-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, COjq+p/G1Y+ApYAhskItWI4mI/gNVHZt+13CKpxTW3LgbAdHbVU2yuXwOQTrRSY6 pjMIcK1so8yh+4ZWUtCpkA== 0000936392-97-001364.txt : 19971027 0000936392-97-001364.hdr.sgml : 19971027 ACCESSION NUMBER: 0000936392-97-001364 CONFORMED SUBMISSION TYPE: S-1/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19971024 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMBICHEM INC CENTRAL INDEX KEY: 0001002276 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH [8731] IRS NUMBER: 330617379 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-1/A SEC ACT: SEC FILE NUMBER: 333-37981 FILM NUMBER: 97700396 BUSINESS ADDRESS: STREET 1: 9050 CAMINO STREET 2: SUITE 200 CITY: SAN DIEGO STATE: CA ZIP: 92121 BUSINESS PHONE: 6195300484 MAIL ADDRESS: STREET 1: 9050 CAMINO SANTA FE CITY: SAN DIEGO STATE: CA ZIP: 92121 S-1/A 1 AMENDMENT #1 TO FORM S-1 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 24, 1997 REGISTRATION NO. 333-37981 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ AMENDMENT NO. 1 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ COMBICHEM, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 8731 33-0617379 (STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
9050 CAMINO SANTA FE, SAN DIEGO, CALIFORNIA 92121 (619) 530-0484 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) DR. VICENTE ANIDO, JR. PRESIDENT AND CHIEF EXECUTIVE OFFICER 9050 CAMINO SANTA FE SAN DIEGO, CALIFORNIA 92121 (619) 530-0484 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) ------------------------ COPIES TO: FAYE H. RUSSELL, ESQ. FREDERICK T. MUTO, ESQ. THOMAS E. HORNISH, ESQ. ERIC J. LOUMEAU, ESQ. LANCE S. KURATA, ESQ. CHRISTOPHER W. KRUEGER, ESQ. BROBECK, PHLEGER & HARRISON LLP COOLEY GODWARD LLP 550 WEST "C" STREET, SUITE 1300 4365 EXECUTIVE DRIVE, SUITE 1100 SAN DIEGO, CALIFORNIA 92101 SAN DIEGO, CA 92121 (619) 234-1966 (619) 550-6000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [ ] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]------------ If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]------------ If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] CALCULATION OF REGISTRATION FEE ================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM AGGREGATE TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE OFFERING AMOUNT OF SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) REGISTRATION FEE - --------------------------------------------------------------------------------------------------------------- Common stock, par value $0.001 per share................... 2,587,500 Shares $13.00 $ 33,637,500 $ 10,194 ===============================================================================================================
(1) Includes 337,500 shares which the Underwriters have the option to purchase to cover over-allotments, if any. (2) Estimated solely for the purpose of computing the amount of the registration fee. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(a), MAY DETERMINE. ================================================================================ 2 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table sets forth all expenses, other than underwriting discounts and commissions, payable by the Registrant in connection with the sale of the Common Stock being registered. All the amounts shown are estimates, except for the registration fee, the Nasdaq National Market filing fee and the NASD fee. Registration fee.................................................. $ 10,194 Nasdaq National Market fee........................................ 50,000 NASD fee.......................................................... 3,864 Blue Sky fees and expenses........................................ 10,000 Printing and engraving expenses................................... 180,000 Legal fees and expenses........................................... 250,000 Accounting fees and expenses...................................... 125,000 Transfer Agent and Registrar fees................................. 5,000 Miscellaneous expenses............................................ 65,942 -------- TOTAL................................................... $700,000 ========
ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS. Section 145 of the Delaware General Corporation Law permits indemnification of officers and directors of the Company under certain conditions and subject to certain limitations. Section 145 of the Delaware General Corporation Law also provides that a corporation has the power to purchase and maintain insurance on behalf of its officers and directors against any liability asserted against such person and incurred by him or her in such capacity, or arising out of his or her status as such, whether or not the corporation would have the power to indemnify him or her against such liability under the provisions of Section 145 of the Delaware General Corporation Law. Article VII, Section 1 of the Restated Bylaws of the Company provides that the Company shall indemnify its directors and executive officers to the fullest extent not prohibited by the Delaware General Corporation Law. The rights to indemnity thereunder continue as to a person who has ceased to be a director, officer, employee or agent and inure to the benefit of the heirs, executors and administrators of the person. In addition, expenses incurred by a director or executive officer in defending any civil, criminal, administrative or investigative action, suit or proceeding by reason of the fact that he or she is or was a director or officer of the Company (or was serving at the Company's request as a director or officer of another corporation) shall be paid by the Company in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Company as authorized by the relevant section of the Delaware General Corporation Law. As permitted by Section 102(b)(7) of the Delaware General Corporation Law, Article V, Section (A) of the Company's Restated Certificate of Incorporation provides that a director of the Company shall not be personally liable for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Company or its stockholders, (ii) for acts or omissions not in good faith or acts or omissions that involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law or (iv) for any transaction from which the director derived any improper personal benefit. The Company has entered into indemnification agreements with each of its directors and executive officers. Generally, the indemnification agreements attempt to provide the maximum protection permitted by Delaware law as it may be amended from time to time. Moreover, the indemnification agreements provide for certain additional indemnification. Under such additional indemnification provisions, however, an individual II-1 3 will not receive indemnification for judgments, settlements or expenses if he or she is found liable to the Company (except to the extent the court determines he or she is fairly and reasonably entitled to indemnity for expenses), for settlements not approved by the Company or for settlements and expenses if the settlement is not approved by the court. The indemnification agreements provide for the Company to advance to the individual any and all reasonable expenses (including legal fees and expenses) incurred in investigating or defending any such action, suit or proceeding. In order to receive an advance of expenses, the individual must submit to the Company copies of invoices presented to him or her for such expenses. Also, the individual must repay such advances upon a final judicial decision that he or she is not entitled to indemnification. The Company has purchased directors' and officers' liability insurance. The Company intends to enter into additional indemnification agreements with each of its directors and executive officers to effectuate these indemnity provisions. The Underwriting Agreement (Exhibit 1.1 hereto) contains provisions by which the Underwriters have agreed to indemnify the Company, each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act, each director of the Company, and each officer of the Company who signs this Registration Statement, with respect to information furnished in writing by or on behalf of the Underwriters for use in the Registration Statement. ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES. Since September 30, 1994, the Company has sold and issued the following unregistered securities (which numbers have not been adjusted for the one-for-four reverse stock split effected in October 1997). (1) From September 30, 1994 to September 30, 1997, the Company issued an aggregate of 6,694,638 options to purchase Common Stock with exercise prices ranging from $0.062 to $0.25 per share under the Predecessor Plan and an aggregate of 4,927,858 shares of Common Stock were issued through the exercise of options granted under the Predecessor Plan for an aggregate exercise price of $405,241. For additional information concerning these transactions, reference is made to the information contained under the caption "Management -- Benefit Plans" in the form of the Prospectus included herein. (2) On October 12, 1995, the Company issued 200,000 shares of Series Z Preferred Stock to Sydney Brenner for an aggregate consideration of $100,000. (3) On October 18, 1994, the Company issued 500,000 shares of Common Stock to Robert A. Curtis, former Chief Executive Officer of the Company, at $.01 per share, of which 229,160 were vested as of the date of the termination of his employment in October 1995. (4) On October 18, 1994, the Company issued an aggregate of 2,500 shares of Common Stock to one investor for an aggregate consideration of $25. (5) On November 1, 1994, the Company issued an aggregate of 400,000 shares of Series A Preferred Stock to certain funds advised by Sequoia Capital for an aggregate consideration of $200,000. (6) From November 23, 1994 through January 15, 1995, the Company issued an aggregate of 2,226,667 shares of Series B Preferred Stock to certain funds advised by Sequoia Capital, Forward Ventures II, L.P. and an individual investor for an aggregate consideration of $1,670,000. (7) On November 1, 1994, the Company issued an aggregate of 100,000 shares of Common Stock to certain venture funds advised by Sequoia Capital for an aggregate consideration of $5,000. (8) On November 8, 1994, the Company issued an aggregate of 175,000 shares of Common Stock to one investor for an aggregate consideration of $8,750. (9) On November 18, 1994, the Company issued an aggregate of 10,000 shares of Common Stock to one investor for an aggregate consideration of $500. II-2 4 (10) In December 1994, the Company issued a warrant to purchase 83,655 shares of Series Z Preferred Stock to Comdisco, Inc. at an exercise price of $0.50 per share in connection with an equipment lease financing. (11) From January 1, 1995 through April 24, 1995, the Company issued an aggregate of 130,000 shares of Common Stock to eight investors for an aggregate consideration of $9,750. (12) On March 20, 1995, the Company issued an aggregate of 400,000 shares of Common Stock to The Scripps Research Institute for an aggregate consideration of $40,000. (13) From April 25, 1995 through July 30, 1995, the Company issued an aggregate of 650,000 shares of Common Stock to three investors for an aggregate consideration of $48,750. (14) On June 15, 1995, the Company issued a warrant to purchase 35,000 shares of Common Stock to LJL BioSystems, Inc. at an exercise price of $0.075. (15) In connection with an asset purchase agreement dated August 4, 1995, the Company issued an aggregate of 332,777 shares of Series Z Preferred Stock to Molecular Simulations, Inc. from June 1996 through July 1996 in consideration for certain technology rights. (16) On August 5, 1995, the Company issued 6,000 shares of Common Stock to Ken Rubenstein at $.075 per share in connection with a consulting agreement. (17) On August 17, 1995, August 25, 1995 and September 11, 1995, the Company issued an aggregate of 12,045,576 shares of Series C Preferred Stock to various venture capital funds and certain other investors for an aggregate consideration of $7,468,257. (18) On August 17, 1995, the Company issued warrants to purchase 120,968 shares of Series C Preferred Stock at an exercise price of $0.62 per share. (19) On September 7, 1995, the Company issued 8,065 shares of Series C Preferred Stock to one investor for an aggregate consideration of $5,000. (20) In December 1995, the Company issued an aggregate of 232,500 shares of Series J Preferred Stock to three employees upon the exercise of options to purchase Series J Preferred Stock at an exercise price of $0.10. (21) On April 9, 1996, the Company issued an aggregate of 5,104,845 shares of Series C Preferred Stock to various venture capital funds and certain other investors for an aggregate consideration of $3,165,003. (22) In April 1996 and June 1996, the Company issued warrants to purchase an aggregate of 240,321 shares of Series C Preferred Stock to Comdisco, Inc. at an exercise price of $0.62 per share in connection with an equipment lease financing. (23) In May 1996, the Company issued warrants to purchase an aggregate of 112,903 shares of Series Z Preferred Stock to Silicon Valley Bank and MMC/GATX Partnership No. 1 at an exercise price of $0.62 per share in connection with an equipment lease financing. (24) On November 15, 1996, the Company issued an aggregate of 9,869,205 shares of Series D Preferred Stock to various venture capital funds and certain other investors for an aggregate consideration of $9,869,205. (25) On January 23, 1997, the Company issued an aggregate of 5,000 shares of Common Stock to one investor at $0.10 per share pursuant to a Restricted Stock Issuance Agreement for an aggregate consideration of $500. (26) On June 11, 1997, the Company issued an aggregate of 40,000 shares of Common Stock to one investor at $0.10 per share for an aggregate consideration of $4,000. (27) On July 1, 1997, the Company issued an aggregate of 45,000 shares of Common Stock to the University of Pittsburgh for technology rights valued at $11,250. II-3 5 (28) On October 7, 1997, the Company issued an aggregate of 50,000 shares of Common Stock to two investors for past services rendered to the Company. (29) On October 10, 1997, the Company issued an aggregate of 1,000,000 shares of Common Stock to ImClone Systems Incorporated in conjunction with a collaboration agreement. (30) On October 15, 1997, the Company issued an aggregate of 4,000,000 shares of Common Stock to Elan International Services Ltd., in conjunction with a collaboration agreement. The sales and issuances of securities in the above transactions were deemed to be exempt under the Act by virtue of Section 4(2) thereof and/or Regulation D and Rule 701 promulgated thereunder as transactions not involving any public offering. The purchasers in each case represented their intention to acquire the securities for investment only and not with a view to the distribution thereof. Appropriate legends were affixed to the stock certificates issued in such transactions. Similar representations of investment intent were obtained and similar legends imposed in connection with any subsequent transfers of any such securities. The Company believes that all recipients had adequate access, through employment or other relationships, to information about the Company to make an informed investment decision. ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a) Exhibits.
