or Incyte Products for the
treatment, control or prevention of the Reverted Indications that are the
subject of such Reversion Notice in the Territory.

 

Notwithstanding
anything to the contrary in this Section 11.4(b), with respect to any Pfizer
Technology, Pfizer Use Patent Claim or Pfizer Process Patent Claim, as the case
may be, that Pfizer acquires by purchase, license, assignment or other means
from a Third Party, Pfizer shall only be required to grant to Incyte a license
to such Pfizer Technology, Pfizer Use Patent Claim or Pfizer Process Patent
Claim (x) to the extent permitted under its agreement with such Third

 

51

***
Confidential material redacted and filed separately with the Commission.

 

Party
and (y) if Incyte agrees to be responsible for all payments to such Third Party
under such Third Party agreement that may be incurred as a result of such
sublicense to Incyte and executes documentation reasonably satisfactory to Pfizer
to such effect.

 

11.5        Termination by Pfizer of
***

 

(a)           Termination of ***.  If Pfizer (i) in its sole discretion, makes a
final decision to terminate *** (ii) in its reasonable discretion, *** then
Pfizer will so notify Incyte.  No later
than thirty (30) days after its receipt of such notice, Incyte will notify
Pfizer as to ***.  If Incyte ***.  If Incyte ***.

 

(b)           Incyte Election
Conditions.  ***

 

52

 

***
Confidential material redacted and filed separately with the Commission.

 

***

 

(c)           Pfizer
Responsibilities.  ***

 

11.6        Effect of Termination.

 

(a)           Survival.

 

(i)            The
following provisions shall survive any expiration or termination of this
Agreement, except for any termination pursuant to Section 11.3(c):  Articles 1 (Definitions), 10
(Confidentiality), 13 (Indemnities), 14 (Dispute Resolution), and 15
(Miscellaneous), and Sections 7.1(c) (License to Pfizer), 7.2(a) (with respect
to Pfizer Technology and Pfizer Confidential Information only), 7.2(c) and 7.2(d)
(Sublicenses and Licenses to Incyte), 7.3 (Research License) and 11.6 (Effect
of Termination), together with any sections or defined terms referred to in
such surviving provisions or necessary to give them effect.

 

(ii)           Except
as set forth in Section 8.2(e), termination of this Agreement shall not relieve
the Parties of any liability that accrued hereunder prior to the effective date
of such termination.  In addition,
termination of this Agreement shall not preclude either Party from pursuing all
rights and remedies it may have hereunder or at Law or in equity

 

53

 

with respect to any breach
of this Agreement nor prejudice either Party’s right to obtain performance of
any obligation.  The remedies provided in
Section 11.6(b) are not exclusive of other remedies available to a Party at Law
or in equity.

 

(b)           Rights Upon
Termination.

 

(i)            Except as set forth in
Sections 11.6(a)(i), 11.6(b)(ii)(E) and 11.6(b)(v), upon termination of this
Agreement by Pfizer pursuant to Section 11.2 or by either Party pursuant to
Section 11.3, all licenses and sublicenses hereunder shall terminate.

 

(ii)           As promptly as practicable
after termination by Pfizer pursuant to Section 11.2 or termination by Incyte
pursuant to Sections 11.3(a) or 11.3(b) (but in no event if (x) any such
termination results, arises from or relates to, or is deemed to result, arise
from or relate to, by operation of law or otherwise, any termination or deemed
termination hereof that occurs during the course of any bankruptcy or other
insolvency proceeding involving Incyte or (y) Incyte rejects this Agreement
pursuant to Sections 363, 365 or 1123 of Title 11 of the United States Code, as
amended), Pfizer shall do the following:

 

(A)          Regulatory
Matters.  transfer to Incyte
ownership of all Regulatory Filings, INDs and Regulatory Approvals relating to
the Pfizer Products in the same form in which Pfizer maintains such items;

 

(B)          Pre-Clinical
and Clinical Matters. deliver to Incyte all material pre-clinical and
clinical data and information in Pfizer’s possession relating to the Pfizer
Products, including copies of all material reports, records, regulatory
correspondence and other materials in Pfizer’s possession or control relating
to the pre-clinical and clinical development of the Pfizer Products and, if
applicable, any material information contained in the global safety database
established and maintained by Pfizer, in each case, in the same form in which
Pfizer maintains such items;

 

(C)          Trademarks.
assign to Incyte all of Pfizer’s, and cause its Affiliates to assign to Incyte
any of their respective, rights, title and interest in and to any trademarks
(other than the Pfizer name) that Pfizer or any of its Affiliates are using in
connection with a Pfizer Product (i) in the United States after the NDA for
such Pfizer Product has been accepted for filing, (ii) in the Major European
Countries after Regulatory Approval for such Pfizer Product has been filed
before the European Agency for the Evaluation of Medicinal Products (or any
successor agency) or such Major European Country, as applicable, (iii) in Japan
after the Regulatory Approval for such Pfizer Product has been accepted for
filing before the Japanese Ministry of Health and Welfare (or any successor agency)
and (iv) in the countries not covered by clauses (i), (ii) and (iii), after
Launch in such country;

 

(D)          Manufacturing
Matters.

 

(I)            at
Incyte’s option, to be exercised no later than (x) sixty (60) days after
receiving any notice of termination by Pfizer pursuant to Section 11.2 or (y)
thirty (30) days after the effective date of any termination by Incyte

 

54

 

***
Confidential material redacted and filed separately with the Commission.

 

pursuant to Section 11.3(a)
or 11.3(b), *** (A) *** and/or (B) ***, in the case of each of clauses (A) and
(B), that ***, but only if the following conditions have been met: (a) *** and
(b) ***.  No later than ten (10) Business
Days before Incyte is required to exercise its option to ***.  If, at the time of Incyte’s request, ***,
then, at Incyte’s request, Pfizer may (but shall not be obligated to) elect to ***,
in which case Incyte shall be required to ***, as the case may be, and Incyte
will also be responsible for all out-of-pocket costs associated with ***;

 

(II)           if
the effective date of termination occurs prior to the Launch of any Pfizer
Product in any country in the Territory, then, following such effective date,
Pfizer shall have no further obligations to Incyte regarding manufacturing
matters, other ***;

 

