[*] indicates that a confidential portion of the text of this agreement has been
omitted and filed separately with the Securities and Exchange Commission
RESEARCH, DEVELOPMENT AND OPTION AGREEMENT
Research, Development and Option Agreement, dated as of June 9, 1987, by
and between Xoma Corporation ("Xoma"), a Delaware corporation, with its
principal place of business located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, and Pfizer Inc. ("Pfizer"), a Delaware corporation, with its principal
place of business located at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
WHEREAS, Xoma has under development certain monoclonal antibody products
useful in the treatment of septic shock; and
WHEREAS, Pfizer desires to fund certain Xoma research and development
regarding such products and desires an exclusive option to acquire certain
rights relating thereto pursuant to the terms and conditions provided therein.
NOW, THEREFORE, the parties hereto agree as follows:
1. CERTAIN DEFINITIONS
For purposes of this Agreement the following definitions shall be
applicable:
1.1 "Accepted Septic Shock Product" means any Other Septic Shock Product
for which Pfizer has acquired rights thereto under Section 4.2 hereof.
1.2 "Affiliate" means (a) any company owned or controlled to the extent of
at least fifty percent (50%) of its issued and voting capital by a party to this
Agreement and any other company so owned or controlled (directly or indirectly)
by any such company or the owner of any such company, or (b) any partnership,
joint venture or other entity directly or indirectly controlled by, controlling,
or under common control of, to the extent of fifty percent (50%) or more of
voting power (or otherwise having power to control its general activities), a
party to this Agreement, but in each case only for so long as such ownership or
control shall continue.
1.3 "Development Costs" means Xoma's costs and expenses related to the
development, research (including process research) and testing of any Subject
Product or any Accepted Septic Shock Product, in each case determined pursuant
to Exhibit A attached hereto and made a part thereof, together with Xoma's
expenses incurred in connection with the Review Panel as specified in Exhibit A.
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1.4 "Development Plan" means (a) the preclinical, clinical and process
development program and budget of estimated Development Costs through PLA
Submission for the E5 Product as set forth in Exhibit B, attached hereto and
made a part hereof, together with such further modifications as shall be
mutually agreed upon between Pfizer and Xoma, and (b) any subsequent Development
Plans (comparable in scope and content to the plan for the E5 Product) for any
Other Antibody Product as agreed upon between Pfizer and Xoma pursuant to
Section 4.1 hereof.
1.5 "E5 Product" means any product for human and/or animal therapeutic or
prophylactic use, now or hereafter developed by Xoma, which is produced (or
susceptible of being produced) from or incorporates any antibody (including
Fragments thereof as hereinafter defined) secreted from the E5 Cell Line (as
hereinafter defined) or any other cell line capable of producing said antibody,
or which product is chemically, organically, biologically or synthetically
derived from or based upon any such antibody, in each case either alone or in
combination with any other therapeutic agent. For purposes of this Section 1.5,
the term "Fragments" shall mean any part or parts of any said antibody
chemically, biologically or organically obtained from said antibody, or
synthetically produced, and which mimics the biological behavior of said
antibody. For purposes of this Section 1.5, the term "E5 Cell Line" shall mean
the cell line described as a murine hybridoma as identified by American Type
Culture Collection No. HB 9081 and mutants and genetically manipulated variants
thereof.
1.6 "FDA" means the United States Food and Drug Administration or any
successor governmental agency performing similar functions.
1.7 "License Agreement" means the agreement so named of even date herewith
between Pfizer and Xoma.
1.8 "Other Antibody Product" means any product for human and/or animal
therapeutic or prophylactic use, now or hereafter developed by Xoma, which is
produced (or susceptible of being produced) from or incorporates any antibodies
(including Fragments thereof as hereinafter defined) secreted from the J5D4 Cell
Line and/or the PCB5 Cell Line (as hereinafter defined) or any other cell lines
capable of producing any such antibodies, or which product is chemically,
organically, biologically or synthetically derived from or based upon any such
antibodies, in each case either alone or in combination with any other
therapeutic agent. For purposes of this Section 1.8, the term "Fragments" shall
mean any part or parts of any said antibodies chemically, biologically or
organically obtained from said antibodies, or synthetically produced, and
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which mimics the biological behavior of said antibodies. For purposes of this
Section 1.8, the term "J5D4 Cell Line" shall mean the cell line described as a
murine hybridoma as identified by American Type Culture Collection No. HB 9083
and mutants and genetically manipulated variants thereof; and the term "PCB5
Cell Line" shall mean the cell line described as a murine hybridoma as
identified by American Type Culture Collection No. HB 8909 and mutants and
genetically manipulated variants thereof.
1.9 "Other Septic Shock Product" means any product, now or hereafter
developed by Xoma, for the treatment, cure or prevention of Septic Shock, other
than any E5 Product or any Other Antibody Product.
1.10 "Patents" means all Xoma patents listed in Exhibit C, annexed hereto
and made a part hereof, and any patents which may issue from the applications
listed in Exhibit C, in each case together with any divisionals, continuations,
continuations-in-part, reissues, patents of addition or extensions thereof.
1.11 "PLA" means a Product License Application or such other application as
shall be required to obtain Product Approval for any Subject Product.
1.12 "PLA Submission" means the submission to FDA by Xoma of a PLA which
has been prepared in good faith by Xoma in a reasonable manner to comply with
FDA requirements necessary to obtain Product Approval.
1.13 "Product Approval" means final FDA approval to market commercially in
the U.S.A. the specified product for use in humans.
1.14 "Review Panel" means a panel of three persons to advise Xoma as
provided herein. Such panel, to be appointed by Xoma with Pfizer's approval,
shall consist of an immunotoxicologist, a physician experienced in clinical
research, and an expert in FDA regulatory requirements for biologicals. Xoma
may, upon notice to Pfizer, remove members from the panel at any time for
reasonable cause provided that it fills any vacancy with persons reasonably
acceptable to Pfizer as promptly as reasonably practicable.
1.15 "Security Agreement" means the agreement so named referred to in
Section 11 hereof.
1.16 "Septic Shock" means endotoxin mediated complications of gram negative
bacterial sepsis.
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1.17 "Subject Product" means any E5 Product and any Other Antibody Product
for which Pfizer has exercised its option under Section 4.1. The E5 Product
shall be the initial Subject Product.
1.18 "Supply Agreement" means the agreement so named of even date herewith
between Pfizer and Xoma.
1.19 "Technical Information" means all of Xoma's trade secrets,
information, and know-how, now owned, licensed or controlled or hereafter
acquired, developed, owned, licensed or controlled by Xoma or any of its
Affiliates during the term of this Agreement, with respect to: (i) the medical,
clinical, toxicological or other scientific data or information relating to any
specified product (including, without limitation, pre-clinical and clinical
data, notes, reports, models, and samples) and (ii) the manufacture, production,
and purification procedures and processes, as well as analytical methodology,
used in the testing, assaying, analysis, production, and packaging of any
specified product. Technical Information shall also include: (i) Xoma's actual
cell lines and other biological materials and substances for any specified
product and (ii) Xoma's other information and non-patent proprietary rights (to
the extent not already included in this definition of Technical Information)
with respect to any specified product.
1.20 "Territory" means all countries of the world.
1.21 "University of California License" means the License Agreement For
Monoclonal Antibodies to Gram Negative Sepsis-Related Bacteria and Human
Diagnostics and Therapeutics Derived Therefrom, effective September 3, 1986,
between Xoma and The Regents of the University of California.
2. XOMA REPRESENTATIONS, WARRANTIES AND COVENANTS
Xoma hereby represents, warrants and covenants to Pfizer as follows:
2.1 Xoma has the corporate power and authority to execute and deliver this
Agreement, the License Agreement and the Supply Agreement and perform its
obligations hereunder and thereunder, and the execution, delivery and
performance of this Agreement, the Supply Agreement and the License Agreement
have been duly and validly authorized by Xoma, and upon execution and delivery
by Pfizer, this Agreement, the Supply Agreement and the License Agreement will
constitute legal, valid and binding agreements of Xoma, enforceable in
accordance with their respective terms.
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2.2 Except to the extent Xoma has licensed patents or applications under
the University of California License, Xoma is the legal and equitable owner of
the Patents and applications listed on Exhibit C hereto, and, except for such
Patents, there are no other patents issued in any country in the Territory and
no other patent applications filed in any country therein, in each case owned or
filed by Xoma or any of its Affiliates relating to the E5 Product or any Other
Antibody Product or methods of use or manufacturing processes thereof. Xoma has
no knowledge of any fact which would cast doubt on the validity of any of the
Patents which have been issued as of this date.
2.3 Xoma has not granted to any third party any rights or interests to the
Patents, the E5 Product, any Other Antibody Product, any Other Septic Shock
Product, or to Technical Information (as it relates to any of the foregoing) in
each case for human or animal therapeutic or prophylactic use, and neither the
execution and delivery of this Agreement, the Supply Agreement or the License
Agreement, nor consummation of the transactions contemplated hereunder or
thereunder, requires Xoma or any of its Affiliates to obtain any permits,
authorizations or consents under current law from any governmental body (except
for health approvals or governmental regulations necessary to sell such
products) or from any other person, firm or corporation under any existing
agreement to which Xoma or any of its Affiliates may be a party, and such
execution, delivery and consummation will not result in the breach of or give
rise to any termination of any agreement or contract to which Xoma or its
Affiliates may be a party or which otherwise relates to the Patents, the E5
Product, any Other Antibody Product, any Other Septic Shock Product, or any
Technical Information relating to any of the foregoing. Neither Xoma nor any of
its Affiliates after the date hereof shall enter into any agreement or take or
fail to take any action which shall restrict its legal right to grant to Pfizer
the rights and licenses contemplated under this Agreement or the License
Agreement.
2.4 As of the date hereof, the University of California License is in full
force and effect and Xoma is in compliance in all material respects with all of
its obligations thereunder; Xoma has heretofore delivered to Pfizer a true and
complete copy thereof and there have been no amendments or modifications
thereof. So as not to adversely affect Pfizer rights hereunder or under the
License Agreement, Xoma agrees during the term of this Agreement not to take any
actions to terminate or restrict its rights under the University of California
License as it relates to the E5 Product, Other Antibody Products, Other Septic
Shock Products, or Technical Information relating thereto and to discharge all
of Xoma's material obligations and responsibilities thereunder, including,
without
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limitation, making all required payments thereunder. In the event Xoma shall
receive any notice of default under the University of California License, Xoma
shall promptly notify Pfizer.
2.5 Xoma has no knowledge as of the date of this Agreement of any material
information, not heretofore disclosed to Pfizer, relating to the potential
safety or efficacy of the E5 Product.
2.6 Xoma shall take all reasonable steps and pay all necessary expenses to
prosecute the patent applications listed in Exhibit C unless Xoma, in
consultation with Pfizer, shall in good faith determine that it is not in the
best interests of both parties for Xoma to continue the prosecution of any
pending application. Xoma also shall take all reasonable steps and pay all
expenses necessary to maintain for the full life thereof all Patents unless
Xoma, in consultation with Pfizer, shall in good faith determine that it is not
in the best interests of both parties for Xoma to take such action or make such
payments. Xoma shall keep Pfizer fully informed as to the status of all pending
applications and the issuance of any such patents.
3. PFIZER REPRESENTATIONS AND WARRANTIES
Pfizer hereby represents and warrants to Xoma as follows:
3.1 Pfizer has the corporate power and authority to execute and deliver
this Agreement, the Supply Agreement and the License Agreement and perform its
obligations hereunder and thereunder, and their execution, delivery and
performance have been duly and validly authorized by Pfizer, and upon execution
and delivery by Xoma, this Agreement, the Supply Agreement and the License
Agreement will constitute legal, valid and binding agreements of Pfizer,
enforceable in accordance with their respective terms.
3.2 Neither the execution and delivery of this Agreement, the Supply
Agreement or the License Agreement, nor consummation of the transactions
contemplated hereunder or thereunder, requires Pfizer to obtain any permits,
authorizations or consents from any governmental body (except for health
approvals or governmental registrations necessary to sell the products
contemplated therein) or from any other person, firm or corporation, and such
execution, delivery and consummation will not result in the breach of or give
rise to any termination of any agreement or contract to which Pfizer may be a
party.
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4. PFIZER OPTIONS
4.1 Other Antibody Products. Xoma hereby grants to Pfizer the exclusive
option during the term of this Agreement to acquire exclusive worldwide rights
to each of the Other Antibody Products pursuant to the terms of the License
Agreement. At such time Xoma files any IND application with FDA for any Other
Antibody Product, Xoma shall give Pfizer a copy of such IND application together
with a summary of all material Technical Information (reasonably necessary for
Pfizer or any like person to make a reasonable scientific and technical
evaluation for the purpose of exercising the option hereunder) regarding such
Other Antibody Product. For a [*] period thereafter Xoma shall not (unless
Pfizer earlier declines) negotiate with any third party regarding such Other
Antibody Product, and as soon as possible, and in no event later than the end of
said [*] period, Pfizer shall notify Xoma whether Pfizer wishes to exercise its
option hereunder with respect to such Other Antibody Product. In the event
Pfizer exercises its option, such Other Antibody Product shall be automatically
included within the definition of "Product" under the License Agreement and
shall become a Subject Product for purposes of this Agreement. In addition, Xoma
shall promptly prepare and submit to Pfizer a reasonable Development Plan
including reasonable budget of estimated Development Costs through PLA
Submission for such Other Antibody Product. Such Development Plan shall be
consistent in scope and content with the E5 Development Plan and, together with
such modifications as shall be mutually agreeable, shall be reasonably agreed
upon by the parties within [*] of Pfizer's notice to Xoma of Pfizer's exercise
of its option hereunder regarding such Other Antibody Product. If Pfizer within
said [*] period shall decline to exercise its option or shall fail to respond to
Xoma, Xoma may develop and market such Other Antibody Product itself (directly
or through its dealers or distributors) or may offer such product to third
parties for [*] following such [*] period, provided that any terms agreed upon
with third parties, considered as a whole, are not (unless offered to Pfizer for
at least [*]) materially less favorable to Xoma than the terms contained in the
License Agreement. If Xoma has not in good faith elected to market such Other
Antibody Product or concluded an agreement with a third party within [*] of the
filing of the IND application, Pfizer's option hereunder for such product shall
be revived.
4.2 Other Septic Shock Products. For 15 years from the date hereof, prior
to granting any rights to third parties during the term of this Agreement with
respect to any Other Septic Shock Products or deciding itself to develop and
market
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any Other Septic Shock Products, Xoma shall first offer such rights to Pfizer.
Any such offer by Xoma to Pfizer shall include an identification of such Other
Septic Shock Product and initial pre-clinical test results (including some
demonstration of activity, and preliminary toxicology) for review by Pfizer. If
Pfizer and Xoma cannot negotiate an agreement within [*] of such offer, Xoma may
develop and market such Other Septic Shock Product itself (directly or through
its dealers or distributors) or may offer such product to third parties for [*]
following such [*] period, provided that the terms offered third parties,
considered as a whole, are not (unless offered to Pfizer for at least [*])
materially less favorable to Xoma than the terms offered by Pfizer. At the end
of such [*], if no such agreement has been concluded and Xoma has not decided to
proceed on its own, Pfizer's rights under this Section 4.2 regarding such Other
Septic Shock Product shall be revived.
4.3 Comparable Other Antibody Products or Other Septic Shock Products.
Notwithstanding to the contrary any provisions of Section 4.1 or 4.2 hereof,
Xoma shall not market itself or enter into any arrangement or contract with any
third party granting rights to the marketing of any Other Antibody Product or
Other Septic Shock Product for which under Section 4.1 Pfizer has declined to
exercise its option thereunder or for which under Section 4.2 Pfizer and Xoma
have not entered into any agreement contemplated therein, unless such Other
Antibody Product or Other Septic Shock Product shall be substantially different
from and materially clinically superior to (for a clinically relevant
indication) any then existing Subject Product.
5. RESEARCH AND DEVELOPMENT
5.1 Xoma Development Efforts. Xoma shall use reasonable diligence to carry
out the Development Plan for each Subject Product in accordance with each such
Development Plan and within all agreed upon timetables therein. Any material
change in any Development Plan shall be agreed to between Xoma and Pfizer. Xoma
and Pfizer recognize that changes or modifications in each Development Plan
(including estimated budgets) will, in all likelihood, be required, and each
agrees to negotiate in good faith and in a reasonable manner to reach agreement
for any such changes or modifications. Xoma shall be solely responsible for the
conduct of all phases of each Development Plan, including but not limited to
clinical trials specified therein; provided, however, Xoma agrees to consult in
good faith with Pfizer and the Review Panel as provided in this Section 5
regarding each Development Plan.
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5.2 Review Panel. The Review Panel (constituted as specified in Section
1.14) will meet with Xoma, and with Pfizer if requested by Pfizer, on a
quarterly basis, or as may otherwise be agreed upon, to discuss and review each
Development Plan, the progress and activities carried out thereunder, and any
other scientific, medical, regulatory, or other matter which either Pfizer or
Xoma deems advisable.
5.3 Funding of Development Costs. Pfizer agrees to reimburse Xoma for its
Development Costs (determined in accordance with Exhibit A) for each Subject
Product, provided such Development Costs shall in no event be greater than the
estimated Development Costs contained in the appropriate Development Plan as
agreed upon between Xoma and Pfizer. Based on the estimated annual budgets in
the Development Plan for each Subject Product, Pfizer shall make monthly
payments, payable on the first day of each month, for estimated Development
Costs to be incurred by Xoma for the ensuing month. Within 30 days after the end
of each calendar quarter Xoma shall prepare and send to Pfizer (i) an invoice of
actual Development Costs incurred by Xoma during the preceding calendar quarter
and (ii) a reconciliation with the estimated monthly payments made by Pfizer
during such quarter. In the event Pfizer's estimated payments for such quarter
shall be greater than the actual invoiced amount, such overpayment shall be
applied by Pfizer against subsequent monthly payments of estimated Development
Costs due to Xoma or, at Pfizer's option, Xoma shall remit such overpayment to
Pfizer. In the event the actual Development Costs for any quarter shall be
greater than Pfizer's estimated monthly payments for such quarter, subject to
the first sentence of this Section 5.3, Pfizer shall make appropriate payment to
Xoma within thirty (30) days of receipt of Xoma's invoice.
Pfizer shall pay all Development Costs (in accordance with the terms of
this Agreement) incurred by Xoma (a) from January 1, 1987 through Product
Approval with respect to the E5 Product, (b) from the date of IND filing through
Product Approval with respect to other Subject Products, and (c) subsequent to
Xoma's internal identification of the product through Product Approval with
respect to any Accepted Septic Shock Product. With respect to Development Costs
for the E5 Product incurred by Xoma prior to the date of this Agreement for
which Pfizer is responsible as provided above, Pfizer will pay such Development
Costs (as specified in Exhibit B) within 30 days of invoice by Xoma.
5.4 Disclosure of Technical Information. Xoma shall disclose to Pfizer
within 30 days of the date of execution of this Agreement and thereafter on at
least a quarterly basis all Technical Information on each Subject Product not
previously
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disclosed to Pfizer; provided, however, until such time as Pfizer's rights of
termination under Section 6.1 hereof shall have lapsed, Xoma shall not be
required to disclose to Pfizer any Technical Information regarding manufacturing
of Subject Products. Nothing herein shall be deemed to require Xoma to disclose
to Pfizer any Technical Information which Xoma is, in good faith, contractually
prohibited from disclosing to third parties. All Technical Information disclosed
to Pfizer shall be subject to the provisions of Section 8 hereof.
5.5 Audit of Development Costs. Xoma shall keep full and accurate books and
records of its Development Costs and determination thereof. Xoma shall permit
Pfizer, at Pfizer's expense, by independent certified public accountants
employed by Pfizer solely for this purpose and reasonably acceptable to Xoma, to
examine such books and records (as they relate to Development Costs) at any
reasonable time, but not later than five (5) years following the invoice to
Pfizer of such Development Costs. As a condition to such examination, the
independent public accountant selected by Pfizer shall execute a written
agreement, reasonably satisfactory in form and substance to Xoma, to maintain in
confidence all information obtained during the course of any such examination
except for disclosure to Pfizer as necessary for the above purpose. The opinion
of said independent accountants regarding such Development Costs shall be
binding on the parties hereto.
5.6 Orphan Drug Designations. At Pfizer's expense, promptly after execution
of this Agreement Xoma shall transfer to Pfizer all of Xoma's interests and
rights to the FDA designation to the E5 Product as an "orphan drug" as evidenced
by FDA's letter to Xoma dated November 4, 1985 (provided Pfizer prepares the
requisite documents). Xoma shall execute such further notices or documents, as
Pfizer may reasonably request and at Pfizer's expense, to effectuate the change
in such designation (provided Pfizer prepares the requisite documents). In
addition, should Xoma obtain in the future any other similar designation for any
other Subject Products, Xoma will, likewise, transfer its rights thereto to
Pfizer; provided, however, Xoma shall not be required to make any such transfer
if Xoma itself shall then be in a position to directly and materially benefit
from the tax credits available thereunder. In the event Pfizer's rights or
licenses shall terminate hereunder or under the License Agreement (except in the
event of termination by Pfizer for Xoma's breach of Section 2.01 of the License
Agreement or as provided otherwise in the Security Agreement) regarding any
Subject Product (or former Subject Product) for which Pfizer holds any such
orphan drug or similar designation, Pfizer will, at its expense, promptly
transfer to Xoma the rights to such designation transferred to Pfizer.
