Document:

EXHIBIT 10.45

 

Portions of this Exhibit were
omitted and filed separately with the Secretary of the Commission pursuant to
an application for confidential treatment filed with the Commission pursuant to
Rule 24b-2 under the Securities Exchange Act of 1934.  Such omissions are designated as ***.

 

 

LICENSE AGREEMENT

 

between

 

BRISTOL-MYERS SQUIBB
COMPANY

 

and

 

PHARMACOPEIA, INC.

 

 

 

LICENSE AGREEMENT

 

THIS
LICENSE AGREEMENT (this “Agreement”) is made and entered into as of October 11,
2007 (the “Effective Date”), by and between Bristol-Myers
Squibb Company, a Delaware corporation headquartered at 345 Park
Avenue, New York, New York 10154 (“BMS”), and Pharmacopeia, Inc., a Delaware
corporation, having its principal office at 3000 Eastpark Boulevard, Cranbury, New
Jersey 08512 (“Pharmacopeia”). 
BMS and Pharmacopeia are sometimes referred to herein individually as a “Party”
and collectively as the “Parties.”

 

RECITALS

 

WHEREAS,
BMS Controls (as defined below) certain patent rights and know-how rights with
respect to the Licensed Compounds (as defined below); and

 

WHEREAS,
Pharmacopeia desires to obtain from BMS the licenses set forth herein, and BMS
desires to grant such licenses to Pharmacopeia, all on the terms and conditions
set forth in this Agreement;

 

NOW,
THEREFORE in consideration of the foregoing and the mutual agreements set forth
below, the Parties agree as follows.

 

ARTICLE
1

DEFINITIONS

 

The
terms in this Agreement with initial letters capitalized, whether used in the
singular or the plural, shall have the meaning set forth below or, if not
listed below, the meaning designated in places throughout this Agreement.

 

1.1           “BMS564929 Toxicology Studies” means the two (2) toxicology
reports due on the IND covering the BMS compound designated BMS564929, specifically
the 6 month oral toxicology studies in rats and dogs.

 

1.2           “AAA” has the meaning set forth in Section 14.2.

 

1.3           “Act” means the United States Food, Drug and
Cosmetic Act, as amended.

 

1.4           “Affiliate” of a Person means any other Person
which (directly or indirectly) is controlled by, controls or is under common
control with such Person.  For the
purposes of this definition, the term “control” (including, with correlative
meanings, the terms “controlled by” and “under common control with”) as used with
respect to a Person means (i) in the case of a corporate entity, direct or
indirect ownership of voting securities entitled to cast at least fifty percent
(50%) of the votes in the election of directors or (ii) in the case of a
non-corporate entity, direct or indirect ownership of at least fifty percent
(50%) of the voting securities with the power to direct the management and
policies of such entity.

 

1.5           “Agreement” means this Agreement, together with all
Appendices attached hereto, as the same may be amended or supplemented from
time to time.

 

1

 

1.6           “Approval” means, with respect to any Licensed
Product in any regulatory jurisdiction, approval from the applicable Regulatory
Authority sufficient for the manufacture, distribution, use and sale of the
Licensed Product in such jurisdiction in accordance with applicable Laws.

 

1.7           “BMS Excluded Compound” has the meaning set forth
in Section 2.7.

 

1.8           “BMS Know-How” means ***.  BMS Know-How shall also include the *** as
set forth in ***.  BMS Know-How shall not
include ***.

 

1.9           “BMS Other Patent Rights” means (i) ***,
which  (a) *** or (b) *** and (ii) ***.  Notwithstanding the foregoing, ***.

 

1.10         “BMS Patent Rights” means the Patents that are listed
in Appendix 1 hereto, and (a)  any Patent that claims priority to any of the Patents listed in  Appendix 1 hereto (but in each
case, only with respect to claims in such Patents that Cover subject matter
within the scope of the claims in the Patents listed in Appendix 1
hereto).

 

1.11         “Board” means Pharmacopeia’s then-current Board of
Directors.

 

1.12         “Business Day” or “business day” means a day
other than Saturday, Sunday or any day on which commercial banks located in New
York, New York are authorized or obligated by applicable Laws to close.

 

1.13         “Calendar Quarter” means the respective periods of
three consecutive calendar months ending on March 31, June 30, September 30
and December 31.

 

1.14         “Calendar Year” means each successive period of 12
months commencing on January 1 and ending on December 31.

 

1.15         “Change of Control” means, with respect to a Party: (i) the
direct or indirect sale or exchange in a single transaction or a series of
related transactions by the shareholders or other ownership interest holders of
such Party of more than fifty percent (50%) of the voting stock or other voting
ownership interests of such Party; (ii) a merger or consolidation of a
Party; or (iii) the sale, exchange or transfer of all or substantially all
of the assets of a Party to which this Agreement pertains; or a liquidation or
dissolution of a Party, provided however,
that any transaction or series of transactions that are effected solely in
connection with a reincorporation, reorganization, recapitalization or
financing not in connection with the sale of all or substantially all of the
assets or stock or other ownership interests of a Party to this Agreement shall
not be deemed to be a Change of Control.

 

1.16         “Combination Product” means a ***.  ***.

 

1.17         “Commercialization” or “Commercialize” means
activities directed to commercially manufacturing, obtaining pricing and
reimbursement approvals, carrying out Phase 4 Trials for, marketing, promoting,
distributing, importing or selling a pharmaceutical product.

 

1.18         “Confidential Information” means all trade secrets,
processes, formulae, data, know-how, improvements, inventions, chemical or
biological materials, assays, techniques, marketing plans, strategies, customer
lists, or other information that has been created, discovered, or developed by
a Party, or has otherwise become known to a Party, or to which rights have been
assigned to a Party, as well as any other information and materials that are
marked as confidential or proprietary to or by a Party (including, without limitation,
all information and materials of a Party’s customers and any other Third 

 

2

 

Party and their
consultants), in each case that are disclosed by or on behalf of such Party to
the other Party, regardless of whether any of the foregoing are marked “confidential”
or “proprietary” or communicated to the other by the disclosing Party in oral,
written, graphic, or electronic form.

 

1.19         “Controlled” or “Controls”, when used in
reference to intellectual property, means the legal authority or right of a
Party to grant a license or sublicense of intellectual property rights to
another Party, or to otherwise disclose proprietary or trade secret information
to such other Party, without breaching the terms of any agreement with a Third
Party, or misappropriating the proprietary or trade secret information of a
Third Party.

 

1.20         “Consented Sublicensee” has the meaning set forth in Section 2.3.

 

1.21         “Cover,” “Covered” or “Covering” means,
with respect to patent rights, (i) that the making, using, importation,
offer for sale or sale of an invention claimed in such patent rights, or (ii) the
conducting of an activity, would, in the absence of a license under such patent
rights, infringe at least one Valid Claim of such patent rights whether present
in an issued patent or in a patent application that, if it issued as a patent,
contains such claim(s).

 

1.22         “Development” means non-clinical and clinical drug
development activities reasonably related to the development and submission of
information to a Regulatory Authority, including, without limitation,
toxicology, pharmacology and other discovery and pre-clinical efforts, test
method development and stability testing, manufacturing process development,
formulation development, delivery system development, quality assurance and
quality control development, statistical analysis, clinical studies (including,
without limitation, pre- and post-approval studies and specifically excluding
regulatory activities directed to obtaining pricing and reimbursement
approvals).  When used as a verb, “Develop”
means to engage in Development.

 

1.23         “Development Compound” means a compound that has been
selected by a Party for ***, including, but not limited to, ***.

 

1.24         “Disclosing Party” has the meaning set forth in Section 11.1.

 

1.25         “Discovery Collaboration” means  that certain
discovery collaboration entered into between BMS and Pharmacopeia of even date
herewith, a copy of which is set forth in Appendix 3.

 

1.26         “Dollar” or “$” means the lawful currency of
the United States.

 

1.27         “Effective Date” means the date specified in the
initial paragraph of this Agreement.

 

1.28         “EMEA” means the European Agency for the Evaluation
of Medicinal Products, or any successor agency thereto.

 

1.29         “EU” means the European Union, as its membership may
be altered from time to time, and any successor thereto, and which, as of the
Effective Date, consists of Austria, Belgium, Bulgaria, Czech Republic, Cyprus,
Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy,
Latvia, Lithuania, Luxembourg, Malta, The Netherlands, Poland, Portugal,
Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom.

 

1.30         “Europe” means the countries comprising the European
Union as it may be constituted from time to time, together with those
additional countries included in the European Economic Area as it may be
constituted from time to time (which as of the Effective Date includes Iceland,
Liechtenstein and 

 

3

 

Norway), Albania, Andorra,
Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Croatia, Georgia, Holy
See (Vatican), Macedonia, Moldova, Monaco, Russian Federation, San Marino,
Serbia and Montenegro, Switzerland, Turkey, Ukraine, other central and eastern
European markets including former Soviet block and USSR countries, and any
successors to, or new countries created from, any of the foregoing.

 

1.31         “Excluded Compound” has the meaning set forth in Section 2.7.

 

1.32         “FDA” means the U.S. Food and Drug Administration, or
any successor agency thereto.

 

1.33         “Field” means the diagnosis, prevention, treatment or
control of any human or animal disease, disorder or condition, excluding the prevention, treatment or control of any human
or animal hyperproliferative disease, disorder or condition.  For purposes of clarity, “hyperproliferative diseases,
disorders and conditions” are those diseases, disorders or conditions which are
characterized by an abnormal increase in the proliferation or accumulation of
cells and include conditions such as cancers and benign hyperplasia, but not
diseases, disorders or conditions incident to an abnormal increase in the
proliferation or accumulation of cells. 
By way of example, the prevention, treatment or control of all forms of
cachexia, regardless of whether the condition is related to a
hyperproliferative disease or disorder, is included within the Field

 

1.34         “First Commercial Sale” means, with respect to any
Licensed Product, the first sale for use or consumption by the general public
of such Licensed Product in any country in the Territory after Approval of such
Licensed Product has been granted, or such marketing and sale is otherwise
permitted, by the Regulatory Authority of such country.

 

1.35         “GAAP” means generally accepted accounting principles
in the United States.

 

1.36         “Generic Product” has the meaning set forth in Section 8.3.4.

 

1.37         “IND” means an Investigational New Drug Application,
as defined in the Act, filed with the FDA or its foreign counterparts.

 

1.38         “IND Materials” has the meaning set forth in Section 4.4.

 

1.39         “Indemnification Claim” has the meaning set forth in Section 12.3.

 

1.40         “Indemnitee” has the meaning set forth in Section 12.3.

 

1.41         “Indemnitor” has the meaning set forth in Section 12.3.

 

1.42         “Independent Evaluator” means an independent
certified public accounting firm, a consulting firm in the biotechnology and/or
pharmaceutical sectors or investment bank, in each case of recognized standing
within such sectors, which is not at the time of the evaluation contemplated in
Section 3.1 providing auditing or consulting services to either Party, and
which is selected by Pharmacopeia.

 

1.43         “JNDA” means a New Drug Application filed with the
Koseisho required for marketing approval for the applicable Licensed Product in
Japan.

 

1.44         “JNDA Approval” means the approval of a JNDA by the
Koseisho for the applicable Licensed Product in Japan.

 

4

 

1.45         “JNDA Filing” means the acceptance by the Koseisho of
the filing of a JNDA for the applicable Licensed Product in Japan.

 

1.46         “Joint Invention” has the meaning set forth in Section 10.1.

 

1.47         “Joint Patent Rights” has the meaning set forth in Section 10.1.

 

1.48         “Koseisho” means the Japanese Ministry of Health and
Welfare, or any successor agency thereto.

 

1.49         “Laws” means all laws, statutes, rules, regulations,
ordinances and other pronouncements having the effect of law of any federal,
national, multinational, state, provincial, county, city or other political
subdivision, agency or other body, domestic or foreign.

 

1.50         “License” means any agreement (i) by which
Pharmacopeia or an Affiliate of Pharmacopeia transfers to any Third Party any
of the rights under license in this Agreement with respect to any Licensed
Compound or any Licensed Product, including without limitation any license,
sublicense, co-development, joint venture, development and commercialization
collaboration or similar transaction involving a transfer of any rights under
license hereunder to a Third Party with respect to a Licensed Compound or
Licensed Product, and including any further transfer of such rights by a Third
Party licensee to any other Third Party; or (ii) the corresponding
arrangement for the grant by Pharmacopeia of rights back to BMS with respect to
one or more Licensed Compound(s) and Licensed Product(s) pursuant to Section 3.1.

 

1.51         “Licensed Compounds” means:

 

(a)   the ***;

 

(b)   any ***; and

 

(c)   *** of any of the foregoing.  For avoidance of doubt, Licensed Compounds do
not include ***.

 

1.52         “Licensed Product” means any pharmaceutical product
containing a Licensed Compound (alone or with other active ingredients), in all
forms, presentations, formulations and dosage forms.

 

1.53         “Listed Compounds”
means those compounds identified in Appendix 2.

 

1.54         “Losses and Claims” has the meaning set forth in Section 12.1.

 

1.55         “MAA Approval” means approval by the EMEA of a
marketing authorization application (“MAA”) filed with the EMEA for the
applicable Licensed Product under the centralized European procedure.  If the centralized EMEA filing procedure is
not used, MAA Approval shall be achieved upon the first Approval for the
applicable Licensed Product in any two of the following countries:  France, Germany, Italy, Spain or the United
Kingdom.

 

1.56         “MAA Filing” means filing with the EMEA of a
marketing authorization application (“MAA”) for the applicable Licensed
Product under the centralized European procedure.  If the centralized EMEA filing procedure is
not used, MAA Filing shall be achieved upon the first filing of a marketing
authorization application for the applicable Licensed Product in any two of the
following countries:  France, Germany,
Italy, Spain or the United Kingdom.

 

5

 

1.57         “Major Market Countries” means the ***. “Major
Market Country” means one of these countries.

 

1.58         “***” has the meaning set forth in Section 3.1.6(a).

 

1.59         “NDA” means a New Drug Application filed with the FDA
required for marketing approval for the applicable Licensed Product in the U.S.

 

1.60         “NDA Approval” means the approval of an NDA by the
FDA for the applicable Licensed Product in the U.S.

 

1.61         “NDA Filing” means the acceptance by the FDA of the
filing of an NDA for the applicable Licensed Product.

 

1.62         “Negotiation Period” has the meaning set forth in Section 3.1.1(a).

 

1.63         “Net Sales” means, with respect to any ***:

 

(a)   ***; provided however, that where any
such ***;

 

(b)   ***;

 

(c)   ***; and

 

(d)   ***.

 

Net Sales shall be
determined ***.  In the case of any
Combination Product sold in the Territory, Net Sales for such Combination
Product shall be calculated by ***.

 

Net Sales shall not include any ***.

 

1.64         “Notice”
has the meaning set forth in Section 3.1.1(a).

 

1.65         “Patents”
means (a) patents and patent applications in any country or jurisdiction, (b) all
priority applications, provisionals, divisionals, continuations, and
continuations-in-part of any of the foregoing, and (c) all patents issuing
on any of the foregoing patent applications, together with all registrations,
reissues, renewals, re examinations, confirmations, supplementary protection
certificates, and extensions of any of (a), (b) or (c).

 

1.66         “Person” means any individual, firm, corporation,
partnership, limited liability company, trust, business trust, joint venture
company, governmental authority, association or other entity.

 

1.67         “Pharmacopeia Excluded Compound” has the meaning set
forth in Section 2.7.  As of the
Effective Date the Listed Compounds shall be deemed to be Pharmacopeia Excluded
Compounds.

 

1.68         “Pharmacopeia Know-How” has the meaning set forth in Section 13.4(f).

 

1.69         “Pharmacopeia Patent Rights” has the meaning set
forth in Section 13.4(f).

 

1.70         “Phase 2 POC Study” means a Phase 2 trial in the U.S.
or a foreign country demonstrating that a Licensed Compound or Licensed Product
produces a statistically significant treatment effect.

 

6

 

1.71         “Phase 4
Trial” means a human clinical trial for a Licensed Product commenced after
receipt of Approval in the country for which such trial is being conducted and
that is conducted within the parameters of the Approval for the Licensed
Product.  Phase 4 Trials may include, without limitation, epidemiological
studies, modeling and pharmacoeconomic studies, investigator sponsored clinical
trials of the Licensed Product and post-marketing surveillance studies.

 

1.72         “Receiving
Party” has the meaning set forth in Section 11.1.

 

1.73         “Regulatory Authority” means any national or
supranational governmental authority, including, without limitation, the FDA,
EMEA or Koseisho (i.e., the Japanese Ministry of Health and Welfare, or any
successor agency thereto), that has responsibility in countries in the
Territory over the Development and/or Commercialization of Licensed Compounds
and Licensed Products

 

1.74         “Remaining Countries” has the meaning set forth in Section 13.4.1(a).

 

1.75         “Right of First Negotiation” has the meaning set
forth in Section 3.1.1.

 

1.76         “SARM Compound” means any compound which is a
selective human androgen receptor modulator, which acts by full or partial
agonism of the androgen receptor.

 

1.77         “***” has the meaning set forth in Section 3.1.6(b).

 

1.78         “Sublicensee” means any Third Party granted a License
under or with respect to any Licensed Compound or Licensed Product, and shall
also include any Third Party to whom such rights are transferred through
further sublicense by a Sublicensee.

 

1.79         “Sublicense Cap” has the meaning set forth in Section 8.10.

 

1.80         “Sublicense Payment” has the meaning set forth in Section 8.10.

 

1.81         “Surviving Sublicensee” has the meaning set forth in Section 2.3(b)(v).

 

1.82         “Table 1” means Table 1 of Section 8.2.

 

1.83         “Terminated Country” has the meaning set forth in Section 13.4.1.

 

1.84         “Territory” means any country in the world.

 

1.85         “Third Party” means any Person other than:
Pharmacopeia, BMS, and their respective Affiliates.

 

1.86         “Third Party Term Sheet” has the meaning set forth in
Section 3.1.2(b).

 

1.87         “Title 11” has the meaning set forth in Section 13.7.

 

1.88         “Transferred Materials” has the meaning set forth in Section 4.3.

 

1.89         “United States” or “U.S.” means the United
States of America and its territories and possessions (including, without
limitation, Puerto Rico).

 

1.90         “Valid Claim” means a claim of (i) an issued and
unexpired patent or a supplementary protection certificate, which claim has not
been held invalid or unenforceable by a court or other 

 

7

 

government agency of
competent jurisdiction from which no appeal can be or has been taken and has
not been held or admitted to be invalid or unenforceable through re-examination
or disclaimer, opposition procedure, nullity suit or otherwise, or (ii) a
pending patent application; provided, however,
that if a claim of a pending patent application shall not have issued within
five (5) years (or in Japan, seven (7) years) after the earliest
filing date from which such claim takes priority, such claim shall not
constitute a Valid Claim for the purposes of this Agreement unless and until a
patent issues with such claim.

 

ARTICLE
2

 

LICENSE
GRANTS

 

2.1           BMS Patent Rights and BMS Know-How.  Subject to the terms and conditions set forth
in this Agreement (including, without limitation, the reservation of rights in Section 2.6
and 2.7), BMS hereby grants to Pharmacopeia an exclusive, worldwide,
non-transferable (except in accordance with Section 15.4), license, with
the right to sublicense in accordance with Section 2.3 hereunder, under
the BMS Patent Rights and BMS Know-How to make, use (including in activities
directed at the research and Development of Licensed Compounds), have made,
sell, have sold, offer to sell, export, import and otherwise exploit or
Commercialize Licensed Compounds and Licensed Products in the Field in the Territory.  Notwithstanding the foregoing, or any other
provision of this Agreement, Pharmacopeia may not Develop or Commercialize any
Licensed Compounds or Licensed Products for use as a male contraceptive.

 

2.2           BMS Other Patent Rights.  Subject to the terms and conditions set forth
in this Agreement (including, without limitation, the reservation of rights in Section 2.6
and 2.7), BMS hereby grants to Pharmacopeia a non-transferable (except in
accordance with Section 15.4), non-exclusive license, with the right to
sublicense in accordance with Section 2.3 hereunder, under the BMS Other
Patent Rights solely to the extent reasonably necessary to make, use (including
in activities directed at the research and Development of Licensed Compounds),
have made, sell, offer to sell, export and import and otherwise exploit or
Commercialize Licensed Compounds and Licensed Products in the Field in the Territory. 
For clarification, no rights are granted under this Section 2.2 (or
otherwise under this Agreement) to co-formulate or use in combination a
Licensed Compound with any proprietary compound, including any BMS Excluded
Compound, of BMS (other than a Listed Compound or Licensed Compound). The rights
granted by BMS to Pharmacopeia under this Section 2.2 include the right to
make, have made, use (including in activities directed at the research and
Development of Licensed Compounds), export and import intermediates and
starting materials reasonably necessary for the manufacture of Licensed
Compounds, to practice methods reasonably necessary for the manufacture of
Licensed Compounds, and to practice methods reasonably necessary for
manufacturing such intermediates and starting materials, but only for the
purposes of manufacturing, using, importing or exporting Licensed Compounds or
Licensed Products in the Field in the Territory.  For clarification, no rights are granted to
sell or offer to sell any such intermediates or starting materials, or use such
intermediates or starting materials for any purpose other than for the purposes
of manufacturing Licensed Compounds or Licensed Products.  Notwithstanding the foregoing, this Section 2.2
shall not apply with respect to any Patent for which BMS would incur any
obligation (including but not limited to a cash payment obligation) to a Third
Party if such Patent were included in this Section 2.2, whether or not
such Patent would fall within the definition of BMS Other Patent Rights, unless
and only to the extent that Pharmacopeia agrees in writing to incur such
obligation to such Third Party, including to fully reimburse BMS or pay
directly to such Third Party any payment obligation.

 

8

 

2.3           Sublicenses.  Pharmacopeia shall have the right to grant
sublicenses with respect to the rights licensed to Pharmacopeia under Sections
2.1 and 2.2 to (i) any Affiliate of Pharmacopeia for so long as such
Affiliate remains an Affiliate of Pharmacopeia, and (ii) any special
purpose company, corporation or other entity established to act as a
sublicensee of Pharmacopeia under the rights licensed hereunder in order to
facilitate the structured financing of the research, Development and
Commercialization activities contemplated hereunder (each, in (i) and
(ii), a “Consented Sublicensee”), provided that (i) such
Consented Licensee shall agree in writing to be bound by and subject to the
terms and conditions of this Agreement in the same manner and to the same
extent as Pharmacopeia, and (ii) Pharmacopeia shall remain responsible for
the performance of this Agreement and shall cause such Consented Sublicensee to
comply with the terms and conditions of this Agreement.  In addition, Pharmacopeia shall have the right
to grant Licenses to Sublicensees (other than Consented Sublicensees, the
conditions for which are set forth in the immediately preceding sentence),
subject to the following:

 

(a)          Other than a
permitted assignment of this Agreement in accordance with Section 15.4.1,
***, and then only in accordance with this Section 2.3 and Article 3.  The foregoing *** shall not limit
Pharmacopeia’s ability to engage Third Party contractors in the Development,
manufacture and/or shipping/warehousing of any Licensed Compound or any
Licensed Product, provided that such engagement is
essentially a fee-for-service or similar purchase arrangement and does not
grant the Third Party contractor the right to sell or promote such Licensed
Compound or Licensed Product.

 

(b)          ***, Pharmacopeia
shall have the right to enter into a License with a Third Party, provided that, to the extent any such License grants rights
with respect to any Licensed Compound:

 

(i)    such
License shall be consistent with the terms and conditions of this Agreement,
and shall not impair (A) Pharmacopeia’s ability to perform its obligations
under this Agreement or (B) BMS’ rights under this Agreement;

 

(ii)   in
such License, the Sublicensee shall agree in writing to be bound to
Pharmacopeia by terms and conditions that are substantially similar to, or less
favorable to the Sublicensee than, or otherwise allow Pharmacopeia to fully
perform the corresponding terms and conditions of this Agreement, provided that Section 3.1.2
of Section 3.1 shall not apply to a Sublicensee;

 

(iii)  promptly
after the execution of such License, Pharmacopeia shall provide a copy of such
License to BMS, with financial and other confidential or proprietary commercial
terms redacted consistent with the public filing of such License with the
Securities and Exchange Commission (“SEC”), or, if not filed with the
SEC, then with financial and other confidential or proprietary commercial terms
redacted (to the extent that such other commercial terms are not reasonably
necessary for BMS to determine Pharmacopeia’s compliance with and payment
obligations under this Agreement, including Sublicense Payments under Article 8);

 

(iv)  Pharmacopeia
shall remain responsible for the performance of this Agreement (including,
without limitation, its obligations under Sections 5.1(a) and 6.1), the
payment of all payments due, and making reports and keeping books and records,
and shall use commercially reasonable efforts to monitor such Sublicensee’s
compliance with the terms of such License;

 

(v)   any
sublicense rights granted by Pharmacopeia in a License (to the extent such
sublicensed rights are granted to Pharmacopeia in this Agreement) shall
terminate on a country-by-country and Licensed Product-by-Licensed Product
basis effective upon the termination under Section 13.2 of the license
from BMS to Pharmacopeia with respect to such sublicensed rights, provided that such sublicensed rights shall not terminate
if, as of the effective date of such termination by BMS under Section 13.2,
the Sublicensee is not in material breach of its obligations to Pharmacopeia
under its 

 

9

 

License agreement, and within sixty (60) days of such termination  the Sublicensee agrees in writing to be bound directly to
BMS under a license agreement substantially similar to this Agreement with
respect to the rights sublicensed hereunder, substituting such Sublicensee (a “Surviving
Sublicensee”) for Pharmacopeia; and

 

(vi)   such
Sublicensees shall have the right to grant further Licenses with respect to the
Development or Commercialization of Licensed Products, provided
that such further Licenses shall be in accordance with and subject to all of
the terms and conditions of this Section 2.3.

 

For purposes of clarification, the preceding provisions of this Section 2.3(b) shall
not apply to Licensed Compounds or Licensed Products with respect to which
Pharmacopeia grants BMS a License.

 

(c)         For clarity, where
provisions of this Agreement provide that Pharmacopeia shall be “solely”
responsible or the like with respect to a matter, it is understood that such
responsibilities may be carried out or borne on Pharmacopeia’s behalf by a
Pharmacopeia Affiliate, Consented Sublicensee, permitted Sublicensee or
contractor of Pharmacopeia.

 

(d)         It shall be a ***.

 

2.4         No Trademark
License.  No right or license,
express or implied, is granted to Pharmacopeia to use any trademark, trade
name, trade dress or service mark owned or Controlled by BMS or any of its
Affiliates.  Pharmacopeia, at its sole
cost and expense, shall be responsible for the selection, registration and
maintenance of all trademarks which it employs in connection with its
activities conducted pursuant to this Agreement, if any, and shall own and
control such trademarks.

 

2.5         No Implied Licenses.  No license or other right is or shall be
created or granted hereunder by implication, estoppel or otherwise for any
purpose.  All such licenses and rights
are or shall be granted only as expressly provided in this Agreement.

 

2.6         Retained Rights.  All rights not expressly granted under
Sections 2.1 and 2.2 are reserved by BMS and may be used by BMS for any
purpose.  Without limiting the foregoing,
BMS retains any and all rights under the BMS Patent Rights, BMS Other Patents
and BMS Know-How to make, have made, use, sell, have sold, export or import any
compounds for use outside the Field, provided that
such compounds are not Listed Compounds or products containing any Listed
Compounds.  BMS also expressly reserves
and retains the right (i) to make, have made and use Licensed Compounds
for any internal research purposes (including but not limited to for purposes
of screening in support of BMS’ internal research programs), (ii) to
support the filing and prosecution of patent applications, and (iii) to
make, have made and use any Licensed Compound solely for use as an intermediate
or starting material in the manufacture of any compound which is not a Listed
Compound for use outside the Field. 
Notwithstanding the foregoing, BMS shall not develop any compounds Covered
by a Valid Claim in the BMS Patent Rights for use in male contraception.

 

2.7         Notification of
Development Compound Selection.  Upon
a Party selecting, in good faith, a compound which is Covered by a Valid Claim
within the BMS Patent Rights as a Development Compound, such Party will send a
notice to the Vice President of Chemistry for the other Party as described
below, and the notice provided shall identify each such Development Compound by
chemical structure.  Each Party may only
select Development Compounds for use in accordance with the rights granted
hereunder (i.e. Pharmacopeia may only select Development Compounds for use
within the Field, and BMS may only select Development Compounds for use outside
the Field and BMS may not select a Listed Compound as a Development Compound)
(upon receipt of such notice by the other Party, such Development Compound will
be deemed an “Excluded Compound” of the notifying Party, i.e. a BMS 

 

10

 

Excluded
Compound if BMS is the notifying Party and a Pharmacopeia Excluded Compound if
Pharmacopeia is the notifying Party).  A
Party may not begin or continue to Develop or Commercialize an Excluded
Compound of the other Party (and such Party shall immediately cease any Development
of such Excluded Compound), regardless of what stage in Development such
Excluded Compound is in each Party’s portfolio. 
Notification of the designation of a Development Compound as an Excluded
Compound shall be in accordance with Section 15.2 except that the
notification shall be sent to:

 

	
   

  	
  For
  BMS:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Bristol-Myers
  Squibb Company

  	
   

  
	
   

  	
   

  	
  P.O. Box
  4000

  	
   

  
	
   

  	
   

  	
  Route
  206 & Province Line Road

  	
   

  
	
   

  	
   

  	
  Princeton,
  New Jersey 08543-4000

  	
   

  
	
   

  	
   

  	
  Attention:
  Vice President of Chemistry

  	
   

  
	
   

  	
   

  	
  Telephone:  ***

  	
   

  
	
   

  	
   

  	
  Facsimile:  ***

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  With a copy to:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Bristol-Myers
  Squibb Company

  	
   

  
	
   

  	
   

  	
  P.O. Box
  4000

  	
   

  
	
   

  	
   

  	
  Route
  206 & Province Line Road

  	
   

  
	
   

  	
   

  	
  Princeton,
  New Jersey 08543-4000

  	
   

  
	
   

  	
   

  	
  Attention:

  	
  Vice
  President and Senior Counsel,

  
	
   

  	
   

  	
   

  	
  Corporate
  and Business Development

  
	
   

  	
   

  	
  Telephone:  ***

  	
   

  
	
   

  	
   

  	
  Facsimile:  ***

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  For Pharmacopeia:

  	
   

  
	
   

  	
   

  	
  Pharmacopeia, Inc.

