Document:

Exhibit 4.2(j)

 

“CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL
PORTIONS OF THIS DOCUMENT HAVE BEEN OMITTED AND HAVE BEEN SEPARATELY FILED WITH
THE COMMISSION.  CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.”

 

	
  DATE

  	
   

  	
  14 March 2003

  

 

AUTOGEN LIMITED

 

and

 

MERCK SANTE s.a.s

 

 

COMMERCIALISATION
LICENCE

(Field of
Diabetes and Obesity)

“AGT 121”

 

 

 

TABLE OF CONTENTS

 

	
  1.
  INTERPRETATION

  	
   

  	
   

  
	
  1.1
  Definitions

  	
   

  	
   

  
	
  1.2
  Construction

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  2.
  GRANT OF LICENCE

  	
   

  	
   

  
	
  2.1
  Grant of licence

  	
   

  	
   

  
	
  2.2
  Autogen’s Rights

  	
   

  	
   

  
	
  2.3
  Scope of exclusive licence

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  3.
  ROYALTIES

  	
   

  	
   

  
	
  3.1
  Royalty Obligation

  	
   

  	
   

  
	
  3.2
  Royalty on unprotected products

  	
   

  	
   

  
	
  3.3
  Multiple royalties

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  4.
  REPORTS

  	
   

  	
   

  
	
  4.1
  Reporting requirements

  	
   

  	
   

  
	
  4.2
  Products which don’t attract royalty

  	
   

  	
   

  
	
  4.3
  Time of Sale

  	
   

  	
   

  
	
  4.4
  Foreign currencies

  	
   

  	
   

  
	
  4.5
  Payment mechanics

  	
   

  	
   

  
	
  4.6
  Merck to keep accounts and records

  	
   

  	
   

  
	
  4.7
  Inspection of accounts

  	
   

  	
   

  
	
  4.8
  Settlement of discrepancies

  	
   

  	
   

  
	
  4.9
  Cost of audit

  	
   

  	
   

  
	
  4.10
  Advance royalty

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  5.
  SUB-LICENSING

  	
   

  	
   

  
	
  5.1
  Scope of sub-licence provisions

  	
   

  	
   

  
	
  5.2
  Right to sub-Licence

  	
   

  	
   

  
	
  5.3
  Sub-licenses to Affiliates

  	
   

  	
   

  
	
  5.4
  Sub-licences - non-Affiliate

  	
   

  	
   

  
	
  5.5
  Calculation of royalty for all Sub-licensees

  	
   

  	
   

  
	
  5.6
  Royalty reporting

  	
   

  	
   

  
	
  5.7
  Enforcement of Sub-licences

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  6.
  COMMERCIALISATION

  	
   

  	
   

  
	
  6.1
  General reporting

  	
   

  	
   

  
	
  6.2
  Decision-making

  	
   

  	
   

  
	
  6.3
  Registration of Product

  	
   

  	
   

  
	
  6.4
  Ceasing to pursue registration

  	
   

  	
   

  
	
  6.5
  Refusal of Registration

  	
   

  	
   

  
	
  6.6
  Maintenance of Registrations

  	
   

  	
   

  
	
  6.7
  Marketing of Products

  	
   

  	
   

  
	
  6.8
  Commencement of Marketing

  	
   

  	
   

  
	
  6.9
  General reports

  	
   

  	
   

  
	
  6.10
  Marketing reports

  	
   

  	
   

  
	
  6.11
  Restriction on clinical trials

  	
   

  	
   

  

 

 

	
  7.
  CONFIDENTIAL INFORMATION

  	
   

  	
   

  
	
  7.1
  Obligations to Autogen

  	
   

  	
   

  
	
  7.2
  Obligations to Merck

  	
   

  	
   

  
	
  7.3
  Exceptions to obligations

  	
   

  	
   

  
	
  7.4 Rights in Know-How

  	
   

  	
   

  
	
  7.5 Term of obligation

  	
   

  	
   

  
	
  7.6 Permitted disclosures

  	
   

  	
   

  
	
  7.7 Delivery-up of Know-How

  	
   

  	
   

  
	
  7.8 Terms of this Agreement

  	
   

  	
   

  
	
  7.9 Public Announcement

  	
   

  	
   

  
	
  7.10 Continuous disclosure obligations

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  8. LIABILITY

  	
   

  	
   

  
	
  8.1 Responsibility for Products

  	
   

  	
   

  
	
  8.2 Autogen not liable

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  9. INDEMNITIES

  	
   

  	
   

  
	
  9.1 Indemnity by Merck

  	
   

  	
   

  
	
  9.2 Indemnity by Autogen

  	
   

  	
   

  
	
  9.3 Notification regarding indemnity

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  10. INSURANCE

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  11. TERM AND TERMINATION

  	
   

  	
   

  
	
  11.1 Term

  	
   

  	
   

  
	
  11.2 Termination for breach

  	
   

  	
   

  
	
  11.3 Termination in default of payment

  	
   

  	
   

  
	
  11.4 Grounds for immediate termination

  	
   

  	
   

  
	
  11.5 Reconstruction exception

  	
   

  	
   

  
	
  11.6 Termination by Autogen

  	
   

  	
   

  
	
  11.7 Termination by Merck

  	
   

  	
   

  
	
  11.8 Termination to be without prejudice

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  12. OBLIGATIONS AND RIGHTS ON TERMINATION

  	
   

  	
   

  
	
  12.1 Obligations of Merck

  	
   

  	
   

  
	
  12.2 Obligations of Autogen

  	
   

  	
   

  
	
  12.3 Limitation of Merck’s rights

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  13. WARRANTIES

  	
   

  	
   

  
	
  13.1 General warranties

  	
   

  	
   

  
	
  13.2 Specific warranty re Licensed Patents

  	
   

  	
   

  
	
  13.3 Warranties by Merck

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  14. PROTECTION OF LICENSED PATENTS

  	
   

  	
   

  
	
  14.1 Maintenance of Licensed Patents

  	
   

  	
   

  
	
  14.2 Reporting infringements

  	
   

  	
   

  
	
  14.3 Conduct of proceedings regarding Rights

  	
   

  	
   

  
	
  14.4 Royalties

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  15. INFRINGEMENT OF OTHERS RIGHTS

  	
   

  	
   

  
	
  15.1 Notification of action

  	
   

  	
   

  
	
  15.2 Autogen action

  	
   

  	
   

  

 

ii

 

	
  15.3 Merck action

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  16. CONSTRUCTION OF PATENTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  17. FORCE MAJEURE

  	
   

  	
   

  
	
  17.1 Party not liable

  	
   

  	
   

  
	
  17.2 Notice of Force Majeure

  	
   

  	
   

  
	
  17.3 Termination in case of Force Majeure

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  18. ARBITRATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  19. NOTICES

  	
   

  	
   

  
	
  19.1 Form of Notice

  	
   

  	
   

  
	
  19.2 Manner of Service

  	
   

  	
   

  
	
  19.3 Address for Service

  	
   

  	
   

  
	
  19.4 Time of Service

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  20. MISCELLANEOUS

  	
   

  	
   

  
	
  20.1 Time of essence

  	
   

  	
   

  
	
  20.2 Severance

  	
   

  	
   

  
	
  20.3 Waiver

  	
   

  	
   

  
	
  20.4 Relationship of parties

  	
   

  	
   

  
	
  20.5 Injunctive relief

  	
   

  	
   

  
	
  20.6 Proper law

  	
   

  	
   

  
	
  20.7 Rule of construction

  	
   

  	
   

  
	
  20.8 Variation

  	
   

  	
   

  
	
  20.9 Assignment

  	
   

  	
   

  
	
  20.10 Further documents

  	
   

  	
   

  
	
  20.11 Affiliates’ actions

  	
   

  	
   

  
	
  20.12 Costs and Taxes

  	
   

  	
   

  
	
  20.13 Interest on overdue amounts

  	
   

  	
   

  
	
  20.14 Withholding taxes

  	
   

  	
   

  
	
  20.15 Counterparts

  	
   

  	
   

  
	
  20.16 Registration of agreement

  	
   

  	
   

  
	
  20.17 Not obliged to act contrary to law

  	
   

  	
   

  
	
  20.18 Statutory rights not limited

  	
   

  	
   

  
	
  20.19 Consents

  	
   

  	
   

  
	
  20.20 Entire agreement

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 1

  	
  Autogen
  Patents

  	
   

  	
   

  
	
  Schedule 2

  	
  Stage
  1 Patents

  	
   

  	
   

  

 

iii

 

	
  THIS AGREEMENT is made on

  	
   

  	
  14 March 2003

  

 

BETWEEN

 

Autogen Limited ACN 074 636 847

of PO Box 1069, Grovedale, Victoria, Australia

(“Autogen”)

 

AND

 

Merck Sante s.a.s

of 37 rue Saint Romain, 69379 Lyon, CEDEX 08, France

 

(“Merck”)

 

RECITALS:

 

A.           Merck has exercised its
option to take a licence in respect of certain intellectual property and to
conduct further research and development of the same with a view to the development
and commercialisation of certain products.

 

B.            Autogen has agreed to
grant this licence to certain intellectual property on the terms and conditions
set out.

 

C.            Merck has agreed to pay to
Autogen certain payments as and by way of royalty in respect of the use by it
of certain intellectual property licensed to it by Autogen and either used by
it directly in the commercialisation of certain products or used by it in the
research and development which has led to those products.

 

OPERATIVE PROVISIONS:

 

1.            INTERPRETATION

 

1.1          Definitions

 

In this agreement the following expressions
have the following meanings:

 

“Affiliate”
means with respect to a party, any person which directly or indirectly
Controls, or is Controlled by, or is under common Control with, such party.

 

“Arms Length”
means in relation to a transaction or dealing, a transaction or dealing which
might reasonably be expected to operate or apply between independent
enterprises dealing wholly independently with one another and where neither bears
the other any special duty or obligation and no special relationship exists
between them and where the only consideration is cash.

 

 

“Autogen Know-How”
means Know-How owned by or licensed to Autogen in relation to the Autogen
Patents in relation to the AGT 121 Gene Product.

 

“Autogen Patents”
the patents and patent applications owned by or licensed to Autogen related to
the Licensed Field including but not limited to those referred to in Schedule 1 and including:

 

(i)            any re-issue, renewal or extension of such a patent or patent
application (whether in whole or in part) and any patent of addition thereto;
and

 

(ii)           any supplementary protection certificate or other form of extension
based on or arising from such patents or patent applications.

 

“Base Rate”
means the PIBOR rate published as such by the French Association of Banks
(Association Francaise de Banque (AFB)) or EURIBOR rate applicable on 1 January 2002
or at any later date, should such date be postponed for any reason and
published as such by the European Federation of Banks (Federation Europeenne de
Banque (FEB)) plus in either case the amount of 1.5% per annum.

 

“AGT 121 Gene Product”
means the novel gene the subject of the Autogen Patents, and any novel proteins
or novel antigens based on such novel gene, and any product arising from
transcription of such gene.

 

“Business Day”
means a day on which the trading banks are open for general banking business in
both Melbourne, Australia and Lyon, France.

 

“Claim Asserted in Good
Faith” means and is limited to any claim asserted in any Project
Patent which can reasonably be considered to be patentable under the laws of
the country where filed having regard to any and all references, prior art,
novelty, inventiveness, utility and any and all other relevant legal criteria.

 

“Commencement Date”
means the date of execution of this agreement by the party last signing it.

 

“Control” means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management of policies of a person, whether through the
ownership of voting securities, by contract or otherwise.

 

“Covered By”
means when used in the context that a Product is covered by a Subsisting Claim
or a Claim Asserted in Good Faith, that the Product or the normal method of operation
or customarily intended use of such Product must, when such Product is
manufactured, sold, or otherwise Exploited by Merck or a Sub-Licensee
constitute (but for the Licence or Merck’s ownership of Stage 2 Patents) an
infringement of a Subsisting Claim or in the period of 5 years from the
Commencement Date an infringement of a Claim Asserted in Good Faith, considered
as if it were a Subsisting Claim.

 

“Dollars” or “$”
means Australian dollars.

 

“EUR” means the
new European currency called EURO.

 

“Exploit” means
in respect of a:

 

2

 

(i)            Product - to make, have made, hire, sell or otherwise dispose of the
Product, to offer to make, sell, hire or otherwise dispose of the Product, to
use or import it or keep it for the purpose of doing any of those things;

 

(ii)           Process - use the method or process or do any act in respect of a
product resulting from such use which falls within paragraph (a);

 

“FFR” means
French Francs.

 

“Final Judgment”
means a Judgment or decree which becomes not further appealable or reviewable
through the exhaustion of all permissible applications for appeal, rehearing or
review by any superior court or tribunal or through the expiration of time
permitted for such applications.

 

“Force Majeure”
means any cause which is not within the reasonable control of the party
affected by it including, but not limited to, acts of God, industrial disputes
of any kind, war declared or undeclared, civil disturbance, acts or omissions
of Government or other competent authority, fire, lightning, explosion or
flood.

 

“Insolvency Event”
means any event of insolvency, bankruptcy or liquidation of the relevant party,
including any voluntary or involuntary judicial liquidation or re-organisation
proceedings.

 

“Know-How” means
technical, commercial and other information, data, know-how, drawings,
specifications and/or designs, animal or other models, methodologies and
biological materials embodied in some Material Form, and without prejudice to
the generality of the foregoing includes:

 

(i)            all experimental, manufacturing, process, analytical, packaging,
product, warehousing, quality control and quality assurance and marketing
specifications, standards, procedures, processes, methods, instructions and
techniques, samples, prototypes, formulae, writings of any kind, opinions or
otherwise unwritten data or in the form of computer software or computer
programs or any part thereof in any code; and

 

(ii)           all other information and other material supplied to or received by
a party or its Representatives from another party or Representatives on a
confidential basis pursuant to this agreement.

 

“Licence” means
the right and licence granted by Autogen to Merck pursuant to this agreement.

 

“Licensed Field”
means the field of human therapeutic applications for the treatment or
prevention of Diabetes and as a secondary field, the field of human therapeutic
applications for the treatment or prevention of diabetes and its
complications.  For clarity it is noted
that this does not include diagnostics or veterinary applications.

 

“Licensed Patents”
means the Autogen Patents and the Stage 1 Patents.

 

“Licensed Technology”
means the Autogen Know-How and Stage 1 Know-How.

 

“Loss” means any
loss, damage, cost, interest, expense, fee, penalty, fine, forfeiture,
assessment, demand, action, suit, claim, proceeding, cause of action, liability
or 

 

3

 

damages incurred by a person, and includes:

 

(i)            the cost of any action taken by the person to protect itself against
any loss or to preserve any right it has under this agreement; and

 

(ii)           where applicable, reasonable legal costs.

 

“Marketing”
means the promotion, advertising, distribution and sale of the Product and
includes a product launch campaign.

 

“Material Form”
in relation to information includes any form (whether visible or not) of
storage from which information can be reproduced, and any form in which
Information is embodied or encoded.

 

“Month” means
calendar month.

 

“Net Sales Value”
of a Product means in the case of an Arms Length sale the gross amount invoiced
by Merck (or the relevant Sub-licensee) to any customer less any and all of the
following:

 

(i)            any discount or rebates on sales of the Products;

 

(ii)           insurance and freight;

 

(iii)          the selling price of any returned goods or free replacements; and

 

(iv)          taxes imposed on sales of the Products such as value added tax,
excise tax and consumption tax.

 

“Party” means
Autogen or Merck and their respective successors and permitted assigns and “Parties”
means both of them.

 

“Patent” means
any patent or patent application as defined in the Patents Act
1952 (C’th) and any similar international, national or regional
patent or patent application and includes any and all extensions, renewals, continuations,
patent-of-addition and/or supplementary protection certificates to any of the
foregoing and includes any corresponding patent or patent application taken out
or applied for in any country in the Territory which is fairly based upon or
derived from any of the aforesaid patents.

 

“Products” means
any products produced or arising out of use of the results of Stage 1 Research
or Stage 2 Research or arising out of all and any further development by Merck
pursuant to Stage 1 Research or Stage 2 Research or both.

 

“Project Patents”
means the Autogen Patents, the Stage 1 Patents and/or the Stage 2 Patents.

 

“Project Research”
means the research in the area of Diabetes and of novel genes involved in
Diabetes and the research arising therefrom, consisting of the Stage 1 Research
and the Stage 2 Research.

 

“Quarter” means
each period of three months commencing on the first days of each January,
April, July and October during the Term.

 

“Registration”
in respect of a country means the gaining of all permissions from all
Regulatory Authorities in that country necessary to permit the commencement of 

 

4

 

Marketing in that country and includes any approval in
respect of packaging or labelling and further includes the agreement of
relevant authorities as to the level of pricing or reimbursement in respect of
the relevant Products, where such registration is mandatory or a practical
commercial imperative.

 

“Regulatory Authority”
in respect of a country means any and all bodies and organisations regulating
the importation, distribution, marketing or sale of the Product in any part of
that country.

 

“Representatives”
of a party means that party’s directors, officers, employees or agents.

 

“Required Insurance” means:

 

(i)            public liability insurance in respect of Losses up to a limit of
$5,000,000 covering property damage and personal injury as may be relevant to
the performance of each party’s obligations under this agreement to the other,
including (without limitation) liability, loss or damage due to negligent or
malicious damage, data corruption or loss, fire, theft, electrical and water
damage; and

 

(ii)           if the relevant party sells a Product, product liability insurance
in respect of Losses up to a limit of $20,000,000 covering any liability
associated with use or misuse of the Product including , personal injury and
consequential loss.

 

“Research Agreement”
means the Research and Licence Agreement in the field of Diabetes between the
parties dated 28 April 1999.

 

“Rights” means
the Licensed Patents and the Licensed Technology.

 

“Royalty Period”
means each Quarter during the Term provided that where the Term commences or
ends on a day other than first day of a Quarter the first and last reports will
be for only so much of the Royalty Period as occurs during the Term.

 

“Significant Competition”
means competition or potential competition to the Product from a third party’s
product which, notwithstanding the fact that it does not breach any Project
Patent:

 

(i)            is in whole or in part intended to have the same function or effect
as the Product; or

 

(ii)           in the country of manufacture or sale has taken or has the potential
to take significant market share from the Product or has prevented or deterred
or has the capacity to prevent or deter the Product from obtaining significant
market share.

 

“Stage 1 Know-How”
means the Know-How relating to or arising out of Stage 1 Research in relation
to the AGT 121 Gene Product.

 

“Stage 1 Patents”
means Patents relating to or arising out of Stage 1 Research including in
particular the Patents set out in Schedule 2.

 

“Stage 1 Research”
means the Research so described conducted under the Research Agreement.

 

5

 

“Stage 2 Know-How”
means the Know-How relating to or arising out of the Stage 2 Research program
in relation to the AGT 121 Gene Product.

 

“Stage 2 Patents”
means Patents relating to or arising out of the Stage 2 Research program in
relation to the AGT 121 Gene Product.

 

“Stage 2 Research”
means generally antibody production, large scale protein production, structural
analysis, screening of compounds affecting the relevant novel gene product,
combinatorial chemistry, toxicological studies and first clinical studies in
obese patients and completion of dose efficiency relationship studies in obese
patients (clinical Phase 2).

 

“Sub-licence”
means a sub-licence granted to an Affiliate or other third party under clause 5.

 

“Sub-licensee”
means the person in favour of whom a Sub-licence is granted in accordance with clause 5

 

“Subsisting Claim”
means and is limited to any valid claim of a validly issued unexpired and
non-lapsed Project Patent which has not been held permanently revoked,
unenforceable or invalid in a judgment or decree which becomes not further
appealable or reviewable through the exhaustion of all permissible applications
for appeal, rehearing or review by any superior court or tribunal or through
the expiration of time permitted for such applications, (which judgment or
decree has not been admitted to be invalid or unenforceable through reissue or
disclaimer or otherwise).  If there
should be two or more decisions within the same country which are conflicting
with respect to the invalidity of the same claim, the decision of the highest
tribunal will thereafter control. 
However should the tribunals be of equal authority, then the decision or
decisions holding the claim valid will prevail where the conflicting decisions
are equal in number and the majority of decisions will prevail where the
conflicting decisions are not equal in number. 
Where a Project Patent has been issued in a country other than Australia
without a separate and independent examination by the relevant authorities of
that country that patent will be deemed to have a scope equivalent to the scope
of the claims of any corresponding Australian Patent which has had examination
in Australia.

 

“Term” means the
period during which this agreement is in force pursuant to clause 11.

 

“Territory”
means the whole of the world

 

“Year” means
each period of twelve months commencing on the first day of each January during
the Term.

 

1.2          Construction

 

In this agreement unless the context
otherwise requires:

 

(a)           Business Day.  If any day appointed or specified by this
agreement for the payment of any money or the doing of any act or thing falls
on a day that is not a Business Day, the day so appointed or specified is
deemed to be the next day which is a Business Day.