(III)         if the
effective date of termination occurs after a Pfizer Product has been Launched
in any country in the Territory, then, (a) pursuant to a transition supply
agreement to be negotiated in good faith by the Parties, Pfizer will provide
Incyte with commercial supplies of such Pfizer Product for a period of time to
be specified in the transition supply agreement but in no event to exceed ***
from the effective date of termination; provided that Incyte shall reimburse
Pfizer for all of Pfizer’s fully-loaded costs associated with the transition
supply agreement and with the manufacture of such Pfizer Product, plus a
royalty to be specified in the transition supply agreement if Pfizer’s

 

55

 

***
Confidential material redacted and filed separately with the Commission.

 

manufacture of such Pfizer
Product uses a process covered by Pfizer Proprietary Process Patent Claims (a “Proprietary Manufacturing Process”); (b) if the manufacture
of the Pfizer Product that has been Launched does not involve the use of a
Proprietary Manufacturing Process, then Pfizer shall have no further
obligations to Incyte regarding manufacturing matters after the expiration of
the transition supply agreement, (c) if the manufacture of the Pfizer Product
that has been Launched involves the use of a Proprietary Manufacturing Process,
then prior to the expiration of the transition supply agreement, Pfizer will
notify Incyte as to whether (x) it will continue to supply Incyte with such
Pfizer Product, with Incyte reimbursing Pfizer for all of Pfizer’s fully-loaded
costs associated with the manufacture of such Pfizer Product, plus a royalty to
be specified in a supply agreement that the Parties will negotiate in good
faith or (y) it will grant Incyte a license to the Pfizer Proprietary Process
Patent Claims for a royalty to be specified in a license agreement that the
Parties will negotiate in good faith; if Pfizer decides to grant Incyte a
license pursuant to clause (y), then Incyte agrees to use its best efforts to
effect a transfer of the manufacturing activities for such Pfizer Product to
another supplier as soon as practicable and agrees to spend the resources
reasonably necessary to do so.

 

(IV)         For
purposes of this Section 11.6(b)(ii)(D), the following terms shall have the
following meanings: (x) “***” shall mean *** and (y) “***” shall mean ***.

 

(E)           License
Grant.  Pfizer shall, and shall cause
its Affiliates to, grant to Incyte a non-exclusive, royalty-free, perpetual
license, with the right to sublicense, (i) to *** to the extent necessary to
make, have made, use import, offer for sale or sell CCR2 Antagonists in the
Territory for the sole purpose of making, having made, using, importing, offering
for sale or selling CCR2 Antagonists in the Territory, (ii) *** to the extent
necessary to manufacture CCR2 Antagonists in the Territory for the sole purpose
of making, having made, using, importing, offering for sale or selling CCR2
Antagonists in the Territory; provided that with respect to ***, (x)
Pfizer shall only be required to grant Incyte a license to ***

 

56

 

***
Confidential material redacted and filed separately with the Commission.

 

to the extent permitted
under its agreement with such Third Party and (y) Incyte shall be responsible
for all payments to such Third Party under such Third Party agreement which
become due after the effective date of termination to the extent such payments
relate to the use of *** with any Compound or Pfizer Product, and Incyte shall
execute such documentation reasonably satisfactory to Pfizer to such effect.

 

(iii)         Upon any termination of this Agreement, Pfizer
shall, as promptly as practicable, do the following:

 

(A)          Program Patent Rights.  execute and deliver to Incyte such documents,
agreements and instruments of assignment and transfer as Incyte reasonably
requests in order to establish joint ownership of all rights, title, and
interest in and to Incyte Program Patent Rights and Program Patent Rights.

 

(B)          Prosecution and Maintenance
of Incyte Patent Rights and Program Patent Rights.  cause its Affiliates to, grant to Incyte the first
right but not the obligation to prosecute and maintain all Incyte Patent Rights.  If Incyte prosecutes or maintains any such
Incyte Patent Rights or Program Patent Rights, then Incyte shall be responsible
for all costs associated with such prosecutions and maintenance.  Pursuant to Section 9.2(c), Pfizer, its agents
and attorneys, shall continue to give Incyte at least thirty (30) days to
comment on all prosecutions and related filings of all Program Patent Rights
and shall give due consideration to all Incyte comments, but Pfizer’s decisions
with respect to such prosecutions and related filings shall be final.  Pfizer shall not abandon any Program Patent
Rights without at least ninety (90) days’ prior notice to Incyte.  If Pfizer decides to abandon any Program
Patent Right, then Incyte shall have the option to obtain sole ownership of such
patents and patent applications in Incyte’s name and Incyte shall be
responsible for all costs associated with such prosecution and maintenance.

 

(C)          Security Interests.  comply with the termination provisions
contained in Section 18 of the Security Agreement.

 

The Parties agree that (A)
any failure by Pfizer to provide immaterial data, information, reports,
records, correspondence or other materials to Incyte pursuant to Section 11.6(b)(ii)
or 11.6(b)(iii) shall not be a breach of Pfizer’s obligations; (B) in no event
shall Pfizer be required by any Third Party to retain any obligations or
liabilities relating to the Compounds or the Pfizer Products following any
delivery or transfer pursuant to this Section 11.6(b)(ii) or 11.6(b)(iii), except
to the extent that such obligations or liabilities result from events that
transpired prior to such delivery or transfer; (C) except as otherwise provided
in Sections 11.6(b)(ii) and 11.6(b)(iii), Incyte shall reimburse Pfizer only
for out-of-pocket expenses relating to any delivery or transfer pursuant to
Section 11.6(b)(ii) or 11.6(b)(iii); (D) Incyte hereby releases Pfizer from any
and all liabilities in connection with any delivery or transfer pursuant to
Sections 11.6(b)(ii) and 11.6(b)(iii) *** and shall not hold Pfizer liable for
any inaccuracy or incompleteness of any data, information, reports, records,
correspondence or other materials delivered or transferred pursuant to this
Section 11.6(b)(ii); and (E) Incyte fully indemnifies Pfizer for all Damages
relating to any sale or use of the API or Drug Product resulting from any
Claims by Third Parties except, in the case of

 

57

 

***
Confidential material redacted and filed separately with the Commission.

 

clauses (D) and (E) only, to
the extent that such liabilities or Damages result from the gross negligence or
willful misconduct of Pfizer.