EXHIBIT NUMBER DESCRIPTION - -------- -------------------------------------------------------------------------------- 1.1+ Form of Underwriting Agreement. 3.1++ Certificate of Incorporation of the Company, as amended. 3.2++ Form of Amended and Restated Certificate of Incorporation of the Company to become effective immediately prior to the Offering. 3.3++ Bylaws of the Company, as amended. 3.4++ Form of Restated Bylaws of the Company to be effective upon completion of the Offering. 4.1+ Form of Certificate for Common Stock. 5.1++ Opinion of Brobeck, Phleger & Harrison LLP with respect to the Common Stock being registered. 10.1++ Preferred Stock Purchase Agreement for Series A Preferred Stock between the Company and Forward Ventures II, L.P., dated August 26, 1994. 10.2++ Preferred Stock Purchase Agreement for Shares of Series Z Preferred Stock between the Company and Sydney Brenner, dated October 14, 1994. 10.3++ Stock Purchase Agreement for Shares of Series A Preferred Stock and Common Stock between the Company and the investors listed on Exhibit A thereto, dated November 1, 1994. 10.4++ Stock Purchase Agreement Series B Preferred Stock between the Company and the purchasers listed on Exhibit A thereto, dated November 29, 1994. 10.5++ Series C Preferred Stock Purchase Agreement between the Company and the purchasers listed on Schedule A thereto, dated August 17, 1995. 10.6++ Stock Purchase Agreement for Series C Preferred Stock between the Company and Todd Schmidt dated September 7, 1995. 10.7*++ Supplemental Purchase Agreement between the Company and the purchasers on Schedule A thereto, dated April 8, 1996. 10.8*++ Series D Preferred Stock Purchase Agreement between the Company and the purchasers listed on Schedule A thereto, dated November 15, 1996. 10.9++ Amended and Restated Investors' Rights Agreement between the Company and the stockholders listed on Schedule A thereto, dated November 15, 1996. 10.10++ Series J Preferred Stock Purchase Agreement between the Company and Steve Teig, dated June 10, 1997. '
II-4 6
EXHIBIT NUMBER DESCRIPTION - -------- -------------------------------------------------------------------------------- 10.11++ Series J Preferred Stock Purchase Agreement between the Company and Jonathan Greene, dated June 11, 1997. 10.12++ Series J Preferred Stock Purchase Agreement between the Company and Andrew Smellie, dated June 11, 1997. 10.13++ Warrant Agreement to Purchase Shares of the Series Z Preferred Stock, as amended between the Company and Comdisco, Inc., dated December 20, 1994. 10.14++ Common Stock Purchase Warrant between the Company and LJL BioSystems, Inc., dated June 15, 1995. 10.15++ Form of Warrant to Purchase Shares of Series C Preferred Stock between the Company and the purchasers listed on Schedule A thereto, dated August 17, 1995. 10.16++ Form of Warrant Agreement to Purchase Shares of Series C Preferred Stock of the Company, between the Company and Comdisco, Inc. in the amounts listed on Schedule A thereto. 10.17++ Form of Warrant to Purchase Shares of Series Z Preferred Stock between the Company and the purchasers listed on Schedule A thereto, dated May 20, 1996. 10.18++ Master Lease Agreement with the Company and Comdisco Inc., dated November 6, 1994, Schedule VL-1, dated November 11, 1994, Schedule VL-2 dated April 15, 1996 and Schedule VL-3 dated April 15, 1996. 10.19*++ Collaboration Agreement between the Company and Teijin Limited, dated March 29, 1996, as amended. 10.20*++ Collaborative Research and License Agreement between the Company and Roche Bioscience, dated October 25, 1996. 10.21*++ Research and Technology Development Agreement between the Company and Sumitomo Pharmaceuticals Co., Ltd., dated August 18, 1997. 10.22* Collaborative Research and License Agreement between the Company and ImClone Systems Incorporated, dated October 10, 1997. 10.23* Collaborative Research and License Agreement between the Company and Athena Neurosciences, Inc., dated October 15, 1997. 10.24++ Full Recourse Secured Promissory Note and Stock Pledge Agreement between the Company and Peter Myers, dated September 5, 1995. 10.25++ Promissory Note Secured by Deed of Trust between the Company and John Saunders, dated August 30, 1996. 10.26++ Promissory Note between the Company and Vicente Anido, Jr., dated February 24, 1997. 10.27++ Pledge Agreement between the Company and Vicente Anido, Jr., dated February 24, 1997. 10.28++ Promissory Note Secured by Stock Pledge Agreement between the Company and Vicente Anido, Jr., dated June 6, 1997 10.29++ Stock Pledge Agreement between the Company and Vicente Anido, Jr., dated June 6, 1997. 10.30++ Employment Agreement with Peter Myers, dated March 1, 1995. 10.31++ Employment Agreement with John Saunders, dated January 1, 1996. 10.32++ Employment Agreement with Steven Teig, dated July 1, 1995. 10.33++ Employment Agreement with Vicente Anido, Jr., dated March 14, 1996. 10.34++ Employment Agreement with Lee R. McCracken, dated May 13, 1996. 10.35++ Employment Letter with Karin Eastham, dated March 14, 1997. 10.36++ Standard Industrial/Commercial Single-Tenant Lease between the Company and Campson corporation, dated December 22, 1995. 10.37++ Standard Office Lease-Full Service between the Company and Nearon Enterprises, LLC, dated October 24, 1996.
II-5 7
EXHIBIT NUMBER DESCRIPTION - -------- -------------------------------------------------------------------------------- 10.38++ Lease Agreement between Harbor Investment Partners and the Company, dated October 6, 1997. 10.39++ 1995 Stock Option/Stock Issuance Plan. 10.40++ 1995 Stock Option/Stock Issuance Plan Form of Notice of Grant. 10.41++ 1995 Stock Option/Stock Issuance Plan Form of Stock Option Agreement. 10.42++ 1995 Stock Option/Stock Issuance Plan Form of Stock Purchase Agreement. 10.43++ 1995 Stock Option/Stock Issuance Plan Form of Restricted Stock Issuance Agreement. 10.44++ 1997 Stock Incentive Plan. 10.45++ 1997 Employee Stock Purchase Plan. 10.46++ Form of Indemnification Agreement between the Company and each of its directors. 10.47++ Form of Indemnification Agreement between the Company and each of its officers. 11.1++ Statement of Computation of pro forma net loss per share. 23.1++ Consent of Brobeck, Phleger & Harrison LLP (contained in their opinion filed as Exhibit 5.1). 23.2++ Consent of Ernst & Young LLP, Independent Auditors. 24.1++ Power of Attorney (see page II-8). 27.1++ Financial Data Schedule.
- --------------- + To be filed by amendment. ++ Previously filed with the Commission. * Certain confidential portions of this Exhibit were omitted by means of redacting a portion of the text (the "Mark"). This Exhibit has been filed separately with the Secretary of the Commission without the Mark pursuant to the Company's Application Requesting Confidential Treatment under Rule 406 under the Securities Act. (b) Financial Statement Schedules included separately in the Registration Statement. All other schedules are omitted because they are not required, are not applicable or the information is included in the Financial Statements or Notes thereto. ITEM 17. UNDERTAKINGS. The undersigned hereby undertakes to provide to the Underwriters at the closing specified in the Underwriting Agreement certificates in such denominations and registered in such names as required by the Underwriters to permit prompt delivery to each purchaser. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Company pursuant to the provisions described in Item 14, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-6 8 The undersigned registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-7 9 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Company has duly caused this Amendment No. 1 to this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Diego, County of San Diego, State of California, on the 24th day of October, 1997. COMBICHEM, INC. By: /s/ VICENTE ANIDO, JR. ------------------------------------ Vicente Anido, Jr. President and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE - ----------------------------------- ----------------------------------- ------------------- /s/ VICENTE ANIDO, JR. President, Chief Executive Officer October 24, 1997 - ----------------------------------- and Director (Principal Executive (Vicente Anido, Jr.) Officer) Vice President of October 24, 1997 Finance and Administration and Chief /s/ KARIN EASTHAM Financial Officer (Principal - ----------------------------------- Financial (Karin Eastham) and Accounting Officer) * Chairman of the Board and Director October 24, 1997 - ----------------------------------- (Pierre Lamond) * Director October 24, 1997 - ----------------------------------- (Peter L. Myers) * Director October 24, 1997 - ----------------------------------- (Philippe O. Chambon) * Director October 24, 1997 - ----------------------------------- (Arthur Reidel) * Director October 24, 1997 - ----------------------------------- (William Scott)
By: /s/ VICENTE ANIDO, JR. ---------------------------------- Vicente Anido, Jr., Attorney-in-fact II-8 10 EXHIBIT INDEX
SEQUENTIALLY EXHIBIT NUMBERED NUMBER DESCRIPTION PAGE - -------- -------------------------------------------------------------------- ------------ 1.1+ Form of Underwriting Agreement. 3.1++ Certificate of Incorporation of the Company, as amended. 3.2++ Form of Amended and Restated Certificate of Incorporation of the Company to become effective immediately prior to the Offering. 3.3++ Bylaws of the Company, as amended. 3.4++ Form of Restated Bylaws of the Company to be effective upon completion of the Offering. 4.1+ Form of Certificate for Common Stock. 5.1++ Opinion of Brobeck, Phleger & Harrison LLP with respect to the Common Stock being registered. 10.1++ Preferred Stock Purchase Agreement for Series A Preferred Stock between the Company and Forward Ventures II, L.P., dated August 26, 1994. 10.2++ Preferred Stock Purchase Agreement for Shares of Series Z Preferred Stock between the Company and Sydney Brenner, dated October 14, 1994. 10.3++ Stock Purchase Agreement for Shares of Series A Preferred Stock and Common Stock between the Company and the investors listed on Exhibit A thereto, dated November 1, 1994. 10.4++ Stock Purchase Agreement Series B Preferred Stock between the Company and the purchasers listed on Exhibit A thereto, dated November 29, 1994. 10.5++ Series C Preferred Stock Purchase Agreement between the Company and the purchasers listed on Schedule A thereto, dated August 17, 1995. 10.6++ Stock Purchase Agreement for Series C Preferred Stock between the Company and Todd Schmidt dated September 7, 1995. 10.7*++ Supplemental Purchase Agreement between the Company and the purchasers on Schedule A thereto, dated April 8, 1996. 10.8*++ Series D Preferred Stock Purchase Agreement between the Company and the purchasers listed on Schedule A thereto, dated November 15, 1996. 10.9++ Amended and Restated Investors' Rights Agreement between the Company and the stockholders listed on Schedule A thereto, dated November 15, 1996. 10.10++ Series J Preferred Stock Purchase Agreement between the Company and Steve Teig, dated June 10, 1997. 10.11++ Series J Preferred Stock Purchase Agreement between the Company and Jonathan Greene, dated June 11, 1997. 10.12++ Series J Preferred Stock Purchase Agreement between the Company and Andrew Smellie, dated June 11, 1997. 10.13++ Warrant Agreement to Purchase Shares of the Series Z Preferred Stock, as amended between the Company and Comdisco, Inc., dated December 20, 1994. 10.14++ Common Stock Purchase Warrant between the Company and LJL BioSystems, Inc., dated June 15, 1995. 10.15++ Form of Warrant to Purchase Shares of Series C Preferred Stock between the Company and the purchasers listed on Schedule A thereto, dated August 17, 1995. 10.16++ Form of Warrant Agreement to Purchase Shares of Series C Preferred Stock of the Company, between the Company and Comdisco, Inc. in the amounts listed on Schedule A thereto.
