<PAGE>
EXHIBIT 10.17
*** TEXT OMITTED AND FILED SEPARATELY
PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST
UNDER 17 C.F.R. SECTION 200.80(b)(4)
AND RULE 406 UNDER THE SECURITIES
ACT OF 1933, AS AMENDED
COLLABORATION AND LICENSE AGREEMENT
THIS
RESEARCH COLLABORATION AND LICENSE AGREEMENT (the "AGREEMENT")
is
made and entered into as of April 14, 2003
(the "EFFECTIVE DATE") by and between
STRUCTURAL GENOMIX, INC. a corporation
organized and existing under the laws of
the State of Delaware and having its
principal place of business at 10505
Roselle Street, San Diego, CA 92121
("SGX"), and ELI LILLY AND COMPANY, a
corporation organized and existing under
the laws of the State of Indiana and
having its principal place of business at
Lilly Corporate Center, Indianapolis,
Indiana 46285 (together with its
Affiliates, "LILLY"). SGX and Lilly may be
referred to herein individually as a
"Party" and collectively as the "Parties."
BACKGROUND
WHEREAS,
SGX is in the business of conducting research in the field of
high throughput protein structure
determination and structure directed drug
discovery;
WHEREAS,
Lilly is in the business of discovering, developing,
manufacturing and commercializing
pharmaceuticals;
WHEREAS,
SGX and Lilly wish to enter into a collaborative research
program
to perform structure determination of Lilly
drug targets and compounds provided
by Lilly; and
WHEREAS,
Lilly desires to obtain access and licenses to certain
technologies and processes of SGX and SGX
is willing to grant such access and
licenses on the terms set forth in this
Agreement.
NOW,
THEREFORE, in consideration of the foregoing and the covenants
and
promises contained in this Agreement, the
Parties hereby agree as follows:
1. DEFINITIONS
1.1
"Affiliate" means, with respect to a Party hereto, a
corporation,
company or other entity that is owned or
controlled by such Party by virtue of
such Party's direct or indirect ownership
or control of more than fifty percent
(50%) of the outstanding shares or
securities (representing the right to vote
for the election of directors or other
managing authority) of such corporation,
company or other entity, but such
corporation, company or other entity shall be
deemed to be an Affiliate only so long as
such ownership or control exists.
1.2
"Collaboration" means the activities conducted by the Parties
in
connection with the Research Plan and the
Technology Installation Plan.
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1.3
"Collaboration Target(s)" means the targets identified in the
attached
Exhibit A, as may be modified from time to
time in accordance with Section
2.6(b).
1.4
"Collaboration Technology" means Patent Rights and Know-How which
are
conceived or reduced to practice or
otherwise developed by or on behalf of Lilly
or SGX, or jointly by Lilly and SGX during
and in the performance of the
Research Collaboration; provided however,
Collaboration Technology does not
include SGX Background Technology, SGX
Process Technology, SGX Additional
Technology or Lilly Background
Technology.
1.5
"Controls" or "Controlled" means possession of the ability to
grant
the licenses or sublicenses as provided for
herein, without violating the terms
of any agreement or other arrangement with
a Third Party.
1.6
"[...***...]" means a [...***...] included in the Research
Collaboration in accordance with Section
[...***...] and supplied by Lilly to
SGX (including [...***...]), which is
[...***...], and which SGX agrees to use
reasonably diligent efforts to
[...***...].
1.7
"Eliminated Target" means a Collaboration Target as further defined
in
Section 2.9.
1.8 "FTE"
means a full time equivalent person year (consisting of a total
of [...***...] ([...***...]) hours per
year) of scientific or technical work
carried out by a qualified SGX Employee on
or directly related to, the Research
Plan or the Technology Installation
Plan.
1.9 "IT Infrastructure"
means the hardware and software listed in Part 2
of the attached Exhibit D.
1.10 "JSC"
has the meaning ascribed such term in Section 2.7.
1.11
"Know-How" means all ideas, inventions, instructions, designs,
processes, formulas, software, materials,
methods, processes, techniques, and
data and all intellectual property rights
therein.
1.12
"Licensed Technology" means (i) SGX Process Technology; and (ii)
SGX
Improvements, Other Inventions, and SGX
Research Stage Technology which Lilly
elects to have installed at a Lilly
Facility pursuant to Section 3.6(a).
1.13
"Lilly Background Technology" means Patent Rights and Know-How
which
are: (a) owned or Controlled by Lilly on
the Effective Date or during the Term
of the Research Collaboration; (b)
developed by Lilly (i) outside of the
Research Collaboration or (ii) within the
Research Collaboration but are of
general application (for example, have
application to other proteins in addition
to the Collaboration Targets); and (c)
necessary for the conduct of the Research
Collaboration. Lilly Background Technology
includes Lilly Compounds.
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1.14
"Lilly Compound" means a [...***...] that is provided by Lilly
to
SGX. Lilly Compound does not include
Reference Compounds.
1.15
"Lilly Facility" means the Lilly San Diego Facility or the
Lilly
Indianapolis Facility.
1.16
"Lilly Improvements" means Patent Rights and Know How owned or
Controlled by Lilly covering improvements,
enhancements or modifications to SGX
Process Technology created by or on behalf
of Lilly using SGX Process
Technology, during the Technology Awareness
Period, that Lilly has installed at
and are in productive use by the protein
crystallography group at Lilly using
the SGX Process Technology and are
necessary or useful for the operation of the
SGX Process Technology.
1.17
"Lilly Materials" means the [...***...] embodying Collaboration
Targets, Lilly Compounds, Lilly Reference
Compounds and any [...***...] used to
express Collaboration Targets, in each
case, which are owned or Controlled by
Lilly.
1.18
"Lilly New Developments" means Patent Rights and Know-How owned
or
Controlled by Lilly, covering methods,
systems, programs, technology and
software created by or on behalf of Lilly
during the Technology Awareness
Period, that are of application in the
field of [...***...], that Lilly has
installed at and are in productive use by
the [...***...] group at Lilly, but
that are not Lilly Improvements.
