LICENSE AND RESEARCH COLLABORATION AGREEMENT

Collaboration Agreement

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DECODE GENETICS INC | MERCK & CO., INC.

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Title: LICENSE AND RESEARCH COLLABORATION AGREEMENT
Governing Law: New Jersey Date: 3/15/2004
Industry: Biotechnology and Drugs Sector: Healthcare

LICENSE AND RESEARCH COLLABORATION AGREEMENT, Parties: decode genetics inc , merck & co. inc.

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Exhibit 10.33

[NOTE: CERTAIN PORTIONS OF THIS DOCUMENT HAVE BEEN MARKED TO INDICATE THAT

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CONFIDENTIAL INFORMATION CONTAINED

IN THIS DOCUMENT. THE CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED

SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.]

LICENSE AND RESEARCH COLLABORATION AGREEMENT

BETWEEN

MERCK & CO., INC.

AND

DECODE GENETICS, EHF.

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LICENSE AND RESEARCH COLLABORATION AGREEMENT

THIS RESEARCH COLLABORATION AND LICENSE AGREEMENT (this "Agreement"),

which shall be effective as of February 25, 2004 (the "Effective Date"), is

entered into by and between deCODE genetics, Ehf., a corporation organized under

the laws of Iceland ("deCODE") and Merck & Co., Inc., a corporation organized

under the laws of the State of New Jersey, having an office located at One Merck

Drive, Whitehouse Station, New Jersey 08889 ("MERCK").

PRELIMINARY STATEMENTS

A. deCODE has expertise in conducting research in the field of human

genetics and genomics and in the conduct of clinical trials.

B. MERCK has certain expertise in drug development and in the design and

conduct of clinical trials to demonstrate the safety and efficacy of its

pharmaceutical products.

C. deCODE and MERCK wish to collaborate on the design and conduct of

Information Rich Clinical Trials (terms with initial capitals as hereafter

defined) on selected MERCK compounds in specified Disease Areas in accordance

with the attached Work Plan.

D. deCODE Parent (as hereinafter defined) and MERCK are simultaneously

entering into a separate Stock and Warrant Purchase Agreement whereby MERCK

shall purchase shares of stock of deCODE Parent pursuant to the terms and

conditions set forth in that agreement.

NOW, THEREFORE, in consideration of the foregoing Preliminary Statements and the

mutual agreements and covenants set forth herein, the Parties hereby agree as

follows:

1. DEFINITIONS

Unless specifically set forth to the contrary herein, the following

terms, whether used in the singular or plural, shall have the respective

meanings set forth below:

1.1 "AFFILIATE" shall mean as to deCODE or MERCK, as the case may be (i)

any corporation or business entity of which fifty percent (50%) or more

of the securities or other ownership interests representing the equity,

the voting stock or general partnership interest are owned, controlled

or held, directly or indirectly, by MERCK or deCODE; or (ii) any

corporation or business entity which, directly or indirectly, owns,

controls or holds fifty percent (50%) (or the maximum ownership

interest permitted by law) or more of the securities or other ownership

interests representing the equity, the voting stock or, if applicable,

the general partnership interest, of MERCK or deCODE.

1.2 "ASSOCIATED INFORMATION" shall mean information about [CONFIDENTIAL

TREATMENT REQUESTED] in an IRCT performed as part of the Research

Program which [CONFIDENTIAL TREATMENT REQUESTED] in an Exclusive

Disease Area or a Non-exclusive Disease Area where the [CONFIDENTIAL

TREATMENT REQUESTED] is associated with the [CONFIDENTIAL TREATMENT

REQUESTED] within the Disease Area being studied in that IRCT.

1.3 "BUDGET" shall mean the projected expenditures for the upcoming year

set out in Schedule 2.6

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and more fully described in Section 2.6.

1.4 "CALENDAR QUARTER" shall mean the respective periods of three (3)

consecutive calendar months ending on March 31, June 30, September 30

and December 31.

1.5 "CALENDAR YEAR" shall mean each successive period of twelve (12) months

commencing on January 1 and ending on December 31.

1.6 A "CHANGE IN CONTROL" shall mean the occurrence of any of the

following:

(a) An acquisition of any voting securities of deCODE Parent (the

"Voting Securities") by any "Person" (as the term "person" is used for

purposes of Section 13(d) or 14(d) of the Securities Exchange Act of

1934, as amended (the "Exchange Act")), immediately after which such

Person has "Beneficial Ownership" (within the meaning of Rule 13d-3

promulgated under the Exchange Act) of more than fifty percent (50%) of

(1) the then-outstanding shares of common stock of deCODE Parent (or

any other securities into which such shares of common stock are changed

or for which such shares of common stock are exchanged) (the "Shares")

or (2) the combined voting power of deCODE Parent's then-outstanding

Voting Securities;

(b) The individuals who, as of Effective Date, are members of the board

of directors of deCODE Parent (the "Incumbent Board"), following a

Merger (as hereinafter defined), do not for any reason constitute at

least a majority of the members of the board of directors of (x) the

corporation resulting from such Merger (the "Surviving Corporation"),

if fifty percent (50%) or more of the combined voting power of the

then-outstanding voting securities of the Surviving Corporation is not

Beneficially Owned, directly or indirectly, by another Person (a

"Parent Corporation") or (y) if there is one or more than one Parent

Corporation, the ultimate Parent Corporation; PROVIDED, HOWEVER, that,

any individual becoming a director subsequent to the date hereof whose

election, or nomination for election by such company's shareholders,

was approved by a vote of at least a majority of the directors then

comprising the Incumbent Board shall be considered as though such

individual were a member of the Incumbent Board, but excluding, for

this purpose, any such individual whose initial assumption of office

occurs as a result of an actual or threatened election contest with

respect to the election or removal of directors or other actual or

threatened solicitation of proxies or consents by or on behalf of a

Person other than the board of directors of deCODE Parent (a "Proxy

Contest"), including by reason of any agreement intended to avoid or

settle any Proxy Contest;

longer owned directly or indirectly by deCODE Parent; or

(d) The consummation of:

(i) A merger, consolidation or reorganization (1) with or

into deCODE Parent or a direct or indirect subsidiary of deCODE Parent

or (2) in which securities of deCODE Parent are issued (both

1.5(c)(i)(1) and (2) are defined as a "Merger"), unless such Merger is

a "Non-Control Transaction." A "Non-Control Transaction" shall mean a

Merger in which:

(A) the stockholders of deCODE Parent immediately

before such Merger own directly or indirectly immediately following

such Merger at least fifty percent (50%) of the combined voting power

of the outstanding voting securities of (x) the Surviving Corporation,

if there is no Parent Corporation or (y) if there is one or more than

one Parent Corporation, the

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ultimate Parent Corporation;

(B) the individuals who were members of the

Incumbent Board immediately prior to the execution of the agreement

providing for such Merger constitute at least a majority of the members

of the board of directors of (x) the Surviving Corporation, if there is

no Parent Corporation, or (y) if there is one or more than one Parent

Corporation, the ultimate Parent Corporation; and

(2) any Person who, immediately prior to the Merger had Beneficial

Ownership of fifty percent (50%) or more of the then outstanding Shares

or Voting Securities, has Beneficial Ownership, directly or indirectly,

of fifty percent (50%) or more of the combined voting power of the

outstanding voting securities or common stock of (x) the Surviving

Corporation, if fifty percent (50%) or more of the combined voting

power of the then outstanding voting securities of the Surviving

Corporation is not Beneficially Owned, directly or indirectly by a

Parent Corporation, or (y) if there is one or more than one Parent

Corporation, the ultimate Parent Corporation; PROVIDED, HOWEVER, that

any Person described in clause (2) of this subsection (C) may not,

immediately following the Merger, Beneficially Own more than thirty

percent (30%) of the combined voting power of the outstanding voting

securities of the Surviving Corporation or the Parent Corporation, as

applicable, for the Merger to constitute a Non-Control Transaction.

(ii) A complete liquidation or dissolution of

deCODE Parent; or

(iii) The sale or other disposition of all or

substantially all of the assets of deCODE Parent and its Subsidiaries

taken as a whole to any Person (other than (x) a transfer under

conditions that would constitute a Non-Control Transaction, with the

disposition of assets being regarded as a Merger for this purpose or

(y) the distribution to deCODE Parent's stockholders of any other

assets).

Notwithstanding the foregoing, a Change in Control shall not be deemed

to occur solely because any Person (the "Subject Person") acquired

Beneficial Ownership of more than the permitted amount of the then

outstanding Shares or Voting Securities as a result of the acquisition

of Shares or Voting Securities by deCODE Parent which, by reducing the

number of Shares or Voting Securities then outstanding, increases the

proportional number of shares Beneficially Owned by the Subject

Persons; provided that if a Change in Control would occur (but for the

operation of this sentence) as a result of the acquisition of Shares or

Voting Securities by deCODE Parent and, after such share acquisition by

deCODE Parent, the Subject Person becomes the Beneficial Owner of any

additional Shares or Voting Securities and such Beneficial Ownership

increases the percentage of the then outstanding Shares or Voting

Securities Beneficially Owned by the Subject Person, then a Change in

Control shall occur.

1.7 "COLLABORATION DATE" shall be February 25, 2004.

1.8 "COLLABORATION INFORMATION AND INVENTION" shall mean any discoveries,

Improvements, processes, methods, protocols, formulas, data,

inventions, know-how and trade secrets, patentable or otherwise, that

arise from the Research Program.

1.9 "COLLABORATION PATENTS" shall mean any and all patents and patent

applications in the Territory (which for the purposes of this Agreement

shall be deemed to include certificates of invention

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and applications for certificates of invention) that a Party or its

Affiliates owns, Controls or through license or otherwise acquires

rights during the term of this Agreement which claim, cover or relate

to Collaboration Information and Inventions or are divisions,

continuations, continuations-in-part, reissues, renewals, extensions,

supplementary protection certificates, utility, models and the like of

any such patents and patent applications and foreign equivalents

thereof.

1.10 "COMBINATION PRODUCT" shall mean a Product which includes one or more

active ingredients other than IRCT Compound or Related IRCT Compound in

combination with IRCT Compound or Related IRCT Compound. All references

to Product in this Agreement shall be deemed to include Combination

Product.

1.11 "COMPETITIVE PRODUCT" shall mean a product containing the IRCT Compound

or Related IRCT Compound which has or attains on a Calendar Year basis

a market share of [CONFIDENTIAL TREATMENT REQUESTED] or more in a

country of sale as measured by prescriptions or other similar

information in the country of sale.

1.12 "COMPETITOR" shall mean a company in the pharmaceutical business sector

with reported annual gross revenues from the sale of pharmaceuticals in

excess [CONFIDENTIAL TREATMENT REQUESTED] for each of its [CONFIDENTIAL

TREATMENT REQUESTED].

1.13 "CONTROL", "CONTROLS" OR "CONTROLLED BY" shall mean either (a) being an

Affiliate of either MERCK or deCODE; or (b) with respect to any item of

or right under Collaboration Patents, Patents or Know-How, the

possession of (whether by ownership or license, other than pursuant to

this Agreement) or the ability of a Party to grant access to, or a

license or sublicense of, such items or right as provided for herein

without violating the terms of any agreement or other arrangement with

any Third Party existing at the time such Party would be required

hereunder to grant the other Party such access or license or

sublicense.