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SEQUENTIALLY EXHIBIT NUMBERED NUMBER DESCRIPTION PAGE - -------- -------------------------------------------------------------------- ------------ 10.17++ Form of Warrant to Purchase Shares of Series Z Preferred Stock between the Company and the purchasers listed on Schedule A thereto, dated May 20, 1996. 10.18++ Master Lease Agreement with the Company and Comdisco Inc., dated November 6, 1994, Schedule VL-1, dated November 11, 1994, Schedule VL-2 dated April 15, 1996 and Schedule VL-3 dated April 15, 1996. 10.19*++ Collaboration Agreement between the Company and Teijin Limited, dated March 29, 1996, as amended. 10.20*++ Collaborative Research and License Agreement between the Company and Roche Bioscience, dated October 25, 1996. 10.21*++ Research and Technology Development Agreement between the Company and Sumitomo Pharmaceuticals Co., Ltd., dated August 18, 1997. 10.22* Collaborative Research and License Agreement between the Company and ImClone Systems Incorporated, dated October 10, 1997. 10.23* Collaborative Research and License Agreement between the Company and Athena Neurosciences, Inc., dated October 15, 1997. 10.24++ Full Recourse Secured Promissory Note and Stock Pledge Agreement between the Company and Peter Myers, dated September 5, 1995. 10.25++ Promissory Note Secured by Deed of Trust between the Company and John Saunders, dated August 30, 1996. 10.26++ Promissory Note between the Company and Vicente Anido, Jr., dated February 24, 1997. 10.27++ Pledge Agreement between the Company and Vicente Anido, Jr., dated February 24, 1997. 10.28++ Promissory Note Secured by Stock Pledge Agreement between the Company and Vicente Anido, Jr., dated June 6, 1997 10.29++ Stock Pledge Agreement between the Company and Vicente Anido, Jr., dated June 6, 1997. 10.30++ Employment Agreement with Peter Myers, dated March 1, 1995. 10.31++ Employment Agreement with John Saunders, dated January 1, 1996. 10.32++ Employment Agreement with Steven Teig, dated July 1, 1995. 10.33++ Employment Agreement with Vicente Anido, Jr., dated March 14, 1996. 10.34++ Employment Agreement with Lee R. McCracken, dated May 13, 1996. 10.35++ Employment Letter with Karin Eastham, dated March 14, 1997. 10.36++ Standard Industrial/Commercial Single-Tenant Lease between the Company and Campson corporation, dated December 22, 1995. 10.37++ Standard Office Lease-Full Service between the Company and Nearon Enterprises, LLC, dated October 24, 1996. 10.38++ Lease Agreement between Harbor Investment Partners and the Company, dated October 6, 1997. 10.39++ 1995 Stock Option/Stock Issuance Plan. 10.40++ 1995 Stock Option/Stock Issuance Plan Form of Notice of Grant. 10.41++ 1995 Stock Option/Stock Issuance Plan Form of Stock Option Agreement. 10.42++ 1995 Stock Option/Stock Issuance Plan Form of Stock Purchase Agreement. 10.43++ 1995 Stock Option/Stock Issuance Plan Form of Restricted Stock Issuance Agreement. 10.44++ 1997 Stock Incentive Plan.
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SEQUENTIALLY EXHIBIT NUMBERED NUMBER DESCRIPTION PAGE - -------- -------------------------------------------------------------------- ------------ 10.45++ 1997 Employee Stock Purchase Plan. 10.46++ Form of Indemnification Agreement between the Company and each of its directors. 10.47++ Form of Indemnification Agreement between the Company and each of its officers. 11.1++ Statement of Computation of pro forma net loss per share. 23.1++ Consent of Brobeck, Phleger & Harrison LLP (contained in their opinion filed as Exhibit 5.1). 23.2++ Consent of Ernst & Young LLP, Independent Auditors. 24.1++ Power of Attorney (see page II-8). 27.1++ Financial Data Schedule.
- --------------- + To be filed by amendment. ++ Previously filed with the Commission. * Certain confidential portions of this Exhibit were omitted by means of redacting a portion of the text (the "Mark"). This Exhibit has been filed separately with the Secretary of the Commission without the Mark pursuant to the Company's Application Requesting Confidential Treatment under Rule 406 under the Securities Act. EX-10.22 2 EXHIBIT 10.22 1 EXHIBIT 10.22 COLLABORATIVE RESEARCH AND LICENSE AGREEMENT BETWEEN COMBICHEM, INC. AND IMCLONE SYSTEMS INCORPORATED OCTOBER 10, 1997 2 COLLABORATIVE RESEARCH AND LICENSE AGREEMENT THIS COLLABORATIVE RESEARCH AND LICENSE AGREEMENT (the "Agreement") is entered into and made effective as of October 10, 1997 (the "Effective Date"), by and between COMBICHEM, INC., a Delaware corporation having its principal offices at 9050 Camino Santa Fe, San Diego, California ("CombiChem"), and IMCLONE SYSTEMS INCORPORATED, a Delaware corporation having its principal offices located at 180 Varick Street, 7th Floor, New York, New York ("ImClone"). WHEREAS, CombiChem has developed and owns certain drug discovery technology and intellectual property rights, including but not necessarily limited to chemical library design software, multi-parallel synthesis and purification methods, chemical libraries suitable for biological screening assays and medicinal chemistry (collectively, "CombiChem Technology"); WHEREAS, ImClone desires to utilize CombiChem Technology for its drug discovery activities under ImClone know-how concerning the identification and characterization of novel small molecule inhibitors for development as therapeutics for treatment of human disease in the area of oncology; WHEREAS, the parties wish to collaborate in a Research Program against Collaboration Target(s) ("Collaboration"); WHEREAS, for purposes of the Collaboration, the Parties intend to focus on up to *** related to ImClone's Areas of Interest; NOW, THEREFORE, the Parties agree as follows: 1. DEFINITIONS 1.1 "Abandoned Compound" shall have the meaning set forth in Section 3.1. 1.2 "Abandoned Target" shall have the meaning set forth in Section 3.1. 1.3 "Active Compound(s)" means a compound (or compounds) which (a) (i) is selected by *** under the Research Program from Collaboration Compounds, or (ii) is derived from a Collaboration Compound; and (b) shows In Vitro Activity. *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 2 3 1.4 "Additional Target(s)" means a Target that is added to the Collaboration in accordance with Section 4.2. 1.5 "Affiliate" of a Party means any corporation or other business entity controlled by, controlling or under common control with, such Party. For this purpose "control" shall mean direct or indirect beneficial ownership of more than fifty percent (50%) of the voting securities or income interest in such corporation or other business, or if not meeting the preceding requirements, any company owned or controlled by or owning or controlling such Party at the maximum control or ownership right permitted in the country where such company exists. 1.6 "Areas of Interest" shall include *** *** . 1.7 "Collaboration" has the meaning set forth in the preamble. 1.8 "Collaboration Compound(s)" means a compound (or compounds) which (a) is synthesized following the Effective Date for screening against a Collaboration Target under the Research Program, (b) is a pre-existing CombiChem Compound which CombiChem desires to designate as a Collaboration Compound, or (iii) is a pre-existing ImClone Compound which ImClone desires to designate as a Collaboration Compound. 1.9 "Collaboration Target(s)" means either an Initial Target or an Additional Target. 1.10 "CombiChem Compound" means a chemical compound that is proprietary to CombiChem, or whose use or manufacture is proprietary to CombiChem. 1.11 "CombiChem Technology" has the meaning set forth in the preamble. 1.12 "Confidential Information" includes, but is not limited to, (a) all information and materials received by either Party from the other Party pursuant to this Agreement; (b) all information and materials developed in the course of the Collaboration; and (c) the material financial terms of this Agreement. *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 3 4 1.13 "Development Compound(s)" means a compound ( or compounds) which (a) (i) is a Lead Compound or (ii) is derived from a Lead Compound; and (b) are determined by *** to be appropriate for preclinical studies for the purpose of IND filing by ImClone. 1.14 "Due Diligence" means the use of the resources of ImClone or its licensees or CombiChem in a manner which is consistent with the exercise of prudent scientific and business judgment as applied to other programs of ImClone or CombiChem, as the case may be, targeting products aimed at markets or patient groups of similar sizes and of similar scientific and commercial potential. With respect to any Development Compound, "Due Diligence" shall also require ImClone or its licensees to conduct all necessary preclinical studies and to file an IND for such Development Compound within *** from the date upon which ImClone has designated such Development Compound from any Lead Compound or its derivatives. 1.15 "Exclusivity Period" means the Research Period plus ***. 1.16 "Field" means all therapeutic indications of human disease for the Collaboration Target. 1.17 "First Commercial Sale" of a Product shall mean the first sale for use or consumption of such Product in a country after required marketing and pricing approval has been granted by the governing health regulatory authority of such country. Sale to an Affiliate or licensee shall not constitute a First Commercial Sale unless the Affiliate or licensee is the end user of the Product. 1.18 "FTE" means full time equivalent with respect to employees of CombiChem. 1.19 "ImClone Compound" means a chemical compound that is proprietary to ImClone, or whose use or manufacture is proprietary to ImClone. 1.20 "Inactive Compound(s)" means a Collaboration Compound(s) which does not have the In Vitro Activity required for an Active Compound. 1.21 "In Vitro Activity" shall mean the observation of *** *** . 1.22 "Initial Target" shall have the meaning set forth in Section 4.1 hereof. *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 4 5 1.23 "Lead Compound(s)" means a compound (or compounds) which (a) is selected from an Active Compound(s) by *** under the Research Program, or (b) is derived from Active Compound(s) and is selected by *** 1.24 "Net Sales" means the gross sales invoiced by ImClone or its Affiliates or licensees for Products to non-Affiliated Third Parties less actual deductions of returns (including withdrawals and recalls), rebates (price reductions, including Medicaid and similar types of rebates e.g. chargebacks), volume (quantity) discounts, discounts granted at the time of invoicing, the cost of transport, insurance, delivery, sales taxes and other taxes (other than income taxes) directly linked to and included in the gross sales amount, as computed on a product-by-product basis for the countries concerned, whereby the amount of such sales in foreign currencies is converted into United States dollars at the exchange rate of the last business day for each calendar month as reported by Citibank, N.A. (New York). 1.25 "Patent" means, (a) valid and enforceable Letters Patent, including any extension (including Supplemental Protection Certificate), registration, confirmation, reissue, continuation, divisionals, continuation-in-part, reexamination or renewal thereof, or (b) pending applications for any of the foregoing. 1.26 "Payments" shall have the meaning set forth in Section 9.3 1.27 "Party" means CombiChem or ImClone, as the case may be, including their respective Affiliates, permitted successors and assigns. 1.28 "Product(s)" means any product containing a Development Compound with such compound as the active ingredient and which is granted regulatory approval by the governing health regulatory authority of the applicable country for marketing in the Field. 1.29 "Project Team" shall have the meaning set forth in Section 2.1(c). 1.30 "Research Management Committee" or" RMC" has the meaning set forth in Article 6 below. 1.31 "Research Period" means the initial twenty-four (24) month term of the Collaboration, which can be extended in accordance with Section 7.1 below. 1.32 "Research Plan" means the mutually-agreed research plan for the Collaboration attached hereto as Appendix A. *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 5 6 1.33 "Research Program" means the research to be conducted as part of the Collaboration under the Research Plan, and shall include, without limitation, the activities and items set forth in Sections 2.1 and 2.2 of this Agreement. 1.34 "Returned Compound" shall have the meaning set forth in Section 9.2. 1.35 "Royalty Term" means, in the case of any Product, in any country, the period of time commencing on the First Commercial Sale and ending upon the later of (a) *** *** from the date of First Commercial Sale in such country; or (b) the expiration of the last-to-expire Patent resulting from the Research Program filed in the Field with claims covering that Product in the relevant country. 1.36 "Target" means a biomolecular entity that a small molecule is screened against in order to determine whether the small molecule demonstrates relevant activity. 1.37 "Territory" means the entire world. 1.38 "Third Party" means an entity other than CombiChem or ImClone or their respective Affiliates. 1.39 "Universal Informer Library" shall mean CombiChem's proprietary Universal Informer Library of compounds. 2. RESEARCH COLLABORATION 2.1 CombiChem Responsibilities. CombiChem shall with Due Diligence conduct the following activities under the Research Program in accordance with the terms of this Agreement and as more fully described in the Research Plan: (a) During the Research Period, CombiChem shall (i) review data and information regarding the Collaboration Targets provided by ImClone; (ii) based on such data and information and using the CombiChem Technology, design informative compound libraries; and (iii) supply all lead chemistries and synthesize compounds as provided in Section 5.3 below. (b) During the Research Period, CombiChem shall keep ImClone informed of its activities performed in connection with the Collaboration, including, without limitation, providing ImClone with *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 6 7 data and information regarding Collaboration Compounds prior to the meetings of the Research Management Committee. (c) Subject to Article 4 and at all times during the Research Period, CombiChem shall dedicate a project team of *** comprised of synthetic and analytical chemists, compound control scientists, and a computational scientist (the "Project Team") to conduct all of its activities in connection with the Collaboration; provided, however, that the RMC may at any time during the Research Period substitute employees for the FTEs described above; provided, further, that ImClone may request that CombiChem expand its Project Team by adding additional FTEs to work on the Collaboration at the rate and in the manner specified in Section 8.2(b). 