1.19
"Lilly San Diego Facility" means either (i) the facility known
as
10575 Roselle Street, San Diego, CA 92121
or (ii) the approximately 7,000 sq ft
of available space in SGX's premises at
10581 Roselle Street, San Diego, CA
92121, as mutually agreed by the Parties as
soon as practicable following the
Effective Date.
1.20
"Lilly Indianapolis Facility" has the meaning ascribed to such
term
in Section 3.2(b).
1.21
"Other Invention" means an invention made by a Party or jointly
by
the Parties in the course of executing the
Technology Installation Plan.
1.22
"Operating Team" has the meaning ascribed to such term in Section
2.8
1.23
"Patent Rights" means patent applications filed in any country
worldwide, including provisionals,
utilities, continuations (in whole or in
part), divisionals, reissues,
reexaminations and foreign counterparts thereof,
any patents issued on such applications and
any extensions of term,
registrations or confirmations of such
patents.
1.24
"Phase IA Acceptance Criteria" means the criteria described in Part
1
of the attached Exhibit G.
1.25
"Phase IB Acceptance Criteria" means the Phase IB(i) and Phase
IB(ii)
criteria described in Part 2 of the
attached Exhibit G.
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1.26
"Phase II Acceptance Criteria" means the criteria described in Part
3
of the attached Exhibit G.
1.27
"Platform" means the hardware, IT Infrastructure, Third Party
Technology and operating system
configuration specified in Exhibit D that is
required for Lilly to have installed at the
Lilly Facilities in order to operate
the SGX Process Technology.
1.28
"Platform Changes" has the meaning ascribed such term in Section
3.8.
1.29
"Reference Compound" means for each Collaboration Target, any
compound which is publicly known to be an
inhibitor or other modulator of such
Collaboration Target and which is approved
by the JSC for inclusion in the
Research Collaboration.
1.30
"Research Collaboration" means the program of research conducted
by
the Parties under the Research Plan.
1.31
"Research Plan" means the plan of research attached as Exhibit B
to
this Agreement, as may be amended from time
to time by the JSC in accordance
with Section 2.7.
1.32 "SGX
Background Technology" means all Patent Rights and Know-How
which are: (a) owned or Controlled by SGX
on the Effective Date or during the
Term of the Research Collaboration; (b)
developed by SGX (i) outside of the
Research Collaboration or (ii) within the
Research Collaboration but are of
general application (for example, have
application to other proteins in addition
to the Collaboration Targets); and (c)
necessary for the conduct of the Research
Collaboration.
1.33 "SGX
Bioinformatics Technology" means integrated software tools in
source code form and all documentation
reasonably necessary for the use thereof,
(i) within SGX Process Technology which are
identified in the attached Exhibit F
and (ii) within SGX Improvements, which are
revisions to (i) above (including
for example, error corrections,
modifications, improvements and enhancements)
made by SGX during the Technology Awareness
Period that SGX has installed and
are in productive use by the relevant
research group at SGX using SGX Process
Technology and are necessary or useful for
the operation of the SGX Process
Technology, and associated software
documentation in hard copy and/or electronic
format, in each case which are owned or
Controlled by SGX, and all Patent Rights
and copyrights covering such software tools
and documentation.
1.34 "SGX
Employee" means an employee or other individual engaged by SGX
who has a duty to assign inventions made by
such person, to SGX.
1.35 "SGX
Improvements" means Patent Rights and Know How owned or
Controlled by SGX, covering improvements,
enhancements or modifications to the
SGX Process Technology created by or on
behalf of SGX using SGX Process
Technology, during the Technology Awareness
Period, that SGX has installed at
and are in productive use by the research
group at SGX using the SGX Process
Technology and are necessary
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or useful for the operation of the SGX
Process Technology. SGX Improvements does
not include SGX Research Stage
Technology.
1.36 "SGX
Materials" means (1) the [...***...] materials embodying any
Target Structure; and (2) any [...***...]
used to express a Target Structure; in
each case which are owned or Controlled by
SGX and are developed in the course
of the Research Collaboration.
1.37 "SGX
New Developments" means Patent Rights and Know-How owned or
Controlled by SGX, covering methods,
systems, programs, technology and software
created by or on behalf of SGX during the
Technology Awareness Period that are
of application in the field of high
throughput structure determination, but that
are not SGX Improvements.
1.38 "SGX
Research Stage Technology" means Patent Rights and Know How
owned or Controlled by SGX, covering
improvements, enhancements or modifications
to the SGX Process Technology, created by
or on behalf of SGX using SGX Process
Technology during the Technology Awareness
Period, that are: (i) in early stages
of development; (ii) not fully supported
within SGX; (iii) not fully integrated
into the SGX Process Technology; or (iv)
are not ready for supported transfer to
Third Parties, and (x) will be used by the
research group at SGX using SGX
Process Technology and (y) are necessary or
useful for the operation of the SGX
Process Technology.
1.39 "SGX
Process Technology" means Patent Rights and Know How owned or
Controlled by SGX as of the Effective Date,
covering methods, systems, programs,
technology and software, listed in Exhibit
F, and including all documentation
reasonably necessary for the use thereof.
SGX Process Technology does not
include SGX Research Stage Technology, SGX
Improvements, SGX New Technology or
Other Inventions.
1.40
"Target Structure" means, on a [...***...] basis, the [...***...]
of
a [...***...] determined by SGX in the
course of the Research Collaboration,
either in the [...***...] and which has the
following characteristics:
[...***...].
1.41
"Technology Awareness Period" means the period commencing on
the
Effective Date and terminating at the end
of the Term of the Research
Collaboration.
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1.42
"Technology Installation Plan" means the plan agreed by the
Parties
in accordance with Section 3.1.
1.43 "Term
of the Research Collaboration" means the period commencing on
the Effective Date, and terminating on the
second anniversary of the Effective
Date, unless extended by mutual agreement
of the Parties in accordance with
Section 2.10.
1.44 "Term
of the Technology Collaboration" means the period commencing on
the Effective Date and terminating upon the
expiration of SGX's support
obligations under Section 3.4.
1.45
"Third Party or Third Parties" means any entity other than Lilly
or
SGX or their respective Affiliates.
