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EXHIBIT 10.19
LICENSE AGREEMENT
BETWEEN ARCH DEVELOPMENT CORPORATION
AND XCYTE THERAPIES INC.
This License Agreement ("Agreement"), dated June 28, 1999, between ARCH
Development Corporation, an Illinois not-for-profit corporation ("ARCH"), and
Xcyte Therapies, Inc., a Delaware Corporation ("Xcyte").
Purpose and Intent
ARCH holds rights to the Licensed Patents defined below and desires that
these rights be used to develop medical treatments to benefit patients.
Xcyte desires to obtain exclusive rights to such Licensed Patents for
commercialization in a certain field.
Therefore the parties agree as follows.
Agreement
1. Definitions. The following capitalized terms used in this Agreement
will mean:
A. "Affiliate" means any person or entity possessing the power to
direct or cause the direction of the management and the policies of an entity
whether through ownership directly or indirectly of fifty percent (50%) or more
of the stock entitled to vote, and for non-stock organizations, the right to
receive fifty percent (50%) or more of the profits by contract or otherwise, or
in countries where control of fifty percent (50%) or more of such rights is not
permitted in the country where such entity exists, the maximum permitted in such
country.
B. "Control" means possession of the ability to grant a license
or sublicense under this Agreement without violating the terms of any agreement
with a third party.
C. "Earlier Agreement" means the license agreement entered by
ARCH and CellGenEx, effective April 9, 1997, which was assigned to Xcyte upon
the merger of CellGenEx and CDR Therapeutics to form Xcyte.
D. "Effective Date" means the date set forth on page 1, line 1,
of this Agreement.
E. "Field" means all applications for prophylactic or therapeutic
use.
F. "IND" means an Investigational New Drug Application filed
pursuant to the requirements of the United States Food and Drug Administration
as more fully defined in 21 C.F.R. Section 312 or its foreign equivalent.
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
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G. "Inventor(s)" means Dr. David Liebowitz and/or Dr. Carl June.
H. "Licensed Patents" means the patent applications listed on
Exhibit A attached hereto, including all divisions, continuations,
continuations-in-part foreign counterparts, and any valid patents which may
issue therefrom and any reissues, renewals, substitutions, or extensions of or
to any such patents or patent applications, in each case that are owned or
Controlled by ARCH during the term of this Agreement. Licensed Patents will not
include any applications and any patents issuing from applications filed in
countries (i) that Xcyte elected not to file in pursuant to Section 4.A and (ii)
where Xcyte's rights are terminated under Section 10.D.
I. "Licensed Product" means any product within the scope of any
Valid Claim, or a product made by a process, method or technique within the
scope of any Valid Claim, or a product, the method of use of which is within the
scope of any Valid Claim.
J. "Net Sales" means:
(1) the gross amounts received by Xcyte and its Affiliates
and Sublicensees for Licensed Products, less the following amounts directly
chargeable to such Licensed Products: (a) customary trade, quantity or cash
discounts and rebates actually allowed and taken; (b) amounts repaid or credited
to customers on account of rejections or returns; (c) freight and other
transportation costs, including insurance charges, and duties, tariffs, sales
and excise taxes and other governmental charges based directly on sales,
turnover or delivery of such Licensed Products and actually paid or allowed by
Xcyte and its Affiliates or any Sublicensee; and (d) provisions for
uncollectible accounts determined in accordance with reasonable accounting
practices, consistently applied to all products of the selling party. For
Licensed Products consumed by Xcyte, its Affiliates or any Sublicensee, the
price used to calculate Net Sales will be equal to the average of the sales
price of the same or a substantially similar Licensed Product, whichever is
relevant, sold to its three largest customers during the same time period. If
Xcyte or a Sublicensee or Affiliates of either of them do not sell Licensed
Products but use Licensed Products as part of selling a service or other means
of deriving commercial benefit from a Licensed Product, the parties agree to
negotiate in good faith to determine a method of calculating a running royalty
equivalent to the running royalty set out in this Agreement on Net Sales. Net
Sales will be calculated on sales to end-users and not on sales between Xcyte
and its Affiliates or Sublicenses.
(2) with respect to any Licensed Product sold in
combination with one or more other product(s) or active therapeutic
ingredient(s) or agent(s) or service(s) for which no royalty would be due
hereunder if sold separately, Net Sales for such combination sales will be
calculated by multiplying the Net Sales calculated pursuant to subsection
1.J.(1) above by the fraction A/(A + B), where A is the gross selling price of
the Licensed Product sold separately and B is the gross selling price of the
other product(s) or active therapeutic ingredient(s) or agent(s) or service(s)
sold separately. In the event that no such separate sales are made by Xcyte, Net
Sales for royalty determination will be jointly and reasonably allocated on a
commercially
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reasonable basis by ARCH and Xcyte between such Licensed Product and such other
product(s), ingredient(s) or agent(s) and/or service(s) based upon their
relative importance and proprietary protection.
K. "Royalties" means all amounts payable under Section 3.B. of
this Agreement.
L. "Sublicensee" means any person, company or other entity
granted a sublicense by Xcyte under Section 2.B. below, including Affiliates of
the Sublicensee.
M. "Sublicense" means the license agreement entered into by Xcyte
with a Sublicensee under Section 2.B. below.
N. "Territory" means worldwide.
O. "University" means the University of Chicago.
P. "Foundation" means the Henry M. Jackson Foundation for the
Advancement of Military Medicine.
