LICENSE AGREEMENT
BY AND BETWEEN
XOMA IRELAND LIMITED
AND
BAXTER HEALTHCARE CORPORATION
DATED AS OF
JANUARY 25, 2000
[*] indicates that a confidential portion of this Agreement has been omitted and
filed separately with the Securities and Exchange Commission.
LICENSE AGREEMENT
LICENSE AGREEMENT, dated as of January 25, 2000 (this "Agreement"), by and
between XOMA Ireland Limited, a company with limited liability organized under
the laws of the Republic of Ireland (including its Affiliates, "XOMA Ireland"),
having a place of business at Shannon Airport House, Shannon, Co. Clare,
Ireland, and Baxter Healthcare Corporation, a Delaware corporation (including
its Affiliates, "Baxter"), having a place of business at 550 North Brand
Boulevard, Glendale, California 91203, United States.
RECITALS
WHEREAS, except as set forth herein, XOMA Ireland is the sole and exclusive
owner or exclusive licensee of all right, title in and to the XOMA Know-How, the
XOMA Inventions and the XOMA Patents (each as defined below) for use in the
Field (as defined below);
WHEREAS, Baxter desires to have the right to make, have made, use, sell,
offer to sell, import and/or export one or more Products (as defined below) for
use in the Field using the Licensed Technology (as defined below); and
WHEREAS, Baxter desires to acquire an exclusive worldwide license to the
Licensed Technology and the Products for use in the Field and XOMA Ireland is
willing to grant such a license to Baxter.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and considerations set forth herein, the parties hereto, intending to be legally
bound, agree as follows:
ARTICLE 1.
DEFINITIONS
The following terms shall have the meanings set forth in this Article.
1.1 "Affiliate" shall mean, with respect to either party hereto, any
corporation, partnership, limited liability company or other business entity
controlled by, controlling, or under common control with either such party, with
"control" meaning direct or indirect beneficial ownership of fifty percent or
more (or such lesser percentage as is the maximum allowed to be owned by a
foreign corporation in a particular jurisdiction) of the voting stock of, or a
fifty percent or more interest in the income of, such corporation, partnership
or other business entity.
1.2 "Agencies" shall mean the United States Federal Trade Commission and
the United States Department of Justice.
1.3 "Baxter BPI Cell Lines" shall mean any Improvement made to the XOMA BPI
Cell Lines or new cell line producing BPI developed by Baxter, including, but
not limited to, the genetic material contained in the cell line from which BPI
is produced.
1.4 "Baxter Competitor" shall mean any Person who sells products or
provides services which compete with any product or service which accounts for
more than ten percent of gross sales for the latest fiscal year then ended of
Baxter's business that is currently conducted by its Hyland Immuno division.
1.5 "Baxter Inventions" shall mean Inventions or Improvements conceived or
reduced to practice solely by employees or others acting on behalf of Baxter.
1.6 "Baxter Know-How" shall mean all information, techniques, data and
materials that are directed to compounds and compositions of BPI, any Baxter BPI
Cell Line and the methods or processes of making or using BPI, and which is not
generally known (including, but not limited to, a proprietary "trade secret" or
other intellectual property right under United States or other applicable law)
which is substantial, secret and identifiable, and which Baxter owns or in which
Baxter has an interest that is capable of being licensed, and which is in the
possession of Baxter on the date of this Agreement or during the term hereof,
including, without limitation, all biological, chemical, pharmacological,
toxicological, clinical, regulatory, analytical, quality control and
manufacturing data, methods, practices, knowledge, experience and any other
information (whether technical or commercial) that may be useful for the
development, regulatory approval, manufacture and/or commercialization of
Products.
1.7 "Baxter Patents" shall mean (a) all patent applications filed or having
legal force in any country owned by or licensed to Baxter or to which Baxter
otherwise acquires rights, which claim a compound or composition containing a
Baxter Invention or a method or process for making or using a Baxter Invention,,
together with any and all patents that issue therefrom, including utility, model
and design patents and certificates of invention, and (b) all divisionals,
continuations, continuations-in-part, reissues, re-examinations, renewals,
extensions or additions to any such patents and patent applications; all to the
extent and only to the extent that Baxter hereafter will have the right to grant
licenses, immunities or other rights thereunder.
1.8 "BLA" shall mean an application for a license to market and sell a
Product filed in accordance with the requirements of the FDA or the CEU, as
applicable.
1.9 "BPI" shall mean bactericidal/permeability increasing protein [*]
1.10 "BPI Cell Lines" shall mean any of the XOMA BPI Cell Lines and any of
the Baxter BPI Cell Lines.
1.11 "CEU" shall mean the Commission of the European Union and any
successor agency performing similar functions.
1.12 "Change of Control" shall mean any of the following events: (i) any
Person or "group" is or becomes the "beneficial owner" (as such terms are
defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, as
amended, directly or indirectly, of fifty percent or more fo the total voting
power of all classes of capital stock then outstanding and normally entitled to
vote in elections of directors ("Voting Stock") of XOMA Ireland Limited or its
parent; (ii) XOMA Ireland Limited or its parent consolidates or amalgamates with
or merges into, another corporation or entity, or any corporation or entity
consolidates or amalgamates with or merges into the XOMA Ireland Limited or its
parent, in either event pursuant to a transaction in which the outstanding
Voting Stock of XOMA Ireland Limited or its parent is changed into or exchanged
for cash, securities or other property, and the holders of the Voting Stock
immediately prior to such transaction do not hold fifty percent or more of the
voting securities of the successor entity; or (iii) XOMA Ireland Limited or its
parent liquidates, dissolves, conveys, transfers or leases all or any
substantial portion of its assets to one or more Persons.
2
1.13 "Clinical Trials" shall mean the use of any Product in the Field in
connection with testing or evaluation of such Product or in connection with a
process to obtain Regulatory Approval to market the Product.
1.14 "Comparative Period" shall mean the [*] month period ending [*]
immediately preceding [*]
1.15 "Cost of Goods Sold" shall mean the sum of Direct Manufacturing Cost
and Fixed Manufacturing Overhead, including, but not limited to, all costs of
materials, labor and reasonable allocations of overhead necessary to perform
receiving, manufacturing, assaying, release testing, packaging, labeling,
shipping (excluding distribution to customers), quality assurance and other
tasks required for compliance with governmental regulations which govern the
manufacture of a pharmaceutical product. Cost of Goods Sold shall also include
the full cost associated with quality control samples, retention samples [*] and
shall not include any fully burdened costs associated with production failures
which cause the actual success ratio for the plant to fall below the lowest
point of the expected success ratio range allowed for such plant as determined
pursuant to the Supply Agreement. In the event that one or more Third Parties
manufacture the product (or any part thereof), Cost of Goods Sold of that
product (or that part) shall mean the amount paid under the contract arrangement
with such Third Parties. Royalties paid to third parties in order to
manufacture, use or sell Product(s) shall be included in the Cost of Goods Sold
(notwithstanding reimbursement to XOMA Ireland by Baxter pursuant to Section
3.3) including, without limitation, (a) royalties under the Existing Licenses
and (b) royalties for patent rights which could reasonably be expected to be
infringed by the manufacture, use or sale of one or more Products.
1.16 "Cost of Manufacturing" shall mean the sum of Direct Manufacturing
Cost and Fixed Manufacturing Overhead, including, but not limited to, all costs
of materials, labor and reasonable allocations of overhead necessary to perform
receiving, manufacturing, assaying, release testing, packaging, labeling,
shipping (excluding distribution to customers), quality assurance and other
tasks required for compliance with governmental regulations which govern the
manufacture of a pharmaceutical product. Cost of Manufacturing shall also
include the full cost associated with quality control samples and retention
samples and shall not include
3
any fully burdened costs associated with production failures which cause the
actual success ratio for the plant to fall below the lowest point of the
expected success ratio range allowed for such plant as determined pursuant to
the Supply Agreement. In the event that one or more Third Parties manufacture
the product (or any part thereof), Cost of Manufacturing shall mean the amount
paid under the contract arrangement with such Third Parties.