1.14 "deCODE INFORMATION AND INVENTIONS" shall mean all Collaboration

Information and Inventions developed or invented solely by employees of

deCODE or other persons not employed by MERCK acting on behalf of

deCODE.

1.15 "deCODE KNOW-HOW" shall mean all secret, substantial and identified

information and materials, including, but not limited to, discoveries,

Improvements, processes, formulas, data, inventions(including without

limitation deCODE's Information and Inventions and deCODE's rights in

Joint Information and Inventions), know-how and trade secrets,

patentable or otherwise, which arise from the Research Program and

during the term of this Agreement (i) are in deCODE's possession or

control, (ii) are not generally known and (iii) are necessary or useful

to MERCK in connection with the Research Program or the research,

development, manufacture, marketing, use or sale of IRCT Compound,

Related IRCT Compound, Tests or Product in the

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Territory.

1.16 "deCODE COLLABORATION PATENTS" shall mean Collaboration Patents that

claim, cover or relate to deCODE Information and Inventions excluding

deCODE Information and Inventions relating to deCODE Generalized

Technology.

1.17 "deCODE COMPOUNDS" shall mean compounds[CONFIDENTIAL TREATMENT

REQUESTED].

1.18 "deCODE GENERALIZED TECHNOLOGY" shall mean any Technical Information

relating to generalized methods for conducting genomics research and

characterizing the function of genes or any raw data useful in

generalized genomics research tools which at any time is owned or

controlled by deCODE or its Affiliates (provided deCODE or its

Affiliates have the right to license or otherwise make available such

Technical Information to MERCK).

1.19 "deCODE GENOMICS DATA" shall mean (a) [CONFIDENTIAL TREATMENT

REQUESTED] as may be created, developed or acquired by deCODE from time

to time during the term of this Agreement or as may be existing or have

been created as of the Effective Date, and (b) deCODE's proprietary

inventions, processes and other assets directly relating to the use,

creation, maintenance, development, operation, access, analysis,

reporting, storage, protection, and/or transmission of such proprietary

databases, including proprietary methods, procedures and techniques,

procedure manuals, personal and scientific data, computer technical

expertise and software, in each case independently developed by or on

behalf of deCODE and such software useful for the analysis of the

information included in such databases.

1.20 "deCODE PARENT" shall mean deCODE genetics, Inc., a corporation

organized and existing under the laws of the State of Delaware.

1.21 "deCODE PATENTS" shall mean Patents, that deCODE or its Affiliates

Control prior to the Effective Date or during the term of this

Agreement, including but not limited to those listed on Schedule 1.21,

that are necessary or useful to MERCK in connection with the Research

Program or the research, development, manufacture, marketing, use or

sale of IRCT Compound, Tests or Product in the Territory including

Patents claiming deCODE Genomics Data but excluding any part of Patents

claiming deCODE Generalized Technology.

1.22 "deCODE PRIOR KNOW-HOW" shall mean all secret, substantial and

identified information and materials, including, but not limited to,

discoveries, Improvements, processes, formulas, data, inventions,

know-how and trade secrets, patentable or otherwise, which existed

prior to the Effective Date and during the term of this Agreement (i)

are in deCODE's possession or control, (ii) are not generally known and

(iii) are necessary or useful to MERCK in connection with the

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Research Program or the research, development, manufacture, marketing,

use or sale of IRCT Compound, Tests or Product in the Territory

including deCODE Genomics Data but excluding deCODE Generalized

Technology and deCODE Know-How.

1.23 "DISEASE AREAS" shall mean Exclusive Disease Areas and Non-exclusive

Disease Areas.

1.24 "EXCLUSIVE DISEASE AREAS" shall mean at least one of the following:

[CONFIDENTIAL TREATMENT REQUESTED].

1.25 [CONFIDENTIAL TREATMENT REQUESTED]

1.26 [CONFIDENTIAL TREATMENT REQUESTED]

1.27 [CONFIDENTIAL TREATMENT REQUESTED]

1.28 "NON-EXCLUSIVE DISEASE AREAS" shall mean [CONFIDENTIAL TREATMENT

REQUESTED].

1.29 [CONFIDENTIAL TREATMENT REQUESTED]

1.30 "ELECTED DISEASE" shall have the meaning set out in Section 3.1(d).

1.31 "EXCLUSIVE LICENSE FEE" shall have the meaning set out in Section

3.1(d).

1.32 "EXECUTIVE COMMITTEE" shall mean the committee made up of one senior

executive of each Party as more fully described in Section 2.5.1.

1.33 "FILING" of an NDA shall mean the acceptance by a Regulatory Authority

of an NDA for filing.

1.34 "FIRST COMMERCIAL SALE" shall mean, with respect to any Product or

Test, the first sale for end use or consumption of such Product or Test

in a country after all required approvals, including Marketing

Authorization, have been granted by the Regulatory Authority of such

country.

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1.35 "FULL TIME EQUIVALENT" or "FTE" shall mean the equivalent of a

full-time scientist's work time over a twelve-month period (including

normal vacations, sick days and holidays). The portion of an FTE year

devoted by a scientist to the Research Program shall be determined by

dividing the number of full days during any twelve-month period devoted

by such employee to the Research Program by the total number of working

days during such twelve-month period.

1.36 "IMPROVEMENT" shall mean any enhancement, whether or not patentable, in

the manufacture, formulation, ingredients, preparation, presentation,

means of delivery, dosage or packaging of IRCT Compound, Related IRCT

Compound, Tests or Product.

1.37 "INFORMATION" shall mean any and all information and data, including

without limitation all MERCK Know-How, deCODE Know-How, and all other

scientific, pre-clinical, clinical, regulatory, manufacturing,

marketing, financial and commercial information or data, whether

communicated in writing or orally or by any other method, which is

provided by one Party to the other Party in connection with this

Agreement.

1.38 "INFORMATION RICH CLINICAL TRIAL OR IRCT" shall mean a clinical trial

which includes the following, as specified in the protocol for such

clinical trial: [CONFIDENTIAL TREATMENT REQUESTED]

1.39 "INVENTION" means any process, method, composition of matter, article

of manufacture, discovery or finding that is conceived and reduced to

practice.

1.40 "IRCT COMPOUND" shall mean a Selected Compound that has [CONFIDENTIAL

TREATMENT REQUESTED] in accordance with the Agreement.

1.41 "JOINT INFORMATION AND INVENTIONS" shall mean all discoveries,

Improvements, processes, methods, protocols, formulas, data,

Inventions, know-how and trade secrets, patentable or otherwise,

arising from the Research Program developed or invented jointly by

employees of MERCK and deCODE or others acting on behalf of MERCK and

deCODE.

1.42 "JOINT COLLABORATION PATENTS" shall mean Collaboration Patents that

claim, cover or relate to Joint Information and Inventions.

1.43 "MARKETING AUTHORIZATION" shall mean any approval (including without

limitation all applicable pricing and governmental reimbursement

approvals) necessary to receive permission from the relevant Regulatory

Authority to market and sell a Product or Test in any country.

1.44 "MERCK COMPOUND OPTION" shall have the meaning set out in Section

3.1(e) (i).

1.45 "MERCK COMPOUND PATENT" shall mean any Patent that claims, covers or

relates to an IRCT Compound, Related IRCT Compound, Test or Product

Controlled by MERCK.

1.46 "MERCK EXERCISE NOTICE" shall have the meaning set out in Section

3.1(e) (iii).

1.47 "MERCK INFORMATION AND INVENTIONS" shall mean all discoveries,

Improvements, processes,

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methods, protocols, formulas, data, Inventions, know-how and trade

secrets, patentable or otherwise, arising from the Research Program

developed or invented solely by employees of MERCK or other persons not

employed by deCODE acting on behalf of MERCK.

1.48 "MERCK KNOW-HOW" shall mean any information and materials, including

but not limited to, discoveries, Improvements, processes, methods,

protocols, formulas, data, inventions (including without limitation

MERCK's Information and Inventions and MERCK's rights in Joint

Information and Inventions), know-how and trade secrets, patentable or

otherwise, which arise from the Research Program and during the term of

this Agreement, (i) are in MERCK's possession or control, (ii) are not

generally known and (iii) are in MERCK's opinion necessary to deCODE in

the performance of its obligations under the Research Program.

1.49 "MERCK COLLABORATION PATENTS" shall mean Collaboration Patents that

claim, cover or relate to MERCK Information and Inventions.

1.50 "MERCK PATENTS" shall mean Patents Controlled by MERCK prior to the

Effective Date or during the term of this Agreement (provided MERCK has

the right to license or otherwise make available such Patents to

deCODE) and are necessary or useful to deCODE in connection with the

Research Program.

1.51 "MERCK PRIOR KNOW-HOW" shall mean any information and materials,

including but not limited to, discoveries, Improvements, processes,

methods, protocols, formulas, data, inventions, know-how and trade

secrets, patentable or otherwise, which existed prior to the Effective

Date and during the term of this Agreement, (i) are in MERCK's

possession or control, (ii) are not generally known and (iii) are in

MERCK's opinion necessary to deCODE in the performance of its

obligations under the Research Program excluding MERCK Know-How.

1.52 "MERCK SHARE" [CONFIDENTIAL TREATMENT REQUESTED].

1.53 "NET SALES" shall mean the gross invoice price of Product or Tests sold

by MERCK or its Related Parties to the first Third Party after

deducting, if not previously deducted, from the amount invoiced or

received:

(a) trade and quantity discounts other than early pay cash

discounts;

(b) returns, rebates, chargebacks and other allowances;

granted;

(d) sales commissions paid to Third Party distributors and/or

selling agents;

(e) a fixed amount equal to [CONFIDENTIAL TREATMENT REQUESTED] of

the amount invoiced to cover bad debt, sales or excise taxes, early

payment cash discounts, transportation and insurance, custom duties,

and other governmental charges; and

(f) the standard inventory cost of devices or delivery systems used

for dispensing or administering Product or Tests, as applicable. With

respect to sales of Combination Products, Net Sales shall be calculated

on the basis of the gross invoice price of Product(s) containing the

same strength of IRCT Compound or Related IRCT Compound sold without

other active ingredients. In the event that Product is sold only as a

Combination Product, Net Sales shall be calculated on the basis of the

gross invoice price of the

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Combination Product multiplied by a fraction, the numerator of which

shall be the inventory cost of IRCT Compound or Related IRCT Compound

in the Product and the denominator of which shall be the inventory cost

of all of the active ingredients in the Combination Product. Inventory

cost shall be determined in accordance with MERCK's regular accounting

methods, consistently applied. The deductions set forth in paragraphs

(a) through (f) above will be applied in calculating Net Sales for a

Combination Product. In the event that Product is sold only as a

Combination Product and either Party reasonably believes that the

calculation set forth in this Paragraph does not fairly reflect the

value of the Product relative to the other active ingredients in the

Combination Product, the Parties shall negotiate, in good faith, other

means of calculating Net Sales with respect to Combination Products.

1.54 "PARTY OR PARTIES" shall mean either MERCK or deCODE or both as the

context requires.

1.55 "PATENT RIGHTS" shall mean deCODE Collaboration Patents, and deCODE's

interest in Joint Collaboration Patents.

1.56 "PATENTS" shall mean any and all patents and patent applications in the

Territory (which for the purposes of this Agreement shall be deemed to

include certificates of invention and applications for certificates of

invention) that a Party owns, Controls or through license or otherwise

acquires rights prior to the Effective Date or during the term of this

Agreement which: (i) claim, cover or relate to a Selected Compound,

Test and/or Product; or (ii) claim, cover or relate to Inventions; or

(iii) are divisions, continuations, continuations-in-part, reissues,

renewals, extensions, supplementary protection certificates, utility,

models and the like of any such patents and patent applications and

foreign equivalents thereof.

1.57 "PRODUCT(s)" shall mean any therapeutic preparation in final form

containing (a) an IRCT Compound for sale by prescription,

over-the-counter or any other method for any and all uses that arise

from the [CONFIDENTIAL TREATMENT REQUESTED] in the Disease Area or (b)

a Related IRCT Compound, including without limitation in the case of

either 1.57(a) or (b) any Combination Product.

1.58 "RELATED PARTIES" shall mean a Party's Affiliates or sublicensees, but

shall not mean a Party's distributors.

1.59 "REGULATORY AUTHORITY" shall mean any applicable government regulatory

authority involved in granting approvals for the manufacturing,

marketing, reimbursement and/or pricing of a Product or Test, as

applicable, in the Territory, including, in the United States, the

United States Food and Drug Administration and any successor

governmental authority having substantially the same function.

1.60 "RELATED IRCT COMPOUND" shall mean a compound Controlled by MERCK that

[CONFIDENTIAL TREATMENT REQUESTED].

1.61 "RESEARCH PROGRAM TERM" shall mean the duration of the Research Program

and "Extended Research Program Term" shall mean any period of the

Research Program as it may be extended by mutual agreement of the

Parties, as described more fully in Section 2.10.

1.62 "RESEARCH PROGRAM" shall mean the research activities undertaken by the

Parties hereto as set forth in Article 2 and Attachment 2.1.

1.63 "SELECTED COMPOUND" shall mean any compound proposed by MERCK and

accepted by the

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Operating Committee to be evaluated in Information Rich Clinical

Trials.

1.64 "OPERATING COMMITTEE" shall mean the joint research committee

established to facilitate the Research Program as more fully described

in Section 2.5.1.

1.65 "SUCCESSFUL CLINICAL RESULT" shall mean result(s) [CONFIDENTIAL

TREATMENT REQUESTED].

1.66 "TECHNICAL INFORMATION" shall mean information, data or know-how

(whether patentable or unpatentable), including without limitation,

formulas, manufacturing methods, procedures, designs, compositions of

matter, plans, applications, specifications, drawings, techniques,

materials (including without limitation biological materials such as

tissue samples, plasma samples, cell lines, RNA, DNA, DNA fragments,

organisms, proteins, polypeptides, plasmids, vectors and the like),

compounds, samples, inventions, discoveries, and the like, as well as

improvements related thereto.

1.67 "TERRITORY" shall mean all of the countries in the world, and their

territories and possessions.

1.68 "THERAPEUTIC FIELD" shall mean any and all application of technology to

[CONFIDENTIAL TREATMENT REQUESTED].

1.69 "TESTS" shall mean pharmacogenomic tests aimed at predicting the

response or non-response and side-effects to an IRCT Compound that are

developed, discovered or identified through the Research Program.

1.70 "THIRD PARTY" shall mean an entity other than MERCK and its Affiliates,

and deCODE and its Affiliates.

1.71 "VALID PATENT CLAIM" shall mean a claim of an issued and unexpired

patent included within the MERCK Compound Patent which claims IRCT

Compound, Related IRCT Compound, Tests or Product as a composition of

matter, which has not been revoked or held unenforceable or invalid by

a decision of a court or other governmental agency of competent

jurisdiction, and which is not appealable or has not been appealed

within the time allowed for appeal, and which has not been disclaimed,

denied or admitted to be invalid or unenforceable through reissue,

re-examination or disclaimer or otherwise.

1.72 "WORK PLAN" shall mean Schedule 2.1-X describing the tasks to be

performed by each of the Parties in furtherance of the Research

Program. It is anticipated that there will be separate work plans

relating to each IRCT conducted by the Parties which shall be appended

to the Agreement in sequential order.

2. RESEARCH PROGRAM

2.1 GENERAL

deCODE and MERCK shall engage in the Research Program upon the terms

and conditions set forth in this Agreement. The activities to be

undertaken in the course of each IRCT pursuant to the Research Program

will be set forth in a Work Plan (Schedule 2.1-X) wherein X shall begin

with 1 continue in succession. Prior to the initiation of any IRCT

herein the Parties shall agree in writing signed by members of the

Executive Committee or their designees on what is a Successful Clinical

Result and the signed writing shall become part of the corresponding

Work

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Plan for that IRCT. The Work Plan may be amended from time to time upon

the mutual written agreement by authorized representatives of the

Parties. All Work Plans including Schedule 2.1-0 attached hereto are

part of the Agreement. Notwithstanding any provision of the Agreement

to the contrary, neither Party shall be obligated to conduct any

activities which it reasonably believes would be in violation of any

statute, regulation, law, or terms of any ongoing deCODE project in a

Non-exclusive Disease Area.

2.2 CONDUCT OF RESEARCH

deCODE and MERCK each shall conduct the Research Program in good

scientific manner, and in compliance in all material respects with all

requirements of applicable laws, rules and regulations and all

applicable good laboratory practices to attempt to achieve their

objectives efficiently and expeditiously. deCODE and MERCK each shall

proceed diligently with the work set out in the Work Plan by using

their respective good faith efforts to allocate sufficient time,

effort, equipment and facilities to the Research Program and to use

personnel with sufficient skills and experience as are required to

accomplish the Research Program in accordance with the terms of this

Agreement and Work Plan.

deCODE and MERCK shall be entitled to utilize the services of their

Affiliates to perform their respective Research Program activities.

Each Party shall also be entitled to utilized the services of Third

Parties to perform their respective Research Program activities only

upon the prior written consent of the other Party or as specifically

set forth in Work Plan. Notwithstanding any such consent, both Parties

shall remain at all times fully liable for its respective

responsibilities under the Research Program.

2.3 INFORMATION RICH CLINICAL TRIALS

Each IRCT shall be conducted in accordance with the Work Plan and a

detailed protocol. A proposed protocol and a draft proposal for what a

Successful Clinical Result will be, shall be prepared initially by the

Operating Committee. These draft proposals shall be further reviewed

internally by the appropriate committees within MERCK and deCODE. The

draft proposals, with any changes or revisions made by MERCK or deCODE,

shall then be considered and revised by the Operating Committee for

submission to the Executive Committee. deCODE shall be obligated to

provide support needed to conduct no more than five (5) IRCTs

concurrently at any time during the Research Program. Each IRCT shall

be conducted under the direction and control of the Operating Committee

in accordance with the terms and conditions set forth in Schedule 2.3

and a Study Protocol for that Selected Compound. In any given IRCT that

is conducted under this Agreement the Parties may modify and/or

supplement the terms and conditions set forth in Schedule 2.3 in

accordance with Section 10.7 herein. All data and results pertaining to

any Selected Compound may be used by MERCK in filings with Regulatory

Authorities and all other rights to any intellectual property that are

embodied by those data and results shall be governed by Article 3.

2.4 COMPOUND SELECTION

MERCK shall nominate MERCK compounds during the Research Program for

which Information Rich Clinical Trials shall be conducted by the

Parties according to the Work Plan. deCODE shall be given the

opportunity to review each proposed compound to confirm that deCODE's

conduct of one or more IRCTs on such compound under this Agreement

would not

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conflict with any other ongoing deCODE project(s). The Operating

Committee shall select which MERCK nominated compounds will become

Selected Compounds; PROVIDED, HOWEVER, that solely with respect to

compounds in the Non-exclusive Disease Area, deCODE shall not be

obligated to perform development efforts with respect to any such

compounds if it reasonably believes that the performance of such

efforts will conflict with any ongoing deCODE project(s).

2.5 GOVERNANCE OF THE COLLABORATION.

The Parties hereby establish process to govern the conduct of the

Research Program and each party's contribution to the Research Program

as follows:

2.5.1 MANAGERIAL OVERSIGHT.

There will be two levels of managerial oversight of the Research

Program. There will be an Executive Committee and an Operating

Committee. In addition each Party shall designate Project Leaders for

the Research Program.

(a) EXECUTIVE COMMITTEE

The Executive Committee shall consist of one senior executive

from each of MERCK and deCODE. The Executive Committee shall

have the ultimate authority for decisions regarding the

Research Program. The matters that require approval by the

Executive Committee shall include approval of financial

statements such as the Budget and approval of the Work Plan.

(i) Any disputes where the Executive Committee cannot

reach a mutually acceptable decision within thirty (30)

days after the matter was referred to them shall be

decided by the President of MERCK Research Laboratories

and the final determination of the issue that shall be

binding on the Parties and the Research Program;

PROVIDED, HOWEVER, as set forth below in Section 2.5.1

(a)(ii) regarding implementation of such decisions and in

all cases that to the extent such disputes materially

affect the rights or obligations of the Parties under

this Agreement, MERCK shall consult with deCODE and the

Parties shall agree on a course of action to lawfully

avoid or minimize such effects upon the rights or

obligations of the Parties, to the extent practicable.

(ii) Any disputes arising with respect to the manner in

which decisions of the Operating Committee, the Executive

Committee or the President of Merck Research Laboratories

will be implemented that will affect relations with

patients participating in the Research Program, research

sites, consultants, investigators or vendors all of which

are in Iceland, or any governmental authority in Iceland

("Implementation Disputes"), shall be decided by the

Chief Executive Officer of deCODE (or his designee) and

the final determination of the issue that shall be

binding on the Parties and the Research Program, who

shall give good faith consideration to the comments of

MERCK's Executive Committee member (or their respective

designees) in resolving such matter; PROVIDED, HOWEVER,

that to the extent such disputes materially affect the

rights or obligations of the Parties under this

Agreement, deCODE shall consult with MERCK and the

Parties shall agree on a course of action to lawfully

avoid or minimize such effects upon the rights or

obligations of the Parties, to the extent practicable.

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(b) OPERATING COMMITTEE

The Operating Committee shall be based in Iceland and

composed of MERCK representatives and deCODE

representatives and shall exist for [**] after

termination or expiration of the Research Program Term.