Q. "Valid Claim" means an issued claim of any unexpired patent or
a claim of any pending patent application within the Licensed Patents which has
not been held unenforceable, unpatentable or invalid by a decision of a court or
governmental body of competent jurisdiction, in a ruling that is unappealable or
unappealed within the time allowed for appeal; which has not been rendered
unenforceable through disclaimer or otherwise; and which has not been lost
through an interference proceeding.
R. "ARCH-Foundation Agreement" means that certain
Inter-Institutional Agreement between the Henry M. Jackson Foundation for
Advancement of Military Medicine and ARCH Development Corporation effective
April 15, 1999.
2. Grant of License and Reservation of Research Rights.
A. Grant. ARCH hereby grants to Xcyte and its Affiliates an
exclusive, worldwide license to make, have made, use, import, have imported,
export, offer to sell and sell Licensed Products within the Field and within the
Territory.
B. Sublicense. Xcyte will have the exclusive right to grant and
authorize sublicenses to the rights granted Xcyte under Section 2.A. consistent
with terms of this Agreement. Xcyte will notify ARCH within sixty (60) days
after the execution of any such sublicense. Upon request by ARCH on a case by
case basis, Xcyte will promptly notify ARCH of the identity of the sublicensee
and will state in such notification that such sublicense was granted and/or
authorized (as applicable) in accordance with this Section 2.B.
C. Reservation of Rights. ARCH reserves for itself and the
University the
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nontransferable right to practice at the University the inventions claimed in
the Licensed Patents to make, have made, and use Licensed Products within the
Field for all educational and noncommercial research purposes it may choose in
its own discretion and without any payment therefore. In addition, the
inventions claimed in the Licensed Patents were made with the use of funds from
the United States government. Therefore, to the extent required by United States
law, there is reserved from the rights granted hereunder the worldwide,
non-exclusive right of the United States government to use and to practice or
have practiced the inventions claimed in the Licensed Patents.
D. U.S. Laws. The inventions claimed in the Licensed Patents were
developed with the use of United States government funds. Therefore, any right
granted in this Agreement greater than that permitted under Public Law 96-5 17
or Public Law 98-620 will be subject to modification as may be required to
conform to the provisions of those laws.
3. Royalties. Equity and Other Payments.
A. License Payment. As partial consideration for the license
granted in Section 2.A. of this Agreement, Xcyte will transfer [*] shares of
Xcyte common stock to ARCH, pursuant to the terms and conditions of the
Restricted Stock Purchase Agreement attached hereto as Exhibit A. The stock due
and payable under this Section 3.A. is nonrefundable and noncreditable against
Royalties.
B. Royalties.
(1) Subject to reduction pursuant to subsection 3.B.(2),
and subject to subsections 3.B.(3), 3.B.(4), and 3.B.(5) below, Xcyte will pay a
royalty to ARCH during the term of this Agreement equal to 200,000 of Net Sales
of Licensed Products within the scope of an issued Valid Claim in the country of
manufacture or sale.
(2) In the event that Xcyte enters into a license
agreement with any third party with respect to intellectual property rights
which are necessary or useful for Xcyte' s practice of the Licensed Patents or
the manufacture, use, import and/or sale of any Licensed Product, Xcyte may
offset any payments made in accordance with such license agreements against any
amounts owed ARCH pursuant to Article 3 herein, up to a maximum of fifty percent
(50%) of the amounts due under Article 3.
(3) No Royalties will be due on Licensed Products used or
distributed for use in research and/or development, in clinical trials or as
promotional samples.
(4) No more than one Royalty payment will be due with
respect to a sale of a particular Licensed Product. No multiple Royalties will
be payable because any Licensed Product, or its manufacture, sale or use is
covered by more than one issued Valid Claim.
(5) Royalties due under this Section 3.B. will be payable
on a country-
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
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by-country and Licensed Product-by-Licensed Product basis until the expiration
of the last-to-expire issued Valid Claim covering such Licensed Product in such
country of manufacture or sale.
C. Calculation of Royalties. Royalties will be payable in U.S.
currency within sixty (60) days after the end of each calendar quarter for the
term specified in Section 10.A. below, beginning with the calendar quarter in
which the first commercial sale of a Licensed Product occurs. Each payment will
be accompanied by a statement showing Net Sales for each country in the
Territory and calculation of the Royalties due. All such statements will be
deemed to be Confidential Information of Xcyte. There will be deducted from all
such payments taxes required to be withheld by any governmental authority and
Xcyte will provide copies of receipts for such taxes to ARCH along with each
Royalty payment. Any necessary conversion of currency into United States dollars
will be at the applicable rate of exchange of Citibank, N.A., in New York, New
York, on the last day of the calendar quarter in which such transaction
occurred. If at any time legal restrictions prevent the prompt remittance of any
Royalties owed on Net Sales in any jurisdiction, Xcyte and ARCH agree to discuss
reasonable alternatives with respect to the prompt remittance of such Royalties;
provided, however, that unless otherwise agreed by the parties, Xcyte may notify
ARCH and make such payments by depositing the amount thereof in local currency
in a bank account or other depository in such country in the name of ARCH, and
Xcyte will have no further obligations under this Agreement with respect
thereto.