  	
   

  
	
   

  	
   

  	
  3000
  Eastpark Boulevard

  	
   

  
	
   

  	
   

  	
  Cranbury,
  New Jersey 08512

  	
   

  
	
   

  	
   

  	
  Attention:
  Chief Science Officer

  	
   

  
	
   

  	
   

  	
  Telephone:  ***

  	
   

  
	
   

  	
   

  	
  Facsimile:  ***

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  with
  a copy to:

  	
   

  
	
   

  	
   

  	
  Pharmacopeia, Inc.

  	
   

  
	
   

  	
   

  	
  3000
  Eastpark Boulevard

  	
   

  
	
   

  	
   

  	
  Cranbury,
  New Jersey 08512

  	
   

  
	
   

  	
   

  	
  Attention:
  General Counsel

  	
   

  
	
   

  	
   

  	
  Telephone:  ***

  	
   

  
	
   

  	
   

  	
  Facsimile:  ***

  	
   

  
					

 

2.8         Unblocking License
Grants.

 

(a)          By Pharmacopeia.  Pharmacopeia hereby grants to BMS a perpetual
fully paid-up, worldwide non-exclusive, sublicensable license under any Patents
Controlled by Pharmacopeia, solely to the extent that the claims of such patent
rights are within the scope of the claims of any Patent within the BMS Patent
Rights (e.g., claims Covering a selection invention within a genus of compounds
Covered in the BMS Patent Rights) and that are composition-of-matter claims
Covering, as compound(s) per se, one 

 

11

 

or
more BMS Excluded Compounds, to make, use (including in research activities),
have made, sell, offer to sell, export and import and otherwise exploit
pharmaceutical products solely for use outside the Field.  For the avoidance of doubt, the unblocking license
granted under this Section 2.8(a) shall not entitle BMS to Develop or
Commercialize any Pharmacopeia Excluded Compound or product incorporating a
Pharmacopeia Excluded Compound. 
Notwithstanding the foregoing, this Section 2.8(a) shall not
apply with respect to any Patent for which Pharmacopeia would incur any
obligation (including but not limited to a cash payment obligation) to a Third
Party if such Patent were included in this Section 2.8(a), unless and only
to the extent that BMS agrees in writing to incur such obligation to such Third
Party, including to fully reimburse Pharmacopeia, or pay directly to such Third
Party, any payment obligation. 
Notwithstanding the foregoing, BMS acknowledges and agrees that the
foregoing license grant shall not include any Patent Controlled by Pharmacopeia
and related to the development and commercialization of JAK3 inhibitor-based
therapeutic products.

 

(b)         By BMS.  BMS hereby grants to Pharmacopeia a perpetual
fully paid-up, worldwide non-exclusive, sublicensable license under any Patents
Controlled by BMS but not included in the BMS Patent Rights or derived from the
BMS Know-How, solely to the extent that the claims of such patent rights are
within the scope of the claims of any patent within the BMS Patent Rights
(e.g., claims Covering a selection invention within a genus of compounds
Covered in the BMS Patent Rights) and that are composition-of-matter claims
Covering, as compound(s) per se, one or
more Pharmacopeia Excluded Compounds, to make, use (including in activities
directed at the research and Development of Licensed Compounds), have made,
sell, offer to sell, export and import and otherwise exploit or Commercialize
Licensed Compounds and Licensed Products
solely for use in the Field. For the avoidance of doubt, the unblocking
license granted under this Section 2.8(b) shall not entitle
Pharmacopeia to Develop or Commercialize any BMS Excluded Compound or product
incorporating a BMS Excluded Compound. 
Notwithstanding the foregoing, this Section 2.8(b) shall not
apply with respect to any Patent for which BMS would incur any obligation
(including but not limited to a cash payment obligation) to a Third Party if
such Patent were included in this Section 2.8(b), unless and only to the
extent that Pharmacopeia agrees in writing to incur such obligation to such
Third Party, including to fully reimburse BMS or pay directly to such Third
Party any payment obligation.

 

ARTICLE 3

 

BMS RIGHT OF FIRST
NEGOTIATION

 

3.1         BMS Right of First
Negotiation.

 

3.1.1      BMS shall have a
limited right of first negotiation with respect to Licensed Compounds as
follows (the “Right of First Negotiation”).

 

(a)          In the event
that Pharmacopeia desires to enter into a License with respect to any Licensed
Compound or Licensed Product, before entering into negotiations with any Third
Party with respect to a License to such Third Party with respect to a Licensed
Compound or Licensed Product, Pharmacopeia will notify BMS of its desire and
provide BMS with information in Pharmacopeia’s possession and control that is
reasonably necessary for BMS to perform its due diligence with respect to such
Licensed Compound or Licensed Product (including but not limited to information
from or relating to clinical studies, correspondence with FDA, information
regarding Third Party patents, and information regarding the manufacture,
sourcing and cost of goods for the Licensed Compound or Licensed Product) (the “Notice”).  Pharmacopeia shall provide to BMS a proposal of terms
and conditions with respect to such proposed License at the time of such
Notice.  If BMS notifies Pharmacopeia
in writing of its election to pursue a License for such Licensed Compound or
Licensed Product within *** (***) days after BMS’ 

 

12

 

receipt
of such Notice, Pharmacopeia shall enter into good faith negotiations with BMS
with respect to such License for a period of *** (***) days (the “Negotiation
Period”) following receipt of such election from BMS.  ***.

 

(b)         During the Negotiation
Period, Pharmacopeia will provide BMS with an opportunity to make a written
proposal of terms and conditions with respect to such a License and
Pharmacopeia will either accept the proposal or provide a counter offer to BMS (i.e., in addition to the proposal
provided to BMS at the time of the Notice).  If BMS has not provided Pharmacopeia with
such a written proposal regarding all principal financial terms of such a
License within the first *** (***) days of the Negotiation Period, the
Negotiation Period will terminate, and Pharmacopeia will then be free to enter into
negotiations with any Third Party regarding a License for such Licensed
Compounds or Licensed Products and free to enter into any such License.  If Pharmacopeia and BMS are able to conclude
an agreement in principle within the Negotiation Period as set forth in a
mutually satisfactory term sheet with respect to such License (being demonstrated by BMS obtaining
internal BMS Executive Committee, and Pharmacopeia obtaining Board approval, to
proceed with completing a definitive agreement based on such term sheet), the Parties
shall negotiate a definitive agreement in good faith with the goal of executing
such agreement within *** (***) days thereafter.

 

(c)         If BMS does not elect through the
written notification described above to pursue a License with respect to such
Licensed Compounds within the *** (***) day period set forth above,
Pharmacopeia will then be free to enter into negotiations with any Third Party
regarding a License for such Licensed Compounds or Licensed Products and free to enter into any such
License.

 

(d)         Following Notice, if BMS does so elect to
pursue a License with respect to the Licensed Compounds or Licensed
Products within the
*** (***) day period set forth above, but Pharmacopeia and BMS do not conclude
an agreement in principle (being demonstrated by BMS obtaining internal BMS
Executive Committee, and Pharmacopeia obtaining Board approval, to proceed with
completing a definitive agreement based on such term sheet) with respect to
such License within the Negotiation Period as described above, Pharmacopeia
will then be free to enter into negotiations with any Third Party regarding a
License for such Licensed Compounds or Licensed Products, and free to enter into any such
License, subject to the provisions of this Article 3 set forth below.

 

3.1.2      Pharmacopeia shall not
enter into an agreement with any Third Party with respect to a License for a
Licensed Compound or Licensed Product except in accordance with the provisions
of this Article 3, including the provisions set forth below.  Notwithstanding the foregoing, in the event
BMS does not (i) deliver to Pharmacopeia a written proposal within the
forty-five (45) day time period set forth in Section 3.1.1(b), or (ii) elect
to pursue a License with respect to Licensed Compounds or Licensed Products
within the time frame set forth in Section 3.1.1(c), then the provisions
of Section 3.1.2 shall not apply.

 

(a)          In the event that
Pharmacopeia intends to enter into a License agreement with a Third Party (based on bona fide arm’s-length negotiations
with such Third Party) after following the procedure set forth in this Article 3,
*** (as defined below).

 

(b)         For purposes of the
***.  For this purpose, the *** at that
time.  Such determination by the
***.  The *** will consider the ***.  Such determination by the Board shall be ***.

 

(c)         If the ***.

 

(d)         If the ****.  In the event that Pharmacopeia makes
***.  If Pharmacopeia offers ***.  If such ***. 
If such ***.

 

13

 

3.1.3      In the event that *** under this Article 3.

 

3.1.4      Upon the initiation of
any such Negotiation Period, Pharmacopeia shall ***.

 

3.1.5      Any License agreement
entered into by Pharmacopeia with a Third Party in accordance with the
foregoing procedure shall be consistent with the terms and conditions of this
Agreement and shall fully enable Pharmacopeia to fully perform all of its
obligations under the Agreement which will continue in effect.  As set forth in Section 2.2, any Sublicensee
shall be bound by the terms and conditions of this Agreement in the same manner
as Pharmacopeia, provided that Section 3.1.2
of Section 3.1 shall not apply to a Sublicensee or a Consented
Sublicensee.

 

3.1.6      Certain Definitions.  For the purposes of this Article 3, the
following capitalized terms shall have the following meanings:

 

(a)         “***” means,
with respect to a ***, compared to a *** under the ***, that the ***, based on
the ***, including without limitation, ***.

 

(b)         “***” means any
***.

 

ARTICLE
4

 

TRANSFER
OF KNOW-HOW AND REGULATORY FILINGS

 

4.1         Documentation.  Within sixty (60) days following the
Effective Date, BMS shall provide to Pharmacopeia one (1) electronic or
paper copy of all scientific, regulatory and manufacturing documents Controlled
by BMS as of the Effective Date to the extent that such documents are (i) included
in the BMS Know-How , and (ii) are reasonably available to BMS without
undue searching, provided however, that subject to
the last sentence of this Section 4.1, the foregoing shall in no event
require BMS to provide copies of laboratory notebook records.  Such documentation is Confidential
Information of BMS (subject to Article 11) and shall not be used by
Pharmacopeia for any purpose other than Development, manufacture or
Commercialization of Licensed Compounds and Licensed Products in accordance
with this Agreement.  BMS shall be
responsible for the cost of providing one (1) set of copies only.  BMS shall have no obligation to reformat or
otherwise alter or modify any such materials, or to create materials in electronic
form, in order to provide them to Pharmacopeia. 
Any and all such materials delivered to Pharmacopeia pursuant to this Section 4.1
are and shall remain the sole property of BMS. 
BMS may elect to provide the documentation under this Section 4.1
as such documents become available or provide all documentation at one time; provided that any documentation and materials provided to
Pharmacopeia pursuant to Section 4.4 will not be separately provided
pursuant to this Section 4.1.

 

Notwithstanding the foregoing, if at any time
during the term of this Agreement Pharmacopeia identifies particular documents, data
or information (including laboratory notebook records) that are within the BMS Know-How or would fall within the IND Materials
under Section 4.4 or that Pharmacopeia reasonably believes are within the
BMS Know-How or would fall within the IND Materials under Section 4.4, but
were not previously delivered to Pharmacopeia, and that are reasonably
necessary for the continued manufacture, Development or Commercialization of a
Licensed Compound or Licensed Product (including without limitation materials
requested in connection with an audit or other inquiry by a Regulatory
Authority), or are reasonably necessary to support
the filing and/or prosecution of Patents Covering the Licensed Compounds or
Licensed Products in accordance with Article 10 (i.e., the BMS Patent
Rights and Joint Patent Rights for which Pharmacopeia has filing and/or
prosecution responsibility), BMS shall promptly provide such material to Pharmacopeia
upon request to the extent that such items are in BMS’ possession and are
reasonably available without undue searching.

 

14

 

4.2         Technical
Assistance.  During the *** (***) day
period following Pharmacopeia’s receipt of the IND materials pursuant to Section 4.4
below, BMS shall provide Pharmacopeia with reasonable access by teleconference
or in-person at BMS’ facilities (subject to BMS’ customary rules and
restrictions with respect to site visits by non-BMS personnel) to BMS personnel
reasonably knowledgeable in the research and development of the Licensed
Compounds and Licensed Products for up to *** (***) hours of consulting advice
with respect to the Licensed Compounds and Licensed Products, provided that (i) such access shall be requested and
coordinated through a single BMS contact person reasonably knowledgeable with
respect to the BMS SARM program, with such person to be designated by BMS, (ii) BMS
makes no warranty, express or implied, that Pharmacopeia shall be able to
successfully implement and use the BMS Know-How, (iii) BMS shall not be
obligated to provide more than *** (***) hours of consulting advice in such
period, and (iv) BMS will use reasonable efforts to provide such
consulting advice promptly.  If
Pharmacopeia requests further consulting advice related to Licensed Compounds
and Licensed Products in excess of the *** (***) hour amount referenced above,
BMS may at its sole discretion provide such consulting advice and, if BMS
elects to provide such consulting advice, Pharmacopeia shall reimburse BMS for
its time incurred in connection therewith at a rate of *** per hour, plus any
reasonable out-of-pocket expenses incurred by BMS in providing such consulting
advice requested by Pharmacopeia.  Such
reimbursement shall be made to BMS within thirty (30) days after receipt by
Pharmacopeia of a BMS invoice reasonably detailing BMS’ time expended, together
with documentation substantiating any out-of-pocket expenses incurred.

 

4.3         Materials.  Within sixty (60) days following the
Effective Date, BMS shall provide Pharmacopeia with all quantities of Listed
Compounds that are reasonably available to BMS as of the Effective Date,
including the Listed Compound designated BMS564929 (the “BMS564929 Compound”)
it being understood that at minimum, Pharmacopeia shall be provided with no
less than *** of BMS564929 Compound.  Any
such materials (including quantities of the BMS564929 Compound) that may be
provided by or for BMS to Pharmacopeia pursuant to this Section 4.3 (the “Transferred
Materials”) are provided “AS IS”. 
Pharmacopeia shall be fully responsible for its and its Affiliates’,
Sublicensees’ and contractors’ use, storage, handling and disposition of the
Transferred Materials.  Under no
circumstances shall BMS be liable or responsible for Pharmacopeia’s or its
Affiliates’, Sublicensees’ and contractors’ use, storage, handling or
disposition of the Transferred Materials, and Pharmacopeia assumes sole
responsibility for any claims, liabilities, damages and losses that might arise
as a result of Pharmacopeia’s and its Affiliates’, Sublicensees’ and
contractors’ use, storage, handling or disposition of any Transferred Material.
Pharmacopeia shall indemnify, defend and hold harmless BMS and its Affiliates,
and their respective officers, directors, employees, agents, licensors, and
their respective successors, heirs and assigns
and representatives, from and against any and all damages,
liabilities, losses, costs and expenses (including, without limitation, reasonable
legal expenses, costs of litigation and reasonable attorney’s fees) arising in
connection with any claims, suits, proceedings, whether for money damages or
equitable relief, of any kind, arising out of or relating, directly or
indirectly, to Pharmacopeia’s, or any of its Affiliates’, Sublicensees’ or
contractors’ use, storage, handling or disposition of any Transferred
Material.  Transferred Materials may only
be provided to Pharmacopeia, its Affiliates, Sublicensees and contractors.  The Transferred Materials shall be used by
Pharmacopeia solely for purposes of supporting the Development of the Licensed
Compounds and Licensed Products. 
Notwithstanding the foregoing, and subject to BMS’s obligation to
provide a minimum quantity of BMS564929 Compound as set forth in the first
sentence of this Section 4.3, BMS shall be entitled to retain reasonable
sample quantities of Listed Compounds in amounts not to exceed the greater of
*** of the available quantities of Listed Compounds.

 

4.4         Assignment of IND.  BMS hereby assigns to Pharmacopeia all of BMS’
rights, title and interests in and to any INDs filed by BMS with any Regulatory
Authority in the Territory for the BMS564929 Compound and BMS will provide to
Pharmacopeia one copy of such IND filing(s), including without limitation the
drug master file for such filing.  In
connection with such assignment, 

 

15

 

BMS
shall deliver to Pharmacopeia within fifteen (15) business days of the
Effective Date, one (1) electronic or paper copy of all correspondence,
responses, meeting minutes and other documentation by and between BMS and any
Regulatory Authority relating to such IND filing(s), and all documents relating
to contacts by or on behalf of BMS and any Regulatory Authority and related to
such IND filing(s) (the IND filing and such ancillary materials, the “IND
Materials”).  For the avoidance of
doubt, upon such assignment, Pharmacopeia shall own all right, title and
interest in and to the IND Materials. 
The Parties will work to provide any formal notice of the assignment of
the INDs to Pharmacopeia pursuant to this Section 4.4 to the Regulatory
Authorities to effect such assignment. 
Notwithstanding anything to the contrary in this Agreement, documents
related to the BMS564929 Toxicology Studies will be provided by BMS as soon as
possible, but in no event later than sixty (60) days after the Effective Date.

 

ARTICLE
5

 

DEVELOPMENT

 

5.1         Development.  Pharmacopeia shall have sole responsibility
for, and shall bear the cost of conducting, all Development with respect to the
Licensed Compounds and Licensed Products.

 

5.2         Development Reports.  Pharmacopeia will provide BMS with ***
written development reports within thirty (30) days following the *** during
the Term, presenting a summary of the Development activities accomplished by
Pharmacopeia during the just ended *** with respect to Licensed Compounds and
Licensed Products.

 

5.3         Regulatory
Responsibilities and Costs. 
Following assignment of the IND by BMS to Pharmacopeia pursuant to Section 4.4,
Pharmacopeia shall have sole responsibility for, and shall bear the cost of
preparing, all regulatory filings and related submissions with respect to the
Licensed Compounds and Licensed Products. 
Pharmacopeia shall be responsible for meeting the requirements of all
pre-approval inspections required by any Regulatory Authorities.  Except as set forth in Section 13.4,
Pharmacopeia or its Affiliate or Sublicensee shall own all INDs, NDAs,
Approvals and submissions in connection therewith and all Approvals shall be
obtained by and in the name of Pharmacopeia or its Affiliate or Sublicensee as
applicable.

 

5.4         Subcontracting.  Subject to and without limiting Section 2.2,
Pharmacopeia may perform any activities in support of its Development or
Commercialization of Licensed Compounds and Licensed Products through
subcontracting to a Third Party contractor or contract service organization, provided that: (a) Pharmacopeia shall enter into an
appropriate written agreement with any such Third Party subcontractor such that
the subcontractor shall be bound by all applicable provisions of this Agreement
to the same extent as Pharmacopeia and such that BMS’ rights under this
Agreement are not adversely effected; (b) any such Third Party subcontractor
to whom Pharmacopeia discloses Confidential Information of BMS shall enter into
an appropriate written agreement obligating such Third Party to be bound by
obligations of confidentiality and restrictions on use of such BMS Confidential
Information that are no less restrictive than the obligations in this
Agreement; (c) Pharmacopeia will obligate such Third Party to agree in
writing to assign or license (with the right to grant sublicenses) to
Pharmacopeia any inventions (and any patent rights covering such inventions)
made by such Third Party in performing such services for Pharmacopeia; and (d) Pharmacopeia
shall at all times be responsible for the performance of such subcontractor.

 

16

 

ARTICLE
6

 

COMMERCIALIZATION

 

6.1                             Pharmacopeia
Obligations. 
Pharmacopeia shall have sole responsibility for, and shall bear the cost
of conducting, all Commercialization with respect to the Licensed Products.

 

6.2                             Marking.  Each Licensed Product Commercialized by
Pharmacopeia under this Agreement shall be marked (to the extent not prohibited
by applicable Laws) with applicable patent and other intellectual property
notices BMS Patent Rights in such a manner as may be required by applicable
Law.

 

6.3                             Reports.  Pharmacopeia shall provide BMS with ***
written reports within *** (***) days following the end of each *** summarizing
significant commercial activities and events with respect to Licensed Products
during the just ended ***.  If
Pharmacopeia plans to launch a Licensed Product in any country of the Territory
in the Calendar Year following the *** such report covers, the report provided
to BMS under this Section 6.3 shall so indicate.

 

ARTICLE
7

 

MANUFACTURE
AND SUPPLY

 

7.1                             Manufacture and
Supply.  Pharmacopeia shall be solely
responsible at its expense for making or having made all of its requirements of
the Licensed Compounds and Licensed Products. 
Pharmacopeia shall manufacture, test, QA release, handle, store and ship
the Licensed Compounds and Licensed Products in compliance with all applicable
Laws, with all regulatory filings, and with its applicable internal
specifications and quality control procedures.

 

ARTICLE
8

 

FINANCIAL
TERMS

 

8.1                             In partial
consideration of the rights granted by BMS to Pharmacopeia pursuant to this
Agreement, Pharmacopeia shall make the payments to BMS as provided for in this Article 8.

 

8.2                             Development Milestone
Payments.

 

Pharmacopeia shall make milestone payments to
BMS upon achievement of each of the milestones events in the amounts as set
forth below in Table 1.  The milestone
payments set forth below will be payable by Pharmacopeia to BMS within ***
(***) days of the first achievement of the specified milestone event with
respect to a Licensed Compound.  Such
milestone payment shall not be refundable or returnable in any event, nor shall
it be creditable against royalties or other payments.  For clarity, each milestone shall be payable
one-time only irrespective of the number of Licensed Compounds achieving any
given milestone or number of indications developed.

 

17

 

Table 1

 

	
  Milestone Event

  	
   

  	
  Milestone Payment

  	
   

  
	
  NDA Filing

  	
   

  	
  $

  	
  ***

  	
   

  
	
  NDA Approval

  	
   

  	
  $

  	
  ***

  	
   

  
	
  MAA Filing

  	
   

  	
  $

  	
  ***

  	
   

  
	
  MAA Approval

  	
   

  	
  $

  	
  ***

  	
   

  
	
  JNDA Filing

  	
   

  	
  $

  	
  ***

  	
   

  
	
  JNDA Approval

  	
   

  	
  $

  	
  ***

  	
   

  

 

8.3                             Royalty
Payments.

 

8.3.1                          Pharmacopeia
shall pay to BMS the following royalty payments on the total aggregate annual
Net Sales in the Territory of all Licensed Products in a particular Calendar
Year by Pharmacopeia, its Affiliates, and Sublicensees in the Territory:

 

	
  Aggregate Annual Worldwide Net Sales of All

  Licensed Products in a Calendar Year

  	
   

  	
  Royalty Rate

  	
   

  
	
  Up to $***

  	
   

  	
  ***

  	
  %

  
	
  More than $***,
  but less than $***

  	
   

  	
  ***

  	
  %

  
	
  More than $***,
  but less than $***

  	
   

  	
  ***

  	
  %

  
	
  More than $***

  	
   

  	
  ***

  	
  %

  

 

By
way of example, in a given Calendar Year, if the aggregate annual worldwide Net
Sales for all Licensed Products is $750 million, the following royalty payment
would be payable under this Section 8.3.1: ***.

 

8.3.2                          Sales-Based
Milestones.  In addition
to the Development Milestones and royalties described above, Pharmacopeia will
pay to BMS sales-based milestones for each Calendar Year that the worldwide
annual Net Sales of Products reach the milestones described in the table below.

 

	
  Net Sales Milestone

  	
   

  	
  Milestone Fee

  	
   

  
	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  $

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  

 

18

 

For
clarity, if a Licensed Product has worldwide annual Net Sales of $*** in a
given Calendar Year, *** described above ***. 
Such milestone fee shall be separately itemized and paid with the
royalty payment made after the Calendar Quarter in which such milestone occurs.

 

8.3.3                          Royalty Term.  Royalties shall be payable on a *** of (i) ***
or (ii) the *** or (iii) the ***.

 

8.3.4                          Generic Product
Competition.  The royalty
rates set forth above in Section 8.3.1 shall be ***.  “Generic Product” means any
pharmaceutical product containing an active pharmaceutical ingredient that is
the same as a Licensed Product

 

8.3.5                          Third Party
Royalty Payments.  If
Pharmacopeia or its Sublicensee, in its reasonable judgment, is ***.  Prior to Pharmacopeia or its Sublicensee
exercising its *** under this Section 8.3.5, Pharmacopeia shall provide
BMS with ***.  The Parties shall discuss
the best course of action to resolve such potential ***, provided
that such discussions shall not limit or delay Pharmacopeia’s or its
Sublicensee’s right to ***.

 

Except
as set forth above, Pharmacopeia shall be ***.

 

8.3.6                          Royalty
Conditions.  The
royalties under Section 8.3.1 shall be subject to the following
conditions:

 

(a)                              that only one
royalty shall be due with respect to the same unit of Licensed Product;

 

(b)                             that no
royalties shall be due upon the sale or other transfer among Pharmacopeia, its
Affiliates, or Sublicensees, but in such cases the royalty shall be due and
calculated upon Pharmacopeia’s or its Affiliate’s or Sublicensee’s Net Sales of
Licensed Product to the first independent Third Party; and

 

(c)                              no royalties
shall accrue on the disposition of Licensed Product in reasonable quantities by
Pharmacopeia, its Affiliates or Sublicensees as part of an expanded access
program, as bona fide samples, as part of Phase 4 Trials
or as donations to non-profit institutions or government agencies for
non-commercial purposes, provided, in
each case, that neither Pharmacopeia, its Affiliate or Sublicensees receives
any payment for such Licensed Product.

 

8.4                             Manner of
Payment.  All payments to be made by
Pharmacopeia hereunder shall be made in Dollars by wire transfer of immediately
available funds to such United States bank account as shall be designated by
BMS.  Late payments shall bear interest
at the rate provided in Section 8.9.

 

8.5                             Sales Reports
and Royalty Payments.  After the
First Commercial Sale of a Licensed Product and during the term of this
Agreement, Pharmacopeia shall furnish to BMS a written report, within *** (***)
days after the end of each *** (or portion thereof, if this Agreement
terminates during a ***), showing the amount of royalty due for such *** (or
portion thereof).  Royalty payments for
each *** shall be due at the same time as such written report for the ***.  With each *** payment, Pharmacopeia shall
deliver to BMS a full and accurate accounting to include at least the following
information:

 

(a)                                    the quantity of
each Licensed Product sold (by country) by Pharmacopeia, its Affiliates, and
Sublicensees;

 

(b)                                   the calculation
of Net Sales from such gross sales (by country);

 

19

 

(c)                                    the royalties payable in
Dollars which shall have accrued hereunder in respect of such Net Sales;

 

(d)                                   withholding taxes, if any,
required by applicable Law to be deducted in respect of such royalties; and

 

(e)                                    the dates of the First
Commercial Sales of Licensed Products in any country during the reporting
period.

 

If no royalty or payment is due for any royalty period hereunder,
Pharmacopeia shall so report.

 

8.6                             Sales Record
Audit.  Pharmacopeia shall keep, and
shall cause each of its Affiliates, and Sublicensees, if any, to keep, full and
accurate books of accounting in accordance with GAAP as may be reasonably
necessary for the purpose of calculating the royalties payable to BMS.  Such books of accounting (including, without
limitation, those of Pharmacopeia’s Affiliates, and Sublicensees, if any) shall
be kept at their principal place of business and, with all necessary supporting
data, shall during all reasonable times for the *** (***) years next following
the end of the Calendar Year to which each shall pertain, be open for
inspection at reasonable times upon written notice by BMS and at BMS’ sole
cost, no more than once per year, by an independent certified accountant
selected by BMS as to which Pharmacopeia has no reasonable objection, for the
purpose of verifying royalty statements for compliance with this
Agreement.  Such accountant must have
agreed in writing to maintain all information learned in confidence, except as
necessary to disclose to BMS such compliance or noncompliance by Pharmacopeia.  The results of each inspection, if any, shall
be ***.  BMS shall pay for such
inspections, except that in the event there is any ***.  Any underpayments shall be paid by
Pharmacopeia within ten (10) Business Days of notification of the results
of such inspection.  Any overpayments
shall be fully creditable against amounts payable in subsequent payment periods
or, if no such amounts become payable within ninety (90) days after
notification of such results, shall be refunded.

 

8.7                             Currency
Exchange. With respect to Net Sales invoiced in Dollars, the
Net Sales and the amounts due to BMS hereunder shall be expressed in
Dollars.  With respect to Net Sales
invoiced in a currency other than Dollars, the Net Sales shall be expressed in
the domestic currency of the entity making the sale, together with the Dollar
equivalent, calculated using the arithmetic average of the spot rates on the
close of business on the last Business Day of each month of the Calendar
Quarter in which the Net Sales were made. 
The “closing mid-point rates” found in the “dollar spot forward against
the dollar” table published by The Financial Times or any other publication as
agreed to by the Parties shall be used as the source of spot rates to calculate
the average as defined in the preceding sentence.  All payments shall be made in Dollars.

 

8.8                             Tax Withholding.  In the event that any withholding taxes or
similar charges are levied or assessed by any taxing authority in the Territory
with respect to payments made by Pharmacopeia to BMS under this Agreement,
Pharmacopeia shall pay such taxes or similar charges to the proper taxing
authority.  Pharmacopeia may deduct the
amount of such taxes or similar charges paid by Pharmacopeia to such taxing
authority from the applicable royalties or other payment otherwise payable to
BMS, subject to the following. 
Pharmacopeia shall promptly provide BMS with evidence of such tax
payment obligation together with an original receipt for such tax payments (or
a certified copy, if the original is not available) and other documentation as
BMS reasonably determines is required for the purpose of BMS’ tax returns.  Pharmacopeia, its Affiliates and Sublicensees
shall cooperate with BMS to enable the claiming of a reduction or exemption
from withholding taxes on payments under any applicable convention on the
avoidance of double taxation or similar agreement in force and shall provide to
BMS proper evidence of payments of withholding tax and assist BMS by obtaining
or providing in as far as 

 

20

 

possible the required documentation for the purpose of BMS’ tax
returns.  Pharmacopeia’s obligation
vis-à-vis the tax authorities shall remain unaffected by the provisions of this
Section.