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6. PFIZER PAYMENTS
6.1 Initial Payment. In addition to any other payments provided for herein,
within ten (10) days hereof, Pfizer shall pay Xoma [*] of which [*] shall be in
consideration of the patent rights for the E5 Product granted to Pfizer under
the License Agreement and [*] shall be in consideration of the granting to
Pfizer of the option under Section 4.1 hereof to acquire a license to patent
rights regarding the Other Antibody Products. If the two-week IV toxicity study
of the E5 Product in monkeys (study no. 81611-T11) (a) is not completed within
nine months after the date hereof pursuant to the protocol heretofore agreed
upon with Pfizer, or (b) is completed pursuant to such protocol with results not
satisfactory to Pfizer (as it may reasonably determine in good faith), or (c)
for any reason shall not have commenced by September 30, 1987, then in any such
event Pfizer shall have the right, by notice given within 30 days thereof, to
demand return by Xoma of said [*] in which event Xoma shall promptly return to
Pfizer said [*] and this Agreement, the License Agreement, the Supply Agreement
and all other agreements contemplated herein or therein shall terminate. If Xoma
agrees that the results of such study are not satisfactory (as it may reasonably
determine in good faith), Pfizer may, as it may elect, alternatively demand the
return of [*], and Xoma shall promptly return to Pfizer said [*] and this
Agreement, the License Agreement the Supply Agreement and all other agreements
contemplated herein or therein shall continue in effect with the E5 Product
eliminated as a Subject Product hereunder and as a "Product" under the License
Agreement. In that event, the first Other Antibody Product for which Pfizer
exercises its option under Section 4.1 shall be treated as the initial Subject
Product for purposes of Section 6.2 (with changes in Section 6.2 to reflect
proper protocol numbers).
6.2 Milestone Payments. In further consideration for Xoma's timely research
and development efforts hereunder, Pfizer shall pay Xoma the following amounts
within 30 days of completion of the applicable events with respect to the
initial Subject Product:
(a) [*] - Upon completion (according to protocol no. 81612-P2B) prior to
[*] of first 100 evaluable patients (which fulfill statistical criteria for
protocol evaluation) with confirmed Gram Negative Sepsis; provided, (i) the
report thereof shall include efficacy and safety analysis by blinded group (to
be unblinded at Pfizer's option) with analyses of adverse drug experiences,
biochemical and hematological parameters, and analysis and listing of all deaths
(together with copies of all reports to FDA -- FD 1639 or substitute form), and
(ii) such report is received by Pfizer on or before [*];
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(b) [*] - Upon completion of Phase II trial according to protocol no.
81612-P2B and receipt by Pfizer of the complete final report thereon on or
before [*];
(c) [*] - Upon PLA Submission to FDA on or before [*]; or [*] - upon PLA
Submission after [*] and on or before [*];
(d) [*] - Upon Product Approval on or before [*]; or [*] - upon Product
Approval after [*] but on or before [*]*; or [*] - upon Product Approval after
[*] but on or before [*]; or [*] - upon Product Approval after [*] and on or
before [*].
It is understood that the provisions of Section 12.1 hereof shall not apply to
this Section 6.2.
7. REGULATORY MATTERS
7.1 Compliance. Xoma agrees that its conduct in performing its obligations
under this Agreement shall conform in all material respects to all applicable
laws and regulations of the U.S. and foreign governments (and political
subdivisions thereof).
8. PROPRIETARY RIGHTS AND CONFIDENTIAL INFORMATION
8.1 Proprietary Riqhts. Except as expressly provided to the contrary
herein, in the License Agreement or the Security Agreement, all proprietary
rights, title, and interest with respect to E5 Products, Other Antibody
Products, Other Septic Shock Products, Subject Products, Accepted Septic
Products, Patents and Technical Information shall be and remain solely in Xoma.
8.2 Confidential Information. Pfizer and its Affiliates shall keep
confidential and not use, except as provided herein, in the License Agreement,
Supply Agreement or as contemplated in the Security Agreement, all Technical
Information supplied in writing (or if orally, as confirmed in writing) by Xoma
during the term of this Agreement and for ten (10) years after termination or
expiration hereof; provided, however, that the foregoing obligations of
confidentiality and non-use shall not apply to the extent that any Technical
Information is demonstrated by written records to be (a) already known to Pfizer
or its Affiliates at the time of disclosure hereunder or is hereafter developed
by Pfizer or its Affiliates in the course of work entirely independent of any
disclosure hereunder; or (b) publicly known prior to or after disclosure
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hereunder other than through acts or omissions of Pfizer or its Affiliates; or
(c) disclosed in good faith to Pfizer or its Affiliates under a reasonable claim
of right of which Pfizer is not aware of any dispute; or (d) disclosed to third
parties by Pfizer under a secrecy agreement with essentially the same
confidentiality provisions provided herein in connection with the exercise of
its rights under the License Agreement (to the extent permitted therein) or the
Supply Agreement. In addition, disclosure may be made (i) to governmental
agencies to the extent required or desirable to secure governmental approval for
marketing of any Subject Product and (ii) to pre-clinical and clinical
investigators where necessary or desirable for their information to the extent
normal and usual in the custom of the trade and under a secrecy agreement with
essentially the same confidentiality provisions contained herein. All Technical
Information heretofore disclosed in writing by Xoma shall be deemed to have been
disclosed under this Agreement and shall be subject to the provisions of this
Section 8.2.
9. INDEMNIFICATION
9.1 Each party (the "Indemnifying Party") will indemnify the other (the
"Indemnified Party") from damages, settlements, costs, legal fees and other
expenses incurred in connection with a claim against the Indemnified Party based
on any action or omission (including, without limitation, resulting from
clinical trials) of the Indemnifying Party or its agents or employees related to
the obligations of the Indemnifying Party under this Agreement, provided,
however, that the foregoing shall not apply (i) if the claim is found to be
based upon the negligence, recklessness or willful action or inaction of the
Indemnified Party, or (ii) if the Indemnified Party fails to give the
Indemnifying Party prompt notice of any claim it receives and such failure
materially prejudices the Indemnifying Party, or (iii) solely to the extent of
indemnification for legal fees and disbursements of counsel of the Indemnified
Party, unless the Indemnifying Party is given the opportunity to control defense
of such action, or (iv) unless the Indemnifying Party is given the opportunity
to approve any settlement, which approval shall not be unreasonably withheld;
and provided further that, except in the event of a material conflict of
interest, the Indemnifying Party shall not be liable for attorney's fees of the
Indemnified Party after assuming control of the defense or settlement.
10. TERM AND TERMINATION
10.1 Term. This Agreement shall be effective as of the
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date first set forth above and shall remain in effect until termination or
expiration of the License Agreement or other earlier termination pursuant to
Sections 6.1, 10.2 or 10.3 hereof.
10.2 Termination in Part.
(a) Pfizer shall have the right, upon ninety (90) days' prior notice to
Xoma, at any time and from time to time, without cause and at Pfizer's sole
discretion, to terminate this Agreement with respect to any Subject Product in
which case such Subject Product shall be automatically deleted as a "Product"
under the License Agreement and shall no longer be a Subject Product hereunder.
(b) Upon any partial termination under Section 10.2(a), Pfizer shall only
be responsible for Development Costs incurred by Xoma with respect to such
Subject Product during the ninety (90) day period following the date of notice
of termination as well as reasonable termination costs incurred by Xoma
thereafter (including reasonable severance payments and reasonable buy-outs of
preexisting contracts reasonably entered into); provided, however, Xoma shall
use best efforts to mitigate and control such termination costs.
(c) In the event of partial termination of this Agreement under Section
10.2 with respect to any Subject Product, Pfizer will have no rights and Xoma
will have no obligations with respect thereto under this Agreement, the License
Agreement, or the Supply Agreement (except for obligations under Sections 8.2
and 9.1 hereof), and Pfizer will immediately return to Xoma all Technical
Information relating thereto.
10.3 Termination in Full.
(a) This Agreement shall terminate in full as provided in Section 6.1
hereof.
(b) At any time, upon ninety (90) days' prior notice to Xoma, Pfizer shall
have the right, without cause at Pfizer's sole discretion, to terminate in full
this Agreement, whereupon this Agreement together with the License Agreement and
Supply Agreement shall terminate ninety (90) days after the date of such notice.
(c) If either Pfizer or Xoma materially breaches or defaults in the
performance or observance of any of the provisions of this Agreement and such
breach or default is not cured within ninety (90) days or, in the case of
failure to pay any amounts due hereunder, sixty (60) days after the giving of
notice by the other party specifying such breach or default, the other party
shall have the right to terminate this Agreement in full upon a further thirty
(30) days' notice.
-15-
(d) Upon any termination under Section 10.3(b) hereof or Section 9.02 of
the License Agreement, Pfizer shall be responsible for all Development Costs
incurred by Xoma with respect to Subject Products during the ninety (90) day
period following the date of notice of termination as well as reasonable
termination costs incurred by Xoma thereafter (including reasonable severance
payments and reasonable buy-outs of preexisting contracts reasonably entered
into); provided, however, Xoma shall use best efforts to mitigate and control
such termination costs.
(e) In the event of termination in full of this Agreement under Sections
6.1 or 10.3 hereof, subject to Section 9.05 of the License Agreement Pfizer will
have no rights and Xoma will have no further obligations under this Agreement,
the License Agreement, or the Supply Agreement (except for obligations under
Section 8.2 and 9.1 hereof or under the Security Agreement), and Pfizer will
immediately return to Xoma all Technical Information.
10.4 Effects of Termination. Termination of this Agreement for any reason
shall be without prejudice to:
(a) The rights and obligations of the parties provided in Sections 8.2 and
9.1 hereof;
(b) Xoma's right to receive all payments accrued under Sections 5.3 and 6.2
hereof prior to the effective date of such termination; and
(c) Any other remedies which either party may otherwise have.
11. SECURITY AGREEMENT
Certain of Xoma's obligations under this Agreement are secured pursuant to
the terms of a Security Agreement, dated the date hereof, between Xoma and
Pfizer, and reference is made to said Security Agreement for a description of
the terms thereof. Notwithstanding to the contrary any provision of this
Agreement, nothing herein shall be deemed to restrict, limit, modify or alter
any of Pfizer's rights under the Security Agreement or derived upon or resulting
from the exercise of any rights or interests thereunder.
12. MISCELLANEOUS
12.1 Force Majeure. No party shall be liable for failure of or delay in
performing obligations set forth in this Agreement, and no party shall be deemed
in breach of its obligations, if such failure or delay is due to natural
disasters or any causes reasonably beyond the control of such party.
-16-
12.2 Assignment. This Agreement may not be assigned by either party without
the prior consent of the other party; provided, however, (a) either party may
assign this Agreement to any entity which acquires substantially all of its
assets and business, and (b) Pfizer may assign this Agreement, in whole or in
part, to any Affiliate of Pfizer.
12.3 Xoma Status. For the purpose of carrying out this Agreement Xoma shall
act as an independent contractor and not as partner, joint venturer, or agent
and shall not bind nor attempt to bind Pfizer to any contract.
12.4 Notices. Any notice, consent or approval required under this Agreement
shall be in writing sent by registered certified airmail, postage prepaid, or by
telex or cable (confirmed by such registered or certified mail) and addressed as
follows:
If to Pfizer: If to Xoma:
Pfizer Inc. Xoma Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telex: 420440 Telex: 856-697
Attention: General Counsel Attention: Chairman
All notices shall be deemed to be effective on the date of mailing. In case any
party changes its address at which notice is to be received, written notice of
such change shall be given without delay to the other party.
12.5 Entire Agreement. This Agreement together with the License Agreement,
Supply Agreement and Security Agreement (as well as any other documents referred
to herein or therein) set forth the entire agreement and understanding among the
parties hereto as to the subject matter hereof and has priority over all
documents, verbal consents or understandings made between Pfizer and Xoma before
the conclusion of this Agreement with respect to the subject matter hereof; none
of the terms of this Agreement shall be amended or modified except in writing
signed by the parties hereto.
12.6 Waivers. A waiver by any party of any term or condition of this
Agreement in any one instance shall not be deemed or construed to be a waiver of
such term or condition for any similar instance in the future or of any
subsequent breach hereof.
-17-
12.7 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without regard to the
conflicts of laws provisions thereof. The exclusive jurisdiction and venue of
any action with respect to this Agreement shall be the Superior Court of
California for the County of Alameda or the United States District Court for the
Northern District of California and each of the parties hereto submits itself to
the exclusive jurisdiction and venue of such courts for the purpose of any such
action. Service of process in any such action may be effected in the manner
provided in Section 12.4 for delivery of notices. The prevailing party in any
legal action to enforce or interpret this Agreement shall be entitled to
reasonable costs and attorney's fees.
12.8 Remedies. The rights and remedies of a party set forth herein with
respect to failure of the other to comply with the terms of this Agreement
(including, without limitation, rights of full or partial termination of this
Agreement) are not exclusive, the exercise thereof shall not constitute an
election of remedies and the aggrieved party shall in all events be entitled to
seek whatever additional remedies may be available in law or in equity.
12.9 Headings. Headings in this Agreement are included herein for ease of
reference only and shall have no legal effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above by their duly authorized officers.
XOMA CORPORATION
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman/ CEO
PFIZER INC.
By /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
EXHIBIT A
DEVELOPMENT COSTS
EXHIBIT A
DEVELOPMENT COSTS
A. Direct Research Expense
Expenses for Subject Products specifically identifiable to a development
task. These expenses include:
1. Direct Labor Salaries and Benefits - Compensation cost per hour for
actual hours worked on approved Pfizer projects (supported by time
cards.) Examples include:
Clinical Research Associates
Technical Writers
Data Entry
Research Scientists (e.g. Toxicologist, Pathologist)
Regulatory Affairs (e.g. Protocol Writing, Validation, Clinical
Auditing, PDA Meetings)
2. Clinical Grants - Hospital expenses for approved studies paid to
investigators. (Supported by approved agreements and expense
reimbursements.)
3. Outside Laboratory Testing for approved Pfizer projects (supported by
contracts and invoices). Examples include:
14 day Primate study
Primate retreatment study
4. Drug Expenses - Actual cost (as defined in Exhibit I of Supply
Agreement) of drug distributed to investigators for use in studies.
5. Scientific Consultants - payments for time and expenses for work done
on approved Pfizer projects (supported by invoices). Examples include:
Research Grants
Outside Analytical Support
6. Scientific Panels - payments for time and expenses for work on
approved Pfizer projects (supported by invoices). Examples include:
Infectious Disease Panel
Advisory Panel
7. Other Direct Expenses - directly identifiable to an approved task
(supported by invoices or receipts). Examples include:
Travel and Entertainment
Supplies, printing and duplicating
Testing
Postage, freight
Routine patent maintenance fees and routine
ordinary expenses for outside professional services
for preparation of filing of patent applications
(uncontested) reasonably allocated to Subject
Products.
EXHIBIT A
DEVELOPMENT COSTS
PAGE -2-
B. Indirect Research Expenses
Costs incurred in the support of direct research activities for Subject
Products but which are not directly identifiable to development tasks.
These costs include:
1. Indirect Labor Salaries and Benefits - Compensation cost for
supervisors, managers, clerks and secretaries in support of
direct labor. Charges should be supported by time cards or
allocated in the same ratio as direct labor for such
department or group. Examples include:
Clinical Research Department Manager
Clinical Research Asst Manager
Business Manager
Project Manager
Secretarial and Clerical support
2. Scientific Consultants - payments for time and expenses based
on a mutually agreeable per cent of charges (supported by
invoices and expense reimbursements).
3. Facilities - Equipment Rental, Depreciation, Utilities,
Security and Maintenance costs. Charges to Pfizer projects
will be allocated in the same ratio as Direct Labor Hours by
department. Machinery or Equipment purchases over $250,000 are
subject to Pfizer approval.
4. Other Indirect Costs - Other expenses in support of Direct
Research activities to be allocated in the same ratio as
Direct Labor. Examples include:
Research materials
Supplies
Services
Assay Validation
5. Product Liability Insurance - Allocated as a per cent of the
total number of patients being treated with drug (supported by
invoices and patient count).
EXHIBIT B
E5 DEVELOPMENT PLAN
"CLINICAL DEVELOPMENT PLAN
XOMA E5 ANTIENDOTOXIN MURINE
MONOCLONAL ANTIBODY"
INTRODUCTION
Gram-negative sepsis has become a major cause of morbidity and mortality in the
United States during the last 30 years. Current incidence in the U.S. is
estimated at approximately 200,000 cases per year with a mortality of 20-50%.
Clinical studies over the last decade have shown that new developments in
antimicrobial therapy have done little to change mortality. The ability to
specifically neutralize endotoxin with XOMA's E5 antiendotoxin antibody
represents the first major therapeutic advance since the introduction of
antibiotics in the 1940's and holds new promise for significant reduction in
mortality and morbidity in gram-negative infection.
I. Overall Development Objectives:
- Generate adequate data for a PLA for FDA approval.
- [*]
- [*]
- [*]
- [*]
- [*]
1
II. Tabular Summary of Clinical Studies
Budget - Total Hospital
Expenses Only
Study No. Phase Site Objective 1987 1988 1989
TOTAL
81612-P1A I St. Louis Univ. Safety & Pharmaco [*] [*] [*]
[*]
kinetics
81612-P2A II St. Louis Univ. Safety & Efficacy [*] [*] [*]
[*]
81612-P2B II/III Multicenter Safety & Efficacy [*] [*] [*]
[*]
A II/III Multicenter Safety & Efficacy [*] [*] [*]
[*]
B II/III Multicenter Safety & Efficacy [*] [*] [*]
[*]
C I/II Multicenter Safety & Pharmaco- [*] [*] [*]
[*]
dynamics
D I/II Multicenter Safety & Pharmaco- [*] [*] [*]
[*]
dynamics
E II/III Multicenter Safety & Efficacy [*] [*] [*][*]
*Completed study funded by XOMA
2
III. Individual 1987 Study Descriptions
Study Number and Name: 81612-P1A:[*]
Design: [*]
Objective: [*]
Rationale: [*]
Number of Patients: [*]
Dosages: [*]
Conclusions: [*]
Estimated Completion: [*]
3
Study Number and Name: 81612-P2A:[*]
Design: [*]
Objective: [*]
Rationale: [*]
Number of Patients: [*]
Number of Centers: [*]
Dosage: [*]
Patient Accrual Rate: [*]
Estimated Start: [*]
Estimated Completion: [*]
4
Study Number and Name: 81612-P2B: [*]
Design: [*]
Objective: [*]
Rationale: [*]
Number of Patients: [*]
Number of Centers: [*]
Number of Centers to
be Added: [*]
Patient Accrual Rate: [*]
Statistical Plan: [*]
Dosages: [*]
Estimated Start: [*]
Estimated Completion: [*]
5
Study Number and Name: Study A: [*]
Design: [*]
Objective: [*]
Rationale: [*]
Number of Centers
Planned: [*]
Patient Accrual Rate: [*]
Number of Patients: [*]
Dosage: [*]
Estimated start: [*]
Estimated Completion: [*]
-6-
Study Number and Name: Study B: [*]
Design: [*]
Objective: [*]
Rationale: [*]
Number of Patients: [*]
Number of Centers
Planned: [*]
Patient Accrual Rate: [*]
Dosage: [*]
Estimated Start: [*]
Estimated Completion: [*]
7
Study Number and Name: Study C: [*]
Design: [*]
Objective: [*]
Rationale: [*]
Number of Patients: [*]
Number of Centers: [*]
Patient Accrual Rate: [*]
Dosage: [*]
Estimated Start: [*]
Estimated Completion: [*]
8
Study Number and Name: Study D: [*]
Design: [*]
Objective: [*]
Rationale: [*]
Number of Patients: [*]
Number of Centers
Planned: [*]
Patient Accrual Rate: [*]
Dosage: [*]
Estimated Start: [*]
Estimated Completion: [*]
Patient Population: [*]
9
Study Number and Name: Study E: [*]
Design: [*]
Objective: [*]
Rationale: [*]
Number of Patients: [*]
Dosage: [*]
Number of Centers: [*]
Patient Accrual Rate: [*]
Estimated Start: [*]
Estimated Completion: [*]
10
1987 1988 1989
PRECLINICAL Pharm/Safety Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Q3 Q4
[*] [*]
Toxicology
[*] [*]
Phase I COMPLETE
Phase II [*]
Multicenter [*]
CLINICAL A [*]
B [*]
C [*]
D [*]
E [*]
11
XOMA E5 BUDGET DETAIL
DIRECT EXPENSES
Direct expenses will be billed to Pfizer as the lesser of actual Costs or the
following maximums. Status against these maximums will be provided in the
quarterly reconciliations.