1.17 "Direct Manufacturing Cost" shall mean the costs directly attributable
to manufacturing Product (i.e. those costs whose total will vary with quantity
of production but which are relatively fixed with respect to a unit of
production), including, but not limited to, direct labor and benefit expenses
and consumable raw materials and other production materials, determined in
accordance with generally accepted cost accounting standards.
1.18 "Effective Date" shall mean the date of termination or expiration of
any applicable waiting period under the HSR Act.
1.19 "Existing Licenses" shall mean the License Agreement, between Incyte
Pharmaceuticals, Inc. and XOMA Technology Ltd., effective as of July 9, 1998,
and the NYU License, each as amended to the date of this Agreement, and any
future amendments thereto which are mutually agreed upon by Baxter and XOMA
Ireland (which agreement shall not be unreasonably withheld).
1.20 "FDA" shall mean the United States Food and Drug Administration or any
successor agency performing similar functions.
1.21 "Field" shall mean any and all antibacterial and/or anti-endotoxin
uses, in human clinical indications (including, but not limited to,
Meningococcemia and future indications but excluding [*] ophthalmic
indications), in which the therapeutic action of the Product involves one or
more of: (a) the binding and/or neutralization of lipopolysaccharide or
endotoxin which is on or released from gram negative bacteria, thereby
interrupting the inflammatory cascade potentially leading to septicemia/sepsis,
(b) killing of gram negative or gram positive bacteria and (c) enhancing the
ability of antibiotics to kill gram negative or gram positive bacteria,
including, but not limited to, reversal of bacterial resistance to antibiotics.
1.22 "Fixed Manufacturing Overhead" shall mean reasonable allocations of
those costs incurred to manufacture Product which are relatively independent of
the volume of production, including, but not limited to, depreciation,
maintenance and repairs, general and administrative expenses, equipment lease
expense and property and fire insurance costs, determined in accordance with
generally accepted cost accounting standards.
1.23 "Gross Profit" shall mean Net Sales [*] less Cost of Goods Sold.
1.24 "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated thereunder.
4
1.25 "IND" shall mean an Investigational New Drug Application as filed with
the FDA or equivalent filed with other agencies performing similar functions.
1.26 "Improvements" shall mean all inventions, discoveries or other
technology (whether patentable or not) conceived or reduced to practice during
the term of this Agreement solely or jointly by employees or others acting on
behalf of XOMA Ireland or Baxter which constitute an improvement directed to
BPI, compounds or compositions of BPI, any of the BPI Cell Lines or any methods
or processes for making or using BPI or any of the BPI Cell Lines.
1.27 "Indicative Period" shall mean the [*] month period ending
[*] as applicable, following [*]
1.28 "Inventions" shall mean all inventions, discoveries, improvements or
other technology (whether patentable or not) directed to compounds or
compositions of BPI, any of the BPI Cell Lines or any methods or processes for
making or using BPI or any of the BPI Cell Lines conceived or reduced to
practice during the term of this Agreement solely or jointly by employees or
others acting on behalf of XOMA Ireland or Baxter.
1.29 "Joint Inventions" shall mean Inventions or Improvements conceived or
reduced to practice jointly by employees or others acting on behalf of XOMA
Ireland and by employees or others acting on behalf of Baxter.
1.30 "Joint Patents" shall mean (a) all patent applications filed or having
legal force in any country owned jointly by Baxter, on the one hand, and XOMA
Ireland, on the other hand, or to which Baxter, on the one hand, and XOMA
Ireland, on the other hand, otherwise acquire joint rights, which claim a
compound or composition containing a Joint Invention or a method or process for
making or using a Joint Invention, together with any and all patents that issue
therefrom, including utility, model and design patents and certificates of
invention, and (b) all divisionals, continuations, continuations-in-part,
reissues, re-examinations, renewals, extensions or additions to any such patents
and patent applications; all to the extent and only to the extent that Baxter
and/or XOMA Ireland, as applicable, hereinafter will have the right to grant
licenses, immunities or other rights thereunder.
1.31 "Know-How" shall mean the Baxter Know-How and the XOMA Know-How.
1.32 "Licensed Technology" shall mean all Know-How, Inventions, Patents and
the BPI Cell Lines directed to Products.
1.33 "Meningococcemia" shall mean an infection of the blood
(septicemia/sepsis) by Neisseria meningitidis.
5
1.34 "Net Sales" shall be calculated in accordance with Baxter's prevailing
accounting practices in effect from time to time and mean the total amount
invoiced in U.S. dollars, or, if in another currency, as converted by Baxter
according to its standard conversion practices for purposes of financial
reporting, or, if greater, received from a Third Party by Baxter, for the use
(not including internal use by Baxter), sale or transfer of any Products after
deducting the following costs provided such costs are attributable to such use,
sale or transfer of such Products and are actually borne by Baxter and are
specifically itemized on the invoice and billing statement and not otherwise
incorporated into the sale or transfer price: (a) prepaid outbound
transportation expenses for shipments to end users, (b) discounts allowed and
taken, in amounts customary in the trade, for reasons such as quantity purchases
and prompt payment by wholesalers and distributors, (c) taxes, including, but
not limited to, sales, use, turnover, excise, import and other taxes or duties,
separately billed or invoiced and borne by Baxter, imposed by a governmental
agency on such sale, use or transfer and (d) credits or allowances given or made
for products returned or not accepted by customers for the Product, provided
that such credit or allowance shall not exceed the invoiced amount for such
Product. If a Product is sold in the form of a combination product containing
one or more active or other ingredients in addition to such Product, Net Sales
for such combination product will be adjusted (x) by multiplying actual Net
Sales of such combination product by the fraction A/(A+B) where A is the
invoiced price of the Product, if sold separately, and B is the invoice price of
any active or other ingredients in the combination, if sold separately, or (y)
if A and/or B are not sold separately, by a good faith estimate by Baxter based
upon the economic value of the Product. If in XOMA Ireland's reasonable
judgment, the adjustment contemplated by clause (y) does not accurately reflect
the true economic value of the Product and the active or other component or
components, then the parties shall negotiate in good faith an appropriate
allocation of the sales price of such combination product between the Product
and the active or other component or components, but if the parties are unable
to reach resolution then Section 13.7 shall apply.
1.35 "NEUPREX" shall mean an intravenous formulation of rBPI21 that has
been tested in Clinical Trials in Meningococcemia, hemorrhage due to trauma and
other indications and for which XOMA Ireland is currently seeking marketing
authorization for sale of the Product in the United States and the European
Union for the treatment of Meningococcemia.
1.36 "NYU License" shall mean the Amended and Restated Research and License
Agreement, dated as of September 1, 1993, by and among New York University and
XOMA Technology Ltd. and XOMA Ireland Limited, as amended to the date of this
Agreement.
1.37 "Patents" shall mean one or more of the Baxter Patents, the Joint
Patents and the XOMA Patents.
1.38 [*]
1.39 "Person" shall mean an individual, corporation, partnership, trust,
business trust, association, limited liability company, joint stock company,
joint venture, pool,
6
syndicate, sole proprietorship, unincorporated organization, governmental
authority or any other form of entity not specifically listed herein.
1.40 "Product(s)" shall mean any pharmaceutical compositions containing BPI
as a pharmaceutically active or other ingredient (either alone or in combination
with one or more other pharmaceutically active or other ingredients) for
intravenous or other methods of administration, including, without limitation,
NEUPREX.
1.41 [*]
1.42 "rBPI21" shall mean the modified fragment of BPI [*]
1.43 "Regulatory Approval" shall mean, in any given country in which a
Product is or is to be manufactured, sold or distributed, the approval of all
government authorities necessary for or regulating the manufacture, sale or
distribution of the Product.
1.44 "Supply Agreement" shall mean the Supply and Development Agreement by
and between XOMA (US) LLC and Baxter, dated as of the date of this Agreement.
1.45 "Third Party" shall mean any Person other than Baxter or XOMA Ireland.