1.46
"Third Party Technology" means software and other technology
listed
on Exhibit E, licensed to SGX by a Third
Party, which Lilly is likely required
to license directly from such Third Party
and which is likely required to
operate fully the SGX Process
Technology.
2. RESEARCH
COLLABORATION.
2.1
Research Collaboration. Subject to the terms and conditions of
this
Agreement Lilly and SGX will use
commercially reasonable efforts to conduct the
Research Collaboration in accordance with
the Research Plan. It is acknowledged
that in furtherance of the Research
Collaboration, SGX commenced certain
research activities prior to the Effective
Date. SGX will commit a total of at
least [...***...] FTEs to the Research
Collaboration during the
period between March 26, 2003 and the
[...***...] anniversary of the Effective
Date, with a minimum of [...***...] FTEs
being used between March
26, 2003 and the [...***...] anniversary of
the Effective Date.
2.2
Provision of Lilly Compounds. During the Term of the Research
Collaboration, Lilly will, at its sole
discretion, deliver Lilly Compounds to
SGX (in quantities for each Lilly Compound
prescribed in the Research Plan) for
inclusion in the Research Collaboration.
SGX will not attempt directly or
indirectly to determine the structure of
Lilly Compounds unless agreed by the
JSC. Lilly Compounds will be deemed
Confidential Information of Lilly pursuant
to Section 7.1. The Lilly Compounds that
will be used in the Research
Collaboration shall be [...***...].
2.3
Provision of Lilly Background Technology. During the term of
the
Research Collaboration, Lilly will provide
SGX with reasonable quantities of
such Lilly Materials and other Lilly
Background Technology as agreed to by Lilly
that are necessary for the conduct of the
Research Collaboration by SGX.
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2.4
Provision of SGX Background Technology and Collaboration
Technology.
During the Term of the Research
Collaboration, SGX will provide Lilly with
reasonable quantities of available SGX
Materials and other SGX Background
Technology and Collaboration Technology as
agreed by the JSC and to the extent
reasonably necessary for Lilly to exercise
its applicable rights under Article
5.
2.5
Records; Reports. At least quarterly during the Term of the
Research
Collaboration SGX will have the obligation
to prepare and provide to the JSC a
detailed written report summarizing the
progress of the work performed by SGX in
the course of the Research Collaboration
during the preceding quarter. Promptly
upon completion of the Research
Collaboration, SGX shall provide a final written
report summarizing its activities during
the Research Collaboration and the
results thereof. In addition, during the
Term of the Research Collaboration, SGX
will provide Lilly with quarterly reports
of the time expended on the Research
Collaboration, within thirty (30) days
after the close of each quarter. Such
report will include the names of SGX
Employees working on the Research
Collaboration and the number of hours each
such SGX Employee has allocated to
the Research Collaboration. Upon the
written request of Lilly and not more than
once in each calendar year, SGX will permit
Lilly, at Lilly's expense, to have
access during normal business hours to
those records of SGX that may be
necessary to verify the accuracy of the FTE
utilization under the Research
Collaboration and the basis for any other
payments hereunder.
2.6
Nomination of Collaboration Targets and Crystallizable Protein.
(a) During the Term of the Research Collaboration, Lilly may
nominate to the JSC up to [...***...]
([...***...])[...***...] other than
Collaboration Targets, for which Lilly
would like SGX to attempt to [...***...]
under the Research Plan. SGX will have two
(2) weeks following receipt of notice
of nominated [...***...] from LillY to
reject (by written notice to Lilly) the
inclusion of any such [...***...] in the
Research Collaboration if any such
[...***...] is the subject of an existing
research program at SGX or if SGX has
existing contractual obligationS to a Third
Party with respect to such
[...***...]. Any [...***...] nominated by
Lilly and not rejected by SGX in
accordance with this Section 2.6(a) will be
deemed a [...***...].
(b) During the Term of the Research Collaboration, subject to
Section 2.9, Lilly may nominate to the JSC
additional [...***...] which Lilly
would like included in the Research
Collaboration as Collaboration Targets. SGX
will have two (2) weeks following receipt
of notice of any such nominated
[...***...] from Lilly to reject (by
written notice to Lilly) the inclusion of
any such [...***...] in the Research
Collaboration if such protein is the
subject of an existing research program at
SGX or if SGX has existing
contractual obligations to a Third Party
with respect to such [...***...]. Any
[...***...] nominated by Lilly and not
rejected BY SGX in accordance with this
Section 2.6(b) will be deemed a
Collaboration Target.
(c) On or before the earlier of commencement of the Phase IA
Acceptance experiments described in Exhibit
G or the start of the [...***...]
month following the Effective Date, the JSC
will designate [...***...]
of the Collaboration Targets
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included in the Collaboration
prior to such date, for inclusion in the Phase
IB(ii) validation experiments described in
Exhibit G; [...***...] of which will
be Level 1, [...***...] of which will be
Level 2 and [...***...] of which will
be Level 2(+) (as further described in the
Research Plan), and such targets in
each Level will be of a similar level of
difficulty as those targets in each
such Level in Exhibit A.
2.7 Joint
Steering Committee.
(a) Formation. SGX and Lilly will establish a joint steering
committee ("JSC") to oversee the strategic
and tactical aspects of the
Collaboration.
(b) Membership. The JSC shall be comprised of three (3)
representatives from Lilly and three (3)
representatives from SGX, designated by
the Parties promptly following the
Effective Date. Each Party may replace its
JSC representatives at any time, with
written notice to the other Party. The JSC
may name additional members to the JSC from
time to time so long as each Party
has an equal number of members. In
addition, each Party may at its discretion
invite non-voting employees, consultants or
scientific advisors to attend
meetings of the JSC.
(c) Decisions. Each Party shall have one vote on the JSC. All
decisions of the JSC shall be made by
unanimous vote. Any matter which the JSC
is unable to agree upon shall be submitted
to the Chief Executive Officer of SGX
and the Group Vice President, Lilly
Research Laboratories of Lilly for
resolution. All decisions that cannot be
agreed upon by the SGX CEO and Lilly
Group Vice President shall be made by Lilly
reasonably taking into consideration
the position of SGX, excluding decisions
under Sections 3.4(b), 3.4(d) and
3.6(c), which will be made by SGX
reasonably taking into consideration the
position of Lilly.