 

8.9                           Interest Due.  Without limiting any
other rights or remedies available to BMS, Pharmacopeia
shall pay BMS interest on any payments that are not paid on or before the date
thirty (30) days after the date such payments are due under this Agreement at a
rate of *** per month or the maximum applicable legal rate, if less, calculated
on the total number of days payment is delinquent.

 

8.10                     Additional
Payments Based on ***.  In addition to the
above milestone and royalty payments, and subject to the *** (as defined
below), Pharmacopeia shall pay to BMS ***.  For clarification, with respect to ***, in
the event that *** (as hereafter defined).

 

Such ***.  Such *** to BMS shall be due within thirty (30) days
following ***.  Notwithstanding the
foregoing, the total amount of all ***.

 

For purposes of
this Section 8.10, “***” means ***, but does not include (i) ***,
(ii) ***, or (iii) ***.

 

ARTICLE
9

 

REPRESENTATIONS
AND WARRANTIES; DISCLAIMER;

LIMITATION OF LIABILITY

 

9.1                           Mutual
Representations and Warranties.  Each Party represents and warrants to the
other Party that (i) it has all requisite corporate power and authority to
enter into this Agreement and to perform its obligations under this Agreement, (ii) execution
of this Agreement and the performance by such Party of its obligations
hereunder have been duly authorized, (iii) this Agreement is legally
binding and enforceable on such Party in accordance with its terms, and (iv) the
performance of this Agreement by it does not create a material breach or
material default under any other agreement to which it is a Party.

 

9.2                           Representations
and Warranties of BMS.

 

9.2.1                          BMS represents
and warrants to Pharmacopeia that as of the Effective Date, to the actual
knowledge of BMS: (i) there is no pending litigation which alleges, or any
written communication alleging, that BMS’ activities with respect to the BMS
Patent Rights or the Licensed Compounds have infringed or misappropriated any
of the intellectual property rights of any Third Party, and (ii) all fees
(including legal fees) required to be paid by BMS in order to maintain the BMS
Patent Rights have been paid to date.

 

9.2.2                          BMS represents
and warrants that it has not previously assigned, transferred, conveyed or
licensed (or granted an option to assign, transfer, convey or license) its
right, title and interest in the BMS Patent Rights or the BMS Know-How.

 

9.2.3                          BMS represents
and warrants to Pharmacopeia that as of the Effective Date, to the actual
knowledge of its in-house patent counsel, other than the BMS Patent Rights, BMS
does not Control any Patent that is reasonably necessary for the Development or
Commercialization of any Listed Compound and that Covers (i) the
composition of matter of any Listed Compound, or (ii) a method of
manufacture or use of any Listed Compound; provided that
if any such Patents are identified, such Patents will be deemed to be BMS Other
Patent Rights and subject to the licenses granted to Pharmacopeia pursuant to Section 2.2.

 

21

 

9.2.4                          BMS represents
and warrants to Pharmacopeia that, to its actual knowledge, and without further
inquiry, with respect to any and all INDs filed by or on behalf of BMS
involving BMS564929 Compound, (i) all such INDs were timely filed and have
not been withdrawn; (ii) other than the outstanding toxicology reports BMS
has timely filed all responses to the appropriate Regulatory Authority with
respect thereto (including any required Annual Reports); and (iii) there
are no outstanding objections, rejections, warning letters or other enforcement
or penalty actions pending or threatened with respect thereto by any Regulatory
Authority.

 

9.2.5                          ***.

 

9.2.6                          BMS represents
and warrants to Pharmacopeia that, to its actual knowledge, there are no
Patents Controlled by BMS as of the Effective Date that, if licensed to
Pharmacopeia pursuant to Section 2.8(b) would incur any obligation
(including but not limited to a cash payment obligation) by BMS to a Third
Party.

 

9.3                             Representations
and Warranties of Pharmacopeia.  Pharmacopeia represents, warrants and
covenants that (i) all of its activities related to its use of the BMS
Patent Rights , BMS Other Patent Rights and BMS Know-How, and the Development
and Commercialization of the Licensed Compounds and Licensed Products, pursuant
to this Agreement shall comply with all applicable legal and regulatory requirements
and (ii) it shall not knowingly engage in any activities (A) that use
the BMS Patent Rights, BMS Other Patent Rights and/or BMS Know-How in a manner
that is outside the scope of the license rights granted to it hereunder or (B) that
infringe the intellectual property rights of any Third Party.  Pharmacopeia further represents and warrants
to BMS that, to its actual knowledge, there are no Patents Controlled by
Pharmacopeia as of the Effective Date that, if licensed to BMS pursuant to Section 2.8(a) would
incur any obligation (including but not limited to a cash payment obligation)
by Pharmacopeia to a Third Party.

 

9.4                             Disclaimer.  EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND, EITHER
EXPRESS OR IMPLIED, INCLUDING ANY EXPRESS OR IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO ANY PATENT
RIGHTS, CONFIDENTIAL INFORMATION OR KNOW-HOW OF SUCH PARTY OR ANY LICENSE
GRANTED BY SUCH PARTY HEREUNDER, OR WITH RESPECT TO ANY COMPOUNDS, INCLUDING
BUT NOT LIMITED TO THE TRANSFERRED MATERIALS, OR PRODUCTS.  FURTHERMORE, EXCEPT AS EXPRESSLY SET FORTH IN
THIS AGREEMENT, NEITHER MAKES ANY REPRESENTATIONS OR WARRANTIES THAT ANY
PATENT, PATENT APPLICATION, OR OTHER PROPRIETARY RIGHTS INCLUDED IN PATENT
RIGHTS, CONFIDENTIAL INFORMATION OR KNOW-HOW LICENSED BY SUCH PARTY TO THE
OTHER PARTY HEREUNDER ARE VALID OR ENFORCEABLE OR THAT USE OF SUCH PATENT
RIGHTS, CONFIDENTIAL INFORMATION OR KNOW-HOW CONTEMPLATED HEREUNDER DOES NOT
INFRINGE ANY PATENT RIGHTS OR OTHER INTELLECTUAL PROPERTY RIGHTS OF ANY THIRD
PARTY.

 

9.5                             Limitation of
Liability. 
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT OR OTHERWISE, NEITHER PARTY
SHALL BE LIABLE TO THE OTHER WITH RESPECT TO ANY SUBJECT MATTER OF THIS
AGREEMENT, WHETHER UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER
LEGAL OR EQUITABLE THEORY, FOR ANY INCIDENTAL, INDIRECT, SPECIAL, EXEMPLARY,
PUNITIVE, MULTIPLE, OR CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT LIMITATION,
CONSEQUENTIAL DAMAGES CONSISTING OF LOST PROFITS, LOSS OF USE, DAMAGE TO
GOODWILL, OR LOSS OF BUSINESS) AND, IN ANY CASE, BMS SHALL NOT BE LIABLE IN AN
AMOUNT 

 

22

 

GREATER THAN THE AMOUNTS PAID BY PHARMACOPEIA TO BMS UNDER ARTICLE 8 OF
THIS AGREEMENT; PROVIDED, HOWEVER, THAT THE
FOREGOING SHALL NOT APPLY TO ANY BREACH BY PHARMACOPEIA OF THE LICENSES GRANTED
TO IT UNDER THIS AGREEMENT THAT IS AN INFRINGEMENT OF BMS PATENT RIGHTS NOT
INCLUDED IN THE PATENT RIGHTS LICENSED TO PHARMACOPEIA HEREUNDER, OR ANY BREACH
BY EITHER PARTY OF ARTICLE 11 HEREOF.

 

ARTICLE 10

 

PATENT MAINTENANCE; INFRINGEMENT; EXTENSIONS

 

10.1               Ownership of
Inventions. 
Inventorship of inventions conceived or reduced to practice in the
course of activities performed under or contemplated by this Agreement shall be
determined by application of United States patent Laws pertaining to
inventorship.  If such an invention is
solely invented by an employee, consultant or contractor of a Party, such
invention shall be owned by such Party, and any patent filed claiming such
solely owned invention shall also be owned by such Party.  If such inventions are jointly invented by
one or more employees, consultants or contractors of each Party, such
inventions shall be jointly owned (“Joint Invention”), and if one or
more claims included in an issued patent or pending patent application which is
filed in a patent office in the Territory claim such Joint Invention, such
claims shall be jointly owned (“Joint Patent Rights”).  Subject to Section 5.6 with respect to
contractors, each Party shall enter into binding agreements obligating all
employees, consultants and contractors performing activities under or
contemplated by this Agreement, including activities related to the BMS Patent
Rights, Licensed Compounds or Licensed Products, to assign his/her interest in
any invention conceived or reduced to practice in the course of such activities
to the Party for which such employee, consultant or contractor is providing its
services. This Agreement shall be understood to be a joint research agreement
in accordance with 35 U.S.C. § 103(c)(3) with respect to
the  development of Licensed Compounds
and Licensed Products.  The filing,
prosecution, maintenance and enforcement of Joint Patent Rights shall be
handled in accordance with this Article 10 to the extent such Joint Patent
Rights Cover a Pharmacopeia Excluded Compound. 
For purposes of clarity, BMS shall be solely responsible, in its sole
discretion, for the filing, prosecution, maintenance and enforcement of any
Joint Patent Rights which Cover a BMS Excluded Compound, and, as further set
forth in Section 10.4.2, for all BMS Other Patent Rights.  The Parties will confer regarding the filing,
prosecution, maintenance and enforcement of any Joint Patent Rights which Cover
neither a BMS Excluded Compound nor a Pharmacopeia Excluded Compound, or which
Cover both a BMS Excluded Compound and a Pharmacopeia Excluded Compound, provided that, to the extent reasonably feasible, the
Parties will endeavor (such as through the filing of divisional applications)
to Cover BMS Excluded Compounds and Pharmacopeia Excluded Compounds in separate
applications within the Joint Patent Rights.

 

10.2                       Filing,
Prosecution and Maintenance of BMS Patent Rights.  Pharmacopeia shall be responsible, using
outside patent counsel selected by Pharmacopeia and acceptable to BMS, such
acceptance not to be unreasonably withheld, for the preparation, prosecution
(including, without limitation, any interferences, reissue proceedings and
reexaminations) and maintenance of BMS Patent Rights.  Promptly following the Effective Date, the
Parties shall cooperate to expeditiously transfer such responsibility for the
further preparation, prosecution and maintenance of BMS Patent Rights to such
outside patent counsel.  Pharmacopeia
shall be responsible for all costs incurred by Pharmacopeia (including outside
counsel fees) with respect to the preparation, prosecution and maintenance of
BMS Patent Rights so long as Pharmacopeia remains responsible for such
preparation, prosecution and maintenance. 
Upon request by BMS, Pharmacopeia (or its patent counsel) shall provide
BMS with an update of the filing, prosecution and maintenance status for each
of the BMS Patent Rights for which Pharmacopeia has responsibility.  Each Party shall reasonably consult with and
cooperate with the other Party with respect to the preparation, prosecution and
maintenance of the BMS Patent Rights reasonably 

 

23

 

prior to any deadline or action with the U.S. Patent &
Trademark Office or any foreign patent office, and Pharmacopeia (or its patent
counsel) shall furnish to BMS copies of any such relevant documents reasonably
in advance of such consultation.  Pharmacopeia
(or its patent counsel) shall provide to BMS copies of any papers relating to
the filing, prosecution or maintenance of the BMS Patent Rights for which
Pharmacopeia has responsibility promptly upon their being filed or received.  Pharmacopeia shall not knowingly take any
action during prosecution and maintenance of the BMS Patent Rights for which
Pharmacopeia has responsibility that would materially adversely affect them
(including any reduction in claim scope), without BMS’ prior consent, such
consent not to be unreasonably withheld, conditioned or delayed.

 

10.3                       Patent
Abandonment.

 

10.3.1                    Generally.  In no event will Pharmacopeia knowingly
permit any of the BMS Patent Rights for which it has responsibility to be
abandoned in any country in the Territory, or elect not to file a new patent
application claiming priority to a patent application within the BMS Patent
Rights either before such patent application’s issuance or within the time
period required for the filing of an international (i.e., Patent Cooperation
Treaty), regional (including European Patent Office) or national application,
without BMS first being given an opportunity to assume full responsibility for
the continued prosecution and maintenance of such BMS Patent Rights, or the
filing of such new patent application. 
Accordingly, Pharmacopeia (or its patent counsel) shall provide BMS with
notice of the allowance and expected issuance date of any patent within the BMS
Patent Rights, or any of the aforementioned filing deadlines, and BMS shall
provide Pharmacopeia with prompt notice as to whether BMS desires Pharmacopeia
to file such new patent application.  In
the event that Pharmacopeia decides either (i) not to continue the
prosecution or maintenance of a patent application or patent within BMS Patent
Rights in any country or (ii) not to file such new patent application
requested to be filed by BMS, Pharmacopeia shall provide BMS with  notice of this decision at least sixty (60) days prior to
any pending lapse or abandonment thereof.

 

10.3.2                    BMS Option to
Assume Responsibility.  Upon
the delivery by Pharmacopeia of a notice that it intends to abandon patent
rights within the BMS Patent Rights as provided in Section 10.3.1, BMS
shall thereupon have the right, but not the obligation, to assume responsibility
for all reasonably documented external costs thereafter incurred associated
with the filing and/or further prosecution and maintenance of such patents and
patent applications, on a patent-by-patent and country-by-country basis.  The outside patent counsel selected by
Pharmacopeia shall proceed with such filing and/or further prosecution and
maintenance promptly upon receipt of written notice from BMS of its election to
assume such responsibility, with such filing to occur prior to the issuance of
the patent to which the application claims priority or expiration of the
applicable filing deadline, as set forth above. 
In the event that BMS assumes such responsibility for such filing,
prosecution and maintenance costs, upon the reasonable request by BMS,
Pharmacopeia shall transfer the responsibility for such filing, prosecution and
maintenance of such patent applications and patents to BMS’ in-house patent
counsel or outside patent counsel selected by BMS, provided
that Pharmacopeia shall (i) provide sufficient written notice to BMS of
any such election such that the relevant transfer shall not prejudice the
filing, prosecution and/or maintenance of patent rights (where possible, such
notice shall be provided at least sixty (60) days prior to any pending lapse or
abandonment thereof); (ii) transfer or cause to be transferred to BMS or
its patent counsel the complete prosecution file for the relevant patents and
patent applications, including all correspondence and filings with patent
authorities with respect thereto; and (iii) at the reasonable request of
BMS and without demanding any further consideration therefore, do all things
necessary, proper or advisable, including without limitation the execution,
acknowledgment and recordation of specific assignments, oaths, declarations and
other documents on a country-by-country basis, to assist BMS in obtaining,
perfecting, sustaining and/or enforcing such patent(s).  Such patent applications and patents shall
otherwise continue to be subject to all of the terms and conditions of the
Agreement in the same way 

 

24

 

as the other BMS Patent Rights, as applicable; provided,
that, BMS may, at its sole option and discretion, abandon all or
part of such BMS Patent Rights without further notice or liability to
Pharmacopeia.

 

10.3.3                    Pharmacopeia
Responsibility for Patent Costs.

 

Pharmacopeia shall remain responsible for all costs incurred after the
Effective Date with respect to preparation, prosecution and maintenance of the
BMS Patent Rights for which it is responsible.

 

10.4                       Enforcement of
BMS Patent Rights Against Infringers.

 

10.4.1                   Enforcement by Pharmacopeia.

 

(a)                                   In the event that BMS or
Pharmacopeia becomes aware of a suspected infringement of any BMS Patent Right
exclusively licensed to Pharmacopeia under this Agreement, such Party shall
notify the other Party promptly, and following such notification, the Parties
shall confer.  Pharmacopeia shall have
the right, but shall not be obligated, to bring an infringement action with
respect to such infringement in the Field at its own expense, in its own name
and entirely under its own direction and control, subject to the
following.  BMS shall reasonably assist
Pharmacopeia (at Pharmacopeia’s expense) in any action or proceeding being
prosecuted if so requested, and shall lend its name to and join as a nominal
party in such actions or proceedings if reasonably requested by Pharmacopeia or
required by applicable Laws.  BMS shall have
the right to participate and be represented in any such suit by its own counsel
at its own expense.  No settlement of any
such action or proceeding which restricts the scope, or adversely affects the
enforceability, of a BMS Patent Right may be entered into by Pharmacopeia
without the prior written consent of BMS, which consent shall not be
unreasonably withheld, delayed or conditioned. 
For an infringement of the BMS Patent Rights that is outside the Field,
the Parties will meet to discuss which Party should take the lead in enforcing
the BMS Patent Rights against such alleged infringer, and pending agreement of
the Parties with respect to the Party bearing responsibility for the
enforcement of such BMS Patent Rights, such enforcement shall be pursued in
accordance with the terms of this Section 10.4.

 

(b)                                  BMS shall have the right at
its discretion to grant to Pharmacopeia such rights (including assignment of
the applicable BMS Patent Rights) as may be necessary for Pharmacopeia to
exercise its rights under this Section 10.4 (including defending or
enforcing any BMS Patent Rights) without BMS’ involvement.  In the event of such grant of rights
(including assignment) with respect to any BMS Patent Rights, such BMS Patent
Rights shall continue to be treated as BMS Patent Rights and shall otherwise
continue to be subject to all of the terms and conditions of the Agreement in
the same way as the other applicable BMS Patent Rights.  For purposes of clarity, election or
non-election by BMS to grant or assign rights to Pharmacopeia under this Section 10.4.1(b) shall
not limit BMS’ obligations under Section 10.4.1(a) to reasonably
assist Pharmacopeia in any action or proceeding, or to join in such action or
proceeding upon request by Pharmacopeia if such joinder is necessary under
applicable Laws for Pharmacopeia to exercise its rights under this Section 10.4.

 

10.4.2                   Enforcement by BMS.  If Pharmacopeia elects not to bring any
action for infringement described in Section 10.4.1 and so notifies BMS,
or if the Parties agree that BMS should enforce the BMS Patent Rights against
an alleged infringer, then BMS may bring such action at its own expense, in its
own name and entirely under its own direction and control, subject to the
following.  Pharmacopeia shall reasonably
assist BMS (at BMS’ expense) in any action or proceeding being prosecuted if so
requested, and shall lend its name to such actions or proceedings if requested
by BMS or required by applicable Laws. 
Pharmacopeia shall have the right to participate and be represented in
any such suit by its own counsel at its own expense.  No settlement of any such action or
proceeding which restricts the scope, or adversely affects the enforceability,
of a BMS Patent Right may be entered into by 

 

25

 

BMS without the prior written consent of Pharmacopeia, which consent
shall not be unreasonably withheld, delayed or conditioned.  BMS will have the sole right, in it sole
discretion, to enforce the BMS Other Patent Rights.

 

10.4.3                   Withdrawal.  If either Party brings an action or
proceeding under this Section 10.4 and subsequently ceases to pursue or
withdraws from such action or proceeding, it shall promptly notify the other
Party and the other Party may substitute itself for the withdrawing Party under
the terms of this Section 10.4.

 

10.4.4                   Damages.  In the event that either Party exercises the
rights conferred in this Section 10.4 and recovers any damages or other
sums in such action, suit or proceeding or in settlement thereof, such damages
or other sums recovered shall ***.  If
such recovery is insufficient to ***.  If
after such *** any funds shall remain from such damages or other sums
recovered, such funds shall be *** under this Section 10.4; provided, however, that if ***.

 

10.5                       Patent Term
Extension.  BMS and
Pharmacopeia shall each cooperate with one another and shall use commercially
reasonable efforts in obtaining patent term extension (including without
limitation, any pediatric exclusivity extensions as may be available) or
supplemental protection certificates or their equivalents in any country with
respect to patent rights covering the Licensed Products.  If elections with respect to obtaining such
patent term extensions are to be made, Pharmacopeia shall have the right to
make the election to seek patent term extension or supplemental protection of a
BMS Patent Right, provided that such election will
be made so as to maximize the period of marketing exclusivity for the Licensed
Product.  For such purpose, for all
Approvals Pharmacopeia shall provide BMS with written notice of any expected
Approval at least thirty (30) days prior to the expected date of Approval, as
well as notice within five (5) business days of receiving each Approval
confirming the date of such Approval. 
Notification of the receipt of an Approval shall be in accordance with Section 15.2
except that the notification shall be sent to:

 

Bristol-Myers Squibb Company

***

 

10.6                       Data Exclusivity and Orange Book Listings.

 

10.6.1                    With
respect to data exclusivity periods (such as those periods listed in the FDA’s
Orange Book (including without limitation any available pediatric extensions)
or periods under national implementations of Article 10.1(a)(iii) of
Directive 2001/EC/83, as amended, and all international equivalents),
Pharmacopeia shall use commercially reasonable efforts consistent with its
obligations under applicable Law to seek, maintain and enforce all such data
exclusivity periods available for the Licensed Products.  With respect to filings in the FDA Orange
Book (and foreign equivalents) for issued patents for a Licensed Product,
Pharmacopeia shall, consistent with its obligations under applicable Law, list
in a timely manner and maintain all applicable BMS Patent Rights and other
patents Controlled by Pharmacopeia required to be filed by it, or that it is
permitted to file, under applicable Law. 
At least *** (***) days prior to an anticipated deadline for the filing
of patent listing information for BMS Patent Rights, Pharmacopeia will consult
with BMS regarding the content of such filing. 
In the event of a dispute between the Parties as to whether a BMS Patent
Right or BMS Other Patent Right can be filed and/or the content of such filing,
the Parties will take expedited steps to resolve the dispute as promptly as
possible, including seeking advice of an independent legal counsel to guide
their decision.  BMS shall use
commercially reasonable efforts consistent with its obligations under
applicable Law, including to provide reasonable cooperation to Pharmacopeia in
filing and maintaining such Orange Book (and foreign equivalent) listings.

 

10.6.2                    Without
limiting the foregoing, BMS shall have the right at its discretion to grant 

 

26

 

to Pharmacopeia such rights (including assignment of the
applicable BMS Patent Rights) as may be necessary for Pharmacopeia to exercise
its rights under this Section 10.6 (including seeking, maintaining and
enforcing all data exclusivity periods) without BMS’ involvement.  In the event of such grant of rights
(including assignment) with respect to any BMS Patent Rights, such BMS Patent
Rights shall continue to be treated as BMS Patent Rights and shall otherwise
continue to be subject to all of the terms and conditions of the Agreement in
the same way as the other applicable BMS Patent Rights.  For purposes of clarity, election by BMS to
grant or assign rights to Pharmacopeia under this Section 10.6.2 shall not
limit BMS’ obligation under Section 10.6.1 to provide reasonable
cooperation to Pharmacopeia to the extent such cooperation is reasonably
necessary for Pharmacopeia in filing and maintaining such Orange Book (and
foreign equivalent) listings.

 

10.7                       Notification of Patent Certification.  Each Party shall
notify and provide the other Party with copies of any allegations of alleged
patent invalidity, unenforceability or non-infringement of a BMS Patent Right
or BMS Other Patent Right, as the case may be, pursuant to a Paragraph IV
Patent Certification by a Third Party filing an Abbreviated New Drug Application,
an application under §505(b)(2) or other similar patent certification by a
Third Party, and any foreign equivalent thereof.  Such notification and copies shall be
provided to the other Party within *** (***) days after such Party receives
such certification, and shall be sent to the address set forth in Section 10.5
in the case of notifications to BMS or the address set forth in Section 15.2
in the case of notifications to Pharmacopeia. 
In addition, upon request by BMS, Pharmacopeia shall provide reasonable
assistance and cooperation (including, without limitation, making available to
BMS documents possessed by Pharmacopeia that are reasonably required by BMS and
making available personnel for interviews and testimony) in any actions
reasonably undertaken by BMS to contest any such patent certification.

 

10.8                       Limitation on
Patent Actions.  Neither
Party shall be required to take any action pursuant to Sections 10.4, 10.5,
10.6 or 10.7 that such Party reasonably determines in its sole judgment and
discretion conflicts with or violates any court or government order or decree
that such Party is then subject to or otherwise may create legal liability on
the part of such Party.

 

ARTICLE 11

 

NONDISCLOSURE OF CONFIDENTIAL INFORMATION

 

11.1                       Nondisclosure.  Each Party agrees that, for so long as this
Agreement is in effect and for a period of *** (***) years thereafter, a Party
(the “Receiving Party”) receiving or possessing Confidential Information
of the other Party (the “Disclosing Party”) (or that has received any
such Confidential Information from the other Party prior to the Effective Date)
shall (i) maintain in confidence such Confidential Information using not
less than the efforts such Receiving Party uses to maintain in confidence its
own proprietary industrial information of similar kind and value, (ii) not
disclose such Confidential Information to any Third Party without the prior
written consent of the Disclosing Party, except for disclosures expressly
permitted below, and (iii) not use such Confidential Information for any
purpose except those permitted by this Agreement (it being understood that this
clause (iii) shall not create or imply any rights or licenses not
expressly granted under Article 2 hereof).

 

11.1.1                    Confidentiality
of BMS Know-How for Disclosure Purposes.  During such time as the license to the BMS
Know-How granted under Section 2.1.1 is in effect, solely for disclosure
purposes to Third Parties, the BMS Know-How shall be deemed to be Confidential
Information of both BMS and Pharmacopeia under Article 11, both BMS and
Pharmacopeia shall be deemed to be a Disclosing Party of the BMS Know-How under
Article 11, and BMS and its Affiliates shall be deemed not to have known
such BMS Know-How prior to disclosure for the purposes of Section 11.1.2(b).  Other 

 

27

 

than for disclosure purposes to Third Parties, the BMS Know-How shall
solely be the Confidential Information of BMS.

 

11.1.2                                Exceptions.  The obligations in Section 11.1 shall
not apply with respect to any portion of the Confidential Information that the
Receiving Party can show by competent proof:

 

(a)                                    is publicly
disclosed by the Disclosing Party, either before or after it is disclosed to
the Receiving Party hereunder; or

 

(b)                                   was known to the
Receiving Party or any of its Affiliates, without any obligation to keep it
confidential or any restriction on its use, prior to disclosure by the
Disclosing Party; or

 

(c)                                    is subsequently
disclosed to the Receiving Party or any of its Affiliates by a Third Party
lawfully in possession thereof and without any obligation to keep it
confidential or any restriction on its use; or

 

(d)                                   is published by
a Third Party or otherwise becomes publicly available or enters the public
domain, either before or after it is disclosed to the Receiving Party; or

 

(e)                                    has been
independently developed after disclosure by the Disclosing Party by employees
or contractors of the Receiving Party or any of its Affiliates without the aid,
application or use of Confidential Information of the Disclosing Party.

 

11.2                       Authorized
Disclosure.  The
Receiving Party may disclose Confidential Information belonging to the
Disclosing Party to the extent (and only to the extent) such disclosure is
reasonably necessary in the following instances:

 

(a)                              filing or prosecuting
patents;

 

(b)                             regulatory filings;

 

(c)                              prosecuting or defending
litigation;

 

(d)                             subject to Section 11.4,
complying with applicable governmental Laws and regulations (including, without
limitation, the rules and regulations of the Securities and Exchange
Commission or any national securities exchange) and with judicial process, if
in the reasonable opinion of the Receiving Party’s counsel, such disclosure is
necessary for such compliance; and

 

(e)                              disclosure (i) in
connection with the performance of this Agreement and solely on a “need to know
basis”, to Affiliates; potential or actual collaborators (including potential
Sublicensees); or  employees, contractors, or
agents; or (ii) solely on a “need to know basis” to potential or actual
investment bankers, investors, lenders, or acquirers; each of whom in the case
of clause (i) or (ii) prior to disclosure must be bound by
written obligations of confidentiality and non-use no less restrictive than the
obligations set forth in this Article 11; provided,
however, that the
Receiving Party shall remain responsible for any failure by any Person who
receives Confidential Information pursuant to this Article 11 to treat
such Confidential Information as required under this Article 11.  Notwithstanding anything in this Agreement to
the contrary, Pharmacopeia may, in its sole discretion, disclose summaries of
data or Confidential Information generated by Pharmacopeia in connection with
the performance of this Agreement in non-confidential corporate presentations.

 

28

 

If and whenever any Confidential Information
is disclosed in accordance with this Section 11.2, such disclosure shall
not cause any such information to cease to be Confidential Information except
to the extent that such disclosure results in a public disclosure of such
information (otherwise than by breach of this Agreement).  Where reasonably possible and subject to Section 11.4,
the Receiving Party shall notify the Disclosing Party of the Receiving Party’s
intent to make such disclosure pursuant to paragraphs (a) through (d) of
this Section 11.2 sufficiently prior to making such disclosure so as to
allow the Disclosing Party adequate time to take whatever action it may deem
appropriate to protect the confidentiality of the information.

 

11.3                       Terms of this
Agreement.  The Parties
acknowledge that the terms of this Agreement shall be treated as Confidential
Information of both Parties.

 

11.4                       Securities
Filings.  In the event either Party
proposes to file with the Securities and Exchange Commission or the securities
regulators of any state or other jurisdiction a registration statement or any
other disclosure document which describes or refers to this Agreement under the
Securities Act of 1933, as amended, the Securities Exchange Act, of 1934, as
amended, or any other applicable Laws, the Party shall notify the other Party
of such intention and shall provide such other Party with a copy of relevant
portions of the proposed filing not less than *** (***) business days prior to
such filing (and any revisions to such portions of the proposed filing a
reasonable time prior to the filing thereof), including any exhibits thereto
relating to this Agreement, and shall use reasonable efforts to obtain
confidential treatment of any information concerning this Agreement that such
other Party requests be kept confidential, and shall only disclose Confidential
Information which it is advised by counsel is legally required to be disclosed.  No such notice shall be required under this Section 11.4
if the substance of the description of or reference to this Agreement contained
in the proposed filing has been included in any previous filing made by the
other Party hereunder or otherwise approved by the other Party.