1.46 "XOMA BPI Cell Line" shall mean the CHO cell line presently used by
XOMA Ireland to manufacture BPI or any Improvement to or new cell lines
producing BPI developed by or for XOMA Ireland, including, but not limited to,
the genetic material contained in the cell line from which BPI is produced.
1.47 "XOMA Inventions" shall mean Inventions or Improvements conceived or
reduced to practice solely by employees or others acting on behalf of XOMA
Ireland.
1.48 "XOMA Know-How" shall mean all information, techniques, data and
materials that are directed to compounds and compositions of BPI, the XOMA BPI
Cell Line, and the methods or processes of making or using BPI, and which is not
generally known (including, but not limited to, a proprietary "trade secret" or
other intellectual property right under United States or other applicable law)
which is substantial, secret and identifiable, and which XOMA Ireland own or in
which XOMA Ireland have an interest that is capable of being
7
licensed, and which is in the possession of XOMA Ireland on the date of this
Agreement or during the term hereof, including, without limitation, all
biological, chemical, pharmacological, toxicological, clinical, regulatory,
analytical, quality control and manufacturing data, methods, practices,
knowledge, experience and any other information (whether technical or
commercial) that may be useful for the development, regulatory approval,
manufacture and/or commercialization of Products.
1.49 "XOMA Patents" shall mean (a) all patent applications filed or having
legal force in any country throughout the world owned by or licensed to XOMA
Ireland or to which XOMA Ireland otherwise acquire rights, which claim BPI, a
compound or composition containing BPI or a XOMA Invention or a method or
process for making or using BPI or a XOMA Invention, together with any and all
patents that issue therefrom, including utility, model and design patents and
certificates of invention, and (b) all divisionals, continuations,
continuations-in-part, reissues, re-examinations, renewals, extensions or
additions to any such patents and patent applications; all to the extent and
only to the extent that XOMA Ireland hereafter will have the right to grant
licenses, immunities or other rights thereunder. The current list of patent
applications and patents encompassed within this definition is set forth in
[*]
1.50 "XOMA Trademarks" shall mean the XOMA trademark and the NEUPREX
trademark.
1.51 "Year of Sales" with respect to a particular country or region shall
mean any calendar year beginning after the first commercial sale of a Product in
that country or region.
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES
The parties hereby represent and warrant together or individually as
follows:
2.1 Corporate Existence and Power. Each party (a) is a corporation or
company duly organized, validly existing and in good standing under the laws of
the jurisdiction in which it is organized; (b) has the power and authority
(corporate or other) and the legal right to own and operate its property and
assets, to lease the property and assets it operates under lease, and to carry
on its business as it is now being conducted; and (c) is in compliance with all
requirements of applicable law, except to the extent that any noncompliance
would not have a material adverse effect on the properties, business, condition
(financial or other) of such party and could not reasonably be expected to
materially adversely affect such party's ability to perform its obligations
under this Agreement.
2.2 Authorization and Enforcement of Obligations. Each party (a) has the
power and authority and the legal right to enter into this Agreement and to
perform its obligations hereunder and (b) has taken all necessary action on its
part to authorize the execution and delivery of this Agreement and the
performance of its obligations hereunder. This
8
Agreement has been duly executed and delivered on behalf of such party, and
constitutes a legal, valid, binding obligation, enforceable against such party
in accordance with its terms.
2.3 No Conflict. The execution and delivery of this Agreement and the
performance of each party's obligations hereunder (a) do not conflict with or
violate any requirement of applicable laws or regulations or any contractual
obligation of such party and (b) do not conflict with, or constitute a default
or require any consent under, any contractual obligation of such party.
2.4 Rights to Licensed Technology. Except for items 14 and 21 of Schedule
1.49 as to which XOMA Ireland is a joint owner, XOMA Ireland is the sole and
exclusive owner or exclusive licensee of all right, title and interest in and to
the XOMA Know-How, XOMA Patents and XOMA Inventions and has the right to license
the same to Baxter in the Field. As of the date of this Agreement, no claim is
pending or, to the best of XOMA Ireland's knowledge, threatened, to the effect
that any XOMA Patents owned or licensed by XOMA Ireland, or which XOMA Ireland
otherwise has the right to use, is invalid or unenforceable by XOMA Ireland,
and, to the best of XOMA Ireland's knowledge, there is no such claim, whether
pending or threatened.
2.5 No Adverse Information. As of the date of this Agreement, except as
disclosed in the regulatory submissions previously made available to Baxter
related to the use of NEUPREX for the Meningococcemia indication, XOMA Ireland
represents and warrants that it knows of no adverse effects or other properties
that could reasonably be expected to raise objections from the FDA or other
regulatory agencies or may affect the use, effectiveness or merchantability of
the Product.
2.6 Third Party Licenses. XOMA Ireland represents and warrants that the
only Third Party license for the XOMA Know-How, XOMA Patents or XOMA Inventions
as of the date of this Agreement is the Existing Licenses. As of the date of
this Agreement, each of the Existing Licenses is in full force and effect and
neither XOMA Ireland, nor to the knowledge of XOMA Ireland, the other parties to
the Existing Licenses are in breach thereof. XOMA Ireland shall provide Baxter
with notice of any fact, circumstance, act or omission of which it has knowledge
and which could reasonably be expected to lead to default under such licenses
with sufficient lead time to allow Baxter to cure, if possible, such default.
XOMA Ireland shall use commercially reasonable efforts to assist Baxter in
obtaining a replacement license in the event of any termination of either of the
Existing Licenses.
ARTICLE 3.
GRANT OF LICENSES
3.1 Grant of License.
3.1.1. Subject to the terms of this Agreement, XOMA Ireland hereby grants
to Baxter an exclusive, worldwide license to the XOMA BPI Cell Lines, XOMA
9
Inventions, XOMA Know-How and XOMA Patents and XOMA's rights in the Joint
Inventions and Joint Patents to make, have made, use, sell, offer to sell,
import and/or export Products in the Field.
3.1.2. Subject to the terms of this Agreement, XOMA Ireland hereby grants
Baxter an exclusive, worldwide license to use the XOMA name and the XOMA
Trademarks to make, have made, sell, use, offer to sell, import and/or export
Products in the Field.
3.1.3. Notwithstanding Section 3.1.1, XOMA Ireland Limited retains its
exclusive, worldwide rights to the XOMA Inventions, XOMA Know-How and XOMA
Patents for license or assignment to an Affiliate of XOMA Ireland Limited in
connection with any other agreement with Baxter for Products.
3.1.4. Subject to the terms of this Agreement, Baxter hereby grants XOMA
Ireland an exclusive, worldwide license to the Baxter BPI Cell Lines, Baxter
Inventions, Baxter Know-How, Baxter Patents and Baxter's rights in and to the
Joint Inventions and Joint Patents, if, as and when any of them come into
existence, to make, have made, use, sell, offer to sell, import and/or export
products containing BPI outside the Field.
3.2 Right to Sublicense. Baxter shall have the right, without XOMA
Ireland's consent, to sublicense any of the rights granted to it under this
Agreement, unless such sublicense transfers all or a substantial portion of
Baxter's rights under this Article 3 worldwide or for the United States, Japan
or any substantial portion of the European Union, but Baxter shall not, to the
extent that the rights granted under this Agreement are a sublicense under the
NYU License, grant more than one sublicense with respect to any one country.
Baxter may, subject to XOMA Ireland's consent, which consent may not be
unreasonably withheld, sublicense all or a substantial portion of Baxter's
rights under this Article 3 worldwide or for the United States, Japan or any
substantial portion of the European Union. Any sublicensees of Baxter shall
agree in writing to be bound by the provisions of this Agreement to the same
extent Baxter is bound.
3.3 Existing Licenses. The foregoing grant and license under this Article 3
are subject to and subordinate to the terms and conditions of and includes
sublicenses under the Existing Licenses, including, without limitation, Sections
15, 16 and 17 of the NYU License. XOMA Ireland shall comply and perform in
accordance with the Existing Licenses. Baxter shall reimburse, within thirty
days after invoice to Baxter by XOMA Ireland all royalties paid by XOMA Ireland
under the Existing Licenses.
