COLLABORATIVE RESEARCH, DEVELOPMENT, COMMERCIALIZATION AND LICENSE AGREEMENT

 

COLLABORATIVE RESEARCH, DEVELOPMENT,
COMMERCIALIZATION AND LICENSE AGREEMENT

 

THIS AGREEMENT is entered into as of March 23, 2006 (the “Effective Date”) by and between SENOMYX, INC., a Delaware Corporation having offices at 11099 North Torrey Pines Road, La Jolla, CA 92037, U.S.A. (“Senomyx”) and AJINOMOTO CO., INC., a Japanese Corporation, having its principal place of business at 15-1, Kyobashi 1-chome, Chuo-ku, Tokyo 104-8315, Japan (“Ajinomoto”).

 

BACKGROUND

 

Ajinomoto and Senomyx desire to enter into this Agreement whereunder Senomyx will grant Ajinomoto certain license rights to Senomyx [***] Compounds and Senomyx [***] Compounds for use in the field and in the territory as provided herein below. In addition, this Agreement will cover two collaborative research and/or development programs to (i) develop Senomyx [***] Compounds during the Collaborative Period under the applicable Research Plan for use in the applicable product categories and Territory set forth in Section 8.1 (the “[***] Program I”); and (ii) discover and develop Senomyx [***] Compounds during the Collaborative Period under the applicable Research Plan for use in the applicable product categories and Territory set forth in Section 8.2 (the “[***] Program II”).

 

NOW, THEREFORE, in consideration of the foregoing promises and of the covenants, representations and agreements set forth below, the parties hereby agree as follows:

 

THE AGREEMENT

 

1.      Definitions . Certain terms set forth in this Agreement with initial capitals are defined in Appendix A, which is incorporated herein by reference.

 

2.      Steering Committee . Within [***] of the Effective Date, the parties will establish a joint steering committee, which will be made up of representatives from the parties (the “Steering Committee”). The Steering Committee will direct the efforts of the Collaborative Program. The Steering Committee will consist of two (2) representatives designated by Senomyx and two (2) representatives designated by Ajinomoto. Steering Committee members may delegate their voting powers to delegates from their respective companies. Each member of the Steering Committee will have one (1) vote. The Steering Committee will meet at least four (4) times per year during the Collaborative Period, and thereafter from time to time, using mutually agreed upon meeting locations and formats including teleconferencing and videoconferencing. Each party shall bear its own expenses relating to the meetings and activities of the Steering Committee. Senomyx will prepare and deliver to the members of the Steering Committee minutes of such meetings for review and

 

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approval by both parties. Decisions of the Steering Committee will be made by unanimous vote, at a meeting where all four voting representatives are present, or by unanimous written consent.

 

3.      Collaborative Program .

 

3.1           Research Plans; Staffing.  

 

(A)    Research Plans. The parties will prepare the Research Plans within [***] from the Effective Date and will conduct the [***] Program I and [***] Program II pursuant thereto. The Research Plan will be reviewed at the first meeting of the Steering Committee. The Research Plans for the respective programs will be prepared and reviewed as follows:

 

•       [***] Program I :  [***], the Steering Committee will authorize the same; and

 

•       [***] Program II : [***], the Steering Committee will authorize the same.

 

(B)    Staffing . Senomyx represents and warrants that the personnel it will provide to participate in the Collaborative Program are qualified to perform the work in the respective Research Plan. Senomyx shall identify to Ajinomoto the Senomyx personnel, including their academic and work experience, who shall participate in the Collaborative Program. Senomyx may change such personnel to other qualified personnel from time to time, in its reasonable discretion, provided that, to the extent reasonably possible, Senomyx shall notify Ajinomoto in advance of any such change and identify to Ajinomoto such new personnel, including their academic and work experience.

 

3.2       [***] Program I .  During the Collaborative Period, Senomyx will collaborate with Ajinomoto in [***] Program I on (i) an Exclusive basis with respect to [***] Product Category I in the Territory; (ii) a Co-Exclusive basis with respect to [***] Product Category II in the Territory; and (iii) an Exclusive basis with respect to [***] Product Category III in the Territory.

 

(A)   Research Plan . The Research Plan for [***] Program I shall include (i) evaluation by Ajinomoto of the Senomyx [***] Compound(s); and (ii) product development by Ajinomoto of the same.

 

(B)    Responsibilities of the Parties . During the Collaborative Period, Ajinomoto will use its reasonable commercial efforts to perform the activities outlined in the Research Plan. During the Collaborative Period,

 

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Senomyx will use its reasonable commercial efforts using the Research Fee provided under Section 7.3 to support Ajinomoto’s performance of the activities in accordance with the Research Plan, including, without limitation, [***] (i) making available any and all relevant information regarding the Senomyx [***] Compounds with respect to [***]; and (ii) providing to Ajinomoto reasonable quantities of [***] Senomyx [***] Compounds selected by Ajinomoto, for evaluation and/or product development. During the Collaborative Period, Ajinomoto may include in [***] Program I the evaluation of the [***] Compounds needed under [***] Program I, or subject to Section 13, may have a third party manufacture the same. [***] Upon expiration of the Collaborative Period, the parties’ research and development obligations pursuant to this Section 3.2 will expire.

 

(C)    Co-Exclusivity/Exclusivity . For so long as Ajinomoto maintains its Exclusive and Co-Exclusive licenses pursuant to Sections 8.1 and 8.2, Senomyx [***]. For the avoidance of doubt, this Section 3.2(C) will not be construed as [***].

 

3.3       [***] Program II .  During the Collaborative Period, Senomyx will collaborate with Ajinomoto in [***] Program II on (i) an Exclusive basis [***] in [***] Product Category I in the Territory; (ii) a Co-Exclusive basis [***] in [***] Product Category II in the Territory; (iii) an Exclusive basis [***] in [***] Product Category II in the Territory; (iv) an Exclusive basis [***] in [***] Product Category III in the Territory; and (v) an Exclusive basis [***] in [***] Product Category IV in the Territory.    