 

(iv)          For
clarity, if either Pfizer terminates this Agreement under Section 11.2 or
Incyte terminates this Agreement under Section 11.3(a) or 11.3(b), and Pfizer
researches, develops, markets, sells, or offers to sell any Compound or Pfizer
Product covered by the Valid Claim of a ***, then such Compound or Pfizer
Product shall be subject to all the financial provisions of Article 8 as if
such Agreement had not been terminated.

 

(v)            Upon
termination by reason of the passing of the Royalty Term Expiration Date with
respect to any Pfizer Product, as of the effective date of such termination and
on a country-by-country basis, the licenses from Incyte to Pfizer under Section
7.1 shall convert to fully-paid, royalty-free, perpetual, non-exclusive
licenses, with the right to sublicense, under the Incyte Technology, Incyte
Confidential Information and Program Technology to make, have made, use,
import, offer for sale and sell such Pfizer Product in such country.

 

11.7        Change of Control.  In the event of any Change of Control, Incyte
shall notify Pfizer promptly, but in no event later than five (5) Business
Days, following approval by Incyte’s board of directors of any transaction that
constitutes a Change of Control.  Pfizer
shall have the right upon sixty (60) days’ notice following any such Change of
Control or following a breach by Incyte of Sections 9.3(b) or 9.3(c), to elect
that any one or more of the following shall be deleted, in whole or in part,
from this Agreement:  Sections 2.1-2.4,
3.1-3.5, 5.2 and 5.3 and the Research Plan. 
If Pfizer makes any election as provided in this Section 11.7 to delete
any Section, each of the Parties hereto will enter into an appropriate and
customary written amendment and no Party shall have any further obligations
with respect to any such deleted Section. For the avoidance of doubt, Pfizer
shall be entitled, in its sole discretion, to make the elections provided for
in this Section 11.7 upon each occurrence of a Change of Control.

 

11.8        Bankruptcy. 
Pfizer may, in addition to any other remedies available to it by Law or
in equity, exercise the rights set forth below in this Section 11.8 by notice to
Incyte, if Incyte shall have become insolvent or bankrupt, or shall have made a
general assignment for the benefit of its creditors, or there shall have been
appointed a trustee or receiver of Incyte or for all or a substantial part of
its property, or any case or proceeding shall have been commenced or other
action taken by or against Incyte in bankruptcy or seeking reorganization,
liquidation, dissolution, winding-up arrangement, composition or readjustment
of its debts or any other relief under any bankruptcy, insolvency,
reorganization or other similar act or law of any jurisdiction now or hereafter
in effect, and any such event shall have continued for ninety (90) days
undismissed, unbonded and undischarged. All rights and licenses granted under
or pursuant to this Agreement by Incyte are, and shall otherwise be deemed to
be, for purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of
rights to “intellectual property” as defined under Section 101(35A) of the U.S.
Bankruptcy Code. The Parties agree that Pfizer, as licensee of such rights
under this Agreement, shall retain and may fully exercise all of its rights and
elections under the U.S. Bankruptcy Code. The Parties further agree that, in
the event of the commencement of a bankruptcy proceeding by or against Incyte
under the U.S. Bankruptcy Code, Pfizer shall be entitled to a complete
duplicate of (or complete access to, as Pfizer deems appropriate) any such
intellectual property and all embodiments of such intellectual property, and
same, if not already in their possession, shall be promptly delivered to Pfizer
(a) upon any

 

58

 

such commencement of a
bankruptcy proceeding upon Pfizer’s written request therefor, unless Incyte
elects to continue to perform all of its obligations under this Agreement or
(b) if not delivered under (a) above, upon the rejection of this Agreement by
or on behalf of Incyte upon written request therefor by Pfizer.

 

12.                               REPRESENTATIONS AND WARRANTIES

 

12.1        General Representations and Warranties.  Each Party represents and warrants to the
other that, as of the date hereof:

 

(a)           it is duly
incorporated and validly existing under the Laws of its state of incorporation,
and has full corporate power and authority to enter into this Agreement and to
carry out the provisions hereof;

 

(b)           it is duly and
validly authorized to execute and deliver this Agreement and to perform its
obligations hereunder, the execution, delivery and performance of this
Agreement have been approved by proper corporate action, it has taken all other
action required by Law, its certificate of incorporation or by-laws or any
agreement to which it is a party or to which it may be subject required to
authorize such execution, delivery and performance (other than compliance with
all applicable requirements of the HSR Act), and the person or persons
executing this Agreement on its behalf has been duly authorized to do so by all
requisite corporate action;

 

(c)           assuming due
authorization, execution and delivery by the other Party, this Agreement is
legally binding upon it and enforceable in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar Laws.  The
execution, delivery and performance of this Agreement by it does not conflict
with any agreement, instrument or understanding, oral or written, to which it
is a party or by which it may be bound, nor violate any Laws or order of any
court or Governmental Authority having jurisdiction over it;

 

(d)           it has not granted, and will not grant
during the Term of the Agreement, any right to any Third Party that
would conflict with the rights granted to the other Party hereunder.  It has (or will have at the time performance
is due) maintained and will maintain and keep in full force and effect all
agreements necessary to perform its obligations hereunder; and

 

(e)           it is aware of
no action, suit or inquiry or investigation instituted by any Governmental
Authority that questions or threatens the validity of this Agreement.