D. Records. Xcyte will keep, and will cause its Sublicensees and
Affiliates of either, to keep full and accurate books and records in sufficient
detail so that sums due ARCH hereunder can be properly calculated. Such books
and records will be maintained for at least three (3) years after the Royalty
reporting period(s) to which they relate. During the term hereof and for three
(3) calendar years thereafter, Xcyte will permit, and will cause its Affiliates
to permit, and use reasonable efforts to have its Sublicensees permit certified
independent accountants designated by ARCH, to whom Xcyte has no reasonable
objection, to examine its books and records solely for the purpose of verifying
the accuracy of the written statements submitted by Xcyte and sums paid or
payable. ARCH may conduct such examination no more than once in any calendar
year and conduct no more than one audit of any period. After completion of any
such examination, ARCH will promptly notify Xcyte in writing of any proposed
modification to Xcyte's statement of sums due and payable. If Xcyte accepts such
modification, or if the parties agree on other modifications, one party will
promptly pay or credit the other in accordance with such resolution. Such
examination will be made at the expense of ARCH, except that if such examination
discloses a discrepancy of ten percent (10%) or more in the amount of Royalties
and other payments due ARCH in any audit period, then Xcyte will reimburse ARCH
for the cost of such examination.
E. Overdue Payments. Payments due to ARCH under this Agreement
will, if not paid when due under the terms of this Agreement, bear simple
interest at the lower of the prime rate of interest (as published by Citibank,
N.A. or its successor on the date such payment is due) plus one [*] or the
highest rate permitted by law, calculated on the basis of a 360-day year for the
number of days actually elapsed, beginning on the due date and ending on the day
prior to the day on which payment is made in full. Interest accruing under this
Section will be due to
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
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ARCH on demand or upon payment of past due amounts, whichever is sooner. The
accrual or receipt by ARCH of interest under this Section will not constitute a
waiver by ARCH of any right it may otherwise have to declare a default under
this Agreement or to terminate this Agreement.
4. Prosecution and Maintenance of Patents; Patent Costs.
A. Prosecution and Maintenance.
(1) ARCH will be solely responsible, using patent counsel
acceptable to Xcyte, for the preparation, filing, prosecution and maintenance of
the Licensed Patents.
(2) ARCH will cause such patent counsel to provide Xcyte
with a list of the countries in which ARCH has filed and/or intends to file
applications. Such list will be provided to Xcyte at least sixty (60) days prior
to the expiration of the corresponding United States priority date to allow
Xcyte to suggest that additional countries be added to the list or that one or
more countries be deleted from the list. ARCH agrees to timely file applications
in each of the countries requested by Xcyte unless it otherwise notifies Xcyte
under Section 4.B. below.
(3) Xcyte agrees to cooperate, and agrees to cause its
Sublicensees and Affiliates of either to cooperate, with ARCH in the
preparation, filing, prosecution and maintenance of the Licensed Patents by
disclosing such information as may be necessary for the same and by promptly
executing such documents as ARCH may reasonably request in connection therewith.
Xcyte and its Sublicensees and Affiliates of either will bear their own costs in
connection with their cooperation with ARCH under this Section 4.A.(3).
(4) ARCH will provide Xcyte copies of all material
documents received or prepared by ARCH in the prosecution and maintenance of the
Licensed Patents. Xcyte will have reasonable opportunities to advise ARCH
concerning, and ARCH will cooperate with Xcyte with respect to, filing,
registration, prosecution and maintenance of all patents and patent applications
within the Licensed Patents. "Reasonable opportunities" means that Xcyte will
receive from ARCH or its patent counsel copies of all documents and materials
relating to filing, registration, prosecution and maintenance of patent
applications and patents within the Licensed Patents as soon as is reasonably
practical after ARCH has received such documents and materials, and at least
forty-five (45) days or the maximum time provided by the Patent Office before
any date imposed upon ARCH for action or response with respect to such patent
applications and patents. ARCH agrees to incorporate into the final version of
such documents and materials any reasonable change(s) and/or claims (s)
requested by Xcyte thereof prior to submission to the applicable government
agencies or other parties. In addition, to avoid any prejudice and added
unnecessary costs to Xcyte, ARCH will adhere to the applicable deadlines, and
Xcyte will not be responsible for the costs of any time extensions for reasons
that are not approved in advance by Xcyte.
B. Xcyte's Rights to Prosecute and Maintain Patents. ARCH will
notify Xcyte in writing of any country(ies) where it either previously declared
its intention to file under
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Section 4.A. and subsequently decided not to file in such country(ies) or
previously filed and decided to abandon the patent application or issued patent.
Such notice will be given so as to allow Xcyte a reasonable time, but not less
than sixty (60) days, within which to file in countries where ARCH either does
not intend to file a patent application or is not going to continue the
prosecution or maintenance of the application or patent, whichever is relevant.
In all cases where Xcyte elects to file, Xcyte will file, prosecute and maintain
the applications and patents in ARCH's name and at Xcyte's expense. Such
applications and patents will be included in the definition of Licensed Patents
for all purposes of this Agreement.
C. Patent Costs. Xcyte agrees to pay all necessary and reasonable
third party fees and out-of-pocket expenses incurred by ARCH in obtaining and
maintaining the Licensed Patents, including those incurred by ARCH prior to the
Effective Date within 30 days after receipt of an invoice for such prior fees
and expenses. Payment for fees and expenses incurred after the Effective Date
will be invoiced to Xcyte on a monthly basis and Xcyte agrees to pay such
invoices within 30 days of receipt. Xcyte also agrees upon reasonable request by
ARCH to make timely reasonable estimated advanced payments for the filing of
national applications in countries selected by Xcyte; provided, that ARCH
provides Xcyte with invoices for such amounts at least thirty (30) days prior to
the date payment must be made by ARCH to a third party. Documentation received
from third party vendors to support the amounts invoiced, in a form reasonably
acceptable to Xcyte, will be included with each invoice. Xcyte will raise any
objections to such amounts invoiced within the 30 day time period for payment.