ARTICLE 4.
PAYMENTS
4.1 License Fee. Within five business days of the execution and delivery of
this Agreement by the parties, Baxter shall pay $9.5 million to XOMA Ireland.
4.2 Meningococcemia Approvals.
4.2.1. Baxter shall pay $4.75 million to XOMA Ireland within five business
days after notice to Baxter of the acceptance by the FDA of a BLA for NEUPREX
for the Meningococcemia indication.
4.2.2. Baxter shall pay $9.5 million to XOMA Ireland within five business
days after notice to Baxter of the receipt of Regulatory Approval by the FDA for
NEUPREX for the Meningococcemia indication.
10
4.2.3. Baxter shall pay $9.5 million to XOMA Ireland within five business
days after notice to Baxter of the receipt of Regulatory Approval by the CEU for
NEUPREX for the Meningococcemia indication.
4.3 Payments During HSR Act Waiting Period. If any fee or other payment
shall be required to be made under this Agreement prior to the Effective Date,
such fee or payment shall be deposited by Baxter in a client trust account of A
& L Goodbody and released to XOMA Ireland, together with interest accrued
thereon, within one business day following receipt by A & L Goodbody of written
notice of termination or expiration of the applicable waiting period under the
HSR Act.
4.4 Royalties to XOMA Ireland.
4.4.1. Baxter will pay XOMA Ireland a royalty equal to [*] of
Gross Profits until such time as Regulatory Approval of a Product for an
indication other than Meningococcemia is received in the United States and the
European Union. All payments pursuant to Section 4.4 or Section 4.5 shall be
made (a) on a good faith estimated basis within forty five days of each March
31, June 30 and September 30 and within sixty days of December 31 of each year
and (b) be adjusted with the next payment under this Section 4.4.1.
4.4.2. After a Product receives Regulatory Approval in an indication other
than Meningococcemia in the United States and in the European Union, Baxter
shall pay XOMA Ireland a royalty equal to the following percentages of Gross
Profits:
- --------------------------------------------------------------------------------
Annual Net Sales for All Products Annual Royalty Rate
[*]
4.4.3. Each such royalty payment shall be calculated as follows:
[*]
11
4.4.4. Any adjustments to Gross Profit paid with respect to any of the
first three quarters of any calendar year shall be made by Baxter as an offset
to the payment due with respect to the next quarter of such calendar year.
4.4.5. In the event that Gross Profit is negative for any calendar quarter,
such negative amount shall be carried over (together with any similar amounts
carried over from prior quarters) as an offset to positive Gross Profit, if any,
in future calendar quarters.
4.5 Royalties to Baxter. In consideration for the license granted under
Section 3.1.4, XOMA Ireland shall pay a royalty equal to [*] of products
containing BPI for use outside the Field requiring the Baxter BPI Cell Lines,
Baxter Inventions, Baxter Know-How or Baxter Patents or Baxter's rights in and
to the Joint Inventions or Joint Patents.
4.6 Audits.
4.6.1. XOMA Ireland and Baxter shall each maintain, for at least three
years from the date of creation, accurate records and accounts of costs and
sales in order to allow XOMA Ireland or Baxter to determine the accuracy of the
calculation of Gross Profit, Net Sales and net sales under Section 4.5. Upon the
written request of either party and not more than once in any calendar year,
each of XOMA Ireland and Baxter shall permit an independent certified public
accounting firm of nationally recognized standing, selected by the other party
and reasonably acceptable to XOMA Ireland or Baxter, as applicable, to have
access during normal business hours to such of the records of the other party as
may be reasonably necessary to verify the accuracy of such calculations
hereunder for any year ending not more than twenty-four months prior to the date
of such request. The accounting firm shall disclose to the requesting party only
whether the records are correct or not and the specific details concerning any
discrepancies. The findings of such inspection shall be Information for the
purposes of Article 8.
4.6.2. If such accounting firm concludes that additional payments were owed
during such period, the obligated party shall pay the additional amounts within
thirty days of the date the requesting party delivers to the obligated party
such accounting firm's written report so concluding plus interest at the
commercial prime lending rate of the Bank of America
12
from the date such payment was originally due until the date paid. Any such
audit of records shall be at the requesting party's expense; provided that in
the event such audit discloses a negative variance of more than five percent
between the amount of royalties due and the amount of royalties paid to XOMA
Ireland or Baxter pursuant to Section 4.5, as applicable, Baxter or XOMA
Ireland, as applicable, shall pay the expense of such audit.
4.7 Other Indication Approvals. For each indication other than
Meningococcemia, Baxter shall pay the following amounts to XOMA Ireland within
five business days of the following applicable events with respect to any
Product based on the number of patients in [*] who have such indication [*]:
4.7.1. Less than [*] patients for such indication:
a. $[*] million upon the receipt of written notice of [*]
b. $[*] million upon the receipt of written notice of [*]
c. $[*] million upon the receipt of written notice of [*]
d. $[*] million upon the receipt of written notice of [*]
4.7.2. At least [*] patients for such
indication:
a. $[*] million upon the receipt of written notice of [*]
b. $[*] million upon the receipt of written notice of [*]
c. $[*] million upon the receipt of written notice of [*]
d. $[*] million upon the receipt of written notice of [*]
4.7.3. At least [*] patients for such indication:
a. $[*] million upon the receipt of written notice of [*]
13
b. $[*] million upon the receipt of written notice of [*]
c. $[*] million upon the receipt of written notice of [*]
d. $[*] million upon the receipt of written notice of [*]
ARTICLE 5.
commercialization
5.1 Development Obligations. Baxter shall use commercially reasonable
efforts to conduct appropriate preclinical studies and Clinical Trials for
enhancement of the commercial opportunity for Products in the Field.
5.2 Manufacturing and Information Transfer. In connection with this
Agreement, XOMA Ireland shall, upon Baxter's request, provide Baxter copies of
and/or access to all then existing and, throughout the term of this Agreement,
shall continue to furnish Baxter with copies of any subsequently developed XOMA
Know-How which may be useful for the development, registration, manufacturing,
marketing or sale of Products in the Field and as otherwise contemplated by this
Agreement. Baxter shall have the right to manufacture Products, subject to the
Supply Agreement and shall have the right to have manufacturing performed by a
Third Party on its behalf.
5.3 Marketing Rights and Diligence. Baxter shall have the exclusive
worldwide right to market and sell Products in the Field. For so long as Baxter
has an exclusive license to market and sell such Products, Baxter will use
commercially reasonable efforts to establish and maintain a marketing and sales
program sufficient to address the market opportunity for such Products. In the
event Baxter fails to comply with its obligations in this Section 5.3 with
respect to any Product(s), XOMA Ireland may, at its option, notify Baxter in
writing of its intent to terminate or render non-exclusive any license (or
relevant portion thereof) granted to Baxter for such Product(s). Such notice
shall specify in reasonable detail the nature of Baxter's non-compliance. Baxter
shall have (a) sixty days following receipt of such notice to develop and submit
to XOMA Ireland in writing a plan (the "Plan") describing the steps Baxter
intends to take to cure such non-compliance and (b) ninety days after submission
of the Plan to XOMA Ireland to cure such non-compliance. In the event that a
license (or relevant portion thereof) granted to Baxter is terminated or
rendered non-exclusive, Baxter, upon XOMA Ireland's request, will provide
reasonable assistance to XOMA Ireland to enable XOMA Ireland to take advantage
of the activities of Baxter prior to such event and to exploit XOMA Ireland's
rights to the Products, and Baxter and XOMA Ireland shall comply with Section
12.4.2.
5.4 Specific Diligence Requirements.
14
5.4.1. Overall Development. (a) Baxter shall commence Clinical Trials for
at least [*] clinical indications in the Field for NEUPREX within [*] years of
the Effective Date and shall continue to conduct Clinical Trials of [*] or more
Products in at least [*] clinical indications continuously thereafter for a
period of at least [*] years following the Effective Date or, if earlier, until
[*] or more Products have received Regulatory Approval for a total of [*]
different label claims (one of which may be Meningococcemia) from either the FDA
or the CEU (e.g., [*] from the FDA and [*] from the CEU).