 

11.5                       Publication.

 

11.5.1                                Publication by
BMS.  BMS may publish or present
data and/or results relating to a Licensed Compound or Licensed Product in
scientific journals and/or at scientific conferences, subject to the prior
review and comment by Pharmacopeia as follows. 
BMS shall provide Pharmacopeia with the opportunity to review any
proposed abstract, manuscript or presentation which discloses information
relating to a Licensed Compound or Licensed Product by delivering a copy
thereof to Pharmacopeia no less than *** (***) days before its intended
submission for publication or presentation. 
Pharmacopeia shall have *** (***) days from its receipt of any such
abstract, manuscript or presentation in which to notify BMS in writing of any
specific objections to the disclosure. 
In the event Pharmacopeia objects to the disclosure in writing within
such *** (***) day period, BMS agrees not to submit the publication or abstract
or make the presentation containing the objected-to information until the Parties
have agreed to the content of the proposed disclosure, and BMS shall delete
from the proposed disclosure any Pharmacopeia Confidential Information or BMS
Know-How or the identity of any Licensed Compound or Licensed Product, upon
reasonable request by Pharmacopeia.  Once
any such abstract or manuscript is accepted for publication, BMS will provide
Pharmacopeia with a copy of the final version of the manuscript or
abstract.  For clarification, this Section 11.5.1
shall not limit or restrict BMS’ ability to publish or present publicly
information on compounds which are not Licensed Compounds or Licensed Products,
provided such publication or
presentation does not contain Pharmacopeia Confidential Information (including
BMS Know-How) or identify any Licensed Compound or Licensed Product.  Notwithstanding the foregoing or any other
provision of this Agreement (including but not limited to Article 11), BMS
shall have the right at its sole discretion to publish or otherwise publicly
disclose any licensed BMS Know-How at any time after the second anniversary of
the Effective Date.

 

29

 

11.5.2                              Publication by
Pharmacopeia. 
Pharmacopeia may publish or present data and/or results relating to a
Licensed Compound or Licensed Product in scientific journals and/or at
scientific conferences, subject to the prior review and comment by BMS as follows.  Pharmacopeia shall provide BMS with the
opportunity to review any proposed abstract, manuscript or presentation which
discloses information relating to a Licensed Compound or Licensed Product by
delivering a copy thereof to BMS no less than *** (***) days before its
intended submission for publication or presentation.  BMS shall have *** (***) days from its
receipt of any such abstract, manuscript or presentation in which to notify
Pharmacopeia in writing of any specific objections to the disclosure, such
objections to be limited to matters involving the disclosure of BMS
Confidential Information, or a good faith and documented concern by BMS that
such publication would otherwise result in material commercial harm to BMS.  In the event BMS objects to the disclosure in
writing within such *** (***) day period, Pharmacopeia agrees not to submit the
publication or abstract or make the presentation containing the objected-to
information until the Parties have agreed to the content of the proposed
disclosure, and Pharmacopeia shall delete from the proposed disclosure any BMS
Confidential Information upon the reasonable request by BMS.  The Parties agree to take all reasonable
steps to address and resolve a notice of objection by BMS within *** (***) days
of receipt of such notice.  Once any such
abstract or manuscript is accepted for publication, Pharmacopeia will provide
BMS with a copy of the final version of the manuscript or abstract.

 

ARTICLE
12

INDEMNITY

 

12.1                           Pharmacopeia
Indemnity. 
Pharmacopeia shall indemnify, defend and hold harmless BMS and its
Affiliates, and their respective officers, directors, employees, agents,
licensors, and their respective successors, heirs and assigns  and representatives, from and against any and all claims,
damages, losses, suits, proceedings, liabilities, costs (including, without
limitation, reasonable legal expenses, costs of litigation and reasonable
attorney’s fees) or judgments, whether for money or equitable relief, of any
kind, arising out of any claim, action, lawsuit or other proceeding brought by
a Third Party (“Losses and Claims”) arising out of or relating, directly
or indirectly, (i) to the research, Development, Commercialization
(including, without limitation, promotion, advertising, offering for sale, sale
or other disposition), transfer, importation or exportation, manufacture,
labeling, handling or storage, or use of, or exposure to, any Licensed Compound
and/or any Licensed Product by or for Pharmacopeia or any of its Affiliates,
Sublicensees, agents and/or contractors, (ii) to Pharmacopeia’s (or its
Affiliates’ and/or Sublicensees’) use and practice otherwise of the BMS Patent
Rights and/or BMS Know-How, including, without limitation, claims based on (A) product
liability, bodily injury, risk of bodily injury, death or property damage, (B) infringement
or misappropriation of Third Party patents, copyrights, trademarks or other
intellectual property rights, or (C) the failure to comply with applicable
Laws related to the matters referred to in the foregoing clauses (i) and (ii) with
respect to any Licensed Compound and/or any Licensed Product, or (iii) Pharmacopeia’s
gross negligence, recklessness or willful misconduct or Pharmacopeia’s material
breach of any representation or warranty set forth in this Agreement; except in any
such case for Losses and Claims to the extent reasonably attributable to BMS
having committed an act or acts of gross negligence, recklessness or willful
misconduct or having materially breached any representation or warranty set
forth in this Agreement.

 

12.2                           BMS Indemnity.  BMS shall indemnify, defend and hold harmless
Pharmacopeia and its Affiliates, and their respective officers, directors,
employees, agents, licensors, and their respective successors, heirs and
assigns  and representatives, from and against
any and all Losses and Claims arising out of or relating, directly or
indirectly to (i) BMS’ gross negligence, recklessness or willful
misconduct; (ii) BMS’ material breach of any representation or warranty
set forth in this Agreement; or (iii) products under development by BMS,
alone or in collaboration with Third Parties, involving the BMS Patent 

 

30

 

Rights
or BMS Know-How, other than Licensed Products,  except in any such case for Losses
and Claims to the extent reasonably attributable to Pharmacopeia having
committed an act or acts of gross negligence, recklessness or willful
misconduct or having materially breached any representation or warranty set
forth in this Agreement.

 

12.3                           Indemnification
Procedure.  A claim to
which indemnification applies under Section 12.1 or Section 12.2
shall be referred to herein as an “Indemnification Claim”.  If any Person or Persons (collectively, the “Indemnitee”)
intends to claim indemnification under this Article 12, the Indemnitee
shall notify the other Party (the “Indemnitor”) in writing promptly upon
becoming aware of any claim that may be an Indemnification Claim (it being
understood and agreed, however, that the failure by an Indemnitee to give such
notice shall not relieve the Indemnitor of its indemnification obligation under
this Agreement except and only to the extent that the Indemnitor is actually
prejudiced as a result of such failure to give notice).  The Indemnitor shall have the right to assume
and control the defense of the Indemnification Claim at its own expense with
counsel selected by the Indemnitor and reasonably acceptable to the Indemnitee,
provided, however, that an Indemnitee
shall have the right to retain its own counsel, with the fees and expenses to
be paid by the Indemnitee, if representation of such Indemnitee by the counsel
retained by the Indemnitor would be inappropriate due to actual or potential
differing interests between such Indemnitee and any other party represented by
such counsel in such proceedings.  If the
Indemnitor does not assume the defense of the Indemnification Claim as
aforesaid, the Indemnitee may defend the Indemnification Claim but shall have
no obligation to do so.  The Indemnitee
shall not settle or compromise the Indemnification Claim without the prior
written consent of the Indemnitor, and the Indemnitor shall not settle or
compromise the Indemnification Claim in any manner which would have an adverse
effect on the Indemnitee’s interests (including without limitation any rights
under this Agreement or the scope or enforceability of the BMS Patents Rights
or BMS Know-How), without the prior written consent of the Indemnitee, which
consent, in each case, shall not be unreasonably withheld or delayed.  The Indemnitee shall reasonably cooperate
with the Indemnitor at the Indemnitor’s expense and shall make available to the
Indemnitor all pertinent information under the control of the Indemnitee, which
information shall be subject to Article 11.

 

12.4                           Insurance.  Pharmacopeia shall, beginning with the
initiation of the first clinical trial for a Licensed Product, maintain at all
times thereafter during the term of the Agreement, and until the later of (i) ***
(***) years *** or (ii) the date that ***, comprehensive general liability
insurance from a recognized, creditworthy insurance company, on a claims-made
basis, with endorsements for contractual liability and product liability, and
with coverage limits of not less than *** to the extent that the *** and ***
thereafter.  The minimum level of
insurance set forth herein shall not be construed to create a limit on
Pharmacopeia’s liability hereunder. 
Within ten (10) days following written request from BMS,
Pharmacopeia shall furnish to BMS a certificate of insurance evidencing such
coverage as of the date.  Pharmacopeia
shall use commercially reasonable efforts to cause such certificate of
insurance, as well as any certificates evidencing new coverages of Pharmacopeia,
to include a provision whereby thirty (30) days’ written notice shall be
received by BMS prior to coverage cancellation by either Pharmacopeia or the
insurer and of any new coverage.  In the
case of a cancellation of such coverage, Pharmacopeia shall promptly provide
BMS with a new certificate of insurance evidencing that Pharmacopeia’s coverage
meets the requirements in the first sentence of this Section.

 

ARTICLE
13

 

TERM
AND TERMINATION

 

13.1                           Term.  This Agreement shall commence as of the
Effective Date and, unless sooner terminated in accordance with the terms
hereof or by mutual written consent, shall continue until Pharmacopeia no
longer has an obligation to make any payments to BMS.

 

31

 

13.2                           Termination By
BMS.

 

13.2.1                           Termination for
Insolvency of Pharmacopeia.  BMS shall have the right to terminate this
Agreement with respect to any or all licenses granted to Pharmacopeia pursuant
to Article 2 of this Agreement, at BMS’ sole discretion, upon delivery of
written notice to Pharmacopeia upon the filing by Pharmacopeia in any court or
agency pursuant to any statute or regulation of the United States or any other
jurisdiction a petition in bankruptcy or insolvency or for reorganization or
similar arrangement for the benefit of creditors or for the appointment of a
receiver or trustee of Pharmacopeia or its assets, or if Pharmacopeia is served
with an involuntary petition against it in any insolvency proceeding, upon the
ninety-first (91st) day after such service if such involuntary petition has not
previously been stayed or dismissed, or upon the making by Pharmacopeia of an
assignment of substantially all of its assets for the benefit of its creditors.

 

13.2.2                              Termination for
Breach by Pharmacopeia.

 

(a)                                              Breach of this
Agreement.  Subject to Section 13.2.3
below, BMS shall have the right to terminate this Agreement with respect to any
or all licenses granted to Pharmacopeia pursuant to Article 2 of this
Agreement, ***, upon delivery of written notice to Pharmacopeia in the event of
any *** of this Agreement, provided that
such breach has not been cured within ninety (90) days after written notice
thereof is given by BMS to Pharmacopeia (the “Cure Period”) specifying
the nature of the alleged breach, provided, however,
that to the extent such *** involves the failure to make a payment when due,
such breach must be cured within thirty (30) days after written notice thereof
is given by BMS to Pharmacopeia. 
Notwithstanding the foregoing, in the event a *** by Pharmacopeia (other
than a breach that involves the failure to make a payment when due) cannot
reasonably be cured within the ninety (90) day period after written notice
thereof is given by BMS to Pharmacopeia, the Agreement shall continue and shall
not be terminated for a period reasonably required by Pharmacopeia to cure such
breach, so long as Pharmacopeia is undertaking in good faith the steps and
following the timelines specified in writing by BMS to reasonably cure said
breach. If, however, at any time after the initial ninety (90) day period
Pharmacopeia ceases to use diligent efforts to take the agreed upon steps to
cure the breach, BMS may terminate this Agreement immediately upon written
notice to Pharmacopeia.

 

(b)                                             Breach of the
Discovery Collaboration.

 

                                                            (i)                         Subject to Section 13.2.3
below, BMS shall have the right to terminate this Agreement with respect to any
or all licenses granted to Pharmacopeia pursuant to Article 2 of this
Agreement, at BMS’ sole discretion, upon thirty (30) days prior written notice
to Pharmacopeia in the event BMS has previously delivered to Pharmacopeia final
notice under Section 9.3 of the Discovery Collaboration of any material
and uncured breach by Pharmacopeia of any terms and conditions of the Discovery
Collaboration (such breach to be determined in accordance with the terms of the
Discovery Collaboration).

 

                                                            (ii)                      Notwithstanding
BMS’ right to terminate this Agreement pursuant to clause (i) above, in
the event that Pharmacopeia reasonably believes that the alleged breach of the
Discovery Collaboration is not curable, and Pharmacopeia desires to maintain
the licenses granted hereunder, the Parties shall determine an ***
hereunder.  The amount of ***.  In the event that the Parties are unable to
***.  BMS will *** is finally determined.

 

13.2.3                              Disputed Breach.  If Pharmacopeia disputes in good faith the
existence or materiality of a breach specified in a notice provided by BMS
pursuant to Section 13.2.2, and Pharmacopeia provides notice to BMS of
such dispute within the applicable thirty (30) day or ninety (90) day period,
BMS shall not have the right to terminate this Agreement unless and until the
existence of 

 

32

 

such
material breach or failure by Pharmacopeia has been determined in accordance
with Section 14.2 and Pharmacopeia fails to cure such breach within ***
(***) days following such determination (except to the extent such breach
involves the failure to make a payment when due, which breach must be cured
within *** (***) days following such determination).  It is understood and acknowledged that during
the pendency of such a dispute, all of the terms and conditions of this
Agreement shall remain in effect and the Parties shall continue to perform all
of their respective obligations hereunder. 
The Parties further agree that any payments that are made by one Party
to the other Party pursuant to this Agreement pending resolution of the dispute
shall be promptly refunded if an arbitrator or court determines pursuant to Section 14.2
that such payments are to be refunded by one Party to the other Party.

 

13.2.4                              BMS’ right to
terminate the Agreement under this Section 13.2 shall be subject to Section 2.2(b)(vi).

 

13.3                           Termination by
Pharmacopeia.

 

13.3.1                  Termination
Without Cause.  At
Pharmacopeia’s discretion, on a country-by-country and product-by-product basis
(including, for example, all Licensed Compounds within specified BMS Patent
Rights), effective upon *** (***) months prior written notice in the case where
Approval has not been obtained for the applicable Licensed Product or upon ***
(***) months prior written notice in the case where Approval has been obtained
for the applicable Licensed Product, Pharmacopeia may terminate this Agreement
for any reason; provided, however, that (i) no
such *** and (ii) no such ***.

 

13.3.2                  Termination For
Breach by BMS.  In
addition, Pharmacopeia may terminate this Agreement in the event of material
breach by BMS, provided that such breach has not
been cured within ninety (90) days after written notice thereof is given by
Pharmacopeia to BMS.  Notwithstanding the
foregoing, if BMS disputes in good faith the existence or materiality of such
breach and provides notice to Pharmacopeia of such dispute within such ninety
(90) day period, Pharmacopeia shall not have the right to terminate this
Agreement in accordance with this Section 13.3.2 unless and until it has
been determined in accordance with Section 14.2 that this Agreement was
materially breached by BMS and BMS fails to cure such breach within ninety (60)
days following such determination.  It is
understood and acknowledged that during the pendency of such a dispute, all of
the terms and conditions of this Agreement shall remain in effect and the
Parties shall continue to perform all of their respective obligations hereunder.  The Parties further agree that any payments
that are made by one Party to the other Party pursuant to this Agreement
pending resolution of the dispute shall be promptly refunded if an arbitrator
or court determines pursuant to Section 14.2 that such payments are to be
refunded by one Party to the other Party. 
In the case where the material breach (other than a breach that involves
the failure to make a payment when due) cannot reasonably be cured within the
ninety (90) day period after written notice thereof is given by Pharmacopeia to
BMS, the Agreement shall continue and shall not be terminated for a period
reasonably required by BMS to cure such breach, so long as BMS is undertaking
in good faith the steps and following the timelines specified in writing by
Pharmacopeia to reasonably cure said breach. If, however, at any time after the
initial ninety (90) day period BMS ceases to use diligent efforts to take the
agreed upon steps to cure the breach, Pharmacopeia may terminate this Agreement
immediately upon written notice to BMS.

 

13.4                           Effect of
Termination.  Upon
termination of this Agreement or any right or license pursuant to Section 13.2
or 13.3, the rights and obligations of the Parties shall be as set forth in
this Section 13.4.

 

13.4.1                  Upon
termination of this Agreement, either in its entirety or with respect to one or
more applicable countries (each, a “Terminated Country”) pursuant to Section 13.2
or 13.3 hereof (the 

 

33

 

rights
and obligations of the Parties as to the remaining countries of the Territory
in which termination under Section 13. 3 has not occurred, being
unaffected by such termination), the following shall apply:

 

(a)                                  All rights and
licenses granted to Pharmacopeia in Article 2 shall terminate with respect
to each Terminated Country (subject to Section 2.2(b)(v)), all rights of
Pharmacopeia under the BMS Patent Rights, BMS Other Patent Rights and BMS
Know-How with respect to each Terminated Country shall revert to BMS, and Pharmacopeia
shall cease all use of the BMS Patent Rights, BMS Other Patent Rights and BMS
Know-How with respect to each Terminated Country.  To the extent that there remain any countries
in the Territory that are not Terminated Countries (“Remaining Countries”),
all such rights and licenses shall remain in place with respect to the
Remaining Countries.

 

(b)                                 All regulatory
filings (including, without limitation, all INDs and NDAs) and Approvals and
other documents reasonably available to Pharmacopeia and necessary to further
develop and commercialize Licensed Compounds and Licensed Products, as they
exist as of the date of such termination, and all of Pharmacopeia’s right,
title and interest therein and thereto, in each Terminated Country shall be
assigned to BMS, and Pharmacopeia shall provide to BMS one (1) copy of the
foregoing documents and filings and all documents and filings contained in or
referenced in any such filings, together with the raw and summarized data for
any preclinical and clinical studies of the Licensed Compounds and such
Licensed Products (and where reasonably available, electronic copies
thereof).  BMS shall have the right to
obtain specific performance of Pharmacopeia’s obligations referenced in this Section 13.4.1(b) and/or
in the event of failure to obtain assignment, Pharmacopeia hereby consents and
grants to BMS the right to access and reference (without any further action
required on the part of Pharmacopeia, whose authorization to file this consent
with any Regulatory Authority is hereby granted) any and all such regulatory
filings for any regulatory or other use or purpose, provided
that, if BMS reasonably deems it necessary, Pharmacopeia will
provide written confirmation to the Regulatory Authority for such
transfer.  In addition, upon request by
BMS, Pharmacopeia shall grant to BMS the right to access and reference any
other documents (including but not limited to regulatory filings) that are
available to Pharmacopeia and reasonably necessary for BMS to further Develop,
manufacture and Commercialize the Licensed Compounds and Licensed Products in
each Terminated Country.  Without
limiting the foregoing in this paragraph, to the extent applicable,
Pharmacopeia’s obligations under Section 10.6 shall continue.

 

(c)                                  All amounts due
or payable to BMS prior to the effective date of termination shall remain due
and payable, but (except as otherwise expressly provided herein) no additional
amounts shall be payable.

 

(d)                                 Should
Pharmacopeia have any inventory of any Licensed Compound allocated for use in
clinical trials in a Terminated Country, Pharmacopeia shall offer to sell such
Licensed Compounds to BMS at Pharmacopeia’s fully burdened cost (but BMS shall
be under no obligation to purchase same unless it agrees to do so in writing at
such time).

 

(e)                                  Should
Pharmacopeia have any inventory of any Licensed Product approved and allocated
prior to termination in a Terminated Country, Pharmacopeia shall have six (6) months
thereafter in which to dispose of such inventory (subject to the payment to BMS
of any royalties due hereunder thereon), provided however
that such Licensed Product shall not be sold at a discount to a purchaser that
is greater than the average discount provided to such purchaser for the
Licensed Product in such country during the 12 month period preceding such
termination and, in addition, such sales shall not result in the applicable
wholesaler inventory levels for such Licensed Product exceeding 120% of the
average levels for the 12 month period preceding such termination.

 

34

 

(f)                                    With respect to
a Terminated Country, the Parties shall diligently negotiate in good faith and
on commercially reasonable terms (i) a license from Pharmacopeia to BMS of
Pharmacopeia Know-How (as defined below) Controlled by Pharmacopeia and in
existence as of the date of such termination, including but not limited to
Pharmacopeia’s manufacturing processes, techniques and trade secrets for making
Licensed Compounds and Licensed Products and Pharmacopeia Know-How relating to
any composition, formulation, method of use or manufacture of such Licensed
Compounds and such Licensed Products, (ii) a license under the
Pharmacopeia Patent Rights (as defined below) Covering the Licensed Compounds
and/or Licensed Products in such Terminated Country (including the use and
manufacture thereof), and (iii) the assignment of Pharmacopeia’s rights in
any Licensed Product trademarks, whether registered or unregistered with
respect to such Terminated Country, provided however,
that it is understood that neither Party shall be obligated to enter into any
such license or assignment.  The Parties
will use good faith efforts to effect such license within ninety (90) days
after the date of such termination.  For
the purposes of the foregoing:

 

“Pharmacopeia
Know-How” means all processes, techniques and know-how Controlled by
Pharmacopeia and/or its Affiliates as of the date of termination that are
reasonably necessary for the research, manufacture, Development and/or
Commercialization of the Licensed Compounds and/or the Licensed Products.  Pharmacopeia Know-How shall not include
information and know-how that is acquired or developed by Pharmacopeia after
the date of termination; and

 

“Pharmacopeia
Patent Rights” means (i) those patents and patent applications
Controlled by Pharmacopeia and/or its Affiliates as of the date of termination
that are reasonably necessary for the research, manufacture, Development and/or
Commercialization of the Licensed Compounds and/or the Licensed Products; (ii) any patent application that claims priority to any of the patents and
patent applications included in clause (i) above (including any divisional, continuation, or continuation-in-part patent
application), and foreign counterparts thereof (but in each
case, only with respect to claims in such application or foreign counterparts
thereof that cover subject matter within the scope of the claims in the patents and patent applications included in clause (i) above),
and (iii) all patents issuing on any of the foregoing patent applications
which are included in clauses (i) and (ii) above, together with all
registrations, reissues, re-examinations, supplemental protection certificates,
or extensions thereof, and any foreign counterparts thereof (but in each case,
only with respect to claims in such patents or foreign counterparts thereof
that cover subject matter within the scope of the claims in the patents and
patent applications included in clause (i) of this definition).

 

(g)                                 If Pharmacopeia
has the capability as of the date of termination to commercially manufacture
and supply Licensed Compounds and/or Licensed Products, upon request by BMS,
Pharmacopeia shall enter into good faith negotiations with BMS with respect to
the terms and conditions of an agreement for Pharmacopeia to supply to BMS
Licensed Compounds and/or Licensed Products for use and sale in the Terminated
Countries, at a supply price and term to be negotiated in good faith.

 

(h)                                 Pharmacopeia
shall provide to BMS all data generated during the term of this Agreement
relating to the Licensed Compounds and the Licensed Products and assign (or, if
applicable, cause its Affiliate to assign) to BMS all of Pharmacopeia’s (and
such Affiliate’s) entire right, title and interest in and to all such data in
each Terminated Country.

 

(i)                                     Neither Party
shall be relieved of any obligation that accrued prior to the effective date of
such termination or expiration.

 

35

 

(j)                                     Each Party
shall have the right to retain all amounts previously paid to it by the other
Party, subject to any applicable determination of an arbitrator or court
pursuant to Section 14.2.

 

(k)                                  It is
understood and agreed that BMS shall be entitled to *** as a remedy to enforce
the provisions of this Section 13.4, ***.

 

13.5                           Scope of Termination.  Except as otherwise expressly provided
herein, termination of this Agreement shall be as to all countries in the
Territory and all Licensed Compounds and Licensed Products.

 

13.6                           Survival.  The following provisions shall survive
termination or expiration of this Agreement, as well as any other provision
which by its terms or by the context thereof, is intended to survive such
termination: Article 1 (as applicable), Section 2.3(b)(v), Article 5
(with respect to obligations arising prior to expiration or termination of this
Agreement), Article 8 (with respect to obligations arising prior to
expiration or termination of this Agreement), Section 9.4, Section 9.5,
Section 10.1, Section 10.4.4 (with respect to an action, suit or
proceeding commenced prior to termination), Section 10.7, Article 11,
Article 12 (with respect to Losses and Claims arising from activities and
breaches that take place prior to expiration or termination of this Agreement),
this Section 13.6, Section 13.7, Article 14 and Article 15.  Termination or expiration of this Agreement
shall not relieve the Parties of any liability or obligation which accrued
hereunder prior to the effective date of such termination or expiration nor
preclude either Party from pursuing all rights and remedies it may have
hereunder or at law or in equity, subject to Section 14.2, with respect to
any breach of this Agreement nor prejudice either Party’s right to obtain
performance of any obligation.  All other
obligations shall terminate upon expiration of this Agreement.

 

13.7                           Bankruptcy. The Parties
agree that in the event a Party becomes a debtor under Title 11 of the U.S.
Code (“Title 11”), this Agreement shall be deemed to be, for purposes of
Section 365(n) of Title 11, a license to rights to “intellectual
property” as defined therein.  Each Party
as a licensee hereunder shall have the rights and elections as specified in
Title 11.  Any agreements supplemental
hereto shall be deemed to be “agreements supplementary to” this Agreement for
purposes of Section 365(n) of Title 11.

 

ARTICLE
14

 

DISPUTE
RESOLUTION; ARBITRATION

 

14.1                           Resolution by
Senior Executives.  Other than (i) determinations made by ***, respectively; (ii) pursuit
of equitable relief as provided in Section 14.2(g); and (iii) a
dispute governed by expedited arbitration in accordance with Section 14.3
below, in the event of any dispute between the Parties in connection with this
Agreement, the construction hereof, or the rights, duties or liabilities of
either Party hereunder, the Parties shall first attempt in good faith to
resolve such dispute by negotiation and consultation between themselves.  In the event that such dispute is not
resolved on an informal basis within *** (***) Business Days, either Party may,
by written notice to the other Party, refer the dispute to the *** of
Pharmacopeia and the *** of BMS or other designated officer of BMS for
attempted resolution by good faith negotiation within *** (***) days after such
notice is received.

 

14.2                           Arbitration.  Other
than (i) determinations made by ***, respectively; (ii) pursuit of
equitable relief as provided in Section 14.2(g); (iii) disputes
regarding the validity, scope or enforceability of intellectual property rights
or regarding confidentiality obligations and
(iv) expedited arbitration in accordance with Section 14.3 below, if
any dispute between the Parties relating to or arising out this 

 

36

 

Agreement cannot
be resolved in accordance with Section 14.1, either Party may submit such
dispute for resolution through binding arbitration as set forth in Sections
14.2 and 14.3, as applicable. 
Notwithstanding the foregoing and for the avoidance of doubt, either
Party may submit any dispute to which Section 13.2.2(b) applies for
resolution through binding arbitration as set forth in this Section 14.2.

 

(a)                                  A Party may submit such dispute to arbitration by notifying the other
Party, in writing, of such dispute. 
Within thirty (30) days after receipt of such notice, the Parties shall
designate in writing a single arbitrator to resolve the dispute; provided, however, that if the Parties cannot agree on an
arbitrator within such thirty (30) day period, the arbitrator shall be selected
by the New York, NY office of the American Arbitration Association (the “AAA”)
or, if such office does not exist or is unable to make a selection, by the
office of the AAA nearest to New York City. 
The arbitrator shall be a lawyer knowledgeable and experienced in the applicable Laws concerning the subject matter of the dispute.  In any case the arbitrator shall not be an
Affiliate, employee, consultant, officer, director or stockholder of either
Party, or otherwise have any current or previous relationship with either Party
or their respective Affiliates.  The
governing law in Section 15.7 shall govern any such proceedings.  The language of the arbitration shall be
English.

 

(b)                                 Within thirty (30) days after the designation of the arbitrator, the
arbitrator and the Parties shall meet, and each Party shall provide to the
arbitrator a written summary of all disputed issues, such Party’s position on
such disputed issues and such Party’s proposed ruling on the merits of each
such issue.

 

(c)                                  The arbitrator shall set a date for a hearing, which shall be no later
than thirty (30) days after the submission of written proposals pursuant to Section 14.2(b),
for the presentation of evidence and legal argument concerning each of the
issues identified by the Parties.  The
Parties shall have the right to be represented by counsel.  Except as provided herein, the arbitration
shall be governed by the Commercial Arbitration Rules of the AAA
applicable at the time of the notice of arbitration pursuant to Section 14.2(a);
provided, however, that the Federal Rules of
Evidence shall apply with regard to the admissibility of evidence in such
hearing.

 

(d)                                 The arbitrator shall use his or her best efforts to rule on each
disputed issue within thirty (30) days after completion of the hearing
described in Section 14.2(c).  The
determination of the arbitrator as to the resolution of any dispute shall be
binding and conclusive upon all Parties. 
All rulings of the arbitrator shall be in writing and shall be delivered
to the Parties except to the extent that the Commercial Arbitration Rules of
the AAA provide otherwise.  Nothing
contained herein shall be construed to permit the arbitrator to award punitive,
exemplary or any similar damages.

 

(e)                                  The (i) attorneys’ fees of the Parties in any arbitration, (ii) fees
of the arbitrator and (iii) costs and expenses of the arbitration shall be
borne by the Parties in a proportion determined by the arbitrator.

 

(f)                                    Any arbitration pursuant to this Section 14.2 shall be conducted in
Princeton, New Jersey.  Any arbitration
award may be entered in and enforced by a court in accordance with Section 15.8.

 

(g)                                 Notwithstanding anything in this Article 14, each Party shall have
the right to seek injunctive or other equitable relief from a court of
competent jurisdiction pursuant to Section 15.8 that may be necessary to
avoid irreparable harm, maintain the status quo or preserve the subject matter
of the arbitration, including any breach or threatened breach of Section 11.1
or 13.4.

 

14.3                           Expedited Arbitration.  The Parties agree that it is
important to be able to clarify any disputes regarding *** quickly.  Accordingly, if:

 

37

 

(i)  BMS ***;

 

(ii)  ***; or

 

(iii)  ***,

 

then
the Parties shall resolve such dispute in accordance with this Section 14.3.