1987 1988 1989
CLINICAL RESEARCH
Labor [*] [*] [*]
Services [*] [*] [*]
Supplies [*] [*] [*]
Travel [*] [*] [*]
Patents/Legal [*] [*] [*]
TOTAL [*] [*] [*]
PRECLINICAL
Labor [*] [*] [*]
Services [*] [*] [*]
Supplies [*] [*] [*]
Travel [*] [*] [*]
TOTAL [*] [*] [*]
PROCESS DEVELOPMENT
Labor [*] [*] [*]
Services [*] [*] [*]
Supplies [*] [*] [*]
Travel [*] [*] [*]
TOTAL [*] [*] [*]
TOTAL DIRECT EXPS [*] [*] [*]
XOMA E5 BUDGET DETAIL
INDIRECT/G&A OVERHEAD
Indirect/G&A overhead expenses will be billed to Pfizer as the lesser of actual
cost or the following annual maximum. Status at these maximums will be provided
in the quarterly reconciliation
1987 1988 1989
CLINICAL RESEARCH
Consulting [*] [*] [*]
Indirect Labor/
Supplies/Legal/
Dept Exps [*] [*] [*]
Regulatory Affairs [*] [*] [*]
Product Liability [*] [*] [*]
TOTAL [*] [*] [*]
PRECLINICAL RESEARCH
Second Generation [*] [*] [*]
Supplies/Travel [*] [*] [*]
Facilities [*] [*] [*]
TOTAL [*] [*] [*]
PROCESS DEVELOPMENT
Supplies/Dept OH [*] [*] [*]
Facilities [*] [*] [*]
TOTAL [*] [*] [*]
TOTAL INDIRECT/G&A [*] [*] [*]
TOTAL EXPENSES
1987 1988 1989 Total
CLINICAL [*] [*] [*] [*]
PRECLINICAL [*] [*] [*] [*]
PROCESS DEV [*] [*] [*] [*]4
TOTAL EXPENSES [*] [*] [*] [*]
XOMA CORPORATION
E5 BUDGET 1987
TOTAL COSTS BY QUARTER
(000'S)
4/20/87
Q1 Q2 Q3 Q4 1987
Preclinical
Labor [*] [*] [*] [*] [*]
Services [*] [*] [*] [*] [*]
Supplies [*] [*] [*] [*] [*]
Travel [*] [*] [*] [*] [*]
Total Direct Expense [*] [*] [*] [*] [*]
Indirect R&D Expense [*] [*] [*] [*] [*]
G & A Overhead [*] [*] [*] [*] [*]
TOTAL PRECLINICAL [*] [*] [*] [*] [*]
Process Development
Labor [*] [*] [*] [*] [*]
Services [*] [*] [*] [*] [*]
Supplies [*] [*] [*] [*] [*]
Travel [*] [*] [*] [*] [*]
Total Direct Expense [*] [*] [*] [*] [*]
Indirect R&D Expense [*] [*] [*] [*] [*]
G & A Overhead [*] [*] [*] [*] [*]
TOTAL PROCESS DEVELOPMENT [*] [*] [*] [*] [*]
Clinical Research
Labor [*] [*] [*] [*] [*]
Services [*] [*] [*] [*] [*]
Supplies [*] [*] [*] [*] [*]
Travel [*] [*] [*] [*] [*]
Patent/Legal [*] [*] [*] [*] [*]
Total Direct Expense [*] [*] [*] [*] [*]
Indirect R&D Expense [*] [*] [*] [*] [*]
G & A Overhead [*] [*] [*] [*] [*]
TOTAL CLINICAL RESEARCH [*] [*] [*] [*] [*]
TOTAL PROJECT [*] [*] [*] [*] [*]
XOMA CORPORATION
E5 BUDGET 1988
TOTAL COSTS BY QTR
(000'S)
4/20/87
Q1 Q2 Q3 Q4 TOTAL
Preclinical
Labor [*] [*] [*] [*] [*]
Services [*] [*] [*] [*] [*]
Supplies [*] [*] [*] [*] [*]
Travel [*] [*] [*] [*] [*]
Total Direct Expense [*] [*] [*] [*] [*]
Indirect R&D Expense [*] [*] [*] [*] [*]
G & A Overhead [*] [*] [*] [*] [*]
TOTAL PRECLINICAL [*] [*] [*] [*] [*]
Process Development
Labor [*] [*] [*] [*] [*]
Services [*] [*] [*] [*] [*]
Supplies [*] [*] [*] [*] [*]
Travel [*] [*] [*] [*] [*]
Total Direct Expense [*] [*] [*] [*] [*]
Indirect R&D Expense [*] [*] [*] [*] [*]
G & A Overhead [*] [*] [*] [*] [*]
TOTAL PROCESS DEVELOPMENT [*] [*] [*] [*] [*]
Clinical Research
Labor [*] [*] [*] [*] [*]
Services [*] [*] [*] [*] [*]
Supplies [*] [*] [*] [*] [*]
Travel [*] [*] [*] [*] [*]
Patent/Legal [*] [*] [*] [*] [*]
Total Direct Expense [*] [*] [*] [*] [*]
Indirect R&D Expense [*] [*] [*] [*] [*]
G & A Overhead [*] [*] [*] [*] [*]
TOTAL CLINICAL RESEARCH [*] [*] [*] [*] [*]
TOTAL PROJECT [*] [*] [*] [*] [*]
CONFIDENTIAL
XOMA CORPORATION
E5 BUDGET 1989
TOTAL COSTS BY QUARTER
(000'S)
4/20/87
Q1 Q2 Q3 Q4 1989
Preclinical
Labor [*] [*] [*] [*] [*]
Services [*] [*] [*] [*] [*]
Supplies [*] [*] [*] [*] [*]
Travel [*] [*] [*] [*] [*]
Total Direct Expense [*] [*] [*] [*] [*]
Indirect R&D Expense [*] [*] [*] [*] [*]
G & A Overhead [*] [*] [*] [*] [*]
TOTAL PRECLINICAL [*] [*] [*] [*] [*]
Process Development
Labor [*] [*] [*] [*] [*]
Services [*] [*] [*] [*] [*]
Supplies [*] [*] [*] [*] [*]
Travel [*] [*] [*] [*] [*]
Total Direct Expense [*] [*] [*] [*] [*]
Indirect R&D Expense [*] [*] [*] [*] [*]
G & A Overhead [*] [*] [*] [*] [*]
TOTAL PROCESS DEVELOPMENT [*] [*] [*] [*] [*]
Clinical Research
Labor [*] [*] [*] [*] [*]
Services [*] [*] [*] [*] [*]
Supplies [*] [*] [*] [*] [*]
Travel [*] [*] [*] [*] [*]
Patent/Legal [*] [*] [*] [*] [*]
Total Direct Expense [*] [*] [*] [*] [*]
Indirect R&D Expense [*] [*] [*] [*] [*]
G & A Overhead [*] [*] [*] [*] [*]
TOTAL CLINICAL RESEARCH [*] [*] [*] [*] [*]
TOTAL PROJECT [*] [*] [*] [*] [*]
CONFIDENTIAL
XOMA CORPORATION
E5 BUDGET 1987
TOTAL COSTS BY BENCHMARK
(000'S)
4/20/87
[*] [*] [*] [*] [*]
Preclinical
Labor [*] [*] [*] [*] [*]
Services [*] [*] [*] [*] [*]
Supplies [*] [*] [*] [*] [*]
Travel [*] [*] [*] [*] [*]
Total Direct Expense [*] [*] [*] [*] [*]
Indirect R&D Expense [*] [*] [*] [*] [*]
G & A Overhead [*] [*] [*] [*] [*]
TOTAL PRECLINICAL [*] [*] [*] [*] [*]
Process Development
Labor [*] [*] [*] [*] [*]
Services [*] [*] [*] [*] [*]
Supplies [*] [*] [*] [*] [*]
Travel [*] [*] [*] [*] [*]
Total Direct Expense [*] [*] [*] [*] [*]
Indirect R&D Expense [*] [*] [*] [*] [*]
G & A Overhead [*] [*] [*] [*] [*]
TOTAL PROCESS DEVELOPMENT [*] [*] [*] [*] [*]
Clinical Research
Labor [*] [*] [*] [*] [*]
Services [*] [*] [*] [*] [*]
Supplies [*] [*] [*] [*] [*]
Travel [*] [*] [*] [*] [*]
Patent/Legal [*] [*] [*] [*] [*]
Total Direct Expense [*] [*] [*] [*] [*]
Indirect R&D Expense [*] [*] [*] [*] [*]
G & A Overhead [*] [*] [*] [*] [*]
TOTAL CLINICAL RESEARCH [*] [*] [*] [*] [*]
TOTAL PROJECT [*] [*] [*] [*] [*]
CONFIDENTIAL
XOMA CORPORATION
E5 BUDGET 1988
TOTAL COSTS BY BENCHMARK
(000'S)
4/20/87
[*] [*] [*] [*] [*]
Preclinical
Labor [*] [*] [*] [*] [*]
Services [*] [*] [*] [*] [*]
Supplies [*] [*] [*] [*] [*]
Travel [*] [*] [*] [*] [*]
Total Direct Expense [*] [*] [*] [*] [*]
Indirect R&D Expense [*] [*] [*] [*] [*]
G & A Overhead [*] [*] [*] [*] [*]
TOTAL PRECLINICAL [*] [*] [*] [*] [*]
Process Development
Labor [*] [*] [*] [*] [*]
Services [*] [*] [*] [*] [*]
Supplies [*] [*] [*] [*] [*]
Travel [*] [*] [*] [*] [*]
Total Direct Expense [*] [*] [*] [*] [*]
Indirect R&D Expense [*] [*] [*] [*] [*]
G & A Overhead [*] [*] [*] [*] [*]
TOTAL PROCESS DEVELOPMENT [*] [*] [*] [*] [*]
Clinical Research
Labor [*] [*] [*] [*] [*]
Services [*] [*] [*] [*] [*]
Supplies [*] [*] [*] [*] [*]
Travel [*] [*] [*] [*] [*]
Patent/Legal [*] [*] [*] [*] [*]
Total Direct Expense [*] [*] [*] [*] [*]
Indirect R&D Expense [*] [*] [*] [*] [*]
G & A Overhead [*] [*] [*] [*] [*]
TOTAL CLINICAL RESEARCH [*] [*] [*] [*] [*]
TOTAL PROJECT [*] [*] [*] [*] [*]
CONFIDENTIAL
XOMA CORPORATION
E5 BUDGET 1989
TOTAL COSTS BY BENCHMARK
(000'S)
4/20/87
[*] [*] [*] [*] [*]
Clinical Research:
Labor [*] [*] [*] [*] [*]
Services [*] [*] [*] [*] [*]
Supplies [*] [*] [*] [*] [*]
Travel [*] [*] [*] [*] [*]
Total Direct Expense [*] [*] [*] [*] [*]
Indirect R&D Expense [*] [*] [*] [*] [*]
G & A Overhead [*] [*] [*] [*] [*]
TOTAL PRECLINICAL [*] [*] [*] [*] [*]
TOTAL PROJECT [*] [*] [*] [*] [*]
CONFIDENTIAL
XOMA CORPORATION
1987 BACK-UP BUDGET DETAIL
(000'S)
4/20/87
Clinical Research Detail:
Labor - St. Louis Study [*]
Multi Center Study [*]
Multicenter Study [*]
Sites/CRA [*]
CRA's Needed [*]
Salary [*]
Fringes [*]
[*] [*]
[*]
Protocol Writer [*]
Data Input [*]
Salary & Fringes [*]
Assay Validation, Documentation
Salary [*]
Fringes [*] [*]
Total Labor [*]
Services - St. Louis Study
Services [*]
Pharmacy [*]
Labs [*]
[*]
[*] [*]
Evaluable Non-Evaluable
Multicenter Study
Business Agreements [*] [*]
Endotoxin Levels
Anti-Murine Levels [*] [*]
Compliment Levels
Misc.
[*] [*]
Patients [*] [*] [*]
Multicenter Equivalency Study [*] [*]
Patients [*] [*] [*]
CONFIDENTIAL
XOMA CORPORATION
1987 BACK-UP BUDGET DETAIL
(000'S)
4/20/87
Advisory Panel - [*] Individuals x [*] Meetings = [*]
Meeting Equiv.
[*] Travel, Etc/Meeting
[*] Compensation Meeting
[*]
E5 Time Spent
▇. ▇▇▇▇▇▇▇▇▇ Consulting [*]
▇. ▇▇▇▇▇ Endotoxin Binding [*]
Infectious Disease Panel [*]
[*]
Total Services
[*]
Supplies [*]
Drug Expenses - St. Louis [*]
Multicenter Efficacy
QTR 1 [*]
QTR 2 [*]
QTR 3 [*] [*]
QTR 4 [*] [*]
Multicenter Equiv.
Total Supplies
[*]
Travel - Clinical Research Budget E5
Budget E5% Total
Septic Shock Travel by CRA's [*] [*] [*]
Dept. Mgr. Travel [*] [*] [*]
▇. ▇▇▇▇▇▇▇▇▇ Travel [*] [*] [*]
Total Travel
[*]
Patent/Legal Fees
[*]
CONFIDENTIAL
XOMA CORPORATION
1987 BACK-UP BUDGET DETAIL
(000'S)
4/20/87
Indirect R&D Expense
▇. ▇▇▇▇▇ Consulting [*]
▇. ▇▇▇▇▇ Contract Grant [*]
Clinical Research Budget:
[*]
Total R&D Expense [*]
G & A Overhead
Product Liability Insurance:
U.S. Premiums [*]
Patients/Quarter: 1st 2nd 3rd 4th Total
E5 [*] [*] [*] [*] [*]
Other Septic Shock[*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*]
Total [*]
%E5 [*]
Premium Costs [*] [*] [*]
Total G & A Overhead [*]
Total Clinical Research [*]
CONFIDENTIAL
XOMA CORPORATION
1987 BACK-UP BUDGET DETAIL
(000'S)
(4/20/87)
[*]
Labor: Estimate of time required to accomplish toxicology studies and assay
development.
% Time on E5 Milestones
[*]
CONFIDENTIAL
XOMA CORPORATION
1987 BACK-UP BUDGET DETAIL
(000'S)
4/20/87
[*]:
Labor: Tech Development [*]
Process Development [*]
Analytical Biochemistry [*]
In-Vitro [*]
Pilot Plant [*]
Indirect:
Supplies, Travel, [*]
Facilities [*]
[*]
Total Process Development [*]
CONFIDENTIAL
XOMA CORPORATION
1988 BACK-UP BUDGET DETAIL
(000'S)
4/20/87
Clinical Research Detail:
Labor - Multicenter Equivalency [*]
Documented Sepsis [*]
Neutropenic [*]
Extended Administration [*]
[*]
Sites/CRA [*]
CRA's Needed [*] [*]
Protocol Writer/Data Input [*]
Assay Validation [*]
Total Labor [*]
Services: Evaluable Non-Evaluable
[*] [*] [*]
CONFIDENTIAL
XOMA CORPORATION
1988 BACK-UP BUDGET DETAIL
(000'S)
4/20/87
Supplies: Drug Expenses QTR 1 [*]
QTR 2 [*]
QTR 3 [*]
QTR 4 [*] [*]
Travel [*]
Legal/Patent [*]
Indirect R&D Expenses:
▇. ▇▇▇▇▇ Consulting & Contract [*]
Clinical Research Budget [*]
Business Mgr. x [*]E5 Portion [*]
Project Mgr. & Support x [*] E5 Portion [*]
Patent Control, Etc. [*]
Assay Validation Overhead [*]
Regulatory Affairs x [*] [*]
[*]
G & A Overhead:
Liability Insurance:
U.S. Premiums [*]
[*]
Patients/Quarter 1st 2nd 3rd 4th Total
E5 [*] [*] [*] [*] [*]
Other Septic Shock [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*]
Total [*]
E5% [*]
Premium Costs [*]
E5% [*]
Total G & A Overhead [*]
Total Clinical Research [*]
CONFIDENTIAL
XOMA CORPORATION
1988 BACK-UP BUDGET DETAIL
(000'S)
4/20/87
Process Development Detail:
Labor: [*]
[*]
Supplies [*]
Travel [*]
Indirect R & D Expense:
Facilities [*]
Dept. Overhead [*] [*]
Total Process Development [*]
CONFIDENTIAL
XOMA CORPORATION
1988 BACK-UP BUDGET DETAIL
(000'S)
4/20/87
Preclinical Detail:
Labor: Finalize assays and primate retreatment work.
Toxicology/Assay [*] [*]
Services: Consultants [*]
Indirect R & D Expense:
Second Generation [*] [*]
Toxicology/Assay Supplies, etc. [*]
Toxicology/Assay Facilities [*]
[*]
Total Preclinical [*]
CONFIDENTIAL
XOMA CORPORATION
1989 BACK-UP BUDGET DETAIL
(000'S)
4/20/87
Clinical Research Detail:
Labor [*] [*]
[*] [*]
[*]
Sites/CRA [*]
CRA's Needed [*] [*]
Data Input [*]
Total Labor [*]
Services: Evaluable Non-Evaluable
[*] [*]
[*]
[*]
Supplies: Drug Expenses [*]
Travel: CRA [*]
Indirect Research Expenses: [*]
Clinical Research Budget [*]
Regulatory Affairs/Proj. Mgr./Etc. [*]
G & A Overhead:
Liability Insurance [*]w/Drug [*]
Total Clinical Research [*]
XOMA CORPORATION
1987 Preclinical Development Plan - E5
April 20, 1987
[*]
Labor [*]
Services & Overhead [*]
Toxicology Studies [*]
Drug & Supplies [*]
TOTAL [*]
XOMA CORPORATION
1988 PRE-CLINICAL DEVELOPMENT PLAN E5
APRIL 20, 1987
[*]
[*]
Labor [*]
Services [*]
Indirect R&D [*]
[*]
E5 PROCESS DEVELOPMENT PLAN
FEBRUARY 23, 1987
PHASE I BENCHMARKS [*]: COMPLETION
[*]
PHASE II BENCHMARKS [*]
[*]
PHASE III [*]:
[*]
XOMA CORPORATION
E5 PROCESS DEVELOPMENT PLAN
APRIL 20, 1987
PHASE I BENCHMARKS [*]: COMPLETION
[*]
PHASE II BENCHMARKS [*]:
[*]
COSTS [*]:
Labor & Fringes [*]
Supplies [*]
Indirect R&D Expense [*]
[*]
PHASE III [*]:
[*]
COSTS
Labor & Fringes [*]
Supplies [*]
Travel [*]
Indirect R&D [*]
Development Costs for E5 Product
January 1, 1987 through March 31, 1987:
[*]
EXHIBIT C
PATENTS
I II III
US 06/855,878 (2) US 06/781,242 (1) US 06/855,878 (2)
(Plus
foreign
filings
listed
under
Col
I)
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇/▇▇ ▇▇ 06/855,878 (2) US 07/036,766 (3)
CANADA 519,066 U.S. 07/036,766 (3)
EUROPE 86306420.0
(10 EPO Countries)
IRELAND 2546/86
ISRAEL ▇▇▇▇▇
▇▇▇▇▇ 229481/86
KOREA ▇▇▇▇/▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ 86/7342
SPAIN 8602198
U.S. 07/036,766 (3)
(1) Filing Date 9/27/84
(2) Filing Date 4/24/86
(3) Filing Date 4/10/87
LICENSE AGREEMENT
AGREEMENT, dated as of June 9, 1987, between Xoma Corporation ("Xoma"), a
Delaware corporation having offices at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, and Pfizer Inc. ("Pfizer"), a Delaware corporation having offices at ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
WHEREAS, Xoma and Pfizer have entered into a Research, Development and
Option Agreement ("R&D Agreement") of even date herewith relating to the
development of certain monoclonal antibody products; and
WHEREAS, the R&D Agreement contemplates the granting by Xoma to Pfizer of
certain licenses under Xoma patents and technical information.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
provided herein Pfizer and Xoma hereby agree as follows:
SECTION 1.00 - DEFINITIONS
For the purpose of this Agreement the following definitions shall be
applicable:
1.01 "Affiliate" shall mean (a) any company owned or controlled to the
extent of at least fifty percent (50%) of its issued and voting capital by a
party to this Agreement and any other company so owned or controlled (directly
or indirectly) by any such company or the owner of any such company, or (b) any
partnership, joint venture or other entity directly or indirectly controlled by,
controlling, or under common control of, to the extent of fifty percent (50%) or
more of voting power (or otherwise having power to control its general
activities), a party to this Agreement, but in each case only for so long as
such ownership or control shall continue.
1.02 "Combination Products" shall mean products which include any Licensed
Product and one or more other active ingredients.
1.03 "Fiscal Year" shall mean (a) with respect to Pfizer's business
operations in the United States, each 12-month period beginning January 1 and
ending on the following December 31, or
-2-
(b) with respect to Pfizer's business operations outside the United States, each
12-month period beginning December 1 and ending on the following November 30.
1.04 "Licensed Patents" shall mean (i) all patents listed in Appendix I,
annexed hereto and made a part hereof, and any patents which may issue from the
applications listed on Appendix I, in each case together with any divisionals,
continuations, continuations-in-part, reissues, patents of addition and
extensions thereof, and (ii) to the extent of Xoma's interest therein, all other
patents and applications in the Territory (as hereinafter defined) now owned or
controlled by, or licensed to, or hereafter during the term of this Agreement
owned or controlled by, or licensed to, Xoma or any of its Affiliates, in each
case relating to the Products or methods of use or manufacturing processes for
the Products, together with any divisionals, continuations,
continuations-in-part, reissues, patents of additions and extensions thereof.
1.05 "Licensed Product" shall mean any Product, the manufacture, use or
sale of which would, in the absence of a license, infringe any of the Licensed
Patents or which utilizes Technical Information.
1.06 "Net Sales" shall mean, with respect to each Licensed Product, gross
sales of Licensed Product sold by Pfizer, its Affiliates and sublicensees to
third parties, less the total of (a) to the extent included in gross sales,
ordinary and customary trade discounts actually allowed, (b) to the extent
included in gross sales, excise taxes, other consumption taxes, customs duty and
compulsory payments to governmental authorities actually paid or deducted to the
extent relating to sales of Licensed Products, and (c) amounts equivalent to 5%
of said gross sales as an allowance for all other discounts and expenses.
1.07 "Payment Computation Period" shall mean (a) with respect to Pfizer's
business operations in the United States, each three (3) month period, or any
portion thereof, ending on the last day of March, June, September and December
of a given year, or (b) with respect to Pfizer's business operations outside the
United States, each three (3) month period, or any portion thereof, ending on
the last day of February, May, August or November of a given year.
1.08 "Production Margin" shall mean with respect to each Licensed Product
the difference between Net Sales and Product Cost for such Licensed Product.
-3-
1.09 "Product Cost" shall mean Pfizer's standard cost for purified active
bulk of Licensed Product, such standard cost determined according to Pfizer's
accounting standards which shall be in conformity with generally accepted
accounting principles consistently applied (and as described, in part, in a
letter from Pfizer to Xoma dated May 5, 1987). It is understood that during any
Payment Computation Period in which Pfizer is purchasing from Xoma 100% of
Pfizer's requirements pursuant to the Supply Agreement, such standard cost shall
be the price paid by Pfizer to Xoma for purified active bulk supplied by Xoma
thereunder. In addition such standard cost shall be the standard cost of Pfizer
or its Affiliate, as the case may be, which first produces or purchases said
purified active bulk.