(b) In the event Baxter fails to comply with its obligation in Section
5.4.1(a) as a result of a Clinical Trial being stopped due to safety concerns,
lack of efficacy or other unanticipated circumstances, XOMA Ireland may, at its
option, notify Baxter in writing of its intent to terminate the licenses granted
to Baxter under this Agreement. Baxter shall have (i) [*] to develop and submit
to XOMA Ireland in writing a plan (the "Clinical Plan") describing the steps
Baxter intends to take to cure such non-compliance, including a specific time
period following submission of the Clinical Plan to XOMA Ireland for commencing
one or more additional Clinical Trials and (ii) [*] to commence such Clinical
Trial(s) and cure such non-compliance; provided that [*]. In the event such
Clinical Trial(s) are not commenced and such compliance is not cured within the
time period set forth in the Clinical Plan, the last sentence of Section 5.3
shall apply.
(c) In the event Baxter fails to comply with its obligation in Section
5.4.1(a) as a result of a Clinical Plan ending (that is, patient follow-up being
completed) in the ordinary course of the conduct of such trial, Baxter shall
have a period of (i) [*] to commence the next Clinical Trial of such Product in
such indication or file an IND thereby commencing, for purposes hereof, an
additional Clinical Trial of a Product in another indication or (ii) [*] to file
an IND thereby commencing, for purposes hereof, an additional Clinical Trial of
a Product in another indication, before XOMA Ireland shall have the right to
terminate the licenses granted hereunder. In the event of any such termination,
the last sentence of Section 5.3 shall apply.
5.4.2. Development Outside the U.S. (a) Baxter shall commence [*] in each
of [*] before [*] and shall file [*] with [*] before [*] and with [*] before
[*]
15
(b) In the event Baxter fails to comply with its obligation in Section
5.4.2(a) in respect of either [*] or [*], XOMA Ireland may, at its option,
terminate the licenses granted hereunder with respect to [*] or [*], as
applicable, in which event the provisions of Section 13.7 shall apply with
respect to such region or country, but such termination in respect of such
region or country shall have no effect on this Agreement in respect of the rest
of the world.
5.4.3. Manufacturing. (a) In the event Baxter manufactures Products
(whether finished or bulk) for the building of inventory for commercial sale,
Baxter's Cost of Manufacturing for the Indicative Period shall be equal to or
less than XOMA (US) LLC's Cost of Manufacturing for the Comparative Period [*]
(b) In the event Baxter fails to comply with its obligation in Section
5.4.3(a), Baxter shall absorb the excess, if any, of its Cost of Manufacturing
for the Indicative Period and each [*] period thereafter over XOMA (US) LLC's
Cost of Manufacturing for the Comparative Period by excluding such amount from
Cost of Goods Sold for such [*] period for purposes of this Agreement, but such
non-compliance shall not affect any other provisions of this Agreement (except
those where such reduced amount of Cost of Goods Sold is used).
5.4.4. Minimum Royalties. (a) Royalty payments to XOMA Ireland pursuant to
Section 4.4 in respect of each country or region indicated in the column
headings below shall equal at least the amounts in the table below for each Year
of Sales in that country or region:
Year of Sales U.S. European Union Japan
------------- ---- -------------- -----
[*]
(b) In the event royalty payments to XOMA Ireland in respect of any country
or region set forth above fail to at least equal the amount set forth in the
table above for a particular Year of Sales, Baxter shall pay to XOMA Ireland an
amount equal to the difference between the amount set forth on the table and the
aggregate amount of royalties paid for such Year of Sales in such country or
region, which payment shall be due and payable on the date a royalty payment is
or would otherwise be due in accordance with Section 4.4.1, or Baxter may, at is
option (and XOMA may, at its option, if such payment is not received when due
and payable), terminate the licenses granted hereunder with respect to the
country or region in respect of which such non-compliance occurred, which
termination in respect of such country or region shall have no effect on this
Agreement in respect of the rest of the world.
(c) [*]
16
5.5 Third Party Licenses. Baxter shall provide XOMA Ireland with sales
reports sufficient for XOMA Ireland to prepare all royalty reports due under the
Existing Licenses. If Baxter or XOMA Ireland determine in good faith that it is
commercially reasonable to acquire intellectual property rights of Third
Parties, or licenses thereof, in order to further the marketing and sale of
Products by Baxter, the parties shall consider such acquisition or license.
ARTICLE 6.
INFRINGEMENT ACTIONS BY THIRD PARTIES
If any of Baxter, XOMA Ireland or their respective Affiliates or
sublicensees is sued by a Third Party for infringement of a Third Party's patent
because of the manufacture, use or sale of a Product, the party which has been
sued shall promptly notify the other party in writing of the institution of such
suit. Baxter shall have the right, in its sole discretion, to control the
defense of such suit at its own expense, in which event XOMA Ireland shall have
the right to be represented by advisory counsel of its own selection, at its own
expense, and shall cooperate fully in the defense of such suit and furnish to
the Baxter entity controlling such legal proceedings all evidence in its control
and commercially reasonable assistance. If Baxter does not elect within thirty
days after receipt of such notice to so control the defense of such suit, XOMA
Ireland may undertake such control at its own expense, and Baxter shall then
have the right to be represented by advisory counsel of its own selection and at
its own expense, and Baxter shall cooperate fully in the defense of such suit
and furnish to XOMA Ireland all evidence in its control and commercially
reasonable assistance. If XOMA Ireland does not elect within sixty days after
receipt of such notice to so control the defense of such suit, Baxter shall be
obligated to undertake such control at its own expense, and XOMA Ireland shall
again have the right to be represented by advisory counsel of its own selection
and at its own expense, and XOMA Ireland shall cooperate fully in the defense of
such suit and furnish to Baxter all evidence in its control and commercially
reasonable assistance. Upon any termination of this Agreement, XOMA Ireland may
undertake such control at its own expense, and Baxter shall cooperate fully in
the defense of such suit and furnish to XOMA Ireland all evidence in its control
and commercially reasonable assistance. Each party shall, in good faith,
consider the advice of the other party in connection with any such action. The
party controlling the suit may not settle the suit or otherwise consent to an
adverse judgment in such suit that diminishes the rights or interests of the
non-controlling party without the express written consent of the non-controlling
party (which consent shall not be unreasonably withheld or delayed). [*]
ARTICLE 7.
[*]
7.1 [*]
17
7.2 Right of First Discussion for [*] During the term of this Agreement,
in the event XOMA Ireland desires to negotiate, or is solicited to enter into, a
corporate partnering, licensing or other transaction with a Third Party with
respect to the development, marketing or sale of any drug, biologic or device
for use or sale in the Field which is not [*] (an "[*] Third Party
Transaction"), XOMA Ireland shall deliver written notice (the "[*] Notice") to
Baxter which shall set forth its intention to negotiate such [*] Third Party
Transaction. For a period of ninety days after the [*] Notice, the parties shall
in good faith negotiate the terms of a corporate partnering, licensing or other
transaction (an "Baxter [*] Transaction"); provided, however, that if at any
time Baxter does not in good faith intend to pursue a Baxter [*] Transaction,
Baxter shall notify XOMA Ireland of such fact within ten days of the date such
decision is made by Baxter. With respect to such products in the Field, if the
parties in good faith cannot agree on the terms of an Baxter [*] Transaction
within the ninety day period set forth above, or Baxter notifies XOMA Ireland
that it does not intend to pursue such a transaction, XOMA Ireland shall be
entitled to enter into an [*] Third Party Transaction with any Third Party.
18
ARTICLE 8.