 

6

 

(b)           Collective references.  Reference to any thing (including, without
limitation, any amount) is a reference to the whole or any part of it and a
reference to a group of things or persons is a reference to any one or more of
them.

 

(c)           Defined expressions.  If a word or phrase is defined, cognate words
and phrases have corresponding definitions.

 

(d)           Gender.  Words importing any gender include the other
genders.

 

(e)           Headings.  Headings must be ignored in construing this
document.

 

(f)            Joint liability.  An obligation of two or more parties binds
them jointly and severally.

 

(g)           Joint obligations.  An obligation incurred in favour of two or
more parties is enforceable by them jointly and severally.

 

(h)           Month.  Means a calendar month.

 

(i)            Numbers.  Words importing the singular include the
plural and vice versa.

 

(j)            Parts of agreement.  References to this agreement include its
recitals, schedules and annexures.

 

(k)           Persons.  References to persons include corporations
and bodies politic.

 

(l)            Reconstituted bodies.  References to a body which has ceased to
exist or has been reconstituted, amalgamated, reconstructed or merged, or the
functions of which have become exercisable by any other person or body in its
place, is taken to refer to the person or body established or constituted in
its place or the person or body by which its functions have become exercisable.

 

(m)          Representatives and assigns.  References to a person
include the legal personal representatives, successors and permitted assigns of
that person.

 

(n)           Statutory amendments.  A reference to a statute, ordinance, code or
other law includes regulations and other statutory instruments under it and
consolidations, amendments, re-enactments or replacements of any of them
(whether of the same or any other legislative authority having jurisdiction).

 

(o)           Variation.  References to this or any other document
include the document as varied or replaced, and notwithstanding any change in
the identity of the parties.

 

(p)           Writing.  References to writing include any mode of
representing or reproducing words in tangible and permanently visible form, and
include telex and facsimile transmissions.

 

7

 

2.            GRANT OF LICENCE

 

2.1          Grant of licence

 

Autogen grants to Merck with effect on and
from the Commencement Date until expiry of the Term an exclusive licence within
the Licensed Field, that is to the exclusion of Autogen and third parties, in
the Territory within that Licensed Field, to use the Licensed Patents and the
Licensed Technology and to Exploit the Products utilising the Licensed Patents
and Licensed Technology.

 

2.2          Autogen’s Rights

 

Autogen and Merck agree and acknowledge
that during the Term, except as set out in or permitted by this agreement:

 

(a)           Autogen must not within the Licensed Field Exploit the Products in
the Territory utilising the Licensed Patents or Licensed Technology; and

 

(b)           must not grant or purport to grant to any third party any right in
respect of the Licensed Patents or Licensed Technology which is inconsistent with
the right and licence granted in clause 2.1.

 

2.3          Scope of exclusive licence

 

The grant of the exclusive licence contained in clause 2.1 does not preclude:

 

(a)           the licensing of the Licensed Patents and Licensed Technology for
use or exploitation outside of the Licensed Field; or

 

(b)           the use of the Licensed Patents or Licensed Technology by Autogen,
the International Diabetes Institute or Deakin University for the purposes of
their own internal research.

 

3.            ROYALTIES

 

3.1          Royalty Obligation

 

In consideration of the grant of the
Licence, Merck agrees to pay to Autogen in respect of sales of Products Covered
By Project Patents in the Territory a royalty equal to the following
percentages of the Net Sales Value of such Products:

 

(a)           for yearly Net Sales Value of Products up to US$[*], at the rate of [*]%;
and

 

(b)           until the yearly Net Sales Value of Products reaches US$[*], in
respect of yearly Net Sales Value between US$[*] and US$[*], [*]%; and

 

(c)           once the yearly Net Sales Value of Products exceeds US$[*], in
respect of all yearly Net Sales Value in excess of US$[*], at the rate of [*]%.

 

In this clause, yearly means from 1 January to 31
December in any year.

 

8

 

Where in accordance with the terms set out
in the Research Agreement Merck pursues the Joint Venture Option, the dollar
amounts of US$[*] and US$[*] above will be replaced with US$[*] and US$[*]
respectively.

 

3.2          Royalty on unprotected products

 

If the manufacture, sale or use of a
Product in a particular country is not Covered By a Project Patent for any
reason then so long as there is in respect of that Product no Significant
Competition, royalties will still be payable in respect of such a Product as if
it were Covered By a Project Patent, but at a rate equal to [*]% of the royalty
rate applicable to Products which are actually Covered By a Project Patent.

 

3.3          Multiple royalties

 

If the manufacture, use or sale of a
Product, which attracts a royalty obligation under clauses 3.1
or 3.2, and also attracts a royalty
obligation to a third party or parties, not being Affiliates of Merck, and the
aggregate of all such third party non-Affiliate royalties exceeds [*]% of Net
Sales Value, then the royalty rate payable under clause 3.1
may be reduced in accordance with the following formula:

 

 

Where:

 

(a)           Rnew is the new royalty rate

 

(b)           Rtotal is the total of the royalties payable in respect of the
Product to third party non-Affiliates, including the royalty payable to Autogen

 

(c)           Rold is the rate of royalty otherwise payable under clause 3.1,

 

provided that Rnew must not be less than half Rold.

 

4.            REPORTS

 

4.1          Reporting requirements

 

Merck must within 60 days of the end of
each Royalty Period provide to Autogen a written report setting out in reasonably
specific detail on a country by country basis:

 

(a)           the gross sales value of all Products which have been sold by Merck
and its Sub-licensees during the preceding Royalty Period and the calculation
of Net Sales Value from such gross sales,

 

(b)           the calculation of the royalty payable on such Products, including
details of the currency conversion rates used, any taxes or other amounts
withheld and any adjustments on account of returns.

 

9

 

4.2          Products which don’t attract royalty

 

Royalty will not be payable in respect of
any Products supplied, used or consumed by Merck or any of its Affiliates or
Sub-licensees (provided Merck itself receives no royalty in the following
circumstances) for the purposes of testing, obtaining Registration or in good
faith pre-marketing or post marketing studies or reasonable quantities of
normal commercial samples.

 

4.3          Time of Sale

 

A Product is deemed to be sold at the time
it is invoiced to the buyer.

 

4.4          Foreign currencies

 

Merck will calculate royalties in local
currencies and convert the same to Dollars (or to such other currency as
Autogen may nominate from time to time) at the ruling rate of exchange as on
the last day of the Royalty Period.

 

4.5          Payment mechanics

 

The royalty payable to Autogen must be paid
to a bank account nominated by Autogen in Melbourne, Australia (or at such
other location as Autogen may stipulate from time to time) within 60 days of
the end of each Royalty Period.

 

4.6          Merck to keep accounts and records

 

Merck must keep and retain at least for a
period of 36 months after the end of the Royalty Period to which they relate,
true and particular accounts and records of all sales of Products sufficient to
verify Merck’s calculation of Net Sales Value of Products sold, the calculation
of royalty based thereon and conversion of such amounts into the relevant
currency.

 

4.7          Inspection of accounts

 

During the Term and for a period of 2 years
thereafter, Autogen or its duly authorised representatives reasonably
acceptable to Merck have the right to inspect and audit from time to time the
accounts and records referred to in clause 4.6 and
such other matters as are directly relevant to the calculation of the amount of
any payment due by Merck to Autogen under this agreement and are entitled to
take copies of such records, on the following conditions:

 

(a)           inspection is limited to 2 times in any 12 month period;

 

(b)           inspections must take place during normal business hours and upon
reasonable prior notice to Merck;

 

(c)           the Representatives of Autogen who inspect such accounts and records
must be suitably qualified personnel reasonably acceptable to Merck and must:

 

(i)            prior to inspecting such records and accounts, enter into a
confidentiality agreement with Merck containing undertakings similar to those
in clause 7;

 

10

 

(ii)           whilst inspecting such records and accounts, abide by all of Merck’s
standard rules and regulations; and

 

(iii)          Autogen must indemnify and hold Merck harmless from all liability
resulting from any negligence or any other activities on the part of Autogen’s
Representatives inspecting such records and accounts.

 

4.8          Settlement of discrepancies

 

If any discrepancy is found by Autogen then
the amount thereof, together with interest at the Base Rate from the proper
date for payment, must be paid within 7 days of demand therefor to Autogen.

 

4.9          Cost of audit

 

Autogen must bear the cost of any such
examination unless a discrepancy of 5% or more in the amount of any royalty
payment is detected, in which event Merck must bear the reasonable expense of
the examination.

 

4.10        Advance royalty

 

Where any advance royalty has been paid by
Merck to Autogen, then until such time as such advance royalty has been fully
recouped from royalties due to Autogen, Merck will be obliged to calculate and
report but not pay the royalties otherwise due to Autogen under this agreement.

 

5.            SUB-LICENSING

 

5.1          Scope of sub-licence provisions

 

Merck acknowledges and agrees that the
provisions of this agreement dealing with sub-licences apply equally to
licences by Merck of Stage 2 Patents, to the extent that any licence by Merck
of a Stage 2 Patent will be subject to the same restrictions and requirements,
including royalty entitlements, as if they were Licensed Patents owned by
Autogen.

 

5.2          Right to sub-Licence

 

Except as required under this agreement,
Merck may grant sub-licences of Project Patents upon such terms and conditions
as it may arrange.

 

5.3          Sub-licenses to Affiliates

 

Merck has the right to grant sub-licences
to an Affiliate in respect of a particular country or group of countries in
respect of the Product provided that the sub-licence complies with the
following:

 

(a)           the Affiliate being granted the sub-licence has the commercial
capacity to promote and exploit the relevant Product with due diligence and
probity and has at least sufficient skills and resources to comply with the
obligations placed upon Merck in relation to that Product in the relevant
country or countries;

 

11

 

(b)           the sub-licence is wholly consistent with the terms of this Licence
and in particular:

 

(i)            such sub-licence does not purport to extend or continue in any
circumstances where this Licence may be terminated, and

 

(ii)           the sub-licensee acknowledges that Autogen owns or is the valid
licensee of the Rights;

 

(c)           the sub-licence prohibits the sub-licensee from taking any action or
allowing any action to be taken which detracts from the ownership of the Rights
by Autogen or conflicts with the provisions contained in this Licence in
relation to prosecuting or defending the Project Patents or defending any
allegation of infringement of the Rights;

 

(d)           the sub-licence is in the English language, executed by the
sub-licensee and giving its place of business;

 

(e)           the sub-licence requires the sub-licensee to maintain all books,
records and accounts necessary to enable verification of Net Sales Value and
royalties and other income required to be paid by Merck to Autogen and permits
inspection by Autogen on terms essentially identical to clauses
 4.6
and 4.7;

 

(f)            the sub-licence limits the duration of the sub-licence in respect of
any Product for the term of this agreement and further provides for the
sub-licence to terminate automatically upon the termination of this agreement,
or upon an Insolvency Event occurring in relation to the sub-licensee;

 

(g)           the sub-licence prohibits the sub-licensee without the consent of
Autogen from assigning, transferring, mortgaging or parting with any of its
rights under the sub-licence;

 

(h)           the sub-licence provides that the sub-licence will terminate in the
event that the relevant company ceases to be an Affiliate of Merck;

 

(i)            the sub-licence obliges the sub-licensee to maintain the insurances
referred to in clause 10 or Merck does so itself
in respect of the Products that may be sold in the sub-licence territory; and

 

(j)            the sub-licence provides that all the terms and conditions of the
sub-licence may be enforced by Autogen against the sub-licensee notwithstanding
that Autogen is not a party to the sub-licence or any rule of law or
equity to the contrary.

 

If the sub-licence to be granted by Merck is in favour
of an Affiliate, and complies in all material respects with the above
requirements, it is not necessary for Merck to seek the consent of Autogen to
the granting of such sub-licence, however, Merck is obliged within 3 months of
the entering into of such sub-licence to notify Autogen of the granting of the
licence and is further obliged to provide Autogen with general details of the
sub-licensee, including information as to its financial affairs and resources
and a copy of the executed sub-licence.

 

12

 

5.4          Sub-licences - non-Affiliate

 

Merck may not grant any sub-licence to a non-Affiliate
without the prior written consent of Autogen, such consent not to be withheld
unless Autogen reasonably believes and can objectively justify its view that:

 

(a)           any proposed sub-licensee will not properly perform and discharge
all of the obligations of Merck under this agreement in respect of the relevant
sub-licensed Territory;

 

(b)           that the proposed sub-licensee is not financially sound or will be
unable to pay royalties and other amounts payable under the relevant
sub-licence as and when they fall due;

 

(c)           there are reasonable grounds to believe that the proposed
sub-licensee is likely to conduct itself in a manner likely to endanger or
cause injury to Autogen’s reputation, or the reputation, quality, image or
character of the Product, in this regard Merck must provide to Autogen full
information detailing any products manufactured, distributed or sold by the
proposed sub-licensee in the proposed sub-licence territory which are competitive
with the Product;

 

(d)           the proposed sub-licence is not wholly consistent with the terms of
this licence and in particular complies with clauses 5.3
(a), (b) (c), (d), (e), (f), (g), (i) and (j); and

 

(e)           the proposed sub-licensee or any of its Affiliates is engaged in
litigation with Autogen or its Affiliates.

 

Merck must provide full and adequate
information to Autogen on the above matters. 
Autogen undertakes to give its consent within a period not exceeding one
month of receipt from Merck of all information reasonably required to make a
determination under this clause, including written confirmation by Merck that
the proposed licence agreement is in compliance with this clause.  If no response is given in that period,
Autogen will be deemed to have consented to the sub-licence.

 

5.5          Calculation of royalty for all Sub-licensees

 

Where any Product is Exploited by a
Sub-licensee, the Net Sales Value of any Products sold by such Sub-licensee to
a person or persons who is not a Sub-licensee is to be included in Net Sales
Value pursuant to clause 3.1 and
bear royalty payable by Merck in accordance with clauses 3
and 4 as if it was Net Sales Value of
Product sold by Merck, not as a
proportion of the royalties or other receipts which may be paid by such
Sub-licensee to Merck pursuant to any sub-licence granted by Merck.

 

5.6          Royalty reporting

 

Any payments due to Autogen under this clause 5 must be included with Merck’s reports and payments
to be made under the provisions of clause 4 for
the Royalty Period in which any such amounts become due and payable to Merck.

 

13

 

5.7          Enforcement of Sub-licences

 

Merck must, if so directed by Autogen, take
all commercially and legally reasonable steps to enforce the terms of any Sub-licence.

 

6.            COMMERCIALISATION

 

6.1          General reporting

 

Merck will at all times during Stage 2 Research and
subsequent steps, including commercialisation, keep Autogen timely and fully
informed of:

 

(a)           the progress of development and commercialisation, including
internal milestones and approvals;

 

(b)           broad details of any competing products being marketed by Merck or
its Affiliates;

 

(c)           any decision to suspend the continuation of the development or
commercialisation of the Products.

 

6.2          Decision-making

 

Where Merck intends to make a decision which may
result in the suspension or termination of Stage 2 Research or the further
development and commercialisation of Products or which is otherwise materially
adverse to such activities  then:

 

(a)           it will give Autogen advance notice of such decision making and the
reasons why such decision may be made; and

 

(b)           it will give Autogen an opportunity to submit material to and make a
presentation to the Merck decision makers in respect of such decision prior to
such decision being made,

 

it being acknowledged that having followed
the above procedures, Merck’s decision will be in Merck’s entire discretion and
will not be fettered or reviewable in any way by Autogen.

 

6.3          Registration of Product

 

After completion of the relevant Stage 2
Research program Merck must use reasonable endeavours to promptly complete
Phase III clinical trials, and to apply for and gain Registration in its own
name in respect of one or more Products. 
The cost of undertaking all such trials and further development and
making and prosecuting such applications is to be borne by Merck.

 

6.4          Ceasing to pursue registration

 

If, following the process of clause 6.2,
Merck in its reasonable opinion decides not to continue to pursue Registration
of any Product on the basis of efficacy, safety or medical reasons, concerns
about the validity of Project Patents or a substantial change in economic
factors, then it must promptly advise Autogen in writing, together with written
reasons for such decision.  In such a
case this licence will terminate and Autogen may request a 

 

14

 

licence in respect of Stage 2 Know-How and Stage 2
Patents, in which case the Parties will negotiate in good faith the terms of a
licence (which may be exclusive or non-exclusive and limited to the
discontinued Novel Gene Product and necessary related technology being part of
Stage 2 Know-How and Stage 2 Patents) for the commercialisation of such
Know-How and Patents.

 

6.5          Refusal of Registration

 

If an application by Merck for Registration
is refused, Merck is obliged to re-apply for Registration when so required by
Autogen but such requirement must only be imposed if Autogen is of the
reasonable belief, following discussions with Merck, that the re-application
will be approved.  The cost of making and
prosecuting any such re-application will be borne by Merck.

 

6.6          Maintenance of Registrations

 

Merck agrees to do all things necessary to
ensure that all product registrations and approvals in respect of the Products
are maintained and to provide Autogen with any and all documentation and
information concerning any variations to such product registrations or
approvals.  Such product registrations
and approvals include without limitation any registration concerning the
packaging or labelling of the Products.

 

6.7          Marketing of Products

 

Following Registration of the Product,
Merck must use its best endeavours, at the expense of Merck, to:

 

(a)           promote, distribute and sell the Products in the Territory in order
to obtain the optimum market potential for the Products;

 

(b)           provide and maintain such suitable places of business for the
storage, handling and sale of the Products at such locations throughout the
Territories as Merck thinks suitable;

 

(c)           provide and maintain such marketing, sales and office staff to
promote and sell the Products in accordance with this agreement, such personnel
to be deemed the agents, representatives or employees of Merck and not those of
Autogen;

 

(d)           maintain in each country in the Territory sufficient stocks of the
Products to meet the market demand for the Products;

 

(e)           where Merck or its Affiliates or sub-licensees are marketing
Competing Products, provide information about the comparative efforts being
made;

 

(f)            no later than 2 months prior to the commencement of each year during
the Term prepare sales and marketing plans in respect of the Product in the
Territories for discussion with Autogen; and

 

(g)           provide to Autogen yearly reports of Merck’s market intelligence and
proposed marketing strategy and performance goals other than where there is a
material change in the market intelligence, proposed marketing strategy or
performance goals, in which case Merck will promptly provide to Autogen a
report of those material changes.

 

15

 

6.8          Commencement of Marketing

 

If Marketing by Merck has not commenced in any country
in the Territories within 6 months of Merck obtaining Registration or within
such other time as agreed by the parties and such failure to so commence
Marketing is not attributable to any failure by Autogen to comply with its
obligations under this agreement, Autogen may by notice in writing to Merck
convert the licence to a non exclusive licence, in respect of that country.

 

6.9          General reports

 

Merck must within one month of the relevant
dates advise Autogen, at Merck’s cost, in respect of each country in the
Territory of:

 

(a)           the making of an application for Registration and the gaining of
Registration of any Product; and

 

(b)           details of the date of commencement of Marketing and details of the
establishment of or change to any facilities referred to in clause 6.7(b).

 

6.10        Marketing reports

 

Merck must every year provide to Autogen a
written report detailing its proposed Marketing activities in relation to the
Products in the coming year.  The initial
marketing plan is to be provided no later than one month prior to the
commencement of Marketing in the relevant country and subsequent Marketing
plans are to be provided at least three months prior to each anniversary of
such initial date.  The marketing plan
will specify objectives and strategies in respect to the following and any
related matters necessary to ensure optimum market penetration in the relevant
country:

 

(a)           pricing and margin structure;

 

(b)           distribution channels;

 

(c)           sales and distribution targets;

 

(d)           accumulation of market data including assessment of total market
size and segmentation in units and dollars;

 

(e)           overview of trading for the current year and objectives and
strategies for the following year;

 

(f)            assessment of competition;

 

(g)           advertising and promotional expenses;

 

(h)           overall advertising and promotional strategy.

 

Merck will allow Autogen to provide comment on the
marketing plan (if any) and will consider such comments in good faith.

 

16

 

6.11        Restriction on clinical trials

 

Merck must not conduct or knowingly supply
Product to any person who intends to conduct any clinical trials or scientific
study concerning or utilising Products (other than where such trial or study is
to involve less than 15 human subjects and does not require any prior
Regulatory Authority approval) unless such trial or study has first been
discussed at and approved by the Scientific Advisory Board established by the
parties.

 

7.            CONFIDENTIAL INFORMATION

 

7.1          Obligations to Autogen

 

Subject to clauses 7.3
and 7.6, Merck covenants with Autogen as
follows:

 

(a)           to keep all Know-How belonging to Autogen or supplied to it by
Autogen, including the existence of such Know-How, strictly secret and
confidential (including from all its employees, servants and agents),
exercising at least the same degree of care as it uses to maintain its own
Know-How;

 

(b)           to provide proper and secure storage for such Know-How within its
possession or control;

 

(c)           to use such Know-How only for the purposes of this agreement and not
for any other activity or purpose whatsoever without the prior written approval
of Autogen; and

 

(d)           to not copy or reduce to writing or any other medium any part of
such Know-How except as may be reasonably necessary for the purposes of this
agreement.