1.10 "Products" shall mean (i) any product, now or hereafter developed by
Xoma, which is produced (or susceptible of being produced) from or incorporates
any antibody (including Fragments thereof as hereinafter defined) secreted from
the E5 Cell Line (as hereinafter defined) or any other cell line capable of
producing said antibody, or which product is chemically, organically,
biologically or synthetically derived from or based upon any such antibody, in
each case either alone or in combination with any other therapeutic agent. For
purposes of this Section 1.10, the term "Fragments" shall mean any part or parts
of any said antibody chemically, biologically or organically obtained from said
antibody, or synthetically produced, and which mimics the biological behavior of
said antibody. For purposes of this Section 1.10, the term "E5 Cell Line" shall
mean the cell line described as a murine hybridoma as identified by American
Type Culture Collection No. HB 9081 and mutants and genetically manipulated
variants thereof; and (ii) any Other Antibody Product, as defined in the R&D
Agreement, for which Pfizer hereafter exercises its option under Section 4.1
thereof -- with respect to the foregoing clauses (i) and (ii), in each case
together with all pharmaceutical compositions and dosage units thereof.
1.11 "Security Agreement" shall mean the agreement so named referred to in
Section 11.09 hereof.
1.12 "Selected Countries" shall mean Japan, United Kingdom, France, Federal
Republic of Germany and Italy.
1.13 "Septic Shock" shall mean endotoxin mediated complications of gram
negative bacterial sepsis.
1.14 "Supply Agreement" shall mean the agreement so named of even date
herewith between Pfizer and Xoma.
-4-
1.15 "Technical Information" shall mean all of Xoma's trade secrets,
information, and know-how, now owned, licensed or controlled by Xoma or its
Affiliates or hereafter acquired, developed, owned, licensed or controlled by
Xoma or any of its Affiliates (to the extent of Xoma or its Affiliates rights)
during the term of this Agreement, in each case with respect to (i) the medical,
clinical, toxicological or other scientific data or information relating to the
Products (including, without limitation, pre-clinical and trial data, notes,
reports, models, and samples) and (ii) the manufacture, production, and
purification procedures and processes, as well as analytical methodology, used
in the testing, assaying, analysis, production, and packaging of the Products.
Technical Information shall also include: (i) Xoma's actual cell lines and other
biological materials and substances for any of the Products and (ii) Xoma's
other information and non-patent proprietary rights (to the extent not already
included in this definition of Technical Information) with respect to the
Products. Any of the foregoing which Xoma in good faith is contractually
prohibited from disclosing to third parties shall not be included within the
definition of Technical Information.
1.16 "Territory" shall mean Territory A and Territory B. "Territory A"
shall mean the United States of America, its territories and possessions, and
"Territory B" shall mean all countries of the world except for Territory A.
1.17 "University of California License" shall mean the License Agreement
for Monoclonal Antibodies to Gram Negative Sepsis-Related Bacteria and Human
Diagnostics and Therapeutics Derived Therefrom, effective September 3, 1986,
between Xoma and The Regents of the University of California.
SECTION 2.00 - GRANT AND RELEASE OF LICENSES
2.01 Subject to the terms hereunder, Xoma hereby grants to Pfizer, and
Pfizer hereby accepts: (a) except with respect to Xoma's rights under the
University of California License, an exclusive license under the Licensed
Patents to make, have made, use and sell Licensed Products for human and animal
therapeutic and/or prophylactic use; (b) except with respect to Xoma's rights
under the University of California License, an exclusive license to use in the
Territory all Technical Information in connection with the manufacture, use and
sale of Licensed Products for human and animal therapeutic and/or prophylactic
use; and (c) with respect to the University of California License, an exclusive
sublicense of all rights and licenses granted to Xoma under the University of
California License with respect to the Licensed Products for human and animal
therapeutic and/or prophylactic use in the Territory. Each of the foregoing
licenses or sublicenses includes the right by Pfizer to grant sublicenses.
-5-
2.02 Notwithstanding the provisions of Section 2.01 hereof, Xoma retains
for itself with respect to Licensed Products those rights to Licensed Patents
and Technical Information which it had immediately prior to the execution of
this Agreement to the extent necessary to perform, and solely for the purpose of
performing, its obligations to supply Licensed Products under the Supply
Agreement so long as such agreement remains in effect.
2.03 At any time Pfizer shall have the right, at Pfizer's sole discretion
upon 60 days' prior notice to Xoma, to release all licenses granted herein with
respect to Territory A or all countries in Territory B, as Pfizer may elect.
2.04 Within three (3) months after the completion by Xoma of the clinical
studies pursuant to protocol no. 81612-P2B and the submission to Pfizer of the
final report thereon, Pfizer shall notify Xoma whether Pfizer intends to pursue
health registration in at least three Selected Countries other than Japan for
such Licensed Product under said protocol. If Pfizer does not intend to pursue
such registration, Pfizer shall promptly terminate its rights hereunder with
respect to such Licensed Product for all countries in Territory B, except for
Japan. If Pfizer shall not terminate its rights as aforesaid, Pfizer shall
diligently pursue in good faith the registration of said Licensed Product in at
least three Selected Countries (other than Japan).
2.05 Within six (6) months after the completion by Xoma of the clinical
studies pursuant to protocol no. 81612-P2B and the submission to Pfizer of the
final report thereon, Pfizer shall notify Xoma whether Pfizer intends to pursue
health registration in Japan for such Licensed Product under said protocol. If
Pfizer does not intend to pursue such registration, Pfizer shall promptly
terminate its rights hereunder with respect to such Licensed Product for Japan.
If Pfizer shall not terminate its rights as aforesaid, Pfizer shall diligently
pursue in good faith the registration of such Licensed Product in Japan.
2.06 In the event a Product described in Section 1.10, clause (i) shall no
longer be a Subject Product under the terms of the R&D Agreement as a result of
the provisions of the penultimate sentence of Section 6.1 of the R&D Agreement,
and an Other Antibody Product (as defined in the R&D Agreement) shall become the
initial Subject Product for purposes of Section 6.2 thereof, the provisions of
Sections 2.04 and 2.05 hereof shall become applicable to the first such Other
Antibody Product, provided the protocol referred to in Sections 2.04 and 2.05
hereof shall be the appropriate protocol for such Other Antibody Product, which
protocol shall be for a multi-center study similar in scope and size to protocol
no. 81612-P2B and designed to obtain sufficient safety and efficacy data for the
submission of a Product License Application to FDA.
-6-
SECTION 3.00 - ROYALTIES AND PAYMENTS
3.01 In consideration of the licenses granted to Pfizer under Section 2.01
hereof, Pfizer shall pay to Xoma royalties based on the aggregate Production
Margin during each Fiscal Year for each Licensed Product. For purposes of
determining royalties, the E5 Product, J5D4, and PCB5 (as defined or described
in the Research and Development Agreement) as well as Combination Products of
each shall each be considered as separate Licensed Products. Royalties shall be
computed (a) separately for each Fiscal Year for each Licensed Product based on
the aggregate Production Margin thereof, (b) separately with respect to Net
Sales in Territory A and Territory B, and (c) with a different royalty rate
applicable to different increments of Production Margin for each such Licensed
Product.
Aggregate Production Margin for
Net Sales in Territory A
for Each Fiscal Year Rate
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
Aggregate Production Margin For
Net Sales in Territory B For
Each Fiscal Year Rate
[*] [*]
[*] [*]
[*] [*]
Example: Aggregate Product Margin for Net Sales in U.S.A. (Territory A) for
Fiscal Year [*] for E5 and [*] for J5D4 antibody. Royalties for U.S.A. sales of
E5 as follows:
E5 Product Margin Rate Amount of Royalty
($ millions)
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*]
-7-
A similar separate computation would be made for J5D4 aggregate
Production Margin for Net Sales in the U.S.A., and similar separate
computations would be made for E5 and J5D4 for aggregate Production
Margin of each for Net Sales in Territory B for each Fiscal Year.
In the event Pfizer shall be selling a Combination Product containing one
or more other active ingredients which are not Licensed Products, then aggregate
Production Margin for such Combination Product shall be determined as follows:
(a) Net Sales for the Combination Product shall be determined as set forth in
Section 1.06 hereof; (b) Product Cost shall not be determined as provided in
Section 1.09 hereof, but rather shall be Pfizer's standard cost for the
Combination Product in finished packaged dosage form (determined according to
Pfizer's accounting standards which shall be in conformity with generally
accepted accounting principles), and (c) such Product Cost shall be subtracted
from such Net Sales of such Combination Product and the resulting difference
shall then be divided by one-half (1/2) which amount shall be the Production
Margin for such Combination Product for royalty purposes hereunder.
Notwithstanding to the contrary the provisions of the immediately preceding
paragraph, if any Combination Product being sold by Pfizer contains, in addition
to a Licensed Product, another active ingredient which, as a single entity
agent, is being sold as a non-prescription (over-the-counter) drug in the United
States, then the immediately preceding paragraph shall not be applicable, and
Production Margin for such Combination Product shall be determined for each
country as hereinafter provided. In the event Pfizer or its Affiliates is
currently selling in such country the Licensed Product (contained in such
Combination Product) as a single entity, "Net Sales" of such Combination Product
for such country for any Payment Computation Period shall be computed as
follows: aggregate net sales during such period of the Licensed Product as a
single entity (determined in accordance with Section 1.06 hereof) shall be
divided by the aggregate number of grams of Licensed Product contained therein,
and the result thereof shall be multiplied by the aggregate number of grams of
Licensed Product contained in the Combination Product sold in such country
during such Payment Computation Period. In the event Pfizer or its Affiliates is
not currently selling in a country the Licensed Product as a single entity, "Net
Sales" of such Combination Product for such country shall be computed as
follows: aggregate net sales of the Combination Product (determined in
accordance with Section 1.06 hereof) shall be multiplied by a fraction, the
numerator being Pfizer's cost of the Licensed Product in such Combination
Product and the
-8-
denominator being Pfizer's total cost of all active ingredients in such
Combination Product. Cost shall be based on Pfizer's accounting procedures which
are in accordance with generally accepted accounting practices. To determine
aggregate Production Margin for such Combination Product, Product Cost for the
Licensed Product contained in such Combination Product shall be determined as
provided in Section 1.09 hereof and Net Sales for such Combination Product shall
be determined as provided above. Royalties on aggregate Production Margin for
such Combination Product shall then be computed for Net Sales in Territory A and
Territory B at the respective rates provided above.
3.02 The period of time royalties under Section 3.01 shall be payable shall
be determined on a country-by-country basis and on a Licensed
Product-by-Licensed Product basis and shall be for the longer of (a) fifteen
(15) years after first commercial sale after regulatory approval in such country
of the respective Licensed Product by Pfizer, its Affiliates or sublicensees, or
(b) until the last to expire of the Licensed Patents in such country which
includes claims directed toward a composition of matter, method of use, or
pharmaceutical dosage form for the particular Licensed Product sold, and,
thereafter, in the case of clause (a) or clause (b) Pfizer's license hereunder
with respect to Technical Information for such Licensed Product shall be a fully
paid-up license. Notwithstanding to the contrary any provision of Section 3.01,
in the event the Licensed Product sold by Pfizer in any particular country shall
not infringe any claim of any Licensed Patent in force in such country with
claims directed toward a composition of matter, method of use, or pharmaceutical
dosage form, then the royalty rates specified in Section 3.01 with respect to
Product Margin for Net Sales of such Licensed Product in such country shall each
be reduced by [*] to reflect the value to Pfizer of the Technical Information
for such Licensed Product.
3.03 During each Fiscal Year, commencing with the first complete Fiscal
Year after the first commercial sale of the first Licensed Product sold in
Territory A, and so long as Licensed Patents covering at least one of the
Licensed Products sold therein shall be in effect in Territory A with claims
directed toward a composition of matter, method of use, or pharmaceutical dosage
form, Pfizer shall pay to Xoma minimum annual royalties under Section 3.01 with
respect to aggregate Net Sales of all Licensed Products in Territory A as
follows:
First Fiscal Year [*]
Second Fiscal Year [*]
Third through fifth Fiscal Year [*]
Sixth and subsequent Fiscal Years [*]
-9-
In addition, during each Fiscal Year, commencing with the first complete Fiscal
Year after the first commercial sale of the first Licensed Product sold in three
of the Selected Countries, and so long as Licensed Patents covering at least one
of the Licensed Products sold therein shall be in effect in such three Selected
Countries with claims directed toward a composition of matter, method of use, or
pharmaceutical dosage form, Pfizer shall pay Xoma minimum annual royalties under
Section 3.01 with respect to aggregate Net Sales of all Licensed Products in
Territory B as follows:
First Fiscal Year [*]
Second Fiscal Year [*]
Third through fifth Fiscal Year [*]
Sixth and Subsequent Fiscal Years [*]
In the event royalties actually paid under Section 3.01 hereof for any Fiscal
Year shall be less than the required minimum royalty for Territory A or
Territory B, as the case may be, Pfizer, within sixty (60) days after the end of
each Fiscal Year, shall pay such amounts to Xoma as necessary to insure that the
total of said royalties actually paid by Pfizer shall be not less than the
applicable minimum royalty.
Notwithstanding to the contrary the foregoing, Pfizer shall not be required
to make minimum royalty payments and shall have no obligations under this
Section 3.03 (a) during such period of time Xoma shall fail for any reason,
including force majeure, to supply Pfizer with Products pursuant to the terms of
the Supply Agreement (provided in such case minimum royalty obligations shall be
reduced pro rata), or (b) for one complete Fiscal Year after the effective date
of any termination by Xoma of the Supply Agreement or (c) for one complete
Fiscal Year after the effective date of any termination of the Supply Agreement
by Pfizer as a result of the breach or default thereof by Xoma.
3.04 Pfizer will in good faith commercialize Licensed Products in the
Territory in a manner to maximize commercial benefit of each Licensed Product
and consistent with the best interests of both Xoma and Pfizer.
SECTION 4.00 - PAYMENT PROCEDURES, REPORTS,
RECORDS, TAXES, AUDITING
4.01 Sales among Pfizer, its Affiliates and sublicensees shall not be
subject to royalties under Section 3.00 hereof but in such cases royalties shall
be calculated upon Production Margin using Pfizer's or its Affiliates' or
sublicensees' Net
-10-
Sales to an independent third party. Notwithstanding to the contrary any other
provisions of this Agreement, Pfizer shall be responsible for payment of any
royalties accrued on sales of Licensed Products to such independent third party
through Pfizer's Affiliates or sublicensees.
4.02 Pfizer shall pay to Xoma royalties on Production Margin for Net Sales
during each Payment Computation Period within sixty (60) days after the end of
each such Payment Computation Period, and each payment shall be accompanied by a
report identifying the Licensed Product, the Net Sales, Production Cost,
Production Margin and the royalties payable Xoma, as well as computation
thereof.
4.03 Payments shall be made in United States Dollars and shall be remitted
to Xoma at its address first specified above. Royalties shall be paid by the
company actually making the sale giving rise to the payment obligation. Such
payments shall be subject to applicable law and regulations existing at the
place of remittance (namely, the location of the company actually making the
sale giving rise to the payment obligation). Net Sales shall first be determined
in the currency in which such Licensed Products were sold and shall then be
converted into the equivalent amount of United States Dollars at (a) the
official closing rate two business days prior to the date of payment hereunder,
as established by the central bank or exchange control authorities in each such
country; or (b) if no such official rate is available or if conversion pursuant
to such official rate cannot be effectuated by the company making the sale
giving rise to the payment obligation, then at the closing rate two business
days prior to the date of payment hereunder, established by a leading commercial
bank (selected by Pfizer) in the relevant country; or (c) if such official or
commercial bank rates are not available, or if conversion pursuant to the
provisions of clauses (a) or (b) hereof cannot be effectuated, then at the
closing rate two business days prior to the date of payment her under as
established by Chase Manhattan Bank, N.A., New York, New York.
4.04 Any taxes required to be paid or withheld by Pfizer or its Affiliates
on account of amounts payable to Xoma under this Agreement shall be deducted
from the amounts due hereunder at the rates specified by applicable law. In
addition, Pfizer shall provide promptly to Xoma receipts from the government or
taxing authority evidencing payment of such taxes.
4.05 Pfizer shall keep full and accurate books and records setting forth
gross sales, Net Sales, Product Cost, Production Margin and amounts payable to
Xoma hereunder. Xoma shall have
-11-
the right, at its own expense, during the term of this Agreement (but not later
than five (5) years following the rendering of any such reports, accountings and
payments) and for one (1) year thereafter, to have an independent public
accountant, reasonably acceptable to Pfizer, examine the relevant financial
books and records of account of Pfizer at normal business hours, upon reasonable
demand, to determine or verify such reports, accounting and payments. If errors
of five percent (5%) or more in Xoma's favor are discovered as a result of such
examination, Pfizer shall reimburse Xoma for the expense of such examination. As
a condition to such examination, the independent public accountant selected by
Xoma shall execute a written agreement, reasonably satisfactory in form and
substance to Pfizer, to maintain in confidence all information obtained during
the course of any such examination except for disclosure to Xoma as necessary
for the above purpose. The opinion of such independent public accountant
regarding such reports accounting and payments shall be binding on the parties
hereto.
4.06 If at any time conditions or legal restrictions exist which conditions
or restrictions prevent the prompt remittance of the royalties due hereunder, or
if conversion into United States Dollars pursuant to the provisions of Section
4.03 hereof cannot be effectuated, the parties shall cooperate fully with each
other and make reasonable efforts to permit such remittance; if such efforts
shall be unsuccessful, Pfizer shall make such payments to Xoma within a
reasonable period of time.
SECTION 5.00 - DISCLOSURE OF INFORMATION AND CONFIDENTIALITY
5.01 Subject to the provisions of Section 5.4 of the R&D Agreement,
periodically during the term of this Agreement and at any time upon the
reasonable written request of Pfizer, Xoma shall disclose to Pfizer in
confidence, pursuant to Section 5.02 hereof, all Technical Information not
heretofore disclosed to Pfizer. Nothing however shall be deemed to require Xoma
to disclose to Pfizer any Technical Information which Xoma is, in good faith,
contractually prohibited from disclosing to third parties. All Technical
Information heretofore disclosed by Xoma to Pfizer shall be deemed to have been
disclosed pursuant to this Agreement and shall be subject to the provisions of
this Agreement, including but not limited to Section 5.02 hereof.
5.02 Pfizer and its Affiliates shall keep confidential and not use, except
as provided herein, in the R&D Agreement, Supply Agreement (if in effect), or as
contemplated in the Security Agreement, all Technical Information supplied in
writing by Xoma during the term of this Agreement and for ten
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(10) years after termination or expiration hereof; provided, however, that the
foregoing obligations of confidentiality and non-use shall not apply to the
extent that any Technical Information is demonstrated by written records to be
(a) already known to Pfizer or its Affiliates at the time of disclosure
hereunder or is hereafter developed by Pfizer or its Affiliates in the course of
work entirely independent of any disclosure hereunder; or (b) publicly known
prior to or after disclosure hereunder other than through acts or omissions of
Pfizer or its Affiliates; or (c) disclosed in good faith to Pfizer or its
Affiliates under a reasonable claim of right of which Pfizer is not aware of any
dispute; or (d) disclosed to third parties by Pfizer under a secrecy agreement
with essentially the same confidentiality provisions provided herein in
connection with the exercise of its rights under this Agreement, the R&D
Agreement, or the Supply Agreement (if in effect); or (e) disclosed by Pfizer in
connection with the exercise of its rights under the Security Agreement.
Notwithstanding to the contrary the foregoing, so long as Xoma shall be
supplying Pfizer with Products pursuant to the terms of the Supply Agreement,
prior to any disclosure of Technical Information regarding manufacturing or
production under circumstances described in the foregoing clause (d), Pfizer
shall notify Xoma of its proposed disclosure and shall not make any such
disclosure to any company as to which Xoma reasonably advises Pfizer, within 60
days of such notification, that there exists, in the reasonable business
judgment of Xoma, a substantial question as to whether such company can be
expected to comply with the provisions of such aforementioned secrecy agreement
relating to the confidential treatment of and restrictions as to the use of the
Technical Information. In addition, disclosure may be made (i) to governmental
agencies to the extent required or desirable to secure governmental approval for
marketing of any Licensed Product and (ii) to pre-clinical and clinical
investigators where necessary or desirable for their information to the extent
normal and usual in the custom of the trade and under a secrecy agreement with
essentially the same confidentiality provisions contained herein. Nothing herein
shall be construed to limit the right of clinical investigators from publishing
the results of their studies.
5.03 During the term of this Agreement Xoma shall keep confidential and not
disclose to others or use for any purpose, other than as authorized herein, any
Technical Information or any know-how, data and information directed to the
Products disclosed by Pfizer hereunder; provided, however, the foregoing
obligations of confidentiality and non-use shall not apply to the extent that
such Technical Information, know-how, data and information is: (a) solely with
respect to know-how, data or
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information disclosed to Xoma by Pfizer already known to Xoma at the time of
disclosure hereunder; or (b) publicly known prior to or after disclosure
hereunder other than through acts or omissions of Xoma or its employees; or (c)
disclosed in good faith to Xoma by a third party under a reasonable claim of
right; or (d) disclosed by Xoma to third parties under a secrecy agreement with
essentially the same confidentiality provisions provided herein with respect to
any Product in any Territory or country after such time as Pfizer has
surrendered the licenses granted hereunder pursuant to Section 2.00 hereof with
respect to such Territory or countries. In addition, disclosure may be made by
Xoma to third parties in order to fulfill Xoma's obligations under this
Agreement, the Supply Agreement or the R&D Agreement, provided that any such
disclosure shall be under a secrecy agreement with essentially the same
confidentiality provisions contained herein. In addition, disclosure may be made
by Xoma to governmental agencies to the extent required or desirable in exercise
of Xoma's rights hereunder, and to preclinical and clinical investigators where
necessary or desirable for their information to the extent normal and usual in
the custom of the trade and under a secrecy agreement with essentially the same
confidentiality provisions contained herein. Nothing herein shall be deemed to
limit the rights of clinical investigators from publishing the results of their
work. Nothing herein shall be deemed to limit Xoma's rights to use or license
any Technical Information or information, data or know-how generated by Xoma in
any manner not inconsistent with the licenses granted to Pfizer under this
Agreement.