 

12.2        Representations and
Warranties of Incyte.  As of
the date hereof, Incyte hereby represents and warrants to Pfizer as follows:

 

 

(a)           to the
knowledge of Incyte and its Affiliates, there is no reason why the claims that may
issue from the patent applications set forth on Exhibit A would not be
valid and enforceable;

 

(b)           none of Incyte
or any of its Affiliates has received any written notice or claim that Incyte
or any of its Affiliates is infringing any Third Party intellectual property
rights through activities related to Compounds or Incyte Compounds, and to the
knowledge of Incyte and its Affiliates, none of Incyte or any of its Affiliates
has in the past infringed or is currently

 

59

 

infringing
any Third Party intellectual property rights through activities related to
Compounds or Incyte Compounds;

 

(c)           to the
knowledge of Incyte and its Affiliates, no Third Party is infringing any Incyte
Patent Rights;

 

(d)           (i) Incyte is
the legal and beneficial owner of, or has the right to grant to Pfizer the
rights granted herein, to all Incyte Patent Rights and all Incyte Technology, (ii)
no other Person has any right, interest or claim in or to such rights and
Incyte has not entered into any agreement granting any right or interest in or
to (x) such Incyte Patent Rights or (y) except for research licenses for
non-commercial purposes granted to academic or non-profit research entities or
to other Third Parties involved in research for non-commercial purposes, such Incyte
Technology and (iii) all assignments to Incyte of inventorship rights relating
to the Incyte Patent Rights Controlled by Incyte are valid and enforceable;

 

(e)           Exhibit A contains a
complete and correct list as of the date hereof of all patents and patent
applications in the Territory Controlled by Incyte or any of its Affiliates
relating to the manufacture, use, sale, offer for sale or importation of any
Compound or Incyte Compound;

 

(f)            none of the
rights of Incyte or its Affiliates under the Incyte Patent Rights set forth on Exhibit
A have been licensed to Incyte or its Affiliates from any Third Party, and
none of such rights were developed with federal funding from the United States
government or any other Governmental Authority;

 

(g)           each of the
Incyte Patent Rights are free of any lien, encumbrances, charge, security
interest, mortgage or other similar restriction;

 

(h)           Incyte and its
Affiliates have disclosed to Pfizer all material information known to it and
its Affiliates with respect to the safety and efficacy of each of the Compounds
and Incyte Compounds;

 

(i)            Incyte and its
Affiliates have disclosed to Pfizer all material correspondence and contact
information between each of them and the FDA and any other Regulatory
Authorities regarding the Compounds and Incyte Compounds.

 

For
purposes of this Section 12.2, “to the knowledge of Incyte and its Affiliates”
shall mean to the actual knowledge of Incyte and its Affiliates (including the
knowledge of those officers, employees and agents of Incyte and its Affiliates
whose duties include responsibility for the matters specified in this Section
12.2).

 

13.                               INDEMNITIES

 

13.1        Indemnification.

 

(a)           Mutual
Indemnification.  Each Party
hereby agrees to indemnify and hold the other Party and its Representatives
harmless from and against any and all damages or other amounts payable to a
Third Party claimant, as well as any reasonable out-of-pocket attorneys’ fees
and costs of litigation arising out of any such Claim, (collectively, “Damages”) resulting from claims, suits, proceedings or
causes of action (“Claims”)
brought by a Third Party against a

 

60

 

Party
or any of its Representatives based on: (a) breach of any representation, warranty,
covenant or agreement contained in this Agreement by the indemnifying Party or
any of its Representatives, (b) breach of any applicable Law by such
indemnifying Party or any of its Representatives, or (c) gross negligence or
willful misconduct by such indemnifying Party, or any of its Representatives; provided
that the indemnification in this Section 13.1 shall not apply to the extent
that any Damages are the result of (x) any breach of any representation,
warranty, covenant or agreement contained in this Agreement by the indemnified
Party or any of its Representatives or (y) any gross negligence or willful
misconduct of the indemnified Party or any of its Representatives.  “Representatives”
means, with respect to a Party, such Party’s Affiliates, licensees, officers,
directors, employees, consultants, contractors, sublicensees and agents.

 

(b)           Incyte
Indemnification.  Incyte shall
indemnify and hold Pfizer and its Representatives harmless from and against all
Damages resulting from Claims brought by a Third Party based on any actual or
alleged infringement, misappropriation or other violation of a Third Party’s
patent rights resulting from the making, having made, using, importation,
offering for sale, sale, promotion, manufacture, commercialization or
distribution of any Incyte Compound or Incyte Product by or on behalf of Incyte.

 

(c)           Pfizer Indemnification. 
Except as provided in Section 9.6, Pfizer shall indemnify and hold
Incyte and its Representatives harmless from and against all Damages resulting
from Claims brought by a Third Party based on any actual or alleged
infringement, misappropriation or other violation of a Third Party’s patent
rights resulting from the making, having made, using, importation, offering for
sale, sale, promotion, manufacture, commercialization or distribution of any
Compound or Pfizer Product by or on behalf of Pfizer.

 

13.2        Product Liability
Indemnification.

 

(a)           Pfizer hereby
agrees to indemnify and hold Incyte and its Representatives harmless from and
against any Damages resulting from Claims brought by a Third Party against
Incyte or any of its Representatives resulting from the sale of any Compound or
Pfizer Product by Pfizer or any of its Representatives, or the use of any
Compound or Pfizer Product, except to the extent that such Damages are covered
by Incyte’s indemnification of Pfizer pursuant to Section 13.1.

 

(b)           Incyte hereby
agrees to indemnify and hold Pfizer and its Representatives harmless from and
against any Damages resulting from Claims brought by a Third Party against
Pfizer or any of its Representatives resulting from the sale of any Incyte
Compound or Incyte Product by Incyte or any of its Representatives, or the use
of any Incyte Compound or Incyte Product, except to the extent that such
Damages are covered by Pfizer’s indemnification of Incyte pursuant to Section
13.1.

 

13.3        Conditions to Indemnification.

 

(a)           In the event
that any Third Party asserts a claim with respect to any matter for which a
Party (the “Indemnified Party”) is entitled to
indemnification under Section 9.7, 13.1, or 13.2 (a “Third Party
Claim”), then the Indemnified Party shall promptly notify the Party
obligated to indemnify the Indemnified Party (the “Indemnifying
Party”) thereof; provided, however, that no delay on
the part of the Indemnified Party in notifying the

 

61

 

Indemnifying
Party shall relieve the Indemnifying Party from any obligation hereunder unless
(and then only to the extent that) the Indemnifying Party is prejudiced
thereby.