CONFIDENTIALITY
8.1 Nondisclosure Obligations. Except as otherwise provided in this Article
8, during the term of this Agreement and for a period of five years thereafter
(but no less than ten years after the Effective Date), the parties shall
maintain in confidence, and use only for purposes of this Agreement, (a)
information and data resulting from or related to the development of Products;
(b) information and data not described in clause (a) above resulting from or
related to the development program contemplated by the Supply Agreement; and (c)
all information and data not described in clause (a) or (b) above but supplied
by the other party under this Agreement marked "Confidential." For purposes of
this Article 8 information and data described in clause (a), (b) or (c) above
shall be referred to as "Information."
8.2 Permitted Disclosures. To the extent it is reasonably necessary or
appropriate to fulfill its obligations or exercise its rights under this
Agreement, (a) a party may disclose Information it is otherwise obligated under
this Article 8 not to disclose to its Affiliates, sublicensees, consultants,
outside contractors and clinical investigators, on a need-to-know basis,
provided that each such Person agrees to keep the Information confidential and
not use the Information for the same time periods and to the same extent as such
party is required; and (b) a party may disclose such Information to government
or other regulatory authorities to the extent that such disclosure is required
by applicable law, regulation or court order, or is reasonably necessary to
obtain patents or authorizations to conduct Clinical Trials with, and to
commercially market, Products, provided that the disclosing party shall provide
written notice to the other party and sufficient opportunity to object to such
disclosure or to request confidential treatment thereof.
8.3 Exceptions. The obligation not to disclose or use Information shall not
apply to any part of such Information that (a) is or becomes patented, published
or otherwise part of the public domain other than by acts of the party obligated
not to disclose such Information or its Affiliates or sublicensees in
contravention of this Agreement; (b) is disclosed to the receiving party or its
Affiliates or sublicensees by a Third Party, provided such Information was not
obtained by such Third Party directly or indirectly from the other party under
this Agreement on a confidential basis; (c) prior to disclosure under this
Agreement, was already in the possession of the receiving party or its
Affiliates or sublicensees, provided such Information was not obtained directly
or indirectly from the other party under this Agreement; or (d) is disclosed in
a press release agreed to by both parties, which agreement shall not be
unreasonably withheld.
8.4 Terms of this Agreement. Baxter and XOMA Ireland shall not disclose the
existence of or any terms or conditions of this Agreement to any Third Party
without the prior consent of the other party, except and only to the extent
required by applicable law, regulation, court order or the Existing Licenses;
provided that the disclosing party shall provide written notice to the other
party and sufficient opportunity to object to such disclosure or to request
confidential treatment thereof. XOMA Ireland shall, prior to filing, and in
connection with any comments received thereto, consult with and consider the
views of Baxter with respect to any
19
confidential treatment request made in connection with the transactions
contemplated by this Agreement.
8.5 Public Announcement. Neither party (nor any Affiliate of either party)
will originate any written publicity, news release or other public announcement,
relating to this Agreement or any other agreement between the parties without
the prior written approval of the other party, which approval will not be
unreasonably withheld or delayed, except as otherwise required by applicable
law, regulation, court order, the Existing Licenses or stock exchange listing
requirement.
ARTICLE 9.
INTELLECTUAL PROPERTY
9.1 Patent and Trademark Prosecution and Maintenance. XOMA Ireland shall be
responsible for and shall control all of the Patents and XOMA Trademarks and
shall consult with Baxter on, and give Baxter a reasonable opportunity to
review, all filings for the Patents and the NEUPREX trademark. XOMA Ireland
shall use commercially reasonable efforts to maintain all Patents and the
NEUPREX trademark and all costs thereof shall be reimbursed by Baxter. XOMA
Ireland shall use its commercially reasonable good faith efforts to have such
costs shared by other persons with a license to such patents in fields other
than the Field. Each party shall make available to the other party or its
authorized attorneys, agents or representatives, its employees, agents or
consultants necessary or appropriate to enable the appropriate party to file,
prosecute and maintain patent applications and resulting patents with respect to
Improvements and Inventions for a period of time sufficient for such party to
obtain the assistance it needs from such personnel. Each applicable party shall
sign or cause to have signed all documents relating to said patent applications
or patents at no charge to the other.
9.2 Enforcement of Patent Rights. XOMA Ireland shall have the right to
determine the appropriate course of action, after reasonable consultation with
Baxter, to enforce the Patents or otherwise abate the infringement thereof, to
take (or refrain from taking) appropriate action to enforce the patents, to
control any litigation or other enforcement action and to enter into, or permit,
the settlement of any such litigation or other enforcement action with respect
to the Patents, and in good faith shall consider the interests of Baxter, if
any, in so doing. The parties shall fully cooperate with each other in any
action to enforce the Patents, and Baxter shall reimburse XOMA Ireland for all
costs incurred under this Section 9.2. All monies recovered upon the final
judgment or settlement of any suit to enforce the Patents shall first be paid to
recover the respective actual out-of-pocket expenses of the parties associated
with the enforcement, and thereafter [*]
20
9.3 Ownership of Inventions. The entire right and title in all XOMA
Inventions, and any patent applications or patents based thereon, shall be owned
solely by XOMA Ireland. The entire right and title in all Baxter Inventions, and
any patent applications or patents based thereon, shall be owned solely by
Baxter. The entire right and title in all Joint Inventions, and any patent
applications or patents based thereon, shall be owned jointly by XOMA Ireland
and Baxter. Each party promptly shall disclose to the other party the making,
conception or reduction to practice of Inventions by employees or others acting
on behalf of such party. XOMA Ireland and Baxter each hereby represents that all
employees and other Persons acting on its behalf in performing its obligations
under this Agreement shall be obligated under a binding written agreement to
assign or license to it, or as it shall direct, all Inventions made or developed
by such employees or other Persons.
9.4 Notification of Patent Term Restoration. Each party or its Affiliates
shall notify the other party of (a) the issuance of each United States patent
included within the Patents, giving the date of issue and patent number for each
such patent, and (b) each notice pertaining to any patent included within the
Patents which it receives as patent owner pursuant to the Drug Price Competition
and Patent Term Restoration Act of 1984 (the "Act"), including notices pursuant
to Sections 101 and 103 of the Act from persons who have filed an abbreviated
new drug application. Such notices shall be given promptly, but in any event
within five days of each such patent's date of issue or receipt of each such
notice pursuant to the Act, whichever is applicable. Each party or its
Affiliates shall notify the other party of each filing for patent term
restoration under the Act, any allegations of failure to show due diligence and
all awards of patent term restoration (extensions) with respect to the Patents.
Likewise, each party or its Affiliates shall inform the other party of patent
extensions and periods of data exclusivity in the rest of the world relating to
Products.
ARTICLE 10.
INDEMNIFICATION AND INSURANCE
10.1 Indemnification by Baxter. Baxter agrees to defend, indemnify and hold
harmless XOMA Ireland, its agents and employees, against claims for loss,
liability, damage and costs (including reasonable fees of counsel, claims for
personal injury or the costs of recalls) attributable to the actions or
omissions, if any, of Baxter or its subcontractors in the manufacturing (to the
extent Baxter or its subcontractors manufacture), packaging, labeling,
marketing, use or sale (subject to XOMA Ireland's obligations under Section
10.2) of any Product.
10.2 Indemnification by XOMA Ireland. XOMA Ireland agrees to defend,
indemnify and hold harmless Baxter, its agents and employees, against claims for
loss, liability, damage and costs (including reasonable fees of counsel, claims
for personal injury or the costs of recalls) attributable to the actions or
omissions, if any, of XOMA Ireland or its subcontractors in the designing,
manufacturing (to the extent XOMA Ireland or its subcontractors manufacture),
packaging, labeling, marketing, use or sale (subject to Baxter's obligations
under Section 10.1) of any Product.