5.04 In connection with the furnishing to Pfizer of Technical Information
hereunder, Xoma agrees, at the request of Pfizer, to allow Pfizer personnel to
visit manufacturing and research facilities of Xoma and to consult with Xoma
personnel, at mutually agreeable times, to discuss and review Xoma's Technical
Information. In addition, Xoma agrees, at the request and expense of Pfizer, to
permit personnel of Xoma to visit Pfizer's manufacturing and research
facilities, at mutually agreeable times, to discuss and review Xoma's Technical
Information.
5.05 Xoma agrees, upon the request of Pfizer, with respect to each Licensed
Product to give Pfizer copies of all submissions to or applications for
registration or approval by governmental health authorities (including, without
limitation all Product License Applications submitted to FDA). To the extent
legally possible, upon receipt by Xoma of any approvals by FDA of any Product
License Applications (including supplements thereto) covering any Licensed
Products, Xoma shall promptly assign to Pfizer such approved Product License
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Applications; provided, however, Xoma shall have such rights of reference and
other rights as shall be necessary or appropriate for Xoma to perform (and/or
subcontract) its obligations to supply Licensed Products to Pfizer under the
terms of the Supply Agreement. In addition, Xoma shall assign to Pfizer, upon
request of Pfizer, or if not legally possible, grant to Pfizer rights of
reference under, all other governmental approvals, permits or registrations held
by Xoma or its Affiliates necessary to market any Licensed Products; provided,
however, the foregoing does have material adverse consequences to Xoma's other
operations and provided that reversion thereof to Xoma is reasonably feasible.
All of the foregoing will be at Pfizer's expense, and Pfizer shall be
responsible for requisite documentation.
SECTION 6.00 - REDUCTION OF ROYALTIES
6.01 Royalties payable by Pfizer to Xoma under Section 3.00 hereof shall be
reduced or abated in their entirety, as the case may be, as follows:
(a) In the event of any patent infringement, royalties shall be
reduced as provided in Section 7.00 hereof.
(b) If Pfizer within any country in the Territory is required by a
final court order from which no appeal can be taken to obtain a license
under any patent not licensed hereunder in order to make, use or sell
Licensed Products and to pay a royalty under such license, and the
infringement of such patent cannot reasonably by avoided by Pfizer,
Pfizer's obligations to pay royalties under Section 3.01 hereof shall be
reduced with respect to Net Sales in such country by the amount of the
royalty payable by Pfizer under such additional license. Pfizer shall,
however, make a good faith attempt to negotiate the royalty rate and
calculation of royalties payable to such third parties with a view to
minimizing the royalty to be deducted under this Section 6.01(b). In the
event any such additional license shall be required for Territory A or any
three Selected Countries in Territory B, Pfizer's obligation to pay minimum
royalties under Section 3.03 hereof with respect to Net Sales in Territory
A or Territory B, as the case may be, shall be reduced by the amount of
royalties paid by Pfizer to such third party.
(c) If a third party obtains, by order, decree or grant from a
competent governmental authority in any country in the Territory, a
compulsory license under Licensed Patents authorizing such third party to
manufacture, use or sell any Licensed Product in such country, Xoma shall
give prompt notice to Pfizer. During the effective period of such
compulsory license, Pfizer's obligations to pay royalties under Section
3.01 hereof with respect to sales in such country for such Licensed Product
shall be reduced
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to a rate equivalent to the rate payable to Xoma by said third party, and
Pfizer's obligations to pay minimum royalties under Section 3.03 hereof
with respect to Net Sales in Territory A or Territory B, as the case may
be, shall be terminated for so long as such compulsory license shall affect
Territory A or any three Selected Countries in Territory B.
SECTION 7.00 - PATENTS
7.01 Xoma shall take all reasonable steps and pay all necessary expenses to
prosecute the patent applications listed in Appendix I and shall take all
reasonable steps and pay all expenses necessary to maintain for the full life
thereof all Licensed Patents, unless Xoma, in consultation with Pfizer, shall in
good faith determine that it is not in the best interests of both parties for
Xoma to continue such prosecution, take such steps, or make such payments.
Pfizer shall have the right, upon consultation with Xoma, to file on behalf of
and as agent for Xoma all applications and take all actions necessary to obtain
the benefits under the Drug Price Competition and Patent Term Restoration Act of
1984 and any amendments thereof. Xoma agrees to sign such further authorizations
and instruments and take such further actions as may be requested by Pfizer to
implement the foregoing.
7.02 If any claim relating to Licensed Patents becomes, within any country
in the Territory, the subject of a judgment, decree or decision of a court,
tribunal, or other authority of competent jurisdiction, which judgment, decree,
or decision is or becomes final (there being no further right of review) and
adjudicates the validity, enforceability, scope, or infringement of the same,
the construction of such claim in such judgment, decree or decision shall be
followed thereafter in such country in determining whether a product is licensed
hereunder, not only as to such claim but also as to all other claims to which
such construction reasonably applies. If at any time there are two or more
conflicting final judgments, decrees, or decisions with respect to the same
claim, the decision of the higher tribunal shall thereafter control, but if the
tribunal be of equal rank, then the final judgment, decree, or decision more
favorable to such claim shall control unless and until the majority of such
tribunals of equal rank adopt or follow a less favorable final judgment, decree,
or decision, in which event the latter shall control.
7.03 If any patent infringement action shall be brought within any country
in the Territory against Pfizer or any Affiliate or sublicensee because of the
manufacture, use or sale of Licensed Products, Pfizer shall promptly notify Xoma
thereof. Pfizer and Xoma shall cooperate with each other in connection with any
such action. Pfizer shall continue to pay
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royalties during the continuance of such infringement action and all appeals
thereof, provided that Pfizer or Xoma shall defend such action. If neither
Pfizer nor Xoma shall commence defense of such infringement action, upon request
by Pfizer to Xoma, then during the pendency of such infringement action,
Pfizer's obligations to pay royalties under Section 3.01 with respect to such
Licensed Product for sales in such country shall be suspended. In addition, if
such infringement action shall relate to Territory A or to any three Selected
Countries in Territory B, Pfizer's obligations to pay minimum royalties under
Section 3.03 for Net Sales in Territory A or Territory B, as the case may be,
shall be suspended during the continuance of such infringement action.
7.04 If any third party shall, in the reasonable opinion of Pfizer,
infringe any of the Licensed Patents, Pfizer shall promptly notify Xoma. Pfizer,
its Affiliates or sublicensees shall have the right to bring suit and to take
action in its own name or in the name of Xoma where necessary. Xoma and Pfizer
shall, at the other's request, take all action necessary to assist in such suits
(including joining as a party), and each party shall bear its own expenses
relating thereto. Any monetary recovery in connection with such infringement
action shall be first applied to reimburse Xoma and Pfizer. Any balance shall be
shared equally by Pfizer and Xoma. If such recovery is less than the
out-of-pocket expenses, reimbursement shall first be on a pro-rata basis. During
the pendency of any such action, regardless of whether Pfizer or Xoma shall
prosecute such action, Pfizer shall continue to pay royalties due under Section
3.01, but Pfizer's obligations to pay minimum royalties under Section 3.03 for
Net Sales in Territory A or Territory B, as the case may be, shall be suspended
if such infringement shall be occurring in Territory A or any three Selected
Countries of Territory B.
SECTION 8.00 - UNIVERSITY OF CALIFORNIA LICENSE
8.01 So as not to adversely affect Pfizer rights hereunder or under the R&D
Agreement, Xoma agrees during the term of this Agreement not to take any actions
to terminate or restrict its rights under the University of California License
as it relates to the Licensed Products, the Licensed Patents or Technical
Information and to discharge all of Xoma's material obligations and
responsibilities under the University of California License, including, without
limitation, making all required payments thereunder. In the event Xoma shall
receive any notice of default thereunder, Xoma shall promptly notify Pfizer. To
the extent, if any, Pfizer as Xoma's sublicensee shall have any obligations or
responsibilities to the University of California under the University of
California
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License resulting from Xoma's sublicense to Pfizer hereunder, Pfizer shall
diligently discharge such obligations and responsibilities. In the event Pfizer
shall be required to pay any royalties under the University of California
License or otherwise shall be required to make any payments to the University of
California with respect to the manufacture, use or sale of Licensed Products
which are the subject of the University of California License, Pfizer shall be
permitted to deduct such royalties from any royalties or other amounts due Xoma
hereunder.
SECTION 9.00 - TERM AND TERMINATION
9.01 This Agreement shall be effective as of the date first set forth above
and shall remain in effect for so long as Pfizer, its Affiliates or sublicensees
shall be obligated to make payments to Xoma under Section 3.00 hereof, unless
earlier terminated pursuant to this Section 9.00. Upon natural expiration of
this Agreement pursuant to this Section 9.01, the licenses granted to Pfizer
under Section 2.01 with respect to Technical Information shall be deemed to be
fully paid licenses. In addition, the provisions of Sections 5.02 and 10.00
hereof shall survive the expiration or any termination of this Agreement.
9.02 At any time, upon sixty (60) days' prior notice to Xoma, Pfizer shall
have the right, without cause at Pfizer's sole discretion, to terminate in full
this Agreement, whereupon this Agreement together with the R&D Agreement and
Supply Agreement (if still in effect) shall terminate sixty (60) days after the
date of such notice.
9.03 At any time Pfizer shall be permitted to terminate its rights and
licenses granted hereunder with respect to any Product as provided in Sections
6.1 and 10.2(a) of the R&D Agreement. In the event of such termination, all
licenses of Pfizer hereunder with respect to such Product shall terminate, and
Pfizer, at its expense, shall return to Xoma all Technical Information regarding
such Product (including all Product License Applications and all other rights
regarding such Product assigned to Pfizer hereunder.)
9.04 If either Pfizer or Xoma materially breaches or defaults in the
performance or observance of any of the provisions of this Agreement, and such
breach or default is not cured within ninety (90) days or, in the case of
failure to pay an amounts due hereunder, sixty (60) days after the giving of
notice by the other party specifying such breach or default, the other party
shall have the right to terminate this Agreement in full upon a further thirty
(30) days' notice.
9.05 Upon termination under Sections 9.02 or 9.04 hereof, or Section
10.3(b) of the R&D Agreement, or termination in full
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under Section 6.1 of the R&D Agreement, or termination by Pfizer under Section
10.3(c) of the R&D Agreement, and except as otherwise provided to the contrary
in the Security Agreement, all licenses of Pfizer hereunder shall terminate and
all obligations and restrictions upon Xoma shall terminate, and Pfizer shall, at
its expense, return to Xoma all Technical Information (including all Product
License Applications and all other rights assigned to Pfizer hereunder) and use
reasonable efforts to return to Xoma all copies thereof provided, however, none
of the provisions of this Section 9.05 shall apply in the event Pfizer shall
terminate this Agreement under Section 9.04 hereof for Xoma's breach of its
obligations under Section 2.01 hereof or if Pfizer shall terminate the R&D
Agreement under Section 10.3(c) thereof for Xoma's breach of its obligations
under Sections 4.1 or 4.2 of the R&D Agreement, and in each case the parties
shall have whatever rights and remedies are provided at law or in equity.
9.06 Termination of this Agreement for any reason shall be without
prejudice to:
(a) The rights and obligations of the parties provided in Sections 5.02 and
10.00 hereof.
(b) Xoma's right to receive all payments accrued under Section 3.00 hereof
prior to the effective date of such termination; and
(c) Any other remedies which either party may otherwise have.
SECTION 10.00 - INDEMNIFICATION
10.01 Except as otherwise provided in the Supply Agreement (if then in
effect), Xoma shall indemnify Pfizer against any and all liability, damages,
loss, cost and expenses, including reasonable attorneys' fees made against or
sustained by Pfizer or any of its Affiliates arising from the death of, or
bodily injury to, any person on account of the ingestion or use of any Licensed
Product (collectively "Pfizer Losses") to the extent such Pfizer Losses are
finally determined by a court of competent jurisdiction or by specific reference
in a settlement of litigation consented to by Xoma pursuant to Section 10.04 to
have been caused by Xoma's gross negligence or willful misconduct.
10.02 Except as otherwise provided in the Supply Agreement (if then in
effect), Pfizer shall indemnify Xoma against any and all liability, damages,
loss, cost and expenses, including reasonable attorneys' fees made against or
sustained by Xoma or any of its Affiliates arising from the death of, or bodily
injury to, any person on account of the ingestion or use of any Licensed Product
(collectively "Xoma Losses") to the extent
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such Xoma Losses are finally determined by a court of competent jurisdiction or
by specific reference in a settlement of litigation consented to by Pfizer
pursuant to Section 10.4 to have been caused by Pfizer's gross negligence or
willful misconduct.
10.03 The indemnities of Sections 10.01 and 10.02 shall not apply (i) if
the indemnified party fails to give the indemnifying party prompt notice of any
claim it receives and such failure materially prejudices the indemnifying party,
or (ii) unless the indemnifying party is given the opportunity to approve any
settlement, which approval shall not be unreasonably withheld. Furthermore, the
indemnifying party shall not be liable for attorneys' fees or expenses of
litigation of the indemnified party unless the indemnified party gives the
indemnifying party the opportunity to assume control of the defense or
settlement. In addition, if the indemnifying party assumes such control, it
shall only be responsible for the legal fees and litigation expenses of the
attorneys it designates to assume control of the litigation. In no event shall
the indemnifying party assume control of the defense of the indemnified party
without the consent of the indemnified party (which consent shall be given or
not at its sole discretion).
10.04 In no event shall the indemnified party be entitled to settle any of
the above-mentioned claims without the consent of the indemnifying party, which
consent shall not be unreasonably withheld.
10.05 To the extent the foregoing indemnities shall not be applicable, the
parties shall have such rights and remedies as provided by law.
SECTION 11.00 - MISCELLANEOUS
11.01 Force Majeure. No party shall be liable for failure of or delay in
performing obligations set forth in this Agreement, and no party shall be deemed
in breach of its obligations, if such failure or delay is due to natural
disasters or any causes reasonably beyond the control of such party.
11.02 Assignability. The Agreement may not be assigned by either party
without the prior consent of the other party; provided, however, (a) either
party may assign this Agreement to any entity which acquires substantially all
of its assets and business, and (b) Pfizer may assign this Agreement, in whole
or in part, to any Affiliate of Pfizer.
11.03 Pfizer Status. For the purpose of carrying out this Agreement Pfizer
shall act as an independent contractor and not as partner, joint venturer, or
agent and shall not bind nor attempt to bind Xoma to any contract.
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11.04 Notices. Any notice, consent or approval required under this
Agreement shall be in writing sent by registered or certified airmail, postage
prepaid, or by telex or cable (confirmed by such registered or certified mail)
and addressed as follows:
If to Pfizer: If to Xoma:
Pfizer Inc. Xoma Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telex: 420440 Telex: 856-697
Attention: General Counsel Attention: Chairman
All notices shall be deemed to be effective on the date of mailing. In case any
party changes its address at which notice is to be received, written notice of
such change shall be given without delay to the other party.
11.05 Entire Agreement. This Agreement together with the R&D Agreement, the
Supply Agreement and the Security Agreement and any other agreements referred to
in any of the foregoing set forth the entire agreement and understanding among
the parties hereto as to the subject matter hereof and has priority over all
documents, verbal consents or understandings made between Pfizer and Xoma before
the conclusion of this Agreement with respect to the subject matter hereof; none
of the terms of this Agreement shall be amended or modified except in writing
signed by the parties hereto.
11.06 Waivers. A waiver by any party of any term or condition of this
Agreement in any one instance shall not be deemed or construed to be a waiver of
such term or condition for any similar instance in the future or of any
subsequent breach hereof.
11.07 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without regard to the
conflicts of laws provisions thereof. The exclusive jurisdiction and venue of
any action with respect to this Agreement shall be the Superior Court of
California for the County of Alameda or the United States District Court for the
Northern District of California and each of the parties hereto submits itself to
the exclusive jurisdiction and venue of such courts for the purpose of any such
action. Service of process in any such action may be effected in the manner
provided in Section 11.04 for delivery of notices. The prevailing party in any
legal action to enforce or interpret this Agreement shall be entitled to costs
and attorney's fees.
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11.08 Remedies. The rights and remedies of a party set forth herein with
respect to failure of the other to comply with the terms of this Agreement
(including, without limitation, rights of full or partial termination of this
Agreement) are not exclusive, the exercise thereof shall not constitute an
election of remedies and the aggrieved party shall in all events be entitled to
seek whatever additional remedies may be available in law or in equity.
11.09 Security Agreement. Pfizer's rights under this Agreement are secured
pursuant to the terms of a Security Agreement, dated the date hereof, between
Pfizer and Xoma, and reference is made to said agreement for a description of
the terms thereof. Notwithstanding to the contrary any provision of this License
Agreement, nothing herein shall be deemed to restrict, limit, modify or alter
any of Pfizer's rights under the Security Agreement or derived upon or resulting
from the exercise of any rights or interests thereunder.
11.10 Other Products. During the term of this Agreement, Pfizer shall not
sell in any Territory or country in which Pfizer has licenses hereunder any
monoclonal-based antibody product for the treatment of Septic Shock other than
the Licensed Products, unless such other antibody product shall be substantially
different from and materially clinically superior to (for a clinically relevant
indication) any Licensed Product.
11.11 Headings. Headings in this Agreement are included herein for ease of
reference only and shall have no legal effect.
IN WITNESS WHEREOF, the parties hereto have caused this License Agreement
to be executed as of the date first written above by their duly authorized
officers.
XOMA CORPORATION
By /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman/ CEO
PFIZER INC.
By /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
APPENDIX I
LICENSED PATENTS
APPENDIX I
LICENSED PATENTS
I II III
US 06/855,878 (2) US 06/781,242 (1) US 06/855,878 (2)
(Plus
foreign
filings
listed
under
Col
I)
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇/▇▇ ▇▇ 06/855,878 (2) US 07/036,766 (3)
CANADA 519,066 U.S. 07/036,766 (3)
EUROPE 86306420.0
(10 EPO Countries)
IRELAND 2546/86
ISRAEL ▇▇▇▇▇
▇▇▇▇▇ 229481/86
KOREA ▇▇▇▇/▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ 86/7342
SPAIN 8602198
U.S. 07/036,766 (3)
----------
(1) Filing Date 9/27/84 (2) Filing Date 4/24/86 (3) Filing Date 4/10/87
SUPPLY AGREEMENT
This Agreement ("Agreement"), dated as of June 9, 1987, by and between XOMA
CORPORATION ("XOMA"), a Delaware corporation, and PFIZER INC. ("Pfizer"), a
Delaware corporation.
WITNESSETH:
WHEREAS, XOMA is engaged in research and clinical studies on monoclonal
antibody-based biological drug products; and
WHEREAS, Pfizer wishes to purchase certain of such products from XOMA in
bulk purified form, and XOMA is willing to supply Pfizer with such products.
NOW, THEREFORE, in consideration of the premises and the mutual promises
and covenants set forth below, XOMA and Pfizer mutually agree as follows:
ARTICLE I
DEFINITIONS
1.1 "Affiliate" shall mean (a) any company owned or controlled to the
extent of at least fifty percent (50%) of its issued and voting capital by a
party to this Agreement and any other company so owned or controlled (directly
or indirectly) by any such company or the owner of any such company, or (b) any
partnership, joint venture or other entity directly or indirectly controlled by,
controlling, or under common control of, to the extent of fifty percent (50%) or
more of voting power (or otherwise having power to control its general
activities), a party to this Agreement, but in each case only for so long as
such ownership or control shall continue.
1.2 "Agreement" shall mean this Supply Agreement, as amended from time to
time.
1.3 "Delivery Date" shall have the meaning set forth n Section 2.2. hereof.
1.4 "FDA" means the United States food and Drug Administration.
1.5 "First Commercial Sale" shall mean, as to each Product, the first
commercial sale by Pfizer, its Affiliates or sublicensees of such Product
following Product Approval.
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1.6 "Initial Term" shall have the meaning set forth in Section 5.1 hereof.
1.7 "License Agreement" means the agreement so named dated the date hereof
between Pfizer and XOMA.
1.8 "Manufacturing Cost" means XOMA'S manufacturing cost for each product
as determined pursuant to Exhibit I attached hereto and made a part hereof.
1.9 "Product" shall mean each subject product (as defined under the R.D&O
Agreement unless terminated thereunder) supplied hereunder by Xoma in purified
bulk form and meeting the specifications set forth in Exhibit II, attached
hereto and made a part hereof, as such Exhibit is amended by the parties from
time to time.
1.10 "Product Approval" means final FDA approval to market commercially in
the U.S.A. the specified Product for use in humans.
1.11 "R,D&O Agreement" means the Research, Development and Option Agreement
dated the day hereof between Pfizer and XOMA.
ARTICLE II
SALE AND PURCHASE OF PRODUCTS
2.1 Sale and Purchase. XOMA, within the limitations contained in this
Article, agrees to sell to Pfizer such quantities of Product as Pfizer may
require for sale pursuant to the License Agreement. Subject to the provisions of
Sections 4.1 and 5.1 hereof, so long as this Agreement shall remain in effect,
XOMA agrees to sell, and Pfizer agrees, for 100% of Pfizer's, its Affiliates'
and sublicensees' requirement of Product. It is understood that Xoma shall have
the right in connection with supply hereunder to contract with respect to
manufacture of Product with such third parties as Xoma deems advisable,
provided, however, Xoma shall remain fully responsible hereunder.