 

(b)           The
Indemnifying Party shall have the right, exercisable by notice to the
Indemnified Party within ten (10) Business Days of receipt of notice from the
Indemnified Party of the commencement of or assertion of any Third Party Claim,
to assume direction and control of the defense, litigation, settlement, appeal
or other disposition of the Third Party Claim (including the right to settle
the claim solely for monetary consideration) with counsel selected by the Indemnifying Party and reasonably acceptable
to the Indemnified Party; provided that (i) the Indemnifying Party has
sufficient financial resources, in the reasonable judgment of the Indemnified
Party, to satisfy the amount of any adverse monetary judgment that is sought,
(ii) the Third Party Claim solely seeks monetary damages and (iii) the
Indemnifying Party expressly agrees in writing that as between the Indemnifying
Party and the Indemnified Party, the Indemnifying Party shall be solely
obligated to satisfy and discharge the Third Party Claim in full (the
conditions set forth in clauses (i), (ii) and (iii) above are collectively
referred to as the “Litigation Conditions”).

 

(c)           Within ten (10)
Business Days after the Indemnifying Party has given notice to the Indemnified
Party of its intended exercise of its right to defend a Third Party Claim, the
Indemnified Party shall give notice to the Indemnifying Party of any objection
thereto based upon the Litigation Conditions. 
If the Indemnified Party reasonably so objects, the Indemnified Party
shall continue to defend the Third Party Claim, at the expense of the
Indemnifying Party, until such time as such objection is withdrawn.  If no such notice is given, or if any such
objection is withdrawn, the Indemnifying Party shall be entitled, at its sole
cost and expense, to assume and conduct such defense, with counsel selected by
the Indemnifying Party.  During such time
as the Indemnifying Party is controlling the defense of such Third Party Claim,
the Indemnified Party shall cooperate, and cause its Affiliates and agents to
cooperate upon request of the Indemnifying Party in the defense or prosecution
of the Third Party Claim, including by furnishing such records, information and
testimony and attending such conferences, discovery proceedings, hearings,
trials or appeals as may reasonably be requested by the Indemnifying
Party.  In the event that the
Indemnifying Party does not satisfy the Litigation Conditions or does not
notify the Indemnified Party of the Indemnifying Party’s intent to defend any
Third Party Claim within ten (10) Business Days after notice thereof, the
Indemnified Party may (without further notice to the Indemnifying Party)
undertake the defense thereof with counsel of its choice and at the
Indemnifying Party’s reasonable expense (including reasonable, out-of-pocket
attorneys’ fees and costs and expenses of enforcement or defense).  The Indemnifying Party or the Indemnified
Party, as the case may be, shall have the right to join in (including the right
to conduct discovery, interview and examine witnesses and participate in all
settlement conferences), but not control, at its own expense, the defense of
any Third Party Claim that the other Party is defending as provided in this
Agreement.

 

(d)           The
Indemnifying Party shall not, without the prior consent of the Indemnified
Party, enter into any compromise or settlement which commits the Indemnified
Party to take or forbear to take any action.

 

(e)           In no event may
an Indemnified Party settle or compromise any Third Party Claim for which
it/he/she intends to seek indemnification from the Indemnifying Party hereunder
without the prior consent of the Indemnifying Party, or the indemnification
provided under such Section 13.1, 13.2 or 13.3 as to such Third Party Claim
shall be null and void.

 

62

 

13.4        Exclusion of Damages.  IN NO EVENT SHALL EITHER PARTY OR ITS
AFFILIATES BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL, SPECIAL,
PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES, WHETHER BASED UPON A CLAIM OR
ACTION OF CONTRACT, WARRANTY, NEGLIGENCE, STRICT LIABILITY OR OTHER TORT, OR
OTHERWISE, ARISING OUT OF THIS AGREEMENT, (A) UNLESS SUCH DAMAGES ARE DUE TO
THE WILLFUL MISCONDUCT OR INTENTIONAL OR WILLFUL BREACH IN BAD FAITH OF ANY
REPRESENTATION, WARRANTY, COVENANT OR AGREEMENT BY THE LIABLE PARTY OR ITS
AFFILIATES OF THIS AGREEMENT OR (B) EXCEPT TO THE EXTENT ANY SUCH DAMAGES ARE
PAID TO A THIRD PARTY AS A PART OF A THIRD PARTY CLAIM.  EXCEPT AS EXPRESSLY PROVIDED IN THIS
AGREEMENT, INDEMNIFICATION PURSUANT TO THIS ARTICLE 13 SHALL BE THE SOLE AND
EXCLUSIVE REMEDY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER LEGAL THEORY)
AVAILABLE TO INCYTE OR PFIZER FOR ANY MATTER COVERED THEREIN.

 

14.                               DISPUTE RESOLUTION

 

14.1        Disputes.  The Parties recognize that disputes as to
certain matters may from time to time arise during the Term that relate to
either Party’s rights and/or obligations hereunder.  It is the objective of the Parties to
facilitate the resolution of disputes arising under this Agreement in an
expedient manner by mutual cooperation and without resort to litigation.  To accomplish this objective, the Parties
agree that, in the event of any disputes, controversies or differences that may
arise between the Parties, out of or in relation to or in connection with this
Agreement, or for the breach thereof, upon the request of either Party, the
Parties agree to meet and discuss in good faith a possible resolution
thereof.  If the matter is not resolved within
sixty (60) days following the request for discussions, then, other than with
respect to disputes over reports, accounting or payments that are subject to
Section 8.10, either Party may commence an action in accordance with Section
14.2 below. Notwithstanding anything to the contrary in Section 14.1 or 14.2,
each Party shall be entitled to seek injunctive relief and specific performance
in any court in the world without waiting for the expiration of any such sixty
(60)-day period.

 

14.2        Governing
Law; Jurisdiction.  Resolution of all disputes arising out of or
related to this Agreement or the performance, enforcement, breach or
termination of this Agreement and any remedies relating thereto, shall be
governed by and construed under the substantive laws of the State of New York,
without regard to conflicts of law rules that would provide for application of
the law of a jurisdiction outside New York. 
If such controversy or claim cannot be resolved by means of negotiations
as described in Section 14.1, then such controversy or claim shall be resolved
by the United States District Court for the
Southern District of New York, a New York state court sitting in New York, New
York, the United States District Court for the District of Delaware, or a
Delaware state court sitting in Wilmington, Delaware (collectively, the “Courts”).  Each Party
(a) irrevocably submits to the exclusive jurisdiction in the Courts, for
purposes of any action, suit or other proceeding relating to or arising out of
this Agreement, and (b) agrees not to raise any objection at any time to the
laying or maintaining of the venue of any such action, suit or proceeding in
any of the Courts, irrevocably waives any claim that such action, suit or other
proceeding has been brought in an inconvenient forum and further irrevocably
waives the right to object, with respect to such action, suit or other
proceeding, that such Court does not have any jurisdiction over such
Party.  Incyte hereby irrevocably
designates, appoints and empowers Corporation Service Company, located at 2711
Centerville Road, Suite

 

63

 

400, Wilmington, DE 19808, as its true and lawful agent
and attorney in fact in its name, place and stead to receive and accept on its
behalf service of process in any action, suit or proceeding in the Courts of
New York with respect to matters as to which it has submitted to jurisdiction
as set forth in the immediately preceding sentence.