21
10.3 Procedure. A party (the "Indemnitee") that intends to claim
indemnification under this Article 10 shall promptly notify the other party (the
"Indemnitor") of any liability or action in respect of which the Indemnitee
intends to claim such indemnification, and the Indemnitor shall have the right
to participate in, and, to the extent the Indemnitor so desires, jointly with
any other Indemnitor similarly noticed, to assume the defense thereof with
counsel selected by the Indemnitor; provided, however, that an Indemnitee shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the Indemnitor, if representation of such Indemnitee by the counsel retained
by the Indemnitor would be inappropriate due to actual or potential differing
interests between such Indemnitee and any other party represented by such
counsel in such proceedings and shall have the right to retain its own counsel
at its own expense for any reason (subject to the Indemnitor's right to control
such defense). The indemnity obligations under this Article 10 shall not apply
to amounts paid in settlement of any loss, claim, damage, liability or action if
such settlement is effected without the consent of the Indemnitor, which consent
shall not be withheld unreasonably. The failure to deliver notice to the
Indemnitor within a reasonable time after the commencement of any such action
shall relieve such Indemnitor of any liability to the Indemnitee under this
Article 10 to the extent such failure is prejudicial to its ability to defend
such action, but the omission so to deliver notice to the Indemnitor will not
relieve it of any liability that it may have to any Indemnitee otherwise than
under this Article 10. The Indemnitee, its employees and agents, shall cooperate
fully with the Indemnitor and its legal representatives in the investigation of
any action, claim or liability covered by this indemnification.
10.4 Insurance. Baxter and XOMA Ireland each shall obtain liability
insurance (but each party may self insure to the extent reasonable given the
financial position of the party and its parent), with respect to its activities
contemplated by this Agreement in such amounts as are customary for
biopharmaceutical companies engaged in similar activities. XOMA Ireland intends
to increase its insurance in connection with the commencement of commercial
sales of Product. Baxter and XOMA Ireland each shall maintain such insurance (or
self insurance in the case of Baxter) for so long as each continues to conduct
such activities, and thereafter for so long as each customarily maintains
insurance for itself covering similar activities. XOMA Ireland has obtained
product liability insurance with respect to the development, manufacture and
sale of such Product in such amounts as are customary for biopharmaceutical
companies engaged in the development, manufacture and sale of similar products.
XOMA Ireland shall maintain such product liability insurance for so long as it
continues to develop, manufacture and sell such Product, and thereafter for so
long as companies in the biopharmaceutical business customarily maintain
insurance covering the development, manufacture and sale of similar products.
Upon request, XOMA Ireland shall furnish to Baxter a certificate of insurance
evidencing such insurance. Upon request, XOMA Ireland shall cause Baxter to be
named an additional insured under such policy within thirty days of such
request, but Baxter shall not have the right to control XOMA Ireland's insurance
but shall be entitled to coverage under such policies to the extent of any loss
arising out of this Agreement. If XOMA Ireland shall obtain coverage in excess
of the self insured loss limits retained by Baxter, Baxter shall name XOMA
Ireland as an additional insured under Baxter's insurance policies insuring
excess losses over Baxter's self insurance program up to the loss limits then
held by XOMA Ireland, but XOMA Ireland shall not have the right to control
Baxter's insurance but shall be entitled to coverage under such policies to the
extent of any insured loss arising out of this Agreement.
22
ARTICLE 11.
CHANGE OF CONTROL
If the board of directors of XOMA Ireland Limited or its parent intends to
enter into one or more agreements or take any other actions which could
reasonably be expected to result in a Change of Control, XOMA Ireland shall, or
cause its Affiliates to provide Baxter with an opportunity to make an offer to
purchase XOMA Ireland Limited or its parent. Baxter shall have ten business days
from the receipt of notice from XOMA Ireland Limited of such intended agreements
or actions to make an offer to acquire XOMA Ireland Limited or its parent, as
applicable. The applicable board of directors shall in good faith, subject to
their fiduciary duties under applicable law, consider such offer.
ARTICLE 12.
TERM AND TERMINATION
12.1 Termination for Cause. Either party may terminate this Agreement, at
its option, upon the occurrence of any of the following:
12.1.1. Voluntary Liquidation Events. The other party or its parent shall
(a) seek the liquidation, reorganization, dissolution or winding up of itself or
the composition or readjustment of all or substantially all of its debts, (b)
apply for or consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee or liquidator of itself or of all or any
substantial portion of its assets, (c) make a general assignment for the benefit
of its creditors, (d) commence a voluntary case under applicable bankruptcy of
insolvency law, (e) file a petition seeking to take advantage of any other law
relating to bankruptcy, insolvency, reorganization, winding-up or composition or
readjustment of debts or (f) adopt any resolution of its board of directors or
shareholders for the purpose of effecting any of the foregoing.
12.1.2. Involuntary Liquidation Events. A proceeding or case shall be
commenced without the application or consent of the other party and such
proceeding or case shall continue undismissed, or an order, judgment or decree
approving or ordering any of the following shall be entered and continue
unstayed in effect, for a period of ninety days from and after the date service
of process is effected upon the other party, seeking (a) its liquidation,
reorganization, dissolution or winding up, or the composition or readjustment of
all or substantially all of its debts, (b) the appointment of a trustee,
receiver, custodian, liquidator or the like of itself or of all or substantially
all of its assets or (c) similar relief under any law relating to bankruptcy,
insolvency, reorganization, winding up or composition or readjustment of debts.
12.1.3. Material Breach. Upon or after the breach of any material provision
of this Agreement, if the breaching party has not cured such breach within
ninety days after written notice thereof from the other party.
12.2 Termination of NYU License. To the extent that a sublicense of XOMA
Ireland's rights under the NYU License is granted hereunder, the license granted
by XOMA
23
Ireland to Baxter under this Agreement shall terminate upon the termination of
XOMA Ireland's rights under the NYU License; provided, that upon such
termination, XOMA Ireland shall use commercially reasonable efforts to assist
Baxter in obtaining a license agreement with New York University upon the same
terms and conditions as in the NYU License.
12.3 HSR. Notwithstanding any other provision herein, this Agreement may be
terminated upon written notice by either party (a) if the Effective Date has not
occurred within ninety days of execution of this Agreement or (b) an Agency
obtains an order preventing or delaying the Effective Date.
12.4 Effect of Termination.
12.4.1. Termination of this Agreement, in whole but not in part, by Baxter
shall terminate all rights granted hereunder but shall not relieve the parties
of any obligation accruing prior to such expiration or termination nor shall it
deny Baxter of its rights to make, have made, use, sell, offer to sell, import
and/or export any Product licensed under this Agreement in a particular clinical
indication to the extent Baxter has then made all required payments under
Section 4.2 or 4.7 for any such clinical indication for such Product; provided
that Baxter then undertakes to continue making payments under Section 4.4 if, as
and when Net Sales of such Product in such indication occur. The provisions of
Articles 8, 9, 11 and 12 and Sections 13.3, 13.5, 13.7.1 and 13.9-13.12 shall
survive the expiration or termination of this Agreement.
12.4.2. Termination of this Agreement by XOMA Ireland shall commence the
following procedure:
a. Baxter and XOMA Ireland shall negotiate in good faith for a thirty-day
period in an effort to reach an allocation of rights to specific indications
within the Field, compensation for investments in Products in the Field and
future royalties, if any.
b. If the parties are unable to reach agreement in such thirty day period,
then the parties shall refer such dispute to the president of XOMA Ireland and
the president of the applicable business unit of Baxter for a ten day period.
c. If the parties are unable to reach agreement in such ten-day period,
then the parties shall refer such dispute to a single third party arbitrator
selected by the Center for Public Resources (the "CPR") in accordance with its
rules. In accordance with the rules of the CPR, such arbitrator shall consider
all relevant facts and circumstances and based thereon conclusively determine an
equitable allocation of rights to specific indications within the Field,
compensation for investments in Products in the Field and future royalties, if
any. Such arbital decision shall be binding on the parties and may be confirmed
by court order under the Federal Arbitration Act, as amended. The cost of such
arbitration shall be borne in accordance with the rules of the CPR.
12.5 Term. To the extent that the license granted under this Agreement is a
license to rights held under Patents, such license shall expire upon expiration
of the last to expire
24
of such Patents. To the extent that the license granted under this Agreement is
a license of Know-How, such license shall terminate forty years from the date of
the first commercial sale of a Product in the European Union.
ARTICLE 13.