 

Arbitration
under this Section 14.3 shall be conducted in the same manner and subject
to the same terms and conditions as arbitration under Section 14.2, provided that:

 

(a)                                  the Parties
shall designate in writing a single arbitrator within fifteen (15) days of
written notice of the dispute;

 

(b)                                 the arbitrator
and the Parties shall meet, and each Party shall provide to the arbitrator a
written summary of all disputed issues, such Party’s position on such disputed
issues and such Party’s proposed ruling on the merits of each such issue within
fifteen (15) days after the designation of the arbitrator;

 

(c)                                  the arbitrator
shall use his or her best efforts to rule on each disputed issue within
fifteen (15) days after completion of the hearing described in Section 14.2(c);

 

(d)                                 the arbitrator
shall select one of the requested positions as his decision, and shall not have
the authority to render any substantive decision other than to so select the
position of either BMS or Pharmacopeia; and

 

(e)                                  the Parties
shall use good faith efforts to complete arbitration under this Section 14.3
within sixty (60) days following a request by any Party for such arbitration.

 

14.4                           In an
arbitration procedure under Section 14.3, in the event that the arbitrator
determines that BMS has failed to act in good faith with respect to its
performance under Section 3.1, the following shall apply:  (a) the provisions of Section 3.1
shall terminate and (b) all other provisions of this Agreement shall
remain in full force and effect.  For
purposes of clarity, the foregoing shall be in addition to and shall in no way
limit any ruling of the arbitrator in accordance with Section 14.3.

 

ARTICLE
15

 

MISCELLANEOUS

 

15.1                           Severability.  If any one or more of the provisions of this
Agreement is held to be invalid or unenforceable, the provision shall be
considered severed from this Agreement and shall not serve to invalidate any
remaining provisions hereof.  The Parties
shall make a good faith effort to replace any invalid or unenforceable
provision with a valid and enforceable one such that the objectives
contemplated by the Parties when entering this Agreement may be realized.

 

15.2                           Notices.  Any notice required or permitted to be given
by this Agreement shall be in writing and shall be delivered by hand or
overnight courier with tracking capabilities or mailed postage prepaid by first
class, registered or certified mail addressed as set forth below unless changed
by notice so given:

 

If to Pharmacopeia:

 

38

 

Pharmacopeia, Inc.

3000
Eastpark Boulevard

Cranbury,
New Jersey 08512

Attention:  Chief Executive Officer

Telephone:
 ***

Facsimile:  ***

 

With a copy to:

Pharmacopeia, Inc.

3000
Eastpark Boulevard

Cranbury,
New Jersey 08512

Attention:  Executive Vice President and General Counsel

Telephone:  ***

Facsimile:  ***

 

If
to BMS:

Bristol-Myers Squibb Company

P.O. Box 4000

Route 206 &
Province Line Road

Princeton, New Jersey 08543-4000

Attention:  Vice President and Head
of Business Development

Telephone:  ***

Facsimile:  ***

 

With a copy to:

Bristol-Myers Squibb Company

P.O. Box
4000

Route 206 & Province Line Road

Princeton, New Jersey 08543-4000

Attention:  Vice President &
Senior Counsel, Corporate and Business Development

Telephone:  ***

Facsimile:  ***

 

Any
such notice shall be deemed given on the date received.  A Party may add, delete, or change the person
or address to whom notices should be sent at any time upon written notice
delivered to the Party’s notices in accordance with this Section 15.2.

 

15.3                           Force Majeure.  Neither Party shall be liable for delay or
failure in the performance of any of its obligations hereunder if such delay or
failure is due to causes beyond its reasonable control, including, without
limitation, acts of God, fires, earthquakes, strikes and labor disputes, acts
of war, terrorism, civil unrest or intervention of any governmental authority (“Force
Majeure”); provided, however, that the
affected Party promptly notifies the other Party and further provided that the
affected Party shall use its commercially reasonable efforts to avoid or remove
such causes of non-performance and to mitigate the effect of such occurrence,
and shall continue performance with the utmost dispatch whenever such causes
are removed.  When such circumstances
arise, the Parties shall negotiate in good faith any modifications of the terms
of this Agreement that may be necessary or appropriate in order to arrive at an
equitable solution.

 

39

 

15.4                           Assignment.

 

15.4.1                              BMS may,
without Pharmacopeia’s consent, assign or transfer all of its rights and
obligations hereunder, in connection with any transfer of all of the BMS Patent
Rights and BMS Know-How, to any Affiliate of BMS or to any Third Party
(including, without limitation, a successor in interest); provided,
however, that such assignee or transferee agrees in writing to be
bound by the terms of this Agreement.

 

15.4.2                              Upon thirty
(30) days advance written notice to BMS and subject to BMS’ approval, such
approval not to be unreasonably withheld, delayed or conditioned, Pharmacopeia
may assign or transfer all of its rights and obligations hereunder to any Third
Party, provided however, that, (i) Pharmacopeia’s
rights and obligations under this Agreement shall be assumed by the Third Party
assignee, (ii) such assignment includes, without limitation, all Approvals
and all rights and obligations under this Agreement, (iii) such Third
Party shall have agreed prior to such assignment or transfer to be bound by the
terms of this Agreement in  writing, and (iv) Pharmacopeia
remains responsible for the performance of this Agreement.

 

15.4.3                              Notwithstanding
the provisions of Section 15.4.2 above, Pharmacopeia may assign or
transfer all of its rights and obligations hereunder without BMS’ consent to an
Affiliate of Pharmacopeia or in connection with a Change of Control of
Pharmacopeia, provided however, that (i) Pharmacopeia’s
rights and obligations under this Agreement shall be assumed by its successor
in interest and shall not, unless consented to pursuant to Section 15.4.2,
be transferred separate from all or substantially all of its other business
assets, (ii) such assignment includes, without limitation, all Approvals
and all rights and obligations under this Agreement, (iii) such successor
in interest or Affiliate shall have agreed prior to such assignment or transfer
to be bound by the terms of this Agreement in writing, and (iv) where this
Agreement is assigned or transferred to an Affiliate, Pharmacopeia remains
responsible for the performance of this Agreement.

 

15.4.4                              Subject to the
foregoing, this Agreement shall inure to the benefit of and be binding on the
Parties’ successors and assigns.  Any
assignment or transfer in violation of the foregoing shall be null and void and
wholly invalid, the assignee or transferee in any such assignment or transfer
shall acquire no rights whatsoever, and the non-assigning non-transferring
Party shall not recognize, nor shall it be required to recognize, such assignment
or transfer.

 

15.5                           Further
Assurances.  Each Party
agrees to do and perform all such further acts and things and shall execute and
deliver such other agreements, certificates, instruments and documents
necessary or that the other Party may deem advisable in order to carry out the
intent and accomplish the purposes of this Agreement and to evidence, perfect
or otherwise confirm its rights hereunder.

 

15.6                           Waivers and
Modifications.  The failure
of any Party to insist on the performance of any obligation hereunder shall not
be deemed to be a waiver of such obligation. 
Waiver of any breach of any provision hereof shall not be deemed to be a
waiver of any other breach of such provision or any other provision on such
occasion or any succeeding occasion.  No
waiver, modification, release or amendment of any obligation under or provision
of this Agreement shall be valid or effective unless in writing and signed by
all Parties hereto.

 

15.7                           Choice of Law.  This Agreement shall be governed by,
enforced, and shall be construed in accordance with the laws of the State of
Delaware without regard to its conflicts of law provisions.

 

40

 

15.8                           Jurisdiction.

 

15.8.1                  Any suit, action or other
proceeding relating to a dispute regarding the validity, scope or
enforceability of intellectual property rights or regarding confidentiality
obligations shall not be subject to the provisions of this Section 15.8.1
and Section 15.8.2.  Unless the
Parties otherwise agree in writing, each Party, for the purpose of enforcing an
award under Section 14.2 or for seeking injunctive or other equitable
relief as permitted under Section 14.2(g), hereby irrevocably submits to
the exclusive jurisdiction of (i) the Supreme Court of the State of New
York, New York County or the Supreme Court or Chancery Court of the State of
Delaware (each a “State Court”), and (ii) the United States
District Court for the Southern District of New York or the U.S. District Court
for the District of Delaware (each a “District Court”), for the purposes
of any suit, action or other proceeding arising out of this Agreement or out of
any transaction contemplated hereby. 
Each Party agrees to commence any such action, suit or proceeding either
in a District Court or if such suit, action or other proceeding may not be
brought in such court for jurisdictional reasons, in a State Court.

 

Each Party further agrees
that service of any process, summons, notice or document by personal delivery,
by registered mail, or by a recognized international express delivery service
to such Party’s respective address set forth above shall be effective service
of process for any action, suit or proceeding in the applicable District Court
or State Court with respect to any matters to which it has submitted to
jurisdiction in this Section.  Each Party
irrevocably and unconditionally waives any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in the applicable District Court or State Court, and hereby
and thereby further irrevocably and unconditionally waives and agrees not to
plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.

 

15.8.2                              Each Party
hereto hereby waives to the fullest extent permitted by applicable Laws, any
right it may have to a trial by jury in respect to any litigation directly or
indirectly arising out of, under or in connection with this Agreement.  Each Party hereto (i) certifies that no
representative, agent or attorney of the other Party has represented, expressly
or otherwise, that such other Party would not, in the event of litigation, seek
to enforce that foregoing waiver and (ii) acknowledges that it and the
other Party hereto have been induced to enter into this Agreement, as
applicable, by, among other things, the mutual waivers and certifications in
this Section 15.8.

 

15.9                           Publicity.  Within thirty (30) days of the Effective Date
Pharmacopeia shall issue a press release regarding the execution of this
Agreement (including the Discovery Collaboration) in substantially the form of
the press release approved by the Parties prior to the Effective Date.  Subject to the provisions of Sections 11.2 and
11.5, each Party agrees not to otherwise issue any other press release or
public statement disclosing the existence of this Agreement or any other
information relating to this Agreement, the other Party, or the transactions
contemplated hereby without the prior written consent of the other Party, provided, however, that any disclosure which is required by
applicable Laws or the rules of a securities exchange, as reasonably
advised by the disclosing Party’s counsel, may be made subject to the
following.  The Parties agree that any
such required disclosure will not contain confidential business or technical
information and, if disclosure of confidential business or technical
information is required by applicable Laws, the Parties will use appropriate
diligent efforts to minimize such disclosure and obtain confidential treatment
for any such information which is disclosed to a governmental agency.  Each Party agrees to provide to the other
Party a copy of any public announcement regarding this Agreement or the subject
matter thereof as soon as reasonably practicable under the circumstances prior
to its scheduled release.  Except under
extraordinary circumstances, or as otherwise required under applicable Laws or
the rules of a securities exchange, each Party shall provide the other
with an advance copy of any such announcement at least five (5) business
days prior to its scheduled release. 
Each Party shall have the right to expeditiously review and recommend
changes to any such announcement and, except as otherwise 

 

41

 

required by applicable Laws or the rules of a
securities exchange, the Party whose announcement has been reviewed shall
remove any Confidential Information of the reviewing Party that the reviewing
Party reasonably deems to be inappropriate for disclosure.  The contents of any announcement or similar
publicity which has been reviewed and approved by the reviewing Party can be
re-released by either Party without a requirement for re-approval.  Nothing in this Section 15.9 shall be
construed to prohibit Pharmacopeia or its Affiliates or Sublicensees from
making a public announcement or disclosure regarding the stage of development
of Licensed Products in Pharmacopeia’s (or its Affiliates’ or Sublicensees’)
product pipeline or disclosing clinical trial results regarding such License
Products, as may be required by applicable Laws or the rules of a
securities exchange, as reasonably advised by Pharmacopeia’s (or its Affiliates’
or Sublicensees’) counsel.

 

15.10                     Relationship of
the Parties.  Each Party
is an independent contractor under this Agreement.  Nothing contained herein is intended or is to
be construed so as to constitute BMS and Pharmacopeia as partners, agents or
joint venturers.  Neither Party shall
have any express or implied right or authority to assume or create any
obligations on behalf of or in the name of the other Party or to bind the other
Party to any contract, agreement or undertaking with any Third Party.

 

15.11                     Headings.  Headings and captions are for convenience
only and are not be used in the interpretation of this Agreement.

 

15.12                     Entire
Agreement.  This
Agreement (including all Appendices attached hereto, which are incorporated
herein by reference) (i) sets forth all of the covenants, promises,
agreements, warranties, representations, conditions and understandings between
the Parties hereto, (ii) constitutes and contains the complete, final and
exclusive understanding and agreement of the Parties with respect to the
subject matter herein and (iii) cancels, supersedes and terminates all
prior agreements and understanding between the Parties with respect to the
subject matter hereof.  For the avoidance
of doubt, the confidentiality agreements entered into by BMS and Pharmacopeia
on July 2, 007 (the “Confidentiality Agreement”) shall remain in
effect with respect to all Confidential Information (as that term is defined in
the Confidentiality Agreements) disclosed by the Parties that does not pertain
to the subject matter of this Agreement. 
All Confidential Information (as that term is defined in the
Confidentiality Agreement) pertaining to the subject matter of this Agreement
disclosed to BMS by Pharmacopeia under the Confidentiality Agreement shall be
considered Confidential Information (as that term is defined in this Agreement)
of Pharmacopeia disclosed under this Agreement and shall be subject to the
terms and conditions of this Agreement; and all Confidential Information (as
that term is defined in the Confidentiality Agreement) pertaining to the
subject matter of this Agreement disclosed to Pharmacopeia by BMS under the
Confidentiality Agreement shall be considered Confidential Information (as that
term is defined in this Agreement) of BMS disclosed under this Agreement and
shall be subject to the terms and conditions of this Agreement.  There are no covenants, promises, agreements,
warranties, representations, conditions or understandings, whether oral or
written, between the Parties other than as set forth herein.  No subsequent alteration, amendment, change
or addition to this Agreement shall be binding upon the Parties hereto unless
reduced to writing and signed by the respective authorized officers of the
Parties.

 

15.13                     Counterparts.  This Agreement may be executed in counter-parts
with the same effect as if both Parties had signed the same document.  All such counterparts shall be deemed an
original, shall be construed together and shall constitute one and the same
instrument.

 

15.14                     Nonsolicitation.  During
the *** (***) *** period following the Effective Date, each Party agrees that
neither it nor any of its Affiliates shall knowingly recruit, solicit or
induce, directly or indirectly, any employee of the other Party or any of its
Affiliates directly involved in the research or Development activities
with respect to Licensed Compounds to
terminate his or her employment with the 

 

42

 

other Party or such Affiliate and
become employed by or consult for such Party or any of its Affiliates.  For purposes of the foregoing, “recruit”, “solicit”
or “induce” shall not be deemed to mean (i) circumstances where an
employee of a Party or any of its Affiliates initiates contact with the other
Party or any of its Affiliates with regard to possible employment, or (ii) general
solicitations of employment not specifically targeted at employees of the other
Party or any of its Affiliates, including responses to general advertisements.

 

15.15                     Exports.  Pharmacopeia agrees not to export or
re-export, directly or indirectly, any information, technical data, the direct
product of such data, samples or equipment received or generated under this
Agreement in violation of any applicable export control Laws.

 

15.17                     Discovery
Collaboration Activities to be Performed by Pharmacopeia.  In partial consideration of the license
rights granted by BMS to Pharmacopeia under this Agreement, Pharmacopeia shall
participate in and perform activities under the Discovery Collaboration.  The obligations of Pharmacopeia to perform
the activities pursuant to the Discovery Collaboration under this Section 15.17
shall survive any termination of this Agreement.

 

15.18                     Interpretation.

 

15.18.1  Each of the Parties acknowledges and agrees
that this Agreement has been diligently reviewed by and negotiated by and
between them, that in such negotiations each of them has been represented by
competent counsel and that the final agreement contained herein, including the
language whereby it has been expressed, represents the joint efforts of the
Parties hereto and their counsel. 
Accordingly, in interpreting this Agreement or any provision hereof, no
presumption shall apply against any Party hereto as being responsible for the
wording or drafting of this Agreement or any such provision, and ambiguities,
if any, in this Agreement shall not be construed against any Party,
irrespective of which Party may be deemed to have authored the ambiguous
provision.

 

15.18.2 
The definitions of the terms herein shall apply equally to the singular
and plural forms of the terms defined. 
Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including”
shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have
the same meaning and effect as the word “shall”.  The word “any” shall mean “any and all”
unless otherwise clearly indicated by context.

 

15.18.3 
Unless the context requires otherwise, (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein
or therein), (b) any reference to any Laws (including any European
Community Directives) herein shall be construed as referring to such Laws as
from time to time enacted, repealed or amended, (c) any reference herein
to any person shall be construed to include the person’s successors and
assigns, (d) the words “herein”, “hereof” and “hereunder”, and words of
similar import, shall be construed to refer to this Agreement in its entirety
and not to any particular provision hereof, and (e) all references herein
to Articles, Sections or Appendices, unless otherwise specifically provided,
shall be construed to refer to Articles, Sections and Appendices of this
Agreement.

 

Signature Page Follows

 

43

 

IN WITNESS WHEREOF, the
Parties have caused this License Agreement to be executed by their respective
duly authorized officers.

 

	
   

  	
  PHARMACOPEIA,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Leslie J. Browne

  
	
   

  	
   

  	
  (Signature)

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Leslie J. Browne, Ph.D.

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  President and Chief Executive Officer

  
				

 

 

	
   

  	
  BRISTOL-MYERS SQUIBB COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Graham R. Brazier

  
	
   

  	
   

  	
  (Signature)

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Graham R. Brazier

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President & Head of Business

  
	
   

  	
   

  	
  Development

  
				

 

44

 

Appendix
1

 

BMS
Patent Rights

 

	
  BMS Patent Docket

  #

  	
   

  	
  Patent/Application No.

  	
   

  	
  Priority Date

  	
   

  	
  PCT publication date

  
	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  

 

45

 

Appendix
2

 

LISTED
COMPOUNDS

 

	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  

 

46

 

Appendix
3

 

Discovery
Collaboration Agreement

 

(incorporated by
reference to Exhibit 10.46 to Pharmacopeia, Inc.’s Report on Form 10-K
for the year ended December 31, 2007)

 

47EXHIBIT
10.46

 

Portions of this Exhibit were
omitted and filed separately with the Secretary of the Commission pursuant to
an application for confidential treatment filed with the Commission pursuant to
Rule 24b-2 under the Securities Exchange Act of 1934.  Such omissions are designated as ***.

 

 

 

 

DISCOVERY COLLABORATION AGREEMENT

 

between

 

PHARMACOPEIA, INC.

 

and

 

BRISTOL-MYERS SQUIBB COMPANY

 

 

 

 

DISCOVERY COLLABORATION AGREEMENT

 

THIS
DISCOVERY COLLABORATION AGREEMENT (the “Agreement”) is made and entered
into effective as of October 11, 2007 (the “Effective
Date”), by and between Bristol-Myers Squibb
Company, a Delaware Corporation (“BMS”)
and Pharmacopeia, Inc., a Delaware
Corporation (“Pharmacopeia”).  BMS and Pharmacopeia each may be referred to
herein individually as a “Party,” or
collectively as the “Parties.”

 

WHEREAS,
Pharmacopeia and BMS
are parties to that certain License Agreement, under which Pharmacopeia has
agreed to perform under this Agreement as partial consideration for BMS
providing the licenses granted in the License Agreement;

 

WHEREAS, Pharmacopeia and BMS each desire to
collaborate in the performance of a Research Program for the purpose of
discovery of Research Compounds suitable for development for human therapeutic
uses, with the objective of identifying one or more Research Compounds for BMS
to advance into human clinical trials; and

 

WHEREAS, BMS will have exclusive rights and will be
solely responsible for the clinical development and commercialization of
products incorporating Research Compounds worldwide, in each case on the terms
set forth in this Agreement.

 

NOW,
THEREFORE, in
consideration of the foregoing and the mutual covenants herein contained, the
Parties do hereby agree as follows.

 

ARTICLE 1 - DEFINITIONS

 

The terms used in this Agreement with initial letters capitalized,
whether used in the singular or the plural, shall have the meaning set forth
below, or if not listed below, the meaning designated in places throughout the
Agreement.

 

“Affiliate”
of an entity means any
other entity that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with such first
entity.  For purposes of this definition
only, “control” (and, with correlative meanings, the terms “controlled by” and “under
common control with”) means the possession, directly or indirectly, of the
power to direct the management or policies of an entity, whether through the
ownership of voting securities or by contract relating to voting rights or corporate
governance.

 

“Alliance
Manager” has the
meaning set forth in Section 3.5.

 

“Applicable
Law” or “Law” means all applicable laws, statutes, rules,
regulations and other pronouncements having the effect of law of any federal,
national, multinational, state, provincial, county, city or other political
subdivision, agency or other body, domestic or foreign, including but not
limited to any applicable rules, regulations, guidelines, or other requirements
of the Regulatory Authorities that may be in effect from time to time, but
excluding patent laws.

 

“BMS Compound(s)” means any chemical compound, a physical sample or the structure of
which is *** or otherwise ***.  BMS
Compounds shall not include any ***.

 

“BMS Materials” has the meaning set forth in Section 3.9.

 

 

“Business Day” means any day, other than Saturday, Sunday
or any statutory holiday in the United States.

 

“Calendar Quarter” means the respective periods of three
consecutive calendar months ending on March 31, June 30, September 30
and December 31.

 

“Calendar Year” means each successive period of 12 months
commencing on January 1 and ending on December 31.

 

“Commercially Reasonable Efforts” means the carrying out of the research
activities in accordance with the Research Plan and under the direction of the
JRC using ***.

 

“Confidential
Information” means
all information and Know-How and any tangible embodiments thereof provided by
or on behalf of the Disclosing Party to the Receiving Party either in
connection with the discussions and negotiations pertaining to this Agreement
or in the course of performing this Agreement, including without limitation
data; knowledge; practices; processes; ideas; research plans; engineering
designs and drawings; research data; manufacturing processes and techniques;
scientific, manufacturing, marketing and business plans; and financial and
personnel matters relating to the Disclosing Party or to its present or future
products, sales, suppliers, customers, employees, investors or business;
regardless of whether any of the foregoing are marked “confidential” or “proprietary”
or communicated to the other by the Disclosing Party in oral, written, graphic
or electronic form.  For all purposes of
this Agreement, the structure of the BMS Compounds and Research Compounds and
the Research Results shall be treated as being Confidential Information of BMS.

 

Notwithstanding the foregoing, information or
Know-How of a Party will not be deemed Confidential Information for purposes of
this Agreement to the extent that the Receiving Party can show by competent
proof that such information or Know-How:

 

(a)                                  was already known to the Receiving Party or
any of its Affiliates, without any obligation to the Disclosing Party to keep
it confidential or restricting its use, prior to the time of disclosure to such
Receiving Party;

 

(b)                                 was generally available or known to parties
reasonably skilled in the field to which such information or Know-How pertains,
or was otherwise part of the public domain, at the time of its disclosure to
the Receiving Party;

 

(c)                                  became generally available or known to
parties reasonably skilled in the field to which such information or Know-How
pertains, or otherwise became part of the public domain, after its disclosure
to such Receiving Party through no fault of the Receiving Party;

 

(d)                                 was disclosed to such Receiving Party or any
of its Affiliates by a Third Party lawfully in possession thereof, and was not
obtained indirectly or directly from the Disclosing Party or in connection with
the Research Program; or

 

(e)                                  was independently discovered or developed
outside of the Research Program by employees or (sub)contractors of the
Receiving Party or any of its Affiliates, without the aid, application or use
of Confidential Information of the Disclosing Party.

 

“Derived” means, with respect to a particular Research Compound, the
identification of a follow-up compound that (i) ***
or (ii) ***, in each case whether or not such follow-up compound is ***.

 

2

 

“Disclosing
Party” has the
meaning set forth in Section 7.1.

 

“Discovery
Collaboration” means
the collaborative discovery research activities to be conducted by the Parties
pursuant to this Agreement.

 

“Dollars” or “$” means the
lawful currency of the United States.

 

“ECN” means a compound that has been designated as
an Early Candidate Nomination (or other equivalent designation as may be in
effect at the applicable time) by BMS, such that such compound has been shown
to meet the internal standards and criteria established by BMS to qualify such
compound for ***.

 

“ECN
Milestone” has the
meaning set forth in Section 5.1.

 

“Effective
Date” means the date
specified in the initial paragraph of this Agreement.

 

“Extended
Research Term” has
the meaning set forth in Section 3.2.

 

 “FTE” means the equivalent of the work of one (1) employee working on a
dedicated full time basis for one (1) year (consisting of at least a total
of *** (***) hours per year of dedicated effort, excluding vacations and
holidays) of work on or directly related to the Research Plan.  No one person will be permitted to account
for more than *** (***) hours of FTE contribution per year.   Any person who devotes less than *** hours per
year shall be treated as an FTE on a pro-rata basis, based upon the actual number
of hours worked directly related to the Research Program divided by ***.  Scientific work performed in the performance
of the Research Program by an FTE may include, but is not limited to, ***.

 

“FTE
Rate” means the rate
at which BMS would fund Pharmacopeia FTEs during any Extended Research
Term.  The FTE Rate will be negotiated
between the parties no later than thirty (30) days prior to the start of the
Extended Research term and will be a fully burdened rate (including any
overhead, laboratory supply costs, etc.) based on the average full-time
equivalent rate charged to all Third Parties for whom Pharmacopeia is
conducting research services and for which the basis of any research funding to
be provided to Pharmacopeia by such Third Party is an FTE rate applicable to a
defined number of Pharmacopeia full-time equivalents committed to such research
services.  If any Subcontractor FTEs are
to be utilized during the Extended Research Term, the FTE Rate will include any
costs incurred by Pharmacopeia related to such Subcontractor FTEs.

 

“Initiation
Date” has the meaning
set forth in Section 3.2.

 

“Joint Invention” has the meaning set forth in Section 8.1.

 

“Joint Patent”
has the meaning set forth in Section 8.1.

 

“Joint Research Committee” or “JRC” has the meaning set forth in
Section 3.3.

 

“Know-How” means technical information, results and
materials, including without limitation, technology, software, instrumentation,
devices, data, biological materials, assays, constructs, compounds, unpatented
inventions, practices, methods, knowledge, know-how, trade secrets, skill and
experience.

 

“License Agreement” means that certain license agreement between BMS and Pharmacopeia
related to selective androgen receptor modulator compounds of even date
herewith.

 

3

 

“Losses” has the meaning set forth in Section 10.1.

 

“Objective” has the meaning set forth in Section 3.1.1.

 

“Patents” means (a) patents and patent
applications in any country or jurisdiction, (b) all priority
applications, divisionals, continuations, and continuations-in-part of any of
the foregoing, and (c) all patents issuing on any of the foregoing patent
applications, together with all registrations, reissues, renewals,
re-examinations, confirmations, supplementary protection certificates, and
extensions of any of (a), (b) or (c). 
Patents shall not include any Know-How.

 

“Person” means any individual, firm, corporation,
partnership, limited liability company, trust, business trust, joint venture
company, governmental authority, association or other entity.

 

“Pharmacopeia
Compound”  means any chemical compound that, as of the
time BMS ***.

 

“Pharmacopeia Inventions” has the meaning set forth in Section 8.1.

 

“Pharmacopeia Know-How” means any Know-How and works of authorship created, used or generated
by Pharmacopeia’s employees or Subcontractors in the course of the Research
Program(s).

 

“Pharmacopeia Program Patent(s)” has the meaning set forth in Section 8.1.

 

“Pharmacopeia Research Personnel” has the meaning set forth in Section 3.7.1.

 

“Product” shall mean a pharmaceutical product incorporating a BMS Compound or
Research Compound, or a compound Derived by BMS from a Research Compound.

 

“Program Inventions” has the meaning set forth in Section 8.1.

 

“Receiving
Party” has the
meaning set forth in Section 7.1.

 

“Regulatory Authority” or “Regulatory
Authorities” shall mean the
Food and Drug Administration (the “FDA”) in the U.S., and any health regulatory
authority(ies) in any foreign country that is a counterpart to the FDA and
holds responsibility for granting regulatory marketing approval for a Product
in such country, and any successor(s) thereto.

 

“Research
Compound” means any
chemical compound created or identified by ***. 
For avoidance of doubt, Research Compounds shall include ***.  Such alternate forms may include any
***.  Research Compounds shall not
include any ***.

 

“Research
Plan” has the meaning set forth in Section 3.6.

 

“Research
Program” has the meaning set forth in Section 3.1.1.

 

“Research
Results” means all data, information, trade secrets, inventions and Know-How which
are discovered, made, reduced to practice, identified or developed in whole or
in part by Pharmacopeia (including any Subcontractor) or BMS in the
course of the performance of the Research Program.

 

“Research Target” means any drug target which is the focus of
a Research Program pursuant to this Agreement.

 

4

 

“Research
Term” will have the meaning set forth in Section 3.2.

 

“Research
Year” means each 12 month period during the Research Term, with the first
Research Year beginning on the Initiation Date.

 

“Senior
Representatives” has the meaning set forth in Section 12.4.

 

“Subcontractor” has the meaning set forth in Section 3.7.2.

 

“Substitute
Research Program” has the meaning set forth in Section 3.1.3.

 

“Term” has the meaning set
forth in Section 9.1.

 

“Third
Party(ies)” means any
Person other than Pharmacopeia or BMS or their respective Affiliates.

 

“Working
Group” has the meaning
set forth in Section 3.4.

 

ARTICLE 2 - 

GRANT OF RIGHTS; EXCLUSIVITY

 

Section 2.1                                   Assignment to BMS. 
Pharmacopeia agrees to assign, and hereby does assign, to BMS all right,
title and interest in and to all Research Compounds, including any Pharmacopeia
Program Patents and Pharmacopeia’s interest in any Joint Patents which claim
the composition-of-matter or a method-of-use of any Research Compound.