 

15.                               MISCELLANEOUS

 

15.1        Entire Agreement; Amendment.  This Agreement, including the exhibits
attached hereto, sets forth the complete, final and exclusive agreement and all
the covenants, promises, agreements, warranties, representations, conditions
and understandings between the Parties hereto and supersedes and terminates all
prior agreements and understandings between the Parties, including the
Confidentiality Agreement between the Parties, dated June 21, 2004, as amended,
and the Common Interest and Joint Purpose Agreement between the Parties, dated
April 29, 2005.  There are no covenants,
promises, agreements, warranties, representations, conditions or
understandings, either oral or written, between the Parties other than as are
set forth herein and therein.  No
subsequent alteration, amendment, change or addition to this Agreement shall be
binding upon the Parties unless reduced to writing and signed by an authorized
officer of each Party.

 

15.2        Force Majeure.  Both Parties shall be excused from the
performance of their obligations under this Agreement to the extent that such
performance is prevented by force majeure and the nonperforming Party promptly
provides notice of the prevention to the other Party.  Such excuse shall be continued so long as the
condition constituting force majeure continues and the nonperforming Party
takes reasonable efforts to remove the condition.  For purposes of this Agreement, force majeure
shall include conditions beyond the control of the Parties, including an act of
God, voluntary or involuntary compliance with any regulation, law or order of
any government, war, civil commotion, labor strike or lock-out, epidemic,
failure or default of public utilities or common carriers, destruction of
production facilities or materials by fire, earthquake, storm or like
catastrophe.  Notwithstanding the
foregoing, any payment due and owing hereunder shall not be delayed by the
payer because of a force majeure affecting the payer, unless such force majeure
specifically precludes the payment process.

 

15.3        Notices.  Any notices, approvals, or consents required
or permitted to be given under this Agreement shall be in writing, shall
specifically refer to this Agreement and shall be deemed to have been
sufficiently given for all purposes if mailed by first class certified or
registered mail, postage prepaid, internationally recognized overnight courier
or personally delivered.  Unless
otherwise specified in writing, the mailing addresses of the Parties shall be
as described below:

 

64

 

	
  For Incyte:

  	
   

  	
  Incyte
  Corporation

  
	
   

  	
   

  	
  Experimental
  Station

  
	
   

  	
   

  	
  Route 141
  & Henry Clay Road

  
	
   

  	
   

  	
  Building
  E336

  
	
   

  	
   

  	
  Wilmington,
  DE 19880

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:
  Chief Business Officer

  
	
   

  	
   

  	
  Facsimile
  No.: (302) 425-2707

  
	
   

  	
   

  	
   

  
	
  with a copy
  to:

  	
   

  	
  Attention:
  General Counsel

  
	
   

  	
   

  	
  Facsimile No.: (302) 425-2722

  
	
   

  	
   

  	
   

  
	
  For Pfizer:

  	
   

  	
  Pfizer Inc.

  
	
   

  	
   

  	
  235 East 42nd Street

  
	
   

  	
   

  	
  New York, New York 10017

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention: President, Pfizer Human Health

  
	
   

  	
   

  	
  Facsimile No.: 212-808-8652

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Attention: Executive Vice President and General Counsel

  
	
   

  	
   

  	
  Facsimile No.: 212-808-8924

  

 

Notices
hereunder shall be deemed to be effective (a) upon receipt if personally
delivered, (b) on the tenth (10th) Business Day following the date
of mailing if sent by first class certified or registered mail, and (c) on the
second (2nd) Business Day following the date of transmission or delivery to the
overnight courier if sent by overnight courier. A Party may change its address
listed above by sending notice to the other Party in accordance with this
Section 14.3.

 

15.4        United States Dollars.  References in this Agreement to “Dollars”
or “$”
shall mean the legal tender of the United States of America

 

15.5        Assignment.  Neither Party may assign or transfer this
Agreement or any rights or obligations hereunder without the prior consent of
the other; provided, however, that a Party may make such an
assignment without the other Party’s consent (a) to an Affiliate, so long as
such Party shall remain jointly and severally liable with such Affiliate with
respect to all obligations so assigned, (b) to a Third Party in conjunction
with a merger or consolidation involving such Party and the Third Party or (c)
to a Third Party to whom a Party is required to, or reasonably believes that it
will be required to, divest any Pfizer Product or Incyte Product, as the case
may be, to the extent necessary to comply with Law or the order of any
Governmental Authority as a result of such transaction; provided that
any such assignment by a Party is subject to the compliance by such Party with
Sections 9.3(b) and (c).  Any assignment
or attempted assignment by either Party in violation of the terms of this
Section 15.5 shall be null and void and of no legal effect.

 

15.6        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.

 

65

 

15.7        Further Actions.  Each Party agrees to execute, acknowledge and
deliver such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.

 

15.8        Severability.  If any one or more of the provisions of this
Agreement is held to be invalid or unenforceable by any court of competent
jurisdiction from which no appeal can be or is taken, the provision shall be
considered severed from this Agreement and shall not serve to invalidate any
remaining provisions hereof.  The Parties
shall make a good faith effort to replace any invalid or unenforceable
provision with a valid and enforceable one such that the objectives
contemplated by the Parties when entering into this Agreement may be realized.

 

15.9        Headings.  The headings for each article and section in
this Agreement have been inserted for convenience of reference only and are not
intended to limit or expand on the meaning of the language contained in the
particular article or section.

 

15.10      No Waiver.  Any delay in enforcing a Party’s rights under
this Agreement or any waiver as to a particular default or other matter shall
not constitute a waiver of such Party’s rights to the future enforcement of its
rights under this Agreement, excepting only as to an express written and signed
waiver as to a particular matter for a particular period of time.