 

7.2          Obligations to Merck

 

Subject to clauses 7.3
and 7.6, Autogen covenants with Merck as
follows:

 

(a)           to keep all Know-How belonging to Merck or supplied to it by Merck,
including the existence of such Know-How, strictly secret and confidential
(including from all its employees, servants and agents), exercising at least
the same degree of care as it uses to maintain its own Know-How;

 

(b)           to provide proper and secure storage for such Know-How within its
possession or control;

 

(c)           to use such Know-How only for the purposes of this agreement and not
for any other activity or purpose whatsoever without the prior written approval
of Merck; and

 

(d)           to not copy or reduce to writing or any other medium any part of
such Know-How except as may be reasonably necessary for the purposes of this
agreement.

 

7.3          Exceptions to obligations

 

The obligations of confidence set out in clauses 7.1 and 7.2 do not
extend to Know-How which:

 

17

 

(a)                                  at
the time of disclosure to a party is in the public domain;

 

(b)                                 after
disclosure to a party becomes part of the public domain otherwise than as a
result of the wrongful act of that party or one of that party’s disclosees;

 

(c)                                  a
party can show was in its possession at the time of disclosure and was not
acquired directly or indirectly from the other party; or

 

(d)                                 is
received from a third party provided that it was not acquired directly or
indirectly by that third party from a party to this agreement or under an
obligation of confidence;

 

(e)                                  is
required by compulsion of law to be disclosed,

 

provided that:

 

(f)                                    the
onus is on the party alleging the same to prove that one of the above
exceptions has application; and

 

(g)                                 in
any case of uncertainty as to whether the obligations in clauses 7.1
or 7.2 have application to any
information, such information must be treated as subject to the obligations
until advised otherwise by the party to whom the obligations are owed.

 

7.4                              Rights
in Know-How

 

Each party acknowledges and agrees that
each other party has made a substantial investment in that party’s Know-How and
has a legitimate right to protect itself against wrongful disclosure or use of
such Know-How.

 

7.5                              Term of
obligation

 

The obligations in this clause 7 survive the expiry or termination of this agreement
for whatever reason and continue  for a
period of 10 years, subject always to the exceptions included in clause 7.3.

 

7.6                              Permitted
disclosures

 

Each party (“the first party”) is permitted
to disclose Know-How belonging to another party or supplied to it by another
party (“the other party”) to such of the first party’s Representatives as
require access to such information for the purposes of this agreement, provided
that:

 

(a)                                  only
such Know-How as needs to be disclosed to a person for the purposes of this
agreement will be disclosed to that person; and

 

(b)                                 the
first party must:

 

(i)                                     have
obtained from each such person undertakings in favour of the other party
substantially in the form of the relevant obligations and undertakings in this clause 7 (but not this clause 7.6);

 

(ii)                                  be
responsible for the performance of its Representatives’ undertakings referred
to in clause 7.6(b)(i); and

 

18

 

(iii)                               take
whatever steps are reasonably necessary, including the institution of legal
proceedings, to ensure that each of its Representatives is bound by and
observes the terms of the undertakings referred to in clause
7.6(b)(i).

 

7.7                              Delivery-up
of Know-How

 

All of a party’s Know-How and all materials
containing or embodying such Know-How and all copies of or extracts from or
notes on the same in the possession, power or control of another party or any
of its employees, servants or agents together with all forms and other
materials relating to practices and procedures in relation to the Know-How to
the extent possible must:

 

(a)                                  in
the event of the expiration or sooner termination of this agreement, be
delivered up by the other party to the first party at the expense of the other
party; and

 

(b)                                 in
the event of any demand made by the first party be delivered up by the other
party to the first party at the expense of the first party.

 

7.8                              Terms of
this Agreement

 

Merck and Autogen shall not disclose any
terms or conditions of this agreement to any third party without the prior
consent of the other party, except as required by applicable law or to a third
party with whom Autogen or Merck has entered into or proposes to enter into a
business relationship, provided that such third party shall enter into a
confidentiality agreement with, or otherwise owe a duty or confidentiality to
Merck or Autogen, as applicable.

 

7.9                              Public
Announcement

 

Except as required by law, order or
regulation of a governmental agency or a court of competent jurisdiction, no
other announcement, public release or notice of any kind may be issued without
the express written consent of both parties, which consent shall not be
unreasonably withheld, provided, however, the parties shall prepare a joint press
release announcing the transaction set forth in this agreement to be issued
promptly upon execution of this agreement.

 

7.10                       Continuous
disclosure obligations

 

Autogen is a subsidiary of Australia Wide
Industries Limited (“AWI”) ACN 000 248 304, which is listed on the Australian
Stock Exchange (“ASX”).  As such Autogen
is subject to the continuous disclosure requirements of the ASX.  The obligations of Autogen under this
agreement will not restrict it or AWI from making whatever disclosures are
necessary for the purposes of fulfilling the requirements applicable to AWI as
a company listed on the ASX, and neither Autogen or AWI is under any obligation
to delay the public release of any required announcement pending the provision
of any consent or approval from Merck. 
The above provision will also apply with such adaptations as are
necessary to disclosure obligations imposed upon Merck as a subsidiary of its
listed parent Merck KGaA.

 

19

 

8.                                     LIABILITY

 

8.1                              Responsibility
for Products

 

Merck must ensure at all times during the
Term that Products are tested, manufactured, used and sold strictly in
accordance with all relevant applicable requirements and standards of relevant
jurisdictions and Merck will be responsible for conducting its own independent
examination and verification of the accuracy and suitability of Licensed
Patents and Licensed Technology and for ensuring the same are suitable for the
purposes for which they are provided.

 

8.2                              Autogen
not liable

 

Except as provided in clauses 9.2
and 13.2, Autogen is not liable (in
contract or tort or otherwise) to compensate Merck for any loss howsoever
arising suffered by Merck arising directly or indirectly from the use of the
Licensed Patents or  Licensed Technology
or the sale of Products.

 

9.                                     INDEMNITIES

 

9.1                              Indemnity
by Merck

 

Merck agrees to indemnify Autogen against
and hold Autogen harmless from any and all Losses arising from or in connection
with:

 

(a)                                  a
breach by Merck of any of its warranties or obligations under this agreement;

 

(b)                                 the
manufacture of the Products by Merck or any Sub-licensee;

 

(c)                                  the
storage, use, sale, shipping and Marketing of the Product by Merck or any
Sub-licensee;

 

(d)                                 any
representations, express, implied or statutory made by Merck or any
Sub-licensee as to the efficacy or safety or use to be made by any purchaser of
the Product including, without limitation, representations made by reference to
the labelling or packaging or the Product; and

 

(e)                                  it
must be a term of any Sub-licence granted by Merck that the Sub-licensee agrees
to the same extent and in the same terms as the indemnities contained in clauses 9.1 (b), (c) and (d) to
indemnify Autogen and the Sub-licensee specifically agrees that it will not
challenge the standing of Autogen in the event of Autogen seeking to rely upon
such indemnification;

 

provided that neither Merck nor any
sub-licensee is required to indemnify Autogen for any Losses, to the extent
they result from Autogen’s or its Representatives negligence or breach of any
of Autogen’s warranties or obligations under this agreement.

 

9.2                              Indemnity
by Autogen

 

Autogen agrees to indemnify Merck and hold
Merck all harmless from any and all Losses, arising from or in connection with
a breach by Autogen of any of its warranties or obligations under this
agreement provided that Autogen is not required to indemnify 

 

20

 

Merck for any Losses, to the extent they
result from Merck’s or its Representatives negligence or breach of any of Merck’s
warranties or obligations under this agreement.

 

9.3                              Notification
regarding indemnity

 

Each party must promptly notify the other
of any claims or suits for which the first party may assert indemnification
from the other party and the first party will permit the other party and its
insurer at the other party’s expense to assume or participate in the defence of
any such claims or suits and the first party will co-operate with the other
party or its insurers in such defence when reasonably requested to do so.

 

10.                              INSURANCE

 

Each party must have and must maintain for
the Term the relevant Required Insurance. 
The Required Insurance must be with a reputable insurer and name the
other party as an additional insured. 
Each party will at the others request provide to that party a
certificate from a reputable insurance broker confirming that the insurance
required by this clause in currently in effect.

 

11.                              TERM AND TERMINATION

 

11.1                       Term

 

Subject to the further provision of this clause 11, the term of this agreement and the rights granted
to Merck under this agreement is for so long as any Product is still Covered By
a Project Patent.

 

11.2                       Termination for
breach

 

If one party breaches any term, provision
or obligation of this agreement (the “Defaulting Party”) and the Defaulting
Party fails to:

 

(a)                                  remedy
such breach within 60 days after receipt of notice from the other party
requiring remedy of the breach; or

 

(b)                                 if
the breach cannot be remedied within the said 60 day period, commence action
within the said 60 day period to remedy the breach and undertake in writing to
the other party to complete remedy of the breach as soon as practicable
thereafter,

 

the other party has the right to terminate
this agreement immediately upon the expiration of the said period of 60 days by
written notice to the Defaulting Party.

 

11.3                       Termination in
default of payment

 

This agreement may be forthwith terminated
by a party by giving notice to the other party if that other party defaults in
the payment of any money due by that other party to the first party under this
agreement and such default continues for a period of 30 days after notice has
been given to the other party demanding the payment of such money.

 

21

 

11.4                       Grounds for
immediate termination

 

Subject to clause 11.5
this agreement may be terminated by a party giving notice to the other party
upon the happening of any of the following events in respect of that other
party:

 

(a)                                  an
Insolvency Event; or

 

(b)                                 if
the other party is in breach of an undertaking given pursuant to clause 11.2(b).

 

11.5                       Reconstruction
exception

 

A winding up or liquidation for the
purposes of reconstruction or amalgamation by the other party is not an event
permitting or giving rise to termination if after that reconstruction or
amalgamation the resulting corporation becomes bound by the terms of this
agreement by way of assignment or novation.

 

11.6                       Termination by
Autogen

 

Autogen may terminate this agreement upon
notice to Merck if:

 

(a)                                  there
is a change of greater than 50% in the control of the issued voting capital of
Merck or a holding company (if any) of Merck other than for the purpose of
internal re-construction;

 

(b)                                 a
person or persons not previously in Control of Merck obtain Control of Merck or
a holding company (if any) of Merck; or

 

(c)                                  if
Merck or any of its Affiliates or any Sub-licensee or any of its Affiliates
challenges or seeks or causes to be challenged the validity of the Project
Patents, provided that in respect of a Sub-licensee not being an Affiliate,
termination will be limited to the country or countries to which such
Sub-licence relates.

 

11.7                       Termination by
Merck

 

Merck may terminate this agreement upon
notice to Autogen if there is a change of greater than 50% in the control of
the issued voting capital of Autogen or a holding company (if any) of Autogen
other than for the purpose of internal re-construction.

 

11.8                       Termination to
be without prejudice

 

Any termination of this agreement is
without prejudice to the rights which a party has against the other in respect
of anything done or omitted to be done hereunder prior to such termination or
in respect of any sums or other claims outstanding at the time of termination.

 

12.                              OBLIGATIONS AND RIGHTS ON TERMINATION

 

12.1                       Obligations of
Merck

 

Immediately upon termination or expiration
of this agreement, but subject to clause 12.3,
Merck must:

 

22

 

(a)                                  pay
all outstanding balances with respect to the Product within the terms of this
agreement;

 

(b)                                 remove
all signs, advertising displays, labels and the like identifying Merck as a
licensee of the Product and thereafter Merck will not use such signs and
displays in connection with any business conducted by it and will not in any
way refer to its previous association with the Product for any commercial
purpose whatsoever; and

 

(c)                                  not
conduct its business so as to falsely reflect discredit on Autogen or the
Product.

 

12.2                       Obligations of
Autogen

 

Immediately upon termination or expiration
of this agreement, Autogen must:

 

(a)                                  as
soon as conveniently possible reconcile all accounts relating to Merck; and

 

(b)                                 accept
all outstanding balances within existing terms of settlement within the terms
of this agreement.

 

12.3                       Limitation of
Merck’s rights

 

Merck is not in any circumstances entitled
to compensation for goodwill which may have accrued to the marketing of the
Product in the Territory.

 

13.                              WARRANTIES

 

13.1                       General
warranties

 

Each party represents and warrants to the
other that:

 

(a)                                  it
has all powers and authorisations necessary to enter into this agreement and
observe its obligations hereunder and allow this agreement to be enforced
against it; and

 

(b)                                 all
necessary consents, approvals and authorisations of all governmental
authorities required to be obtained by that party in connection with this
agreement have been obtained; and

 

(c)                                  the
execution and delivery of this agreement does not contravene any law,
regulation or official directive or any obligations or undertakings,
contractual or otherwise, by which it or any of its assets are bound or cause a
limitation on its powers to be exceeded; and

 

(d)                                 the
performance of the party’s obligations under this agreement:

 

(i)                                     do
not and will not conflict with or violate any requirement of applicable laws or
regulations; and

 

(ii)                                  do
not and will not conflict with, or constitute a default under any contractual
obligation of that party; and

 

23

 

(e)                                  there
does not presently exist any event which would either now or with the effluxion
of time entitle the other party to terminate this agreement pursuant to clause 11; and

 

(f)                                    it
is not a party to any pending or threatened action or proceeding affecting it
or any of its assets before a court, governmental agency, commission or
arbitrator where an adverse outcome could reasonably be expected to adversely
impact upon the performance of its obligations under this agreement; and

 

(g)                                 it
has no immunity from the jurisdiction of a court or from legal process (whether
through service of notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise).

 

13.2                       Specific
warranty re Licensed Patents

 

Autogen warrants to Merck that:

 

(a)                                  as
at the date of this agreement it has disclosed to Merck details of all prior
art sighted by Autogen by way of international search in relation to the
Licensed Patents; and

 

(b)                                 at
the date of this agreement it is unaware of any other Patent which has not been
disclosed to Merck and which may be infringed by Merck exercising the Licensed
Patents in accordance with the terms of this agreement.

 

13.3                       Warranties by
Merck

 

Merck warrants to Autogen that:

 

(a)                                  it
will obtain or has obtained from its Representatives who have access to the
Licensed Technology written obligations to treat such information as
confidential strictly in accordance with this agreement; and

 

(b)                                 that
it has made its own enquiries into the validity and enforceability of the
Licensed Patents and satisfied itself that the usage by Merck, its Affiliates
or sub-licensees of the Licensed Patents and the Licensed Technology do not and
will not infringe the intellectual property rights of any third party.

 

14.                              PROTECTION OF LICENSED PATENTS

 

14.1                       Maintenance of
Licensed Patents

 

Autogen is responsible for the cost of
preparing, filing, prosecuting and maintaining the Autogen Patents but nothing
expressed or implied herein necessarily obliges Autogen to institute legal
proceedings to protect same.  The party
responsible for the cost of preparing, filing, prosecuting and maintaining the
Stage 1 Patents will be determined in accordance with the Research
Agreement.  Merck is responsible for the
cost of preparing, filing, prosecuting and maintaining the Stage 2
Patents.  Nothing expressed or implied
herein necessarily obliges Merck to institute legal proceedings to protect
Stage 1 Patents or Stage 2 Patents.

 

24

 

14.2                       Reporting
infringements

 

A party must promptly report to the other
in writing particulars of any action or activity of which the first party
becomes aware which might reasonably amount to infringement of or challenge to
any of the Rights.

 

14.3                       Conduct of
proceedings regarding Rights

 

Merck has the first right to take control of
and conduct any infringement proceedings in respect of the Rights where such
infringement is within the Licensed Field. 
Should Merck undertake such proceedings Autogen must fully co-operate
with Merck in relation to such action including the lending of Autogen’s name
to the action and assistance by personnel of Autogen.  The costs and expenses of any such action
will be borne by Merck, and the proceeds of such action after payment of Merck’s
reasonable external costs will be divided between Autogen and Merck on the
basis that Autogen gets 50% and Merck the balance.  In the event Merck does not wish to undertake
the conduct of such proceedings on its own, Autogen and Merck must discuss
whether they will undertake joint proceedings and if so on what basis.  If no such agreement can be reached Autogen is
entitled to bring an action in its own name, and Merck must provide Autogen
with all reasonable assistance including lending Merck’s name to such
action.  Autogen must bear all the costs
of such an action, and the proceeds of any such action belongs to Autogen
absolutely.

 

14.4                       Royalties

 

Merck is not entitled to withhold or deduct any amount
from any royalty payable to Autogen on account of any proceeding as referred to
in clause 14.3.

 

15.                              INFRINGEMENT OF OTHERS RIGHTS

 

15.1                       Notification of
action

 

In the event that legal action is
threatened or commenced against Merck or any Sub-licensee arising out of Merck’s
use of Autogen Patents or Autogen Know-How, Merck must not make any admissions
or enter into any substantive steps in connection therewith but must promptly
notify Autogen.

 

15.2                       Autogen action

 

If such legal action against Merck or a
Sub-licensee arises out of the use of the Autogen Patents or Autogen Know-How
in accordance with the terms and conditions of this agreement in relation to
Products, then Autogen must defend and/or assist in the defence of such
litigation, and must bear the reasonable costs and expenses of such
defence.  If any damages or awards are assessed
against Merck, then provided that Merck has at all times followed the
instructions of, or otherwise obtained the consent of, Autogen in respect of
the defence of such claims, then such damages or awards must, as well as any
and all reasonable costs incurred by Merck, be satisfied and paid by Autogen.

 

15.3                       Merck action

 

If such legal action against Merck related
to the use by Merck, Merck Affiliates or Sub-licensee of the Autogen Patents or
Autogen Know-How or use of Stage 1 Patents, Stage 1 

 

25

 

Know-How or Stage 2 Patents or Stage 2
Know-How other than in accordance with the terms and conditions of this
agreement Merck must promptly notify Autogen of the commencement of legal
action. Merck must bear all its own costs and expenses and must be responsible
for awards against it and Autogen, as well as any and all reasonable costs
incurred by Autogen, to the extent that indemnification, warranties and other
claims may not be available against Autogen. 
If any amounts are recovered by or awarded or paid to Merck from or by a
third party as a result of any such action or litigation, Merck must from such
amounts reimburse Autogen for all costs and amounts paid by Autogen in
connection with such action or litigation and must, after deducting the legal
costs incurred by it in taking such legal or other action, pay to Autogen from
any compensation recovered thereby, Autogen’s part thereof determined in
accordance with the respective interests of the parties in such compensation.

 

16.                              CONSTRUCTION OF PATENTS

 

If in any proceedings in which the validity
infringement or priority of any claim of any patent or patent application
included in Licensed Patents is in issue a Final Judgment is obtained the
construction placed upon any such claim by such a Final Judgment must be
thereafter followed not only as to such claim but as to all claims to which
such construction applies with respect to acts occurring thereafter.

 

17.                              FORCE MAJEURE

 

17.1                       Party not
liable

 

Where a party is required under this
agreement to perform an obligation or do any act or thing by a designated time
or date (other than an obligation to make payment) (“Obligation”),
the part is not be liable for any delay in performing or for failure to perform
an Obligation where the delay or failure arises from Force Majeure and that
party has complied with this clause.

 

17.2                       Notice of Force
Majeure

 

A party who claims Force Majeure must:

 

(a)                                  give
the other party prompt notice of the Force Majeure with reasonably full
particulars and an estimate of the extent and duration of its delay in
performance, or inability to perform; and

 

(b)                                 use
all possible diligence to remove the Force Majeure as quickly as possible
provided that this will not oblige the party to settle on terms unsatisfactory
to that party any strike, lockout or other labour difficulty, or any
investigation or proceeding by any governmental authority or any litigation by
any third party.

 

17.3                       Termination in
case of Force Majeure

 

If the delay continues beyond 30 Business
Days, after the notice given under clause 17.2,
the parties must meet to discuss in good faith a mutually satisfactory
resolution of the problem and, if unable to achieve such a resolution within a
further 30 Business Days, either party may elect to terminate this agreement by
5 Business Days prior written notice to the other.

 

26

 

18.                              ARBITRATION

 

In case of any disputes arising between the
parties or arising out of the performance or non-performance of the obligations
of either party hereunder, or the termination of this agreement, the parties
will endeavour to settle such disputes amicably between themselves.  If the parties fail to resolve such disputes,
then such disputes shall be finally resolved by arbitration in accordance with
the Rules of Conciliation and Arbitration of the International Chamber of
Commerce (ICC) by one or more arbitrators appointed in accordance with the said
rules.

 

Any such arbitration will be held in
English language and take place in Paris - FRANCE.

 

19.                              NOTICES

 

19.1                       Form of
Notice

 

Any notice, approval, consent or other
communication (“notice”) from one party to another (“Recipient”) must be in
writing and be signed by a person duly authorised by the person giving the
notice.