2.2 Quantity; Forecasts.
(a) With respect to each Project, Pfizer shall deliver to XOMA (i) at least
four (4) full calendar quarters prior to the calendar quarter in which the First
Commercial Sale of such Product is projected to occur, a forecast of Pfizer's
quantity requirements for such Product for the calendar quarter in which the
First Commercial Sale of such Product is projected to occur
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and (ii) at least one (1) full calendar quarter prior to the calendar quarter in
which the First Commercial Sale of such Product ("Delivery Date") for such
calendar quarter and a forecast of its quantity requirements for such Product
for the three (3) following calendar quarters. Thereafter, Pfizer shall deliver
to XOMA at or prior to the end of each calendar quarter, Pfizer's firm order and
Delivery Date for such Product for the second calendar quarter following such
calendar quarter and a forecast of its quantity requirements for such Product
for the three (3) following calendar quarters.
For purposes of illustration only, on or before September 30, 1987, Pfizer
must give to XOMA its firm order for delivery of Product in the first calendar
quarter of 1988 and a forecast of its requirements for the second, third and
fourth quarters of 1988. On or before December 31, 1987, Pfizer must give XOMA
its firm order for delivery of Product in the second quarter of 1988, updated
forecasts of its requirements for the third and fourth quarter of 1988 and a
forecast of its requirements for the first quarter of 1989.
(b) For each quarterly forecast of Product, the amount of Product
forecasted for delivery in the first of the three calendar quarters forecasted
shall be not less than fifty percent (50%) or more than one hundred fifty
percent (150%) of the most recent previous forecast for such quarter.
(c) The total amount of each Product ordered by Pfizer for delivery in any
one calendar quarter may not be less than seventy-five percent (75%) of Pfizer's
most recent forecast of its requirements for such Product for such quarter. In
addition, XOMA will not be obligated to supply more than one hundred twenty-five
percent (125%) of Pfizer's most recent forecast of its requirements for such
product for such quarter. If a Pfizer product requirement for any quarter
exceeds 125% of Pfizer's most recent forecast of its requirements for such
Product for such calendar quarter, XOMA and Pfizer will discuss in good faith
the additional amount which XOMA will be able to supply consistent with its
other obligations and Pfizer will adjust its order accordingly (however,
Pfizer's orders will have first priority on equipment funded under the Credit
Agreement between the parties of even date herewith). Pfizer shall indemnify
XOMA and reimburse it promptly upon request for all reasonable out of pocket
costs and expenses, including the cost of carrying increased inventory, to the
extent caused by any deviation in order quantities from the limits imposed by
the preceding sentence, and XOMA will act reasonably to mitigate any such costs
and expenses.
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2.3 Delivery.
(a) XOMA shall, subject to the terms of this Agreement, deliver to Pfizer
all Product ordered by Pfizer. All Products delivered to Pfizer shall be F.O.B.
XOMA's plant or other place of shipment. XOMA shall use its reasonable best
efforts to assist Pfizer in arranging any desired insurance (in amounts that
Pfizer shall determine) and transportation, via air freight unless otherwise
specified in writing, to any destinations specified in writing from time to time
by Pfizer. All customs, duties, costs, taxes, insurance premiums, and other
expenses relating to such transportation and delivery, shall be at Pfizer's
expense.
(b) XOMA will package the Products in accordance with the specifications
set forth in Exhibit II hereto.
2.4 Rejection of Product in Case of Nonconformity.
(a) Pfizer may reject any shipment of Product which is (i) not conforming
with the specifications contained in Exhibit II or (ii) adulterated or
misbranded within the meaning of the Federal, Food, Drug and Cosmetic Act (the
"Act"). In order to reject a shipment, Pfizer must (i) give notice to XOMA of
Pfizer's intent to reject the shipment within thirty (30) days of receipt
together with an indication of the reasons for such possible rejection, and (ii)
as promptly as reasonably possible thereafter, provide XOMA with notice of final
rejection and the full basis therefor. After notice of intention to reject is
given, Pfizer shall be deemed to have accepted such delivery of Product,
provided, however, in the case of products having latent defects which upon
diligent examination by Pfizer upon receipt could not have been discovered,
Pfizer must give notice of Pfizer's intent to reject within thirty (30) days
after discovery of such defects.
In any event, Pfizer shall pay for the shipment as otherwise provided
herein and shall be entitled to a refund of the purchase price (together with
insurance and freight charges) of rejected Products at the time they are
ultimately rejected, provided that if XOMA disputes the rejection, refund shall
be made at the time the dispute is finally resolved. XOMA shall notify Pfizer as
promptly as reasonably possible whether it accepts Pfizer's basis for any
rejection.
(b) Whether or not XOMA accepts Pfizer's basis for rejection, promptly on
receipt of a notice of rejection, XOMA
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shall use its reasonable efforts, at Pfizer's request, to provide replacement
Product which shall be purchased by Pfizer as provided hereunder.
(c) Unless XOMA requests the return to it of a rejected batch within sixty
(60) days of receipt of Pfizer's notice of rejection, Pfizer shall destroy such
batch promptly and provide XOMA with certification of such destruction. Pfizer
shall, upon receipt of XOMA's request for return, promptly dispatch said batch
to XOMA, at XOMA's cost.
ARTICLE III
PRICE AND PAYMENTS
3.1 Price. Pfizer shall pay to XOMA for Product purchased hereunder an
amount equal to [*] or such amount as determined under Section 4.1(a) hereof.
3.2 Method of Payment. All payments due hereunder to XOMA shall be paid to
XOMA in United States dollars not later than thirty (30) days following the date
of the applicable invoice.
3.3 Examination of Books. Pfizer shall have the right, at its own expense,
for any period during which Product is purchased by Pfizer hereunder and for one
(1) year thereafter, to have an independent public accountant, reasonably
acceptable to XOMA, examine the relevant financial books and records of account
of XOMA at normal business hours, upon reasonable demand, to determine or verify
the appropriate manufacturing Cost of Product purchased hereunder. If errors of
five percent (5%) or more in Pfizer's favor are discovered as a result of such
examination, XOMA shall reimburse Pfizer for the expense of such examination. As
a condition to such examination, the independent public accountant selected by
Pfizer shall execute a written agreement, reasonably satisfactory in form and
substance to XOMA, to maintain in confidence all information obtained during the
course of any such examination except for disclosure to Pfizer as necessary for
the above purpose. The opinion of such independent public accountant shall be
binding on the parties hereto with respect to Manufacturing Cost hereunder.
ARTICLE IV
SUPPLY OBLIGATION
4.1 Termination of Supply Obligations, Breach of Delivery Obligation. In
addition to any Termination of this Agreement
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under Article V hereof, this Agreement shall terminate as follows:
(a) If at any time after the Initial Term Pfizer notifies XOMA that Pfizer
has received a good faith firm quote from a reputable third party supplier of
recognized standing (other than an Affiliate) to supply Pfizer for a period of
at least two years with all Pfizer's requirements of any Product at a price
which is less than 75% of XOMA's then current transfer price to Pfizer of such
product, XOMA shall have sixty (60) days after receipt of such notice to notify
Pfizer that XOMA intends or does not intend to reduce its then applicable
transfer price of such Product to a price no greater than 125% of the third
party quoted price effective upon the expiration of such 60-day period. If XOMA
fails to give such notice or notifies Pfizer that it does not intend to so
reduce its then applicable transfer price of such Product, Pfizer may, upon
thirty (30) day's prior notice to XOMA, elect to terminate its obligations
hereunder to purchase, and XOMA's obligations to supply, such product.
Notwithstanding the foregoing, Pfizer shall have not rights under this Section
4.1(a) if the third party quote is given in connection with or in anticipation
of some other relationship with Pfizer.
(b) If XOMA materially fails to deliver the amount of any Product ordered
by Pfizer as required hereunder for any reason, including force majeure, or XOMA
fails to deliver Product conforming to the warranties set forth in Section 6.1
hereof, in each case for ninety (90) or more consecutive days, then Pfizer may
upon twenty (20) days prior notice to XOMA elect to terminate Pfizer's
obligations to purchase, and XOMA's obligations to supply, such Product
hereunder. Except as otherwise expressly provided in Section 6.2 hereof, and
except in the case where XOMA has generally not been attempting in good faith to
meet its supply obligations, the foregoing shall be Pfizer's sole remedy for
breach of warranty or for failure of XOMA to supply products hereunder.
ARTICLE V
TERMINATION, RIGHTS AND OBLIGATIONS UPON TERMINATION
5.1 Term. Unless termination for any particular Product pursuant to
Sections 4.1(a) or 4.1(b) hereof or by either party pursuant to the other
provisions of this Article v, this Agreement shall continue in effect for a
period of three (3) years from the date of First Commercial Sale of the first
Product supplied hereunder (the `Initial Term"), and shall thereafter remain in
effect until terminated by XOMA upon at least one (1) year prior notice to
Pfizer (which notice may be given any time after the second year of the Initial
Term). In addition, Pfizer shall have the right at any time after the Initial
Term to terminate this Agreement upon three years' prior notice (given after the
Initial
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Term)to XOMA, provided however, Pfizer shall be required to purchase from Xoma
100% of its requirements and those of its Affiliates and sublicensees in the
first year after said notice, 50% of such requirements in the second such year
and 25% of such requirement in the third such year provided further that XOMA
shall have the right, by notice given to Pfizer not more than 60 days after the
date of any Pfizer notice of termination under this Section 5.1, to decline to
supply any Product in the second and third year after the date of Pfizer's
termination notice.
5.2 Termination by Mutual Agreement. This Agreement may be terminated upon
mutual written agreement between the parties.
5.3 Termination by Default. If either party materially defaults in the
performance of any materials agreement, condition or covenant of this Agreement,
the R,D&O Agreement or the License Agreement, and such default or noncompliance
shall not have been remedied, or steps initiated to remedy the same to the other
party's reasonable satisfaction, within ninety (90) days after receipt by the
defaulting party of a notice thereof from the other party, the party not in
default may terminate this Agreement.
5.4 Termination of License Rights. In the event any Product supplied
hereunder shall no longer be a Licensed Product under the License Agreement or
Pfizer's license with respect thereto under the License Agreement is no longer
in effect, then Pfizer's obligations to purchase and XOMA's obligation to supply
such Product hereunder shall terminate.
5.5 Rights and Obligations on Term, Termination or Suspension. Unless
expressly provided to the contrary, the following provisions shall survive the
termination of this Agreement: Article III, the last sentence of Section 4.1(b),
this Section 5.5 and Article VI. Any rights of XOMA to payments accrued through
termination as well as obligations of the parties under firm orders for purchase
and delivery of Products at the time of such termination shall remain in effect.
ARTICLE VI
WARRANTY AND INDEMNIFICATION
6.1 Warranties. XOMA warrants that the Products, when shipped to Pfizer by
XOMA, (i) will conform in all respects to the specifications set forth on
Exhibit II, as then in effect, and (ii) will not be adulterated or misbranded
within the meaning of the Act. PFIZER'S SOLE AND EXCLUSIVE REMEDY FOR ANY BREACH
OF THE FOREGOING WARRANTIES SHALL BE ITS RIGHTS UNDER SECTIONS 2.4, 4.1(B) and
6.2 HEREOF. EXCEPT FOR THE FOREGOING WARRANTIES, XOMA DOES NOT WARRANT THE
MERCHANTABILITY OR
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FITNESS FOR A PARTICULAR PURPOSE OF THE PRODUCTS OR THE PERFORMANCE THEREOF,
DOES NOT MAKE ANY WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO PRODUCTS,
SPECIFICATION, SUPPORT, SERVICE OR ANYTHING ELSE AND DOES NOT MAKE ANY WARRANTY
TO PFIZER'S CUSTOMERS OR AGENTS. XOMA HAS NOT AUTHORIZED ANYONE TO MAKE ANY
REPRESENTATION OR WARRANTY OTHER THAN AS PROVIDED ABOVE. THE FOREGOING
LIMITATIONS OF WARRANTIES SHALL NOT IN ANY WAY LIMIT PFIZER'S RIGHTS UNDER
SECTION 6.2 HEREOF.
6.2 XOMA Indemnification.
(a) XOMA shall indemnify Pfizer against any and all liability, damages,
loss, cost and expenses, including reasonable attorneys' fees made against or
sustained by Pfizer or any of its Affiliates arising from the death of, or
bodily injury to, any person on account of the ingestion or use of any Product,
and any reasonable out-of-pocket costs to Pfizer and its Affiliates of the
recall of any Product (collectively "Pfizer Losses") to the extent (i) such
Pfizer Losses are finally determined by a court of competent jurisdiction or by
specific reference in a settlement of litigation consented to by XOMA pursuant
to Section 6.5 to have been caused by XOMA's failure to deliver such Product in
accordance with XOMA's warranties as provided in this Agreement or (ii) such
Pfizer Losses are finally determined by a court of competent jurisdiction or by
specific reference in a settlement of litigation consented to by XOMA pursuant
to Section 6.5 to have been caused by XOMA's gross negligence or willful
misconduct.
(b) In addition to indemnification pursuant to Section 6.2(a)hereof, and
except in cases where Xoma is entitled to indemnification under 6.3(a0 hereof,
XOMA shall further indemnify Pfizer for any and all Pfizer Losses arising from
the death of, or bodily injury to, any person on account of the ingestion or use
of any Product to the extent such Pfizer Losses are finally determined by a
court of competent jurisdiction or by XOMA pursuant to Section 6.5 to have been
caused other than by Pfizer's gross negligence or willful misconduct, and then
(i) with respect to each such incident to the extent of the first $1,000,00 of
XOMA's insurance coverage for such Losses, and (ii) to the extent any Pfizer
Losses exceed Pfizer's recovery pursuant to such insurance, XOMA's
indemnification shall be to the extent of the lesser of (a) such excess Pfizer
Loses or (b) one-half of the aggregate of such excess Pfizer Losses and related
Xoma Losses referred to in Section 6.3(b) hereof. XOMA agrees to use its best
efforts to procure and, at all times during the term of this Agreement and for a
period of three (3) years after the termination hereof, to maintain in full
force and effect liability insurance coverage of at least $1,000,000 per
occurrence (with a deductible of no more than $250,000 aggregate per year
-9-
with Pfizer as a named insured party as provided herein). Such insurance
shall cover any and all Pfizer Losses (as provided herein for which
indemnification is provided by this Section 6.2(b)) and Xoma's contractual
liability hereunder to indemnify Pfizer as provided in this Section 6.2(b), in
each case to the extent such insurance coverage in such amount is obtainable at
premiums which are reasonable in the reasonable good faith judgment of XOMA.
Xoma, upon request of Pfizer, will supply Pfizer with appropriate certificates
of insurance evidencing the foregoing insurance.
6.3 Pfizer Indemnification.
(a) Pfizer shall indemnify XOMA against any and all liability, damages,
loss, cost and expenses, including reasonable attorneys' fees made against or
sustained by XOMA or any of its Affiliates arising from the death of, or bodily
injury to, any person on account of the ingestion or use of any Product
(collectively "XOMA Losses") to the extent such XOMA Losses are finally
determined by a court of competent jurisdiction or by specific reference in a
settlement of litigation consented to by Pfizer pursuant to Section 6.5 to have
been caused by Pfizer's gross negligence or willful misconduct.
(b) In addition to indemnification pursuant to Section 6.3(a) hereof, and
except in cases where Pfizer is entitled to indemnification under Section 6.2(a)
hereof, Pfizer shall further indemnify XOMA for any and all XOMA Losses arising
from the death of, or bodily injury to, any person on account of the ingestion
or use of any Product to the extent such XOMA Losses are finally determined by a
court of competent jurisdiction or by specific reference in a settlement of
litigation consented to by Pfizer pursuant to Section 6.5 to have been caused
other than by XOMA's gross negligence or willful misconduct, and then with
respect to each incident to the extent of the lesser of (a) such XOMA Losses or
(b) one-half of the aggregate of such XOMA Losses and the related Pfizer Loses
referred to in Section 6.2(b) hereof which are in excess of the recovery by
Pfizer under the XOMA insurance policy pursuant to Section 6.2(b) hereof.
6.4 Limitations to Indemnity. The indemnities of Sections 6.2 and 6.3 shall
not apply (i) if the indemnified party fails to give the indemnifying party
prompt notice of any claim it receives and such failure materially prejudices
the indemnifying party, or (ii) unless the indemnifying party is given the
opportunity to approve any settlement, which approval shall not be unreasonably
withheld. Furthermore, the indemnifying party shall not be liable for attorneys'
fees or expenses of litigation of the indemnified party unless the indemnified
party gives the indemnifying party the opportunity to assume control of the
defense or settlement. In addition, if the indemnifying party assumes such
control, it shall only be responsible for the legal fees and litigation expenses
of the attorneys it designates to assume control of the litigation. In no event
shall the indemnifying party assume control of the defense of the indemnified
party without the consent of the indemnified party (which consent shall be given
or not at its sole discretion).
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6.5 Settlement. In no event shall the indemnified party be entitled to
settle any of the above-mentioned claims without the consent of the indemnifying
party, which consent shall not be unreasonably withheld.
ARTICLE VII
MISCELLANEOUS
7.1 Entire Agreement. This Agreement contains the entire agreement of the
parties regarding the subject matter hereof and, together with the License
Agreement, R,D&O Agreement and all other agreements referred to therein,
supersede all prior agreements, understandings and negotiations regarding the
same. This Agreement may not be changed, modified, amended or supplemented
except by a written instrument signed by both parties.
7.2 Assignability. This Agreement may not be assigned by either party
without the prior consent of the other party; provided, however, (a) either
party may assign this Agreement to any entity which acquires substantially all
of its assets and business, and (b) Pfizer may assign this Agreement, in whole
or in part, to any Affiliate of Pfizer.
7.3 Severability. If any part of this Agreement shall be held
unenforceable, the remainder of the Agreement shall nevertheless remain in full
force and effect.
7.4 Further Assurances. Each party hereto agrees to execute, acknowledge
and deliver such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.
7.5 Use of Party's Name. No right, express or implied, is granted by this
Agreement to either party to use in any manner the name of the other or any
other trade name or trademark of the other in connection with the performance of
this Agreement.
7.6 Notice and Reports. All notices, consents or approvals required by this
Agreement shall be in writing sent by certified or registered air mail, postage
prepaid or by telex or cable (confirmed by such certified or registered mail) to
the parties at the following addresses or such other addresses as may be
designated in writing by the respective parties:
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To XOMA: XOMA Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chairman
Telex: 856-697
To Pfizer: Pfizer Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telex: 420440
Notices shall be deemed effective on the date of the mailing.
7.7 Relationships of the Parties. Both parties are independent contractors
under this Agreement. Nothing contained in this Agreement is intended nor is to
be construed so as to constitute XOMA and Pfizer as partners or joint venturers
with respect to this Agreement. Neither party hereto shall have any express or
implied right or authority to assume or create any obligations on behalf of or
in the name of the other party or to bind the other party to any contract,
agreement or undertaking with any third party.
7.8 Waiver. The waiver by either party of a breach of any provisions
contained herein shall be in writing and shall in no way be construed as a
waiver of any succeeding breach of such provision of the waiver of the provision
itself.
7.9 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without regard to the
conflicts of laws provisions thereof. The exclusive jurisdiction and venue of
any action with respect to this Agreement shall be the Superior Court of
California for the County of Alameda or the United States District Court for the
Northern District of California and each of the parties hereto submits itself to
the exclusive jurisdiction and venue of such courts for the purpose of nay such
action. Service or process in any such action may be effected in the manner
provided in Section 7.6 for delivery of notices. The prevailing party in any
legal action to enforce or interpret this Agreement shall be entitled to
reasonable costs and attorney's fees.
7.10 Captions. Paragraph captions are inserted for convenience only and in
no way are3 construed to define, limit or affect the construction or
interpretation hereof.
7.11 Force Majeure. A party shall not be liable for nonperformance or delay
in performance caused by any event
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reasonably beyond the control of such party including, but not limited to wars,
hostilities, revolutions, riots, civil commotion, national emergency strikes,
lockouts, unavailability of supplies, epidemics, fire, flood, earthquake, force
of nature, explosion, embargo, or any other Act of God, or any law,
proclamation, regulation, ordinance, or other act or order of any court,
government or governmental agency.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
effective as of the date first written above.
XOMA Corporation PFIZER INC.
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title Chairman/CEO Title Vice President
EXHIBIT I
MANUFACTURING COST
EXHIBIT I
MANUFACTURING COSTS
Xoma will provide the Product to Pfizer at its direct cost of production as
evidenced by written records plus a reasonable allowance for manufacturing
overhead based on utilization of the facility for the Product as a percentage of
capacity as follows:
Direct Costs of Production
Labor - Actual cost of labor incurred for production of the Product.
Materials - Actual cost of materials consumed in the manufacture of the
Product
Quality Control - Actual cost of labor hours and supplies used in the
testing and inspection of the Product.
Manufacturing Overhead
The cost of required manufacturing support services and supplies. Product
cost will include the percentages of these costs that the product
represents as a percentage of total production capacity for the year.
Pfizer and Xoma will use their best efforts to develop these percentages at
the time the PLA is filed with the FDA and annually thereafter. If the
parties are unable to agree upon such total production capacity or the
relevant percentages for the Product, the parties agree to submit a
determination to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Company for resolution of any such
matter which shall be binding on the parties.
These costs include:
Manufacturing supervision and management
Facility and Occupancy Costs
- Depreciation of leasehold improvements, machinery and equipment used
in manufacturing the Product.
- Utilities
- Material handling
- Supplies
- Clerical Support
EXHIBIT II
PRODUCT SPECIFICATIONS
To be agreed upon.
SECURITY AGREEMENT
This SECURITY AGREEMENT (this "Security Agreement"), dated as of June 9 ,
1987, by and between Pfizer Inc. , a Delaware corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("Pfizer"), and Xoma Corporation, a Delaware
corporation, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Xoma").