Invoices for advanced payments will be reconciled with the advance payments made
by Xcyte every six (6) months. Any excess payment by Xcyte will be credited to
future patent costs specified in this Section 4.C.
5. Due Diligence and Milestones.
A. Research and Development Expenditures. Xcyte or its
Sublicensees will use commercially reasonable diligent efforts to develop and
commercialize Licensed Products. Through September 30, 2000, "commercially
reasonable diligent efforts" will automatically be deemed to have been met if
[*] The foregoing Milestone may be satisfied by Xcyte and/or its Affiliates or
Sublicensees or a combination thereof.
B. Progress Report. Within 30 days of the end of each June 30
during the term of this Agreement, Xcyte will submit a written report to ARCH
covering the preceding year and summarizing the progress of Xcyte toward
achieving the development and commercialization of Licensed Products. Xcyte
agrees to immediately notify ARCH in writing when commercial products are first
sold and when Xcyte's obligation to begin making running Royalty payments
begins.
C. Termination Rights of ARCH. If Xcyte fails to use commercially
reasonable diligent efforts (as defined in Section 5.A. above) to develop and
commercialize at least one Licensed Product, ARCH may terminate this Agreement
pursuant to Section 10.C.
6. Data Access and Usage.
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
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ARCH will make reasonable efforts in cooperation with the University and
the Inventors to supply Xcyte with all data, materials, documents, reports,
analyses and other information that relate to and support the claims or practice
of the Licensed Patents or Licensed Products (including, without limitation,
protocols, procedures and written communications to regulatory and other
agencies) (collectively, "Patent Related Materials"), within thirty (30) days of
execution of this Agreement by both parties. To the extent Xcyte requests
additional Patent Related Materials from ARCH during the term hereof and ARCH or
the University has such additional Patent Related Materials in its possession,
ARCH will make reasonable efforts in cooperation with the University and the
Inventors to supply such additional Patent Related Materials. Xcyte will pay the
actual handling and shipping costs for any additional Patent Related Materials
provided. Promptly following the execution of this Agreement and thereafter upon
Xcyte's request, ARCH will use reasonable efforts in cooperation with the
University and Inventors to disclose and provide to Xcyte all tangible materials
associated with the Patent Related Materials. Xcyte shall have the right, free
of charge, to refer to, access, cross reference and otherwise use all Patent
Related Materials and all associated tangible materials so provided for any
purpose relevant to this License Agreement, and to provide the same to third
parties under reasonable conditions of confidentiality customary in patent-based
product development.
7. Warranties; Disclaimer Indemnification, Insurance.
A. ARCH. ARCH represents and warrants that: (i) except for the
ownership rights of the Foundation as set forth in the ARCH-Foundation Agreement
attached hereto as Exhibit B, ARCH is the sole and exclusive owner of all right,
title and interest in the Licensed Patents; (ii) it has the right to grant the
rights and licenses granted herein, and the Licensed Patents are free and clear
of any lien, encumbrance, security interest or restriction on license; (iii) it
has not previously granted, and will not grant during the term of this
Agreement, any right, license or interest in and to the Licensed Patents, or any
portion thereof, inconsistent with the license granted to Xcyte herein; and (iv)
to its knowledge there are no threatened or pending actions, suits,
investigations, claims or proceedings in any way relating to the Licensed
Patents.
B. Disclaimer of Warranties. Except as expressly provided above,
ARCH makes no representations or warranties of any kind, express or implied,
with respect to the invention(s) claimed in the Licensed Patents or with respect
to the Licensed Patents themselves, including but not limited to, any
representations or warranties about (i) the validity, scope or enforceability of
any of the Licensed Patents; (ii) the accuracy, safety or usefulness for any
purpose of any information provided by ARCH to Xcyte, its Sublicensees or
Affiliates of either, with respect to the invention(s) claimed in the Licensed
Patents or with respect to the Licensed Patents themselves and any products
developed from or covered by them; (iii) whether the practice of any claim
contained in any of the Licensed Patents will or might infringe a patent or
other intellectual property right owned or licensed by a third party; (iv) the
patentability of any invention claimed in the Licensed Patents; or (v) the
accuracy, safety, or usefulness for any purpose of any product or process made
or carried out in accordance with or through the use of the Licensed Patents.
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C. Indemnification. Xcyte agrees, and agrees to cause its
Sublicensees and Affiliates of either, to indemnify, defend and hold harmless
ARCH, its Affiliates and all trustees, directors, officers, employees, fellows
and agents of any of the foregoing (including ARCH and its Affiliates, each an
"Indemnified Person") from and against any and all third party claims, demands,
loss, damage, penalty, cost or expense (including attorneys' and witnesses' fees
and costs) of any kind or nature, arising from the development, production, use,
sale or other disposition of Licensed Products and all activities associated
therewith by Xcyte, its Sublicensees or Affiliates of either, or any use by
Xcyte and its Sublicensees or Affiliates of information provided by ARCH to
Xcyte. ARCH will be entitled to participate at its option and expense through
counsel of its own selection, and may join in any legal actions related to any
such third party claims, demands, losses, damages, costs, expenses and
penalties. Xcyte, its Sublicensees and Affiliates of either, will not enter into
any settlement which includes an express or implied admission of liability,
negligence or wrongdoing by any Indemnified Person, without the prior written
consent of such Indemnified Person, which consent will not be unreasonably
withheld.