 

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(A)   Research Plan . The Research Plan for [***] Program II shall include (i) research by Senomyx to determine whether there are any Senomyx [***] Compounds among the compounds Controlled by Senomyx and [***]; (ii) evaluation of Senomyx [***] Compounds by Ajinomoto; and (iii) development by Ajinomoto of Selected Senomyx [***] Compounds. Ajinomoto will decide whether or not to conduct the work provided in Section 3.3 (A) (ii) and (iii) based on the results of the work provided for in Section 3.3 (A) (i). In the event that Ajinomoto wishes Senomyx to [***] Controlled by Senomyx in an attempt to [***] Compound, Ajinomoto shall so notify Senomyx and Senomyx shall prepare a draft Research Plan for Ajinomoto’s review. Following approval by the Steering Committee of such Research Plan, such Research Plan shall be included in [***] Program II. In the event such [***] is included in [***] Program II, the Steering Committee shall [***]; provided , however , that (i) in no event shall the amount of such [***]; and (ii) such [***].

 

(B)    Responsibilities of the Parties . During the Collaborative Period, Senomyx will use its reasonable commercial efforts using the applicable Research Fee provided under Section 7.3 to perform the activities outlined in the Research Plan. [***] Senomyx will prepare a data package for Senomyx [***] Compounds, and reasonable quantities of [***] Senomyx [***] Compounds, which results from the works described in Section 3.3 (A) (i) and (ii), subject to agreement of the parties on the contents of such data package. During the Collaborative Period, Ajinomoto will use its reasonable commercial efforts to perform the activities in accordance with the Research Plan, and the evaluation of the data package and the [***] Senomyx [***] Compounds. With respect to each Senomyx [***] Compound [***] in the course of [***] Program II, by no later than [***] immediately following the Collaborative Period (the “Selection Date”), Ajinomoto may, upon written notice to Senomyx, select [***] Senomyx [***] Compound(s), or such larger reasonable number as the parties shall reasonably agree, for development; provided , however , that if a Regulatory Approval has been obtained with respect to a Senomyx [***] Compound at least

 

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[***] prior to the Selection Date, Ajinomoto may decide by a date which is [***] after the date of [***] whether Ajinomoto selects such compound or not; provided further , that Ajinomoto shall [***]. Until the Selection Date, Ajinomoto may include in [***] Program II the evaluation of the manufacturability of the relevant Senomyx [***] Compound, and if Ajinomoto so desires, it may manufacture any necessary additional quantities of such Senomyx [***] Compounds needed under [***] Program II, or subject to Section 13, may have a third party manufacture the same. [***]  During the Collaborative Period, Senomyx and Ajinomoto will cooperate in good faith to support the other party’s performance of the activities set forth in the Research Plan. Upon expiration of the Collaborative Period, the parties’ research and development obligations pursuant to this Section 3.3 will expire. If no compounds are selected as Selected Senomyx [***] Compound(s) pursuant to this Section 3.3(B) by the Selection Date, [***].

 

(C)    Extension of the Collaborative Period . Ajinomoto may extend the Collaborative Period for [***] Program II beyond the original three (3) year Collaborative Period. If Ajinomoto chooses to extend the Collaborative Period for [***] Program II, Ajinomoto must notify Senomyx at least [***] prior to expiration of the Collaborative Period. In such event, the Collaborative Period of [***] Program II shall be extended in [***] increments; provided , however , that in no event shall the Research Fee in the Collaborative Period so extended [***].

 

(D)   Co-Exclusivity/Exclusivity . During the Collaborative Period, Senomyx shall [***]; provided , however , that Senomyx may [***]. Notwithstanding the foregoing, this Section 3.3(D) will not be construed as [***]

 

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[***]. For the avoidance of doubt, provided that Ajinomoto has [***], Ajinomoto shall [***].

 

3.4       Acceptance of Ajinomoto’s Scientists . For the purpose of [***] Program II, Senomyx will accept [***] Ajinomoto’s scientists at Senomyx’s laboratory (“Ajinomoto Scientists”), the detailed terms and conditions of such acceptance of the Ajinomoto Scientists will be discussed and agreed between Senomyx and Ajinomoto separately. Such terms and conditions will include [***].

 

3.5       Product Development and Commercialization .

 

(A)   Product Development . Within a commercially reasonable time, but no later than [***] of the selection of a Selected Senomyx [***] Compound, Ajinomoto will prepare a plan for product development (the “Product Development Plan”) for [***] Products containing such compound for approval by the Steering Committee, which will be incorporated into the minutes of the Steering Committee. Within a commercially reasonable time, but no later than [***] of the Effective Date, Ajinomoto will prepare a Product Development Plan for [***] Products containing Senomyx [***] Compounds for approval by the Steering Committee. The Product Development Plan(s) will set forth the following:  (i) specific products with potential inclusion of any of the Selected Senomyx [***] Compound(s) and/or Senomyx [***] Compounds; (ii) specific countries of potential interest for commercialization of [***] Products; (iii) prioritization of [***] Products and countries for development and commercialization; and (iv) a development plan timeline including plans for [***] Product [***]. Ajinomoto will use its commercially reasonable efforts to perform the activities set forth in the Product Development Plan(s). For the avoidance of doubt, Ajinomoto will be responsible for [***] of [***] Product [***] in accordance with the activities outlined in the Product Development Plan(s).

 

(B)    Product Commercialization . Ajinomoto will use commercially reasonable efforts to commercialize [***] Product containing one or more

 

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Senomyx [***] Compounds within [***] from [***]. Ajinomoto will use commercially reasonable efforts to commercialize [***] Product containing one or more of the Selected Senomyx [***] Compound(s) within [***] from [***]. Notwithstanding any failure of Ajinomoto to commercialize [***] Product in [***] within such period, Ajinomoto shall not lose any rights under Section 8 in [***]. Ajinomoto may, at any time, elect to discontinue all rights to one or more Senomyx [***] Compounds or one or more Selected Senomyx [***] Compounds on a country-by country basis upon written notice to Senomyx, and Ajinomoto will, after such written notice, lose all rights provided for in Section 8 to such compound(s) in such discontinued country(ies) and also will be released from any obligations with respect to such compound(s) in such country(ies). Notwithstanding the foregoing, (i) any accrued payment obligations of Ajinomoto (including minimum annual royalties) will continue to be payable; and (ii) such minimum annual royalty obligations with respect to (x) [***] and/or (y) [***] will continue unless Ajinomoto has discontinued all rights to all Senomyx [***] Compounds and all Selected Senomyx [***] Compounds in either (i) [***] and/or (ii) [***].