 

19.2                       Manner of
Service

 

A notice must be served by:

 

(a)                                  leaving
it at the Recipient’s address;

 

(b)                                 sending
it by ordinary pre-paid post (airmail if being sent from or to a place outside
of Australia) to the Recipient’s address; or

 

(c)                                  sending
it by facsimile to the facsimile number of the Recipient.

 

19.3                       Address for
Service

 

Until other details are specified by a
Party as its address or facsimile number for service the following apply:

 

Autogen

 

	
  Address :

  	
   

  	
  PO Box 1069, Grovedale, Victoria,
  Australia

  
	
   

  	
   

  	
   

  
	
  Facsimile :

  	
   

  	
  61 3 5227 2752

  
	
   

  	
   

  	
   

  
	
  Attention :

  	
   

  	
  Company Secretary

  

 

Merck

 

	
  Address :

  	
   

  	
  37 rue Saint Romain, 69379 Lyon, CEDEX
  08, France

  
	
   

  	
   

  	
   

  
	
  Facsimile :

  	
   

  	
  33-4-78-75-39-05

  
	
   

  	
   

  	
   

  
	
  Attention :

  	
   

  	
  Head of Legal Department

  

 

27

 

19.4                       Time of Service

 

A letter or facsimile will be taken to be
served:

 

(a)                                  in
the case of a delivered letter, on the day of delivery, unless delivery is made
on a non Business Day or after 4:30 p.m. (local time in the place of
receipt) on a Business Day, in which case it will be taken to be served on the
next Business Day;

 

(b)                                 in
the case of a posted letter, on the third (or seventh in the case of airmail)
Business Day after posting; and

 

(c)                                  in
the case of a facsimile, on receipt by the party giving the notice of a transmission
confirmation report, unless within one Business Day of receipt the Recipient
has informed the party giving the notice that the transmission was incomplete
or garbled, provided that in any case if transmission is completed after 4:30 p.m.
(local time in the place of receipt) or is received on a non Business Day, the
notice will be taken to be served on the next Business Day.

 

20.                              MISCELLANEOUS

 

20.1                       Time of essence

 

Time will be of the essence of the
obligations of each party to each other under this agreement.

 

20.2                       Severance

 

This agreement is severable and is deemed
to apply separately as to each country comprising the Territory.  A material breach of this agreement in
respect of one or more countries in the Territory will not affect the validity
or enforceability of this agreement as to the other countries comprising the
Territory.  If any provision is held
invalid or unenforceable, in whole or in part in any jurisdiction, then such
invalidity or unenforceability will only affect such provision or part thereof
in such jurisdiction, and will not in any manner affect the provision in this
agreement in any other jurisdiction.  To
the extent legally permissible an arrangement which reflects the original intent
of the parties must be substituted for such invalid or unenforceable provision.

 

20.3                       Waiver

 

The failure, delay, relaxation or
indulgence by any party in exercising any power or right given to that party
under this agreement will not operate as a waiver of that power or right, nor
will any single exercise of a power or right preclude any other or further
exercise of it or the exercise of any other power or right under this
agreement.  A power or right may only be
waived in writing, signed by the party to be bound by the waiver.

 

20.4                       Relationship of
parties

 

Nothing contained in this agreement is to
be construed so as to place any party in the relationship of principal,
employee, agent, partner, joint venturer or legal representative of any other
party.  The parties expressly agree and
acknowledge that each of the parties is an independent contracting party and
does not, unless expressly provided, have the 

 

28

 

authority or power for or on behalf of any
other party to enter into any contract, to incur debts, to accept money, to
assume any obligations or to make any warranties or representations.

 

20.5                       Injunctive
relief

 

If there is any conduct or threatened
conduct which is or may be a breach of this agreement, both parties acknowledge
that damages may be inadequate compensation for such a breach and that the
other party is entitled to apply to any court of competent jurisdiction for
interim or permanent injunctive relief or both restraining the other party from
committing any breach or threatened breach of this agreement without showing or
proving any actual damage sustained by it. 
Such rights and remedies will be cumulative and in addition to any other
rights or remedies which that party may be entitled to at law or in equity.

 

20.6                       Proper law

 

This agreement must be construed in
accordance with and governed by the laws of the United Kingdom and its form,
execution, validity, construction and effect is to be determined in accordance
with the laws of the United Kingdom.

 

20.7                       Rule of
construction

 

No rule of construction applies to
this agreement to the disadvantage of a party because that party was
responsible for the preparation of this agreement or any part of it.

 

20.8                       Variation

 

Any modification, alteration, change or
variation of any term or condition of this agreement must be in writing,
executed by all parties.

 

20.9                       Assignment

 

This agreement is personal to the respective parties
and neither is entitled to assign in whole or in part without the prior written
consent of the other party.

 

20.10                Further documents

 

Each party agrees that it will forthwith
upon the request of the other party execute and deliver all such instruments
and agreements and will take all such other actions as the other party may
reasonably request from time to time in order to give effect to the provisions
and purposes of this agreement.

 

20.11                Affiliates’ actions

 

Each party will ensure that none of its
Affiliates takes any action which is inconsistent with that party’s obligations
under this agreement, or which if it was done or not done under this agreement
by that party would amount to a breach of this agreement by that party.

 

29

 

20.12                Costs and Taxes

 

Each party must pay its own costs and
expenses in relation to the negotiation, preparation, execution, delivery,
stamping and registration, completion, variation and discharge of this
agreement and Merck must pay any Tax in respect of the execution, delivery,
performance, release, discharge, amendment, enforcement or attempted
enforcement or otherwise of any of the following:

 

(a)                                  this
agreement;

 

(b)                                 any
agreement or document entered into or signed under this agreement;

 

(c)                                  any
transaction contemplated under this agreement; and

 

(d)                                 any
payment made or received in respect of this agreement,

 

except in any case to the extent to which
such Tax is payable in Australia or on or in respect of the income of Autogen.

 

20.13                Interest on overdue
amounts

 

If any amount due under this agreement is
not paid when due, then the party obliged to make payment must pay to the other
party interest at the Base Rate on the amount due and payable, accruing from
day to day and to be computed from the date for payment of the amount until
payment of the amount in full.

 

20.14                Withholding taxes

 

If Merck is legally obliged to deduct or
withhold any tax from any payment, in particular any royalty payment, to be
made to Autogen hereunder, then if such payment is made from its country of
domicile (for tax purposes) Merck must on request provide Autogen with receipts
and any other evidence from relevant revenue authorities which may be required
by Autogen for its own tax affairs, provided that in no circumstances may the
amount withheld be more than the minimum amount required to be withheld under
the double tax treaty between France and Australia and to the extent the
withholding is greater than the minimum amount, Merck is obliged to gross up
such payment so that the net payment actually received by Autogen is not less
than the full payment less the minimum amount.

 

20.15                Counterparts

 

This agreement may be executed in
counterparts, and by the parties on separate or the same counterparts, each of
which is deemed an original, but all of which constitute one and the same
instrument.

 

20.16                Registration of agreement

 

If this agreement or any associated
transaction is required by the law of any country, except Australia, to be
either approved or registered in any country or with any governmental agency,
Merck is responsible for obtaining such approval or registration including
without limiting the generality of the foregoing, causing this agreement to be
stamped, recorded and registered at its cost in such country.  Autogen agrees to co-operate 

 

30

 

in any such application or registration
procedure.  Merck must furnish proof of
compliance with the foregoing to Autogen when and if Autogen so requires.

 

20.17                Not obliged to act
contrary to law

 

No party is obliged to carry out or perform
any of the terms of this agreement where doing so would constitute a violation
of any treaty, law, code or regulation of any governmental authority whether
local, national or supranational.  In any
event the other terms of this agreement nevertheless continue and the parties
must use all reasonable endeavours to re-negotiate and amend this agreement so
that the performance of this agreement as so amended will not involve any such
violation.

 

20.18                Statutory rights not
limited

 

The powers, remedies and rights conferred
upon the parties by or under any statute are (except to the extent inconsistent
with the terms and provisions expressed in this agreement) be in addition to
the powers, remedies and rights conferred by this agreement.

 

20.19                Consents

 

Unless this agreement provides otherwise
and to the extent permitted by law, a party may, in its absolute discretion,
conditionally or unconditionally give or withhold any approval or consent
permitted or required to be given by it pursuant to this agreement.

 

20.20                Entire agreement

 

This agreement constitutes the entire
agreement between the parties in relation to the subject matter of this
agreement.  Any prior arrangements,
agreements, representations or undertakings are superseded and, except as expressly
provided, each party acknowledges that it has not relied on any arrangement,
agreement, representation or understanding which is not expressly set out in
this agreement.

 

31

 

SCHEDULE 1

 

Autogen
Patents

 

(Referred
to in clause 1.1, definition of “Autogen
Patents”)

 

1. Patent application entitled “A gene and uses therefor” (AGT-119, AGT-120, AGT-121,
AGT-122, AGT-422, AGT-123, AGT504). National applications and their
status are shown in the following table

 

	
  Country

  	
   

  	
  Appl. No./Patent No.

  	
   

  	
  Filing/Patent Date

  	
   

  	
  Status

  	
   

  
	
  USA

  	
   

  	
  60/330,149

  	
   

  	
  16.10.2001

  	
   

  	
  Pending

  	
   

  

 

2. United States patent application
60/330,149 “A gene and uses therefor”
filed 16 October 2001, in the name of Autogen Research Pty Ltd.

 

32

 

SCHEDULE 2

 

Stage 1
Patents

 

The
following is a list all of the patent applications (in addition to those
described in Schedule 1)
relating to or arising out of Stage 1 Research.

 

1.
Invention entitled “A novel gene and uses
therefor” Beacon (claiming priority from Australian Patent
Application Nos. PP0117/97 and PP0323/97), filed in the name of Deakin
University and International Diabetes Institute.

 

	
  Country

  	
   

  	
  Appl. No./ 

  Patent No.

  	
   

  	
  Filing/ 

  Patent Date

  	
   

  	
  Status

  	
   

  
	
  Australia

  	
   

  	
  10112/99
  (742651)

  	
   

  	
  30.10.1998

  	
   

  	
  Granted

  	
   

  
	
  Canada

  	
   

  	
  2307839

  	
   

  	
  30.10.1998

  	
   

  	
  Pending
  -

  	
   

  
	
  Europe

  	
   

  	
  98952412.9

  	
   

  	
  30.10.1998

  	
   

  	
  Pending

  	
   

  
	
  Hong
  Kong

  	
   

  	
  00107656.0

  	
   

  	
  29.11.2000

  	
   

  	
  Pending

  	
   

  
	
  Israel

  	
   

  	
  135822

  	
   

  	
  30.10.1998

  	
   

  	
  Pending

  	
   

  
	
  Japan

  	
   

  	
  2000-519076

  	
   

  	
  30.10.1998

  	
   

  	
  Pending

  	
   

  
	
  Mexico

  	
   

  	
  0004223

  	
   

  	
  30.10.1998

  	
   

  	
  Pending

  	
   

  
	
  New
  Zealand

  	
   

  	
  504327

  	
   

  	
  30.10.1998

  	
   

  	
  Accepted

  	
   

  
	
  New
  Zealand

  	
   

  	
  520101
  (Division of NZ Application No. 504327)

  	
   

  	
  10.7.2002

  	
   

  	
  Under
  examination

  	
   

  
	
  Singapore

  	
   

  	
  200002303-6

  	
   

  	
  30.10.1998

  	
   

  	
  Granted

  	
   

  
	
  U.S.A.

  	
   

  	
  09/331,930

  	
   

  	
  30.10.1998

  	
   

  	
  Accepted

  	
   

  
	
  U.S.A.

  	
   

  	
  not
  yet available (divisional of USSN 09/331,930)

  	
   

  	
  30.10.1998

  	
   

  	
  Pending

  	
   

  

 

2.
Invention entitled “A ligand of the protein ‘beacon’”,
claiming priority from Australian Patent Application Nos. PP9919/99 and
PQ6454/00, filed in the name of Autogen Research Pty Ltd.

 

	
  Country

  	
   

  	
  Appl. No./Patent No.

  	
   

  	
  Filing/Patent Date

  	
   

  	
  Status

  	
   

  
	
  PCT

  	
   

  	
  PCT/AU00/00342

  	
   

  	
  19.4.2000

  	
   

  	
  Dormant

  	
   

  
	
  Australia

  	
   

  	
  39469/00

  	
   

  	
  19.4.2000

  	
   

  	
  Pending
  – examination requested

  	
   

  
	
  Canada

  	
   

  	
  2370286

  	
   

  	
  19.4.2000

  	
   

  	
  Pending

  	
   

  
	
  Europe

  	
   

  	
  00918579.4

  	
   

  	
  19.4.2000

  	
   

  	
  Pending

  	
   

  
	
  Hong
  Kong

  	
   

  	
  02106821.0

  	
   

  	
  18.9.2002

  	
   

  	
  Pending

  	
   

  
	
  Israel

  	
   

  	
  146035

  	
   

  	
  19.4.2000

  	
   

  	
  Pending

  	
   

  
	
  Japan

  	
   

  	
  2000-614280

  	
   

  	
  19.4.2000

  	
   

  	
  Pending

  	
   

  
	
  Mexico

  	
   

  	
  PA/2001/010743

  	
   

  	
  19.4.2000

  	
   

  	
  Pending

  	
   

  
	
  New
  Zealand

  	
   

  	
  514754

  	
   

  	
  19.4.2000

  	
   

  	
  Under
  examination

  	
   

  
	
  Singapore

  	
   

  	
  200106345-2

  	
   

  	
  19.4.2000

  	
   

  	
  Pending

  	
   

  
	
  U.S.A.

  	
   

  	
  09/959,164

  	
   

  	
  19.4.2000

  	
   

  	
  Pending

  	
   

  

 

33

 

3.Invention
entitles “Novel genes and their use in
modulation of obesity, diabetes and energy imbalance”, (B38, B55 (Tanis), B60),
claiming priority from US Provisional Patent application No. 60/141,441.

 

	
  Country

  	
   

  	
  Appl. No./Patent No.

  	
   

  	
  Filing/Patent Date

  	
   

  	
  Status

  	
   

  
	
  PCT

  	
   

  	
  PCT/AU00/00786

  	
   

  	
  29.6.2000

  	
   

  	
  Dormant

  	
   

  
	
  Australia

  	
   

  	
  55129/00

  	
   

  	
  29.6.2000

  	
   

  	
  Pending
  – examination requested

  	
   

  
	
  Canada

  	
   

  	
  2377784

  	
   

  	
  26.9.2000

  	
   

  	
  Pending

  	
   

  
	
  Europe

  	
   

  	
  00940047.4

  	
   

  	
  29.6.2000

  	
   

  	
  Pending

  	
   

  
	
  Hong
  Kong

  	
   

  	
  60/141441

  	
   

  	
  26.6.2000

  	
   

  	
  Pending

  	
   

  
	
  Israel

  	
   

  	
  147183

  	
   

  	
  29.6.2000

  	
   

  	
  Pending

  	
   

  
	
  Japan

  	
   

  	
  2001-508333

  	
   

  	
  29.6.2000

  	
   

  	
  Pending

  	
   

  
	
  Mexico

  	
   

  	
  PA/2001/013425

  	
   

  	
  29.6.2000

  	
   

  	
  Pending

  	
   

  
	
  New
  Zealand

  	
   

  	
  516211

  	
   

  	
  29.6.2000

  	
   

  	
  Under
  examination

  	
   

  
	
  Singapore

  	
   

  	
  00108084-5

  	
   

  	
  29.6.2000

  	
   

  	
  Pending

  	
   

  
	
  U.S.A.

  	
   

  	
  10/039,050

  	
   

  	
  29.6.2000

  	
   

  	
  Pending

  	
   

  

 

4.
Invention entitled “A method of treatment and
agents for same” (modulator of calpain, calpastain & myofibrillar
protein), claiming priority from Australian Patent Application No. PQ6565/00,
filed in the name of Autogen Research Pty Ltd.

 

	
  Country

  	
   

  	
  Appl. No./Patent No.

  	
   

  	
  Filing/Patent Date

  	
   

  	
  Status

  	
   

  
	
  PCT

  	
   

  	
  PCT/AU01/00348

  	
   

  	
  28.3.2001

  	
   

  	
  Lapsed
  – national phase applications not proceeded with

  	
   

  

 

5.
Invention entitled “A novel gene and uses
therefor” (H24, H15, H20), filed
in the name of Autogen Research Pty Ltd, International Diabetes
Institute and Deakin University.

 

	
  Country

  	
   

  	
  Appl. No./Patent No.

  	
   

  	
  Filing/Patent Date

  	
   

  	
  Status

  	
   

  
	
  PCT

  	
   

  	
  PCT/AU02/01099

  	
   

  	
  13.8.2002

  	
   

  	
  Pending

  	
   

  
	
  Australia

  	
   

  	
  PR7042/01

  	
   

  	
  14.8.2001

  	
   

  	
  Dormant
  – continued as PCT/AU02/01099

  	
   

  
	
  U.S.A

  	
   

  	
  60/323,281

  	
   

  	
  18.9.2001

  	
   

  	
  Dormant
  – continued as PCT/AU02/01099

  	
   

  

 

6.
Invention entitled “A gene and uses therefor”
(AGT-106, AGT-113, AGT-201, AGT-202 and AGT-203), filed in the name of Autogen
Research Pty Ltd, International Diabetes Institute and Deakin University.

 

	
  Country

  	
   

  	
  Appl. No./Patent No.

  	
   

  	
  Filing/Patent Date

  	
   

  	
  Status

  	
   

  
	
  PCT

  	
   

  	
  PCT/AU02/00109

  	
   

  	
  5.2.2002

  	
   

  	
  Pending

  	
   

  
	
  Australia

  	
   

  	
  PR2950/01

  	
   

  	
  7.2.2001

  	
   

  	
  Dormant
  – continued as PCT/AU02/00109

  	
   

  

 

34

 

7.
Invention entitled “A gene and uses therefor”
(L25, L27, L28, S6, S9, S10, S15 and S31), filed in the name of Autogen Research Pty Ltd, International
Diabetes Institute and Deakin University.

 

	
  Country

  	
   

  	
  Appl. No./Patent No.

  	
   

  	
  Filing/Patent Date

  	
   

  	
  Status

  	
   

  
	
  PCT

  	
   

  	
  PCT/AU02/00628

  	
   

  	
  21.5.2002

  	
   

  	
  Pending

  	
   

  
	
  Australia

  	
   

  	
  PR5137/01

  	
   

  	
  21.5.2001

  	
   

  	
  Dormant
  — continued as PCT/AU02/00628

  	
   

  

 

8.
Invention entitled “A gene and uses therefor”
(AGT-109, AGT-407, AGT-408, AGT-409, AGT-601, AGT-204), filed in the name of Autogen
Research Pty Ltd, International Diabetes Institute and Deakin University.

 

	
  Country

  	
   

  	
  Appl. No./Patent No.

  	
   

  	
  Filing/Patent Date

  	
   

  	
  Status

  	
   

  
	
  PCT

  	
   

  	
  PCT/AU02/01173

  	
   

  	
  28.9.2002

  	
   

  	
  Pending

  	
   

  
	
  USA

  	
   

  	
  60/315,743

  	
   

  	
  29.8.2001

  	
   

  	
  Dormant
  – continued as PCT/AU02/01173

  	
   

  

 

9.
Invention entitled “A gene and uses therefor”
(AGT-106, AGT-113, AGT-201, AGT-202, AGT-203), filed in the name of Autogen
Research Pty Ltd, International Diabetes Institute and Deakin University.

 

	
  Country

  	
   

  	
  Appl. No./Patent No.

  	
   

  	
  Filing/Patent Date

  	
   

  	
  Status

  	
   

  
	
  PCT

  	
   

  	
  PR2950/01

  	
   

  	
  07.02.2001

  	
   

  	
  Dormant

  	
   

  
	
  International

  	
   

  	
  PCT/AU02/00109

  	
   

  	
  05.02.2002

  	
   

  	
  Pending

  	
   

  

 

10.
Invention entitled “A gene and uses therefor”
(AGT-124, AGT-125, AGT-126, AGT-131, and
AGT-432), filed in
the name of Autogen Research Pty Ltd.

 

	
  Country

  	
   

  	
  Appl. No./Patent No.

  	
   

  	
  Filing/Patent Date

  	
   

  	
  Status

  	
   

  
	
  USA

  	
   

  	
  60/353,355

  	
   

  	
  1.2.2002

  	
   

  	
  Pending

  	
   

  

 

11.
Invention entitled “Modulation of
physiological processes and agents useful for the same”, (apolipoprotein
{modulator of Tanis}).

 

	
  Country

  	
   

  	
  Appl. No./Patent No.