 

15.11      Non-Solicitation of Employees.  During the term of this Agreement, neither
Party shall, directly or indirectly, recruit or solicit any employee of the
other Party with whom such Party has come into contact or interacted for the
purposes of performing this Agreement, without the prior consent of the other
Party, except pursuant to general solicitations not targeted at such employees.

 

15.12      Third-Party Beneficiaries.  None of the provisions of this Agreement
shall be for the benefit of or enforceable by any Third Party, including any
creditor of either Party. No such Third Party shall obtain any right under any
provision of this Agreement or shall by reasons of any such provision make any
claim in respect of any debt, liability or obligation (or otherwise) against
either Party.

 

15.13      Binding Effect.  This Agreement shall be binding upon and
inure to the benefit of the Parties hereto and their respective heirs,
successors and permitted assigns.

 

REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

 

66

 

IN WITNESS WHEREOF, the
Parties have executed this Agreement in duplicate originals by their proper
officers as of the date and year first above written.

 

 

	
  INCYTE CORPORATION

  	
  PFIZER INC.

  
	
   

  	
   

  
	
  BY:

  	
  /S/ PAUL A FRIEDMAN

  	
   

  	
  BY:

  	
  /S/ LISA RICCIARDI

  	
   

  
	
   

  	
   

  
	
  NAME:

  	
  PAUL A. FRIEDMAN

  	
   

  	
  NAME:

  	
  LISA RICCIARDI

  	
   

  
	
   

  	
   

  
	
  TITLE:

  	
  PRESIDENT & CEO

  	
   

  	
  TITLE:

  	
  SR. VICE PRESIDENT

  	
   

  

 

67

 

***
Confidential material redacted and filed separately with the Commission.

 

 

EXHIBIT A

 

***

 

68

 

***
Confidential material redacted and filed separately with the Commission.

 

EXHIBIT B

 

Research Plan

 

***

 

78

 

***
Confidential material redacted and filed separately with the Commission.

 

Exhibit B-1

 

Testing Activities at Incyte

 

***

 

82

 

***
Confidential material redacted and filed separately with the Commission.

 

EXHIBIT C

 

***

 

83

 

***
Confidential material redacted and filed separately with the Commission.

 

ATTACHMENT C-1

 

***

 

94

 

***
Confidential material redacted and filed separately with the Commission.

 

 

EXHIBIT
D-1

 

***

 

102

 

***
Confidential material redacted and filed separately with the Commission.

 

EXHIBIT
D-2

 

***

 

103

 

*** Confidential material redacted and filed separately with the
Commission.

 

EXHIBIT D-3

 

***

 

104

 

*** Confidential material redacted and filed separately with the
Commission.

 

SCHEDULE 1.7(a)

 

***

 

105

 

*** Confidential material redacted and filed separately with the
Commission.

 

SCHEDULE 1.7(b)

 

***

 

107

 

*** Confidential material redacted and filed separately with the
Commission.

 

SCHEDULE 1.7(c)

 

***

 

109

 

*** Confidential material redacted and filed separately with the
Commission.

 

SCHEDULE 1.27

 

***

 

110

 

*** Confidential material redacted and filed separately with the
Commission.

 

SCHEDULE 1.28

 

***

 

111

 

*** Confidential material redacted and filed separately with the
Commission.

 

SCHEDULE 1.29

 

***

 

112

 

*** Confidential material redacted and filed separately with the
Commission.

 

SCHEDULE 1.30

 

***

 

113

 

*** Confidential material redacted and filed separately with the
Commission.

 

SCHEDULE 1.31

 

***

 

114

 

*** Confidential material redacted and filed separately with the
Commission.

 

SCHEDULE 1.32

 

***

 

115

 

*** Confidential material redacted and filed separately with the
Commission.

 

SCHEDULE 1.33

 

***

 

116

 

*** Confidential material redacted and filed separately with the
Commission.

 

SCHEDULE 1.34

 

***

 

117

 

*** Confidential material redacted and filed separately with the
Commission.

 

SCHEDULE 1.35

 

***

 

118

 

*** Confidential material redacted and filed separately with the
Commission.

 

SCHEDULE 1.75

 

***

 

119

 

*** Confidential material redacted and filed separately with the
Commission.

 

SCHEDULE 6.7(a)

 

***

 

120

 

*** Confidential material redacted and filed separately with the
Commission.

 

SCHEDULE 6.7(b)

 

***

 

121

 

SCHEDULE 10.3(a)

 

Press Release

 

	
  For
  immediate release:

  	
   

  	
  Contacts:

  	
  Paul
  Fitzhenry

  
	
  November
  21, 2005

  	
   

  	
   

  	
  Pfizer
  Inc

  
	
   

  	
   

  	
   

  	
  (212)
  733-4637

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Pam Murphy

  
	
   

  	
   

  	
   

  	
  Incyte Corporation

  
	
   

  	
   

  	
   

  	
  (302) 498 6944

  

 

Pfizer and Incyte Enter Collaborative
Research and License Agreement for the Development and Commercialization of
CCR2 Antagonists

 

Pfizer gains
worldwide development and commercialization rights across a broad range of
indications

 

Incyte may receive
up to $803 million in payments and retains rights in multiple sclerosis and an
additional undisclosed indication

 

New York, NY, and Wilmington, DE – November 21, 2005
Pfizer Inc., (NYSE: PFE) and Incyte Corporation (NASDAQ: INCY) announced today
that the two companies have entered into a global collaborative research and
license agreement for the development, manufacture and marketing of novel oral
CCR2 antagonists.

 

Under the agreement:

 

•                  Pfizer
gains exclusive worldwide development and commercialization rights to Incyte’s
portfolio of CCR2 antagonist compounds, the most advanced of which is currently
in Phase IIa studies in rheumatoid arthritis and insulin-resistant obese
patients. Pfizer’s rights extend to the full scope of potential indications,
with the exception of multiple sclerosis and one other undisclosed indication,
where Incyte retains exclusive worldwide rights, along with certain compounds. Incyte
will not have obligations to Pfizer on pre-clinical development candidates it
selects for pursuit in these indications.