 

3.6       Regulatory . Through the Steering Committee process, both parties will have input into the regulatory approval process to be followed with respect to Senomyx [***] Compound(s) and Senomyx [***] Compound(s), including, without limitation, safety studies, regulatory strategy, and timing.

 

(A)   Regulatory Filings . Subject to the provision of Section 3.6(C), all regulatory filings for any Senomyx [***] Compounds and Senomyx [***] Compounds and all Regulatory Approvals received or issued in connection therewith shall be [***]. Subject to Section 3.6(C), any data that is required to submit or complete a regulatory filing or obtain Regulatory Approval (“Regulatory Filing Data”) shall be [***]. Any regulatory filings made by Ajinomoto under Section 3.6(C) and all Regulatory Approvals issued in connection therewith will [***]

 

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[***].

 

Notwithstanding the foregoing, at the request of [***], and subject to [***] consent (not to be unreasonably withheld), [***] will, with the commercially reasonable assistance of [***], represent [***].

 

(B)   Reimbursement of the Cost of Filings to [***] . [***] will reimburse [***] for the costs associated with the regulatory filings and the Regulatory Filing Data for the Senomyx [***] Compounds and Selected Senomyx [***] Compounds made pursuant to Section 3.6(A); provided , however , that if any Third Party licensee of [***] has the right to [***]. For the avoidance of doubt, with respect to Senomyx [***] Compounds [***].

 

(C)   [***] to Make Filings. If at any time Ajinomoto determines, in its reasonable discretion, that a regulatory filing with respect to a Senomyx [***] Compound or a Selected Senomyx [***] Compound in any country within the Territory is necessary, then Ajinomoto may request that Senomyx make such filing. [***] in the event that Senomyx fails to agree to make the regulatory filing requested by Ajinomoto or to take reasonable steps to make such filing (including, without limitation, taking steps to commence safety studies) within [***] of the date of such Ajinomoto request. In the event [***] the Steering Committee for the Steering Committee’s review and approval, which shall not be unreasonably withheld. To the extent [***]

 

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[***]. Ajinomoto hereby [***]; provided , however , that whenever Senomyx [***], then Senomyx will [***]. In addition, Senomyx will have a [***]; provided , however , that the parties will agree on [***]. Notwithstanding the foregoing, Senomyx shall [***].

 

4.      Right of First Negotiation and [***] .

 

4.1       Right of First Negotiation. Until [***], Ajinomoto shall have the exclusive right of first negotiation to be granted additional licenses to expand the [***] Field or the Territory. Except to the extent that Senomyx is [***], Senomyx will, to the extent it will not breach any existing agreement with any Third Parties, negotiate in good faith with Ajinomoto the terms and conditions for a license to the expanded territory and/or [***] Field. After [***], if at any time during the Term Senomyx wishes to develop any new opportunity with a Third Party in [***] or [***], then Senomyx will notify Ajinomoto in writing of such opportunity and Ajinomoto will then have [***] to communicate to Senomyx in writing its interest in such opportunity and specific financial terms. In the event Senomyx does not receive such written notification within such [***] period or if such terms offered by Ajinomoto are [***], then Senomyx shall [***]. If the terms offered by Ajinomoto are [***], the parties shall [***] for a period not to exceed [***], which period can be extended by mutual agreement of the parties.

 

4.2       [***]. In the event that, [***], Senomyx grants Co-Exclusive rights to a Third Party to a Senomyx [***] Compound or

 

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a Selected Senomyx [***] Compound in the Territory and the [***] Field [***], Senomyx will notify Ajinomoto and Ajinomoto [***].

 

5.      Law and Regulation . The [***] Compounds, Senomyx [***] Compounds, Senomyx [***] Compounds, Selected Senomyx [***] Compounds, and Substances provided by Senomyx under this Agreement must be used in compliance with all applicable laws and regulations, including, without limitation, all import and export laws and regulations.

 

6.      Reporting . During the Collaborative Period, each party will report to the other a written summary, the contents of which shall be determined by the parties following the Effective Date, of results of research and development work it carries out, if any, under this Agreement within [***] after each quarterly Steering Committee meeting. The exchange of such report may be reasonably supplemented, at the request of the party receiving a report, by correspondence and/or, upon reasonable prior notice, visits to the other party’s facilities. In addition, each party agrees to prepare and exchange written and electronic reports concerning any results and data that must be used by either party as supporting information for any regulatory filings. Anything in this Agreement to the contrary notwithstanding, Ajinomoto shall be under no obligation to report to Senomyx [***]. Each party shall promptly bring to the other party’s attention any [***] with respect to any Senomyx [***] Compound or Senomyx [***] Compound.

 

7.      Financial Terms .

 

7.1           License Fee for Licenses to Senomyx [***] Compounds. In consideration for the license grants for [***] Program I under Section 8, Ajinomoto shall pay to Senomyx a license fee of [***] within [***] of the Effective Date. Such license fee shall be non-refundable and non-creditable.

 

7.2           Fee for Technology Access for [***] Program II and License to Senomyx [***] Compounds . In consideration for [***] Program II, including without limitation, for the license grants under Section 8 for Senomyx [***] Compounds, Ajinomoto shall pay to Senomyx a fee of [***] within [***] of the Effective Date. Such fee shall be non-refundable and non-creditable.