(d) Responsibilities. The JSC will review, direct and supervise
the
performance of the Collaboration. The JSC
will be responsible for (i)
determining the research strategy and time
lines for the Research Plan and
allocating resources between Collaboration
Targets (provided however, that SGX
will have the right to require that at
least [...***...] FTEs are allocated to
the Phase IB validation experiments
described in Exhibit G) and modifying or
amending the Research Plan as appropriate
subject to the final sentence of this
Section 2.7(d); (ii) designating
Collaboration Targets as Eliminated Targets in
accordance with Section 2.9; (iii)
designating structures of Collaboration
Targets as Target Structures if they meet
the criteria in Section 1.40; ; (iv)
determining whether to obtain licenses from
Third Parties with respect to
intellectual property that may be necessary
for the conduct of the Research
Collaboration; and (v) discussing patent
matters relating to Research Plan
activities. Related to the Technology
Installation Plan, the JSC will be
responsible for (i) reviewing and approving
the Technology Installation Plan in
accordance with Section 3.1 and modifying
or amending the Technology
Installation Plan as appropriate subject to
the final sentence of this Section
2.7(d); (ii) determining whether any SGX
Improvements, Other Inventions or SGX
Research Stage Technology will be included
in the Technology Installation Plan
and supported under Section 3.4; (iii)
determining which Licensed Technology
will not be supported in accordance with
Section 3.4(d); (iv) agreeing on
additional support at the
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Lilly Indianapolis Facility in accordance
with Section 3.4(b); and (v)
determining which Platform Changes or Lilly
Improvements will be supported at
Lilly in accordance with Section 3.4. Any
amendments to the Research Plan or the
Technology Installation Plan which
materially alter the nature or scope of the
Research Collaboration or Technology
Collaboration must be agreed in writing by
the Parties.
(e) Meetings. The JSC shall meet at least quarterly. The
Parties
shall mutually agree upon times and places
for such meetings (alternating
between San Diego, CA and Indianapolis, IN,
or as the JSC may otherwise agree),
to discharge its responsibilities. If
mutually agreed by the Parties, such
meeting may be held via videoconference or
teleconference. Each Party will be
responsible for paying its own expenses in
connection with participating in the
meetings of the JSC. The JSC shall prepare
written minutes of each meeting and a
written record of all JSC decisions,
whether made at a JSC meeting or otherwise.
2.8
Operating Teams. The JSC may appoint one or more other working
teams
("Operating Teams") to perform the
day-to-day implementation of the Research
Plan and Technology Installation Plan and
such other functions as the JSC may
determine.
(a) Membership. All Operating Teams shall have at least one (1)
representative of each Party. Operating
Teams shall have such decision-making
authority as may be delegated to them by
the JSC. Each Party may replace its
Operating Team representatives at any time,
upon written notice to the other
Party. Operating Team leaders at their
discretion can name additional team
members or form sub-teams.
(b) Decisions. Each Party shall have one vote on an Operating
Team.
All decisions of the Operating Teams shall
be made by unanimous vote. Any matter
that the Operating Team is unable to agree
upon shall be submitted to the JSC.
(c) Meetings. Each Operating Team shall meet as agreed by its
members or as directed by the JSC. Each
Party shall bear its own costs
associated with holding and attending such
meetings.
(d)
Initial Operating Teams. The JSC shall establish the following
two (2) Operating Teams, with such number
of representatives of each Party and
such decision-making authority as the JSC
shall determine:
(i) the Research Operations Team, which shall be responsible
for matters relating to the tactical
aspects of the Research Plan, including:
(x) coordinating, monitoring and reporting research
progress, resource allocation and ensuring open exchange
between the Parties with respect to Research
Collaboration activities; and (y) determining which
Reference Compounds or Lilly Compounds to include in the
Research Collaboration to aid in crystallization;
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(ii) the Technology Operations Team, which shall be
responsible for matters relating to the
successful installation of the SGX
Process Technology and the Platform at the
Lilly San Diego Facility and the
Lilly Indianapolis Facility, including:
(x) reviewing, directing and supervising the performance
of the Technology Installation Plan and revising the
Technology Installation Plan from time to time as
necessary; and (y) coordinating, monitoring and
reporting installation progress and ensuring open
exchange
between the Parties with respect to Technology
Installation Plan activities;;
(iii) For avoidance of doubt, it is intended that the JSC will
delegate decision-making authority for
day-to-day management of the
Collaboration to the Operating Teams
described in this Section 2.8. While the
JSC retains the ability to review the
decisions of the Operating Teams, it is
intended that the Operating Teams shall be
given latitude to make decisions
without the need to first consult the
JSC.
2.9
Eliminated Targets. The JSC will remove a Collaboration Target
from
the Research Collaboration and deem such
Collaboration Target to be an
"Eliminated Target" for the purposes of
Section 5.5(a), upon the occurrence of
any of the following:
(a) either Party requests that the JSC agree to remove a
Collaboration Target from the Research
Collaboration and the JSC so agrees;
(b) Lilly determines not to pursue a Collaboration Target as a
[...***...]; notifies the JSC of such
decision (which notification Lilly is
obligated to provide the JSC within thirty
(30) days of such decision at Lilly)
and the JSC agrees to the removal of such
Collaboration Target;
(c) as determined by the JSC, (i) a Target Structure has not
been
obtained for the Collaboration Target after
reasonable effort, and (ii) it is
reasonable to conclude based on an
assessment of technical feasibility, that a
Target Structure will not be obtained by
SGX for such Collaboration Target
before the second anniversary of the
Effective Date; or
(d) at any time the total number of Collaboration Targets
included
in the Research Collaboration for which
Target Structure has not yet been
obtained exceeds [...***...] ([...***...]);
in such event, the JSC will, within
thirty (30) days of a request by either
Party, deem such number of Collaboration
Targets exceeding [...***...] ([...***...])
as Eliminated Targets in accordance
with this Section 2.9, as results in there
being no more than [...***...]