  	
   

  	
  Filing/Patent Date

  	
   

  	
  Status

  	
   

  
	
  PCT

  	
   

  	
  Not
  yet available

  	
   

  	
  1.2003

  	
   

  	
  Pending

  	
   

  
	
  Australia

  	
   

  	
  Not
  yet available

  	
   

  	
  1.2003

  	
   

  	
  Pending

  	
   

  

 

35

 

EXECUTED as an agreement

 

 

	
  The common seal of Autogen Limited is

  affixed in accordance with its articles of

  association in the presence of:

  	
   

  	
  )

  )

  )

  )

   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   Greg
  Collier

  
	
  Director

  	
   

  	
   (name printed)

   

   

   Steven Cole

  
	
  Director/Secretary

  	
   

  	
   (name printed)

  

 

 

	
  The common seal of Merck S.A. is affixed

  in accordance with its articles of association

  in the presence of:

  	
   

  	
  )

  )

  )

  )

   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   Jean-Noel
  Treilles

  
	
  Director

  	
   

  	
   (name printed)

   

   

   Remi Delansorne

  
	
  Director/Secretary

  	
   

  	
   (name printed)

  

 

36Exhibit 4.2(k)

 

“CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS
DOCUMENT HAVE BEEN OMITTED AND HAVE BEEN SEPARATELY FILED WITH THE
COMMISSION.  CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.”

 

	
  DATE

  	
   

  	
  August 26
  2002

  

 

AUTOGEN
PTY LTD

 

and

 

MERCK SANTE s.a.s.

 

 

 

COMMERCIALISATION LICENCE

(Field of Diabetes and obesity)

“TANIS”

 

 

TABLE OF CONTENTS

 

	
  1. INTERPRETATION

  	
   

  
	
  1.1 Definitions

  	
   

  
	
  1.2 Construction

  	
   

  
	
   

  	
   

  
	
  2. GRANT OF LICENCE

  	
   

  
	
  2.1 Grant of licence

  	
   

  
	
  2.2 Autogen’s Rights

  	
   

  
	
  2.3 Scope of exclusive
  licence

  	
   

  
	
   

  	
   

  
	
  3. ROYALTIES

  	
   

  
	
  3.1 Royalty Obligation

  	
   

  
	
  3.2 Royalty on
  unprotected products

  	
   

  
	
  3.3 Multiple royalties

  	
   

  
	
   

  	
   

  
	
  4. REPORTS

  	
   

  
	
  4.1 Reporting requirements

  	
   

  
	
  4.2 Products
  which don’t attract royalty

  	
   

  
	
  4.3 Time of Sale

  	
   

  
	
  4.4 Foreign currencies

  	
   

  
	
  4.5 Payment mechanics

  	
   

  
	
  4.6 Merck
  Sante to keep accounts and records

  	
   

  
	
  4.7 Inspection of accounts

  	
   

  
	
  4.8 Settlement of
  discrepancies

  	
   

  
	
  4.9 Cost of audit

  	
   

  
	
  4.10 Advance royalty

  	
   

  
	
   

  	
   

  
	
  5. SUB-LICENSING

  	
   

  
	
  5.1 Scope of
  sub-licence provisions

  	
   

  
	
  5.2 Right to sub-Licence

  	
   

  
	
  5.3 Sub-licenses to
  Affiliates

  	
   

  
	
  5.4 Sub-licences -
  non-Affiliate

  	
   

  
	
  5.5
  Calculation of royalty for all Sub-licensees

  	
   

  
	
  5.6 Royalty reporting

  	
   

  
	
  5.7 Enforcement of
  Sub-licences

  	
   

  
	
   

  	
   

  
	
  6. COMMERCIALISATION

  	
   

  
	
  6.1 General reporting

  	
   

  
	
  6.2 Decision-making

  	
   

  
	
  6.3 Registration of Product

  	
   

  
	
  6.4 Ceasing to
  pursue registration

  	
   

  
	
  6.5 Refusal of Registration

  	
   

  
	
  6.6 Maintenance of
  Registrations

  	
   

  
	
  6.7 Marketing of Products

  	
   

  
	
  6.8 Commencement of
  Marketing

  	
   

  
	
  6.9 General reports

  	
   

  
	
  6.10 Marketing reports

  	
   

  
	
  6.11 Restriction on
  clinical trials

  	
   

  

 

 

	
  7. CONFIDENTIAL INFORMATION

  	
   

  
	
  7.1 Obligations to Autogen

  	
   

  
	
  7.2 Obligations to Merck
  Sante

  	
   

  
	
  7.3 Exceptions to
  obligations

  	
   

  
	
  7.4 Rights in Know-How

  	
   

  
	
  7.5 Term of obligation

  	
   

  
	
  7.6 Permitted disclosures

  	
   

  
	
  7.7 Delivery-up of Know-How

  	
   

  
	
  7.8 Terms of this Agreement

  	
   

  
	
  7.9 Public Announcement

  	
   

  
	
  7.10 Continuous
  disclosure obligations

  	
   

  
	
   

  	
   

  
	
  8.
  LIABILITY

  	
   

  
	
  8.1 Responsibility for
  Products

  	
   

  
	
  8.2 Autogen not liable

  	
   

  
	
   

  	
   

  
	
  9. INDEMNITIES

  	
   

  
	
  9.1 Indemnity by Merck
  Sante

  	
   

  
	
  9.2 Indemnity by Autogen

  	
   

  
	
  9.3 Notification
  regarding indemnity

  	
   

  
	
   

  	
   

  
	
  10.
  INSURANCE

  	
   

  
	
   

  	
   

  
	
  11. TERM AND TERMINATION

  	
   

  
	
  11.1 Term

  	
   

  
	
  11.2 Termination for breach

  	
   

  
	
  11.3 Termination
  in default of payment

  	
   

  
	
  11.4 Grounds for
  immediate termination

  	
   

  
	
  11.5 Reconstruction
  exception

  	
   

  
	
  11.6 Termination by Autogen

  	
   

  
	
  11.7 Termination by
  Merck Sante

  	
   

  
	
  11.8 Termination
  to be without prejudice

  	
   

  
	
   

  	
   

  
	
  12.
  OBLIGATIONS AND RIGHTS ON TERMINATION

  	
   

  
	
  12.1 Obligations of
  Merck Sante

  	
   

  
	
  12.2 Obligations of Autogen

  	
   

  
	
  12.3 Limitation
  of Merck Sante’s rights

  	
   

  
	
   

  	
   

  
	
  13. WARRANTIES

  	
   

  
	
  13.1 General warranties

  	
   

  
	
  13.2
  Specific warranty re Licensed Patents

  	
   

  
	
  13.3 Warranties by Merck
  Sante

  	
   

  
	
   

  	
   

  
	
  14. PROTECTION OF
  LICENSED PATENTS

  	
   

  
	
  14.1 Maintenance
  of Licensed Patents

  	
   

  
	
  14.2 Reporting
  infringements

  	
   

  
	
  14.3
  Conduct of proceedings regarding Rights

  	
   

  
	
  14.4 Royalties

  	
   

  
	
   

  	
   

  
	
  15. INFRINGEMENT OF
  OTHERS RIGHTS

  	
   

  
	
  15.1 Notification of action

  	
   

  
	
  15.2 Autogen action

  	
   

  

 

ii

 

	
  15.3 Merck Sante action

  	
   

  
	
   

  	
   

  
	
  16. CONSTRUCTION OF PATENTS

  	
   

  
	
   

  	
   

  
	
  17. FORCE MAJEURE

  	
   

  
	
  17.1 Party not liable

  	
   

  
	
  17.2 Notice of Force
  Majeure

  	
   

  
	
  17.3
  Termination in case of Force Majeure

  	
   

  
	
   

  	
   

  
	
  18. ARBITRATION

  	
   

  
	
   

  	
   

  
	
  19. NOTICES

  	
   

  
	
  19.1 Form of Notice

  	
   

  
	
  19.2 Manner of Service

  	
   

  
	
  19.3 Address for Service

  	
   

  
	
  19.4 Time of Service

  	
   

  
	
   

  	
   

  
	
  20. MISCELLANEOUS

  	
   

  
	
  20.1 Time of essence

  	
   

  
	
  20.2 Severance

  	
   

  
	
  20.3 Waiver

  	
   

  
	
  20.4 Relationship of
  parties

  	
   

  
	
  20.5 Injunctive relief

  	
   

  
	
  20.6 Proper law

  	
   

  
	
  20.7 Rule of
  construction

  	
   

  
	
  20.8 Variation

  	
   

  
	
  20.9 Assignment

  	
   

  
	
  20.10 Further documents

  	
   

  
	
  20.11 Affiliates’ actions

  	
   

  
	
  20.12 Costs and Taxes

  	
   

  
	
  20.13 Interest on
  overdue amounts

  	
   

  
	
  20.14 Withholding taxes

  	
   

  
	
  20.15 Counterparts

  	
   

  
	
  20.16 Registration of
  agreement

  	
   

  
	
  20.17 Not obliged
  to act contrary to law

  	
   

  
	
  20.18 Statutory
  rights not limited

  	
   

  
	
  20.19 Consents

  	
   

  
	
  20.20 Entire agreement

  	
   

  
	
   

  
	
  Schedule 1

  	
  Autogen Patents

  
	
  Schedule 2

  	
  Stage 1 Patents

  
			

 

iii

 

	
  THIS AGREEMENT is
  made on

  	
   

  	
  August 26
  2002

  

 

BETWEEN

 

Autogen Pty Ltd ACN 074 636 847

of 210 Kings Way, South Melbourne, Victoria, Australia

(“Autogen”)

 

AND

 

MERCK
SANTE s.a.s.

of 37 rue Saint Romain, 69379 Lyon, CEDEX 08, France

(“Merck Sante”)

 

RECITALS:

 

A.           Merck
Sante has exercised its option to take a licence in
respect of certain intellectual property and to conduct further research and
development of the same with a view to the development and commercialisation of
certain products.

 

B.            Autogen has agreed to
grant this licence to certain intellectual property on the terms and conditions
set out.

 

C.            Merck Sante has agreed to pay to Autogen
certain payments as and by way of royalty in respect of the use by it of
certain intellectual property licensed to it by Autogen and either used by it
directly in the commercialisation of certain products or used by it in the
research and development which has led to those products.

 

OPERATIVE PROVISIONS:

 

1.            INTERPRETATION

 

1.1          Definitions

 

In this
agreement the following expressions have the following meanings:

 

“Affiliate” means with respect to a party, any person which
directly or indirectly Controls, or is Controlled by, or is under common
Control with, such party.

 

“Arms Length” means in relation to a transaction or dealing,
a transaction or dealing which might reasonably be expected to operate or apply
between independent enterprises dealing wholly independently with one another
and where neither bears the other any special duty or obligation and no special
relationship exists between them and where the only consideration is cash.

 

 

“Autogen Know-How” means Know-How owned by or licensed to
Autogen in relation to the Autogen Patents in relation to the Tanis Gene
Product.

 

“Autogen Patents” the patents and patent applications owned
by or licensed to Autogen related to the Licensed Field including but not
limited to those referred to in Schedule 1 and
including:

 

(i)            any re-issue, renewal or extension of such a patent or patent
application (whether in whole or in part) and any patent of addition thereto;
and

 

(ii)           any supplementary protection certificate or other form of extension
based on or arising from such patents or patent applications.

 

“Base Rate” means the PIBOR rate published as such by the
French Association of Banks (Association Francaise de Banque (AFB)) or EURIBOR
rate applicable on 1 January 2002 or at any later date, should such date
be postponed for any reason and published as such by the European Federation of
Banks (Federation Europeenne de Banque (FEB)) plus in either case the amount of
1.5% per annum.

 

“Business Day” means a day on which the trading banks are
open for general banking business in both Melbourne, Australia and Lyon,
France.

 

“Claim Asserted in Good Faith” means and is limited to any
claim asserted in any Project Patent which can reasonably be considered to be
patentable under the laws of the country where filed having regard to any and
all references, prior art, novelty, inventiveness, utility and any and all
other relevant legal criteria.

 

“Commencement Date” means the date of execution of this
agreement by the party last signing it.

 

“Control” means the possession, directly or indirectly, of
the power to direct or cause the direction of the management of policies of a
person, whether through the ownership of voting securities, by contract or
otherwise.

 

“Covered By” means when used in the context that a Product is
covered by a Subsisting Claim or a Claim Asserted in Good Faith, that the
Product or the normal method of operation or customarily intended use of such
Product must, when such Product is manufactured, sold, or otherwise Exploited
by Merck Sante or a Sub-Licensee constitute (but for the Licence or Merck Sante’s
ownership of Stage 2 Patents) an infringement of a Subsisting Claim or in the
period of 5 years from the Commencement Date an infringement of a Claim
Asserted in Good Faith, considered as if it were a Subsisting Claim.

 

“Dollars” or “$” means Australian dollars.

 

“EUR” means the new European currency called EURO.

 

“Exploit” means in respect of a:

 

(i)            Product - to make, have made, hire, sell or otherwise dispose of the
Product, to offer to make, sell, hire or otherwise dispose of the Product, to
use or import it or keep it for the purpose of doing any of those things;

 

2

 

(ii)           Process - use the method or process or do any act in respect of a
product resulting from such use which falls within paragraph (i) (a);

 

“FFR” means French Francs.

 

“Final Judgment” means a Judgment or decree which becomes not
further appealable or reviewable through the exhaustion of all permissible
applications for appeal, rehearing or review by any superior court or tribunal
or through the expiration of time permitted for such applications.

 

“Force Majeure” means any cause which is not within the
reasonable control of the party affected by it including, but not limited to,
acts of God, industrial disputes of any kind, war declared or undeclared, civil
disturbance, acts or omissions of Government or other competent authority, fire,
lightning, explosion or flood.

 

“Insolvency Event” means any event of insolvency, bankruptcy
or liquidation of the relevant party, including any voluntary or involuntary
judicial liquidation or re-organisation proceedings.

 

“Know-How” means technical, commercial and other information,
data, know-how, drawings, specifications and/or designs, animal or other
models, methodologies and biological materials embodied in some Material Form,
and without prejudice to the generality of the foregoing includes:

 

(i)            all experimental, manufacturing, process, analytical, packaging,
product, warehousing, quality control and quality assurance and marketing
specifications, standards, procedures, processes, methods, instructions and
techniques, samples, prototypes, formulae, writings of any kind, opinions or
otherwise unwritten data or in the form of computer software or computer
programs or any part thereof in any code; and

 

(ii)           all other information and other material supplied to or received by
a party or its Representatives from another party or Representatives on a
confidential basis pursuant to this agreement.

 

“Licence” means the right and licence granted by Autogen to
Merck Sante pursuant to this agreement.

 

“Licensed Field” means the field of human therapeutic
applications for the treatment or prevention of Diabetes and its complication and as a secondary field, the field of
human therapeutic applications for the treatment or prevention of obesity. For
clarity it is noted that this does not include diagnostics or veterinary
applications.

 

“Licensed Patents” means the Autogen Patents and the Stage 1
Patents.

 

“Licensed Technology” means the Autogen Know-How and Stage 1
Know-How.

 

“Loss” means any loss, damage, cost, interest, expense, fee,
penalty, fine, forfeiture, assessment, demand, action, suit, claim, proceeding,
cause of action, liability or damages incurred by a person, and includes: the
cost of any action taken by the person to protect itself against any loss or to
preserve any right it has under this agreement; and

 

3

 

(ii)           where applicable, reasonable legal costs.

 

“Marketing” means the promotion, advertising, distribution
and sale of the Product and includes a product launch campaign.

 

“Material Form” in relation to information includes any form
(whether visible or not) of storage from which information can be reproduced,
and any form in which Information is embodied or encoded.

 

“Month” means calendar month.

 

“Net Sales Value” of a Product means in the case of an Arms
Length sale the gross amount invoiced by Merck Sante (or the relevant
Sub-licensee) to any customer less any and all of the following: 

 

(i)            any discount or rebates on sales of the Products;

 

(ii)           insurance and freight;

 

(iii)          the selling price of any returned goods or free replacements; and

 

(iv)          taxes imposed on sales of the Products such as value added tax,
excise tax and consumption tax.

 

“Party” means Autogen or Merck Sante and their respective
Affiliates and successors and permitted assigns and “Parties” means all of
them.

 

“Patent” means any patent or patent application as defined in
the Patents Act 1952 (C’th) and any similar
international, national or regional patent or patent application and includes
any and all extensions, renewals, continuations, patent-of-addition and/or
supplementary protection certificates to any of the foregoing and includes any
corresponding patent or patent application taken out or applied for in any
country in the Territory which is fairly based upon or derived from any of the
aforesaid patents.

 

“Products” means any products produced or arising out of use
of the results of Stage 1 Research or Stage 2 Research or arising out of all
and any further development by Merck Sante pursuant to Stage 1 Research or
Stage 2 Research or both.

 

“Project Patents” means the Autogen Patents, the Stage 1
Patents and/or the Stage 2 Patents.

 

“Project Research” means the research in the area of Diabetes
and of novel genes involved in Diabetes and the research arising therefrom,
consisting of the Stage 1 Research and the Stage 2 Research.

 

“Quarter” means each period of three months commencing on the
first days of each January, April, July and October during the Term.

 

“Registration” in respect of a country means the gaining of
all permissions from all Regulatory Authorities in that country necessary to
permit the commencement of Marketing in that country and includes any approval
in respect of packaging or labelling and further includes the agreement of
relevant authorities as to the level of pricing or reimbursement in respect of
the relevant Products, where such registration is mandatory or a practical
commercial imperative.

 

4

 

“Regulatory Authority” in respect of a country means any and
all bodies and organisations regulating the importation, distribution,
marketing or sale of the Product in any part of that country.

 

“Representatives” of a party means that party’s directors,
officers, employees or agents.

 

“Required Insurance” 

 

(i)            means: public liability insurance in respect of Losses up to a limit
of $5,000,000 covering property damage and personal injury as may be relevant
to the performance of each party’s obligations under this agreement to the
other, including (without limitation) liability, loss or damage due to
negligent or malicious damage, data corruption or loss, fire, theft, electrical
and water damage; and

 

(ii)           if the relevant party sells a Product, product liability insurance
in respect of Losses up to a limit of $20,000,000 covering any liability
associated with use or misuse of the Product including, personal injury and
consequential loss.

 

“Research Agreement” means the Research and Licence Agreement
in the field of Diabetes between the parties dated 28 April 1999.

 

“Rights” means the Licensed Patents and the Licensed
Technology.

 

“Royalty Period” means each Quarter during the Term provided
that where the Term commences or ends on a day other than first day of a
Quarter the first and last reports will be for only so much of the Royalty
Period as occurs during the Term.

 

“Significant Competition” means competition or potential
competition to the Product from a third party’s product which, notwithstanding
the fact that it does not breach any Project Patent:

 

(i)            is in whole or in part intended to have the same function or effect
as the Product; or

 

(ii)           in the country of manufacture or sale has taken or has the potential
to take significant market share from the Product or has prevented or deterred
or has the capacity to prevent or deter the Product from obtaining significant
market share.

 

“Stage 1 Know-How” means the Know-How relating to or arising
out of Stage 1 Research in relation to
the Tanis Gene Product.

 

“Stage 1 Patents” means Patents relating to or arising out of
Stage 1 Research including in particular the Patents set out in Schedule 2.

 

“Stage 1 Research” means the Research so described conducted
under the Research Agreement.

 

“Stage 2 Know-How” means the Know-How relating to or arising
out of the Stage 2 Research program in
relation to the Tanis Gene Product.

 

“Stage 2 Patents” means Patents relating to or arising out of
the Stage 2 Research program in
relation to the Tanis Gene Product.

 

5

 

“Stage 2 Research” means generally antibody production, large scale protein production, structural
analysis, screening of compounds affecting the relevant novel gene product,
combinatorial chemistry, toxicological studies and first clinical studies in
obese patients and completion of dose efficiency relationship studies in
diabetic patients (clinical Phase 2).

 

“Sub-licence” means a sub-licence granted to an Affiliate or
other third party under clause 5.

 

“Sub-licensee” means the person in favour of whom a
Sub-licence is granted in accordance with clause 5

 

“Subsisting Claim” means and is limited to any valid claim of
a validly issued unexpired and non-lapsed Project Patent which has not been
held permanently revoked, unenforceable or invalid in a judgment or decree
which becomes not further appealable or reviewable through the exhaustion of
all permissible applications for appeal, rehearing or review by any superior
court or tribunal or through the expiration of time permitted for such
applications, (which judgment or decree has not been admitted to be invalid or
unenforceable through reissue or disclaimer or otherwise).  If there should be two or more decisions
within the same country which are conflicting with respect to the invalidity of
the same claim, the decision of the highest tribunal will thereafter
control.  However should the tribunals be
of equal authority, then the decision or decisions holding the claim valid will
prevail where the conflicting decisions are equal in number and the majority of
decisions will prevail where the conflicting decisions are not equal in
number.  Where a Project Patent has been
issued in a country other than Australia without a separate and independent
examination by the relevant authorities of that country that patent will be
deemed to have a scope equivalent to the scope of the claims of any
corresponding Australian Patent which has had examination in Australia.

 

“Tanis Gene Product” means the novel
gene the subject of the Autogen Patents, and any novel proteins or novel
antigens based on such novel gene, and any product arising from transcription
of such gene.