 

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7.3           Research Fees. During the Collaborative Period of [***] Program I and [***] Program II, Ajinomoto will pay Senomyx research fees for the work of Senomyx under [***] Program I and [***] Program II (“Research Fees”). The Research Fees for the first year of the Collaborative Program shall be [***] (which shall be equivalent to the cost of [***] FTEs on the basis of [***] per FTE, for [***] Program I and/or [***] Program II hereunder, including, without limitation, the cost of overhead, salaries and necessary materials and supplies for such FTEs). The Research Fees for the second year of the Collaborative Program shall be a minimum of [***]. The Research Fees for the third year of the Collaborative Program shall be a minimum of [***], and thereafter, the same will be decided through a good faith negotiation between Senomyx and Ajinomoto. The Research Fees will be paid in equal quarterly installments payable in advance. The first payment will be made within [***] following the Effective Date. The Research Fees [***].   

 

7.4           Milestone Payments . Ajinomoto will pay Senomyx the following non-creditable, non-refundable milestone payments within [***] of the occurrence, and written backup information to Ajinomoto from Senomyx, of the following milestone events for [***] Program I and [***] Program II:

 

•       Milestone 1 : [***];

 

•       Milestone 2 : [***].   

 

With respect to Milestone 2 above, within [***] of the [***], Ajinomoto will notify

 

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Senomyx whether Ajinomoto wishes to commercialize such compound. In the event Ajinomoto does not wish to commercialize such compound, then [***]; and

 

•       Milestone 3 : [***].

 

7.5           Royalty for [***] Products . Pursuant to the provisions of Section 7.7, Ajinomoto will pay to Senomyx a royalty of [***] on [***] during the Royalty Term; provided , however , that the royalty rate of the sales of [***] Products in [***] Product Category III and [***] Product Category IV shall be [***] on [***]. For the avoidance of doubt, there shall be no double or triple royalty in the event that [***] Product contains more than any one of the following (i) Senomyx [***] Compound(s); and/or (ii) Senomyx [***] Compound(s). In the event that Ajinomoto sells [***] Products to Affiliates of Ajinomoto, royalties will be based on [***]. In all such cases above, the sales price in such transactions shall be determined on an arms-length basis. For the avoidance of doubt, [***] Products in [***] Product Category III and [***] Product Category IV shall always be sold as a [***] and shall, in no event, be sold as [***].

 

7.6           Minimum Annual Royalties .

 

7.6.1         Minimum Annual Royalty Amount. During the Royalty Term, Ajinomoto shall pay to Senomyx a minimum annual royalty based on the following schedule for each of the following two territories (“Minimum Annual Royalty”): (i) [***]; and (ii) [***].

 

Following [***] for [***]

 

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Anniversary of “Commercialization Date”		Minimum Annual Royalty Payment Due
The Commercialization Date with respect to [***] means the earlier of the following:  [***].
1 st Anniversary of Commercialization Date in [***]		[***]
2 nd Anniversary of Commercialization Date in [***]		[***]
3 rd Anniversary of Commercialization Date in [***], and successive anniversaries		[***]

 

Following [***] for [***]

 

Anniversary of “Commercialization Date”		Minimum Annual Royalty Payment Due
The Commercialization Date with respect to [***] means the earlier of the following:  [***].
1 st Anniversary of Commercialization Date in [***]		[***]
2 nd Anniversary of Commercialization Date in [***]		[***]
3 rd Anniversary of Commercialization Date in [***] and successive anniversaries		[***]

 

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For purposes of this Section 7.6, if [***] for a Senomyx [***] Compound prior to [***], the [***] shall be deemed to be the [***]. There will be no duplication of Minimum Annual Royalties in either territory; only one Minimum Annual Royalty will be paid in the applicable territory even if [***] for both a Senomyx [***] Compound and a Senomyx [***] Compound [***]. For each of (i) [***]; and (ii) [***], the Minimum Annual Royalties shall be paid according to a schedule based on when the first Minimum Annual Royalty payment for [***] Compound becomes due. Thus, for example, if (i) [***] for a Senomyx [***] Compound [***] in [***] on June 15, 2006 and (ii) then (x) [***] for a Senomyx [***] Compound [***] in [***] on July 15, 2006, or (y) if [***] prior thereto, Ajinomoto [***] on such date and year, Minimum Annual Royalties will first become due on [***] and each subsequent Minimum Annual Royalty payment for [***] will be due on an anniversary thereof, but no additional Minimum Annual Royalties will become due on [***] notwithstanding that such date would be [***] with respect to such Senomyx [***] Compound.

 

7.6.2         Calculation of the Minimum Annual Royalty. The amount by which the earned royalties provided for in Section 7.5 paid for a Minimum Annual Royalty Year (as defined below) is less than the amount of the relevant Minimum Annual Royalty shall be paid by Ajinomoto to Senomyx within [***] from the end of that Minimum Annual Royalty Year; provided , however , that a “Minimum Annual Royalty Year” shall mean each twelve-(12)-month period commencing on the Commercialization Date and each anniversary thereof. Anything in this Agreement to the contrary notwithstanding, with respect to the Minimum Annual Royalty for [***], the [***] shall be used to determine whether a Minimum Annual Royalty is due with respect to such [***].

 

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7.6.3         Pro Ration of Minimal Annual Royalty. In the event of the expiration or termination of this Agreement [***], the Minimum Annual Royalty for the final Minimum Annual Royalty Year shall be calculated by subtracting (i) the amount of the applicable earned royalty for such Minimum Annual Royalty Year from (ii) the product of (a) the amount of the applicable Minimum Annual Royalty multiplied by (b) the quotient of the number of days from the beginning of such Minimum Annual Royalty Year through the date of such expiration or termination divided by the number of days in such Minimum Annual Royalty Year.

 

7.6.4         Reset of Minimum Annual Royalty. Once the Minimum Annual Royalties are triggered as provided above, such Minimum Annual Royalties will remain in place during the entire Royalty Term unless this Agreement is earlier terminated pursuant to the provisions of Section 14; provided , however , that the Commercialization Date may be re-set if both of the following occur:  [***]. In the event the Commercialization Date is re-set, Ajinomoto will be responsible for the Minimum Annual Royalty [***] with respect to the returned compounds. By way of example, if (i) Ajinomoto commercializes in [***] Product containing a Senomyx [***] Compound, (ii) the Commercialization Date for such [***] Product is October 1, 2007, (iii) the [***] is March 31, 2010, and (iv) the aggregate earned royalties for the last Minimum Annual Royalty Year were [***], then the Minimum Royalty Payment for the last Minimum Annual Royalty Year shall be [***]. In addition, if Ajinomoto commercializes in [***] Product containing a Selected [***] Compound (“[***] Product”) more than [***], the Minimum Annual Royalties for the [***] Product for the first Minimum Annual Royalty Year will be [***].

 

7.7           Payment Terms. The royalties due under Section 7.5 will be paid within [***] after the end of each calendar quarter period in which such royalties are earned during the Royalty Term for [***]. With each such quarterly payment, Ajinomoto (or its respective Affiliate) will furnish to Senomyx a royalty statement in sufficient detail to permit confirmation of the accuracy of the royalty payment made, which sets forth on a country-by-country basis the [***]

 

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[***], the royalties payable in United States dollars, the method used to calculate the royalty, the exchange rate used and [***].

 

7.8           Currency of Payment . All payments to be made under this Agreement, including the royalties payable to Senomyx by Ajinomoto, will be paid in United States dollars by wire transfer or other mutually acceptable means to a bank account designated by Senomyx. With respect to each quarter, for countries other than the United States, whenever conversion of payments from any foreign currency are required, such conversion will be made at [***].

 

7.9           Taxes Withheld . Any income or other tax that Ajinomoto, or any of its Affiliates is required by a government agency to withhold and pay on behalf of Senomyx with respect to the royalties payable under this Agreement will be deducted from and offset against such royalties prior to remittance to Senomyx; provided , however , that in regard to any tax so deducted, Ajinomoto will give or cause to be given to Senomyx such assistance as may reasonably be necessary to enable Senomyx to claim exemption from or credit for the tax so deducted, and in each case will without delay furnish to Senomyx proper evidence of the taxes paid on Senomyx’s behalf.

 

7.10         Late Payment . In the event that any payment, including royalty payments, due hereunder is not made when due, the payment will accrue interest from that date due at the rate of [***] per annum; provided , however , that in no event will such rate exceed the maximum legal annual interest rate. The payment of such interest will not limit the receiving party from exercising any other rights it may have as a consequence of the lateness of any payment.

 

7.11         Records of [***] and Royalty Calculations . During the Royalty Term and for a period of [***] thereafter, Ajinomoto will keep complete and accurate records of [***] in sufficient detail to allow the accrued royalties to be determined accurately in accordance with the generally accepted accounting principles of the relevant country and to verify the royalty payments pursuant to Section 7.5. Senomyx, following reasonable prior written notice to Ajinomoto, will have the right [***] in order to verify the accuracy of the reports of [***] and royalty payments. [***]

 

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[***]. Senomyx will bear [***] unless [***], in which event, Ajinomoto will bear [***]. In all events, Ajinomoto will pay any underpayment with interest in accordance with Section 7.10 and Senomyx shall refund any overpayment with interest in accordance with Section 7.10. Senomyx acknowledges that the information concerning royalty payments reports, and all other information learned [***] constitutes the Confidential Information of Ajinomoto, but Senomyx may disclose the same to the extent necessary for Senomyx to enforce its rights under this Agreement or if disclosure is required by law or falls under an exception under Section 10.4; provided , however , that in the event of such disclosure, Senomyx shall observe the provisions of the second paragraph of Section 10.4.

 

8.      Grants . Commencing on the Effective Date and throughout the Royalty Term, Senomyx hereby grants to Ajinomoto the following rights, which shall be subject to the terms and conditions of this Agreement: 

 

8.1           Grant of Rights regarding Senomyx [***] Compounds:

 

(A)   [***] Product Category I . An Exclusive, nontransferable (except as permitted under Sections 8.3 and 17.12) license under the Senomyx Technology to (i) use Senomyx [***] Compounds for evaluation and development of [***] Products in [***] Product Category I in the Territory; (ii) make, have made, use, sell, offer for sale, have sold, import and export [***] Products containing Senomyx [***] Compounds in [***] Product Category I in the Territory; and (iii) make and have made Senomyx [***] Compounds to be used by Ajinomoto and/or its Affiliates (only if pursuant to a permitted sublicense as provided for in Section 8.3) in [***] Products in [***] Product Category I in the Territory, subject to Section 13.

 

(B)    [***] Product Category II .  A Co-exclusive, nontransferable (except as permitted under Sections 8.3 and 17.12) license under the Senomyx Technology to (i) use Senomyx [***] Compounds for evaluation and development of [***] Products in [***] Product Category II in the Territory; (ii) make, have made, use, sell, offer for sale, have sold, import and export [***] Products containing Senomyx [***] Compounds in [***] Product Category II in the Territory; and (iii) make and have made Senomyx [***] Compounds to be used by Ajinomoto and/or its Affiliates (only if pursuant

 

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to a permitted sublicense as provided for in Section 8.3) in [***] Products in [***] Product Category II in the Territory, subject to Section 13.

 

(C)    [***] Product Category III . An Exclusive, nontransferable (except as permitted under Sections 8.3 and 17.12) license under the Senomyx Technology to (i) use Senomyx [***] Compounds for evaluation and development of [***] Products in [***] Product Category III in the Territory; (ii) make, have made, use, sell, offer for sale, have sold, import and export [***] Products containing Senomyx [***] Compounds in [***] Product Category III in the Territory; and (iii) make and have made Senomyx [***] Compounds to be used by Ajinomoto and/or its Affiliates (only if pursuant to a permitted sublicense as provided for in Section 8.3) in [***] Products in [***] Product Category III in the Territory, subject to Section 13.