WHEREAS, Pfizer and Xoma have entered into a License Agreement (the
"License Agreement") and a Research, Development and Option Agreement (the "R&D
Agreement"), both dated the date hereof (the License Agreement and the R&D
Agreement shall be referred to collectively as the "Agreements"), which
memorialize Xoma's agreement to grant Pfizer certain rights and options
regarding monoclonal antibodies that have been researched and developed by Xoma
and the products relating to such monoclonal antibodies; and
WHEREAS, Xoma has agreed to secure the full and complete performance of
certain of its obligations and agreements to Pfizer under the Agreements and
this Security Agreement and the payment of any claims arising thereunder by
executing this Security Agreement, which grants to Pfizer certain hereinafter
defined security interests.
NOW, THEREFORE, Pfizer and Xoma, in consideration of their respective
obligations and agreements stated in the Agreements and for other good and
valuable consideration, the
2
receipt and sufficiency of which are hereby acknowledged, agree as follows:
1. For purposes of this Security Agreement, the following terms shall have
the meanings set forth below:
(a) "Affiliate" means (a) any company owned or controlled to the extent of
at least fifty percent (50%) of its issued and voting capital by a party to this
Security Agreement and any other company so owned or controlled (directly or
indirectly) by any such company or the owner of any such company, or (b) any
partnership, joint venture or other entity directly or indirectly controlled by,
controlling, or under common control of, to the extent of fifty percent (50%) or
more of voting power (or otherwise having power to control its general
activities), a party to this Security Agreement, but in each case only for so
long as such ownership or control shall continue.
(b) "E5 Product" means any product for human and/or animal therapeutic or
prophylactic use, now or hereafter developed by Xoma, which is produced (or
susceptible of being produced) from or incorporates any antibody (including
Fragments thereof as hereinafter defined) secreted from the E5 Cell Line (as
hereinafter defined) or any other cell line capable of producing said antibody,
or which product is chemically, organically, biologically or synthetically
derived from or based upon any such antibody, in each case (i) either alone or
in combination with any other therapeutic agent and (ii) together with all
pharmaceutical compositions and dosage
3
units thereof. For the purposes of this Section 1(b), the term "Fragments" shall
mean any part or parts of any said antibody chemically, biologically or
organically obtained from said antibody, or synthetically produced, and which
mimics the biological behavior of said antibody. For purposes of this Section
1(b), the term "E5 Cell Line" shall mean the cell line described as a murine
hybridoma as identified by American Type Culture Collection No. HB 9081 and
mutants and genetically manipulated variants thereof.
(c) "FDA" means the United States Food and Drug Administration or any
successor governmental agency performing similar functions.
(d) "Other Antibody Product" means any product for human and/or animal
therapeutic or prophylactic use, now or hereafter developed by Xoma, which is
produced (or susceptible of being produced) from, or incorporates any antibodies
(including Fragments thereof as hereinafter defined) secreted from the J5D4 Cell
Line and/or PCB5 Cell Line (as hereinafter defined) or any other cell lines
capable of producing any such antibodies, or which product is chemically,
organically, biologically or synthetically derived from or based upon any such
antibodies, in each case (i) either alone or in combination with any other
therapeutic agent and (ii) together with all pharmaceutical compositions and
dosage units thereof. For purposes of this Section 1(d), the term "Fragments"
shall mean any part or parts of any said antibodies chemically, biologically or
organically obtained from said antibodies, or
4
synthetically produced, and which mimics the biological behavior of said
antibodies. For purposes of this Section 1(d), the term "J5D4 Cell Line" shall
mean the cell line described as a murine hybridoma as identified by American
Type Culture Collection No. HB 9083 and mutants and genetically manipulated
variants thereof; and the term "PCB5 Cell Line" shall mean the cell line
described as a murine hybridoma as identified by American Type Culture
Collection No. HB 8909 and mutants and genetically manipulated variants thereof.
(e) "Other Septic Shock Product" means any product, now or hereafter
developed by Xoma, for the treatment, cure or prevention of Septic Shock, other
than any E5 Product or any Other Antibody Product.
(f) "Patents" means (i) all patents listed in Appendix A, annexed hereto
and made a part hereof, and any patents which may issue from the applications
listed on Appendix A, in each case together with any divisionals, continuations,
continuations-in-part, reissues, patents of addition and extensions thereof, and
(ii) all other patents and applications in the Territory now owned or controlled
by, or licensed to, or hereafter during the term of this Security Agreement
owned or controlled by, or licensed to, Xoma that are used in or related to any
E5 Product, Other Antibody Product, and/or Other Septic Shock Product or methods
of use or manufacturing processes for any E5 Product, Other Antibody
5
Product, and/or Other Septic Shock Product, together with any divisionals,
continuations, continuations-in-part, reissues, patents of addition and
extensions thereof.
(g) "PLA" means a Product License Application or such other application as
shall be required to obtain Product Approval for any E5 Product, Other Antibody
Product, and/or Other Septic Shock Product.
(h) "PLA Submission" means the submission to FDA by Xoma of a PLA which has
been prepared in good faith by Xoma in a reasonable manner to comply with FDA
requirements necessary to obtain Product Approval.
(i) "Product Approval" means final FDA approval to market commercially in
the U.S.A the specified product for use in humans.
(j) "Septic Shock" means endotoxin mediated complications of gram negative
bacterial sepsis.
(k) "Supply Agreement" means the agreement so named of even date herewith
between Pfizer and Xoma.
(l) "Technical Information" means all of Xoma's trade secrets, information,
and know-how, now owned, licensed or controlled or hereafter acquired,
developed, owned, licensed or controlled by Xoma during the term of this
Security Agreement, with respect to (i) the medical, clinical, toxicological or
other scientific data or information used in or related to any E5 Product, Other
Antibody Product, and/or Other Septic Shock
6
Product (including, without limitation, pre-clinical and clinical data, notes,
reports, models, and samples) and (ii) the manufacture, production, and
purification procedures and processes, as well as analytical methodology, used
in or related to the testing, assaying, analysis, production, and packaging of
any E5 Product, Other Antibody Product, and/or Other Septic Shock Product.
Technical Information shall also include: (i) Xoma's actual cell lines and
hybridomas used or useful in the production of any E5 Product, Other Antibody
Product, and/or Other Septic Shock Product and (ii) Xoma's other general
intangibles (excluding rights to payment), information, and non-patent
proprietary rights (to the extent not already included in this definition of
Technical Information) arising out of, used in or related to any E5 Product,
Other Antibody Product, and/or Other Septic Shock Product.
(m) "Territory" means all countries of the world.
(n) "University of California License" means the License Agreement for
Monoclonal Antibodies to Gram Negative Sepsis-Related Bacteria and Human
Diagnostics and Therapeutics Derived Therefrom, effective September 3, 1986,
between Xoma and The Regents of the University of California.
2. In addition to the definitions stated in Section 1 of this Security
Agreement, the term "Security", for the purposes of this Security Agreement,
means, collectively, the following property of Xoma to the full extent of Xoma's
rights and interests therein, now owned, licensed or controlled or
7
hereafter acquired, owned or controlled by Xoma, and any proceeds of such
property: (a) all Technical Information, (b) all Patents, (c) all licenses (and
sublicenses) that have been granted to or by Xoma that are used in or related to
any E5 Product, Other Antibody Product, and/or Other Septic Shock Product
including, without limitation, the University of California License (the
property described in this Subsection (c) shall be referred to collectively as
the "Licenses"; for the purposes of this Security Agreement the terms
sublicense, sublicensee and sublicensed are included and encompassed within the
terms license, licensee, and licensed, respectively), (d) all information,
applications, instruments, authorizations, and other property of Xoma that would
be required to be submitted to any governmental agency in the Territory in order
to be granted permission or authority to manufacture, produce or sell any E5
Product, Other Antibody Product, and/or Other Septic Shock Product including,
without limitation, the information, applications, instruments, authorizations,
and other property of Xoma used in or related to any Product Approval, PLA or
PLA Submission, (e) all approvals, consents, permits, product license
applications, and authorizations of Xoma (or received by or granted to Xoma) to
manufacture, produce or sell any E5 Product, Other Antibody Product, and/or
Other Septic Shock Product including, without limitation, any "orphan drug
designation" under Section 526 of the Federal Food, Drug and Cosmetic Act, as
amended, or any other similar legislation in the Territory, (f) all claims,
causes of action, and lawsuits
8
belonging to Xoma arising from, related to or connected with the Technical
Information, the Patents, and/or the Licenses; provided, however, Xoma may
handle such claims, causes of action, and lawsuits in a manner that those
claims, causes of action, and lawsuits included and encompassed within the
Security are separate and segregatable from those that relate to Xoma's
properties that are not Security, and this Subsection (f) shall not be deemed to
convert assets that are not Security into Security merely because any claims,
causes of action or lawsuits are combined into one lawsuit, (g) the equipment of
Xoma described in Appendix B, annexed hereto and made a part hereof
(collectively the "Equipment"), and (h) all of Xoma's inventory of (i) E5
Products, Other Antibody Products, and Other Septic Shock Products (including,
without limitation, the purified active bulk of any E5 Product, Other Antibody
Product, and/or Other Septic Shock Product) and (ii) the actual cell lines used
in or related to the manufacture, production and purification of E5 Products,
Other Antibody Products, and Other Septic Shock Products.
For purposes of this Security Agreement, the term "proceeds" includes,
without limitation, whatever is receivable or received when the Security or
proceeds of such Security is sold, licensed, collected, exchanged or otherwise
disposed of, whether such disposition is voluntary or involuntary, and includes,
without limitation, all proceeds consisting of receivables, accounts, general
intangibles, documents, instruments, chattel paper, rights to payment, money,
contract
9
or license rights, notes, proceeds, products, revenues, and returned premiums
with respect to any insurance related thereto.
For purposes of this Security Agreement, Security shall constitute "Foreign
Security" to the extent that the perfection or priority of Pfizer's security
interests and liens (or any other rights or interests to be acquired by Pfizer
under this Security Agreement) in the Security is not governed by the law of the
United States or any political subdivision within the United States (hereinafter
the laws of any jurisdiction other than the United States or any political
subdivision within the United States shall be referred to collectively as the
"Foreign Laws").
3. As security for Xoma's full and complete performance of its agreements
and obligations to Pfizer under the Agreements and this Security Agreement and
the payment of any claims arising under the Agreements and this Security
Agreement (collectively the "Secured Obligations"), Xoma hereby grants to Pfizer
a security interest in the Security (including, without limitation, the Foreign
Security), wherever located or situated in the Territory, and the proceeds
thereof; provided, however, nothing in this Security Agreement shall be deemed
(i) to cause the Foreign Security not to be included or encompassed within the
Security or not to be subject to the rights or interests granted to Pfizer
pursuant to this Security Agreement or (ii) to require Xoma to suffer or permit
disclosure of any document, information or asset to Pfizer of
10
any other party in violation of any license agreement or other contract or
obligation of Xoma.
4. Xoma represents and warrants to Pfizer as of the date of this Agreement
as follows: (a) the tangible Security is located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, (b) Xoma's principal place of business is at ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and Xoma also conducts business at the
following locations: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, (c) Xoma has title to the Security
(including any as licensee), free and clear of all mortgages, liens, charges,
encumbrances, equities, assignments or security interests of any kind other than
as granted or created in favor of Pfizer by this Security Agreement, and no
financing statement or other similar type of filing, other than a financing
statement or a filing in the United States Patent and Trademark Office naming
Pfizer as the secured party or the assignee or mortgagee of any Patent, is now
on file in any public office, (d) Xoma has no Affiliate that has any rights or
interests in any of the Security or rights or interests in any property that
would be included or encompassed within the Security if any such rights or
interests were held by Xoma, (e) no person or other entity has any rights or
interests in any of the Security, and Xoma has not granted, or agreed to grant,
to any person or other entity any rights or interests in any of the Security,
(f) Xoma has the corporate power to make this Security Agreement and to grant
the security interests and
11
liens hereunder and such security interests and liens shall constitute (to the
extent possible under the laws of the United States or any political subdivision
in the United States) first valid and perfected security interests and liens on
the Security and, to the extent possible under the Foreign Laws and where
specifically required by Pfizer to be perfected or protected under the Foreign
Laws, shall constitute first valid and perfected security interests and liens on
the Foreign Security subject to no consensual prior security interests or liens,
and this Security Agreement has been duly authorized by all necessary corporate
action of Xoma and does not violate any provision of law or of the charter or
by-laws of Xoma or any contract, license or agreement to which Xoma is a party
or by which it is bound, and (g) Xoma's representations and warranties in the
Agreements are true and correct as of the date hereof.
5. So long as this Security Agreement and the rights and interests,
including security interests and liens, created hereunder shall remain in
effect, unless Pfizer shall otherwise consent in writing, Xoma hereby covenants
and agrees with Pfizer as follows:
(a) Xoma shall give Pfizer not leas than thirty (30) days prior
written notice of any change of its name, in the location of its chief
executive office, any location where it conducts business, or the location
where it keeps any of the Security or any of the records related thereto or
of any change in Xoma's circumstances that affects or
12
may affect the continuing efficacy of any financing statement or other
document filed by Xoma or Pfizer or, subject to Pfizer's specific
instructions for perfection or protection of any Foreign Security under the
Foreign Laws, the continuing status of Pfizer's security interests and
liens as the first valid and perfected security interests and liens on the
Security in the U.S.A. and the continuing status of Pfizer's security
interests and liens as the first valid and perfected consensual security
interests and liens on the Security in countries other than the U.S.A.;
provided, however, Pfizer shall pay the reasonable out-of-pocket costs and
expenses incurred by Xoma in complying with Pfizer's instructions for
perfecting or protecting Pfizer's rights and interests in any Foreign
Security under the Foreign Laws. Xoma shall promptly notify Pfizer of the
need for Pfizer under the laws of the United States or any political
subdivision within the United States to take any action or to execute any
financing statement, filing, application, assignment, registration, notice,
document of further assurances or other document or writing to perfect or
protect the rights and interests of Pfizer in any Security that is
hereafter acquired, controlled or owned by Xoma including, without
limitation, prompt notice of the need to take any action or to file any
document or writing to perfect or protect Pfizer's rights and interests in
any Patent in the United States or any political subdivision within the
United
13
States and prompt notice of the filing of any application for a Patent
anywhere in the Territory. Xoma shall give notice to Pfizer on the first
business day of every other month of its activities in countries other than
the U.S.A. to enable Pfizer to specify any action it requires Xoma to take
under the Foreign Laws to perfect or protect Pfizer's rights and interests
in the Foreign Security; provided, however, nothing in this Subsection (a)
shall restrict or limit Xoma's other obligations or agreements under this
Security Agreement. Xoma shall take such action as Pfizer may reasonably
require to perfect or protect Pfizer's rights and interests in the Foreign
Security, and Pfizer shall pay the reasonable out-of-pocket costs and
expenses incurred by Xoma in taking any such action.
(b) Xoma shall not breach, default or wrongfully terminate any
agreement, contract, lease or license that is encompassed or included in
the Security where such action could have any material adverse effect on
the rights and interests of Pfizer, and Xoma shall give Pfizer written
notice of any allegation or assertion by any other party that Xoma has so
breached, defaulted or improperly terminated any such agreement, contract,
lease or license within five (5) business days of the making of such
allegation or assertion in the case of material matters and within fifteen
(15) business days in other cases. Xoma may terminate any license it has
granted to others that is included or encompassed within the Security in
accordance
14
with its terms where it is commercially reasonable and does not have any
material adverse effect on Pfizer's rights and interests in the Security
and where Xoma has given Pfizer fifteen (15) business days notice of such
intended termination; provided, however, nothing in this provision or any
other provision of this Security Agreement shall restrict or limit Xoma's
obligations, or waive such obligations, under Section 2.4 of the R&D
Agreement and Section 8 of the License Agreement. Xoma shall also give
Pfizer five (5) business days written notice of its intent to breach,
default, terminate, reject or repudiate any such agreement, contract, lease
or license. Xoma shall not create or suffer to exist or permit any
mortgage, pledge, lien, charge, encumbrance, equity, assignment or security
interest (other than non-consensual liens or interests on the Foreign
Security that arise in the normal course of Xoma's business) upon or in
respect of the Security and, subject to the provisions of Section 5(a) of
this Security Agreement regarding the Foreign Security, shall take any and
all actions necessary to perfect or protect the rights and interests of
Pfizer in the Security including, without limitation, (i) paying all claims
and charges that in Pfizer's reasonable opinion might prejudice, imperil or
adversely affect the Security in any significant respect or any security
interest or lien of Pfizer in the Security, (ii) reasonably curing any
breaches or defaults relating to or arising out of the Security, and (iii)
commencing or
15
processing any patent applications or infringement or misappropriation
proceedings or lawsuits relating to the Security in a manner not
inconsistent with the License Agreement. Pfizer acknowledges that Xoma may
conduct its business outside the United States in the ordinary course even
though certain of the Foreign Laws may create non-consensual liens and
encumbrances senior or junior to those of Pfizer. Xoma shall not under any
circumstances permit any Equipment to become a fixture by attachment to any
real property, unless such Equipment is described on any financing
statement filed as a mortgage or fixture filing perfecting Pfizer's
security interests and liens on such Equipment.
(c) Xoma shall not sell or otherwise dispose of any rights or
interests in or to any of the Security other than as permitted by the terms
of this Subsection (c), Section 5(b) or (d) of this Security Agreement or
with Pfizer's written consent, which consent shall not be unreasonably
withheld in the case of the disposal of obsolete or practically worthless
tangible property, in the case of the settlement of litigation or disputes
with third parties, or in the case of the trade-in of equipment that does
not affect any material portion of the Security. Xoma may use and spend
cash proceeds of the Security in the ordinary course of business as long as
no Event of Default (as such term is defined in Section 10 of this Security
Agreement) occurs and is continuing. Nothing in this
16
Security Agreement shall be deemed to limit or restrict Pfizer's rights and
interests under the License Agreement, the R&D Agreement, and the Supply
Agreement.
(d) Xoma shall not grant, or agree to grant, to any Affiliate any
rights or interests in any of the Security or to cause any Affiliate to own
any rights or interests in any property that would be included or
encompassed within the Security if any such rights and interests were held
by Xoma. Notwithstanding any other provision of this Security Agreement,
Xoma, prior to an Event of Default, shall be permitted to license
(exclusively or nonexclusively) to any person or entity any of the
Security, including the Technical Information and the Patents, subject to
the rights and interests of Pfizer created by this Security Agreement and
subject to and not inconsistent with Pfizer's rights and interests under
the License Agreement, the R&D Agreement, and the Supply Agreement. Xoma
shall not secure the performance of any of its obligations or agreements
under any such license permitted under the immediately preceding sentence
of this Subsection (d) or the payment of any claims arising under such
license by creating or suffering to exist or permitting any mortgage,
pledge, lien, charge, encumbrance, equity, assignment or security interest
upon or in respect of any of the Security.
17
(e) To the extent reasonably desirable for the protection of Pfizer's
rights and interests in the Security, Xoma shall keep accurate and complete
records of the Security and, after any Event of Default, the proceeds
therefrom and, after any Event of Default, shall keep the Security and the
proceeds therefrom separate and distinct from its other property. After any
Event of Default shall have occurred, Xoma shall account for, and, promptly
deliver to Pfizer, in the form received, all proceeds of the Security
received, endorsed to Pfizer as appropriate, and until so delivered, all
proceeds shall be held by Xoma in trust for Pfizer, separate and apart from
all other property of Xoma and identified as the Security of Pfizer.
(f) Risk of loss of the Security shall be on Xoma, and the loss,
injury or destruction of the Security shall not release Xoma hereunder. To
the extent commercially reasonable, Xoma shall insure the Equipment in such
amounts and against such risks, as Pfizer shall reasonably deem acceptable,
and Xoma shall deposit complete insurance policies or copies thereof with
Pfizer; provided, however, Pfizer has agreed that Xoma's current insurance
policies on the Equipment are commercially reasonable.
18
Pfizer shall be named as an insured and loss payee under such insurance
policies. If Xoma fails to obtain appropriate insurance covering the
Equipment in a timely fashion, Pfizer may, but shall not be obligated to,
obtain such insurance and the cost thereof shall be immediately due and
owing from Xoma to Pfizer and shall become a Secured Obligation and, at
Pfizer's option, set-off against any amounts owing to Xoma under the
License Agreement or Supply Agreement. Xoma hereby irrevocably appoints
Pfizer as its agent to adjust all insurance losses, to sign all
applications, receipts, releases, and other papers necessary to collect any
such loss and any return or unearned premium, to execute proofs of loss, to
make settlements, to endorse and collect any check or other item payable to
Xoma issued in connection therewith, and to apply the same to payment of
the debt; provided, however, Pfizer may exercise the rights set forth in
this sentence of this Subsection (f) only after an Event of Default.
(g) Without limiting the generality of the foregoing, promptly upon
Pfizer's request, Xoma shall sign and execute together, alone or with
Pfizer, as Pfizer shall determine, any financing statement, filing,
application, assignment, registration, notice, document of further
assurances or other document or writing or take such other additional
actions as Pfizer may reasonably require to perfect or protect the rights
and interests of Pfizer in the Security (including, without limitation,
making any
19
filing with the United States Patent and Trademark Office that may be
requested by Pfizer or assigning to Pfizer any application, instrument or
authorization that seeks or grants approval or authority for the
manufacture, production or sale of any E5 Product, Other Antibody Product,
and/or Other Septic Shock Product). Except after an Event of Default,
nothing in this Security Agreement shall accelerate or expand Xoma's
disclosure obligations beyond those obligations set forth in other
agreements between Xoma and Pfizer; provided, however, (i) Xoma shall
provide to Pfizer notice of the filing of any application for a Patent or
the issuance of any Patent anywhere in the Territory and (ii) Xoma shall
provide to Pfizer all information that is reasonably necessary for Pfizer
to perfect its security interests and liens in the Security. Xoma, however,
hereby irrevocably appoints Pfizer as its agent to execute such documents
or take such other action as is reasonably necessary to perfect or protect
Pfizer's rights and interests in the Security. Xoma shall not file or
authorize to be filed in any jurisdiction in the Territory or with any
public office any financing statement, filing, application, assignment,
registration, notice, document of further assurances or other document or
writing relating to the Security in which Pfizer is not named as the sole
secured party or assignee; provided, however, Xoma may record or file any
Existing License (as such term is defined in Section 7 of this Security
20
Agreement) if (i) such recording or filing does not have the effect of
perfecting or creating a security interest or lien in the Security and
(ii) such recording or filing would be subject to and not inconsistent
with the rights and interests of Pfizer created by this Security
Agreement and subject to and not inconsistent with the provisions of
Section 7 of this Security Agreement. Notwithstanding anything to the
contrary in this Security Agreement, Xoma shall not be required to
file, prosecute, enforce or maintain any Patent or any application for
a Patent except to the extent required by the Agreements; provided,
however, nothing in this sentence of this Subsection (g) shall affect,
limit or restrict (i) whatever rights or remedies Pfizer may possess
after an Event of Default under this Security Agreement or under law or
equity and (ii) Xoma's obligations and agreements after an Event of
Default.
(h) Xoma shall keep the Equipment in good condition and repair, normal
wear and tear excepted. Subject to the provisions of Section 5(c) of this
Security Agreement, Xoma shall do all acts that may be reasonable and
necessary to maintain, preserve, and protect the Security that is tangible
personal property, including the payment of all repair, maintenance, and
preservation costs relating to the Security. Xoma shall pay promptly when
due all taxes, assessments, charges, encumbrances, levies, and liens now or
hereafter imposed upon or affecting the Security subject to Xoma's right to
contest in good faith
21
any such claim or lien and to defer payment pending the resolution of such
contest unless Pfizer's rights or interests in the Security shall be
materially threatened or diminished by such deferral of payment.
(i) Xoma shall not use or permit any Security to be used unlawfully or
in violation of any provision of this Security Agreement, or any applicable
statute, regulation or ordinance or any policy of insurance covering the
Security. To the extent not inconsistent with the License Agreement or any
other written agreement between Pfizer and Xoma, Xoma shall appear in and
defend any proceedings or lawsuits that may affect its right, title or
interest to the Security or Pfizer's rights or interests in the Security in
the United States and, at Pfizer's expense, any other country in the
Territory where directed to by Pfizer.
6. After an Event of Default has occurred, Pfizer, at its option, may, in
its name or in the name of Xoma or otherwise, demand, ▇▇▇ for, collect or
receive any money or property at any time payable or receivable on account of or
in exchange for, or make any compromise or settlement deemed desirable with
respect to, any of the Security, but Pfizer shall be under no obligation to do
so, or Pfizer may extend the time of payment, arrange for payment in
installments, or otherwise modify the terms of, or release, any of the Security,
without thereby incurring responsibility to, or discharging or otherwise
affecting any liability of Xoma.
22
7. After an Event of Default has occurred, Pfizer may also, at its option
and without notice to or demand on Xoma, and in addition to all rights and
remedies available to Pfizer as a secured party, at law or in equity or
otherwise, (a) foreclose or otherwise enforce Pfizer's security interests and
liens or other rights and interests in the Security in any manner permitted by
law or provided for in this Security Agreement, (b) sell or otherwise dispose of
the Security or any part thereof or interest therein at one or more public or
private sales at Pfizer's place of business or any other place or places,
whether or not such Security is present at the place of sale, for cash or credit
or future delivery, on such terms and in such manner as Pfizer may reasonably
determine, (c) recover from Xoma the reasonable costs and expenses (including,
without limitation, attorneys' fees) reasonably incurred or paid by Pfizer in
exercising any right, power or remedy provided by law or this Security Agreement
(including, without limitation, the reasonable costs and expenses incurred in
assembling, taking, repairing or selling the Security or any part thereof), (d)
require Xoma to promptly assemble the Security and all information, books,
records, and other materials relating thereto and make such available to Pfizer
at a place to be designated by Pfizer, (e) enter onto the property where any
Security is located and take possession thereof with or without judicial
process, (f) cure any breach, default or improper termination of any agreement,
contract, lease or
23
license of Xoma that is included or encompassed in the Security, (g) substitute
itself for Xoma in any proceeding or lawsuit included or encompassed within,
arising from, related to or connected with the Security or Pfizer's rights and
interests in it (including, without limitation, substituting itself for Xoma in
any proceeding seeking the approval of any application for a Patent or any
proceeding seeking approval or authority for the manufacture, production or sale
of any E5 Product, Other Antibody Product, and/or Other Septic Shock Product) or
commence, on behalf of Xoma and in Xoma's name, any proceeding or lawsuit to
protect the Security or Pfizer's rights and interests in it, and (h) prior to
the disposition of the Security, prepare it for disposition in any manner and to
the extent Pfizer deems appropriate. Xoma shall be given ten (10) business days
prior written notice of the time and place of any public sales or of the time
after which any private sales or other intended dispositions are to be made,
which notice Xoma hereby agrees shall be deemed reasonable notice thereof;
provided, however, Pfizer shall not be required to give such notice in the case
of any Security that Pfizer in good faith determines to be declining speedily in
value. Upon any sale or other disposition pursuant to this Security Agreement,
Pfizer shall have the right to deliver, assign, and transfer to the purchaser
thereof the Security or portion thereof so sold or disposed of by Pfizer. Each
purchaser at any such sale or other disposition (including Pfizer) shall
24
hold the Security free from any claim or right of whatever kind, including any
equity or right of redemption of Xoma.
Notwithstanding any of the provisions of this Security Agreement, Pfizer
(for the purposes of this second paragraph of this Section 7 the term "Pfizer"
means Pfizer and its Affiliates, successors, and assigns) covenants for the
benefit of Xoma and any licensee or sublicensee of any of the Security from Xoma
that, in or after exercising its rights and remedies under this Security
Agreement, Pfizer shall not ▇▇▇ for infringement or misappropriation any person
or other entity (a "Licensee") that has licensed or sublicensed rights in any of
the Security, including any of the Patents and Technical Information, from Xoma
pursuant to a license (or sublicense) (an "Existing License") that is not
inconsistent with or contrary to the provisions of Section 5(d) of this Security
Agreement so long as (i) Xoma or Pfizer, as Xoma's successor in interest, has no
right to terminate such Existing License with such Licensee pursuant to the
terms and conditions of such Existing License or otherwise, including, without
limitation, any rightful repudiation (by words or action) or termination by Xoma
of its obligations, covenants or agreements with such Licensee under an Existing
License, and (ii) Xoma has not rejected its agreement with such Licensee under
an Existing License pursuant to Section 365 of the Bankruptcy Code, 11 U.S.C ss.
365; provided, however, subject to Pfizer's agreement stated in this first
sentence of this second paragraph of this
25
Section 7, nothing in this Section 7 shall restrict or limit in any fashion or
manner whatsoever (i) Pfizer's rights and interests (including security
interests and liens) in the proceeds of any Existing License and the claims,
causes of action or lawsuits included or encompassed within the Security, (ii)
Pfizer's rights and remedies against a Licensee arising under either an Existing
License, this Security Agreement, the Agreements or otherwise, (iii) the
description and scope of the Security granted to Pfizer pursuant to Section 2 of
this Security Agreement, and (iv) Pfizer's rights or interests in any of the
Security (including, without limitation, all claims and fields of use included
or encompassed within any of the Patents and any of the Technical Information)
or Pfizer's rights or remedies against the Security or Xoma under this Security
Agreement or otherwise.
8. After an Event of Default has occurred, Xoma shall pay to Pfizer all
reasonable expenses of, or incidental to, the enforcement or application of any
of the provisions hereof, or any actual or attempted sale, or any exchange,
enforcement, collection, compromise or settlement of any of the Security or
receipt of the proceeds thereof, and for the care of the Security and defending
or asserting the rights and claims of Pfizer in respect thereof, by litigation
or otherwise, including, without limitation, reasonable attorneys' fees and
insurance expenses; and all such expenses shall be Secured Obligations within
the terms of this Security Agreement and, at
26
Pfizer's option, set-off against any amounts owing to Xoma under the License
Agreement or Supply Agreement.
9. No delay on the part of Pfizer in exercising any power or right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any power or right hereunder preclude other or further exercise
thereof or the exercise of any other power or right. The rights, remedies, and
benefits herein expressly specified are cumulative and not exclusive of any
rights, remedies or benefits that Pfizer may otherwise have. Xoma hereby waives
presentment, notice of dishonor, and protest of all instruments included in or
evidencing Xoma's liability for payment or performance of the Secured
Obligations or the Security and any and all other notices and demands
whatsoever, whether or not related to such instruments. Xoma hereby waives, to
the full extent permitted by law, the right to plead any statute of limitations
as a defense to any action or proceeding for the enforcement hereof, or for the
enforcement of any of the Secured Obligations.
10. For purposes of this Security Agreement, an "Event of Default" shall be
deemed to occur if (a) Xoma shall materially breach or materially default in the
performance or observance of any of its material obligations, covenants or
agreements under Section 4.1 and Section 4.2 of the R&D Agreement, and such
breach or default is not cured within the cure period following notice thereof
as provided therein, (b) Xoma shall materially breach or materially default in
the
27
performance or observance of any of its material obligations, covenants or
agreements under the License Agreement, and such breach or default is not cured
within the cure period following notice thereof as provided therein, (c) Xoma
shall breach or default in the performance of or observance of any of its
obligations, covenants or agreements under Section 5(d) of this Security
Agreement or (d) Pfizer obtains a judgment for money or specific performance
against Xoma arising out of Xoma's breach or default in the performance of its
obligations, covenants or agreements under this Security Agreement (other than
Section 5(d) of this Security Agreement) and such judgment goes unsatisfied for
a period of thirty (30) days after the resolution of the last appeal taken by
Xoma of such judgment; provided, however, nothing in this Section 10 shall
restrict or limit Pfizer's right to bring an action in equity or law against
Xoma for its breach or default of any of its obligations, covenants or
agreements set forth in this Security Agreement or in the Agreements.
11. No provision hereof shall be modified or limited except by a written
instrument expressly referring hereto and to the provision so modified or
limited. This Security Agreement shall be binding upon the successors and
assigns of Xoma and Pfizer and shall be assignable by Pfizer to any of its
Affiliates. Xoma and Pfizer intend to bind any subsequent purchaser of the
Security in accordance with the provisions of Section 17 of this Security
Agreement.
28
12. No course of dealing, omission or delay of Pfizer in the exercise of
any right, power or privilege referred to in this Security Agreement or in
either of the Agreements shall operate as a waiver hereof, nor shall any partial
exercise thereof preclude any further exercise thereof, as Pfizer may exercise
each such right, power or privilege either independently or concurrently and as
often and in such order as Pfizer deems expedient. Nothing in the Agreements and
the Supply Agreement shall be deemed to limit or restrict Pfizer's remedies,
rights and interests under this Security Agreement.
13. Any notice, consent or approval required under this Security Agreement
shall be in writing sent by registered or certified airmail, postage prepaid, or
by telex or cable (confirmed by such registered or certified mail) and addressed
as follows:
If to Pfizer: If to Xoma:
Pfizer Inc. Xoma Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telex: 420440 Telex: 856-697
Attention: General Counsel Attention: Chairman
All notices shall be deemed to be effective on the date of mailing. In case any
party changes its address at which notice is to be received, written notice of
such change shall be given without delay to the other party.
14. If Pfizer, pursuant to Sections 4, 6.1 or 10.2 of the R&D Agreement or
Section 9.03 of the License Agreement (or in the case of an Other Septic Shock
Product accepted under
29
Section 4.2 of the R&D Agreement in accordance with the terms of a license
agreement between Pfizer and Xoma with respect thereto), (a) rejects its option
to acquire rights to any Other Antibody Product or Other Septic Shock Product or
terminates its rights or licenses with respect to any such Other Antibody
Product or Other Septic Shock Product or any E5 Product (the "Rejected or
Terminated Product") and (b) Pfizer no longer has any right under the R&D
Agreement to exercise an option at any time in the future to acquire such rights
to such Rejected or Terminated Product or to acquire any other rights or
interests in such Rejected or Terminated Product, (i) such Rejected or
Terminated Product shall no longer be included or encompassed within the
Security if it is in no fashion or manner otherwise included or encompassed
within the Security and (ii) any Security that is exclusively and solely used in
and related to such Rejected or Terminated Product and is in no fashion or
manner used in and related to any E5 Product, Other Antibody Product, and/or
Other Septic Shock Product (which is not a Rejected or Terminated Product) shall
also not be included or encompassed within the Security (the "Rejected or
Terminated Security"). Pfizer shall execute any financing statement, filing,
application, assignment registration, notice, document of further assurances or
other document or writing to evidence Pfizer's lack of rights or interests in
any Rejected or Terminated Product and any Rejected or Terminated Security.
30
15. If it should appear that any provisions of this Security Agreement are
in conflict with any statute or rule of law of any jurisdiction wherein it may
be sought to be enforced, then such provisions shall be deemed null and void to
the extent that they conflict therewith, but without invalidating the remaining
provisions hereof.
16. This Security Agreement and the rights and obligations of the parties
hereunder shall be construed in accordance with and governed by the laws of the
State of California.
17. To state and evidence the agreements between Xoma and Pfizer embodied
in this Security Agreement, any financing statement or filing made by Pfizer (or
any of its Affiliates) with any governmental authority in the Territory
(including, without limitation, any UCC-1 financing statement) to perfect or
protect Pfizer's rights and interests in the Security shall include the
following language:
Subject to the terms and conditions of a certain Security Agreement
(the "Security Agreement") between Pfizer Inc. (including its
Affiliates (as such term is defined in the Security Agreement),
successors, and assigns) ("Pfizer") and Xoma Corporation ("Xoma"),
Pfizer and Xoma intend that the Security Agreement shall bind Pfizer
and any subsequent purchaser of the Security (as such term is defined
in the Security Agreement) that purchases the Security pursuant to, and
after, Pfizer's exercise of its rights and remedies under the Security
Agreement from suing for infringement or misappropriation any person or
other entity (a "Licensee"; this is the meaning given such term in the
Security Agreement) that has licensed or sublicensed rights in any of
31
the Security, including any of the Patents and Technical Information
(as such terms are defined in the Security Agreement), from Xoma
pursuant to a license (or sublicense) (an "Existing License"; this is
the meaning given such term in the Security Agreement) that is not
inconsistent with or contrary to the provisions of Section 5(d) of the
Security Agreement so long as (i) Xoma or Pfizer, as Xoma's successor
in interest, has no right to terminate such Existing License with such
Licensee pursuant to the terms and conditions of such Existing License
or otherwise, including, without limitation, any rightful repudiation
(by words or action) or termination by Xoma of its obligations,
covenants or agreements with such Licensee under an Existing License,
and (ii) Xoma has not rejected its agreement with such Licensee under
an Existing License pursuant to Section 365 of the Bankruptcy Code, 11
U.S.C ss. 365; provided, however, subject to Pfizer's agreement stated
in the first sentence of the second paragraph of Section 7 of the
Security Agreement, nothing in Section 7 of the Security Agreement
shall restrict or limit in any fashion or manner whatsoever (i)
Pfizer's rights and interests (including security interests and liens)
in the proceeds of any Existing License and the claims, causes of
action or lawsuits included or encompassed within the Security, (ii)
Pfizer's rights and remedies against a Licensee arising under either an
Existing License, the Security Agreement, the Agreements (as such term
is defined in the Security Agreement) or otherwise, (iii) the
description and scope of the Security granted to Pfizer pursuant to
Section 2 of the Security Agreement, and (iv) Pfizer's rights or
interests in any of the Security (including, without limitation, all
claims and fields of use included or encompassed within any of the
Patents and any of the Technical Information) or Pfizer's rights or
remedies against the Security or Xoma under the Security Agreement or
otherwise.
18. This Security Agreement shall terminate at such time that (a) Xoma
shall have fully performed and complied with, in all material respects, all of
its material obligations
32
and agreements with Pfizer under the License Agreement (other than any
obligation or agreement stated in Section 10.01 of the License Agreement) and
Section 4.1 of the R&D Agreement and Pfizer, under the Agreements, shall have no
rights or interests (including, without limitation, future rights, interests of
expectancies) in any E5 Product and/or any Other Antibody Product and Pfizer
shall have no right to obtain any such rights or interests; (b) no Event of
Default shall exist and be occurring; (c) no claim or cause of action arising or
resulting from any Event of Default shall exist; and (d) no lawsuit or appeal
thereof that is or could be encompassed in Section 10(d) of this Security
Agreement shall exist or be pending (the events, claims, and occurrences
described in or encompassed or included within Subsections (a) through (d) of
this Section 18 shall hereinafter be referred to collectively as the "Continuing
Obligations"). In the event that Pfizer alleges, in the exercise of its
reasonable judgment, that this Security Agreement has not and cannot terminate
due only to the occurrence or existence of any Continuing Obligation described
in or encompassed or included within Subsection (c) or Subsection (d) of this
Section 18 (an "Open Secured Obligation"), this Security Agreement shall
terminate (in the absence of the occurrence or existence of any other Continuing
Obligation, including any Open Secured Obligation) if, without admitting the
existence or merit of any disputed Open Secured Obligation and without prejudice
to Xoma's right to dispute or
33
defend against any Open Secured Obligation, (i) Xoma and Pfizer agree as to the
potential liquidated amount of such Open Secured Obligation (the "Claim Amount")
and Xoma shall have provided to Pfizer a letter of credit or surety bond in the
Claim Amount, in a form and substance reasonably satisfactory to Pfizer, to
secure Xoma's full payment of such Open Secured Obligation upon entry of a final
judgment in Pfizer's favor on such Open Secured Claim or (ii) Xoma and Pfizer
agree to a mechanism or arbitrator to settle the disputes (the "Dispute
Resolution Mechanism") between them regarding the Claim Amount and the form and
substance of the letter of credit or surety bond to be given to Pfizer to secure
Xoma's full payment of such Open Secured Obligation upon entry of a final
judgment in Pfizer's favor on such Open Secured Claim and Xoma provides to
Pfizer the letter of credit or surety bond in the Claim Amount and in the form
and substance established by the Dispute Resolution Mechanism; provided,
however, in the absence of any agreement between Xoma and Pfizer as to the
Dispute Resolution Mechanism, a federal court having jurisdiction over Xoma and
Pfizer (or, if no jurisdiction shall exist in any federal court in the United
States, then the Superior Court of California for the County of Alameda) shall
serve as the Dispute Resolution Mechanism in accordance with and subject to the
provisions of Subsection (ii) of this Section 18. Nothing in this Security
Agreement shall cause this Security Agreement or the rights and interests
created hereunder to terminate or lapse or shall
34
cause any property of Xoma to not be included or encompassed within the Security
due to the rejection or repudiation of Xoma's obligations and agreements
(including, without limitation, a rejection under 11 U.S.C. ss. 365) stated in
this Security Agreement or either of the Agreements except in accordance with
and consistent with the express terms and provisions of such agreements.
IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement
to be duly executed as of the day and year first above written.
PFIZER INC.
By /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title Vice President
XOMA CORPORATION
By /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title Chairman/ CEO
Debtor: Xoma Corporation
Appendix A
Page 1
LICENSED PATENTS
I II III
US 06/855,878 (2) US 06/781,242 (1) US 06/855,878 (2)
(Plus foreign
filings listed
under Col I)
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇/▇▇ ▇▇ 06/855,878 (2) US 07/036,766 (3)
CANADA 519,066 U.S. 07/036,766 (3)
EUROPE 86306420.0
(10 EPO Countries)
IRELAND 2546/86
ISRAEL ▇▇▇▇▇
▇▇▇▇▇ 229481/86
KOREA ▇▇▇▇/▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ 86/7342
SPAIN 8602198
U.S. 07/036,766 (3)
(1) Filing Date 9/27/84
(2) Filing Date 4/24/86
(3) Filing Date 4/10/87
Debt : Xoma Corporation
Appendix B
Page 1
Appendix B
All equipment of Xoma Corporation ("Xoma"), now owned, leased or controlled or
hereafter acquired, owned, leased or controlled by Xoma that is used in the
purification of raw antibody into purified active antibody for the purpose of
producing and manufacturing products for supply to Pfizer, Inc. pursuant to a
certain Supply Agreement, between Pfizer and Xoma including, without limitation,
the following equipment of Xoma so long as so used or intended to be so used:
Equipment Description Serial Number Leased Equipment
Amicon Columns 180-0101
0309
450-006
300-0089
180-0149
NSN (1)
Masterflex Pumps 391282
401895
405402
426501
LXB Uvicords SII 1723
282
3783 X
128
3788 X
3798 X
Chart Records:
▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇▇▇
▇&▇ 842476
861781 X
861779 X
861778 X
861780 X
Millipore Diafiltration
Unit NSN (1)
Pharmacia Fraction
Collector 132012 X
132008
(1) No Serial Number on Equipment
Debtor: Xoma Corporation
Appendix B
Page 2
Equipment Description Serial Number Leased Equipment
Lightnin Mixers 86/271843/4
86/271843/3
86/271843/5
MN DS3004
MN ▇▇▇▇▇▇
▇▇▇▇▇▇-▇▇▇▇▇▇ Pumps 106149 X
105307
105704 X
105311
105306
Millipore High Volume Cell NSN (1) X
▇▇▇▇▇▇▇ ▇▇▇▇ Balance F12856
Sartorius Filter Housing 3607019 X
(1) No Serial Number on Equipment
Nothing herein shall be deemed to grant a security interest to Pfizer in any
equipment leased to Xoma (the "Leased Equipment") except to the extent of Xoma's
rights and interests as lessee in the Leased Equipment and then only to the
extent the granting of such security interest in the Leased Equipment would not
cause a material breach of any lease between Xoma and any equipment lessor;
provided, however, Pfizer, notwithstanding any other agreement between it and
Xoma, shall have a security interest in the proceeds of any lease of the Leased
Equipment to Xoma.