([...***...]) Collaboration Targets
included in the Research Collaboration for
which Target Structure has not been
obtained. The JSC shall be responsible for
deciding which targets shall be excluded
from Collaboration Targets under this
Section 2.9 (d).
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2.10 Option to Extend Term of the Research Collaboration. On or
before the second anniversary of the
Effective Date, Lilly will have the right
to extend the Term of the Research
Collaboration for an additional [...***...]
period. In such event the Parties will
negotiate in good faith the terms of such
extension, provided however, nothing in
this Section 2.10 shall obligate the
Parties to enter into such extension.
3. TECHNOLOGY
TRANSFER
3.1
Technology Installation Plan. Within three (3) months following
the
Effective Date, SGX will prepare and the
JSC will review and approve, a
Technology Installation Plan, based on the
outline plan attached as Exhibit C.
The Technology Installation Plan may be
updated or otherwise amended (in
accordance with Section 2.7(d)) as
necessary from time to time by the JSC. Prior
to the approval by the JSC of the
Technology Installation Plan, SGX may begin
ordering the equipment as described in
Appendix D2. SGX shall supply any
existing validation documentation on SGX
Process Technology, and will discuss
with Lilly the results of Lilly's gap
analysis to be performed during the
Technology Installation Period. At Lilly's
request, SGX will install the
components of the SGX Bioinformatics
Technology listed in Appendix F at Lilly in
Indianapolis in advance of the installation
of the SGX Process Technology at the
Lilly San Diego Facility. Upon
installation, SGX will provide Lilly with a
reasonable amount of training on the use of
this technology, provided however,
that any such training shall be included in
the number of days allocated to
Initial Training under Section 3.4(a)
below.
3.2
Installation.
(a) Installation at Lilly San Diego Facility. SGX will, at
Lilly's
expense in accordance with Section 4.3,
procure and install the Platform (other
than the IT Infrastructure) and install the
SGX Process Technology on the
Platform at the Lilly San Diego Facility in
accordance with the Technology
Installation Plan, provided that Lilly has
purchased and installed, at its
expense, the IT Infrastructure at the Lilly
San Diego Facility or at Lilly, as
agreed in the Technology Installation Plan
(including in each case obtaining
from Third Parties the necessary licenses
to Third Party Technology detailed in
Exhibit E). SGX will have no obligation to
acquire or pay for any Third Party
Technology or any other part of the IT
Infrastructure. SGX will provide the
Lilly San Diego Facility with access to
certain components of SGX's IT
Infrastructure as described in the
Technology Installation Plan. In the event of
any delay by Lilly in (i) approving the
Technology Installation Plan, (ii)
obtaining a lease to the Lilly San Diego
Facility and entering into a sublease
with SGX beyond one month after the
Effective Date; (iii) approving the plans
and budget for the tenant improvements to
the Lilly San Diego Facility,
including any revisions thereto, beyond one
week after submission of such plans,
budgets or revisions thereto to Lilly by
SGX, (iv) procuring and installing the
IT Infrastructure, or any other Platform
components which the Parties agree
Lilly will procure, beyond the applicable
timeline in the Technology
Installation Plan; or (v) procuring
licenses to Third Party Technology required
for the Phase IA and Phase IB validation
experiments as detailed in the
Technology Installation Plan, beyond
the
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applicable timeline in the Technology
Installation Plan, then upon request by
either Party, the timelines for
installation in the Technology Installation
Plan, will be adjusted correspondingly;
provided however: (i) in the event such
delay results in the Phase IA validation
experiments described in Exhibit G not
commencing before the start of the
[...***...] ([...***...]) month following the
Effective Date, then (A) Lilly shall
immediately pay SGX [...***...]
([...***...]%) of the payment under Section
4.2(b), notwithstanding that the
Phase IA Acceptance Criteria may not yet
have been achieved, and (B) commencing
at the beginning of the [...***...]
([...***...]) month following the Effective
Date and continuing through the [...***...]
([...***...]) month after the
Effective Date, one Collaboration Target
will be removed from the Phase IB(ii)
validation experiment each month with the
order of removal of such Collaboration
Targets being from the most difficult
(within Level 2+) to the least difficult
(within Level 1); and (ii) in the event
such delay results in the Phase IA and
Phase IB validation experiments not
commencing before the start of the
[...***...] ([...***...]) month following
the Effective Date, Lilly shall
immediately pay SGX the remaining payments
due under Section 4.2(b) and 4.2(c),
notwithstanding that the Phase IA
Acceptance Criteria and Phase IB Acceptance
Criteria may not yet have been achieved,
and notwithstanding that such payments
are made, SGX will conduct the Phase IA and
Phase IB validation experiments at
the Lilly San Diego Facility using
reasonable diligence, as soon as the Lilly
San Diego Facility becomes available for
such activities, provided however, in
the case of the Phase IB(ii) experiments,
that the Term of the Research
Collaboration has been extended to allow
such activities, in accordance with
Section 2.10. SGX will assist Lilly in the
procurement of the IT Infrastructure,
including without limitation, liaising with
Third Party providers of hardware
and Third Party Technology, as agreed by
the JSC.
(b) Installation at the Lilly Indianapolis Facility. At a time
determined by Lilly, but in no event later
than the earlier of (i) the
expiration of Lilly's lease to the Lilly
San Diego Facility and (ii) [...***...]
([...***...]) years after the commencement
of Lilly's lease to the Lilly San
Diego Facility (the "Cut-Off Date"), SGX
will disassemble the Platform and
uninstall the Licensed Technology, at the
Lilly San Diego Facility, and
reassemble and reinstall the Platform and
Licensed Technology at a facility of
Lilly in Indianapolis designated by Lilly
(the "Lilly Indianapolis Facility") in
accordance with the Technology Installation
Plan. Notwithstanding anything to
the contrary in this Agreement, if Lilly
relocates the Platform and/or the
Licensed Technology after the Cut-Off Date,
SGX will have no further obligations
under Article 3 with respect to the
Platform or the Licensed Technology. Lilly
will be responsible for: (i) the costs of
Third Party vendors of Platform
components for repackaging, transportation
and reinstallation of the Platform,
and all other reasonable costs associated
with the transportation (collectively
the "Relocation") of the Licensed
Technology and the Platform under this Section
3.2(b), in accordance with Section 4.3(c);
(ii) Relocation of the IT
Infrastructure to the Lilly Indianapolis
Facility prior to commencement of the
reinstallation of the Licensed Technology
at the Lilly Indianapolis Facility and
(iii) making fully available the Lilly
Indianapolis Facility, services and Lilly
personnel necessary for installation in
accordance with the Technology
Installation Plan. SGX will use reasonable
diligence in performing its
obligations under this Section 3.2(b).