 

8.2           Grant of Rights regarding Senomyx [***] Compounds. A non-exclusive, nontransferable (except as permitted under Sections 8.3 and 17.12), license under the Senomyx Technology to [***] Senomyx [***] Compound(s) [***] in [***] Product Category I, [***] Product Category II, [***] Program III and [***] Product Category IV [***] in the Territory. In addition, Senomyx hereby grants to Ajinomoto the following rights below:

 

(A)   [***] Product Category I . An Exclusive, nontransferable (except as permitted under Sections 8.3 and 17.12) license under the Senomyx Technology to (i) [***] Senomyx [***] Compounds [***] for [***] of [***] Products in [***] Product Category I in the Territory; (ii) make, have made, use, sell, offer for sale, have sold, import and export [***] Products containing Selected Senomyx [***] Compounds in [***] Product Category I in the Territory; and (iii) make and have made Selected Senomyx [***] Compounds to be used by Ajinomoto and/or its Affiliates (only if pursuant to a permitted sublicense as provided for in Section 8.3) in [***] Products in [***] Product Category I in the Territory, subject to Section 13.

 

(B)    [***] Product Category II . With respect to [***], a Co-Exclusive, and with respect to [***] an Exclusive, nontransferable (except as permitted under Sections 8.3 and 17.12) license under the Senomyx Technology to (i) [***] Senomyx [***] Compounds [***] for [***] of [***] Products in [***] Product Category II in the Territory; (ii)

 

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make, have made, use, sell, offer for sale, have sold, import and export [***] Products containing Selected Senomyx [***] Compounds in [***] Product Category II in the Territory; and (iii) make and have made Selected Senomyx [***] Compounds to be used by Ajinomoto and/or its Affiliates (only if pursuant to a permitted sublicense as provided for in Section 8.3) in [***] Products in [***] Product Category II in the Territory, subject to Section 13.

 

(C)    [***] Product Category III . An Exclusive, nontransferable (except as permitted under Sections 8.3 and 17.12) license under the Senomyx Technology to (i) [***] Senomyx [***] Compounds [***] for [***] of [***] Products in [***] Product Category III in the Territory; (ii) make, have made, use, sell, offer for sale, have sold, import and export [***] Products containing Selected Senomyx [***] Compounds in [***] Product Category III in the Territory; and (iii) make and have made Selected Senomyx [***] Compounds to be used by Ajinomoto and/or its Affiliates (only if pursuant to a permitted sublicense as provided for in Section 8.3) in [***] Products in [***] Product Category III in the Territory, subject to Section 13.

 

(D)   [***] Product Category IV . With respect to [***], an Exclusive, nontransferable (except as permitted under Sections 8.3 and 17.12) license under the Senomyx Technology to (i) [***] Senomyx [***] Compounds [***] for [***] of [***] Products in [***] Product Category IV in the Territory; (ii) make, have made, use, sell, offer for sale, have sold, import and export [***] Products containing Selected Senomyx [***] Compounds in [***] Product Category IV in the Territory; and (iii) make and have made Selected Senomyx [***] Compounds to be used by Ajinomoto and/or its Affiliates (only if pursuant to a permitted sublicense as provided for in Section 8.3) in [***] Products in [***] Product Category IV in the Territory, subject to Section 13.   

 

8.3           Limitations on Licenses. Except as provided below, Ajinomoto may not sublicense its rights under Section 8 to third parties. Ajinomoto may sublicense its rights under Section 8.1 and/or 8.2 to any Affiliates, on the condition that Ajinomoto assumes the responsibility for performance due by any such sublicensee under a sublicense of the obligations imposed upon Ajinomoto in the license under this Agreement (including, without limitation, diligence obligations under Section 3 of this Agreement and timely payment by Ajinomoto under Section 7). Ajinomoto will agree to be responsible for and to guarantee payment of royalties due on [***] by any of Ajinomoto’s sublicensees hereunder.

 

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8.4           Grant of Rights from Ajinomoto to Senomyx .

 

8.4.1.        Possible Future Grants. If Ajinomoto identifies any Ajinomoto Technology that may be relevant or useful for the research purposes under this Agreement, [***] license for Senomyx to use the relevant Ajinomoto Technology for the [***]. For the avoidance of doubt, this license will not include the right to sub-license unless Ajinomoto gives its consent, which may be withheld for any reason.

 

8.4.2         [***]; Patent License. Ajinomoto hereby grants to Senomyx a non-exclusive, sublicenseable, royalty-free, perpetual license under any Ajinomoto Patent Rights made in the course of the Collaborative Program during the Collaborative Period, claiming [***] (i) to make, have made, use, sell, offer for sale, have sold, import and export in any country outside of the Territory products containing Senomyx [***] Compounds, Senomyx [***] Compounds and Selected Senomyx [***] Compounds; (ii) to make, have made, use, sell, offer for sale, have sold, import and export within the Territory outside of the [***] Field products containing Senomyx [***] Compounds, Senomyx [***] Compounds and Selected Senomyx [***] Compounds; (iii) only for so long as the rights in the Co-Exclusive Field remain Co-Exclusive, to make, have made, use, sell, offer for sale, have sold, import and export in the Territory in the Co-Exclusive Field products containing Senomyx [***] Compounds, Senomyx [***] Compounds and Selected Senomyx [***] Compounds; and (iv) in the event that Ajinomoto’s Exclusive or Co-Exclusive licenses under Section 8 terminate, to make, have made, use, sell, offer for sale, have sold, import and export in any country inside the Territory in the [***] Field products containing Senomyx [***] Compounds, Senomyx [***] Compounds and Selected Senomyx [***] Compounds; provided , however , that the forgoing shall not be deemed to restrict or otherwise limit the scope of the licenses granted to Ajinomoto under Section 8. Notwithstanding anything to the contrary herein, this Section 8.4.2 shall not be construed as granting any rights to Senomyx under any [***] under Section 9.5.1 or [***] under Section 9.5.2.  

 

8.4.3         [***]; Covenant Not To Sue. Ajinomoto hereby grants to Senomyx and its Affiliates, licensees and sublicensees a worldwide royalty-free, perpetual immunity from suit

 

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by Ajinomoto or its Affiliates based on any claim of [***] developed in the course of the Collaborative Program during the Collaborative Period, relating to [***] (i) to make, have made, use, sell, offer for sale, have sold, import and export in any country outside of the Territory products containing Senomyx [***] Compounds, Senomyx [***] Compounds and Selected Senomyx [***] Compounds; (ii) to make, have made, use, sell, offer for sale, have sold, import and export within the Territory outside of the [***] Field products containing Senomyx [***] Compounds, Senomyx [***] Compounds and Selected Senomyx [***] Compounds; (iii) only for so long as the rights in the Co-Exclusive Field remain Co-Exclusive, to make, have made, use, sell, offer for sale, have sold, import and export in the Territory in the Co-Exclusive Field products containing Senomyx [***] Compounds, Senomyx [***] Compounds and Selected Senomyx [***] Compounds; and (iv) in the event that Ajinomoto’s Exclusive or Co-Exclusive licenses under Section 8 terminate, to make, have made, use, sell, offer for sale, have sold, import and export in any country inside the Territory in the [***] Field products containing Senomyx [***] Compounds, Senomyx [***] Compounds and Selected Senomyx [***] Compounds; provided , however , that the foregoing shall not be deemed to restrict or otherwise limit the scope of the licenses granted to Ajinomoto under Section 8. Notwithstanding anything to the contrary in this Agreement, including without limitation, the provisions of Section 10.2, (i) this Section 8.4.3 shall not be construed as granting any rights to Senomyx under any [***] under Section 9.5.1 or [***] under Section 9.5.2, (ii) Ajinomoto shall be under no obligation to disclose to Senomyx any [***] Ajinomoto elects to retain as Know-How, (iii) Senomyx shall not be relieved of its obligations under Section 10 with respect to such Know-How or any other Ajinomoto Confidential Information and (iv) Senomyx shall have no right to disclose any such Know-How constituting Ajinomoto’s Confidential Information to sublicensees under Section 8.4.2 or to any other licensees or sublicensees.

 

8.4.4         Procurement of Certain Rights for Ajinomoto from Third Parties. In the event that during the Collaborative Period Ajinomoto desires a license under [***] within the Territory claiming [***] Senomyx [***] Compounds and/or Selected Senomyx [***] Compounds within the [***] Field, Senomyx hereby agrees to request [***] license for Ajinomoto under such Patent Rights to make, have made, use, sell, offer for sale, have sold, import and export [***]

 

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Products in the Territory in the [***] Field in a manner consistent with the licenses granted to Ajinomoto under Section 8.

 

8.5           Regulatory Filings and Regulatory Filing Data . [***] a license to any regulatory filings, Regulatory Approvals and associated Regulatory Filing Data described in Section 3.6 [***] in order to practice the licenses set forth in Sections 8.1, 8.2 and 8.3 above.  

 

8.6           Expansion of License for the [***] Category . In the event that, at any time during the Term, any rights to Senomyx [***] Compounds and/or [***] in the [***] Category currently held by [***] in the Territory become available, Senomyx shall immediately notify Ajinomoto and Ajinomoto shall have [***], for [***] from the date Ajinomoto receives such notice, [***] (i) [***] hereunder to Ajinomoto and (ii) the [***] Field, to the extent such rights become available. By way of example, were all such rights held by [***] to become available, Ajinomoto shall have [***], for [***] from the date Ajinomoto receives such notice, to (i) [***] granted hereunder to Ajinomoto pursuant to Sections 8.1(B) and 8.2(B) [***] and (ii) expand [***] Product Category I and [***] Product Category IV to include the [***] Category without restriction.

 

9.      Ownership of Intellectual Property .

 

9.1           Retention of Rights . Senomyx retains all rights in Senomyx Technology not expressly licensed, assigned or jointly owned pursuant to the terms of this Agreement. Ajinomoto retains all rights in Ajinomoto Technology not expressly licensed, assigned or jointly owned pursuant to the terms of this Agreement. Except as otherwise expressly provided in this Agreement, nothing in this Agreement is intended to convey or transfer ownership or the grant of any license or sublicense by one party to the other party of any rights in any Confidential Information, Patent Rights or Know-How Controlled by a party.

 

9.2           Senomyx Sole Inventions . Senomyx will own all Inventions and other Know-How made solely by its employees and agents under this Agreement[***] (the “Senomyx Sole Inventions”), and all claims within Patent Rights claiming such Inventions and Know-How. Senomyx hereby irrevocably assigns to Ajinomoto all right, title and interest in and to any such Senomyx Sole Inventions [***] that consist of improvements to the Ajinomoto Technology, excluding Jointly Owned Technology (“Ajinomoto Improvements”), and all claims within Patent Rights claiming such Senomyx

 

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Sole Inventions, subject to any license granted to Senomyx pursuant to Section 8. In the event that Senomyx is legally unable to assign such rights to Ajinomoto, then Senomyx agrees either to waive the enforcement of such rights against Ajinomoto and any sublicensees and assignees, or to grant Ajinomoto an Exclusive, irrevocable, perpetual, worldwide, fully paid-up license, with right to sublicense through multiple tiers of sublicense, to such rights, subject to any license granted to Senomyx pursuant to Section 8.

 

9.3           Ajinomoto Sole Inventions . Ajinomoto will own all Inventions and other Know-How made solely by its employees and agents under this Agreement[***], (“Ajinomoto Sole Inventions”), and all claims within Patent Rights claiming such Inventions and Know-How. Ajinomoto hereby irrevocably assigns to Senomyx all right, title and interest in and to any such Ajinomoto Sole Inventions [***] that consist of improvements to the Senomyx Technology, excluding Jointly Owned Technology (“Senomyx Improvements”), including, without limitation, Senomyx [***] Compounds, Senomyx [***] Compounds and Selected Senomyx [***] Compounds and all claims within Patent Rights claiming such Ajinomoto Sole Inventions, subject to any license granted to Ajinomoto pursuant to Section 8. In the event that Ajinomoto is legally unable to assign such rights to Senomyx, then Ajinomoto agrees either to waive the enforcement of such rights against Senomyx and any sublicensees and assignees, or to grant Senomyx an Exclusive, irrevocable, perpetual, worldwide, fully paid-up license, with right to sublicense through multiple tiers of sublicense, to such rights, subject to any license granted to Ajinomoto pursuant to Section 8. Notwithstanding anything to the contrary in this Agreement, at no time during or for [***] after the Term will Ajinomoto file Patent Rights disclosing Senomyx Confidential Information.  