 

Section 2.2                                   Exclusive License Grant to BMS. 
Pharmacopeia agrees to grant, and hereby does grant, to BMS and its
Affiliates an exclusive (even as to Pharmacopeia), worldwide, perpetual,
royalty-free license (including the right to sublicense) under such Research
Results (including the Pharmacopeia Know-How), and any Pharmacopeia Program
Patents or Joint Patents, other than those assigned pursuant to Section 2.1,
that are necessary for BMS to make, have made, and use BMS Compounds or
Research Compounds in order to make, have made, use, import, export, offer for
sale and sell Products.

 

Section 2.3                                   Non-Exclusive License Grant to
BMS.  Pharmacopeia agrees to grant, and hereby does
grant, to BMS and its Affiliates a non-exclusive, worldwide, perpetual,
royalty-free license (including the right to sublicense) under such Research
Results (including the Pharmacopeia Know-How), and any Pharmacopeia Program
Patents or Joint Patents, other than those assigned pursuant to Section 2.1
or licensed pursuant to Section 2.2, that are useful, but not necessary,
for BMS to make, have made, and use BMS Compounds or Research Compounds in
order to make, have made, use, import, export, offer for sale and sell
Products.

 

Section 2.4                                   Research Exclusivity. 
During the Term and continuing thereafter for a period of *** (***) ***,
Pharmacopeia agrees that it will not ***.

 

Section 2.5                                   Exception for JAK-3 Kinase
Inhibitors.  BMS acknowledges that, pursuant to a
Research and License Agreement dated December 22, 2006 between
Pharmacopeia and Wyeth, Pharmacopeia is not permitted to grant any license or
right, to any party other than Wyeth, under any Patents or Know-How controlled
by Pharmacopeia, to any compound having as its primary mechanism of action
JAK-3 kinase inhibitory activity or to any method of making or using such a 

 

5

 

compound.  Therefore, it is understood and agreed that
the assignment and license provisions of Sections 2.1 through 2.3 shall not
apply to (i) any compound determined to have, as its primary mechanism of
action, JAK-3 kinase inhibitory activity or (ii) any method of making or
using such a compound.

 

Section 2.6                                   Third Party Rights.

 

2.6.1                                       Overlapping
Rights.  It is understood that
Pharmacopeia is in the business of discovering pharmaceutically active
compounds for Third Parties, and that Pharmacopeia may grant Third Parties
rights to such compounds comparable to those rights granted to BMS herein.  Notwithstanding the assignments in favor of,
and licenses granted to, BMS pursuant to Sections 2.1 through 2.3 above, it is
possible that a Third Party may acquire rights from Pharmacopeia with respect
to one or more compounds of which Pharmacopeia is a sole or joint owner, which
compounds were identified independently of Pharmacopeia’s activities and
knowledge gained under the Discovery Collaboration. Accordingly, Pharmacopeia’s
grant of rights under Sections 2.1 through 2.3 shall be limited, and shall be
subject to any grant of rights to a Third Party, to the extent that (i) such
Third Party (either alone or jointly with Pharmacopeia) has filed a patent
application with respect to such a compound prior to the filing by BMS (either
alone or jointly with Pharmacopeia) of a patent application with respect to
such a compound, or (ii) Pharmacopeia has previously granted such Third
Party a license or other rights with respect to such a compound.

 

2.6.2                     No Liability.  It is understood and agreed that, even if
Pharmacopeia complies with its obligations under this Agreement, including its
obligations under Section 2.4, compounds provided to Third Parties in the
course of Pharmacopeia’s other business activities may result in patent
applications and patents owned by such Third Parties, or owned jointly by
Pharmacopeia and such Third Parties, which could conflict with patent
applications and patents owned by BMS, or jointly owned by BMS and Pharmacopeia
hereunder.  Pharmacopeia shall use its
reasonable efforts to avoid such conflict; provided, that
unless BMS is damaged as a proximate result of a material breach by
Pharmacopeia of Section 2.4, Section 3.9, Section 9.4.2, Article 7
or of any of the representations and warranties in Article 11, then
Pharmacopeia shall have no liability under this Agreement with respect to any
such conflict.

 

Section 2.7                                   No Implied Licenses.  Only the licenses granted pursuant to the
express terms of this Agreement shall be of any legal force or effect.  No other license rights shall be created by
implication, estoppel or otherwise.

 

ARTICLE 3 - 

RESEARCH PROGRAM

 

Section 3.1                                   Research Program.

 

3.1.1                     During the Research Term, the Parties will
collaborate in carrying out a research program to discover and preclinically
develop Research Compounds against a Research Target as described in the
Research Plan (the “Research
Program”).  The objective of the Research Program will be
to *** (the “Objective”).  The Research Program will be carried out in
accordance with the Research Plan, as may be amended by the JRC.  BMS will provide BMS Compounds which it has
identified as having activity against the Research Target, and the design and
prioritization of Research Compounds will be done by the Working Group.  Pharmacopeia’s role in the Research Program
will focus on the synthesis of Research Compounds with respect to the Research
Target.

 

6

 

3.1.2                     Within thirty (30) days after BMS’ disclosure
to Pharmacopeia of the applicable BMS Compounds, Pharmacopeia will provide to
BMS a listing of any Pharmacopeia Compounds that Pharmacopeia believes could be
encompassed by a reasonable medicinal chemistry program of the type to be
performed in the Research Program.  The
listing of Pharmacopeia Compounds shall be deemed to be Confidential
Information of Pharmacopeia. 
Pharmacopeia will retain ownership of all Pharmacopeia Compounds. No
Pharmacopeia Compound shall be deemed to be a BMS Compound or a Research
Compound, and Pharmacopeia Compounds shall not be included in any of the
assignment of rights or licenses to BMS pursuant to Sections 2.1 through
2.3.  No Pharmacopeia Compounds will be
evaluated in the course of the Research Program without express written
permission of BMS.

 

3.1.3                     In the event that the JRC determines that the
Research Program with respect to the original Research Target has failed to
meet the Objective or cannot or should not, based on good faith reasonable
commercial or development considerations, be further progressed by or on behalf
of BMS, BMS will have sixty (60) days from such decision in which to substitute
another research project into the Research Program subject to approval of the
new Research Program by Pharmacopeia (the “Substitute Research
Program”).  BMS may use its discretion in the
selection of the Substitute Research Program, provided that, (i) such
Substitute Research Program is not directed to the same drug target that is the
subject of an active (at the time of such selection) internal or Third Party
collaborative research, development or commercialization program of
Pharmacopeia; (ii) such Substitute Research Program is not directed
towards a drug target for which Pharmacopeia has an obligation to any Third
Party not to conduct any research, development or commercialization; and (iii) such
Substitute Research Program does not (in the opinion of counsel selected by
Pharmacopeia) infringe valid claims of any Third Party intellectual property,
unless BMS first obtains a license reasonably satisfactory to Pharmacopeia at
BMS’s sole cost and expense or BMS agrees to indemnify Pharmacopeia against any
claims arising from the alleged infringement of such Third Party intellectual
property.  For any proposed Substitute
Research Programs, Pharmacopeia will provide notice to BMS if the proposed
Substitute Research Program must be excluded due to one of clauses (i) — (iii) above
within fifteen (15) Business Days of the Substitute Research Program being
proposed, and such Substitute Research Program thereafter shall be subject to Section 3.1.2
above.  In the event that (a) a
Substitute Research Program has been included in the Discovery Collaboration,
and (b) at any time during Pharmacopeia’s performance of such Substitute Research
Program, BMS conducts (or has conducted on its behalf) activities to further
progress the Research Program with respect to the original Research Target, BMS
shall promptly report to Pharmacopeia such activities with respect to the
original Research Target.

 

3.1.4                     The Research Program will be conducted by
each Party in good scientific manner, and in compliance with all applicable
safety rules and practices, and in accordance with Applicable Law, to
attempt to achieve efficiently and expeditiously the objectives of the Research
Program.  Each Party will comply with all
Applicable Laws, in the performance of work under this Agreement.

 

3.1.5                     Each Party will maintain laboratories,
offices and all other facilities at its own expense and risk necessary to carry
out its responsibilities under the Research Program pursuant to the Research
Plan.  Each Party agrees to make its
employees reasonably available at their respective places of employment to
consult with the other Party on issues arising during the performance of the
Research Program.  BMS and Pharmacopeia will cooperate with each
other in carrying out the Research Program, and each Party will contribute its
relevant Know-How and experience necessary to carry out the Research Program.

 

7

 

Section 3.2                                   Research Term.

 

3.2.1                     Subject to Section 3.2.2 below, the term
of the Research Program will extend until the earlier of (i) the
expiration of the three (3) year period following an initiation date (the “Initiation Date”) to be agreed upon
by the Parties (such Initiation Date not to be later than January 1,
2008), or (ii) the JRC’s determination that the Research Program has
successfully met the Objective (the “Research
Term”).

 

3.2.2                     In the event that  the JRC determines that (x) the Research
Program has failed to meet the Objective or (y) that the Research Program
cannot or should not be further progressed, and BMS has substituted a new
Research Program into the Discovery Collaboration pursuant to Section 3.1.3,
such new Research Program shall continue for the unexpired remainder of the
original three (3) years from the Initiation Date.  BMS will not be required to pay any
additional consideration to Pharmacopeia for any such remainder of the Research
Term.

 

3.2.3                     BMS shall have the right to extend the
Research Term for up to one year beyond the expiration of the original three (3) year
term (the “Extended Research Term”)
by (i) providing written notice to Pharmacopeia of BMS’s desire to so
extend at least one hundred twenty (120) days before the expiration of the
original three (3) year term and (ii) paying Pharmacopeia’s FTE Rate
for all Pharmacopeia Research Personnel during the Extended Research Term for
activities conducted under the Research Program, pursuant to Sections 3.7.1(b) and
3.7.3(b)(ii).

 

Section 3.3                                   Joint Research Committee.

 

3.3.1                     Formation and Purpose.  The
Parties will establish and maintain a joint research committee (the “Joint Research Committee” or “JRC”), which shall oversee
the activities of the Parties under the Research Program and progress towards
meeting the Objective.  The JRC shall
have the membership and shall operate by the procedures set forth in this Section 3.3.    The JRC shall be dissolved at the end of
the Research Term unless otherwise agreed to by the Parties.

 

3.3.2                     Specific Responsibilities of the
JRC.  In addition to its overall responsibility for
the Research Program, the JRC shall, in particular, during the Research Term
(including any Extended Research Term):

 

(i)   oversee the activities of the Working Group;

 

(ii)   resolve any disputes or disagreements relating to the Research Program
that are submitted to it by the Working Group or a Party;

 

(iii)   modify the Research Plan as necessary, but in no event shall such modification
increase the *** or be contrary to the intent and purpose of this Agreement;

 

(iv)   determine the status of the Research Program to meet the Objective,
including determination of success, failure and whether the Research Program
cannot, or should not, be further progressed; in determining whether the
Research Program can, or should, be further progressed, the JRC may consider
factors such as commercial factors and risks related to the Research Target and
safety concerns among others;  and

 

(v)   review of Program Inventions and the filing of Program Patents.

 

Other than the obligations under (i), (ii) and
(iv) above, the JRC may delegate its obligations under this Agreement to
the Working Group or any other subcommittee.

 

8

 

3.3.3                     Decisions of the JRC.  The
JRC shall make its decision on matters within its purview only after the JRC
discusses such matters and only after reasonably considering each Party’s
comments (through its JRC members) on such matters.  All decisions by the JRC must be consistent
with the terms of this Agreement, and may not modify the terms and conditions
of this Agreement or the rights and obligations of a Party under this
Agreement.

 

3.3.4                     JRC Membership and Procedures.

 

a.               Membership. 
Pharmacopeia and BMS shall *** with appropriate expertise to serve as
members of the JRC.  Each Party may
replace any of its JRC representatives at any time upon written notice to the
other Party.  BMS shall select ***.  The chairperson of the JRC (or his/her
designees) shall be responsible for calling meetings, preparing and circulating
an agenda in advance of each meeting of the JRC, and preparing and issuing
minutes of each meeting within thirty (30) days thereafter; provided that the
JRC chairperson shall call a meeting of the JRC promptly upon the written
request of a Pharmacopeia JRC representative to convene such a meeting.  Such minutes will not be finalized until both
chairpersons review and confirm the accuracy of such minutes in writing.

 

b.               Meetings.  The
JRC shall hold meetings at such times as it elects to do so, but in no event
shall such meetings be held less frequently than once every ***.  The JRC shall meet alternately at
Pharmacopeia’s facilities in New Jersey and BMS’ facilities in New Jersey or at
such locations as the Parties may otherwise agree.  Other employees of each Party involved in the
development of Research Compounds may attend meetings of the JRC as nonvoting
participants.  Each Party shall be
responsible for all of its own expenses of participating in the JRC.  Meetings of the JRC may be held by audio or
video teleconference with the consent of each Party; provided
that at least one (1) meeting of the JRC per Calendar Year
shall be held in person.  A quorum for a
meeting of the JRC requires the presence of at least one representative of each
Party.

 

c.               Decision-Making.  Each
Party’s representatives on the JRC shall, *** present at the meeting.  Except as otherwise expressly provided in
this Agreement, the JRC shall operate as to matters within its jurisdiction by
***; provided, that the JRC shall not have
the authority to amend or modify, or waive compliance with, this Agreement
other than to modify the Research Plan, but only as permitted by this
Agreement.  Further, no decision of the
JRC shall violate or breach any provision of this Agreement.  In the event of a failure of the JRC to reach
agreement on any issue, such dispute shall be subject to the dispute
resolution provisions set forth in Section 12.4., including any disputes concerning the validity, interpretation
or construction of, or the compliance with or breach of, this Agreement.

 

d.               Meeting Agendas.  Each
Party will disclose to the other proposed agenda items along with appropriate
information at least five (5) Business Days in advance of each meeting of
the JRC; provided that under exigent
circumstances requiring JRC input, a Party may provide its agenda items to the
other Party within a lesser period of time in advance of the meeting, or may
propose that there not be a specific agenda for a particular meeting, so long
as such other Party consents to such later addition of such agenda items or the
absence of a specific agenda for such JRC meeting.

 

Section 3.4                                   Research Program Working Group.

 

3.4.1                     Membership.  A
working group will be established immediately after the formation of the JRC
(the “Working Group”).  The Working Group will have ***.  The key responsibility of the Working Group
will be the day-to-day execution of the Research Plan.  The Working Group will report directly to the
JRC and will present its progress against the Research Plan to the JRC ***
during the term of the Research Program. 
The chairpersons of the Working Group will designate 

 

9

 

employees from BMS and Pharmacopeia to be members of the Working Group
as needed to get proper representation on the Working Group for all expertise
needed to execute the Research Plan.   
In addition, from time to time, the Working Group may establish and delegate
duties to sub-committees on an “as-needed” basis to oversee particular projects
or activities.  Each such sub-committee
shall be constituted and shall operate as the Working Group determines.  Sub-committees may be established on an ad
hoc basis for purposes of a specific project or on such other basis as the
Working Group may determine.  The Working
Group and each sub-committee and their activities shall be subject to the
oversight, review and approval of, and shall report to, the JRC.  Decisions of the Working Group and each
sub-committee shall be reached by consensus between the Parties’
representatives.  In the case of a
non-concurrence in the Working Group, or in a sub-committee, the issue shall be
referred for a decision to the JRC.  In
no event shall the authority of the Working Group exceed that specified for the
JRC in this Article 3.  The Working
Group shall hold meetings at such times as it elects to do so approximately on
a monthly basis as needed.  Meetings of
the Working Group may be held by audio or video teleconference or in person at
a location agreed to by the chairpersons; provided that
at least one (1) meeting of the Working Group per year shall be held in
person.  Each Party shall be responsible
for all of its own expenses of participating in the Working Group.  A quorum for a meeting of the Working Group
requires the presence of at least one representative of each Party.

 

3.4.2                     Interactions Between the JRC and
the Working Group, and Internal Teams.  The Parties recognize that
while they will establish the JRC,  the
Working Group, and sub-committees of the Working Group for the purpose of the
Research Program, each Party possesses an internal structure (including without
limitation various committees, teams and review boards) that will be involved
in administering such Party’s activities under this Agreement.  The JRC and the chairpersons of the Working
Group shall establish procedures to facilitate communications between the JRC
and the Working Group and any relevant internal committee, team or board in
order to maximize the efficiency of the Research Program, including without
limitation by requiring appropriate members of the JRC, the Working Group, or
any sub-committee of the JRC to be available at reasonable times and places and
upon reasonable prior notice for making appropriate oral reports to, and
responding to reasonable inquiries from, the relevant internal committee, team
or board.  Furthermore, the JRC and the
Working Group will establish the necessary working level contacts between the
two Parties to ensure that necessary day-to-day interactions will occur in
implementing the Research Plan.

 

Section 3.5                                   Alliance Managers.  Each
Party shall have the right, but not the obligation, to appoint one
representative who possesses a general understanding of the scientific and
business issues relevant to this Agreement to act as its respective alliance
manager (each, an “Alliance Manager”) for the
relationship of the Parties under this Agreement.  Each Party may change its designated Alliance
Manager, who may not be a member of the JRC, from time to time upon notice to
the other Party.  Any Alliance Manager
may designate a substitute to temporarily perform the functions of that
Alliance Manager.  Each Alliance Manager
will take responsibility for ensuring that governance activities occur as set
forth in this Agreement, in particular ensuring that the JRC meetings occur,
and that any conflict is given prompt attention as set forth in Section 3.3.4.  The Alliance Managers shall be entitled to
attend meetings of the JRC, but shall not have, or be deemed to have, any
rights or responsibilities of a member of the JRC.  Similarly, the Alliance Managers may attend
meetings of the Working Group or any subcommittees of the JRC.  Each Alliance Manager may bring any matter to
the attention the JRC where such Alliance Manager reasonably believes that such
matter requires such attention.  For
purposes of clarification, in no event will the Alliance Managers have the
power or authority to amend any provision of this Agreement.

 

10

 

Section 3.6                                   Research Plan.

 

3.6.1                     The Research Program will be carried out in
accordance with a written research plan (the “Research
Plan”).  The initial
Research Plan agreed to by the Parties
as of the Effective Date is attached hereto as Appendix 1 and is hereby
incorporated into this Agreement by reference and is made a part of this
Agreement.  The purpose of the
Research Plan is to detail the responsibilities and activities of Pharmacopeia
and BMS with respect to carrying out the Research Program.  The Research Plan will include a description
of the specific activities to be performed by the Parties in support of the
Research Program, the allocation of Pharmacopeia Research Personnel to perform
such activities, and projected timelines for completion of such activities and
the desired specifications for the Research Compounds.  At least once each Research Year (starting in
Calendar Year 2008), the JRC will review and, if necessary, update the Research
Plan.  The Research Plan may only be ***
and is subject to Section 3.7.1 below. 
The Working Group may ***.

 

3.6.2                     In addition, at least six (6) months
prior to the beginning of any Extended Research Term, the JRC will begin the
process of updating the Research Plan for such Extended Research Term (if
applicable).  At least three (3) months
prior to the beginning of any Extended Research Term, the JRC will have agreed
on an updated Research Plan for such Extended Research Term (as applicable).

 

Section 3.7                                   Research Staffing; Funding.

 

3.7.1                     Staffing.

 

a.                   During the Research Term.  Pharmacopeia will provide *** (***) ***, of which *** (collectively, “Pharmacopeia Research Personnel”)
per Research Year during the Research Term to perform activities in support of
the Research Program, in accordance with the then-current Research Plan.    The Pharmacopeia Research Personnel
dedicated to the Research Program cannot be reduced during the Research Term
without express written consent of BMS. 
Throughout the Research Term, Pharmacopeia shall assign, as Pharmacopeia
Research Personnel, no fewer than the number of FTE qualified scientists
specified in this Section 3.7.1 to perform the work set forth in the
then-applicable Research Plan.  The
mixture of skills and levels of the Pharmacopeia Research Personnel shall be
appropriate to the scientific objectives of the Research Program.  No later than sixty (60) days following the
end of each Calendar Quarter, during the Research Term Pharmacopeia shall
report to the JRC a listing of the FTEs comprising the Pharmacopeia Research
Personnel and their percentage of time devoted to working on the Research
Program.  If BMS has concern regarding
any specific Pharmacopeia Research Personnel assigned to the Research Program,
such concerns shall be communicated to the JRC for its consideration.

 

b.                   During the Extended Research Term.  At
least three (3) months prior to the beginning of an Extended Research
Term, if applicable, the JRC shall determine the number of Pharmacopeia
Research Personnel to be provided by Pharmacopeia in accordance with Section 3.6.2
above, such number ***, and to be funded by BMS in accordance with Section 3.7.3(b)(ii) below.

 

3.7.2                     Subcontracting. 
Except as provided in the Research Plan or as may be specifically
permitted by the JRC, Pharmacopeia shall be entitled to subcontract to a Third
Party (a “Subcontractor”)
up to *** (***) *** to conduct any of the work for which it is responsible in
the performance of the Research Program (such Subcontractor FTEs to be
considered Pharmacopeia Research Personnel for the purposes of this
Agreement).  In the case of any
subcontracting of Research Program activities by a Party to a Third Party, such
Third Party must have entered into a written agreement with 

 

11

 

such Party consistent with the terms and conditions of this Agreement,
including provisions (i) protecting and limiting use and disclosure of
Confidential Information and Know-How at least to the same extent as under this
Agreement, (ii) providing for assignment of all Program Inventions and
Program Patents to effect the rights of the Parties under this Agreement, and (iii) obligations
regarding the use and transfer of materials consistent with those contained in
this Agreement.  Each Party is
responsible for compliance by such Third Party with the applicable terms and
conditions of this Agreement in the same way and to the same extent as such
Party.

 

3.7.3                     Funding; Expenses.

 

a.               Responsibility for Expenses for
Conduct of Research Program.  Except as set forth in this Section 3.7.3
and as may be otherwise specifically agreed to in writing by Pharmacopeia and
BMS, each Party shall bear its own costs incurred in conducting work under the
Research Program.

 

b.               Pharmacopeia Research Personnel

 

(i)   During the Research Term. 
Pharmacopeia will bear its own costs, including costs related to the
Pharmacopeia Research Personnel (which may include Subcontractor FTEs under Section 3.7.2
above), standard research supplies, consumables and applicable overhead costs,
in performing its obligations under the Research Program.

 

(ii)   During the Extended Research Term. BMS will pay Pharmacopeia in advance for
the Pharmacopeia Research Personnel assigned to the Research Program in
accordance with Section 3.7.1(b) for each Calendar Quarter (a
prorated amount shall be payable for any portion of a Calendar Quarter) of the
Extended Research Term at the agreed upon FTE Rate.  Such FTE payment obligation of BMS will be
subject to Pharmacopeia providing such qualified Pharmacopeia Research Personnel.  No later than sixty (60) days following the
end of each Calendar Quarter, Pharmacopeia will provide BMS with a report of
the number of FTEs assigned to the Research Program with a summary of their
activities.  Any overpayment by BMS may
be applied by BMS to the funding of Pharmacopeia FTEs in a subsequent Calendar
Quarter.  If the Parties agree that the
activities contemplated by the Research Plan at any time do not justify the
number of Pharmacopeia FTEs allocated to the Research Program, the Parties will
modify the scope of the Research Plan or adjust the number of Pharmacopeia
Research Personnel.

 

c.               Additional Studies. 
During the course of the Research Program, the JRC may request that
Pharmacopeia conduct studies which Pharmacopeia does not have the necessary
internal resources or expertise to conduct (as an example, NovaScreen
studies).  In the event that Pharmacopeia
needs to engage a Third Party to perform such studies, Pharmacopeia will notify
the JRC:   (i) that it does not have the internal
resources or expertise to conduct such studies, (ii) the identity of the
Third Party that Pharmacopeia proposes to engage in such work, and (iii) the
proposed budget for such studies.  If the
JRC approves Pharmacopeia’s engagement of the Third Party to conduct such
studies and the proposed budget, then BMS will reimburse Pharmacopeia for any
external out-of-pocket expenses incurred by Pharmacopeia in undertaking such
additional studies which are not carried out by the Pharmacopeia Research
Personnel.  Absent such approval by the
JRC, Pharmacopeia need not outsource, nor conduct itself, any such additional
study.  Further, notwithstanding the
preceding sentences, nothing in this Agreement shall be deemed to obligate Pharmacopeia
to undertake any study, or to expend its own funds 

 

12

 

to engage a Third Party to conduct any study, that normally would not
be performed by Pharmacopeia employees in connection with one of Pharmacopeia’s
internal research programs.

 

d.                   Synthesis of Research Compounds. 
Pharmacopeia will synthesize Research Compounds for testing by BMS in
quantities of at least ***.  Upon
direction of the Working Group, Pharmacopeia will scale up synthesis of
Research Compounds selected by the Working Group to quantities of ***.  If the Working Group directs Pharmacopeia to
synthesize quantities of any single Research Compound in excess of 5g,
Pharmacopeia will present the JRC with a proposed budget for such synthesis
(covering Pharmacopeia’s external out-of-pocket costs to be incurred for such
synthesis).  If the JRC approves the
budget for such synthesis, then BMS will reimburse Pharmacopeia for its
external out-of-pocket expenses incurred by Pharmacopeia in undertaking such
synthesis. Absent such approval by the JRC, Pharmacopeia need not outsource,
nor conduct itself, any such synthesis.

 

Section 3.8                                   Research Efforts. 
Subject to Section 3.7, each Party shall use good faith
Commercially Reasonable Efforts to perform its activities under the Research Program,
including its responsibilities under the Research Plan.

 

Section 3.9                                   Materials Transfer.  In
order to facilitate the Research Program, either Party may provide to the other
Party certain materials for use by the other Party in furtherance of the Research
Program.  All such materials shall be
used by the receiving Party in accordance with the terms and conditions of this
Agreement solely for purposes of performing its rights and obligations under
this Agreement, and the receiving Party shall not transfer such materials to
any Third Party unless expressly contemplated by this Agreement or upon the
written consent of the supplying Party.

 

a.               Any
materials provided by BMS to Pharmacopeia in support of the Research Program,
including but not limited to BMS Compounds (such materials being individually
and collectively referred to as the “BMS
Materials”) shall be used
by Pharmacopeia solely for purposes of performing the Research Program and for
no other purpose, and any remaining BMS Materials will be returned to BMS (or
destroyed as may be requested by BMS in writing) promptly following the end of
the Research Term or earlier upon request by BMS.  All information related to such BMS Materials
shall be deemed to be BMS Confidential Information.  All such materials must be used
with prudence and appropriate caution in any experimental work, since all of
their characteristics may not be known.

 

b.               All physical samples of the BMS Compounds and
Research Compounds are and will be the property of BMS. In general, physical
samples of BMS Compounds and Research Compounds in Pharmacopeia’s possession
during the Research Term will be shipped from Pharmacopeia to BMS as the JRC
directs.  Any remaining physical samples
of Research Compounds or BMS Compounds will be sent to BMS at the end of the
Research Term.

 

Section 3.10                            Research Program Records.  Pharmacopeia will maintain complete and accurate records of all work
conducted in the performance of the Research Program and all results, data,
inventions and developments made in the performance of the Research
Program.  Such records will be in
sufficient detail and in good scientific manner appropriate for patent and
regulatory purposes.  Pharmacopeia shall
maintain appropriate records sufficient to document the work performed by each
of the individuals comprising the FTEs working in support of the Research
Program and the time such individuals spent working in support of the Research
Program.  Pharmacopeia shall provide BMS
the right to inspect such records, and shall provide copies of all requested
records, to the extent reasonably required for the performance of BMS’ rights
and obligations under this Agreement; provided however,
that BMS shall maintain such records and the information of Pharmacopeia in
confidence in accordance 

 

13

 

with Article 7 hereof and shall not use such records or
information except to the extent otherwise permitted by this Agreement.

 

Each Party agrees to maintain a policy that requires
its employees to record and maintain all data and information developed during
the Research Program in such a manner as to enable the Parties to use such
records to establish the earliest date of invention and/or diligence to
reduction to practice.  At a minimum, the
policy shall require such individuals to record all inventions generated by
them in standard laboratory notebooks or other suitable means that are dated
and corroborated by non-inventors on a regular, contemporaneous basis.

 

Section 3.11                            Disclosure of Results of Research
Program.  The results of all work performed by the
Parties as part of the Research Program shall be promptly disclosed to the
other Party in a reasonable manner as such results are obtained.  Pharmacopeia shall provide BMS monthly with
reports of the work performed under the Research Program and the Research
Results in a format acceptable to the Working Group and JRC.  Pharmacopeia and BMS will provide reports and
analyses at each JRC meeting, and more frequently on reasonable request by the
JRC, detailing the current status of the Research Program, including but not
limited to the utilization of the Pharmacopeia Research Personnel.  Within thirty (30) days following the end of
each Calendar Quarter, Pharmacopeia and BMS Alliance Managers and/or JRC
members, as applicable, shall exchange and provide to the JRC a report in a
mutually acceptable format summarizing in reasonable detail the work performed
under the Research Program and results achieved during the preceding Calendar
Quarter.  The results, reports, analyses
and other information regarding the Research Program disclosed by one Party to
the other Party pursuant hereto may be used only in accordance with the rights
granted and other terms and conditions under this Agreement.  Upon reasonable request by BMS, Pharmacopeia
shall provide BMS with additional data, results and other information with
respect to the work performed by Pharmacopeia in the performance of the
Research Program.  Any reports required
under this Section 3.11 may take the form of and be recorded in minutes of
the JRC that will contain copies of any slides relating to the results and
presented to the JRC.  Upon direction of
the JRC, the Parties will setup and maintain a secure electronic data storage
system where the Research Results will be uploaded and stored by each Party,
the electronic data storage system will accessible only by the Parties (and any
Subcontractors as appropriate).

 

ARTICLE 4 - 

DEVELOPMENT, COMMERCIALIZATION & MANUFACTURING

 

Section 4.1                                   Development, Commercialization
and Regulatory Responsibilities.  Other than Pharmacopeia’s
responsibilities under the Research Program, BMS shall have sole responsibility
(including without limitation sole responsibility for all funding, resourcing
and decision-making) for all further development and commercialization with
respect to the BMS Compounds, Research Compounds and Products incorporating a
BMS Compound or Research Compound.  BMS
will be solely responsible for, and will solely own, all regulatory filings
related to BMS Compounds, Research Compounds and Products incorporating a BMS
Compound or Research Compound.