MISCELLANEOUS
13.1 HSR Filings. Not later than five business days following the date of
execution of this Agreement by the parties, each party shall cause to be made
any and all filings required at that time under the HSR Act with the Agencies,
copies of which have previously been delivered to the other party, and each
party agrees to reasonably cooperate with the other party in connection with the
preparation of those filings. Each party shall use its commercially reasonable
efforts to take, or cause to be taken, all actions, and do, or cause to be done,
all commercially reasonable things necessary, proper or advisable under
applicable laws and regulations to avoid a negative determination by either of
the Agencies, including, without limitation, responding promptly and
appropriately to any request for additional information, or other formal or
informal requests which may be made by either of the Agencies for information,
witnesses or documents pertaining to the transaction(s) contemplated by this
Agreement, and shall keep the other party fully apprised of its actions with
respect thereto; provided that nothing in this Agreement shall require either
party to (i) commence any litigation, (ii) hold separate any of its assets or
(iii) enter into any consent decree or similar arrangement at the request of any
of the Agencies.
13.2 Notices. Any consent, notice or report required or permitted to be
given or made under this Agreement by one of the parties hereto to the other
shall be in writing, delivered personally or by facsimile (and promptly
confirmed by personal delivery, U.S. first class mail or courier),
internationally recognized courier service, postage prepaid (where applicable),
addressed to such other party at its address indicated below, or to such other
address as the addressee shall have last furnished in writing to the addressor
and (except as otherwise provided in this Agreement) shall be effective upon
receipt by the addressee.
If to Baxter: Baxter Healthcare Corporation
One Baxter Parkway
Deerfield, IL 60015
United States of America
Attention: General Counsel
with a copy to: Baxter Healthcare Corporation
Hyland Immuno Recombinant SBU
550 North Brand Blvd.
Glendale, CA 91203
United States of America
Attention: President
25
with a copy (which shall not constitute notice) to:
Brobeck, Phleger & Harrison LLP
550 So. Hope Street
Los Angeles, CA 90071
United States of America
Attention: Richard S. Chernicoff
If to XOMA Ireland: XOMA Ireland Limited
c/o Sentinel Investments (Shannon) Limited
Shannon Airport House
Shannon, Co. Clare
Ireland
Attention: Company Secretary
with copies (which shall not constitute notice) to:
A. & L. Goodbody
25/28 North Wall Quay
Dublin 1, Ireland
Attention: Michael A. Greene
and
Cahill Gordon & Reindel
80 Pine Street
New York, NY 10005
United States of America
Attention: Geoffrey E. Liebmann
13.3 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 law principles thereof.
13.4 Payment Method. Each payment under this Agreement shall be paid in
United States dollars and made by bank wire transfer in immediately available
funds to such account as the intended recipient shall designate before such
payment is due. All payments shall be made net of any withholding required by
applicable law. In the event XOMA Ireland claims exemption from such withholding
and provides Baxter with appropriate documentation of such exemption, then
Baxter shall not withhold any amounts from payments due XOMA Ireland under this
Agreement.
26
13.5 Assignment. This Agreement may not be assigned or otherwise
transferred, nor, except as expressly provided hereunder, may any right or
obligation hereunder be assigned or transferred (by operation of law or
otherwise) by either party without the prior written consent of the other party;
provided, however, either party may, without the consent of the other party,
assign this Agreement and its rights and obligations hereunder to an Affiliate;
provided further that such Affiliate must be capable of performing the
assignor's obligations under this Agreement and, in the case of Baxter, may not
be organized under the laws of the Republic of Ireland. With respect to any
other assignment by Baxter to an Affiliate (other than an Affiliate organized
under the laws of Switzerland), Baxter and XOMA Ireland shall cooperate in good
faith to make reasonable efforts to minimize any adverse consequence to either
party from such assignment. This Agreement may also be assigned or transferred
to any successor by merger, sale, transfer, or consolidation or the transferee
of all or substantially all of the assets of its business unit to which this
Agreement relates; provided that in the case of XOMA Ireland such assignee or
transferee may not be a Baxter Competitor. Any permitted assignee shall assume
all obligations of its assignor under this Agreement.
13.6 Force Majeure. Neither party shall be held liable or responsible to
the other party nor be deemed to have defaulted under or breached this Agreement
for failure or delay in fulfilling or performing any term of this Agreement
(except for the failure to pay money) when such failure or delay is caused by or
results from causes beyond the reasonable control of the affected party,
including, but not limited to, fire, floods, embargoes, war, acts of war
(whether war be declared or not), insurrections, riots, civil commotions,
strikes, lockouts or other labor disturbances, acts of God or acts, omissions or
delays in acting by any governmental authority or the other party.
13.7 Dispute Resolution.
13.7.1. Except as otherwise specifically provided herein, any disputes or
disagreements arising under the Agreement will be referred to the Chief
Executive Officer of XOMA Ireland's parent and the president of the relevant
business unit for Baxter (or their designees) for good faith resolution, for a
period not to exceed ninety days. During such ninety days, both parties may in
good faith explore resolution of the dispute using alternative dispute
resolution techniques before pursuing other remedies. If such dispute is not
resolved by the end of such ninety day period, the parties shall be free to
pursue any legal or equitable remedy available to them.
13.7.2. The parties agree that any action may only be in Superior Court of
the State of California or a United States District Court in the State of
California. XOMA Ireland hereby (a) submits to the exclusive jurisdiction of
such courts, (b) waives the defense of an inconvenient forum, (c) consents to
service of process upon it by mailing or delivering such service to Cahill
Gordon & Reindel at its address set forth above, (d) agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law, and (e) to the extent that it or its properties have or
hereafter may acquire immunity for jurisdiction of any court or from any legal
process (whether service or notice, attachment prior to judgment, attachment in
aid of execution,
27
execution or otherwise), waives such immunity in respect of its obligations
under this Agreement.
13.8 Headings. The captions to the several Articles and Sections hereof are
not a part of this Agreement, but are merely guides or labels to assist in
locating and reading the several Articles and Sections hereof.
13.9 Independent Contractors. XOMA Ireland and Baxter each acknowledge that
they shall be independent contractors and that the relationship between the two
parties shall not constitute a partnership, joint venture or agency. Neither
XOMA Ireland nor Baxter shall have the authority to make any statements,
representations or commitments of any kind, or to take any action, which shall
be binding on the other party, without the prior consent of the other party to
do so.
13.10 Severability. Should one or more provisions of this Agreement be or
become invalid, the parties hereto shall substitute, by mutual consent, valid
provisions for such invalid provisions which valid provisions in their economic
effect are sufficiently similar to the invalid provisions that it can be
reasonably assumed that the parties would have entered into this Agreement with
such provisions. In case such provisions cannot be agreed upon, the invalidity
of one or several provisions of this Agreement shall not affect the validity of
this Agreement as a whole, unless the invalid provisions are of such essential
importance to this Agreement that it is to be reasonably assumed that the
parties would not have entered into this Agreement without the invalid
provisions.
13.11 Waiver. The waiver by either party hereto of any right hereunder or
the failure to perform or of a breach by the other party shall not be deemed a
waiver of any other right hereunder or of any other breach or failure by said
other party whether of a similar nature or otherwise.
13.12 Entire Agreement. This Agreement contains the entire understanding of
the parties with respect to the subject matter hereof. All express or implied
agreements and understandings, either oral or written, heretofore made are
expressly superseded by this Agreement. This Agreement may be amended, or any
term hereof modified, only by a written instrument duly executed by both parties
hereto. No prior drafts of this Agreement may be used in the construction or
interpretation of this Agreement.
28
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
XOMA IRELAND LIMITED
Signed By: /s/ Alan Kane
------------------------------------------
Alan Kane, Director
duly authorized for and on behalf of XOMA
Ireland Limited in the presence of:
----------------------------------
BAXTER HEALTHCARE CORPORATION
By: /s/ Charlotte A. Schwab
------------------------------------------
Charlotte A. Schwab
Vice President
Global Business Development
Hyland Immuno Division
[*]