The Operating Committee shall perform the following

functions (i) approve and, as the need arises, determine

the necessity to remove personnel working on the Research

Program, (ii) prepare the Budget, (iii) formulate and

adjust Work Plans, (iv) select Compounds; (v) oversee

progress of the Research Program and exchange of data

between the Parties; and (vi) appoint sub-committees of

equal representation to fulfill any of the enumerated

tasks set forth in this Section 2.5.1(b). Each Party

shall have 1 vote. Each Party shall appoint its

representatives to the Operating Committee from time to

time, and may substitute one or more of its

representatives, in its sole discretion, effective upon

notice to the other Party of such change. These

representatives shall have, individually or collectively,

appropriate technical credentials, experience and

knowledge, and ongoing familiarity with the Research

Program. Additional representatives or consultants may

from time to time, by mutual consent of the Parties, be

invited to attend Operating Committee meetings, in the

case of consultants subject to such consultant's written

agreement to comply with the requirements of Section 4.1.

Any member of the Operating Committee may designate a

substitute to attend and perform the functions of that

member at any meeting of the Operating Committee. A

chairperson and secretary of the Operating Committee

shall serve co-terminus one (1) year terms, commencing on

the Collaboration Date or an anniversary thereof, as the

case may be. deCODE shall have the right to name the

chairperson and MERCK shall have the right to name the

secretary of the Operating Committee. Decisions of the

Operating Committee shall be made unanimously by the

members. In the event that the Operating Committee cannot

or does not, after good faith efforts, reach agreement on

an issue, the resolution and/or course of conduct shall

be referred to the Executive Committee. Each Party shall

bear its own expenses related to the attendance of such

meetings by its representatives and invitees.

2.5.2 MEETINGS AND MINUTES.

Meetings of the Operating Committee require the participation of at

least one member of the Operating Committee from each Party. During the

Research Program Term, the Operating Committee shall meet in person at

least once during every Calendar Year. From time to time, a Party may

give the other Party reasonable notice of its desire to hold a meeting

of the Operating Committee. Unless otherwise agreed by the Parties,

meetings of the Operating Committee shall be held in person and shall

alternate between the offices of the Parties, or meet in such other

place as agreed by the Parties. Instead of meeting in person, the

members of the Operating Committee may, for purposes of holding a

Operating Committee meeting, convene or be polled or consulted from

time to time by means of telecommunications, video conferences,

electronic mail or correspondence, as deemed necessary or appropriate

by the Parties.

With the sole exception of specific items of the meeting minutes to

which the chairperson and the secretary cannot agree and which are

escalated as provided below, definitive minutes of all Operating

Committee meetings shall be finalized promptly after the meeting to

which the minutes pertain, as follows:

Promptly after each Operating Committee meeting, the secretary shall

prepare and distribute to all members of the Operating Committee draft

minutes of the meeting. Such minutes shall provide a description, in

reasonable detail, of the discussions at the meeting and a list of any

actions,

<Page>

decisions or determinations approved by the Operating Committee and a

list of any issues to be resolved by the Executive Officers.

The chairperson shall then promptly after receiving such draft minutes

collect comments thereon from the members of his or her Party and

provide them to the secretary.

The chairperson and the secretary of the Operating Committee shall then

discuss each other's comments and finalize the minutes. The secretary

and chairperson shall each sign and date the final minutes. The

signature of the chairperson and the secretary upon the final minutes

shall indicate each Party's assent to the minutes.

If at any time during the preparation and finalization of the Operating

Committee meeting minutes, the secretary and the chairperson do not

agree on any issue with respect to the minutes, such issue shall be

resolved by the decision making process as provided in Section

2.5.1(a). The decision resulting from the decision making process shall

be recorded by the secretary in amended finalized minutes for said

meeting.

2.5.3 PROJECT LEADERS.

MERCK and deCODE each shall appoint a person (a "Project Leader") from

the Operating Committee to coordinate its part of the Research Program.

The Project Leaders shall be the primary contact between the Parties

and the Operating Committee with respect to the Research Program. Each

Party shall notify the other within thirty (30) days of the date of the

Agreement of the appointment of its Project Leader and shall notify the

other Party as soon as practicable upon changing this appointment.

2.6 ANNUAL BUDGET .

All costs in personnel time, expenses, goods and Third Party services

shall be estimated in advance for the subsequent Calendar Year

according to the Budget to be set forth in Schedule 2.6. The Budget

shall be prepared by the Project Leaders under the direction and

control of the Operating Committee by September 30th of the year

preceding the Calendar Year of the Budget.

2.7 RECORDS AND REPORTS

2.7.1 RECORDS.

Each Party shall maintain records, in sufficient detail and in good

scientific manner appropriate for patent and regulatory purposes, which

shall fully and properly reflect all work done and results achieved in

the performance of the Research Program by that Party.

2.7.2 COPIES AND INSPECTION OF RECORDS.

(a) MERCK shall have the right, during normal business hours and upon

reasonable notice, to inspect and copy all such records of deCODE

referred to in Section 2.7.1. MERCK shall maintain such records and the

information disclosed therein in confidence in accordance with Section

4.1. MERCK shall have the right to arrange for its employees and/or

consultants involved in the activities contemplated hereunder to visit

the offices and laboratories of deCODE and any of its Third Party

contractors as permitted under Section 2.2 during normal business hours

and upon reasonable notice, and to discuss the Research Program work

and its results in

<Page>

detail with the technical personnel and consultants of deCODE. Upon

request, deCODE shall provide copies of the records described in

Section 2.7.1 above.

(b) At least once per Calendar Year during the term of the Agreement,

MERCK shall provide deCODE with information about the status of any

IRCT Compounds in development at MERCK including a review of any

significant developmental milestones achieved or setbacks encountered

since the previous year's review and such other information as may be

reasonably requested by deCODE so as to enable deCODE to monitor or

confirm MERCK's compliance with the provisions of Section 3.4 hereof.

deCODE shall have the right, during normal business hours and upon

reasonable notice, to inspect and copy all such records of MERCK

referred to in Section 2.7.1 that are necessary to deCODE to perform

its obligations under this Agreement. deCODE shall maintain such

records and the information disclosed therein in confidence in

accordance with Section 4.1.

2.8 COMPLIANCE

deCODE shall conduct the Research in accordance with all applicable

laws, rules and regulations, including, without limitation, all current

governmental regulatory requirements concerning Good Laboratory

Practices. In addition, if animals are used in research hereunder,

deCODE will comply with the Animal Welfare Act or any other applicable

local, state, national and international laws or regulations relating

to the care and use of laboratory animals. MERCK encourages deCODE to

use the highest standards, such as those set forth in the Guide for the

Care and Use of Laboratory Animals (NRC, 1996), for the humane

handling, care and treatment of such research animals. Any animals

which are used in the course of the Research, or products derived from

those animals, such as eggs or milk, will not be used for food

purposes, nor will these animals be used for commercial breeding

purposes. deCODE shall notify MERCK in writing of any deviations from

applicable regulatory or legal requirements. deCODE hereby certifies

that it will not and has not employed or otherwise used in any capacity

the services of any person debarred under Section 21 USC 335a in

performing any services hereunder.

2.9 RESEARCH PROGRAM TERM

Except as otherwise provided herein, the term of the Research Program

shall commence on the Collaboration Date and continue for a period of

seven (7) years. Following the initial seven (7) year term, the

Research Program will renew annually for successive one (1) year terms

("Extended Research Term") unless either Party sends a written notice

of termination at any time to the other Party PROVIDED, HOWEVER, that

MERCK may send such written notice of termination at any time beginning

five (5) years after the Collaboration Date. Such notice of termination

shall be sent at least [**] prior to the date of termination. In the

event that deCODE exercises its right to terminate under this Section

2.9, such termination shall not affect any ongoing IRCTs which shall be

completed at MERCK's discretion, PROVIDED HOWEVER that deCODE shall not

be obligated to begin any new IRCT which has been approved by the

Operating Committee but not yet begun. From time-to-time, the Parties

shall amend the Work Plan as applicable. In the event of a Change of

Control pursuant to which a Competitor Controls deCODE, MERCK shall

have the right to terminate the Research Program at any time on written

notice to deCODE. In the event that the term of the Research Program

expires or the Research Program is terminated during the pendency of an

IRCT or in the event that the Parties elect to abandon or terminate any

IRCT during the course of the Research Program, the Parties shall

arrange for orderly completion or

<Page>

early termination of such IRCT over a reasonable period of at least 90

days, including making provision for payment for all non-cancelable

expenses associated therewith.

2.10 EXCLUSIVE EFFORTS

(a) During the Research Program Term, deCODE shall work exclusively

with MERCK in efforts to conduct IRCT [CONFIDENTIAL TREATMENT

REQUESTED] and shall not otherwise facilitate or assist any Third Party

to conduct IRCT [CONFIDENTIAL TREATMENT REQUESTED] by providing rights

to, either through license or any agreement to forgo enforcement of,

deCODE Patents or deCODE Prior Know-How. This Agreement does not

prohibit deCODE from (i) conducting IRCT [CONFIDENTIAL TREATMENT

REQUESTED]; or (ii) conducting clinical trials [CONFIDENTIAL TREATMENT

REQUESTED]. In the event that MERCK and deCODE begin an IRCT with a

Selected Compound in a Non-exclusive Disease Area, deCODE shall not

commence any IRCT with [CONFIDENTIAL TREATMENT REQUESTED].

(b) Beginning after the first anniversary of the Effective Date, if

during any [**] period the Parties do not commence or continue an IRCT

in any one of the Exclusive Disease Areas, and if during such two-year

period the Operating Committee neither plans nor conducts at least five

concurrent IRCT's during at least [**] of such [**] period, then such

specific Disease Area shall thereafter become a Non-Exclusive Disease

Area for all purposes under this Agreement. Notwithstanding the

preceding sentence, the Parties may agree to create exceptions to, or

the tolling of, the foregoing for special circumstances.

2.11 EXCHANGE OF INFORMATION

During the Research Term, deCODE promptly shall disclose on an ongoing

basis to MERCK in English and in writing all deCODE Know-How. MERCK

shall promptly disclose to deCODE during the Research Program Term all

MERCK Know-How.

2.12 USE OF HUMAN MATERIALS

With respect to any human cell lines, tissue, human clinical isolates

or similar human-derived materials that have been or are to be

collected and/or used in the Research Program ("Human Materials"), each

Party represents and warrants (i) that it has complied, or shall

comply, with all applicable laws, guidelines and regulations relating

to the collection and/or use of the Human Materials and (ii) that it

has obtained, or shall obtain, all necessary approvals and appropriate

informed consents, in writing, for the collection and/or use of such

Human Materials. deCODE shall provide documentation of such approvals

and consents upon MERCK's request. Each Party further represents and

warrants that such Human Materials may be used as contemplated in this

Agreement without any obligations to the individuals or entities

("Providers") who contributed the Human Materials, including, without

limitation, any obligations of compensation to such Providers or any

other Third Party for the intellectual property associated with, or

commercial use of, the Human Materials for any purposes.

2.13 PHARMACOGENOMICS TESTS.

(a) TESTS FOR USE IN CLINICAL TRIALS. MERCK shall have the sole and

exclusive right to direct and control the development and

commercialization of Tests for use with Selected Compounds. deCODE

shall have the first right to perform the work needed to develop such

Tests for use in the

<Page>

conduct of IRCT's under this Agreement as set forth below. MERCK shall

identify and prioritize the Tests it wishes to have developed and Merck

shall have the right to solicit bids from Third Parties including

deadlines for the achievement of defined events in the development of

suc

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