D. Assumption of Risk. The entire risk as to the performance,
safety and efficacy of any invention claimed in the Licensed Patents resulting
from the practice thereof by Xcyte or its Affiliates or Sublicensees or of any
Licensed Products made by Xcyte or its Affiliates or Sublicensees is assumed by
Xcyte, its Sublicensees and Affiliates of either, provided that such assumption
of the risk will not apply to the intentional misconduct or gross negligence by
Indemnified Persons. Indemnified Persons will not, except for their intentional
misconduct or gross negligence, be responsible or liable for any injury, loss,
or damage of any kind, including but not limited to direct, indirect, special,
incidental or consequential damages or lost profits to Xcyte, any Sublicensee,
Affiliates of either or customers of any of the foregoing, or for any such
injury, loss or damage to any other individual or entity, regardless of legal
theory based on the development, manufacture, use, sale or other disposition of
Licensed Products and all activities associated therewith. The above limitations
on liability apply even though the Indemnified Person may have been advised of
the possibility of such injury, loss or damage. Xcyte will not, and will require
all Sublicensees and Affiliates of either to not, make any agreements,
statements, representations or warranties or accept any liabilities or
responsibilities whatsoever with regard to any person or entity which are
inconsistent with this Section.
E. Insurance. Xcyte will, at its sole cost and expense, procure
prior to the initiation of any human clinical trials of a Licensed Product, and
maintain thereafter, a comprehensive general liability insurance policy naming
the Indemnitees as additional insureds. The limits of such insurance shall not
be less than, [*] per incident and [*] annual aggregate for any Phase I clinical
trials of any Licensed Product, [*] per incident and [*] annual aggregate for
any later phase clinical trials of any Licensed Product and [*] per incident and
[*] annual aggregate upon the first commercial distribution or sales (other than
for the purpose of obtaining regulatory approvals) of any Licensed Product by
Xcyte or by a Sublicensee or agent of Xcyte.
Such comprehensive general liability insurance will provide (a) product
liability coverage, and (b) broad form contractual liability coverage for
Xcyte's indemnification under Section 7.C. of this Agreement. If Xcyte elects to
self-insure all or part of the limits described above (including deductibles or
retentions which are in excess of [*] annual aggregate), such self-insurance
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
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program must be reasonably acceptable to ARCH. The minimum amounts of insurance
coverage required under these provisions will not be construed to create a limit
of Xcyte's liability with respect to its indemnification obligation under
Section 7.C. of this Agreement. Xcyte will provide ARCH with written evidence of
such insurance upon written request. Xcyte will provide ARCH with written notice
at least fifteen (15) days prior to the cancellation, non-renewal or material
change in such insurance. Xcyte will maintain such comprehensive general
liability insurance beyond the expiration or termination of this Agreement
during (i) the period that any product, process, or service, relating to, or
developed pursuant to, this Agreement is being commercially distributed or sold
(other than for the purpose of obtaining regulatory approvals) by Xcyte or by a
Sublicensee or agent of Xcyte, and (ii) a reasonable period after the period
referred to in (i) above which in no event will be less than fifteen (15) years.
8. Confidentiality.
A. Confidentiality, Publications and Data Access. All information
submitted by one party to the other concerning the invention(s) claimed in the
Licensed Patents and Licensed Products identified as confidential at the time of
disclosure will be considered as confidential ("Confidential Information") and
will be utilized only pursuant to the licenses granted hereunder. During the
term of this Agreement and for a period of ten (10) years thereafter, neither
party will disclose to any third party any Confidential Information received
from the other party without the specific written consent of such party. The
foregoing will not apply where such Information a) was or becomes public through
no fault of the receiving party, b) was, at the time of receipt, already in the
possession of the receiving party as evidenced by its prior written records, c)
was obtained from a third party legally entitled to use and disclose the same,
d) is independently developed by the receiving party without use of any
Confidential Information of the disclosing party, or e) is required by law to be
disclosed to a court or governmental agency.
B. Permitted Use and Disclosures. Notwithstanding Section 8.A.
above, each party hereto may use or disclose information disclosed to it by the
other party to the extent such use or disclosure is reasonably necessary in
filing or prosecuting patent applications, prosecuting or defending litigation,
complying with applicable governmental regulations or otherwise submitting
information to tax or other governmental authorities, conducting clinical
trials, or making a permitted sublicense or otherwise exercising its rights
hereunder, provided that if a party is required to make any such disclosure of
another party's confidential information, other than pursuant to a
confidentiality agreement, it will give reasonable advance notice to the latter
party of such disclosure and, save to the extent inappropriate in the case of
patent applications, will use its best efforts to secure confidential treatment
of such information prior to its disclosure (whether through protective orders
or otherwise).
C. Confidential Terms. Except as expressly provided herein, each
party agrees not to disclose any terms of this Agreement to any third party
without the consent of the other party; provided, disclosures may be made as
required by securities or other applicable laws, or to actual or prospective
investors or corporate partners, or to a party's accountants, attorneys and
other professional advisors.
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D. Publications. ARCH will provide to Xcyte copies of (i) any
proposed written publication by ARCH or the University containing any
Confidential Information, (ii) any proposed written publication by the
Inventor(s) containing any Confidential Information, to the extent ARCH is aware
of, and has access to, such publication and (iii) proposed publications
containing any information relating to the Licensed Patents, to the extent ARCH
is aware of, and has access to, such publications. Xcyte will provide to ARCH
copies of (i) any proposed written publication by Xcyte, its Sublicensees and/or
Affiliates of either of them containing any Confidential Information and (ii)
proposed publications containing any information relating to the Licensed
Patents, to the extent Xcyte is aware of, and has access to, such publications.
The parties will provide copies of such proposed written publications at least
ninety (90) days in advance of publication. In addition, the topic and contents
of any proposed oral disclosures regarding the Licensed Patents which will be
made to third persons by ARCH will be disclosed in writing to Xcyte at least
thirty (30) days prior to any proposed oral presentation. The receiving party
may object to such proposed publication or disclosure on the grounds that (i) it
contains patentable subject matter that needs patent protection or (ii) that the
publication contains Confidential Information of the objecting party. At the
request of the objecting party, Confidential Information of the objecting party
will be deleted from the publication or oral disclosure.
9. Infringement. In the event of an infringement of a Licensed Patent
the following will apply:
A. Notice. Each party will give the other written notice if one
of them becomes aware of any infringement by a third party of any Licensed
Patent. Upon notice of any such infringement, the parties will promptly consult
with one another with a view toward reaching agreement on a course of action to
be pursued.
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B. Xcyte's Right to Bring Infringement Action.
(1) If a third party infringes any patent included in the
Licensed Patents within the Field, Xcyte will have the first right, but not the
obligation, to institute and prosecute an action or proceeding to abate such
infringement and to resolve such matter by settlement or otherwise. Xcyte agrees
to notify ARCH of its intention to bring an action or proceeding prior to filing
the same (or responding to any declaratory judgment action) and in sufficient
time to allow ARCH the opportunity to discuss with Xcyte the choice of counsel
for such matter. Xcyte agrees to hire counsel reasonably acceptable to ARCH.
Xcyte will keep ARCH timely informed of material developments in the prosecution
or settlement of such action or proceeding. Xcyte will be responsible for all
costs and expenses of any action or proceeding against infringers which Xcyte
initiates. ARCH will cooperate fully in such action, including without
limitation, by joining as a party plaintiff if required to do so by law to
maintain such action or proceeding, and by executing and making available such
documents as Xcyte may reasonably request. Xcyte agrees to promptly reimburse
ARCH for its reasonable third party out-of-pocket fees and expenses incurred in
joining an action or proceeding or cooperating with Xcyte. ARCH may be
represented by counsel in any such legal proceedings, at ARCH's own expense,
acting in an advisory but not controlling capacity.
(2) The prosecution, settlement, or abandonment of any
action or proceeding under subsection 9.B.(1) will be at Xcyte's reasonable
discretion provided that Xcyte will not have any right to surrender any of ARCH'
s rights to the Licensed Patents.
(3) Except as provided herein, all amounts of every kind
and nature recovered from an action or proceeding of infringement by Xcyte will
belong to Xcyte. After deduction of the fees and expenses of both parties to
this Agreement, any remaining amounts recovered will be considered Net Sales
under this Agreement and subject to Royalty payments in accordance with Section
3.B.
C. ARCH's Right to Bring Infringement Action. If a third party
infringes any patent included in the Licensed Patents within the Field, and ARCH
wishes to initiate a legal proceeding against such infringement, ARCH will first
notify Xcyte in writing and request that Xcyte bring an action or proceeding
against the infringing third party. if Xcyte declines or fails to bring such an
action or proceeding within three hundred sixty five (365) days of receipt of
the notice, ARCH will have the right, at its discretion, to institute and
prosecute an action or proceeding to abate such infringement and to resolve such
matter by settlement or otherwise. Xcyte will cooperate fully by joining as a
party plaintiff if required to do so by law to maintain such action and by
executing and making available such documents as ARCH may reasonably request.
Except as specifically provided in this Article 9, ARCH will have the right to
retain all amounts recovered of every kind and nature. Amounts recovered by ARCH
will not be considered Net Sales under this Agreement and will not give rise to
Royalty payments under Article 3.
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10. Termination.
A. Term. Unless terminated earlier, this Agreement will expire on
the expiration date of the last to expire of the Licensed Patents. The term of
this Agreement will commence on the Effective Date, and unless earlier
terminated as provided herein, will continue in full force and effect on a
country-by-country and Licensed Product-by-Licensed Product basis until there
are no remaining royalty payment obligations in a country, at which time the
Agreement will expire in its entirety in such country.
B. ARCH's Right to Terminate. ARCH will have the right to
terminate this Agreement as follows, in addition to all other available
remedies:
(1) Subject to Section 10.C., if Xcyte fails to make any
Royalty or other payment when due, this Agreement will terminate effective
thirty (30) days after ARCH's written notice to Xcyte to such effect, unless
Xcyte makes such payment within such thirty (30) days.
(2) Subject to Section 10.C., if Xcyte fails to observe
any other material obligation of this Agreement, this Agreement will terminate
effective ninety (90) days after ARCH's written notice to Xcyte describing such
failure, unless Xcyte cures such failure within such ninety (90) days.
(3) if Xcyte will have filed by or against it a petition
under any bankruptcy or insolvency law and such petition is not dismissed within
sixty (60) days of its filing, or if Xcyte makes an assignment of all or
substantially all of its assets for the benefit of its creditors ARCH may
terminate this Agreement by written notice effective as of the (i) date of
filing by Xcyte of any such petition, (ii) date of any such assignment to
creditors, or (iii) end of the sixty (60) days if a petition is filed against it
and not dismissed by such time, whichever is applicable.
(4) If Xcyte will be dissolved, liquidated or otherwise
ceases to exist due to insolvency, other than for reasons specified in
subsection 10.B.(3) above, this Agreement will automatically terminate as of (i)
the date articles of dissolution or a similar document is filed on behalf of
Xcyte with the appropriate government authority or (ii) the date of
establishment of a liquidating trust or other arrangement for the winding up of
the affairs of Xcyte.
C. Termination for Cause. If any party materially breaches this
Agreement, the Xcyte, if ARCH is the breaching party, or ARCH, if Xcyte is the
breaching party, may elect to give the breaching party written notice describing
the alleged breach. If the breaching party has not cured such breach within
sixty (60) days after receipt of such notice, the notifying party will be
entitled, in addition to any other rights it may have under this Agreement, to
terminate this Agreement effective immediately; provided, however, if either
party receives notification from the other of a material breach and if the party
alleged to be in default notifies the other party in writing within thirty (30)
days of receipt of such default notice that it disputes the asserted default,
the matter will be submitted to arbitration as provided in Article 11 of this
Agreement. In
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such event, the nonbreaching party shall not have the right to terminate this
Agreement until it has been determined in such arbitration proceeding that the
other party materially breached this Agreement, and the breaching party fails to
cure such breach within ninety (90) days after the conclusion of such
arbitration proceeding, including any appeal subject to Section 11.B.
D. Xcyte's Right to Terminate. Xcyte may terminate this Agreement
as to any of the patent applications and/or patents within the Licensed Patents
and/or any country at any time by giving ARCH ninety (90) days prior written
notice.
E. Effect of Termination.
(1) Accrued Rights and Obligations. Termination of this
Agreement for any reason will not release any party hereto from any liability
which, at the time of such termination, has already accrued to the other party
or which is attributable to a period prior to such termination, nor preclude
either party from pursuing any rights and remedies it may have hereunder or at
law or in equity which accrued or are based upon any event occurring prior to
such termination.
(2) Stock on Hand. In the event this Agreement is
terminated for any reason, Xcyte and its Affiliates and Sublicensees shall have
the right to sell or otherwise dispose of the stock of any Licensed Product
subject to this Agreement then on hand, subject to Article 3.
(3) Sublicensees. In the event of any termination of this
Agreement, any sublicenses granted by Xcyte shall remain in force and effect and
shall be assigned by Xcyte to ARCH; provided, the financial obligations of each
Sublicensee to ARCH shall be limited to the amounts Xcyte shall be obligated to
pay to ARCH for the activities of such Sublicensee pursuant to this Agreement,
and the obligations of ARCH to each Sublicensee will not exceed the obligations
of ARCH to Xcyte pursuant to this Agreement.
F. Survival. The provisions of (i) Xcyte's obligation to pay
Royalties and Patent Costs accrued prior to the date of termination and which
were not paid or payable before termination, along with the report of Net Sales
and record keeping required by Sections 3.C and 3.D, and (ii) Articles 7, 8, 11
and 12 and Sections 10.E. and 10.F. will survive termination of this Agreement
for any reason.
11. Arbitration. If the parties cannot satisfactorily settle any claim,
disagreement or controversy arising out of or related to this Agreement or its
interpretation, performance, nonperformance, breach or their respective rights
and obligations hereunder, such disagreement will, at the request of either
party, be settled by arbitration as follows:
A. Panel. All such disputes will be referred to an arbitration
panel comprised of three persons, one to be selected by each party hereto and
the third selected by the first two. The arbitrators will be persons involved in
and familiar with the licensing and technology transfer field. Each party will
select an arbitrator within twenty (20) days of request for arbitration by
either party. The first two arbitrators will select the third member of the
panel
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within fifteen (15) days after their selection. The arbitration will be held as
soon as is reasonably possible after selection of the arbitration panel. The
proceedings will be held in an informal manner as reasonably determined by the
arbitrators. Except for the right of appeal as set forth in Section 1 1.B.
below, the parties will be bound by a decision of the arbitration panel with
respect to the matter in dispute. All proceedings of the arbitration panel will
be held in Chicago, Illinois.
B. Appeals. There will be no appeal from an arbitration panel's
unanimous decision. In the event of a majority decision by the arbitration
panel, a dissatisfied party may appeal the panel's decision to the American
Arbitration Association (AAA) for an independent, final, binding decision. All
appeals will be heard in Chicago, Illinois. The dissatisfied party must make
such an appeal within thirty (30) days after receipt of the arbitration panel's
decision and if it loses the appeal must bear the parties' expenses and costs
for such appeal. The AAA is hereby authorized to make arrangements for such
appeal, to be held under the procedures provided by its arbitration rules.
Judgment upon any award rendered by all or a majority of the appeal arbitrators
or a unanimous judgment of the initial panel, may be entered in any court of
competent jurisdiction, after any and all applicable appeal periods have passed.
12. Miscellaneous.
A. Marking. Xcyte will and agrees to cause its Sublicensees and
Affiliates of either, to place in a conspicuous location on Licensed Products
(or its packaging where marking the Product is physically impossible) sold to
third parties, a patent notice in accordance with the laws concerning the
marking of patented articles in the country in which such articles are sold.
B. United States Manufacture. Xcyte agrees that, to the extent
required by 35 United States Code Section 204, any Licensed Product sold in the
United States will be manufactured substantially in the United States of
America.
C. Export Regulations. To the extent that the United States
Export Control Regulations are applicable, neither Xcyte nor ARCH will, without
having first fully complied with such regulations, (i) knowingly transfer,
directly or indirectly, any unpublished technical data obtained or to be
obtained from the other party hereto to a destination outside the United States,
or (ii) knowingly ship, directly or indirectly, any product produced using such
unpublished technical data to any destination outside the United States.
D. Entire Agreement, Amendment, Waiver. This Agreement together
with the Exhibits attached hereto constitutes the entire agreement between the
parties regarding the subject matter hereof, and supersedes all prior written or
oral agreements or understandings (express or implied) between them concerning
the same subject matter. This Agreement may not be amended or modified except in
a document signed by duly authorized representatives of each party. No waiver of
any default hereunder by either party or any failure to enforce any rights
hereunder will be deemed to constitute a waiver of any subsequent default with
respect to the same or any other provision hereof.
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E. Notice. Any notice required or otherwise made pursuant to this
Agreement will be in writing, sent by registered or certified mail properly
addressed, or by facsimile with confirmed answer-back, to the other party at the
address set forth below or at such other address as may be designated by written
notice to the other party. Notice will be deemed effective three (3) business
days following the date of sending such notice if by mail, on the day following
deposit with an overnight courier, if sent by overnight courier, or upon
confirmed answer-back if by facsimile.
If to ARCH: ARCH Development Corporation
5640 South Ellis, Suite 405
Chicago, Illinois 60637
Attention: President
If to Xcyte: Xcyte Therapies, Inc.
2203 Airport Way South
Suite 300
Seattle, Washington 98134
Attention: President
F. Assignment. This Agreement will be binding on the parties
hereto and upon their respective successors and assigns. Either party may at any
time, upon written notice to the other party, assign or delegate to a successor
to all or substantially all of its business any of its rights and obligations
hereunder, provided that, any such assignment or delegation will in no event
relieve either party of its primary responsibility for the same. Except as
provided in the preceding sentence, Xcyte may not assign or delegate any right
or obligation hereunder without the prior written consent of ARCH, which consent
will not be unreasonably withheld, and any attempted assignment or delegation in
violation thereof will be void. ARCH may assign this Agreement at any time to
any third party on written notice to Xcyte. In such event, the assignee will be
substituted for ARCH as a party hereto, and ARCH will no longer be bound hereby.
G. Governing Law. The interpretation and performance of this
Agreement will be governed by the laws of the State of Illinois applicable to
contracts made and to be fully performed in that state.
H. The University. This Agreement is entered into by ARCH in its
own private capacity and not on behalf of the University, nor as its contractor
or agent. It is understood and agreed that the University is not a party to this
Agreement and is not liable for nor assumes any responsibility or obligation
under this Agreement, and is not liable for any action or lack thereof by ARCH.
I. Advertising. Each party agrees not to use the name of the
other party in any commercial activity, marketing, advertising or sales
brochures except with the prior written consent of the other party, which
consent may be granted or withheld in such party's sole discretion. Xcyte agrees
not to use, and will prohibit its Sublicensees and the Affiliates of either from
using, the name of the University or any of the Inventor(s) in any commercial
activity,
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marketing, advertising or sales brochures, except to the extent required by law.
J. Independent Contractors. The relationship of the parties
hereto is that of independent contractors. The parties hereto are not deemed to
be agents, partners or joint venturers of the others for any purpose as a result
of this Agreement or the transactions contemplated thereby.
K. Right to Develop Independently. Nothing in this Agreement will
impair Xcyte' s right to independently acquire, license, develop for itself, or
have others develop for it, intellectual property and technology performing
similar functions as the Licensed Patents or to market and distribute Licensed
Products or other products based on such other intellectual property and
technology. Nothing in this Agreement will impair ARCH's or the University's
right to independently acquire, license, develop for itself, or have others
develop for it, intellectual property and technology (other than the Licensed
Patents) performing similar functions as the Licensed Patents or to market and
distribute products (other than Licensed Products) based on such other
intellectual property and technology.
L. Force Majeure. Neither party shall lose any rights hereunder
or be liable to the other party for damages or losses (except for payment
obligations) on account of failure of performance by the defaulting party if the
failure is occasioned by war, strike, fire, Act of God, earthquake, flood,
lockout, embargo, governmental acts or orders or restrictions, failure of
suppliers, or any other reason where failure to perform is beyond the reasonable
control and not caused by the negligence, intentional conduct or misconduct of
the nonperforming party and the non-performing party has exerted all reasonable
efforts to avoid or remedy such force majeure; provided, however, that in no
event shall a party be required to settle any labor dispute or disturbance.
M. Limitation of Liability. NEITHER PARTY SHALL BE LIABLE TO THE
OTHER FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES ARISING OUT
OF THIS AGREEMENT, HOWEVER CAUSED, UNDER ANY THEORY OF LIABILITY.
N. Severability. In the event that any provisions of this
Agreement are determined to be invalid or unenforceable by a court of competent
jurisdiction, the remainder of the Agreement shall remain in full force and
effect without said provision. The parties shall in good faith negotiate a
substitute clause for any provision declared invalid or unenforceable, which
shall most nearly approximate the intent of the parties in entering this
Agreement.
O. Counterparts. This Agreement may be executed in two
counterparts, each of which shall be deemed an original and which together shall
constitute one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed by their respective duly authorized officers or representatives on the
date first above written.
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ARCH Development Corporation Xcyte Therapies, Inc.
By: /s/: Thomas L. Churchwell By: /s/: Ronald J. Berenson
----------------------------------- ---------------------------------
Thomas L. Churchwell Ronald J. Berenson
President and CEO President and CEO
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EXHIBIT A
SCHEDULE OF LICENSED PATENTS
[*]
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
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