 

9.4           Joint Inventions. All Inventions and other Know-How made under this Agreement jointly by employees or agents of Senomyx and employees or agents of Ajinomoto (the “Joint Inventions”) and all claims within Patent Rights claiming such Joint Inventions will be owned jointly by Ajinomoto and Senomyx. Ajinomoto hereby irrevocably assigns to Senomyx all interest in and to any Joint Inventions made in the course of the Collaborative Program during the Collaborative Period that consist of Senomyx Improvements, including, without limitation, Senomyx [***] Compounds, Senomyx [***] Compounds and Selected Senomyx [***] Compounds, thereof, and all claims within Patent Rights claiming such Joint Inventions, subject to the licenses granted to Ajinomoto pursuant to Section 8. In the event that Ajinomoto is legally unable to assign such rights to Senomyx, then Ajinomoto agrees either to waive the enforcement of such rights against Senomyx and any sublicensees and assignees, or to grant Senomyx an Exclusive, irrevocable, perpetual, worldwide, fully paid-up license, with right to sublicense through multiple tiers of sublicense, to such

 

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rights, subject to any license granted to Ajinomoto pursuant to Section 8. Senomyx hereby irrevocably assigns to Ajinomoto all interest in and to any Joint Inventions made in the course of Collaborative Program during the Collaborative Period that consist of Ajinomoto Improvements, and all claims within Patent Rights claiming such Joint Inventions, subject to any licenses granted to Senomyx pursuant to Section 8. In the event that Senomyx is legally unable to assign such rights to Ajinomoto, then Senomyx agrees either to waive the enforcement of such rights against Ajinomoto and any sublicensees and assignees, or to grant Ajinomoto an Exclusive, irrevocable, perpetual, worldwide, fully paid-up license, with right to sublicense through multiple tiers of sublicense, to such rights, subject to any license granted to Senomyx pursuant to Section 8.

 

9.5           [***].

 

9.5.1         [***] . All [***] (excluding [***]) Controlled by [***] prior to the Effective Date (the “[***]”) and all claims within Patent Rights claiming such [***] will be owned [***].

 

9.5.2         [***]. Notwithstanding anything to the contrary contained in Sections 9.2, 9.3 or 9.4, all [***] (excluding [***])  developed by [***] after the Effective Date which consist of improvements to [***] or which are [***] (the “[***]”) and all claims within Patent Rights claiming such [***] will be owned [***].   

 

9.5.3         [***]. Notwithstanding anything to the contrary contained in Sections 9.2, 9.3, 9.4 or 9.5.2, all [***] made in the course of the Collaborative Program during the Collaborative Period and all claims within Patent Rights claiming such [***] will be owned [***], subject to [***]. Anything in this Agreement to the contrary notwithstanding, [***] shall be under no obligation to disclose to [***] any [***] elects to retain as Know-How. Notwithstanding anything to the contrary in this Agreement, [***] will have no right to practice, except as expressly provided for in Section 11.4, the [***].

 

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9.6           [***] .   

 

9.6.1         [***] Products. Notwithstanding anything to the contrary contained in Sections 9.2, 9.3 or 9.4, all Inventions and Know-How developed by Ajinomoto [***] that consist of [***] Products (specifically excluding [***]) and all claims within Patent Rights claiming such Inventions will be owned [***].   

 

9.6.2         [***] . Notwithstanding anything to the contrary contained in Sections 9.2, 9.3 or 9.4, all Patent Rights in Inventions developed by Ajinomoto [***] which consist of [***] will be owned [***]. Anything in this Agreement to the contrary notwithstanding, [***] Senomyx’s interest in such Patent Rights shall be subject to and part of the license grants to Ajinomoto pursuant to Section 8, including without limitation, Ajinomoto’s right to have [***] by a Third Party using the [***]. In the event that Senomyx licenses rights, including without limitation, the right [***], under its interest in such Patent Rights to any Third Party, Senomyx and Ajinomoto will negotiate in good faith [***]; provided , however , that Ajinomoto shall have the option, to negotiate with Senomyx’s Third Party licensees to [***] Senomyx [***] Compounds or Selected Senomyx [***] Compounds to any of Senomyx’s licensees. Anything in this Agreement to the contrary notwithstanding, such Patent Rights shall not be used by Ajinomoto to [***] Senomyx [***] Compounds or Senomyx [***] Compounds without [***] or otherwise. Anything in this Agreement to the contrary notwithstanding, in the event of [***], Senomyx shall [***]

 

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[***]. Anything in this Agreement to the contrary notwithstanding, Ajinomoto shall solely own, and be under no obligation to disclose to Senomyx, any [***] Ajinomoto developed solely by Ajinomoto employees or agents that [***].

 

9.7           Other Inventions . Any Inventions not included in Sections 9.2, 9.3, 9.4, 9.5 or 9.6 will be owned by their inventors including, without limitation, (i) any Invention by an Ajinomoto Scientist that is not a Joint Invention or a Senomyx Improvement made [***] shall be owned solely by Ajinomoto; or (ii) any Invention by a Senomyx scientist that is not a Joint Invention or an Ajinomoto Improvement made [***] shall be owned solely by Senomyx.

 

9.8           Inventorship and Assignment . United States federal intellectual property law will determine inventorship of and ownership of patentable inventions, including, without limitation, Inventions conceived jointly by the parties and Inventions conceived solely by one party or the other. Subject to the provisions of Section 6, each of Senomyx and Ajinomoto agrees to promptly disclose to the other party Inventions and Know