 

ARTICLE 5 - 

FINANCIAL PROVISIONS

 

Section 5.1                                   Milestone Payments by BMS.  Provided that (i) *** and (ii) ***, in the event that
***.  Furthermore, if the ***.  It is understood and agreed that BMS shall
not be required to pay more than one set of milestone payments as described in
this Section.

 

14

 

ARTICLE 6 - 

PRESS RELEASES & PUBLICATIONS

 

Section 6.1                                   Press Releases; Public
Disclosure.

 

6.1.1                     Any press releases or other public statements
regarding this Agreement will be made solely pursuant to Section 15.9 of
the License Agreement and,  except as set
forth in Section 15.9 of the License Agreement, each Party agrees not to
issue any press release or other public statement disclosing other information
relating to this Agreement or the transactions contemplated hereby without the
prior written consent of the other Party.

 

Section 6.2                                   Publication of Research Results.

 

6.2.1                     Publication by Pharmacopeia. 
Pharmacopeia shall not publish, present or otherwise disclose to the
public the Research Results or any information related to the Research Program,
including, but not limited to any information related to the BMS Compounds,
Research Compounds, strategy, screening tier, and novel assays.

 

6.2.2                     Publication by BMS.  BMS
will have the sole and exclusive right to publish the Research Results, and all
information related to the BMS Compounds and Research Compounds.  Notwithstanding the foregoing, BMS will not
publish any Confidential Information of Pharmacopeia, and will not use the name
of Pharmacopeia (or any of its directors, employees, or Affiliates) in any such
publication without the express written consent of Pharmacopeia.

 

6.2.3                     For clarification, this Section 6.2
shall not apply with respect to the use and disclosure of Confidential
Information as specifically provided for in Section 6.1 or Article 7
(i.e., a disclosure expressly permitted and made in accordance with Section 6.1
or Article 7).

 

ARTICLE 7 - 

CONFIDENTIALITY

 

Section 7.1                                   Disclosure and Use Restriction.  Each
Party agrees that, for so long as this Agreement is in effect and for a period
of *** (***) years thereafter, a Party (the “Receiving Party”) receiving Confidential
Information of the other Party (the “Disclosing Party”)
shall (i) maintain in confidence such Confidential Information using not
less than the efforts such Receiving Party uses to maintain in confidence other
proprietary industrial information of similar kind and value, (ii) not
disclose such Confidential Information except to the Receiving Party’s
employees having a need-to-know such Confidential Information solely for
purposes of performing Receiving Party’s obligations under this Agreement, (iii) not
disclose such Confidential Information to any Third Party without the prior
written consent of the Disclosing Party, except for disclosures expressly
permitted by this Agreement, and (iv) not use such Confidential
Information for any purpose except those expressly permitted by this
Agreement.  For avoidance of doubt,
Pharmacopeia shall be permitted to use the BMS Confidential Information solely
for purposes of performing the Research Program in accordance with the Research
Plan and for no other purpose.  Upon
completion of the Research Program or earlier upon written request by BMS,
Pharmacopeia shall return to BMS or destroy any BMS Confidential Information,
with the understanding that Pharmacopeia will be entitled to retain one (1) copy
of BMS Confidential Information in the files of its legal counsel solely for
archival purposes.

 

15

 

Section 7.2                                   Authorized Disclosure.  To
the extent (and only to the extent) that it is reasonably necessary or appropriate
to fulfill its obligations or exercise its rights under this Agreement, a Party
may disclose Confidential Information belonging to the other Party in the
following instances:

 

(a)                                        filing or prosecuting patent applications in
accordance with this Agreement;

 

(b)                                       made to the Regulatory Authorities as
necessary for the development or commercialization of a Product in a country,
as required in connection with any filing, application or request for
regulatory approval; provided, however,
that reasonable measures will be taken to assure confidential treatment of such
information;

 

(c)                                        prosecuting or defending litigation;

 

(d)                                       complying with applicable governmental laws
and regulations (including, without limitation, the rules and regulations
of the Securities and Exchange Commission or any national securities exchange,
and compliance with tax laws and regulations) and with judicial process, if (i) in
the reasonable opinion of the Receiving Party’s counsel, such disclosure is
necessary for such compliance and (ii) such disclosure is made in
accordance with Section 7.3 or 7.4 as applicable; and

 

(e)                                        disclosure, in connection with the
performance of this Agreement and solely on a need-to-know basis, to
Affiliates, potential or actual collaborators (including potential licensees),
potential or actual investment bankers, investors, lenders, or acquirers,  or  employees, independent contractors
(including without limitation consultants and clinical investigators) or
agents, each of whom prior to disclosure must be bound by written obligations
of confidentiality and non-use no less restrictive than the obligations set
forth in this Article 7; provided, however,
that the Receiving Party shall remain responsible for any failure by any Person
who receives Confidential Information pursuant to this Article 7 to treat
such Confidential Information as required under this Article 7.

 

If and whenever any Confidential Information
is disclosed in accordance with this Section 7.2, such disclosure shall
not cause any such information to cease to be Confidential Information except
to the extent that such permitted disclosure results in a public disclosure of
such information (other than by breach of this Agreement).  Where reasonably possible and subject to
Sections 7.3 and 7.4, the Receiving Party shall notify the Disclosing Party of
the Receiving Party’s intent to make such disclosure pursuant to clauses (a) through
(d) of this Section 7.2 sufficiently prior to making such disclosure
so as to allow the Disclosing Party adequate time to take whatever action it
may deem appropriate to protect the confidentiality of the information.

 

For purposes of this Agreement, the Research Results shall be treated
as Confidential Information of BMS. 
Accordingly, Pharmacopeia shall be considered the Receiving Party with
respect to the Research Results and shall be subject to all of the restrictions
and obligations of this Article 7 with respect to the disclosure and use
of such Research Results to the same extent as applicable to Confidential Information
disclosed to Pharmacopeia by BMS.

 

Section 7.3                                   Required Disclosure.  A
Receiving Party may disclose Confidential Information pursuant to
interrogatories, requests for information or documents, subpoena, civil
investigative demand issued by a court or governmental agency or as otherwise
required by Law; provided however, that the
Receiving Party shall notify the Disclosing Party promptly upon receipt
thereof, giving (where practicable) the Disclosing Party sufficient advance
notice to permit it to oppose, limit or seek confidential treatment for such
disclosure, and to file for patent protection if relevant; and provided, further, that the Receiving Party shall furnish
only that portion of the Confidential Information which it is advised by
counsel is legally required whether or not a protective order or other similar
order is obtained by the Disclosing Party.

 

16

 

Section 7.4                                   Securities Filings.  In
the event either Party proposes to file with the Securities and Exchange
Commission or the securities regulators of any state or other jurisdiction a
registration statement, periodic report, or any other disclosure document which
describes or refers to this Agreement under the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, or any other
applicable securities Law, the Party shall notify the other Party of such
intention and shall provide such other Party with a copy of relevant portions
of the proposed filing not less than three (3) Business Days prior to such
filing (provided that, whenever practicable,
such portions shall be provided not less than five (5) Business Days prior
to such filing) (and any revisions to such portions of the proposed filing a
reasonable time prior to the filing thereof), including any exhibits thereto
relating to the Agreement, and shall use reasonable efforts to obtain
confidential treatment of any information concerning the Agreement that such
other Party requests be kept confidential (except to the
extent advised by counsel that confidential treatment is not available for such
information), and shall only disclose Confidential Information which it is
advised by counsel or, if applicable, by a Regulatory Authority, is legally
required to be disclosed.  No such notice
shall be required under this Section 7.4 if the substance of the
description of or reference to this Agreement contained in the proposed filing
has been included in any previous filing made by either Party hereunder or
otherwise approved by the other Party.

 

Section 7.5                                   Terms of Agreement.  The
existence and the terms and conditions of the Agreement that the Parties have
not specifically agreed to disclose pursuant to Article 6 or Section 7.4
shall be considered Confidential Information of both Parties.  Either Party may disclose such terms to a bona fide potential licensee, investor, investment banker,
acquirer, merger partner or other potential financial partner, and their
attorneys and agents, provided that
each such Person to whom such information is to be disclosed is informed of the
confidential nature of such information and has entered into a written
agreement with the Party requiring such Person to keep such information
confidential.

 

Section 7.6                                   Injunctive Relief.  The
Parties hereto understand and agree that remedies at Law may be inadequate to
protect against any breach of any of the provisions of this Article 7 by
either Party or their employees, agents, officers or directors or any other
person acting in concert with it or on its behalf.  Accordingly, each Party shall be entitled to
seek injunctive relief by a court of competent jurisdiction against any action
that constitutes any such breach of this Article 7.

 

ARTICLE 8 - 

PATENTS

 

Section 8.1                                   Ownership of Inventions and
Patents.

 

(a)                                  Except as set forth in Section 2.1
above, title to inventions, discoveries, improvements and other technology,
whether or not patentable, conceived, made or reduced to practice in the
performance of the Research Program under this Agreement (collectively, the “Program Inventions”) and any
Patents claiming such Program Inventions (“Program
Patents”), are retained by the Party that is the employer
of the inventor (or, in the case of consultants and (sub)contractors, the Party
for which the consultant or (sub)contractor is providing its services).  The Parties agree that the United States
federal patent law on inventorship shall determine the inventorship of any
invention and the names of the inventors on any patent filings, whether sole or
joint inventions, which arise in connection with activities conducted pursuant
to this Agreement.  BMS shall own Program
Inventions invented solely by employees, consultants and/or (sub)contractors of
BMS (the “BMS Inventions”)
and any Patents claiming such Program Inventions (the “BMS Program Patents”).  Subject to Section 2.1, Pharmacopeia
shall own Program Inventions invented solely by employees, consultants and/or
(sub)contractors of Pharmacopeia, including the Pharmacopeia Research Personnel
(the “Pharmacopeia Inventions”)
and any Patents claiming such Program Inventions (the “Pharmacopeia Program Patents”).  Subject to 

 

17

 

Section 2.1,
Pharmacopeia and BMS shall own jointly such Program Inventions invented jointly
by employees, consultants and/or (sub)contractors of Pharmacopeia and BMS (the “Joint Inventions”) and any
Patents claiming such jointly invented Program Inventions (the “Joint Patents”).  Pharmacopeia shall promptly disclose to BMS
any such Pharmacopeia Invention or Joint Invention arising from or made in the
performance of the Research Program and any patent or patent application
claiming such Program Invention.

 

(b)                                 This Agreement shall be understood to be a
joint research agreement to discover Research Compounds and associated uses in
accordance with 35 U.S.C. § 103(c)(3).

 

(c)                                  Each Party has entered or will enter into
binding agreements obligating all employees, consultants and/or
(sub)contractors performing activities in the performance of the Research
Program to assign (or, in the case of (sub)contractors, assign or license) the
employee’s, consultant’s and/or (sub)contractor’s interest in any invention and
related intellectual property conceived or reduced to practice in the course of
such activities to the Party for which such employee, consultant and/or
(sub)contractor is providing its services.

 

Section 8.2                                   Filing, Prosecution and
Maintenance of Patent Rights.

 

8.2.1                     Solely Owned Patents. 
Subject to the other sections of this Article 8, including the
other subsections of this Section 8.2 below, each Party will have the sole
right, at its cost and expense and at its sole discretion, to prepare, file,
prosecute (including, without limitation, to control any interferences, reissue
proceedings, oppositions and reexaminations), maintain, enforce and defend
throughout the world any Patents solely owned or controlled by such Party.  For purposes of the preceding sentence, all
Pharmacopeia Program Patents assigned to BMS pursuant to Section 2.1 shall
be understood to be solely owned or controlled by BMS.

 

8.2.2                     Filing, Prosecution and
Maintenance of Pharmacopeia Program Patents.    As between Pharmacopeia and
BMS, Pharmacopeia shall be responsible for the preparation, filing, prosecution
(including, without limitation, any interferences, reissue proceedings,
oppositions and reexaminations) and maintenance of Pharmacopeia Program Patents
(other than those assigned to BMS pursuant to Section 2.1), provided that
for those Pharmacopeia Program Patents exclusively licensed to BMS pursuant to Section 2.2
BMS and Pharmacopeia will agree upon an outside counsel for the filing,
prosecution and maintenance of such Patents. 
Pharmacopeia shall be responsible for all costs incurred by Pharmacopeia
with respect to such preparation, filing, prosecution and maintenance of such
Pharmacopeia Program Patents, except in the case of those Pharmacopeia Program
Patents exclusively licensed to BMS pursuant to Section 2.2, for which BMS
shall be responsible for all costs incurred by Pharmacopeia.  At BMS’ reasonable request, Pharmacopeia, or
its outside counsel, shall promptly provide BMS with an update of the filing,
prosecution and maintenance status for each of the Pharmacopeia Program
Patents.  In addition, for any
Pharmacopeia Program Patents that are licensed to BMS pursuant to Article 2,
Pharmacopeia will coordinate the preparation, filing and prosecution of such
Patents with BMS and incorporate reasonable comments, suggestions and requests
from BMS in the preparation, filing and prosecution of such Patents.  If BMS specifically directs that a patent
application within the Pharmacopeia Program Patents that are licensed to BMS
pursuant to Article 2 be filed in a country where Pharmacopeia was not
intending to file such patent application, then Pharmacopeia will prepare, file
and prosecute such patent application and will consult with BMS at all times to
assure that such patent application(s) cover all items of commercial
interest and importance.  With respect to
all reasonable documented attorneys’ fees and other out-of-pocket costs paid by
Pharmacopeia in connection with the preparation, filing, prosecution, and
maintenance by Pharmacopeia of  said
Pharmacopeia Program Patent for those countries as to which BMS has
specifically directed that a patent application be filed (the “Costs”),
until such time as BMS notifies Pharmacopeia that it is no longer willing to
cover such Costs as 

 

18

 

to any country(ies) and/or patent application(s), BMS shall reimburse
Pharmacopeia for *** of such Costs (it being understood that, as of such time
as BMS notifies Pharmacopeia that BMS is no longer willing to cover such Costs
as to any country(ies) and/or patent application(s), Pharmacopeia shall be free
to discontinue prosecution of, or otherwise abandon, such country(ies) and/or
patent application(s) without further notice or obligation to BMS).  In the event that Pharmacopeia does not want
to file a particular patent application covering a Program Invention which is a
Pharmacopeia Invention, or to continue the prosecution, maintenance or defense
of a particular Pharmacopeia Program Patent which is licensed to BMS pursuant
to Article 2, Pharmacopeia shall so notify BMS, and if BMS wants to file
such patent application or continue the prosecution or maintenance of such
Patent, Pharmacopeia shall assign such Patent to BMS and BMS may prosecute and
maintain such Patent at its sole discretion and expense.

 

8.2.3                     Filing, Prosecution and
Maintenance of Joint Patents.    For Joint Patents (other than those
assigned to BMS pursuant to Section 2.1), Pharmacopeia and BMS agree to
meet and confer in order to discuss whether, and in what countries, Joint
Patents should be filed.  Unless the
Parties agree otherwise, BMS shall handle the preparation, filing, prosecution
and maintenance of such Joint Patents, and BMS may elect to use either its
in-house patent counsel or external counsel reasonably acceptable to
Pharmacopeia for the filing and prosecution of such Joint Patents, at BMS’ sole
cost and expense.  In the event that BMS
does not want to continue to be responsible for the costs and expenses with
respect to the filing, prosecution and/or maintenance of a particular Joint
Patent, BMS shall so notify Pharmacopeia, and if Pharmacopeia wants to continue
the filing, prosecution and/or maintenance of such Joint Patent it may do so,
subject to Section 8.2.4 below, at its sole expense.

 

8.2.4                     Cooperation.  In accordance with the foregoing, each Party will cooperate reasonably
in the preparation, filing, prosecution, and maintenance of the Program Patent
Rights.  Such cooperation includes (a) promptly
executing all papers and instruments and requiring employees (and other persons
under obligation to assign Patents to such Party) to execute such papers and
instruments as reasonable and appropriate so as to enable such other Party, to
prepare, file, prosecute, and maintain such Patents in any country; and (b) promptly
informing such other Party of matters that may affect the preparation, filing,
prosecution, or maintenance of the Program Patents and Joint Patents.

 

Section 8.3                                   Patent Term Extension. 
Pharmacopeia and BMS shall each cooperate with one another and shall use
commercially reasonable efforts in obtaining patent term extensions (including
without limitation, any pediatric exclusivity extensions as may be available)
or supplemental protection certificates or their equivalents in any country
with respect to Patents covering Products. 
If elections with respect to obtaining such patent term extensions or
supplemental protection are to be made, BMS shall have the right to make such
election, provided that such election will be made
in accordance with applicable Law so as to maximize the period of marketing
exclusivity for such Product.

 

Section 8.4                                   Enforcement of Patents

 

8.4.1                     Enforcement of Solely Owned
Patents.  Except as set forth in Section 8.4.2
below for those Pharmacopeia Program Patents exclusively licensed to BMS
pursuant to Section 2.2 and Joint Patents, each Party will have the sole
right and responsibility to enforce, at its discretion, any Patents solely
owned by such Party.  For purposes of the
preceding sentence, all Pharmacopeia Program Patents assigned to BMS pursuant
to Section 2.1 shall be understood to be solely owned by BMS.

 

8.4.2                     Enforcement of Pharmacopeia
Program Patents and Joint Patents Licensed to BMS.

 

a.               Enforcement by BMS.  In
the event that Pharmacopeia or BMS becomes aware of a suspected infringement of
any Pharmacopeia Program Patent exclusively licensed to BMS 

 

19

 

pursuant to Section 2.2 or Joint Patent, or any such Pharmacopeia
Program Patent or Joint Patent is challenged in any action or proceeding (other
than any interferences, reissue proceedings, oppositions or reexaminations,
which are addressed above), such Party shall notify the other Party promptly,
and following such notification, the Parties shall confer.  BMS shall have the right, but shall not be
obligated, to defend any such action or proceeding or bring an infringement
action with respect to such infringement to the extent relevant to BMS’s
exclusive rights hereunder at its own expense, in its own name and entirely
under its own direction and control, or settle any such action, proceeding or
dispute by license (to the extent such sublicense is permitted under this
Agreement), subject to the following. 
Pharmacopeia shall reasonably assist BMS in any action or proceeding
being defended or prosecuted if so requested, and shall lend its name to such
actions or proceedings if reasonably requested by BMS or required by Applicable
Law.  BMS shall reimburse Pharmacopeia
for the documented out-of-pocket costs Pharmacopeia reasonably incurs in
providing such assistance requested by BMS. 
In the event Pharmacopeia is a required party to the proceeding or
action, Pharmacopeia shall have the right to be represented by its own counsel
(such selection to be subject to BMS’s approval, such approval not to be
unreasonably withheld), and BMS shall reimburse Pharmacopeia for the documented
out-of-pocket costs Pharmacopeia reasonably incurs that are reasonably related
to the proceeding or action, including attorneys’ fees; provided
that BMS shall retain overall responsibility for the prosecution of such action
or proceeding in such event.  In the
event that Pharmacopeia is not a necessary party to the proceeding or action,
Pharmacopeia shall have the right to participate and be represented in any such
suit by its own counsel at its own expense, provided that
BMS shall retain overall responsibility for the prosecution of such action or
proceedings in such event.  No settlement
of any such action or proceeding (a) that restricts the validity or scope,
or adversely affects the enforceability, of a (i) Joint Patent or (ii) Pharmacopeia
Program Patent which, in each case (i) and (ii), is not exclusively
licensed to BMS under Section 2.2, or (b) which could be reasonably
expected to have a material adverse financial impact on Pharmacopeia, may be
entered into by BMS without the prior written consent of Pharmacopeia.

 

b.               Enforcement by Pharmacopeia.  If
BMS elects not to settle, defend or bring any action for infringement of a
Pharmacopeia Program Patent or Joint Patent described in Section 8.4.2 and
so notifies Pharmacopeia, including following any request by Pharmacopeia to do
so, then Pharmacopeia may defend or bring such action at its own expense, in
its own name; provided however that,
Pharmacopeia agrees not to so settle, defend or bring any action for
infringement of a Pharmacopeia Program Patent or Joint Patent upon BMS’s
request based on BMS’s good faith reasonable determination, the basis for which
shall be provided to Pharmacopeia, that it is not in the best interest of the
Parties to so settle, defend or bring such action for infringement.  In the case where Pharmacopeia proceeds to
settle, defend or bring an action for such infringement, the following shall apply.  BMS shall reasonably assist Pharmacopeia in
any action or proceeding being defended or prosecuted if so requested, and
shall lend its name to such actions or proceedings if requested by Pharmacopeia
or required by Applicable Law. 
Pharmacopeia shall reimburse BMS for the documented external costs BMS
reasonably incurs in providing such assistance as specifically requested in
writing by Pharmacopeia.  BMS shall have
the right to participate and be represented in any such suit by its own counsel
at its own expense, provided that
Pharmacopeia shall retain overall responsibility for the prosecution of such
suit or proceedings in such event.  No
settlement of any action or proceeding defended or brought by Pharmacopeia with
respect to a Pharmacopeia Program Patent exclusively licensed to BMS under Article 2
or any Joint Patent, (a) that restricts the validity or scope, or
adversely affects the enforceability, of such Patent, or (b) which could
be reasonably expected to have a material adverse financial impact on BMS, may
be entered into by Pharmacopeia without the prior written consent of BMS.

 

c.               Withdrawal.  If
either Party brings an action or proceeding under this Section 8.4 with regard to any Pharmacopeia Program Patents
which are exclusively licensed to BMS under Section 2.2 or Joint Patents,
and subsequently ceases to pursue or withdraws from such action or 

 

20

 

proceeding, it shall promptly notify the other Party and the other
Party may substitute itself for the withdrawing Party and pursue such action or
proceeding in accordance with the terms of this Section 8.4.

 

d.               Cooperation.  The
Party not enforcing the applicable Patent will provide reasonable assistance to
the other Party (at such other Party’s expense), including providing access to
relevant documents and other evidence, making its employees available at
reasonable business hours, and joining the action to the extent necessary to
allow the enforcing Party to maintain the action.

 

e.               Damages.  In the
event that either Party exercises the rights conferred in this Section 8.4 and recovers any
damages or other sums in such action, suit or proceeding or in settlement
thereof, such damages or other sums recovered shall first be applied to all
out-of-pocket costs and expenses incurred by the Parties in connection
therewith, including, without limitation, attorneys’ fees.  Except as otherwise provided in this Section 8.4,
each Party will bear its own expenses with respect to any suit or other
proceeding against an infringer.  If such
recovery is insufficient to cover all such costs and expenses of both Parties,
it shall be shared pro rata in proportion to the total of such costs and
expenses incurred by each Party.  If
after such reimbursement any funds shall remain from such damages or other sums
recovered, such funds shall remain with the Party that brought the enforcement
action at its expense.

 

Section 8.5                                   Notification of Patent
Certification.  Pharmacopeia shall notify and provide BMS
with copies of any allegations of alleged patent invalidity, unenforceability
or non-infringement of any Pharmacopeia Program Patent covering a Research
Compound or BMS Compound, or a Product (including methods of use thereof)
pursuant to a Paragraph IV Patent Certification by a Third Party filing an
Abbreviated New Drug Application, an application under §505(b)(2) or other
similar patent certification by a Third Party, and any foreign equivalent
thereof for a Generic Product.  Such
notification and copies shall be provided to BMS by Pharmacopeia as soon as
practicable and at least within five (5) Business Days after Pharmacopeia
receives such certification, and shall be sent by facsimile and overnight
courier to the address set forth below:

 

Bristol-Myers Squibb Company

P.O. Box 4000

Route 206 & Province Line Road

Princeton, New Jersey 08543-4000

Attention: 
Vice President and Chief Intellectual Property Counsel

Telephone: 
***

Facsimile: 
***

 

Section 8.6                                   Further Actions.  Each
Party shall, upon the reasonable request of the other Party, provide such
assistance and execute such documents as are reasonably necessary for such
Party to exercise its rights and/or perform its obligations pursuant to this Article 8;
provided however, that neither Party
shall be required to take any action pursuant to Article 8 that such Party
reasonably determines in its sole judgment and discretion conflicts with or
violates any applicable court or government order or decree.

 

Section 8.7                                   Infringement Claims; Oppositions.  BMS
and Pharmacopeia shall promptly inform the other in writing of any written
notice to it of alleged infringement or misappropriation, based on the
research, development, making, using, importing, exporting or selling of a
Research Compound or Product incorporating a Research Compound, of a Third
Party’s intellectual property rights of which it shall become aware.  The Parties shall confer on the handling of
such matter.  Pharmacopeia shall not ***,
and BMS shall not ***.  BMS and
Pharmacopeia shall each keep the other advised of all material developments in
the conduct of any proceedings in defending any claim of such 

 

21

 

alleged infringement or misappropriation and shall cooperate with the
other in the conduct of such defense.  In
no event may either Party settle any such infringement or misappropriation
claim in a manner that would limit the rights of the other Party or impose any
obligation on the other Party, without such other Party’s prior written
consent, such consent not to be unreasonably withheld or delayed.

 

BMS and Pharmacopeia shall promptly inform the other in writing of any
challenge to  Pharmacopeia Program Patents and
Joint Patents (an interference proceeding or opposition related to a
Pharmacopeia Program Patent or Joint Patent will be deemed a challenge for
purposes of this paragraph).  The Parties
shall confer on the handling of such matter, and such matter will be handled in
accordance with Section 8.2.3 and 8.2.4 above.

 

Section 8.8                                   Records Regarding Pharmacopeia
Program Patents and Joint Patents.  Each Party shall assign patent
counsel representatives who, under the direction of the JRC, shall be
responsible for coordinating activities between the Parties in accordance with
this Article 8.  Such
representatives will use good faith diligent efforts to maintain a report
listing the Pharmacopeia Program Patents and Joint Patents that are subject to
the license granted to BMS under Section 2.2 or 2.3.  Such report shall be used to facilitate the
identification and tracking of the Pharmacopeia Program Patents and Joint
Patents licensed under this Agreement, but shall not, unless specifically
agreed to in a separate written agreement signed by authorized representatives
of both Parties, be considered to be a then-current complete and binding list
of the Pharmacopeia Program Patents and Joint Patents licensed under this
Agreement.

 

ARTICLE 9 - 

TERM AND TERMINATION

 

Section 9.1                                   Term.  The
term of this Agreement (the “Term”)
commences upon the Effective Date and, unless earlier terminated in accordance
with the provisions of this Article 9, will continue until the expiration
of the Research Term or any Extended Research Term, provided
that the obligation to pay milestones as described in Section 5.1 will
survive expiration of the Term.

 

Section 9.2                                   BMS Right to Terminate Without
Cause.

 

(a)                                  BMS may terminate this Agreement in full (but
not in part), effective upon ninety (90) calendar days prior written notice to
Pharmacopeia.

 

(b)                                 If BMS elects not to substitute a new Research
Program into the Discovery Collaboration within the sixty (60) day time period
set forth in Section 3.1.3, Pharmacopeia’s obligations to continue to
perform the Discovery Collaboration shall automatically terminate.

 

Section 9.3                                   Material Breach.

 

(a)                                  If either Party believes that the other is in
material breach of this Agreement, then the non-breaching Party may deliver
notice of such breach to the other Party. 
In such notice the non-breaching Party shall identify the actions or
conduct that it wishes such Party to take for an acceptable and prompt cure of
such breach; provided that such identified
actions or conduct shall not be binding upon the other Party with respect to
the actions that it may need to take to cure such breach.  The allegedly breaching Party shall have
ninety (90) days to either cure such breach or, if cure cannot be reasonably
effected within such ninety (90) day period, to deliver to the other Party a
plan for curing such breach which the breaching Party believes is reasonably
sufficient to effect a cure within a reasonable period; provided
that the breaching Party must notify the non-breaching Party as soon
as practicable after the 

 

22

 

breaching Party becomes aware that it will not be able to cure the
breach within the ninety (90) day period. 
Following agreement to such plan by the other Party, such agreement not
to be unreasonably withheld, the breaching Party shall use commercially
reasonable efforts to carry out the plan and cure the breach.  If the Party receiving notice of breach fails
to cure such breach within the ninety (90) day period or the cure period
identified in the proposed corrective plan, as applicable, or the Party
providing the notice reasonably determines that the proposed corrective plan or
the actions being taken to carry it out is not commercially practicable, the
Party originally delivering the notice may declare a breach hereunder upon
thirty (30) days advance written notice. 
Subject to Section 9.3(b), such notice shall effectively terminate
this Agreement upon expiration of such thirty (30) day period.

 

(b)                                 Notwithstanding the foregoing, if the
allegedly breaching Party disputes in good faith the existence or materiality
of any such breach, and provides notice to the other Party (the “Other Party”) of such dispute
within such ninety (90) day period, the Other Party shall not have the right to
terminate this Agreement in accordance with this Section 9.3 unless and
until it has been determined in accordance with Section 12.4 that this
Agreement was materially breached by the allegedly breaching Party and that
Party fails to cure such breach within ninety (90) days following such
determination.  It is understood and
acknowledged that during the pendency of such a dispute, all of the terms and
conditions of this Agreement shall remain in effect and the Parties shall
continue to perform all of their respective obligations hereunder.

 

(c)                                  This Section 9.3 shall be subject to and
shall not limit the provisions of Section 9.4 and Section 9.5.

 

Section 9.4                                   Consequences of Termination.

 

9.4.1                     Licenses and Assignment
Obligations.  BMS’ rights and Pharmacopeia’s obligations
under Article 2 shall survive termination and expiration of this
Agreement.

 

9.4.2                     Return of Information and
Materials.  Upon early termination of this Agreement in
its entirety by either Party pursuant to this Article 9, each Party will
return to the other (or destroy, as directed by such other Party) all data,
files, records and other materials containing or comprising the other Party’s
Confidential Information. 
Notwithstanding the foregoing, (i) BMS will be permitted to retain
all Research Results (which are deemed to be Confidential Information of BMS
pursuant to Section 7.1), (ii) subject to clause (iii) below,
Pharmacopeia will destroy all Research Results in its possession as of the date
of termination or expiration, and (iii) each Party will be entitled to
retain one (1) copy of the other Party’s Confidential Information in the
files of its legal counsel solely for archival purposes.

 

9.4.3                     Termination Pursuant to Section 9.2.   For
the avoidance of doubt, in the event BMS terminates this Agreement pursuant to Section 9.2(a) or
elects not to substitute a new Research Program into the Discovery Collaboration
pursuant to Section 9.2(b), then Pharmacopeia’s rights and BMS’
obligations under the License Agreement shall survive without any additional
obligation by either Party.

 

Section 9.5                                   Accrued Rights; Surviving
Obligations.

 

9.5.1                     Accrued Rights.  Termination
or expiration of this Agreement for any reason will be without prejudice to any
rights or financial compensation that will have accrued to the benefit of a
Party prior to such termination or expiration. 
Such termination or expiration will not relieve a Party from obligations
that are expressly indicated to survive the termination or expiration of this
Agreement 

 

23

 

(including the Milestone Payments by BMS to Pharmacopeia pursuant to Article 5,
and the obligations to license or assign compounds and inventions pursuant to Article 2).

 

9.5.2                     Survival.  The
definitions contained in Article 1, the license and obligations to assign
under Article 2, as well as Articles 6, 7, 8, 10, and 12, and Sections
9.5, 9.6 and 11.2 of this Agreement will survive expiration or termination of
this Agreement for any reason.

 

Section 9.6                                   Rights in Bankruptcy.  All
rights and licenses granted under or pursuant to this Agreement by Pharmacopeia
or BMS are, and shall otherwise be deemed to be, for purposes of Section 365(n) of
the U.S. Bankruptcy Code (i.e., Title 11 of the U.S. Code) or analogous
provisions of Applicable Law outside the United States, licenses of rights to “intellectual
property” as defined under Section 101 of the U.S. Bankruptcy Code or
analogous provisions of Applicable Law outside the United States.  The Parties agree that each Party, as
licensee of such rights under this Agreement, shall retain and may fully
exercise all of its rights and elections under the U.S. Bankruptcy Code or any
other provisions of Applicable Law outside the United States that provide
similar protection for ‘intellectual property.’ 
The Parties further agree that, in the event of the commencement of a
bankruptcy proceeding by or against a Party under the U.S. Bankruptcy Code or
analogous provisions of Applicable Law outside the United States, the Party
that is not subject to such proceeding will be entitled to a complete duplicate
of (or complete access to, as appropriate) such intellectual property and all
embodiments of such intellectual property, which, if not already in the non
subject Party’s possession, shall be promptly delivered to it upon the non
subject Party’s written request therefor. 
Any agreements supplemental hereto shall be deemed to be “agreements
supplementary to” this Agreement for purposes of Section 365(n) of
the U.S. Bankruptcy Code.

 

ARTICLE 10 - 

INDEMNIFICATION, INSURANCE AND LIMITATION OF LIABILITY

 

Section 10.1                            Indemnification of Pharmacopeia.  BMS
agrees to defend Pharmacopeia,
its Affiliates and their respective directors, officers, employees and agents,
and their respective successors, heirs and assigns (collectively, the “Pharmacopeia Indemnitees”), and
shall indemnify and hold harmless the Pharmacopeia
Indemnitees, from and against any liabilities, losses, costs, damages,
fees or expenses payable to a Third Party, and reasonable attorney’s fees and
other legal expenses with respect thereto (collectively, “Losses”)
arising out of any claim, action, lawsuit or other proceeding by a Third Party
(collectively, “Third Party Claims”) brought
against any Pharmacopeia Indemnitee
and resulting from or occurring as a result of: (a) whether or not
negligence is found, the development, manufacture, use, handling, storage, sale
or other commercialization or disposition of any Product (or any product
incorporating a compound derived from a BMS Compound) by BMS or its Affiliates
or licensees, (b) any breach by BMS
of any of its representations or warranties pursuant to this Agreement, (c) the
gross negligence or willful misconduct of BMS or any BMS Affiliate or licensee
in connection with this Agreement, (d) any breach of Applicable Law in
connection with this Agreement by BMS or any BMS Affiliate or licensee, or (e) claims
arising from the infringement of Third Party intellectual property related to a
Research Program selected by BMS pursuant to Section 3.1.3, including
but not limited to patent infringement claims in connection with the use of any
Research Target or of any materials relating to any Research Target but excluding any intellectual property that
Pharmacopeia routinely uses in its business that is not specifically related to
the Research Program.

 

Section 10.2                            Indemnification of BMS.  Pharmacopeia agrees to defend BMS, its
Affiliates, Licensees and their respective directors, officers, employees and
agents, and their respective successors, heirs and assigns (collectively, the “BMS
Indemnitees”), and shall indemnify and hold harmless the BMS
Indemnitees, from and against any Losses and Third Party Claims brought against
any 

 

24

 

BMS Indemnitee and resulting from or
occurring as a result of: (a) any breach by Pharmacopeia of its representations or warranties pursuant to this
Agreement, (b) the gross negligence or willful misconduct of Pharmacopeia or any Subcontractor in
connection with this Agreement, (c) any breach of Applicable Law in
connection with this Agreement by Pharmacopeia or any Subcontractor, or (d) any
breach by Pharmacopeia or any Subcontractor under any agreement with a Third
Party related to this Agreement (including any breach of an agreement between
Pharmacopeia and a Subcontractor) .

 

Section 10.3                            Notice of Claim. All indemnification claims provided for in
Sections 10.1 and 10.2 shall be made solely by such Party to this Agreement
(the “Indemnified Party”).  The Indemnified Party shall give the
indemnifying Party prompt written notice (an “Indemnification
Claim Notice”) of any Losses or the discovery of any fact upon
which the Indemnified Party intends to base a request for indemnification under
Section 10.1 or 10.2, but in no event shall the indemnifying Party be
liable for any Losses to the extent such Losses result from any delay in
providing such notice.  Each
Indemnification Claim Notice must contain a description of the claim and the
nature and amount of such Loss (to the extent that the nature and amount of
such Loss is known at such time).  The
Indemnified Party shall furnish promptly to the indemnifying Party copies of
all papers and official documents received in respect of any Losses and Third
Party Claims.

 

Section 10.4                            Defense, Settlement, Cooperation
and Expenses.

 

(a)                                  Control of Defense.  At
its option, the indemnifying Party may assume the defense of any Third Party
Claim by giving written notice to the Indemnified Party within thirty (30)
calendar days after the indemnifying Party’s receipt of an Indemnification
Claim Notice.  The assumption of the
defense of a Third Party Claim by the indemnifying Party shall not be construed
as an acknowledgment that the indemnifying Party is liable to indemnify the
Indemnified Party in respect of the Third Party Claim, nor shall it constitute
a waiver by the indemnifying Party of any defenses it may assert against the
Indemnified Party’s claim for indemnification. 
Upon assuming the defense of a Third Party Claim, the indemnifying Party
may appoint as lead counsel in the defense of the Third Party Claim any legal
counsel selected by the indemnifying Party. 
In the event the indemnifying Party assumes the defense of a Third Party
Claim, the Indemnified Party shall as soon as is reasonably possible deliver to
the indemnifying Party all original notices and documents (including court
papers) received by the Indemnified Party in connection with the Third Party
Claim.  Should the indemnifying Party
assume the defense of a Third Party Claim, except as provided in Section 10.4(b),
the Indemnified Party shall be responsible for the legal costs or expenses
subsequently incurred by such Indemnified Party in connection with the
analysis, defense or settlement of the Third Party Claim.  In the event that it is ultimately determined
that the indemnifying Party is not obligated to indemnify, defend or hold
harmless the Indemnified Party from and against the Third Party Claim, the
Indemnified Party shall reimburse the indemnifying Party for any and all costs
and expenses (including attorneys’ fees and costs of suit) and any Third Party
Claims incurred by the Indemnifying Party solely attributed to the defense of
the Third Party Claim on behalf of the Indemnified Party (but not those costs
and expenses otherwise attributable to the defense of the Indemnifying Party).

 

(b)                                 Right to Participate in Defense. 
Without limiting Section 10.4(a), any Indemnified Party shall be
entitled to participate in, but not control, the defense of such Third Party
Claim and to employ counsel of its choice for such purpose; provided, however, that such employment shall be at the
Indemnified Party’s own cost and expense unless (i) the employment thereof
has been specifically authorized by the indemnifying Party in writing, (ii) the
indemnifying Party has failed to assume the defense and employ counsel in
accordance with Section 10.4(a) (in which case the Indemnified Party
shall control the defense) or (iii) the interests of the Indemnified Party
and the indemnifying Party with respect to such Third Party Claim are
sufficiently adverse to prohibit the representation by the same counsel of both
Parties under Applicable Law, ethical rules or equitable principles in
which case the 

 

25

 

indemnifying Party shall be responsible for any such costs and expenses
of counsel for the Indemnified Party.

 

(c)                                  Settlement.  With
respect to any Third Party Claims relating solely to the payment of money
damages in connection with a Third Party Claim and that shall not admit
liability or violation of Law on the part of the Indemnified Party or result in
the Indemnified Party’s becoming subject to injunctive or other relief or
otherwise adversely affecting the business of the Indemnified Party in any
manner (such as granting a license or admitting the invalidity of a Patent
controlled by an Indemnified Party), and as to which the indemnifying Party
shall have acknowledged in writing the obligation to indemnify the Indemnified
Party hereunder, the indemnifying Party shall have the sole right to consent to
the entry of any judgment, enter into any settlement or otherwise dispose of
such Loss, on such terms as the indemnifying Party, in its sole discretion,
shall deem appropriate.  With respect to
all other Losses in connection with Third Party Claims, where the indemnifying
Party has assumed the defense of the Third Party Claim in accordance with Section 10.4(a),
the indemnifying Party shall have authority to consent to the entry of any
judgment, enter into any settlement or otherwise dispose of such Loss provided
it obtains the prior written consent of the Indemnified Party (which consent
shall not be unreasonably withheld).  The
indemnifying Party shall not be liable for any settlement or other disposition
of a Loss by an Indemnified Party that is reached without the written consent
of the indemnifying Party.  Regardless of
whether the indemnifying Party chooses to defend or prosecute any Third Party
Claim, no Indemnified Party shall admit any liability with respect to or
settle, compromise or discharge, any Third Party Claim without the prior
written consent of the indemnifying Party, such consent not to be unreasonably
withheld.

 

(d)                                 Cooperation. 
Regardless of whether the indemnifying Party chooses to defend or
prosecute any Third Party Claim, the Indemnified Party shall, and shall cause
each other Indemnified Party to, cooperate in the defense or prosecution
thereof and shall furnish such records, information and testimony, provide such
witnesses and attend such conferences, discovery proceedings, hearings, trials
and appeals as may be reasonably requested in connection therewith.  Such cooperation shall include access during
normal business hours afforded to indemnifying Party to, and reasonable
retention by the Indemnified Party of, records and information that are
reasonably relevant to such Third Party Claim, and making Indemnified Parties
and other employees and agents available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder, and the indemnifying Party shall reimburse the Indemnified Party for
all its reasonable out-of-pocket costs and expenses in connection therewith.

 

(e)                                  Costs and Expenses. 
Except as provided above in this Section 10.4, the costs and
expenses, including attorneys’ fees and expenses, incurred by the Indemnified
Party in connection with any claim shall be reimbursed on a Calendar Quarter
basis by the indemnifying Party, without prejudice to the indemnifying Party’s
right to contest the Indemnified Party’s right to indemnification and subject
to refund in the event the indemnifying Party is ultimately held not to be
obligated to indemnify the Indemnified Party.

 

Section 10.5                            Insurance.  Each Party shall maintain at its sole cost and expense, an adequate
liability insurance or self-insurance program (including, in the case of BMS,
clinical trials and product liability insurance) to protect against potential
liabilities and risk arising out of activities to be performed under this
Agreement and any agreement related hereto and upon such terms (including
coverages, deductible limits and self-insured retentions) as are customary in
the U.S. pharmaceutical industry for the activities to be conducted by such
Party under this Agreement.

 

Section 10.6                            Limitation of Liability.  Neither Party hereto will be liable for the other Party’s indirect,
incidental, consequential, special, exemplary, punitive or multiple damages
arising in 

 

26

 

connection with this Agreement or the exercise of its rights hereunder,
or for lost profits arising from or relating to any breach of this Agreement,
regardless of any notice of such damages; provided however,
that this Section 10.6 shall not limit or restrict (i) damages
available for breaches of confidentiality obligations set forth in Article 7
and (ii) damages available for willful breaches of Article 11.

 

ARTICLE 11 - 

REPRESENTATIONS AND WARRANTIES

 

Section 11.1                            Representations, Warranties and
Covenants.  Each Party hereby represents and warrants as
of the Effective Date and covenants to the other Party that:

 

(a)  it has the power
and authority and the legal right to enter into this Agreement and perform its
obligations hereunder, and that it has taken all necessary action on its part
required to authorize the execution and delivery of this Agreement and the
performance of its obligations hereunder;

 

(b)  this Agreement has
been duly executed and delivered on behalf of such Party and constitutes a
legal, valid and binding obligation of such Party and is enforceable against it
in accordance with its terms subject to the effects of bankruptcy, insolvency
or other laws of general application affecting the enforcement of creditor
rights and judicial principles affecting the availability of specific
performance and general principles of equity, whether enforceability is considered
a proceeding at law or equity;

 

(c)  all necessary
consents, approvals and authorizations of all Regulatory Authorities and other
parties required to be obtained by such Party in connection with the execution
and delivery of this Agreement and the performance of its obligations hereunder
have been obtained;

 

(d)  the execution and
delivery of this Agreement and the performance of such Party’s obligations
hereunder (i) do not conflict with or violate any requirement of
Applicable Law or any provision of the articles of incorporation, bylaws or any
similar instrument of such Party, as applicable, in any material way, and (ii) do
not conflict with, violate, or breach or constitute a default or require any
consent not already obtained under, any contractual obligation or court or
administrative order by which such Party is bound;

 

(e)  it has and will
have enforceable written agreements with all of its employees who receive
Confidential Information under this Agreement assigning to such Party ownership
of all intellectual property rights created in the course of their employment;
and

 

(f) it
has the requisite personnel, facilities, equipment, expertise, experience and
skill to perform its obligations under this Agreement.

 

Section 11.2                            DISCLAIMER OF WARRANTY.  EXCEPT
FOR THE EXPRESS WARRANTIES SET FORTH IN THIS ARTICLE 11, BMS AND PHARMACOPEIA
MAKE NO REPRESENTATIONS AND GRANT NO WARRANTIES, EXPRESS OR IMPLIED, EITHER IN
FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, AND BMS AND PHARMACOPEIA
EACH SPECIFICALLY DISCLAIM ANY OTHER WARRANTIES, WHETHER WRITTEN OR ORAL, OR
EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY OR
FITNESS FOR A PARTICULAR USE OR PURPOSE OR ANY WARRANTY AS TO THE VALIDITY OF
ANY PATENTS OR THE NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS OF
THIRD PARTIES.

 

27

 

ARTICLE 12 - 

MISCELLANEOUS

 

Section 12.1         Assignment.  Except as expressly set forth in this Agreement, without the prior
written consent of the other Party hereto, neither Party will sell, transfer,
assign, delegate, pledge or otherwise dispose of, whether voluntarily,
involuntarily, by operation of law or otherwise, this Agreement or any of its
rights or duties hereunder; provided, however,
that either Party hereto may assign or transfer this Agreement or any of its
rights or obligations hereunder without the consent of the other Party to any
Third Party with which it has merged or consolidated, or to which it has
transferred all or substantially all of its assets or stock to which this
Agreement relates if in any such event the Third Party assignee or surviving
entity assumes in writing all of the assigning Party’s obligations under this
Agreement.  Any purported assignment or
transfer in violation of this Section 12.1 will be void ab initio and of no force or effect.

 

Section 12.2         Severability.  If
any provision of this Agreement is held to be illegal, invalid or unenforceable
by a court of competent jurisdiction, such adjudication will not affect or
impair, in whole or in part, the validity, enforceability, or legality of any
remaining portions of this Agreement. 
All remaining portions will remain in full force and effect as if the
original Agreement had been executed without the invalidated, unenforceable or
illegal part.

 

Section 12.3         Governing Law; Jurisdiction.  This
Agreement will be governed by and construed and enforced in accordance with the
laws of the State of Delaware, USA without reference to any rules of
conflicts of laws.  Each of the Parties
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any federal court of the United States of
America sitting in the State of Delaware and any appellate court from any
jurisdiction thereof, in any action or proceeding arising out of or relating to
this Agreement, or for recognition or enforcement of any judgment, and each of
the Parties hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in any
such federal court in Delaware.  For
clarification, any dispute relating to the scope, validity, enforceability or
infringement of any Patents shall be governed by and construed and enforced in
accordance with the patent laws of the applicable jurisdiction.

 

Section 12.4         Dispute Resolution.

 

12.4.1     Resolution by Senior Representatives.  The
Parties shall seek to settle amicably any and all disputes, controversies or
claims arising out of or in connection with this Agreement.  Any dispute between the Parties, including
any failure by the JRC to agree, shall be promptly presented to the *** for
resolution.  If either Party has failed
to appoint ***, or if the *** are unable to resolve such dispute, such dispute
shall then be presented to the *** of BMS and the *** of Pharmacopeia (the “Senior Representatives”) for
resolution.  Such Senior Representatives
will meet in-person or by teleconference as soon as reasonably possible
thereafter, and use their good faith efforts to mutually agree upon the
resolution of the dispute, controversy or claim.  If the Senior Representatives are not able to
resolve such dispute, and if the dispute relates to (i) *** or (ii) ***.  If any other dispute between the Parties
(i.e., a dispute other than those described in (i) and (ii) of the
preceding sentence such as, but not limited to, ***, either Party may refer
such dispute to binding arbitration to be conducted as set forth below in Section 12.4.2.

 

12.4.2     Arbitration.

 

(a)           With respect to any
dispute amenable to arbitration under this Agreement as set forth in Section 12.4.1,
a Party may submit such dispute to arbitration by notifying the other Party, in
writing, of 

 

28

 

such dispute.  Within thirty (30)
days after receipt of such notice, the Parties shall designate in writing a
single arbitrator to resolve the dispute; provided, however,
that if the Parties cannot agree on an arbitrator within such thirty (30) day
period, the arbitrator shall be selected by the New Jersey office of the
American Arbitration Association (the “AAA”) or, if such office does not
exist or is unable to make a selection, by the office of the AAA nearest to
Princeton, New Jersey.  The arbitrator
shall be a lawyer knowledgeable and experienced in the Applicable Laws
concerning the subject matter of the dispute. 
In any case the arbitrator shall not be an Affiliate, employee,
consultant, officer, director or stockholder of either Party, or otherwise have
any current or previous relationship with either Party or their respective
Affiliates.  The governing law in Section 12.3
shall govern any such proceedings.  The
language of the arbitration shall be English. 
No individual will be appointed to arbitrate a dispute pursuant to this
Agreement unless he or she agrees in writing to be bound by the provisions of
this 12.4.2.  The place of arbitration
will be Princeton, New Jersey.  Either
Party may apply to the arbitrator for interim injunctive relief until the
arbitration award is rendered or the controversy is otherwise resolved.

 

(b)           Within
sixty (60) days after the designation of the arbitrator, the arbitrator and the
Parties shall meet, and each Party shall provide to the arbitrator a written
summary of all disputed issues, such Party’s position on such disputed issues
and such Party’s proposed ruling on the merits of each such issue.

 

(c)           The
arbitrator shall set a date for a hearing, which shall be no later than thirty
(30) days after the submission of written proposals pursuant to Section 12.4.2(b), for the presentation of evidence and
legal argument concerning each of the issues identified by the Parties.  The Parties shall have the right to be
represented by counsel.  Except as
provided herein, the arbitration shall be governed by the Commercial Arbitration
Rules of the AAA applicable at the time of the notice of arbitration pursuant
to Section 12.4.2(a); provided, however, that the
arbitrator shall determine what discovery will be permitted, consistent with
the goal of limiting the cost and time that the Parties must expend for
discovery; provided the arbitrators shall permit such discovery as is deemed
necessary to permit an equitable resolution of the dispute.  In
any such arbitration proceeding, the Parties shall be entitled to all remedies
to which they would be entitled in a United States District Court, including
monetary damages and injunctive relief, provided that
the arbitrator may not order the termination of licenses or assignment rights
to a Research Compound to either of the Parties.

 

(d)           The
arbitrator shall use his or her best efforts to rule on each disputed
issue within thirty (30) days after completion of the hearing described in Section 12.4.2(c). 
The determination of the arbitrator as to the resolution of any dispute
shall be binding and conclusive upon all Parties.  All rulings of the arbitrator shall be in writing
and shall be delivered to the Parties as soon as is reasonably possible.  Nothing contained herein shall be construed
to permit the arbitrator to award punitive, exemplary or any similar damages.  The
arbitrator shall render a “reasoned decision” within the meaning of the
Commercial Arbitration Rules which shall include findings of fact and
conclusions of law.  The Parties
undertake to satisfy any award without delay.

 

(e)           The
arbitrator shall determine the proportion in which the Parties shall bear (i) attorneys’
fees of the Parties in any arbitration, (ii) fees of the arbitrator and (iii) costs
and expenses of the arbitration.

 

(f)            Any
arbitration pursuant to this Section 12.4 shall be conducted in Princeton,
New Jersey, unless the Parties otherwise agree to a different location.  Any arbitration award may be entered in and
enforced by a court in accordance with Section 12.3.

 

(g)           Notwithstanding anything in this Section 12.4,
each Party shall have the right to seek injunctive or other equitable relief
from a court of competent jurisdiction pursuant to Section 12.3 that 

 

29

 

may
be necessary to avoid irreparable harm, maintain the status quo or preserve the
subject matter of the arbitration.

 

(h)           The Parties agree
that any payments that are made by one Party to the other Party pursuant to
this Agreement pending resolution of any dispute shall be promptly refunded if
an arbitrator or court determines pursuant to this Section 12.4.2 that
such payments are to be refunded by one Party to the other Party.

 

(i)            The Parties intend,
and will take all reasonable action as is necessary or desirable to ensure,
that there be a speedy resolution to any dispute which becomes the subject of
arbitration, and the arbitrator will conduct the arbitration so as to resolve
the dispute as expeditiously as possible.

 

(j)            Except to the
extent necessary to confirm an award or as may be required by Applicable Law,
neither a Party nor an arbitrator may disclose the existence, content, or
results of an arbitration without the prior written consent of both
Parties.  In no event will an arbitration
be initiated after the date when commencement of a legal or equitable
proceeding based on the dispute, controversy or claim would be barred by the
applicable Delaware statute of limitations.

 

(k)           Disputes
Regarding Material Breach.  If
the Parties are in dispute as to whether one Party is in material breach of
this Agreement, then the arbitrator will first determine if material breach has
in fact occurred, and if so, will grant the defaulting Party the cure period
provided pursuant to Section 9.3. 
If the material breach is not cured within the time period provided
pursuant to Section 9.3, the arbitration will continue and the arbitrator
will, as part of the same arbitration, award actual direct damages to the
non-defaulting Party.

 

Section 12.5         Notices.  Except as otherwise provided for in this Agreement, all notices or
other communications that are required or permitted hereunder will be in writing
and delivered personally with acknowledgement of receipt, sent by facsimile
(and promptly confirmed by personal delivery, registered or certified mail or
overnight courier as provided herein), sent by nationally-recognized overnight
courier or sent by registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:

 

If to BMS, to:

 

Bristol-Myers
Squibb Company

P.O. Box 4000

Route
206 & Province Line Road

Princeton,
NJ  08543-4000

Attention:  Vice President, and Head of
Business Development

Telephone:  ***

Facsimile:  ***

 

With
copy to:

Bristol-Myers
Squibb Company

P.O. Box
4000

Route
206 and Province Line Road

Princeton,
NJ  08543-4000

Attention: 
Vice President and Senior Counsel, Corporate &

Business Development

Phone:  ***

Facsimile:  ***

 

30

 

If
to Pharmacopeia, to:

Pharmacopeia, Inc.

3000
Eastpark Boulevard

Cranbury,
New Jersey 08512

Attention:  Chief Executive Officer

Telephone:  ***

Facsimile:  ***

 

With
a copy to:

Pharmacopeia, Inc.

3000
Eastpark Boulevard

Cranbury,
New Jersey 08512

Attention:  Executive Vice President and General Counsel

Telephone:  ***

Facsimile:  ***

 

or
to such other address as the Party to whom notice is to be given may have
furnished to the other Party in writing in accordance herewith.  Any such communication will be deemed to have
been given (i) when delivered, if personally delivered or sent by
facsimile on a Business Day, (ii) on the Business Day after dispatch, if
sent by nationally-recognized overnight courier, and (iii) on the third
Business Day following the date of mailing, if sent by mail.  It is understood and agreed that this Section 12.5
is not intended to govern the day-to-day business communications necessary
between the Parties in performing their duties, in due course, under the terms
of this Agreement.

 

Section 12.6         Entire Agreement; Modifications.  This
Agreement (including the attached Research Plan) sets forth and constitutes the
entire agreement and understanding between the Parties with respect to the
subject matter hereof and all prior agreements, understandings, promises and
representations, whether written or oral, with respect thereto are superseded
hereby.  Each Party confirms that it is
not relying on any representations or warranties of the other Party except as
specifically set forth herein.  No
amendment, modification, release or discharge will be binding upon the Parties
unless in writing and duly executed by authorized representatives of both
Parties.

 

Section 12.7         Headings.  The
headings of Articles and Sections of this Agreement are for ease of reference
only and shall not affect the meaning or interpretation of this Agreement in
any way.

 

Section 12.8         Relationship of the Parties.  It is
expressly agreed that the Parties will be independent contractors of one
another and that the relationship between the Parties will not constitute a
partnership, joint venture or agency.

 

Section 12.9         Waiver.  Any
term or condition of this Agreement may be waived at any time by the Party that
is entitled to the benefit thereof, but no such waiver will be effective unless
set forth in a written instrument duly executed by or on behalf of the Party
waiving such term or condition.  Any such
waiver will not be deemed a waiver of any other right or breach hereunder.

 

Section 12.10       Counterparts.  This
Agreement may be executed in two or more counterparts, each of which will be
deemed an original, but all of which together will constitute one and the same
instrument.

 

Section 12.11       No Benefit to Third Parties.  The representations, warranties, covenants and agreements set forth in
this Agreement are for the sole benefit of the Parties hereto and their 

 

31

 

successors and permitted assigns, and they will not be construed as
conferring any rights on any other parties.

 

Section 12.12       Further Assurances.  Each
Party will duly execute and deliver, or cause to be duly executed and
delivered, such further instruments and do and cause to be done such further
acts and things, including the filing of such assignments, agreements,
documents and instruments, as may be necessary to carry out the provisions and
purposes of this Agreement.

 

Section 12.13       Force Majeure. 
Neither Party will be charged with any liability for delay in
performance of an obligation under this Agreement to the extent such delay is
due to a cause beyond the reasonable control of the affected Party, such as
war, riots, labor disturbances, fire, explosion, and compliance in good faith
with any governmental Law, regulation or order. 
The Party affected will give prompt written notice to the other Party of
any material delay due to such causes.

 

Section 12.14       Interpretation.

 

(a)           Each of the Parties
acknowledges and agrees that this Agreement has been diligently reviewed by and
negotiated by and between them, that in such negotiations each of them has been
represented by competent counsel and that the final agreement contained herein,
including the language whereby it has been expressed, represents the joint
efforts of the Parties hereto and their counsel.  Accordingly, in the event an ambiguity or a
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue of the authorship of
any provisions of this Agreement.

 

(b)           The definitions of
the terms herein shall apply equally to the singular and plural forms of the
terms defined.  Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms.  The words “include”, “includes”
and “including” shall be deemed to be followed by the phrase “without
limitation”.  The word “will” shall be
construed to have the same meaning and effect as the word “shall”.  The word “any” shall mean “any and all”
unless otherwise clearly indicated by context.

 

(c)           Unless the context
requires otherwise, (i) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein or therein), (ii) any
reference to any Applicable Laws herein shall be construed as referring to such
Applicable Laws as from time to time enacted, repealed or amended, (iii) any
reference herein to any person shall be construed to include the person’s
successors and assigns, (iv) the words “herein”, “hereof” and “hereunder”,
and words of similar import, shall be construed to refer to this Agreement in
its entirety and not to any particular provision hereof, and (v) all
references herein to Articles, Sections or Appendices, unless otherwise
specifically provided, shall be construed to refer to Articles, Sections and
Appendices of this Agreement.

 

(d)           References to
sections of the Code of Federal Regulations and to the United States Code shall
mean the cited sections, as these may be amended from time to time.

 

[SIGNATURE PAGE FOLLOWS]

 

32

 

IN WITNESS WHEREOF, the Parties hereto have caused this Discovery Collaboration Agreement
to be executed by their duly authorized representatives as of the date first
above written.

 

 

	
  PHARMACOPEIA, INC.

  
	
   

  
	
   

  	
   

  
	
  By:

  	
          /s/
  Leslie J. Browne

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  Leslie J. Browne, Ph.D.

  	
   

  
	
   

  	
   

  
	
  Title:

  	
  President and Chief Executive Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  BRISTOL-MYERS SQUIBB COMPANY

  
	
   

  
	
   

  	
   

  
	
  By:

  	
         /s/ Graham
  R. Brazier

  	
   

  
	
   

  	
   

  
	
  Name:

  	
    Graham R. Brazier

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
    Vice President & Head of
  Business Development

  	
   

  
							

 

33

 

APPENDIX 1

 

RESEARCH PLAN

 

***

 

34

 

***.

 

35

 

***

 

36

 

***

 

37

 

***.

 

38

 

APPENDIX 2

 

***

 

39

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00138-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00138-of-00352.parquet"}]]