 

“Term” means the period during which this agreement is in
force pursuant to clause 11.

 

“Territory” means the whole of the world

 

“Year” means each period of twelve months commencing on the
first day of each January during the Term.

 

1.2          Construction

 

In this
agreement unless the context otherwise requires:

 

(a)           Business Day.  If any day appointed or specified by this
agreement for the payment of any money or the doing of any act or thing falls
on a day that is not a Business Day, the day so appointed or specified is
deemed to be the next day which is a Business Day.

 

6

 

(b)           Collective references.  Reference to any thing (including, without
limitation, any amount) is a reference to the whole or any part of it and a
reference to a group of things or persons is a reference to any one or more of
them.

 

(c)           Defined expressions.  If a word or phrase is defined, cognate words
and phrases have corresponding definitions.

 

(d)           Gender.  Words importing any gender include the other
genders.

 

(e)           Headings.  Headings must be ignored in construing this
document.

 

(f)            Joint liability.  An obligation of two or more parties binds
them jointly and severally.

 

(g)           Joint obligations.  An obligation incurred in favour of two or
more parties is enforceable by them jointly and severally.

 

(h)           Month.  Means a calendar month.

 

(i)            Numbers.  Words importing the singular include the
plural and vice versa.

 

(j)            Parts of agreement.  References to this agreement include its
recitals, schedules and annexures.

 

(k)           Persons.  References to persons include corporations
and bodies politic.

 

(l)            Reconstituted bodies.  References to a body which has ceased to
exist or has been reconstituted, amalgamated, reconstructed or merged, or the
functions of which have become exercisable by any other person or body in its
place, is taken to refer to the person or body established or constituted in
its place or the person or body by which its functions have become exercisable.

 

(m)          Representatives and assigns.  References to a person
include the legal personal representatives, successors and permitted assigns of
that person.

 

(n)           Statutory amendments.  A reference to a statute, ordinance, code or
other law includes regulations and other statutory instruments under it and
consolidations, amendments, re-enactments or replacements of any of them
(whether of the same or any other legislative authority having jurisdiction).

 

(o)           Variation.  References to this or any other document
include the document as varied or replaced, and notwithstanding any change in
the identity of the parties.

 

(p)           Writing.  References to writing include any mode of
representing or reproducing words in tangible and permanently visible form, and
include telex and facsimile transmissions.

 

7

 

2.            GRANT OF LICENCE

 

2.1          Grant of licence

 

Autogen grants
to Merck Sante with effect on and from the Commencement Date until expiry of
the Term an exclusive licence within the Licensed Field, that is to the
exclusion of Autogen and third parties, in the Territory within that Licensed
Field, to use the Licensed Patents and the Licensed Technology and to Exploit
the Products utilising the Licensed Patents and Licensed Technology.

 

2.2          Autogen’s Rights

 

Autogen and
Merck Sante agree and acknowledge that during the Term, except as set out in or
permitted by this agreement:

 

(a)           Autogen must not within the Licensed Field Exploit the Products in
the Territory utilising the Licensed Patents or Licensed Technology; and

 

(b)           must not grant or purport to grant to any third party any right in
respect of the Licensed Patents or Licensed Technology which is inconsistent
with the right and licence granted in clause 2.1.

 

2.3          Scope of exclusive licence

 

The grant of the exclusive licence contained
in clause 2.1 does not preclude:

 

(a)           the licensing of the Licensed Patents and Licensed Technology for
use or exploitation outside of the Licensed Field as long as it is not
competitive to the Product; or

 

(b)           the non-commercial use of the Licensed Patents or Licensed Technology by Autogen, the
International Diabetes Institute or Deakin University for the purposes of their
own internal research.

 

3.            ROYALTIES

 

3.1          Royalty Obligation

 

In
consideration of the grant of the Licence, Merck Sante agrees to pay to Autogen
in respect of sales of Products Covered By Project Patents in the Territory a
royalty equal to the following percentages of the Net Sales Value of such
Products:

 

(a)           for yearly Net Sales Value of Products up to US$[*], at the rate of [*]%; and

 

(b)           until the yearly Net Sales Value of Products reaches US$[*], in
respect of yearly Net Sales Value between US$[*] and US$[*], [*]%; and

 

(c)           once the yearly Net Sales Value of Products exceeds US$[*], in
respect of all yearly Net Sales Value in excess of US$[*], at the rate of [*]%.

 

8

 

In this clause, yearly means from 1 January to
31 December in any year.

 

Where in
accordance with the terms set out in the Research Agreement Merck Sante pursues
the Joint Venture Option, the dollar amounts of US$[*] and US$[*] above will be
replaced with US$[*] and US$[*] respectively.

 

3.2          Royalty on unprotected
products

 

If the
manufacture, sale or use of a Product in a particular country is not Covered By
a Project Patent for any reason then so long as there is in respect of that
Product no Significant Competition, royalties will still be payable in respect
of such a Product as if it were Covered By a Project Patent, but at a rate
equal to [*]% of the royalty rate applicable to Products which are actually
Covered By a Project Patent.

 

3.3          Multiple royalties

 

If the
manufacture, use or sale of a Product, which attracts a royalty obligation
under clauses 3.1 or 3.2,
and also attracts a royalty obligation to a third party or parties, not being
Affiliates of Merck Sante, and the aggregate of all such third party
non-Affiliate royalties exceeds [*]% of Net Sales Value, then the royalty rate
payable under clause 3.1 may be reduced in
accordance with the following formula:

 

	
  Rnew = 

  	
  Rold

  	
    x
  [*]%

  
	
  Rtotal

  

 

Where:

 

(a)           Rnew is the new royalty rate

 

(b)           Rtotal is the total of the royalties payable in respect of the
Product to third party non-Affiliates, including the royalty payable to Autogen

 

(c)           Rold is the rate of royalty otherwise payable under clause 3.1,

 

provided that Rnew must not be less than
half Rold.

 

4.            REPORTS

 

4.1          Reporting requirements

 

Merck Sante
must within 60 days of the end of each Royalty Period provide to Autogen a
written report setting out in reasonably specific detail on a country by
country basis:

 

(a)           the gross sales value of all Products which have been sold by Merck
Sante and its Sub-licensees during the preceding Royalty Period and the
calculation of Net Sales Value from such gross sales,

 

(b)           the calculation of the royalty payable on such Products, including
details of the currency conversion rates used, any taxes or other amounts
withheld and any adjustments on account of returns.

 

9

 

4.2          Products which don’t attract
royalty

 

Royalty will
not be payable in respect of any Products supplied, used or consumed by Merck
Sante or any of its Affiliates or Sub-licensees (provided Merck Sante itself
receives no royalty in the following circumstances) for the purposes of
testing, obtaining Registration or in good faith pre-marketing or post
marketing studies or reasonable quantities of normal commercial samples.

 

4.3          Time of Sale

 

A Product is
deemed to be sold at the time it is invoiced to the buyer.

 

4.4          Foreign currencies

 

Merck Sante
will calculate royalties in local currencies and convert the same to Dollars at
the ruling rate of exchange as on the last day of the Royalty Period.

 

4.5          Payment mechanics

 

The royalty
payable to Autogen must be paid to a bank account nominated by Autogen in
Melbourne, Australia (or at such other location as Autogen may stipulate from
time to time) within 60 days of the end of each Royalty Period.

 

4.6          Merck Sante to keep accounts
and records

 

Merck Sante
must keep and retain at least for a period of 36 months after the end of the
Royalty Period to which they relate, true and particular accounts and records
of all sales of Products sufficient to verify Merck Sante’s calculation of Net
Sales Value of Products sold, the calculation of royalty based thereon and
conversion of such amounts into the relevant currency.

 

4.7          Inspection of accounts

 

During the
Term and for a period of 2 years thereafter, Autogen or its duly authorised
representatives reasonably acceptable to Merck Sante have the right to inspect
and audit from time to time the accounts and records referred to in clause 4.6 and such other matters as are directly relevant
to the calculation of the amount of any payment due by Merck Sante to Autogen
under this agreement and are entitled to take copies of such records, on the
following conditions:

 

(a)           inspection is limited to 2 times in any 12 month period;

 

(b)           inspections must take place during normal business hours and upon
reasonable prior notice to Merck Sante;

 

(c)           the Representatives of Autogen who inspect such accounts and records
must be suitably qualified personnel reasonably acceptable to Merck Sante and
must:

 

(i)            prior to inspecting such records and accounts, enter into a
confidentiality agreement with Merck Sante containing undertakings similar to
those in clause 7;

 

10

 

(ii)           whilst inspecting such records and accounts, abide by all of Merck
Sante’s standard rules and regulations; and

 

(iii)          Autogen must indemnify and hold Merck Sante harmless from all
liability resulting from any negligence or any other activities on the part of
Autogen’s Representatives inspecting such records and accounts.

 

4.8          Settlement of discrepancies

 

If any
discrepancy is found by Autogen then the amount thereof, together with interest
at the Base Rate from the proper date for payment, must be paid within 7 days
of demand therefor to Autogen.

 

4.9          Cost of audit

 

Autogen must
bear the cost of any such examination unless a discrepancy of 5% or more in the
amount of any royalty payment is detected, in which event Merck Sante must bear
the reasonable expense of the examination.

 

4.10        Advance royalty

 

Where any
advance royalty has been paid by Merck Sante to Autogen, then until such time
as such advance royalty has been fully recouped from royalties due to Autogen,
Merck Sante will be obliged to calculate and report but not pay the royalties
otherwise due to Autogen under this agreement.

 

5.            SUB-LICENSING

 

5.1          Scope of sub-licence
provisions

 

Merck Sante
acknowledges and agrees that the provisions of this agreement dealing with
sub-licences apply equally to licences by Merck Sante of Stage 2 Patents, to
the extent that any licence by Merck Sante of a Stage 2 Patent will be subject
to the same restrictions and requirements, including royalty entitlements, as
if they were Licensed Patents owned by Autogen.

 

5.2          Right to sub-Licence

 

Except as
required under this agreement, Merck Sante may grant sub-licences of Project
Patents upon such terms and conditions as it may arrange.

 

5.3          Sub-licenses to Affiliates

 

Merck Sante
has the right to grant sub-licences to an Affiliate in respect of a particular
country or group of countries in respect of the Product provided that the
sub-licence complies with the following:

 

(a)           the Affiliate being granted the sub-licence has the commercial
capacity to promote and exploit the relevant Product with due diligence and
probity and has at least sufficient skills and resources to comply with the
obligations placed upon Merck Sante in relation to that Product in the relevant
country or countries;

 

11

 

(b)           the sub-licence is wholly consistent with the terms of this Licence
and in particular:

 

(i)            such sub-licence does not purport to extend or continue in any
circumstances where this Licence may be terminated, and

 

(ii)           the sub-licensee acknowledges that Autogen owns or is the valid
licensee of the Rights;

 

(c)           the sub-licence prohibits the sub-licensee from taking any action or
allowing any action to be taken which detracts from the ownership of the Rights
by Autogen or conflicts with the provisions contained in this Licence in
relation to prosecuting or defending the Project Patents or defending any
allegation of infringement of the Rights;

 

(d)           the sub-licence is in the English language, executed by the
sub-licensee and giving its place of business;

 

(e)           the sub-licence requires the sub-licensee to maintain all books,
records and accounts necessary to enable verification of Net Sales Value and
royalties and other income required to be paid by Merck Sante to Autogen and
permits inspection by Autogen on terms essentially identical to clauses  4.6 and 4.7;

 

(f)            the sub-licence limits the duration of the sub-licence in respect of
any Product for the term of this agreement and further provides for the
sub-licence to terminate automatically upon the termination of this agreement,
or upon an Insolvency Event occurring in relation to the sub-licensee;

 

(g)           the sub-licence prohibits the sub-licensee without the consent of
Autogen from assigning, transferring, mortgaging or parting with any of its
rights under the sub-licence;

 

(h)           the sub-licence provides that the sub-licence will terminate in the
event that the relevant company ceases to be an Affiliate of Merck Sante;

 

(i)            the sub-licence obliges the sub-licensee to maintain the insurances
referred to in clause 10 or Merck Sante does so
itself in respect of the Products that may be sold in the sub-licence
territory; and

 

(j)            the sub-licence provides that all the terms and conditions of the
sub-licence may be enforced by Autogen against the sub-licensee notwithstanding
that Autogen is not a party to the sub-licence or any rule of law or
equity to the contrary.

 

If the sub-licence to be granted by Merck
Sante is in favour of an Affiliate, and complies in all material respects with
the above requirements, it is not necessary for Merck Sante to seek the consent
of Autogen to the granting of such sub-licence, however, Merck Sante is obliged
within 3 months of the entering into of such sub-licence to notify Autogen of
the granting of the licence and is further obliged to provide Autogen with
general details of the sub-licensee, including information as to its financial
affairs and resources and a copy of the executed sub-licence.

 

12

 

5.4          Sub-licences - non-Affiliate

 

Merck Sante may not grant any sub-licence to
a non-Affiliate without the prior written consent of Autogen, such consent not
to be withheld unless Autogen reasonably believes and can objectively justify
its view that:

 

(a)           any proposed sub-licensee will not properly perform and discharge
all of the obligations of Merck Sante under this agreement in respect of the
relevant sub-licensed Territory;

 

(b)           that the proposed sub-licensee is not financially sound or will be
unable to pay royalties and other amounts payable under the relevant
sub-licence as and when they fall due;

 

(c)           there are reasonable grounds to believe that the proposed
sub-licensee is likely to conduct itself in a manner likely to endanger or
cause injury to Autogen’s reputation, or the reputation, quality, image or
character of the Product, in this regard Merck Sante must provide to Autogen
full information detailing any products manufactured, distributed or sold by
the proposed sub-licensee in the proposed sub-licence territory which are
competitive with the Product;

 

(d)           the proposed sub-licence is not wholly consistent with the terms of
this licence and in particular complies with clauses 5.3
(a), (b) (c), (d), (e), (f), (g), (i) and (j); and

 

(e)           the proposed sub-licensee or any of its Affiliates is engaged in
litigation with Autogen or its Affiliates.

 

Merck Sante
must provide full and adequate information to Autogen on the above
matters.  Autogen undertakes to give its
consent within a period not exceeding one month of receipt from Merck Sante of
all information reasonably required to make a determination under this clause,
including written confirmation by Merck Sante that the proposed licence
agreement is in compliance with this clause. 
If no response is given in that period, Autogen will be deemed to have
consented to the sub-licence.

 

5.5          Calculation of royalty for
all Sub-licensees

 

Where any
Product is Exploited by a Sub-licensee, the Net Sales Value of any Products
sold by such Sub-licensee to a person or persons who is not a Sub-licensee is
to be included in Net Sales Value pursuant to clause 3.1
and bear royalty payable by Merck Sante in accordance with clauses 3
and 4 as if it was Net Sales Value of
Product sold by Merck Sante, not as a
proportion of the royalties or other receipts which may be paid by such
Sub-licensee to Merck Sante pursuant to any sub-licence granted by Merck Sante.

 

5.6          Royalty reporting

 

Any payments
due to Autogen under this clause 5 must
be included with Merck Sante’s reports and payments to be made under the
provisions of clause 4 for the Royalty Period in
which any such amounts become due and payable to Merck Sante.

 

13

 

5.7          Enforcement of Sub-licences

 

Merck Sante
must, if so directed by Autogen, take all commercially and legally reasonable
steps to enforce the terms of any Sub-licence.

 

6.            COMMERCIALISATION

 

6.1          General reporting

 

Merck Sante will at all times during Stage 2
Research and subsequent steps, including commercialisation, keep Autogen timely
and fully informed of:

 

(a)           the progress of development and commercialisation, including
internal milestones and approvals;

 

(b)           broad details of any competing products being marketed by Merck
Sante or its Affiliates;

 

(c)           any decision to suspend the continuation of the development or
commercialisation of the Products.

 

6.2          Decision-making

 

Where Merck Sante intends to make a decision
which may result in the suspension or termination of Stage 2 Research or the
further development and commercialisation of Products or which is otherwise
materially adverse to such activities then:

 

(a)           it will give Autogen advance notice of such decision making and the
reasons why such decision may be made; and

 

(b)           it will give Autogen an opportunity to submit material to and make a
presentation to the Merck Sante decision makers in respect of such decision
prior to such decision being made,

 

it being
acknowledged that having followed the above procedures, Merck Sante’s decision
will be in Merck Sante’s entire discretion and will not be fettered or
reviewable in any way by Autogen.

 

6.3          Registration of Product

 

After
completion of the relevant Stage 2 Research program Merck Sante must use
reasonable endeavours to promptly complete Phase III clinical trials, and to
apply for and gain Registration in its own name in respect of one or more
Products.  The cost of undertaking all
such trials and further development and making and prosecuting such
applications is to be borne by Merck Sante.

 

6.4          Ceasing to pursue
registration

 

If, following the process of clause 6.2, Merck Sante in its reasonable opinion decides not
to continue to pursue Registration of any Product on the basis of efficacy,
safety or medical reasons, concerns about the validity of Project Patents or a
substantial change in economic factors, then it must promptly advise Autogen in
writing, together with written

 

14

 

reasons for such decision.  In such a case this licence will terminate
and Autogen may request a licence in respect of Stage 2 Know-How and Stage 2
Patents, in which case the Parties will negotiate in good faith the terms of a
licence (which may be exclusive or non-exclusive and limited to the
discontinued Novel Gene Product and necessary related technology being part of
Stage 2 Know-How and Stage 2 Patents) for the commercialisation of such
Know-How and Patents.

 

6.5          Refusal of Registration

 

If an
application by Merck Sante for Registration is refused, Merck Sante is obliged
to re-apply for Registration when so required by Autogen but such requirement
must only be imposed if Autogen is of the reasonable belief, following
discussions with Merck Sante, that the re-application will be approved.  The cost of making and prosecuting any such
re-application will be borne by Merck Sante.

 

6.6          Maintenance of Registrations

 

Merck Sante
agrees to do all things necessary to ensure that all product registrations and
approvals in respect of the Products are maintained and to provide Autogen with
any and all documentation and information concerning any variations to such
product registrations or approvals.  Such
product registrations and approvals include without limitation any registration
concerning the packaging or labelling of the Products.

 

6.7          Marketing of Products

 

Following
Registration of the Product, Merck Sante must use its best endeavours, at the expense
of Merck Sante, to:

 

(a)           promote, distribute and sell the Products in the Territory in order
to obtain the optimum market potential for the Products;

 

(b)           provide and maintain such suitable places of business for the
storage, handling and sale of the Products at such locations throughout the
Territories as Merck Sante thinks suitable;

 

(c)           provide and maintain such marketing, sales and office staff to
promote and sell the Products in accordance with this agreement, such personnel
to be deemed the agents, representatives or employees of Merck Sante and not
those of Autogen;

 

(d)           maintain in each country in the Territory sufficient stocks of the
Products to meet the market demand for the Products;

 

(e)           where Merck Sante or its Affiliates or sub-licensees are marketing
Competing Products, provide information about the comparative efforts being
made;

 

(f)            no later than 2 months prior to the commencement of each year during
the Term prepare sales and marketing plans in respect of the Product in the
Territories for discussion with Autogen; and

 

(g)           provide to Autogen yearly reports of Merck Sante’s market
intelligence and proposed marketing strategy and performance goals other than
where there is a material change in the market intelligence, proposed marketing
strategy or

 

15

 

performance goals, in which case Merck Sante will
promptly provide to Autogen a report of those material changes.

 

6.8          Commencement of Marketing

 

If Marketing by Merck Sante has not commenced
in any country in the Territories within 6 months of Merck Sante obtaining
Registration or within such other time as agreed by the parties and such
failure to so commence Marketing is not attributable to any failure by Autogen
to comply with its obligations under this agreement, Autogen may by notice in
writing to Merck Sante convert the licence to a non exclusive licence, in
respect of that country. This section should
be applicable, if Merck Sante is not able to justify the delay or to give the
reasons why it was not able to commence marketing within the given period.

 

6.9          General reports

 

Merck Sante
must within one month of the relevant dates advise Autogen, at Merck Sante’s
cost, in respect of each country in the Territory of:

 

(a)           the making of an application for Registration and the gaining of
Registration of any Product; and

 

(b)           details of the date of commencement of Marketing and details of the
establishment of or change to any facilities referred to in clause 6.7(b).

 

6.10        Marketing reports

 

Merck Sante
must every year provide to Autogen a written report detailing its proposed
Marketing activities in relation to the Products in the coming year.  The initial marketing plan is to be provided
no later than one month prior to the commencement of Marketing in the relevant
country and subsequent Marketing plans are to be provided at least three months
prior to each anniversary of such initial date. 
The marketing plan will specify objectives and strategies in respect to
the following and any related matters necessary to ensure optimum market
penetration in the relevant country:

 

(a)           pricing and margin structure;

 

(b)           distribution channels;

 

(c)           sales and distribution targets;

 

(d)           accumulation of market data including assessment of total market
size and segmentation in units and dollars;

 

(e)           overview of trading for the current year and objectives and
strategies for the following year;

 

(f)            assessment of competition;

 

(g)           advertising and promotional expenses;

 

(h)           overall advertising and promotional strategy.

 

16

 

Merck Sante will allow Autogen to provide
comment on the marketing plan (if any) and will consider such comments in good
faith.

 

6.11        Restriction on clinical trials

 

Merck Sante
must not conduct or knowingly supply Product to any person who intends to
conduct any clinical trials or scientific study concerning or utilising
Products (other than where such trial or study is to involve less than 15 human
subjects and does not require any prior Regulatory Authority approval) unless
such trial or study has first been discussed at and approved by the Scientific
Advisory Board established by the parties.

 

7.            CONFIDENTIAL INFORMATION

 

7.1          Obligations to Autogen

 

Subject to clauses 7.3 and 7.6, Merck
Sante covenants with Autogen as follows:

 

(a)           to keep all Know-How belonging to Autogen or supplied to it by
Autogen, including the existence of such Know-How, strictly secret and
confidential (including from all its employees, servants and agents),
exercising at least the same degree of care as it uses to maintain its own
Know-How;

 

(b)           to provide proper and secure storage for such Know-How within its
possession or control;

 

(c)           to use such Know-How only for the purposes of this agreement and not
for any other activity or purpose whatsoever without the prior written approval
of Autogen; and

 

(d)           to not copy or reduce to writing or any other medium any part of
such Know-How except as may be reasonably necessary for the purposes of this
agreement.

 

7.2          Obligations to Merck Sante

 

Subject to clauses 7.3 and 7.6, Autogen
covenants with Merck Sante as follows:

 

(a)           to keep all Know-How belonging to Merck Sante or supplied to it by
Merck Sante, including the existence of such Know-How, strictly secret and
confidential (including from all its employees, servants and agents),
exercising at least the same degree of care as it uses to maintain its own
Know-How;

 

(b)           to provide proper and secure storage for such Know-How within its
possession or control;

 

(c)           to use such Know-How only for the purposes of this agreement and not
for any other activity or purpose whatsoever without the prior written approval
of Merck Sante; and

 

(d)           to not copy or reduce to writing or any other medium any part of
such Know-How except as may be reasonably necessary for the purposes of this
agreement.

 

17

 

7.3          Exceptions to obligations

 

The
obligations of confidence set out in clauses 7.1 and
7.2 do not extend to Know-How which:

 

(a)           at the time of disclosure to a party is in the public domain;

 

(b)           after disclosure to a party becomes part of the public domain
otherwise than as a result of the wrongful act of that party or one of that
party’s disclosees;

 

(c)           a party can show was in its possession at the time of disclosure and
was not acquired directly or indirectly from the other party; or

 

(d)           is received from a third party provided that it was not acquired
directly or indirectly by that third party from a party to this agreement or
under an obligation of confidence;

 

(e)           is required by compulsion of law to be disclosed,

 

provided that:

 

(f)            the onus is on the party alleging the same to prove that one of the
above exceptions has application; and

 

(g)           in any case of uncertainty as to whether the obligations in clauses 7.1 or 7.2 have
application to any information, such information must be treated as subject to
the obligations until advised otherwise by the party to whom the obligations
are owed.

 

7.4          Rights in Know-How

 

Each party
acknowledges and agrees that each other party has made a substantial investment
in that party’s Know-How and has a legitimate right to protect itself against
wrongful disclosure or use of such Know-How.

 

7.5          Term of obligation

 

The
obligations in this clause 7
survive the expiry or termination of this agreement for whatever reason and
continue for a period of 10 years, subject always to the exceptions included in
clause 7.3.

 

7.6          Permitted disclosures

 

Each party (“the
first party”) is permitted to disclose Know-How belonging to another party or
supplied to it by another party (“the other party”) to such of the first party’s
Representatives as require access to such information for the purposes of this
agreement, provided that:

 

(a)           only such Know-How as needs to be disclosed to a person for the
purposes of this agreement will be disclosed to that person; and

 

(b)           the first party must:

 

18

 

(i)            have obtained from each such person undertakings in favour of the
other party substantially in the form of the relevant obligations and
undertakings in this clause 7 (but
not this clause 7.6);

 

(ii)           be responsible for the performance of its Representatives’
undertakings referred to in clause 7.6(b)(i);
and

 

(iii)          take whatever steps are reasonably necessary, including the
institution of legal proceedings, to ensure that each of its Representatives is
bound by and observes the terms of the undertakings referred to in clause 7.6(b)(i).

 

7.7          Delivery-up of Know-How

 

All of a party’s
Know-How and all materials containing or embodying such Know-How and all copies
of or extracts from or notes on the same in the possession, power or control of
another party or any of its employees, servants or agents together with all
forms and other materials relating to practices and procedures in relation to
the Know-How to the extent possible must:

 

(a)           in the event of the expiration or sooner termination of this
agreement, be delivered up by the other party to the first party at the expense
of the other party; and

 

(b)           in the event of any demand made by the first party be delivered up
by the other party to the first party at the expense of the first party.

 

7.8          Terms of this Agreement

 

Merck Sante
and Autogen shall not disclose any terms or conditions of this agreement to any
third party without the prior consent of the other party, except as required by
applicable law or to a third party with whom Autogen or Merck Sante has entered
into or proposes to enter into a business relationship, provided that such
third party shall enter into a confidentiality agreement with, or otherwise owe
a duty or confidentiality to Merck Sante or Autogen, as applicable.

 

7.9          Public Announcement

 

Except as
required by law, order or regulation of a governmental agency or a court of
competent jurisdiction, no other announcement, public release or notice of any
kind may be issued without the express written consent of both parties, which
consent shall not be unreasonably withheld, provided, however, the parties
shall prepare a joint press release announcing the transaction set forth in
this agreement to be issued promptly upon execution of this agreement.

 

7.10        Continuous disclosure
obligations

 

Autogen is a
subsidiary of Australia Wide Industries Limited (“AWI”) ACN 000 248 304, which
is listed on the Australian Stock Exchange (“ASX”).  As such Autogen is subject to the continuous
disclosure requirements of the ASX.  The
obligations of Autogen under this agreement will not restrict it or AWI from
making whatever disclosures are necessary for the purposes of fulfilling the
requirements applicable to AWI as a company listed on the ASX, and neither
Autogen or AWI is under any obligation to delay the public release of any
required announcement pending the provision of any consent or approval from

 

19

 

Merck
Sante.  The above provision will also
apply with such adaptations as are necessary to disclosure obligations imposed
upon Merck Sante as a subsidiary of its listed parent Merck KGaA.

 

8.            LIABILITY

 

8.1          Responsibility for Products

 

Merck Sante
must ensure at all times during the Term that Products are tested,
manufactured, used and sold strictly in accordance with all relevant applicable
requirements and standards of relevant jurisdictions and Merck Sante will be
responsible for conducting its own independent examination and verification of
the accuracy and suitability of Licensed Patents and Licensed Technology and
for ensuring the same are suitable for the purposes for which they are
provided.

 

8.2          Autogen not liable

 

Except as
provided in clauses 9.2 and 13.2, Autogen is not liable (in contract or tort or
otherwise) to compensate Merck Sante for any loss howsoever arising suffered by
Merck Sante arising directly or indirectly from the use of the Licensed Patents
or Licensed Technology or the sale of Products.

 

9.            INDEMNITIES

 

9.1          Indemnity by Merck Sante

 

Merck Sante
agrees to indemnify Autogen against and hold Autogen harmless from any and all
Losses arising from or in connection with:

 

(a)           a breach by Merck Sante of any of its warranties or obligations
under this agreement;

 

(b)           the manufacture of the Products by Merck Sante or any Sub-licensee;

 

(c)           the storage, use, sale, shipping and Marketing of the Product by
Merck Sante or any Sub-licensee;

 

(d)           any representations, express, implied or statutory made by Merck
Sante or any Sub-licensee as to the efficacy or safety or use to be made by any
purchaser of the Product including, without limitation, representations made by
reference to the labelling or packaging or the Product; and

 

(e)           it must be a term of any Sub-licence granted by Merck Sante that the
Sub-licensee agrees to the same extent and in the same terms as the indemnities
contained in clauses 9.1 (b), (c) and (d) to indemnify Autogen and the Sub-licensee
specifically agrees that it will not challenge the standing of Autogen in the
event of Autogen seeking to rely upon such indemnification;

 

provided that
neither Merck Sante nor any sub-licensee is required to indemnify Autogen for
any Losses, to the extent they result from Autogen’s or its Representatives
negligence or breach of any of Autogen’s warranties or obligations under this
agreement.

 

20

 

9.2          Indemnity by Autogen

 

Autogen agrees
to indemnify Merck Sante and hold Merck Sante all harmless from any and all
Losses, arising from or in connection with a breach by Autogen of any of its
warranties or obligations under this agreement provided that Autogen is not
required to indemnify Merck Sante for any Losses, to the extent they result
from Merck Sante’s or its Representatives negligence or breach of any of Merck
Sante’s warranties or obligations under this agreement.

 

9.3          Notification regarding
indemnity

 

Each party
must promptly notify the other of any claims or suits for which the first party
may assert indemnification from the other party and the first party will permit
the other party and its insurer at the other party’s expense to assume or
participate in the defence of any such claims or suits and the first party will
co-operate with the other party or its insurers in such defence when reasonably
requested to do so.

 

10.          INSURANCE

 

Each party
must have and must maintain for the Term the relevant Required Insurance.  The Required Insurance must be with a
reputable insurer and name the other party as an additional insured.  Each party will at the others request provide
to that party a certificate from a reputable insurance broker confirming that
the insurance required by this clause in currently in effect.

 

11.          TERM AND TERMINATION

 

11.1        Term

 

Subject to the
further provision of this clause 11, the
term of this agreement and the rights granted to Merck Sante under this
agreement is for so long as any Product is still Covered By a Project Patent.

 

11.2        Termination for breach

 

If one party
breaches any term, provision or obligation of this agreement (the “Defaulting
Party”) and the Defaulting Party fails to:

 

(a)           remedy such breach within 60 days after receipt of notice from the
other party requiring remedy of the breach; or

 

(b)           if the breach cannot be remedied within the said 60 day period,
commence action within the said 60 day period to remedy the breach and
undertake in writing to the other party to complete remedy of the breach as
soon as practicable thereafter,

 

the other
party has the right to terminate this agreement immediately upon the expiration
of the said period of 60 days by written notice to the Defaulting Party.

 

21

 

11.3        Termination in default of
payment

 

This agreement
may be forthwith terminated by a party by giving notice to the other party if
that other party defaults in the payment of any money due by that other party
to the first party under this agreement and such default continues for a period
of 30 days after notice has been given to the other party demanding the payment
of such money.

 

11.4        Grounds for immediate
termination

 

Subject to clause 11.5 this agreement may be terminated by a party
giving notice to the other party upon the happening of any of the following
events in respect of that other party:

 

(a)           an Insolvency Event; or

 

(b)           if the other party is in breach of an undertaking given pursuant to clause 11.2(b).

 

11.5        Reconstruction exception

 

A winding up
or liquidation for the purposes of reconstruction or amalgamation by the other
party is not an event permitting or giving rise to termination if after that
reconstruction or amalgamation the resulting corporation becomes bound by the
terms of this agreement by way of assignment or novation.

 

11.6        Termination by Autogen

 

Autogen may
terminate this agreement upon notice to Merck Sante if, taking into consideration that the given reasons for termination by
Autogen should only be applicable to occurrences after the effective:

 

(a)           there is a change of greater than 50% in the control of the issued
voting capital of Merck Sante or a holding company (if any) of Merck Sante
other than for the purpose of internal re-construction;

 

(b)           a person or persons not previously in Control of Merck Sante obtain
Control of Merck Sante or a holding company (if any) of Merck Sante; or

 

(c)           if Merck Sante or any of its Affiliates or any Sub-licensee or any
of its Affiliates challenges or seeks or causes to be challenged the validity
of the Project Patents, provided that in respect of a Sub-licensee not being an
Affiliate, termination will be limited to the country or countries to which
such Sub-licence relates.

 

11.7        Termination by Merck Sante

 

Merck Sante
may terminate this agreement upon notice to Autogen if there is a change of
greater than 50% in the control of the issued voting capital of Autogen or a
holding company (if any) of Autogen other than for the purpose of internal
re-construction.

 

11.8        Termination to be without
prejudice

 

Any
termination of this agreement is without prejudice to the rights which a party
has against the other in respect of anything done or omitted to be done
hereunder prior to such

 

22

 

termination or
in respect of any sums or other claims outstanding at the time of termination.

 

12.          OBLIGATIONS AND RIGHTS ON TERMINATION

 

12.1        Obligations of Merck Sante

 

Immediately
upon termination or expiration of this agreement, but subject to clause 12.3, Merck Sante must:

 

(a)           pay all outstanding balances with respect to the Product within the
terms of this agreement;

 

(b)           remove all signs, advertising displays, labels and the like
identifying Merck Sante as a licensee of the Product and thereafter Merck Sante
will not use such signs and displays in connection with any business conducted
by it and will not in any way refer to its previous association with the
Product for any commercial purpose whatsoever; and

 

(c)           not conduct its business so as to falsely reflect discredit on
Autogen or the Product.

 

12.2        Obligations of Autogen

 

Immediately
upon termination or expiration of this agreement, Autogen must:

 

(a)           as soon as conveniently possible reconcile all accounts relating to
Merck Sante; and

 

(b)           accept all outstanding balances within existing terms of settlement
within the terms of this agreement.

 

12.3        Limitation of Merck Sante’s
rights

 

Merck Sante is
not in any circumstances entitled to compensation for goodwill which may have
accrued to the marketing of the Product in the Territory.

 

13.          WARRANTIES

 

13.1        General warranties

 

Each party
represents and warrants to the other that:

 

(a)           it has all powers and authorisations necessary to enter into this
agreement and observe its obligations hereunder and allow this agreement to be
enforced against it; and

 

(b)           all necessary consents, approvals and authorisations of all
governmental authorities required to be obtained by that party in connection
with this agreement have been obtained; and

 

23

 

(c)           the execution and delivery of this agreement does not contravene any
law, regulation or official directive or any obligations or undertakings,
contractual or otherwise, by which it or any of its assets are bound or cause a
limitation on its powers to be exceeded; and

 

(d)           the performance of the party’s obligations under this agreement:

 

(i)            do not and will not conflict with or violate any requirement of
applicable laws or regulations; and

 

(ii)           do not and will not conflict with, or constitute a default under any
contractual obligation of that party; and

 

(e)           there does not presently exist any event which would either now or
with the effluxion of time entitle the other party to terminate this agreement
pursuant to clause 11; and

 

(f)            it is not a party to any pending or threatened action or proceeding
affecting it or any of its assets before a court, governmental agency,
commission or arbitrator where an adverse outcome could reasonably be expected
to adversely impact upon the performance of its obligations under this
agreement; and

 

(g)           it has no immunity from the jurisdiction of a court or from legal
process (whether through service of notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise).

 

13.2        Specific warranty re Licensed
Patents

 

Autogen
warrants to Merck Sante that:

 

(a)           as at the date of this agreement it has disclosed to Merck Sante
details of all prior art sighted by Autogen by way of international search in
relation to the Licensed Patents; and

 

(b)           at the date of this agreement it is unaware of any other Patent
which has not been disclosed to Merck Sante and which may be infringed by Merck
Sante exercising the Licensed Patents in accordance with the terms of this
agreement.

 

13.3        Warranties by Merck Sante

 

Merck Sante
warrants to Autogen that:

 

(a)           it will obtain or has obtained from its Representatives who have access
to the Licensed Technology written obligations to treat such information as
confidential strictly in accordance with this agreement; and

 

(b)           that it has made its own enquiries into the validity and
enforceability of the Licensed Patents and satisfied itself that the usage by
Merck Sante, its Affiliates or sub-licensees of the Licensed Patents and the
Licensed Technology do not and will not infringe the intellectual property
rights of any third party.

 

24

 

14.          PROTECTION OF LICENSED PATENTS

 

14.1        Maintenance of Licensed
Patents

 

Autogen is
responsible for the cost of preparing, filing, prosecuting and maintaining the
Autogen Patents but nothing expressed or implied herein necessarily obliges
Autogen to institute legal proceedings to protect same.  The party responsible for the cost of
preparing, filing, prosecuting and maintaining the Stage 1 Patents will be
determined in accordance with the Research Agreement.  Merck Sante is responsible for the cost of preparing,
filing, prosecuting and maintaining the Stage 2 Patents.  Nothing expressed or implied herein
necessarily obliges Merck Sante to institute legal proceedings to protect Stage
1 Patents or Stage 2 Patents.

 

14.2        Reporting infringements

 

A party must
promptly report to the other in writing particulars of any action or activity
of which the first party becomes aware which might reasonably amount to
infringement of or challenge to any of the Rights.

 

14.3        Conduct of proceedings
regarding Rights

 

Merck Sante
has the first right to take control of and conduct any infringement proceedings
in respect of the Rights where such infringement is within the Licensed
Field.  Should Merck Sante undertake such
proceedings Autogen must fully co-operate with Merck Sante in relation to such
action including the lending of Autogen’s name to the action and assistance by
personnel of Autogen.  The costs and
expenses of any such action will be borne by Merck Sante, and the proceeds of
such action after payment of Merck Sante’s reasonable external costs will be
divided between Autogen and Merck Sante on the basis that Autogen gets 50% and
Merck Sante the balance.  In the event
Merck Sante does not wish to undertake the conduct of such proceedings on its
own, Autogen and Merck Sante must discuss whether they will undertake joint
proceedings and if so on what basis.  If
no such agreement can be reached Autogen is entitled to bring an action in its
own name, and Merck Sante must provide Autogen with all reasonable assistance
including lending Merck Sante’s name to such action.  Autogen must bear all the costs of such an
action, and the proceeds of any such action belongs to Autogen absolutely.

 

14.4        Royalties

 

Merck Sante is not entitled to withhold or
deduct any amount from any royalty payable to Autogen on account of any
proceeding as referred to in clause 14.3.

 

15.          INFRINGEMENT OF OTHERS RIGHTS

 

15.1        Notification of action

 

In the event
that legal action is threatened or commenced against Merck Sante or any
Sub-licensee arising out of Merck Sante’s use of Autogen Patents or Autogen
Know-How, Merck Sante must not make any admissions or enter into any
substantive steps in connection therewith but must promptly notify Autogen.

 

25

 

15.2        Autogen action

 

If such legal
action against Merck Sante or a Sub-licensee arises out of the use of the
Autogen Patents or Autogen Know-How in accordance with the terms and conditions
of this agreement in relation to Products, then Autogen must defend and/or
assist in the defence of such litigation, and must bear the reasonable costs
and expenses of such defence.  If any
damages or awards are assessed against Merck Sante, then provided that Merck
Sante has at all times followed the instructions of, or otherwise obtained the
consent of, Autogen in respect of the defence of such claims, then such damages
or awards must, as well as any and all reasonable costs incurred by Merck
Sante, be satisfied and paid by Autogen.

 

15.3        Merck Sante action

 

If such legal
action against Merck Sante related to the use by Merck Sante, Merck Sante
Affiliates or Sub-licensee of the Autogen Patents or Autogen Know-How or use of
Stage 1 Patents, Stage 1 Know-How or Stage 2 Patents or Stage 2 Know-How other
than in accordance with the terms and conditions of this agreement Merck Sante
must promptly notify Autogen of the commencement of legal action. Merck Sante
must bear all its own costs and expenses and must be responsible for awards
against it and Autogen, as well as any and all reasonable costs incurred by
Autogen, to the extent that indemnification, warranties and other claims may
not be available against Autogen.  If any
amounts are recovered by or awarded or paid to Merck Sante from or by a third
party as a result of any such action or litigation, Merck Sante must from such
amounts reimburse Autogen for all costs and amounts paid by Autogen in
connection with such action or litigation and must, after deducting the legal
costs incurred by it in taking such legal or other action, pay to Autogen from
any compensation recovered thereby, Autogen’s part thereof determined in
accordance with the respective interests of the parties in such compensation.

 

16.          CONSTRUCTION OF PATENTS

 

If in any
proceedings in which the validity infringement or priority of any claim of any
patent or patent application included in Licensed Patents is in issue a Final
Judgment is obtained the construction placed upon any such claim by such a
Final Judgment must be thereafter followed not only as to such claim but as to
all claims to which such construction applies with respect to acts occurring
thereafter.

 

17.          FORCE MAJEURE

 

17.1        Party not liable

 

Where a party
is required under this agreement to perform an obligation or do any act or
thing by a designated time or date (other than an obligation to make payment) (“Obligation”), the part is not be liable for any delay in
performing or for failure to perform an Obligation where the delay or failure
arises from Force Majeure and that party has complied with this clause.

 

17.2        Notice of Force Majeure

 

A party who
claims Force Majeure must:

 

26

 

(a)           give the other party prompt notice of the Force Majeure with
reasonably full particulars and an estimate of the extent and duration of its
delay in performance, or inability to perform; and

 

(b)           use all possible diligence to remove the Force Majeure as quickly as
possible provided that this will not oblige the party to settle on terms
unsatisfactory to that party any strike, lockout or other labour difficulty, or
any investigation or proceeding by any governmental authority or any litigation
by any third party.

 

17.3        Termination in case of Force
Majeure

 

If the delay
continues beyond 30 Business Days, after the notice given under clause 17.2, the parties must meet to discuss in good faith
a mutually satisfactory resolution of the problem and, if unable to achieve
such a resolution within a further 30 Business Days, either party may elect to
terminate this agreement by 5 Business Days prior written notice to the other.

 

18.          ARBITRATION

 

In case of any
disputes arising between the parties or arising out of the performance or
non-performance of the obligations of either party hereunder, or the
termination of this agreement, the parties will endeavour to settle such
disputes amicably between themselves.  If
the parties fail to resolve such disputes, then such disputes shall be finally
resolved by arbitration in accordance with the Rules of Conciliation and
Arbitration of the International Chamber of Commerce (ICC) by one or more
arbitrators appointed in accordance with the said rules.

 

Any such
arbitration will be held in English language and take place in Paris - FRANCE.

 

19.          NOTICES

 

19.1        Form of Notice

 

Any notice,
approval, consent or other communication (“notice”) from one party to another (“Recipient”)
must be in writing and be signed by a person duly authorised by the person
giving the notice.

 

19.2        Manner of Service

 

A notice must
be served by:

 

(a)           leaving it at the Recipient’s address;

 

(b)           sending it by ordinary pre-paid post (airmail if being sent from or
to a place outside of Australia) to the Recipient’s address; or

 

(c)           sending it by facsimile to the facsimile number of the Recipient.

 

27

 

19.3        Address for Service

 

Until other
details are specified by a Party as its address or facsimile number for service
the following apply:

 

	
  Autogen

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address :

  	
   

  	
  210 Kings
  Way, South Melbourne, Victoria, Australia

  
	
   

  	
   

  	
   

  
	
  Facsimile :

  	
   

  	
  61 3 9234
  1190

  
	
   

  	
   

  	
   

  
	
  Attention :

  	
   

  	
  Company
  Secretary

  
	
   

  	
   

  	
   

  
	
  Merck
  Sante

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address :

  	
   

  	
  37 rue Saint
  Romain, 69379 Lyon, CEDEX 08, France

  
	
   

  	
   

  	
   

  
	
  Facsimile :

  	
   

  	
  33-4-78-75-39-05

  
	
   

  	
   

  	
   

  
	
  Attention :

  	
   

  	
  Head of
  Legal Department

  

 

19.4        Time of Service

 

A letter or
facsimile will be taken to be served:

 

(a)           in the case of a delivered letter, on the day of delivery, unless
delivery is made on a non Business Day or after 4:30 p.m. (local time in
the place of receipt) on a Business Day, in which case it will be taken to be
served on the next Business Day;

 

(b)           in the case of a posted letter, on the third (or seventh in the case
of airmail) Business Day after posting; and

 

(c)           in the case of a facsimile, on receipt by the party giving the
notice of a transmission confirmation report, unless within one Business Day of
receipt the Recipient has informed the party giving the notice that the
transmission was incomplete or garbled, provided that in any case if
transmission is completed after 4:30 p.m. (local time in the place of
receipt) or is received on a non Business Day, the notice will be taken to be
served on the next Business Day.

 

20.          MISCELLANEOUS

 

20.1        Time of essence

 

Time will be
of the essence of the obligations of each party to each other under this
agreement.

 

20.2        Severance

 

This agreement
is severable and is deemed to apply separately as to each country comprising
the Territory.  A material breach of this
agreement in respect of one or more countries in the Territory will not affect
the validity or enforceability of this agreement as

 

28

 

to the other
countries comprising the Territory.  If
any provision is held invalid or unenforceable, in whole or in part in any
jurisdiction, then such invalidity or unenforceability will only affect such
provision or part thereof in such jurisdiction, and will not in any manner
affect the provision in this agreement in any other jurisdiction.  To the extent legally permissible an
arrangement which reflects the original intent of the parties must be
substituted for such invalid or unenforceable provision.

 

20.3        Waiver

 

The failure,
delay, relaxation or indulgence by any party in exercising any power or right
given to that party under this agreement will not operate as a waiver of that
power or right, nor will any single exercise of a power or right preclude any
other or further exercise of it or the exercise of any other power or right
under this agreement.  A power or right
may only be waived in writing, signed by the party to be bound by the waiver.

 

20.4        Relationship of parties

 

Nothing
contained in this agreement is to be construed so as to place any party in the
relationship of principal, employee, agent, partner, joint venturer or legal
representative of any other party.  The
parties expressly agree and acknowledge that each of the parties is an
independent contracting party and does not, unless expressly provided, have the
authority or power for or on behalf of any other party to enter into any
contract, to incur debts, to accept money, to assume any obligations or to make
any warranties or representations.

 

20.5        Injunctive relief

 

If there is
any conduct or threatened conduct which is or may be a breach of this
agreement, both parties acknowledge that damages may be inadequate compensation
for such a breach and that the other party is entitled to apply to any court of
competent jurisdiction for interim or permanent injunctive relief or both
restraining the other party from committing any breach or threatened breach of
this agreement without showing or proving any actual damage sustained by
it.  Such rights and remedies will be
cumulative and in addition to any other rights or remedies which that party may
be entitled to at law or in equity.

 

20.6        Proper law

 

This agreement
must be construed in accordance with and governed by the laws of the United
Kingdom and its form, execution, validity, construction and effect is to be
determined in accordance with the laws of the United Kingdom.

 

20.7        Rule of construction

 

No rule of
construction applies to this agreement to the disadvantage of a party because
that party was responsible for the preparation of this agreement or any part of
it.

 

20.8        Variation

 

Any
modification, alteration, change or variation of any term or condition of this
agreement must be in writing, executed by all parties.

 

29

 

20.9        Assignment

 

This agreement is personal to the respective
parties and neither is entitled to assign in whole or in part without the prior
written consent of the other party.

 

20.10     Further documents

 

Each party
agrees that it will forthwith upon the request of the other party execute and
deliver all such instruments and agreements and will take all such other
actions as the other party may reasonably request from time to time in order to
give effect to the provisions and purposes of this agreement.

 

20.11     Affiliates’ actions

 

Each party
will ensure that none of its Affiliates takes any action which is inconsistent
with that party’s obligations under this agreement, or which if it was done or
not done under this agreement by that party would amount to a breach of this
agreement by that party.

 

20.12     Costs and Taxes

 

Each party
must pay its own costs and expenses in relation to the negotiation,
preparation, execution, delivery, stamping and registration, completion,
variation and discharge of this agreement and Merck Sante must pay any Tax in
respect of the execution, delivery, performance, release, discharge, amendment,
enforcement or attempted enforcement or otherwise of any of the following:

 

(a)           this agreement;

 

(b)           any agreement or document entered into or signed under this
agreement;

 

(c)           any transaction contemplated under this agreement; and

 

(d)           any payment made or received in respect of this agreement,

 

except in any
case to the extent to which such Tax is payable in Australia or on or in
respect of the income of Autogen.

 

20.13     Interest on overdue amounts

 

If any amount
due under this agreement is not paid when due, then the party obliged to make
payment must pay to the other party interest at the Base Rate on the amount due
and payable, accruing from day to day and to be computed from the date for
payment of the amount until payment of the amount in full.

 

20.14     Withholding taxes

 

If Merck Sante
is legally obliged to deduct or withhold any tax from any payment, in
particular any royalty payment, to be made to Autogen hereunder, then if such
payment is made from its country of domicile (for tax purposes) Merck Sante
must on request provide Autogen with receipts and any other evidence from
relevant revenue authorities which may be required by Autogen for its own tax
affairs, provided that in no circumstances may the amount withheld be more than
the minimum amount required to be withheld under the

 

30

 

double tax
treaty between France and Australia and to the extent the withholding is
greater than the minimum amount, Merck Sante is obliged to gross up such
payment so that the net payment actually received by Autogen is not less than
the full payment less the minimum amount.

 

20.15     Counterparts

 

This agreement
may be executed in counterparts, and by the parties on separate or the same
counterparts, each of which is deemed an original, but all of which constitute
one and the same instrument.

 

20.16     Registration of agreement

 

If this
agreement or any associated transaction is required by the law of any country,
except Australia, to be either approved or registered in any country or with
any governmental agency, Merck Sante is responsible for obtaining such approval
or registration including without limiting the generality of the foregoing,
causing this agreement to be stamped, recorded and registered at its cost in
such country.  Autogen agrees to
co-operate in any such application or registration procedure.  Merck Sante must furnish proof of compliance
with the foregoing to Autogen when and if Autogen so requires.

 

20.17     Not obliged to act contrary to
law

 

No party is
obliged to carry out or perform any of the terms of this agreement where doing
so would constitute a violation of any treaty, law, code or regulation of any
governmental authority whether local, national or supranational.  In any event the other terms of this
agreement nevertheless continue and the parties must use all reasonable
endeavours to re-negotiate and amend this agreement so that the performance of
this agreement as so amended will not involve any such violation.

 

20.18     Statutory rights not limited

 

The powers,
remedies and rights conferred upon the parties by or under any statute are
(except to the extent inconsistent with the terms and provisions expressed in
this agreement) be in addition to the powers, remedies and rights conferred by
this agreement.

 

20.19     Consents

 

Unless this
agreement provides otherwise and to the extent permitted by law, a party may,
in its absolute discretion, conditionally or unconditionally give or withhold
any approval or consent permitted or required to be given by it pursuant to
this agreement.

 

20.20     Entire agreement

 

This agreement
constitutes the entire agreement between the parties in relation to the subject
matter of this agreement.  Any prior
arrangements, agreements, representations or undertakings are superseded and,
except as expressly provided, each party acknowledges that it has not relied on
any arrangement, agreement, representation or understanding which is not
expressly set out in this agreement.

 

31

 

SCHEDULE 1

 

Autogen Patents

 

(Referred to in clause 1.1, definition of “Autogen Patents”)

 

1. Patent
application entitled “Novel genes and their use in the modulation of obesity,
diabetes and energy imbalance” (B38, B55 (Tanis), B60). Claiming priority from
U.S. Provisional Patent Application No. 60/141,441, filed on the 29 June 1999.
National applications and their status are shown in the following table

 

	
  Country

  	
   

  	
  Appl. No./Patent No.

  	
   

  	
  Filing/Patent Date

  	
   

  	
  Status

  
	
  PCT

  	
   

  	
  PCT/AU00/00786

  	
   

  	
  29.6.2000

  	
   

  	
  Dormant

  
	
  Australia

  	
   

  	
  55129/00

  	
   

  	
  29.6.2000

  	
   

  	
  Pending

  
	
  Canada

  	
   

  	
  not yet
  available

  	
   

  	
  26.9.2000

  	
   

  	
  Pending

  
	
  Europe

  	
   

  	
  00940047.4

  	
   

  	
  29.6.2000

  	
   

  	
  Pending

  
	
  Hong Kong

  	
   

  	
  to be filed

  	
   

  	
   

  	
   

  	
   

  
	
  Israel

  	
   

  	
  not yet
  available

  	
   

  	
  29.6.2000

  	
   

  	
  Pending

  
	
  Japan

  	
   

  	
  2001-508333

  	
   

  	
  29.6.2000

  	
   

  	
  Pending

  
	
  Mexico

  	
   

  	
  PA/2001/013425

  	
   

  	
  29.6.2000

  	
   

  	
  Pending

  
	
  New Zealand

  	
   

  	
  516211

  	
   

  	
  29.6.2000

  	
   

  	
  Pending

  
	
  Singapore

  	
   

  	
  00108084-5

  	
   

  	
  29.6.2000

  	
   

  	
  Pending

  
	
  U.S.A.

  	
   

  	
  10/039,050

  	
   

  	
  29.6.2000

  	
   

  	
  Pending

  

 

2. Australian
patent application PR5898/01”Modulation of physiological processes and agents
useful for same” (apolipoprotein {modulator of Tanis}), filed on 22 June 2001,
in the name of Autogen Research Pty Ltd.

 

32

 

SCHEDULE 2

 

Stage 1 Patents

 

The following is a list all of the patent applications (in addition to
those described in Schedule 1)
relating to or arising out of Stage 1 Research.

 

1. Invention entitled “A novel gene and uses
therefor” Beacon (claiming priority from Australian Patent
Application Nos. PP0117/97 and PP0323/97), filed in the name of Deakin
University and International Diabetes Institute.

 

	
  Country

  	
   

  	
  Appl. No./ Patent No.

  	
   

  	
  Filing/

  Patent Date

  	
   

  	
  Status

  
	
  Australia

  	
   

  	
  10112/99

  (742651)

  	
   

  	
  30.10.1998

  	
   

  	
  Accepted

  
	
  Canada

  	
   

  	
  2307839

  	
   

  	
  30.10.1998

  	
   

  	
  Pending -

  
	
  Europe

  	
   

  	
  98952412.9

  	
   

  	
  30.10.1998

  	
   

  	
  Pending

  
	
  Hong Kong

  	
   

  	
  00107656.0

  	
   

  	
  29.11.2000

  	
   

  	
  Pending

  
	
  Israel

  	
   

  	
  135822

  	
   

  	
  30.10.1998

  	
   

  	
  Pending

  
	
  Japan

  	
   

  	
  2000-519076

  	
   

  	
  30.10.1998

  	
   

  	
  Pending

  
	
  Mexico

  	
   

  	
  0004223

  	
   

  	
  30.10.1998

  	
   

  	
  Pending

  
	
  New Zealand

  	
   

  	
  504327

  	
   

  	
  30.10.1998

  	
   

  	
  Pending

  
	
  Singapore

  	
   

  	
  200002303-6

  	
   

  	
  30.10.1998

  	
   

  	
  Pending

  
	
  U.S.A.

  	
   

  	
  09/331,930

  	
   

  	
  30.10.1998

  	
   

  	
  Under

  examination

  
	
  U.S.A.

  	
   

  	
  not yet
  available

  (divisional of USSN

  09/331,930)

  	
   

  	
  30.10.1998

  	
   

  	
  Pending

  

 

2. Invention entitled “A ligand of the protein ‘beacon’”,
claiming priority from Australian Patent Application Nos. PP9919/99 and
PQ6454/00, filed in the name of Autogen Research Pty Ltd.

 

	
  Country

  	
   

  	
  Appl. No./Patent No.

  	
   

  	
  Filing/Patent

  Date

  	
   

  	
  Status

  
	
  PCT

  	
   

  	
  PCT/AU00/00342

  	
   

  	
  19.4.2000

  	
   

  	
  Dormant

  
	
  Australia

  	
   

  	
  39469/00

  	
   

  	
  19.4.2000

  	
   

  	
  Pending

  
	
  Canada

  	
   

  	
  not yet
  available

  	
   

  	
  19.4.2000

  	
   

  	
  Pending

  
	
  Europe

  	
   

  	
  00918579.4

  	
   

  	
  19.4.2000

  	
   

  	
  Pending

  
	
  Hong Kong

  	
   

  	
  to be filed

  	
   

  	
   

  	
   

  	
  in the
  process

  of being filed

  
	
  Israel

  	
   

  	
  146035

  	
   

  	
  19.4.2000

  	
   

  	
  Pending

  
	
  Japan

  	
   

  	
  2000-614280

  	
   

  	
  19.4.2000

  	
   

  	
  Pending

  
	
  Mexico

  	
   

  	
  PA/2001/010743

  	
   

  	
  19.4.2000

  	
   

  	
  Pending

  
	
  New Zealand

  	
   

  	
  514754

  	
   

  	
  19.4.2000

  	
   

  	
  Pending

  
	
  Singapore

  	
   

  	
  200106345-2

  	
   

  	
  19.4.2000

  	
   

  	
  Pending

  
	
  U.S.A.

  	
   

  	
  09/959,164

  	
   

  	
  19.4.2000

  	
   

  	
  Pending

  

 

33

 

3. Invention entitled “A method of treatment and
agents for same” (modulator of calpain, calpastain & myofibrillar
protein), claiming priority from Australian Patent Application No. PQ6565/00,
filed in the name of Autogen Research Pty Ltd.

 

	
  Country

  	
   

  	
  Appl. No./Patent No.

  	
   

  	
  Filing/Patent

  Date

  	
   

  	
  Status

  
	
  PCT

  	
   

  	
  PCT/AU01/00348

  	
   

  	
  28.3.2001

  	
   

  	
  Pending

  

 

4. Invention entitled “A novel gene and uses
therefor” (H24, H15, H20), filed in the name of Autogen Research Pty
Ltd, International Diabetes Institute and Deakin University.

 

	
  Country

  	
   

  	
  Appl. No./Patent No.

  	
   

  	
  Filing/Patent

  Date

  	
   

  	
  Status

  
	
  Australia

  	
   

  	
  PQ9385/00

  	
   

  	
  11.8.2000

  	
   

  	
  Lapsed

  
	
  Australia

  	
   

  	
  PR7042/01

  	
   

  	
  14.8.2001

  	
   

  	
  Pending -
  refile of PQ9385/00

  
	
  U.S.A

  	
   

  	
  60/323,281

  	
   

  	
  18.9.2001

  	
   

  	
  Pending

  

 

5. Invention entitled “A gene and uses therefor”
(AGT-106, AGT-113, AGT-201, AGT-202 and AGT-203),
filed in the name of Autogen Research Pty Ltd, International Diabetes Institute
and Deakin University.

 

	
  Country

  	
   

  	
  Appl. No./Patent No.

  	
   

  	
  Filing/Patent

  Date

  	
   

  	
  Status

  
	
  Australia

  	
   

  	
  PR2950/01

  	
   

  	
  7.2.2001

  	
   

  	
  Lapsed,
  continued as PCT

  
	
  PCT

  	
   

  	
  PCT/AU02/00109

  	
   

  	
  5.2.2002

  	
   

  	
  Pending

  

 

6. Invention entitled “A gene and uses therefor”
(L25, L27, L28, S6, S9, S10, S15 and S31), filed in the name of
Autogen Research Pty Ltd, International Diabetes Institute and Deakin
University.

 

	
  Country

  	
   

  	
  Appl. No./Patent No.

  	
   

  	
  Filing/Patent

  Date

  	
   

  	
  Status

  
	
  Australia

  	
   

  	
  PR5137/01

  	
   

  	
  21.5.2001

  	
   

  	
  Pending

  

 

7. Invention entitled “A gene and uses therefor”
(AGT-109, AGT-407, AGT-408, AGT-409, AGT-601, AGT-204),
filed in the name of Autogen Research Pty Ltd, International Diabetes Institute
and Deakin University.

 

	
  Country

  	
   

  	
  Appl. No./Patent No.

  	
   

  	
  Filing/Patent

  Date

  	
   

  	
  Status

  
	
  USA

  	
   

  	
  60/315,743

  	
   

  	
  29.8.2001

  	
   

  	
  Pending

  

 

8. Invention entitled “A gene and uses therefor”
(AGT-119, AGT-120, AGT-121,
AGT-122, AGT-422, AGT-123 and AGT-504),
filed in the name of Autogen Research Pty Ltd, International Diabetes Institute
and Deakin University.

 

	
  Country

  	
   

  	
  Appl. No./Patent No.

  	
   

  	
  Filing/Patent

  Date

  	
   

  	
  Status

  
	
  USA

  	
   

  	
  60/330,149

  	
   

  	
  16.10.2001

  	
   

  	
  Pending

  

 

34

 

9. Invention entitled “A gene and uses therefor”
(AGT-124, AGT-125, AGT-126,
AGT-131, and AGT-432), filed in the name of
Autogen Research Pty Ltd.

 

	
  Country

  	
   

  	
  Appl. No./Patent No.

  	
   

  	
  Filing/Patent

  Date

  	
   

  	
  Status

  
	
  USA

  	
   

  	
  not yet
  available

  	
   

  	
  1.2.2002

  	
   

  	
  Pending

  

 

35

 

EXECUTED as an
agreement

 

 

	
  The common seal of
  Autogen Pty Ltd is affixed in
  accordance with its articles of association in the presence of:

  	
   

  	
  )

  )

  )

  )

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Gregory Royce Collier

  	
   

  
	
  Director

  	
   

  	
  (name printed)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Steven Allan Cole

  	
   

  
	
  Director/Secretary

  	
   

  	
  (name printed)

  

 

 

	
  The common seal of
  Merck Sante S.A. is affixed in
  accordance with its articles of association in the presence of:

  	
   

  	
  )

  )

  )

  )

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Jean-Noel Treilles

  	
   

  
	
  Director

  	
   

  	
  (name printed)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Remi Delansorne

  	
   

  
	
  Director/Secretary

  	
   

  	
  (name printed)

  

 

 

36

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