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3.3
Acceptance.
(a) Phase IA. Promptly upon notification by SGX to Lilly that it
has
installed the SGX Process Technology and
Platform at the Lilly San Diego
Facility, Lilly, in consultation with the
JSC, shall determine in good faith
whether such installation satisfies the
Phase IA Acceptance Criteria.
(b) Phase IB. Promptly upon notification by SGX to the JSC that
it
has completed the Phase IB validation,
Lilly, in consultation with the JSC,
shall determine in good faith whether such
validation satisfies the Phase IB
Acceptance Criteria. Upon the determination
by Lilly of achievement of the Phase
1B Acceptance Criteria but in no event
later than the end of the Term of the
Research Collaboration, SGX will assign to
Lilly its entire right, title and
interest in and to the Platform components
procured by SGX on behalf of Lilly
under Section 3.2(a), installed at the
Lilly San Diego Facility, including
without limitation, assignment of Third
Party warranties and service contracts
where permitted.
(c) Phase II. Promptly upon notification by SGX to Lilly that it
has
installed the SGX Process Technology and
Platform at the Lilly Indianapolis
Facility, Lilly, in consultation with the
JSC, shall determine in good faith
whether such installation satisfies the
Phase II Acceptance Criteria.
3.4
Maintenance, Training and Technical Support. Once Lilly has
determined
that the Phase IA Acceptance Criteria have
been met, and payment has been made
by Lilly pursuant to Section 4.2(b), SGX
will provide the following maintenance,
training and technical support services to
Lilly:
(a) Initial Training. SGX will provide, a training course at
the
Lilly San Diego Facility (or at some other
location as may be agreed by the JSC)
for Lilly personnel to receive detailed
training on the operation of the
Licensed Technology (other than SGX
Research Stage Technology) on the Platform
("Initial Training"). Such Initial Training
will be conducted over a period of
no more than [...***...] ([...***...])
months and will comprise a total of at
least [...***...] ([...***...]) person
months. Lilly will ensure that Lilly
personnel with appropriate technical skill
are available at the Lilly San Diego
Facility to receive such training.
(b) On-Site Training, Maintenance and Technical Support. During
the
[...***...] ([...***...]) month period
following completion of the Initial
Training, SGX will provide at least
[...***...] ([...***...]) person days of
support for the Licensed Technology (other
than SGX Research Stage Technology)
on the Platform at the Lilly San Diego
Facility. If the required support results
from inherent problems with the Licensed
Technology and is not due to Lilly's
action or inactions related thereto, then
such support shall not count against
such [...***...] ([...***...]) person days.
During the [...***...] ([...***...])
month period following payment by Lilly
pursuant to Section 4.2(d), SGX will
provide at least [...***...] ([...***...])
person days of support for the
Licensed Technology (other than Research
Stage Technology) on the Platform, at
the Lilly Indianapolis Facility. At Lilly's
option, such support at the Lilly
Facilities may comprise: training, routine
maintenance, and/or resolution of
defects or errors. Should
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additional assistance be required by Lilly
beyond the [...***...] ([...***...])
days at the Lilly San Diego Facility or the
[...***...] ([...***...]) days at
the Lilly Indianapolis Facility, SGX will
provide such assistance as is agreed
by the JSC at a consulting rate comparable
to reasonable commercial software
support service rates. Contact person(s)
designated by each of the Parties shall
be the sole contacts for the coordination,
delivery and receipt of the support
services under Sections 3.4(b) and (c) and
shall be knowledgeable and trained in
the use of the applicable SGX Process
Technology.
(c) Support. For the [...***...] ([...***...]) month period
following the achievement of the Phase II
Acceptance Criteria, SGX will provide
Lilly with a reasonable amount of
electronic mail and telephone support for the
Licensed Technology (other than SGX
Research Stage Technology), with email being
the primary means of support, for, among
other things, problem determination,
verification and resolution, on a
email-back basis, during SGX's normal business
hours of 8 am to 5 pm Pacific Standard
Time, in accordance with the schedule
described in Exhibit H.
(d) Limitations. The maintenance and technical support
described
above shall be provided by SGX only for the
Licensed Technology (other than SGX
Research Stage Technology) used in
conjunction with the Platform. In the event
that Lilly (i) makes Platform Changes that
are not agreed by the JSC, (ii) does
not accept a SGX Improvement, or Other
Invention recommended by SGX, or (iii)
does not acquire additional Third Party
Technology or implement other Platform
Changes recommended by SGX as necessary for
the operation of the Licensed
Technology, or (iv) makes modifications to
the Licensed Technology other than
those agreed by the JSC, SGX will have no
obligation to provide maintenance or
technical support for the Licensed
Technology modified or not modified by such
actions or inactions, respectively, of
Lilly. Notwithstanding the previous
sentence, while a SGX Improvement or Other
Invention is being installed at
Lilly, SGX shall continue to support the
earlier release of the applicable
Licensed Technology only until the JSC
determines that the SGX Improvement or
Other Invention has been successfully
installed at Lilly. In addition, in the
event that any problem is the result of an
action or inaction of Lilly as
described in (i) through (iv) above, SGX
shall have the right to charge Lilly at
SGX's standard rates (comparable to
reasonable commercial software support
rates), for the time spent resolving such
problem. SGX will have no obligations
under this Section 3.4 with respect to SGX
Research Stage Technology.