2.2 ImClone Responsibilities. ImClone shall with Due Diligence provide CombiChem with the following resources under the Research Program as more fully described in the Research Plan: (a) ImClone shall provide CombiChem with support and assistance useful or necessary for the conduct of the Research Program, including providing data and information (including leads and/or screening hits to the extent available) relating to Collaboration Targets, certain chemistries useful in compound synthesis, information concerning assay methods and screening data. (b) During the Research Period, ImClone shall provide CombiChem with data and information regarding Collaboration Compounds and the Collaboration Target assays developed by ImClone under the Research Program prior to the meetings of the Research Management Committee. (c) During the Exclusivity Period and with Due Diligence, ImClone shall screen Collaboration Compounds for In Vitro and, where appropriate, in vivo activity against the Collaboration Target. (d) During the Exclusivity Period and with Due Diligence, ImClone shall (i) screen Lead Compounds, (ii) endeavor to determine Development Compounds, and (iii) develop Products. 2.3 Research Plan. The Parties hereby agree that the Research Program shall be carried out in accordance with the Research Plan which is attached hereto as Appendix A. *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 7 8 At the direction of the RMC, the Research Program shall involve the use of CombiChem's Universal Informer Library in order to initiate CombiChem's discovery process with the objective of identifying Lead Compounds with respect to a specific Collaboration Target. The Research Management Committee shall review the Research Plan on an ongoing basis and may make changes to the Research Plan so long as such changes are mutually agreed to by CombiChem and ImClone. 2.4 Annual Reports. Following the first IND filing through First Commercial Sale, ImClone shall provide CombiChem with an annual report summarizing ImClone's activities in developing Development Compounds. 2.5 Third Party Licenses. Each Party shall be solely responsible for any Third Party license fees required to perform its obligations under this Agreement subject to Section 8.4. Any agreements between a Party and a Third Party shall in all material respects permit performance under this Agreement. 3. EXCLUSIVITY 3.1 Collaboration Target Exclusivity. So long as ImClone or its licensee is proceeding with Due Diligence, CombiChem shall not work on a Collaboration Target with any Third Parties. In the event that ImClone or its licensee fails to exercise Due Diligence with respect to, or notifies CombiChem that it has abandoned work on, any Collaboration Target (an "Abandoned Target") and any Collaboration Compound, other than an ImClone Compound which *** associated with such Collaboration Target (together with all derivatives of such Collaboration Compound, an "Abandoned Compound"), then, (a) such Abandoned Target shall not be subject to any provision hereunder, and (b) such Abandoned Compound shall be available to CombiChem for any purpose thereafter. 3.2 Active Compounds. (a) Following the designation of any Collaboration Compound as an Active Compound, such Active Compound shall be exclusively available to ImClone during the Research Period. Following the expiration of the Research Period, Active Compounds with respect to which ImClone fails to proceed with Due Diligence shall be deemed to be Inactive Compounds for all purposes hereunder; provided, that any Active Compound which is the subject of claim(s) under a pending Patent shall continue to be treated as an Active Compound during the Exclusivity Period so long as ImClone exercises Due Diligence with respect to any Collaboration Compound. (b) Prior to the existence of Patent(s) in accordance with Section 5.2, ImClone shall have exclusive rights in all intellectual property relating to Active Compounds, their use, and method of manufacture so long as ImClone continues to show Due Diligence under this Agreement; provided, however, that ImClone acknowledges and agrees that CombiChem *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 8 9 reserves the right to assign or grant exclusive rights, including rights to Active Compounds, to a third party collaborator who first identifies a novel compound, a novel use of a compound, or a novel method of manufacturing a compound, to the extent CombiChem is obligated to do so under its existing contractual obligations. Upon notice by ImClone that it intends to file a Patent application with respect to any Active Compound, Lead Compound, Development Compound or Product, CombiChem shall promptly inform ImClone whether CombiChem has the power to grant the exclusive rights in accordance with this Section 3.2 and the assignments in accordance with Section 5.2; provided, however, that under no circumstances CombiChem will grant assurances to ImClone to the effect that any Active Compound, Lead Compound, Development Compound or Product is not covered under the patent claims of Third Parties wherein such claims are not the direct result of a collaboration between the Third Party and CombiChem. 3.3 Inactive Compounds/Returned Compounds. Subject to Section 9.4, Inactive Compounds and Returned Compounds shall be available to both Parties for any purpose. 4. TARGETS 4.1 Initial Targets. During the Research Period, ImClone may designate *** *** *** *** *** *** *** *** *** *** *** *** *** ***. In addition, ImClone's right to designate or substitute a Target (including those Additional Targets set forth in Section 4.2) relating to ImClone's Areas of Interest shall be subject to the written notice and approval requirements specified in Section 4.2(b). 4.2 Additional Targets. (a) Within ninety (90) days prior to the commencement of the second 12-month period of the Research Program, ImClone may add up to *** relating to ImClone's Areas of Interest to the Collaboration by notifying CombiChem in writing that it wishes to designate such Target(s) as Additional Target(s); it being understood that the Project Team shall be obligated to simultaneously work on no more than *** Collaboration Targets as directed by the RMC. *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 9 10 (b) *** *** *** *** *** Otherwise, the RMC shall establish the specific scientific achievements (to be mutually agreed between CombiChem and ImClone) for such Target and the same shall be designated as an Additional Target for the Collaboration and subject to the terms (including the commercial terms) of this Agreement. 4.3 Expansion of Project Team. Notwithstanding the provisions of Sections 4.1 and 4.2, ImClone may request that CombiChem expand its Project Team during the Research Period in order to accelerate work on Collaboration Targets and/or to add additional Target(s). In such event, the RMC shall promptly confer as to the appropriate number of FTEs to be added to Project Team to work on the Collaboration at a cost to ImClone as specified in Section 2.1(c). 5. COLLABORATION COMPOUNDS 5.1 Pre-Existing Compounds. ImClone shall have no rights to any pre-existing CombiChem Compound unless and until such compound is designated as a Collaboration Compound by CombiChem. Additionally, CombiChem may decline to synthesize a particular compound or library of compounds by reason of existing Patents or contractual obligations. CombiChem shall have no rights to any pre-existing ImClone Compound which is not utilized in the Research Program. 5.2 Intellectual Property Rights; Assignment to ImClone. Subject to Section 3.2(b) above, ImClone shall have the right and responsibility at ImClone's expense to file, maintain and prosecute Patents relating to Active Compounds, Lead Compounds, Development Compounds and Products, their use, and their methods of manufacture. At ImClone's request, CombiChem shall assign all its right, title and interest in such Patents to ImClone. If ImClone fails to so file, maintain or prosecute such Patent, CombiChem shall have the right to request ImClone to do so. If ImClone elects not to file, maintain or prosecute such Patent, CombiChem shall have the right to take over such filing, maintenance or prosecution of such Patent, at its sole expense, and ImClone shall assign all intellectual property rights it may have in the Active Compound, Lead Compound, Development Compound or Product to CombiChem. 5.3 Supply of Collaboration Compounds. Aliquots of *** of any Collaboration Compound that has been synthesized will be prepared and given to ImClone. CombiChem shall replenish that amount upon ImClone's reasonable request. CombiChem shall maintain aliquots of any Collaboration Compound that has been synthesized by CombiChem. CombiChem shall also provide ImClone with additional requirements of samples at CombiChem's cost. *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 10 11 6. RESEARCH MANAGEMENT COMMITTEE The design, review and conduct of the Research Program will be coordinated by the Research Management Committee, which will meet regularly on a mutually-agreeable schedule. The Research Management Committee may establish and amend or revise the Research Plan as necessary to reflect the scientific progress and work performed under the Research Program, such amendments to be mutually agreed to by ImClone and CombiChem. The Research Management Committee will consist of an equal number of members from ImClone and CombiChem and will include appropriate representatives from ImClone and CombiChem as mutually agreed. The co-chairs of the Research Management Committee will initially be the Vice President, Chemistry of CombiChem and the Vice President for Research of ImClone and subsequently may change as mutually-agreed upon by the Parties. Decisions of the Research Management Committee shall be by consensus. If a decision is not reached by the RMC with respect to management of the Research Program, the dispute will be referred to the co-chairs of the RMC. If the co-chairs of the RMC are unable to resolve the dispute, the dispute will be referred to the respective Chief Executive Officers of CombiChem and ImClone. 7. RESEARCH PERIOD; TERMINATION OF RESEARCH PROGRAM 7.1 Research Period: Option to Extend the Research Period. The initial term of the Collaboration shall be the Research Period, subject to extension upon mutual agreement. To extend the Research Period, ImClone must notify CombiChem no later than ninety (90) days prior to the then-current expiration date and the Parties shall negotiate in good faith the terms and conditions of any such extension. 7.2 Termination of Research Program. (a) The Research Program may be terminated by a Party for the material breach by the other Party of obligations under the Research Program by giving the breaching party notice of the breach and of the intent of the non-breaching Party to terminate the Research Program unless the breach is cured within *** . The non-breaching Party may terminate the Research Program following *** by providing the breaching party with *** prior written notice that the Research Program is terminated, and the Research Program shall be terminated on the *** following such date. (b) Within thirty (30) days prior to the one (1) year anniversary of this Agreement, ImClone and CombiChem senior and scientific management personnel shall meet to review the status of the Collaboration. *** *** *** *** *** *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 11 12 *** *** *** *** *** *** ***. (c) CombiChem shall, within thirty (30) days following the effective date of termination under Section 7.2(a) or 7.2(b), *** *** *** *** *** *** *** ***. 8. CONSIDERATION 8.1 Equity Purchase. Upon execution of this Agreement, ImClone shall purchase 1,000,000 shares (on a pre-split basis and subject to adjustment) of Common Stock of CombiChem at a per share purchase price equal to $2.00 per share for an aggregate purchase price of U.S. $2 million, pursuant to the terms of that certain Common Stock Purchase Agreement, dated as of the Effective Date, by and between CombiChem and ImClone (together with all ancillary agreements thereto, the "Stock Purchase Agreement"). *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** . *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 12 13 8.2 Program Funding. (a) ImClone shall support CombiChem's efforts in conducting the Research Program by making a payment upon the execution of this Agreement in the sum of U.S. *** *** *** *** *** *** *** ***. (b) In the event that the Project Team is expanded in accordance with Section 4.3, ImClone shall make payments, in cash, to CombiChem, at a per annum rate of U.S. *** payable quarterly in advance of the work to be performed by such FTE(s). (c) *** *** *** *** *** ***. 8.3 Milestone Payments. Within thirty (30) days of the occurrence of a development milestone triggered by the activities of ImClone as shown on Appendix B, ImClone shall pay CombiChem the related milestone payment in U.S. dollars as set forth on Appendix B. Alternatively, in the event that ImClone shall outlicense the Patents covering any Product, CombiChem shall be entitled to the payments set forth in Section 9.3 in lieu of any payments pursuant to this Section 8.3. 8.4 Royalties. (a) Direct Sales by ImClone (i) Subject to Section 8.4(c), during the Royalty Term, ImClone will pay CombiChem a running royalty of *** sold by ImClone or its Affiliates in all countries in the Territory. Each payment of royalties shall be accompanied by a report of Net Sales of Products in sufficient detail to permit confirmation of the accuracy of the royalty payment made. *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 13 14 (ii) *** *** *** ***. (b) Sales by ImClone's Licensees In the event that ImClone outlicenses Active Compounds, Lead Compounds, Development Compounds and resulting Products are sold by ImClone's licensees in any country in the Territory, ImClone's royalty payable to CombiChem shall be as follows: *** *** *** *** *** *** *** *** *** *** *** *** *** ***. (c) *** *** *** *** *** *** *** *** *** *** *** *** *** *** ***. *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 14 15 *** *** *** *** ***. 8.5 Manner and Place of Payment. Royalty payments and reports for Net Sales of Products shall be calculated in local currencies and reported for each calendar quarter. All royalty payments owed under this Agreement shall be made by wire transfer to the bank account to be designated by CombiChem within thirty (30) days following the end of each such calendar quarter. 8.6 Records and Audit. During the term of this Agreement and for a period of five (5) years thereafter, ImClone shall keep complete and accurate records pertaining to the sale or other disposition of Products in sufficient detail to permit CombiChem to confirm the accuracy of all payments due hereunder. CombiChem shall have the right to cause an independent certified public accounting firm reasonably acceptable to ImClone to audit such records to confirm ImClone's Net Sales for the preceding year. Any information obtained during such audit shall be treated as Confidential Information. Such audits may be exercised during normal business hours of ImClone no more than once each year. CombiChem shall bear the full cost of such audit unless such audit discloses a variance of more than five percent (5%) in ImClone's favor from the amount of the Net Sales reported by ImClone for such audited period. In such case, ImClone shall bear the fill cost of such audit. 