 

•                  Incyte
will receive an upfront payment of $40 million and will be eligible to receive
additional milestone payments of up to $743 million for the successful
development and commercialization of CCR2 antagonists in multiple indications,
as well as royalties on worldwide sales.

 

•                  Pfizer
will purchase $20 million in convertible subordinated notes, with $10 million
to be issued within 20 days after the effective date of the agreement and
another $10 million to be issued after Incyte files an Investigational New Drug
Application in a retained Incyte indication. The notes will bear no interest
and will be convertible into Incyte common stock at a premium.

 

122

 

•                  Pfizer
will also provide research funding to Incyte to support the continued expansion
of the CCR2 compound portfolio.

 

The agreement is subject to antitrust review and approval, and other
standard closing conditions.

 

“This transaction is a further step in our strategy to augment Pfizer’s
internal research and development efforts with high-potential, externally
sourced product candidates and technologies,” said Martin Mackay, Pfizer Senior
Vice President Worldwide Research and Technology. “We are excited about Incyte’s
CCR2 antagonist program and its potential use in treating a range of chronic
diseases with significant unmet medical need.”

 

Paul A. Friedman, M.D., President and CEO of Incyte, stated: “Our CCR2
antagonist program has the potential to generate multiple products in a variety
of major indications, and Pfizer, with its unique breadth of capabilities, is
ideally positioned to maximize the value of the program to patients. The deal
structure, which provides for us to retain certain compounds for our
independent pursuit in two potentially high-value specialty indications,
supports our efforts to build a leading drug discovery and development company.
We look forward to working with Pfizer to realize the full potential of our
first internally-developed program.”

 

About CCR2 Antagonism

 

The chemokine receptor CCR2 has a central role in the establishment and
maintenance of chronic inflammatory processes. CCR2 and its primary ligand,
MCP-1, represent a critical signaling pathway for the recruitment of peripheral
blood monocytes to sites of immune-mediated inflammation, where they become
inflammatory macrophages. Macrophages are among the predominant cell types
found at sites of chronic inflammation, and clinical observations show a close
correlation between lower macrophage burden, reduced severity of disease, and
improved outcomes in rheumatoid arthritis. There is a growing body of evidence
that the presence of inflammatory macrophages contributes to the pathogenesis
of numerous other disorders, and positive effects of blockade of the CCR2/MCP-1
axis have been shown in animal models of rheumatoid arthritis, multiple
sclerosis, diabetes, atherosclerosis, neuropathic pain and inflammatory bowel
disease.

 

About Pfizer

 

Pfizer Inc discovers, develops, manufactures
and markets leading prescription medicines, for humans and animals, and many of
the world’s best-known consumer brands.

 

About
Incyte

 

Incyte Corporation is a Wilmington, Delaware-based drug discovery and
development company with a growing pipeline of oral compounds to treat HIV,
inflammation, cancer and diabetes. The company’s most advanced product
candidate, dexelvucitabine, DFC (formerly Reverset) is an oral, once-a-day
therapy in Phase IIb clinical development to treat patients with HIV infections.
The company’s lead internal compounds include INCB3284, a proprietary oral CCR2
antagonist that is in Phase II development for a number of inflammation-driven
diseases, and INCB7839, a proprietary oral sheddase inhibitor that is in 

 

123

 

Phase I development as a potential treatment for cancer. Incyte has
several other early drug discovery programs underway in the areas of cancer,
inflammation, diabetes and HIV.

 

Forward Looking Statements

 

PFIZER DISCLOSURE NOTICE: The information contained in this release is
as of November 21, 2005. Pfizer assumes no obligation to update any
forward-looking statements contained in this release as the result of new
information or future events or developments.

 

This release contains forward-looking information about an agreement
between Pfizer Inc. and Incyte Corporation and about possible product
candidates that may be developed from Incyte’s portfolio of compounds and the
potential benefits of such product candidates. This information involves
substantial risks and uncertainties including, among other things, the
satisfaction of conditions to closing the agreement; the uncertainties inherent
in research and development activities; decisions by regulatory authorities
regarding whether and when to approve any drug applications for product
candidates that may be developed from Incyte’s portfolio of compounds as well
as their decisions regarding labeling and other matters that could affect the
commercial potential of any such product candidates; and competitive
developments.

 

A further list and description of risks and uncertainties can be found
in Pfizer’s Annual Report on Form 10-K for the fiscal year ended December 31,
2004 and in its reports on Form 10-Q and Form 8-K.

 

INCYTE DISCLOSURE NOTICE: Except for the historical information
contained herein, the matters set forth in this press release, including
statements with respect to the purchase of convertible subordinated notes, the
potential indications and benefits of CCR2 antagonist compounds, and the
potential benefits from and payments under the agreement, are all
forward-looking statements within the meaning of the “safe harbor” provisions of
the Private Securities Litigation Reform Act of 1995. These forward-looking
statements are subject to risks and uncertainties that may cause actual results
to differ materially, including the satisfaction of conditions to closing the
agreement and the sale of the convertible subordinated notes, the high degree
of risk associated with drug development and clinical trials, results of
further research and development, the impact of competition and of
technological advances, and other risks detailed from time to time in Incyte’s
filings with the Securities Exchange Commission, including its Quarterly Report
on Form 10-Q for the quarter ended September 30, 2005. Incyte disclaims any
intent or obligation to update these forward-looking statements.

 

124

 

*** Confidential material redacted and filed separately with the
Commission.

 

SCHEDULE 10.3(b)

 

Permitted Disclosures

 

•                  Signing of this
Agreement

•                  Effective Date
of this Agreement and receipt of payment pursuant to Section 8.1

•                  Achievement of
Event Milestones set forth in Section 8.2(a)

•                  Achievement of
Commercial Milestones set forth in Section 8.3

•                  ***

•                  If a Pfizer
Indication becomes a Reverted Indication pursuant to Section 11.4 and
reversion, if any, of any Compound for such Reverted Indication

•                  Termination of
the Agreement pursuant to Section 11.2 or 11.3

 

125

 

*** Confidential material redacted and filed separately with the
Commission.

 

SCHEDULE 10.4

 

***

 

126

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00098-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00098-of-00352.parquet"}], [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00098-of-00352.parquet"}]]