3.5
Obligations. The Parties will:
(i) ensure that the contact persons designated by each Party
shall
be the sole contact for the coordination
and receipt of the services provided
under Section 3.4; such person may be
changed upon notice to the other Party;
(ii) maintain during the Term of the Technology Collaboration,
adequate network connectivity as necessary
to the systems of Lilly running the
SGX Process Technology, in a manner
consistent with each Party's confidentiality
obligations to Third Parties, including to
enable SGX to test and verify
reported problems; and
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<PAGE>
(iii) provide reasonable supporting data to and aid each other
in
the identification and correction of
reported problems.
3.6 SGX
Additional Technology.
(a) Notification and Acceptance. During the Technology
Awareness
Period, SGX will provide the JSC with
regular confidential updates (at least
quarterly) on the progress of development
of SGX Improvements, Other Inventions
and SGX Research Stage Technology ("SGX
Additional Technology") and SGX New
Developments, including without limitation,
identification of (i) technology
which at the time of such update, SGX
reasonably believes it could successfully
transfer to Lilly and (ii) technology which
SGX recommends that Lilly have
installed at the Lilly Facilities. Lilly
will have the right but not the
obligation to have any such SGX Additional
Technology installed at the Lilly San
Diego Facility and/or the Lilly
Indianapolis Facility, and if Lilly elects to
have such technology installed: Lilly will
pay SGX for the reasonable costs of
such installation; such SGX Additional
Technology will be deemed Licensed
Technology; and SGX will have the
obligation to provide Lilly with support under
the terms of Sections 3.4(b) and (c) for
such SGX Additional Technology (other
than SGX Research Stage Technology).
(b) SGX New Developments. In the event that Lilly desires to
obtain
a license to any SGX New Developments
identified by SGX to the JSC in accordance
with Section 3.6(a), Lilly will provide
written notice of such desire to SGX
within thirty (30) days of such
identification by SGX and upon receipt of notice
by SGX, the Parties will negotiate in good
faith the terms of a such license for
a period of up to ninety (90) days. Nothing
in this Agreement will obligate SGX
to develop any SGX Additional Technology or
SGX New Developments or will
obligate the Parties to enter into any
license agreement under this Section
3.6(b).
(c) Lilly Request for New Technology. In the event that Lilly
desires SGX to undertake any new
development relating to the SGX Process
Technology, it shall present such request
to the JSC which shall decide whether
SGX shall undertake such development. In
the event that it is decided that SGX
shall undertake such developments, SGX and
Lilly shall agree on the
specifications, development schedule and
payments for such developments which
shall then be described in detail in the
Technology Installation Plan. Any
technology developed by SGX, or jointly by
SGX and Lilly under this Section
3.6(c) will be deemed SGX Improvements.
3.7 Lilly
New Developments and Improvements.
(a) During the Technology Awareness Period, Lilly will provide
the
JSC with regular confidential updates (at
least quarterly) on the progress of
development of Lilly Improvements, Lilly
New Developments and Other Inventions,
including without limitation,
identification of technology, which at the time of
such update, Lilly reasonably believes it
could successfully transfer to SGX.
SGX will have the right but not the
obligation to have any such Lilly
Improvements licensed to SGX and if SGX
Page 15 of 68
<PAGE>
elects to license such Lilly Improvements,
Lilly will provide SGX with all
necessary documentation and materials to
enable SGX to exercise such rights.
(b) In the event that SGX desires to obtain a license to any
Lilly
New Developments identified by Lilly to the
JSC in accordance with Section
3.7(a), SGX will provide written notice of
such desire to Lilly within thirty
(30) days of such identification by Lilly
and upon receipt of notice by Lilly,
the Parties will negotiate in good faith
the terms of a such license for a
period of up to ninety (90) days. Nothing
in this Agreement will obligate Lilly
to develop any Lilly New Developments or
will obligate the Parties to enter into
any license agreement under this Section
3.7(b).
3.8
Platform Changes. During the Term of the Technology Collaboration,
(i)
Lilly will inform the JSC in advance of any
upgrades, modifications,
enhancements or changes it proposes making
to the Platform during the Term of
the Technology Collaboration ("Platform
Changes"); and (ii) SGX will inform the
JSC of any Platform Changes it has
implemented at SGX or recommends Lilly
implement at the Lilly Facility.
3.9 Use of
the Lilly San Diego Facility.
(a) By SGX Employees. During the Term of the Technology
Collaboration, SGX employees, consultants
and agents involved in the
Collaboration, may use the Lilly San Diego
Facility, and the Platform and
Licensed Technology installed at the Lilly
San Diego Facility: (i) for any
purpose in connection with the Technology
Installation Plan; (ii) for the
conduct of Research Plan activities as
agreed by the JSC; and (iii) to fulfill
its support obligations under Section
3.4.
(b) By Lilly Employees. During the Term of the Technology
Collaboration, Lilly employees and
consultants may use the Lilly San Diego
Facility, and the Platform and Licensed
Technology installed at the Lilly San
Diego Facility: (i) for the conduct of
Technology Installation Plan activities
as agreed by the JSC; (ii) for the conduct
of Research Plan activities as agreed
by the JSC; (iii) for any purpose permitted
under Lilly's licenses in Section
5.1, provided, however that Lilly
activities do not interfere with SGX's ability
to fulfill the Phase IB Acceptance
Criteria; and (iv) upon the end of the Term
of the Research Collaboration and prior to
transfer of the Platform and Licensed
Technology to the Lilly Indianapolis
Facility, for any purpose permitted under
Lilly's licenses in Section 5.1, provided
in each case that Lilly has first
obtained all necessary licenses, permits
and permissions to use the Lilly San
Diego Facility, reasonably acceptable to
SGX.
4. CONSIDERATION
4.1
Research Fee.
(a) Within thirty (30) days after the Effective Date, Lilly will
pay
to SGX a non-refundable research fee of two
million US dollars ($2,000,000).
Page 16 of 68
<PAGE>
(b)
Within forty five (45) days after the first anniversary of the
Effective Date, Lilly will pay to SGX a
non-refundable research fee of
$[...***...], provided that SGX has met the
FTE commitment set forth in Section
2.1 for the first year of the Research
Collaboration.