8.7 Taxes. All income and other taxes levied on account of the royalties and other payments accruing to CombiChem under this Agreement shall be paid by CombiChem, including taxes levied thereon as income to CombiChem. If provision is made in law or regulation for withholding, such tax shall be deducted from the royalty or other payment made by ImClone to the proper taxing authority and a receipt of payment of the tax secured and promptly delivered to CombiChem. Each Party agrees to assist the other Party in claiming exemption from such deductions or withholdings under any double taxation or similar agreement or treaty from time to tune in force. 9. LICENSE GRANTS; OUTLICENSE 9.1 CombiChem License Grant to ImClone. Subject to the terms and conditions of this Agreement, CombiChem hereby grants to ImClone an exclusive worldwide license, with the right to sublicense, to use such CombiChem Technology as is necessary to make, have made, use, have used, sell, have sold and import Collaboration Compounds or Products in the Territory. Such license shall remain exclusive in relation to each Collaboration Compound and/or Product so long as ImClone or its licensee continues to develop and commercialize such Collaboration Compound and/or Product containing such Collaboration Compound against a Collaboration Target with Due Diligence. *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 15 16 9.2 ImClone License Grant to CombiChem. Subject to the terms and conditions of this Agreement and following the failure of ImClone or its licensee to develop and commercialize with Due Diligence a Lead Compound, a Development Compound or Product, as the case may be, (collectively, and together with all Abandoned Compounds, "Returned Compound"), ImClone shall grant to CombiChem an exclusive license (exclusive even as to ImClone and its Affiliates), with the right to sublicense, under those ImClone Patents and know-how which are resulting from the Research Program and related exclusively to the Returned Compound to make, have made, use, have used, sell, have sold and import such Returned Compound in the Territory. 9.3 ImClone Outlicense. ImClone shall have a right to outlicense the Patents covering the Product to a Third Party subject to CombiChem's right to receive *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** ***. In addition, CombiChem shall have the right to receive all audit reports relating to sales of Products of ImClone's licensees, and to cause ImClone or its successor to have an independent certified public accounting firm audit such licensees records on the same terms as those specified in Section 8.6. All payments shall be made by wire transfer to such bank account designated by CombiChem. Failure of such licensee to make any milestone or royalty payment in respect of such Product shall not relieve ImClone of its obligations to make royalty and milestone payments to CombiChem hereunder. *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 16 17 9.4 Rights to Inactive Compounds/Returned Compounds. No provision of this Agreement shall prevent either Party from making, having made, using, having used, selling, having sold, or importing Inactive Compounds, products containing Inactive Compounds, Returned Compounds or products containing Returned Compounds or screening Inactive Compounds and Returned Compounds against any target other than the Collaboration Targets. *** *** *** *** *** *** *** ***. 9.5 Miscellaneous License. In addition to any other rights granted by either Party in accordance with this Article 9, each Party grants to the other party a non-exclusive license without the right to grant sublicenses, under any intellectual property rights the granting Party has the power to grant in order for the other Party to carry out its rights and obligations under this Agreement including, but not necessarily limited to, conducting the Research Program and manufacturing, developing, selling and importing Products. 10. TERM AND TERMINATION 10.1 Term. The term of this Agreement shall commence upon the Effective Date of this Agreement, and shall expire on the expiration of the last royalty obligation under this Agreement, except as provided hereunder. 10.2 Termination by ImClone or CombiChem. Subject to Section 7.2, if either Party materially breaches this Agreement and fails to remedy that breach within *** of receiving written notice thereof from the other Party, or enters into any arrangement of composition with its creditors or goes into liquidation, insolvency, bankruptcy, receivership or reorganization proceedings, whether voluntarily or compulsorily which is not dismissed within *** then the other Party may at any time, by notice in writing or by telefax, terminate this Agreement. 10.3 After Termination. (a) Upon any termination of the Research Program under Section 7.2(a) due to a material breach of this Agreement by ImClone, ImClone's rights pursuant to Sections 3.1, 3.2, 5.3, 9.1, 9.3 and 9.5 shall immediately cease, and all rights granted hereunder with respect to Targets and Collaboration Compounds, Active Compounds, Lead Compounds, Development Compounds, or Products shall immediately revert to CombiChem without further obligation to ImClone. ImClone's rights pursuant to Section 5.2 and 9.3 above that accrue prior *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 17 18 to such termination shall be retained by ImClone. ImClone may make, use, sell and import Active Compounds, Lead Compounds, Development Compounds or Products under rights retained by ImClone pursuant to this Section 10.3(a) so long as ImClone continues to satisfy all of its royalty, milestone, and Payment obligations in accordance with Sections 8.3, 8.4, 9.3 and 9.4. (b) Upon any termination of the Research Program under Section 7.2(a) due to a material breach of this Agreement by CombiChem with respect to a Collaboration Compound, Active Compound, Lead Compound, Development Compound or Product, all of ImClone's rights pursuant to Sections 3.1, 3.2, 5.2, 5.3, 9.1, 9.3 and 9.5 shall be retained by ImClone. ImClone may make, use, sell or import Active Compounds, Lead Compounds, Development Compounds and Products with respect to which ImClone is not in material breach under rights retained by ImClone pursuant to this Section 10.3(b) so long as ImClone continues to satisfy all of its royalty, milestone, and Payment obligations in accordance with Sections 8.3, 8.4, 9.3 and 9.4, except that ImClone shall not be required to satisfy such obligations with respect to any Collaboration Compound, Active Compound, Lead Compound, Development Compound or Product with respect to which CombiChem is in material breach. (c) If ImClone materially breaches this Agreement following the Research Period with respect to an Active Compound, Lead Compound, Development Compound or Product for any reason including, but not limited to, failing to satisfy its royalty, milestone and Payment obligations pursuant to Sections 8.3, 8.4, 9.3 and 9.4, ImClone shall not make, use, sell or import Active Compounds, Lead Compounds, Development Compounds or Products with respect to which ImClone is in material breach. ImClone shall retain the right to make, use, sell and import Active Compounds, Lead Compounds, Development Compounds or Products with respect to which ImClone is not in material breach so long as ImClone continues to satisfy all of its royalty, milestone, and Payment obligations in accordance with Sections 8.3, 8.4, 9.3 and 9.4. (d) If CombiChem materially breaches this Agreement following the Research Period for any reason including, but not limited to, failing to satisfy its confidentiality and warranty obligations under Articles 11 and 19, ImClone shall have the right to make, use, sell or import Active Compounds, Lead Compounds, Development Compounds and Products with respect to which ImClone is not in material breach so long as ImClone continues to satisfy all of its royalty, milestone, and Payment obligations in accordance with Sections 8.3, 8.4, 9.3 and 9.4. (e) Upon any expiration or earlier termination of this Agreement for any reason, ImClone shall not be entitled to any refund of any payments made to CombiChem hereunder except as provided in Section 7.2(c). 10.4 Effect of Termination on Licensees. In the event of any termination of this Agreement pursuant to this Article 10 where such termination shall not have been caused by the action or inaction on the part of any respective licensee of ImClone or CombiChem, or by any breach by such licensee of its obligations under its licensee from ImClone or CombiChem, as appropriate, such termination of this Agreement shall be without prejudice to the rights of each non-breaching licensee and such licensee shall be deemed to be a direct licensee hereunder. 18 19 11. CONFIDENTIAL INFORMATION 11.1 Nondisclosure. During the term of the Collaboration and for a period of five (5) years after termination thereof, each Party will maintain all Confidential Information in trust and confidence and will not disclose any Confidential Information to any third party for any purpose except (i) as expressly authorized by this Agreement, or (ii) as required by law or court order, or (iii) to its consultants, subcontractors or agents who need to know to accomplish the purposes of this Agreement. Each Party may use such Confidential Information only to the extent required to accomplish the purposes of this Agreement. Each Party will use at least the same standard of care as it uses to protect proprietary or confidential information of its own to ensure that its Affiliates, employees, agents, consultants and other representatives do not disclose or make any unauthorized use of the Confidential Information. Each Party will promptly notify the other upon discovery of any unauthorized use or disclosure of the Confidential Information. Confidential Information is understood to include, but not necessarily to be limited to, the structures of chemical compounds and the identification of chemical compounds as Collaboration Compounds, Active Compounds, Inactive Compounds, Lead Compounds, Development Compounds, or Products. 11.2 Exceptions. Confidential Information shall not include any information which the receiving Party can prove by competent evidence: (a) is now, or hereafter becomes, through no act or failure to act on the part of the receiving Party, generally known or available; (b) is known by the receiving Party at the time of receiving such information, as evidenced by its records; (c) is hereafter disclosed to the receiving Party by a Third Party, as a matter of right and without restriction on disclosure; (d) is independently developed by the receiving Party without the aid, application or use of Confidential Information; (e) is the subject of a written permission to disclose provided by the disclosing Party; or (f) is necessary to obtain regulatory approval for a Product, or patent protection with respect to Active Compounds, Lead Compounds, Development Compounds, or Products, and the uses and methods of manufacturing thereof. 12. PUBLICATIONS AND PUBLIC STATEMENTS 12.1 Publications. Each Party shall be permitted to publish any information, except Confidential Information, relating to the Research Program as long as the Party has the prior written permission of the other Party. Such permission shall be approved or disapproved within twenty-one (21) days of written request for permission. Such permission shall not be unreasonably withheld. 12.2 Public Statements. Neither Party shall use the name of the other Party in any public statement, prospectus, annual report or press release or other public communication (collectively "Public Statements") without the prior written approval of the other Party, which may not be unreasonably withheld or delayed; provided, however, that both Parties shall endeavor in good faith to give the other Party a minimum of two (2) business days to review such Public Statements; provided, further, that, upon approval of any such Public Statement, both Parties may disclose to third parties the information contained in such Public Statement without the further approval of the other; and provided, further, that if a Party does not approve such Public Statement, either Party may still use the name of the other Party in any Public Statement without the prior written approval of the other Party, if such Party is advised by counsel that such 19 20 disclosure is required to comply with applicable law. 13. *** 13.1 *** *** *** *** *** *** *** *** *** *** *** *** *** ***. 13.2 *** *** *** *** *** *** *** *** *** *** *** ***. 13.3 *** *** *** *** ***. *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 20 21 14. ASSIGNABILITY This Agreement may not be assigned by either Party without the prior written consent of the other Party; provided, however, that either Party may assign this Agreement, in whole or in part, to an Affiliate or to a successor of a Party in connection with the merger, consolidation or sale of all or substantially all of such Party's assets or that portion of its business pertaining to the subject matter of this Agreement. 15. DISPUTE RESOLUTION PROCEDURES 15.1 Senior Executives Discussions. If a decision is not reached by the RMC, the dispute will be resolved as set forth in Article 6 above. If a dispute arises between CombiChem and ImClone with respect to matters other than the management of the Research Program, either during or after the Research Period, such dispute will be referred to the appropriate senior management in the area of the dispute. If such senior management are unable to resolve such dispute, such dispute will be referred to the Chief Executive Officers of CombiChem and ImClone. If such officers are unable to reach an agreement within thirty (30) days following the initiation of discussions between them, such dispute shall be settled by arbitration as described in Section 15.2 below. 15.2 Binding Arbitration. If the parties have not been able to resolve the dispute as provided in Section 15.1 above, the dispute shall be finally settled by binding arbitration. Any arbitration hereunder shall be conducted under rules of the American Arbitration Association. The arbitration shall be conducted before *** If the Parties cannot agree on the choice of the arbitrator within a period of thirty (30) days after submission, then the arbitrator shall be appointed by the Court of Arbitration of the American Arbitration Association. Any such arbitration shall be held in a mutually agreeable location; provided, however that if the parties cannot so agree, the location(s) for such arbitration(s) shall alternate between San Diego, California and New York, New York, with the first such arbitration to be located in San Diego, California. The arbitrators shall have the authority to grant specific performance, and to allocate between the parties the costs of arbitration in such equitable manner as he or she may determine. The arbitral award (i) shall be final and binding upon the parties; and (ii) may be entered in any court of competent jurisdiction. 15.3 Injunctive Relief. Nothing contained in this Article 15 or any other provisions of this Agreement shall be construed to limit or preclude a Party from bringing any action in any court of competent jurisdiction for injunctive or other provisional relief to compel the other Party to comply with its obligations hereunder before or during the pendency of arbitration proceedings. *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 21 22 16. NOTICES Any notice required or permitted to be given hereunder shall be deemed sufficient if sent by facsimile letter or overnight courier, or delivered by hand to ImClone or CombiChem at the respective addresses and facsimile numbers as set forth below or at such other address and facsimile number as either Party hereto may designate. If sent by facsimile letter, notice shall be deemed given when the transmission is completed if the sender has a confirmed transmission report. If a confirmed transmission report does not exist, then the notice will be deemed given when the notice is actually received by the person to whom it is sent. If delivered by overnight courier, notice shall be deemed given when it has been signed for. If delivered by hand, notice shall be deemed given when received. if to CombiChem, to: CombiChem, Inc. 9050 Camino Santa Fe San Diego, California 92121 Attention: President Fax number: (619) 530-9998 with a copy to: Brobeck, Phleger & Harrison LLP 550 South Hope Street, 21st Floor Los Angeles, California 90071 Attention: Laurie A. Allen, Esq. Fax number: (213) 239-1324 if to ImClone, to: ImClone Systems Incorporated 180 Varick Street New York, New York 10014 Attn: Vice President, Business Development Fax number: (212) 645-2054 with a copy to: Hoffmann and Baron 350 Jericho Turnpike Jericho, New York 11753 Attn: Irving N. Feit, Esq. Fax number: (516) 822-3582 17. SURVIVAL The provisions of Sections 2.5, 5.1, 5.2, 7.2(c),10.3, 10.4, and Articles 1, 3, 8, 9, 11, 12, 13, 14, 15, 16, 18 and this Article 17 shall survive termination of this Agreement in addition to those provisions which by their terms survive. 18. ADDITIONAL TERMS 18.1 Entire Agreement. This Agreement and the Common Stock Purchase Agreement constitute the entire understanding between the Parties with respect to the subject matter hereto and supersedes and replaces all previous negotiations, understandings, representations, writings and contract provisions and rights relating hereof. The Parties agree that 22 23 all services provided hereunder shall be subject to and governed by the terms and provisions set forth herein, and none of the terms and conditions contained on any proposal, purchase order, invoice or other writing shall have any effect or change the provisions of this Agreement. 18.2 Amendment; No Waiver. No provision of this Agreement may be amended, revoked or waived except by a writing signed and delivered by an authorized officer of each Party. Any waiver on the part of either Party of any breach or any fight or interest hereunder shall not imply the waiver of any subsequent breach or waiver of any other right or interest. 18.3 Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, 9each of which shall remain in full force and effect. In addition, should the invalidity or unenforceability of any provision of this Agreement cause an unintended result or result in any unfairness to either Party, then ImClone and CombiChem shall promptly meet and negotiate in good faith to modify or amend this Agreement to change such result or to eliminate such unfairness. 18.4 Headings. The descriptive headings are inserted for convenience of reference only and are not intended to be part of or to affect the meaning of or interpretation of this Agreement. 18.5 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which together shall be deemed to be one and the same instrument. 18.6 Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of California, without regard to conflicts of laws principles. 19. WARRANTY Each Party warrants that it has the power to grant all of the rights granted and make such required assignments, and to assume all of the obligations required, under this Agreement. If, at the time a Patent application is to be filed by ImClone with respect to any Active Compound, Lead Compound, Development Compound or Products, CombiChem informs ImClone that CombiChem has the power to grant the exclusive rights to such Active Compound, Lead Compound, Development Compound or Products, and to assign such Patents related thereto, to ImClone in accordance with Sections 3.2 and 5.2 above, CombiChem further warrants that, in fact, as of such date, it has such power subject to the proviso that under no circumstances does CombiChem warrant to ImClone that its rights in any Active Compound, Lead Compound, Development Compound or Products are exclusive to the extent such Active Compound, Lead Compound, Development Compound or Products may be covered under the patent claims of Third Parties wherein such claims are not the direct result of a collaboration between the Third Party and CombiChem. 23 24 IN WITNESS WHEREOF, the parties have executed this Agreement to be effective as of the Effective Date. COMBICHEM, INC. IMCLONE SYSTEMS INCORPORATED By: /s/ Vicente Anido By:/s/ illegible -------------------------------- ------------------------------------- Its: President and CEO Its:CFO ------------------------------- ------------------------------------ 24 25 Appendix A *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 26 Appendix B *** *** *** *** *** *** *** *** *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. EX-10.23 3 EXHIBIT 10.23 1 EXHIBIT 10.23 COLLABORATIVE RESEARCH AND LICENSE AGREEMENT BETWEEN COMBICHEM, INC. AND ATHENA NEUROSCIENCES, INC. OCTOBER 15, 1997 2 COLLABORATIVE RESEARCH AND LICENSE AGREEMENT THIS COLLABORATIVE RESEARCH AND LICENSE AGREEMENT (the "Agreement") is entered into and made effective as of October 15, 1997 (the "Effective Date"), by and between COMBICHEM, INC., a Delaware corporation having its principal offices at 9050 Camino Santa Fe, San Diego, California 92121 ("CombiChem") and ATHENA NEUROSCIENCES, INC., a Delaware corporation and a wholly-owned subsidiary of Elan Corporation, plc ("Elan"), having its principal offices located at 800 Gateway Boulevard, South San Francisco, California 94080 ("Athena"). WHEREAS, CombiChem has developed and owns certain drug discovery technology and intellectual property rights, including chemical library design software, multi-parallel synthesis and purification methods, chemical libraries suitable for high throughput biological screening assays and medicinal chemistry (collectively, "CombiChem Technology"); WHEREAS, as of the Effective Date, Elan, Athena and their Affiliates have developed and own certain drug discovery and intellectual property rights, including certain assays, methods and know how regarding the *** among other things (collectively "Athena Technology"); WHEREAS, Athena desires to utilize CombiChem Technology for its drug discovery activities under Athena know-how concerning the identification and characterization of novel small molecule inhibitors for development as therapeutics for treatment of central nervous system conditions in humans; WHEREAS, the parties wish to collaborate in a Research Program against Target(s) ("Collaboration"); WHEREAS, during the Research Period and for purposes of the Collaboration, the Parties intend to focus on up to six (6) Collaboration Targets; NOW, THEREFORE, the Parties agree as follows: 1. DEFINITIONS 1.1 "Abandoned Target" shall have the meaning given in Section 4.1. 1.2 "Abandoned Compound" shall have the meaning given in Section 4.1. 1.3 "Active Compound(s)" means a compound (or compounds) which (a) (i) is selected by *** under the Research Program from Collaboration Compounds under Section 4.2, or *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 2 3 (ii) is a Derivative of a Collaboration Compound which is so by *** and (b) shows In Vitro Activity. 1.4 "Affiliate" of a Party means any corporation or other business entity controlled by, controlling or under common control with, such Party. For this purpose "control" shall mean direct or indirect beneficial ownership of more than fifty percent (50%) of the voting securities or income interest in such corporation or other business, or if not meeting the preceding requirements, any company owned or controlled by or owning or controlling such Party at the maximum control or ownership right permitted in the country where such company exists. 1.5 "Athena Compound" means a chemical compound that is proprietary to Athena or whose use or manufacture is proprietary to Athena or its Affiliates. 1.6 "Athena Technology" shall have the meaning set forth in the preamble of this Agreement. 1.7 "Collaboration" has the meaning set forth in the preamble. 1.8 "Collaboration Compound(s)" means a compound (or compounds) which (a) is synthesized following the Effective Date for screening against a Collaboration Target under the Research Program, (b) is a pre-existing or hereafter acquired CombiChem compound which CombiChem desires to designate as a Collaboration Compound, or (iii) is a pre-existing or hereafter acquired Athena compound which Athena desires to designate as a Collaboration Compound. 1.9 "Collaboration Library" means a library synthesized under the direction of the RMC, containing compounds designed to provide information regarding activity against a specific Collaboration Target. 1.10 "Collaboration Target(s)" means either an Initial Target or an Optional Target. 1.11 "CombiChem Compound" means a chemical compound that is proprietary to CombiChem, or whose use or manufacture is proprietary to CombiChem. 1.12 "CombiChem Technology" has the meaning set forth in the preamble. 1.13 "Confidential Information" includes, but is not limited to, (a) all information and materials received by either Party from the other Party pursuant to this Agreement which is confidential under Article 11; *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 3 4 (b) all information and materials by either Party arising out of the Collaboration during the Research Period; (c) all Daughter Libraries, excluding Inactive Compounds and Returned Compounds; and (d) the financial terms of this Agreement. 1.14 "Daughter Libraries" shall mean the compound libraries which are designed and synthesized as a part of the Collaboration. 1.15 "Derivative" shall mean a compound (or compounds) which has resulted from subsequent chemical synthesis to generate an Active Compound or Development Compound in support of the Research Program. 1.16 "Development Compound(s)" means a compound ( or compounds) which (a) (i) is an Active Compound or (ii) is a Derivative of an Active Compound; and (b) is determined by *** to be appropriate for preclinical studies for the purpose of IND filing by Athena. 1.17 "Due Diligence" means the use of by a Party of its or its Affiliates' resources in a manner which is consistent with the exercise of reasonable and prudent scientific and business judgment as applied to other programs of Athena or CombiChem, as the case may be, targeting products aimed at markets or patient groups of similar sizes and of similar scientific and commercial potential. With respect to any Development Compound, *** *** *** *** *** . For purposes of this Agreement, failure to exercise Due Diligence by any Party shall be established if such Party receives written notice describing such failure and does not cure such failure within ninety (90) days of the receipt of such notice. 1.18 "Exclusivity Period" means the Research Period *** 1.19 "Field" means all therapeutic and diagnostic indications in humans for any target against which an Active Compound, Development Compound or Products may be directed. 1.20 "First Commercial Sale" of a Product shall mean the first sale for use or consumption of such Product in a country after required marketing and pricing approval has been granted by the governing health regulatory authority of such country. Sale to an Affiliate shall not constitute a First Commercial Sale unless the Affiliate is the end user of the Product. *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 4 5 1.21 "FTE" shall mean a full-time equivalent employee of CombiChem. For of this Agreement, the FTEs shall include *** *** 1.22 "Inactive Compound(s)" means a Collaboration Compound(s) which does not have the In Vitro Activity required for an Active Compound. 1.23 "In Vitro Activity" shall mean the observation of *** in assays as described by Athena in the Research Plan for each Collaboration Target. 1.24 "Initial Target" shall have the meaning set forth in Section 3.1 hereof. 1.25 "Net Sales" means the gross sales invoiced by Athena or its Affiliates for Products to non-Affiliated Third Parties (and to Affiliates who are the end users of such Products) less actual deductions or returns (including withdrawals and recalls), rebates (price reductions, including formulary or Medicaid and similar types of rebates, e.g. chargebacks), cash, trade or volume (quantity) discounts, discounts granted at the time of invoicing, the cost of transport, insurance, delivery, sales taxes and use, tariff, excise or other taxes (other than income taxes) directly linked to and included in the gross sales amount as computed on a product-by-product basis for the countries concerned, whereby the amount of such sales in foreign currencies is converted into United States dollars at the exchange rate of the last business day for each calendar month as reported in The Wall Street Journal. 1.26 *** *** . 1.27 "Patent" means (a) valid and enforceable Letters Patent, and any non-U.S. equivalent, including any extension (including Supplemental Protection Certificates), registration, confirmation, reissue, continuation, divisionals, continuation-in-part, reexamination or renewal thereof, or (b) pending applications for any of the foregoing, whether filed or issued before or after the Effective Date of this Agreement. 1.28 "Party" means CombiChem or Athena, as the case may be, including their respective Affiliates, permitted successors and assigns. 1.29 "Product(s)" means any product containing an Active Compound or Development Compound with such compound as the active ingredient and which is granted regulatory approval by the governing health regulatory authority of the applicable country for marketing in the Field. 1.30 "Project Team" shall have the meaning set forth in Section 2.1(c). 1.31 "Proposed Targets" shall have the meaning given in Section 3.1. 1.32 *** *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 5 6 *** ***. 1.33 "Research Management Committee" or "RMC" has the meaning set forth in Article 6 below. 1.34 "Research Period" means the initial term of the Collaboration commencing on the Effective Date and *** unless earlier terminated, which can be extended in accordance with Section 7.1 below. 1.35 "Research Plan" means the research plan to be agreed in writing between the Parties, which describes the research activities to be performed for each Collaboration Target. 1.36 "Research Program" means the research to be conducted for the Collaboration including, without limitation, the activities described in the Research Plan and set forth in Sections 2.1 and 2.2 of this Agreement. 1.37 "Returned Compound" shall have the meaning set forth in Section 9.2. 1.38 "Royalty Term" means, in the case of any Product, in any country, the period of time commencing on the First Commercial Sale and ending upon the later of *** *** from the date of First Commercial Sale in such country; or (b) the expiration of the last-to-expire Patent resulting from the Research Program filed in the Field during the Exclusivity Period with claims covering that Product in the relevant country. 1.39 "Target" means a biomolecular entity that a small molecule is synthesized against wherein the small molecule demonstrates relevant activity. 1.40 "Territory" means the entire world. 1.41 "Third Party" means an entity other than CombiChem or Athena or their respective Affiliates. 1.42 "UIL" means CombiChem's proprietary Universal Informer Library(TM). 2. RESEARCH COLLABORATION 2.1 CombiChem Responsibilities. CombiChem shall with Due Diligence provide the following resources to Athena and conduct the following activities under the Research Program and as more fully described in the Research Plan: (a) During the Research Period, CombiChem shall (i) review data and information regarding the Collaboration Targets provided by Athena; (ii) based on such data and information and using the *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 6 7 CombiChem Technology, design Daughter Libraries; and (iii) supply all lead chemistries and synthesize compounds as provided in Section 5.4 below. (b) During the Research Period, CombiChem shall keep Athena informed of its activities performed in connection with the Collaboration, including, without limitation, providing Athena with data and information (and, upon Athena's request, reasonable quantities of samples pursuant to Section 5.4) regarding the status of all Collaboration Compounds prior to the meetings of the Research Management Committee. (c) Subject to Section 2.3, Article 3 and Section 8.3, and at all times during the Research Period, *** *** *** *** *** *** *** ***. 2.2 Athena Responsibilities. Athena shall with Due Diligence provide the following resources to CombiChem and conduct the following activities under the Research Program as more fully described in the Research Plan: (a) Athena shall provide CombiChem with funding for the Collaboration as set forth in Article 8, provide screening, biological and structural data and information (including leads and/or screening hits and assay methods relating to Collaboration Compounds) to CombiChem with respect to the Collaboration necessary for CombiChem to perform its duties under this Agreement, and will assume scientific, financial and administrative responsibility for screening and biological support activities, drug development and regulatory filings during and after the term of the Collaboration on the terms set forth below. *** *** ***. (b) During the Research Period, Athena shall provide CombiChem with data and information regarding Collaboration Compounds and the Collaboration Target assays developed by Athena under the Research Program prior to the meetings of the Research Management Committee. *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 7 8 (c) During the Exclusivity Period, Athena shall *** *** ***. (d) During the Exclusivity Period, with respect to any Collaboration Target against which an Active Compound has designated by the RMC, Athena shall (i) *** (ii) endeavor to determine Development Compounds, and (iii) endeavor to develop Products. *** *** ***. (e) Following the first IND filing through First Commercial Sale, Athena shall provide CombiChem with an annual report summarizing Athena's activities in developing Development Compounds. 2.3 Conduct of Research Program. The Parties hereby agree that the Research Programs shall be carried out in accordance with the Research Plan, as amended from time to time. The Research Management Committee shall review the Research Plan on an ongoing basis and may make changes to the Research Plan so long as such changes are mutually agreed to by CombiChem and Athena. *** *** *** *** *** *** *** *** ***. 2.4 Third Party Licenses. Each Party shall be solely responsible for any Third Party license fees required to perform its obligations under this Agreement. 3. TARGETS 3.1 *** *** *** *** *** *** *** ***. *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 8 9 3.2 *** *** *** *** *** *** *** *** *** *** *** *** *** ***. 4. EXCLUSIVITY 4.1 Collaboration Target Exclusivity. Prior to designating a Collaboration Target for an active Research Program under Article 3, and thereafter so long as *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** ***. 4.2 Active Compounds. Following the designation of any Collaboration Compound as an Active Compound, such Active Compound shall be exclusively available to Athena for research or application to any Target, within or outside the Collaboration, during the *** and CombiChem shall not knowingly work on or knowingly provide information regarding such Active Compound to any Third Party, except to reject and take any steps necessary to protect Athena's exclusivity hereunder. Following the expiration of the *** *** Active Compounds for that Target *** *** shall be deemed to be Inactive Compounds for all purposes ; provided, that any Active Compound which is *** *** *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 9 10 *** *** ***. 4.3 Inactive and Returned Compounds. Any Inactive Compounds and Returned Compounds shall be *** *** following the designation of a Collaboration Compound as an Inactive Compound or Returned Compound. 4.4 Duration of Exclusivity for Collaboration Targets. Notwithstanding any other provision of this Agreement, *** *** *** *** *** *** *** *** *** *** ***. 4.5 *** *** *** *** *** *** *** ***. *** *** *** *** *** *** *** *** ***. *** *** *** *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 10 11 *** *** ***. 4.6 Survival. This Article 4 shall survive termination or expiration of this. 5. COLLABORATION COMPOUNDS 5.1 Pre-Existing Compounds. Neither Party shall have any rights to any pre-existing compound of the other Party unless and until such compound is designated as a Collaboration Compound by such Party. Additionally, CombiChem may decline (after informing Athena) to synthesize a particular compound or library of compounds by reason of existing Patents or contractual obligations. 5.2 *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** ***. 5.3 Structural Information. Neither Party shall disclose the structure of any Active Compound to any Third Party without the other Party's written permission, unless required to do so by law, in which case such Party shall promptly notify the other Party of such required disclosure. If a subpoena or other legal process concerning the same is served upon either Party, *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 11 12 the other Party shall cooperate with the Party served in any effort to contest the validity of such subpoena or other legal process. 5.4 Supply of Collaboration Compounds. Aliquots of at least *** milligrams of any Collaboration Compound that has been synthesized will be prepared and given to Athena. CombiChem shall replenish that amount upon Athena's reasonable request. CombiChem shall maintain aliquots of any Collaboration Compound that has been synthesized by CombiChem. CombiChem shall also provide Athena with additional requirements of samples at CombiChem's cost. 6. RESEARCH MANAGEMENT COMMITTEE The design, review and conduct of the Research Program will be coordinated by the Research Management Committee, which will meet regularly on a mutually-agreeable schedule. Each Party shall bear its own expenses related to such meetings. The Research Management Committee may establish and amend or revise the Research Plan as reasonable and necessary to reflect the scientific progress and work performed under the Research Program, such amendments to be mutually agreed to in writing by Athena and CombiChem. The Research Management Committee will consist of an equal number of members from Athena and CombiChem and will include appropriate representatives from Athena and CombiChem as mutually agreed. The co-chairs of the Research Management Committee will initially be the Vice President, Chemistry of CombiChem and the Vice President, Research of Athena and subsequently may change as each Party determines for its co-chair. Decisions of the Research Management Committee shall be by consensus. *** *** *** *** *** ***. 7. RESEARCH PERIOD; TERMINATION OF RESEARCH PROGRAM 7.1 Research Period: Option to Extend the Research Period. The initial term of the Collaboration shall be *** subject to extension upon mutual agreement. To extend the Research Period, Athena must notify CombiChem no later than ninety (90) days prior to the then-current expiration date and the Parties shall negotiate in good faith the terms and conditions of any such extension. 7.2 Termination of Research Program Upon Breach. The Research Program and/or this Agreement may be terminated by a Party for the material breach by the other Party as provided by Section 10.2. 7.3 Termination by Athena. Athena may terminate this Agreement effective at any time after *** in its sole discretion, upon ninety (90) days' prior written notice. Athena may also terminate any part of the Research Program directed at one or *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 12 13 more of the Collaboration Targets, also upon ninety (90) days' prior written notice, at any time during the Collaboration, in which case the RMC shall reallocate the FTEs affected to any of the other Collaboration Targets. 8. CONSIDERATION 8.1 *** *** *** *** *** *** *** ***. 8.2 Equity Purchase. *** an Affiliate of Athena, shall purchase shares of Common Stock of CombiChem pursuant to the terms of that certain Common Stock Purchase Agreement, dated as of the Effective Date, by and between CombiChem and EIS (the "Stock Purchase Agreement"). 8.3 Program Funding. (a) *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** ***. (b) Expansion of Project Team. Athena may request that CombiChem expand its Project Team during the Research Period in order to accelerate work on Collaboration Targets and/or to add Optional Targets. In such event, the RMC shall promptly confer as to the appropriate number of FTEs to be added to the Project Team, at a cost to Athena of U.S. *** per FTE to be paid as specified in Section 8.3(a). *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 13 14 8.4 Milestone Payments. Within thirty (30) days of the occurrence of a development milestone triggered by the activities of Athena or its Affiliates as shown on Appendix A, Athena shall pay CombiChem the related milestone payment in U.S. dollars as set forth on Appendix A. Such payments shall apply to any milestone reached by an Active Compound, Development Compound or Product, whether the Target is within or outside the Collaboration. 8.5 Royalties. During the Royalty Term, Athena will pay CombiChem a *** of Net Sales of Products sold by Athena or its Affiliates in all countries in the Territory. Each payment of royalties shall be accompanied by a report of Net Sales of Products in sufficient detail to permit confirmation of the accuracy of the royalty payment made. 8.6 Manner and Place of Payment. Royalty payments and reports for Net Sales of Products shall be calculated in local currencies and reported for each calendar quarter. All royalty payments owed under this Agreement shall be made by wire transfer to the bank account to be designated by CombiChem within sixty (60) days following the end of each such calendar quarter. 8.7 Records and Audit. During the term of this Agreement and for a period of three (3) years thereafter, Athena shall keep complete and accurate records pertaining to the sale or other disposition of Products in sufficient detail to permit CombiChem to confirm the accuracy of all payments due hereunder. CombiChem shall have the right to cause an independent certified public accounting firm reasonably acceptable to Athena to audit such records to confirm Athena's Net Sales for the preceding year. Any information obtained during such audit shall be treated as Confidential Information. Such audits may be exercised after reasonable notice during normal business hours of Athena no more than once each year. CombiChem shall bear the full cost of such audit unless such audit discloses a deficiency of the *** from the amount of the Net Sales reported by Athena for such audited period. In such case, Athena shall bear the reasonable cost of such audit. 8.8 Taxes. All income and other taxes levied on account of the royalties and other payments accruing to CombiChem under this Agreement shall be paid by CombiChem, including taxes levied thereon as income to CombiChem. If provision is made in law or regulation for withholding, such tax shall be deducted from the royalty or other payment made by Athena to the proper taxing authority and a receipt of payment of the tax secured and promptly delivered to CombiChem. Each Party agrees to assist the other Party reasonably in claiming exemption from such deductions or withholdings under any double taxation or similar agreement or treaty from time to time in force. 9. LICENSE GRANTS; OUTLICENSE 9.1 CombiChem License Grant to Athena. Subject to the terms and conditions of this Agreement, CombiChem hereby grants to Athena an exclusive, royalty-free, worldwide license, with the right to sublicense to use such CombiChem Technology as is necessary to make, *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 14 15 have made, use, have used, sell, have sold, import and export Collaboration Compounds or Products in the Territory. Such license shall remain exclusive (including as to CombiChem) in relation to each Active Compound, Development Compound and/or Product so long as Athena or its licensee continues to develop and commercialize such Active Compound, Development Compound and/or Product against a Collaboration Target with Due Diligence. 9.2 Athena License Grant to CombiChem. Subject to Article 4 and following the failure of Athena or its licensee to develop and commercialize with Due Diligence an Active Compound, a Development Compound or Product, as the case may be (collectively, and together with all Abandoned Compounds, "Returned Compounds"), Athena shall grant to CombiChem a non-exclusive, royalty-free license, with the right to sublicense, under those Athena Patents and know-how which are resulting from the Research Program and related exclusively to the Returned Compound, to make, have made, use, have used, sell, have sold, import and export such Returned Compound in the Territory. 9.3 Athena Outlicense. Athena shall have the right to transfer, assign or to a Third Party the Products or Patents covering the Products, subject to right to receive *** *** *** *** *** *** ***. All Payments shall be made to CombiChem by wire transfer to such bank account designated by CombiChem within five (5) business days after receipt by Athena or its Affiliates of such Payments from the Third Party. As an express condition of any such outlicense, any such licensee shall be required to agree in writing to be bound by due diligence, royalty reporting and recordkeeping and inspection provisions no less stringent than those contained in this Agreement. In addition, CombiChem shall have the right to receive all audit reports relating to sales of Products of Athena's licensees, and to cause Athena or its Affiliates or successors to have an independent certified public accounting firm (reasonably acceptable to Athena) audit such licensee's records on the same terms as those specified in Section 8.6. Failure of such licensee to make any milestone or royalty payment in respect of such Product shall not relieve Athena of its obligations to make royalty and milestone payments to CombiChem hereunder. 9.4 Rights to Inactive Compounds. Except for any Athena Compounds (which remain proprietary to Athena), each of Athena and, subject to Athena's Patent rights, CombiChem shall have rights to make, have made, use, have used, sell, have sold, import and export Inactive Compounds or products containing Inactive Compounds. *** *** *** *** *** ***. *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 15 16 10. TERM AND TERMINATION OF THE AGREEMENT 10.1 Term. The term of this Agreement shall commence upon the Effective Date of this Agreement, and unless earlier terminated as provided in this Agreement, shall expire on *** . 10.2 Termination by Athena or CombiChem. If either Party materially breaches this Agreement and fails to remedy that breach within ninety (90) days of receiving written notice thereof from the other Party, or enters into any arrangement of composition with its creditors or goes into liquidation, insolvency, bankruptcy, receivership or reorganization proceedings, whether voluntarily or compulsorily which is not dismissed within ninety (90) days, then the other Party may at any time, by notice in writing or by telefax, terminate this Agreement. Within sixty (60) days following termination for any Research Program and/or research related to any Target under this Agreement, the RMC shall prepare a detailed, final written report to each Party, and provide any remaining supply of compounds in synthesis to date, for each Target or Research Program being terminated. 10.3 After Termination. Any termination of this Agreement or the Research Program shall be without prejudice to the accrued rights of either Party prior to the termination. In case of termination of this Agreement or the Research Program pursuant to Section 10.2 above, all royalty, milestone, Payment and confidentiality obligations set forth in Sections 8.1, 8.4, 8.5, 9.3, 9.4 and Articles 11 and 12 shall survive any such termination. Moreover, Athena shall not be entitled to any refund of any payments made to CombiChem hereunder upon the expiration of the term of this Agreement or earlier termination pursuant to this Article 10. 10.4 Effect of Termination on Licensees. In the event or any termination of this Agreement pursuant to this Article 10 where such termination shall not have been caused by the action of inaction on the part of any respective licensee of Athena or CombiChem, or by any breach by such licensee of its obligations under its licensee from Athena or CombiChem, as appropriate, such termination of this Agreement shall be without prejudice to the rights of each non-breaching licensee and such licensee shall be deemed to be a direct licensee hereunder. 11. CONFIDENTIAL INFORMATION 11.1 Nondisclosure. During the term of this Agreement and for a period of *** *** after termination thereof, each Party will maintain all Confidential Information in trust and confidence and will not disclose any Confidential Information to any third party or use any Confidential Information for any purpose except (i) as expressly authorized by this Agreement, (ii) as required by law or court order, after as much advance notice as is practical to the other Party, (iii) to its consultants, subcontractors or agents who need to know to accomplish the purposes of this Agreement and who are bound by equivalent written confidentiality obligations. Each Party may use the other Party's Confidential Information only to the extent required to accomplish the purposes of this Agreement. Each Party will use at least the same standard of care as it uses to protect proprietary or confidential information of its own to ensure that its *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 16 17 Affiliates, employees, agents, consultants and other representatives do not disclose or make any unauthorized use of the Confidential Information. Each Party will promptly notify the other upon discovery of any unauthorized use or disclosure of the Confidential Information. 11.2 Exceptions. Confidential Information shall not include any information which the receiving Party can prove by competent evidence: (a) is now, or hereafter becomes, through no act or failure to act on the part of the receiving Party, generally known or available; (b) is known by the receiving Party at the time of receiving such information, as evidenced by its records; (c) is hereafter disclosed to the receiving Party by a Third Party, as a matter of right and without restriction on disclosure; (d) is independently developed by the receiving Party without the aid, application or use of Confidential Information; or (e) is the subject of a written permission to disclose provided by the disclosing Party. 12. PUBLICATIONS AND PUBLIC STATEMENTS 12.1 Publications. Without affecting obligations under Article 11 above, neither Party shall publish any information with respect to Collaboration Compounds or Development Compound during the Exclusivity Period without the prior written permission of the other Party. Such permission shall be approved or disapproved within thirty (30) days of written request for permission unless the other Party requests additional time (not to exceed ninety (90) days) for the purpose of protecting its intellectual property position. Such permission shall not be unreasonably withheld. The Party proposing to publish such information shall give the other Party ninety (90) days prior written notice and an opportunity to review such manuscript in order to determine the patentability of the information contained therein. 12.2 Public Statements. Neither Party shall use the name of the other Party in any public statement, prospectus, annual report or press release or other public communication (collectively "Public Statements") without the prior written approval of the other Party, which may not be unreasonably withheld or delayed; provided, however, that both Parties shall endeavor in good faith to give the other Party a minimum of two (2) business days to review such Public Statements; provided, further, that, upon approval of any such Public Statement, both Parties may disclose to Third Parties the information contained in such Public Statement without the further approval of the other; and provided, further, that if a Party does not approve such Public Statement, either Party may still use the name of the other Party in any Public Statement without the prior written approval of the other Party, if such Party is advised by counsel that such disclosure is required to comply with applicable law. 17 18 13. *** 13.1 *** *** *** *** *** *** ***. 13.2 *** *** *** *** *** ***. 13.3 *** *** *** *** ***. 14. ASSIGNABILITY This Agreement may not be assigned by either Party without the prior written consent of the other Party, not to be unreasonably withheld; provided, however, that either Party may assign this Agreement, in whole or in part, to an Affiliate *** *** or to a successor of a Party in connection with the merger, consolidation or sale of all or substantially all of such Party's assets or that portion of its business pertaining to the subject matter of this Agreement (and upon doing so will promptly notify the other Party in writing); provided that the assigning Party remains fully liable as obligated hereunder. 15. DISPUTE RESOLUTION PROCEDURES 15.1 Senior Executives Discussions. If a decision on a matter regarding the management of the Research Program as provided herein is not reached by the RMC, the dispute will be resolved as set forth in Article 6 above. If a dispute arises between CombiChem and Athena with respect to matters other than the management of the Research Program, either during or after the Research Period, such dispute will be referred to the appropriate senior management in the area of the dispute. *** *** *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 18 19 *** *** ***. 15.2 Binding Arbitration. If the parties have not been able to resolve the dispute as provided in Section 15.1 above, the dispute shall be finally settled by binding arbitration. Any arbitration hereunder shall be conducted under rules of the American Arbitration Association. The arbitration shall be conducted before three arbitrators chosen according to the following procedure: each of the parties shall appoint one arbitrator and the two so nominated shall choose the third. If the arbitrators chosen by the parties cannot agree on the choice of the third arbitrator within a period of thirty (30) days after their appointment, then the third arbitrator shall be appointed by the Court of Arbitration of the American Arbitration Association. If CombiChem brings an arbitration action, such arbitration shall occur in San Francisco, California. If Athena brings an arbitration action, such arbitration shall occur in San Diego, California. The arbitrators shall have the authority to grant specific performance, and to allocate between the parties the costs of arbitration in such equitable manner as they determine. The arbitral award (i) shall be final and binding upon the parties; and (ii) may be entered in any court of competent jurisdiction. 15.3 Injunctive Relief. Nothing contained in this Article 15 or any other provisions of this Agreement shall be construed to limit or preclude a Party from bringing any action in any court of competent jurisdiction for injunctive or other provisional relief to compel the other Party to comply with its obligations hereunder before or during the pendency of arbitration proceedings. 16. NOTICES Any notice required or permitted to be given hereunder shall be deemed sufficient if sent by facsimile letter or overnight courier, or delivered by hand to Athena or CombiChem at the respective addresses and facsimile numbers as set forth below or at such other address and facsimile number as either Party hereto may designate. If sent by facsimile letter, notice shall be deemed given when the transmission is completed if the sender has a confirmed transmission report. If a confirmed transmission report does not exist, then the notice will be deemed given when the notice is actually received by the person to whom it is sent. If delivered by overnight courier, notice shall be deemed given when it has been signed for. If delivered by hand, notice shall be deemed given when received. if to CombiChem, to: CombiChem, Inc. 9050 Camino Santa Fe San Diego, California 92121 Attention: President Fax number: (619) 530-9998 *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 19 20 with a copy to: Brobeck, Phleger & Harrison LLP 550 South Hope Street, 21st Floor Los Angeles, California 90071 Attention: Laurie A. Allen, Esq. Fax number: (213) 239-1324 if to Athena, to: Athena Neurosciences, Inc. 800 Gateway Boulevard South San Francisco, California 94080 Attn: General Counsel Fax number: (415) 875-3620 17. SURVIVAL The provisions of Sections 2.4, 5.1, 5.2, 5.3, 10.3, 10.4 and Articles 4, 8, 9, 11, 12, 13, 15, and this Article 17 shall survive termination of this Agreement in addition to those provisions which by their terms survive. 18. ADDITIONAL TERMS 18.1 Entire Agreement. This Agreement and the Common Stock Purchase Agreement constitute the entire understanding between the Parties with respect to the subject matter hereto and supersedes and replaces all previous negotiations, understandings, representations, writings and contract provisions and rights relating hereof. 18.2 Amendment; No Waiver. No provision of this Agreement may be amended, revoked or waived except by a writing signed and delivered by an authorized officer of each Party. Any waiver on the part of either Party of any breach or any fight or interest hereunder shall not imply the waiver of any subsequent breach or waiver of any other right or interest. 18.3 Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, each of which shall remain in full force and effect. 18.4 Headings. The descriptive headings are inserted for convenience of reference only and are not intended to be part of or to affect the meaning of or interpretation of this Agreement. 18.5 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which together shall be deemed to be one and the same instrument. 20 21 18.6 Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of California, without regard to conflicts of laws principles. 18.7 Further Assurances. At any time and from time to time after the Effective Date, the Parties shall each do, execute, acknowledge and deliver, and cause to be done, executed, acknowledged or delivered, all such further acts, transfers, conveyances, or assignments as may be reasonably required to carry out the transactions contemplated by this Agreement 19. REPRESENTATIONS AND WARRANTIES 19.1 Authorization. All action on the part of each of CombiChem, Athena and their respective officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement and the performance of all obligations of CombiChem, Athena and Athena, respectively, hereunder has been taken. *** *** ***. 19.2 Compliance with Other Instruments. The execution, delivery and performance by CombiChem of this Agreement and the consummation of the Research Program hereunder will not result in a violation of, or be in material conflict with, or constitute a material default, under any agreement in existence as of the Effective Date between CombiChem and its Third Party Collaborators. Subject to Section 5.2 and except for the rights expressly reserved by CombiChem therein, from the Effective Date until the expiration or termination of this Agreement, CombiChem agrees that it shall not enter into any agreement with any Third Party collaborator which would be in material conflict with, or cause a default under, this Agreement. 19.3 Rights to Intellectual Property. Each Party warrants that it has the power to grant all of the rights granted and make such required assignments, and to assume all of the obligations required, under this Agreement. Under no circumstances does CombiChem warrant to Athena that its rights in any Active Compound, Development Compound or Products are exclusive to the extent such Active Compound, Development Compound or Products may be covered under the patent claims of Third Parties wherein such claims are not the direct result of a collaboration between the Third Party and CombiChem. *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. 21 22 IN WITNESS WHEREOF, the parties have executed this Agreement to be effective as of the Effective Date. COMBICHEM, INC. ATHENA NEUROSCIENCES, INC. By: Vicente Anido, Jr. By:/s/illegible -------------------------------- ------------------------------------- Its: President & CEO Its:Vice President & General Counsel ------------------------------- ------------------------------------ [SIGNATURE PAGE TO THE COLLABORATIVE RESEARCH AND LICENSE AGREEMENT] 22 23 Appendix A *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the commission. -----END PRIVACY-ENHANCED MESSAGE-----