(c) Within forty five (45) days after the second anniversary of
the
Effective Date, Lilly will pay to SGX a
non-refundable research fee of
[...***...] US dollars ($[...***...]),
provided however, that SGX has committed
a [...***...] ([...***...]) [...***...] to
the Research Collaboration during the
period between March 26, 2003 and the
[...***...] of the Effective Date. If SGX
has not honored such commitment, then Lilly
will pay SGX a pro-rated amount
proportionate with the amount of FTEs that
have actually been used as long as
the total number of FTEs committed by SGX
during the period between March 26,
2003 and the [...***...] of the Effective
Date exceeds [...***...]. In the event
that SGX did not receive payment under
Section 4.1(b) but has committed a total
of [...***...] ([...***...])[...***...] to
the Research Collaboration during the
period between March 26, 2003 and the
second anniversary of the Effective Date,
Lilly will pay a further non-refundable
research fee to SGX of [...***...]
dollars ($[...***...]) within forty-five
(45) days after the second anniversary
of the Effective Date.
4.2
Technology Access Fee.
(a) Within thirty (30) days after the Effective Date, Lilly will
pay
to SGX a technology access fee of four
million US dollars ($4,000,000). If SGX
fails to substantially deliver and install
the SGX Process Technology at the
Lilly San Diego Facility by December 31,
2006, then SGX agrees to refund
[...***...] percent ([...***...]%) of such
fee.
(b) Within forty five (45) days after determination by Lilly
that
the Phase IA Acceptance Criteria have been
met, Lilly will pay to SGX a
non-refundable technology access fee of
[...***...] US dollars ($[...***...]),.
(c) Within forty five (45) days after determination by Lilly of
achievement by SGX of the Phase IB(i)
Acceptance Criteria, Lilly will pay to SGX
a non-refundable technology access fee of
[...***...] US dollars ($[...***...]).
Within forty five (45) days after
determination by Lilly of achievement by SGX
of the Phase IB(ii) Acceptance Criteria,
Lilly will pay to SGX a further
non-refundable technology access fee of
[...***...] US dollars ($[...***...]).
(d) Within forty five (45) days after determination by Lilly
that
the Phase II Acceptance Criteria have been
met, Lilly will pay to SGX a
non-refundable technology access fee of
[...***...] US dollars ($[...***...]);
provided however, if Lilly has not
instructed SGX to commence [...***...] the
Platform and [...***...] the SGX Process
Technology at the Lilly San Diego
Facility within [...***...] ([...***...])
months after Phase IA Acceptance
Criteria are achieved or by [...***...],
whichever is later, and
SGX has achieved the Phase IB(i) Acceptance
Criteria, Lilly will pay to SGX such
non-refundable technology access fee of
[...***...] US dollars ($[...***...])
within four (4)
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months thereafter, notwithstanding that the
Phase II Acceptance Criteria has not
been met.
4.3
Procurement and Installation Costs.
(a) Procurement of the Platform. SGX will be responsible, at
Lilly's
expense, for the procurement of the
Platform (other than the IT Infrastructure)
in accordance with the Technology
Installation Plan. An estimate of the costs
for the Platform, together with the
expected delivery and payment dates, is
attached as Appendix D(1). A budget for
such expense shall be proposed by SGX
and approved by the JSC as part of the
Technology Installation Plan, based on
the estimate in Exhibit D(1), provided
however, during the three (3) months
following the Effective Date, SGX will make
reasonable efforts to obtain
detailed quotations from Third Party
vendors of Platform components and will
update the estimate accordingly. SGX shall
not exceed the agreed upon budget
without the further approval of the JSC.
SGX will update the estimate on at
least a quarterly basis during the period
during which the Platform is being
procured. Within thirty (30) days after the
Effective Date and on a quarterly
basis thereafter, Lilly will pay SGX the
amount estimated to be due Third
Parties during the following quarter. In
the event of any overpayment in any
quarter, SGX will credit such overpayment
towards the next quarterly payment due
from Lilly under this Section 4.3(a). In
the event that Lilly has paid more than
SGX has spent after the final quarter of
payments, SGX agrees to refund such
overpayment within forty-five (45) days of
the end of the quarter.
(b) Lilly San Diego Facility. Lilly will be responsible, at
Lilly's
expense for (i) obtaining the necessary
lease to the Lilly San Diego Facility
and making payments thereunder and (ii)
obtaining and installing the IT
Infrastructure. SGX will be responsible for
supervising the tenant improvements
to the Lilly San Diego Facility and Lilly
will be responsible for the costs of
such tenant improvements; which shall be
paid directly by Lilly to the appointed
architect and general contractor.
(c) Installation. Lilly will pay SGX [...***...] US dollars
($[...***...]) within thirty (30) DayS of
receipt of written notification that
the Technology Installation Plan has been
approved. Such payment will cover (i)
installing the Platform and Licensed
Technology at the Lilly San Diego Facility,
(ii) uninstallation of the Platform and
Licensed Technology at the Lilly San
Diego Facility and reinstallation of the
Platform and the Licensed Technology at
the Lilly Indianapolis Facility if
completed prior to the third anniversary of
the Effective Date, and (iii) project
management of the procurement of the Lilly
San Diego Facility (including without
limitation, designing and supervising
tenant improvements). Lilly shall pay
separately the reasonable costs of
Relocation of the Platform and Licensed
Technology from San Diego to
Indianapolis as further described in
Section 3.2(b). In the event that Lilly
decides to install the Licensed Technology
and Platform at the Lilly
Indianapolis Facility under Section 3.2(b)
and such installation is completed
after the third anniversary of the
Effective Date, Lilly will pay SGX
[...***...] US dollars ($[...***...])
within thirty (30) days of completion of
such installation. Such payment will cover
uninstallation of the Licensed
Technology at the Lilly San Diego Facility
and reinstallation of the Licensed
Technology at the Lilly
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Indianapolis Facility and support for such
Licensed Technology in accordance
with Section 3.4(b).
5. LICENSES
5.1
Licenses to Lilly. Subject to the terms and conditions of this
Agreement, SGX hereby grants to Lilly, the
following licenses:
