[*] indicates that a confidential portion of this Agreement has been omitted and
filed separately with the Securities and Exchange Commission.
SUPPLY AND DEVELOPMENT AGREEMENT
BY AND BETWEEN
XOMA(US) LLC
AND
BAXTER HEALTHCARE CORPORATION
DATED AS OF
JANUARY 25, 2000
SUPPLY AND DEVELOPMENT AGREEMENT
SUPPLY AND DEVELOPMENT AGREEMENT, dated as of January 25, 2000 (this
"Agreement"), by and between XOMA(US) LLC, a Delaware limited liability company
(including its Affiliates, "XOMA US"), having a place of business at 2910
Seventh Street, Berkeley, CA 94710, 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, Baxter desires to purchase from XOMA US, and XOMA US desires to
supply to Baxter, Product or Bulk Product (each as defined below) for use in
Products; and
WHEREAS, XOMA US has expertise in developing products from BPI (as defined
below), and Baxter desires to have XOMA US provide services to it in connection
with the development of Products for use in the Field (as defined below);
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 "BLA" shall mean an application for a license to market and sell a
Product prepared in accordance with the requirements of the FDA or the CEU, as
applicable.
1.3 "BPI" shall mean bactericidal/permeability increasing protein [*]
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 "Bulk Product" shall mean Product in bulk form rather than in unlabeled
vials.
1.6 "CEU" shall mean the Commission of the European Union and any successor
agency performing similar functions.
1.7 "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 of 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 (US) LLC or its parent;
(ii) XOMA (US) LLC 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 (US) LLC or its parent, in either
event pursuant to a transaction in which the outstanding Voting Stock of XOMA
(US) LLC 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 (US) LLC or its parent liquidates, dissolves,
conveys, transfers or leases all or any substantial portion of its assets to one
or more Persons.
1.8 "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.
1.9 "Cost of Manufacturing" shall mean the sum of XOMA US' Direct
Manufacturing Cost and XOMA US' 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 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 by the Project Core Team. 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.
1.10 "Development Program" shall mean the activities to be conducted by
XOMA US and Baxter with respect to developing one or more Products in the Field,
conducting preclinical tests on such Product(s) and thereafter conducting
Clinical Trials, product positioning and implementation, including, but not
limited to, preparation and filing of one or more INDs
2
and other regulatory filings, manufacture of the Product(s) for preclinical and
clinical studies, the filing and prosecution of patents and applications, the
planning, implementation, evaluation and administration of Clinical Trials,
manufacturing process development and scale-up, market studies and other
pre-commercialization efforts.
1.11 "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.
1.12 "Effective Date" shall mean the date of termination or expiration of
any applicable waiting period under the HSR Act.
1.13 "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 US
(which agreement shall not be unreasonably withheld).
1.14 "FDA" shall mean the United States Food and Drug Administration or any
successor agency performing similar functions.
1.15 "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.
1.16 "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.
1.17 "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated thereunder.
1.18 "IND" shall mean an Investigational New Drug Application as filed with
the FDA or equivalent filed with other agencies performing similar functions.
3
1.19 "License Agreement" shall mean the License Agreement, dated as of the
date of this Agreement, by and between Baxter Healthcare Corporation and XOMA
Ireland Limited.
1.20 "Meningococcemia" shall mean an infection of the blood
(septicemia/sepsis) by Neisseira meningitidis.
1.21 "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 US is currently seeking marketing
authorization for sale of the Product in the United States and the European
Union for the treatment of Meningococcemia.
1.22 "NYU License" shall mean the Amended and Restated Research and License
Agreement, dated as of September 1, 1993, by and between New York University and
XOMA Corporation, as amended to the date of this Agreement.
1.23 [*]
1.24 [*]
1.25 "Person" shall mean an individual, corporation, partnership, trust,
business trust, association, limited liability company, joint stock company,
joint venture, pool, syndicate, sole proprietorship, unincorporated
organization, governmental authority or any other form of entity not
specifically listed herein.
1.26 "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.
1.27 "Product Specifications" shall mean the specifications for NEUPREX
attached as Schedule 1.27 which shall be (a) updated with regard to any other
Products as required in connection with obtaining Regulatory Approvals or
continuing compliance with regulatory requirements and (b) agreed upon from time
to time by Baxter and XOMA US after consultation with each other.
1.28 "Project Core Team" shall mean the project core team established in
the manner contemplated by Section 3.2.
1.29 "rBPI21" shall mean the modified fragment of BPI [*]
4
1.30 "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.
1.31 "Relationship Oversight Committee" shall mean the committee
established in the manner contemplated by Section 3.1.
1.32 "Third Party" shall mean any Person other than Baxter or XOMA US.
ARTICLE 2.
PRODUCT SUPPLY
Supply. 2.1.1. Baxter shall be obligated to purchase exclusively from XOMA
US and XOMA US shall be obligated to supply exclusively to Baxter, Product, or
at Baxter's request, Bulk Product, for use in the Field. Such use may be
commercial use, preclinical studies, academic studies or for Clinical Trials.
XOMA US will maintain itself in a condition to supply Product in accordance with
Section 2.7 and the warranties of Section 2.8.
2.1.2. On reasonable notice and during normal business hours, XOMA US and
Baxter shall each allow representatives of the other party and FDA and/or other
health regulatory representatives access to the manufacturing, filling,
packaging, labeling, warehousing, storage and quality control equipment and
facilities utilized with respect to Product or Bulk Product being produced
pursuant to this Agreement for use in the Field, and to all applicable records
relating to manufacturing, filling, labeling, warehousing, storage, packaging,
and quality control of the Bulk Product or Product being produced pursuant to
this Agreement for use in the Field. XOMA US and Baxter shall each notify the
other party of any such FDA inspection or inspections by any other regulatory
health agency related to Bulk Product or Product being produced pursuant to this
Agreement or the Parkedale Agreement for use in the Field and shall allow a
representative of the other party to be present during same. Baxter may elect to
package and label the Product at its own cost and such costs shall not be
included in Cost of Manufacturing.
2.1.3. XOMA US shall not provide Product for use in the Field except under
the direction of the Project Core Team.
2.2 [*]
5
2.3 Records. XOMA US shall maintain and keep for a period of at least three
years complete and accurate records in sufficient detail to enable actual Cost
of Manufacturing to be determined.
2.4 Cost Adjustment.
2.4.1. With respect to each six month period ended June 30 or December 31
and the period from the first date that XOMA US is manufacturing Product for the
purpose of building inventory for commercial sale by Baxter until the next
following June 30 or December 31, as applicable, XOMA US shall prepare a report
(the "Cost Report") detailing its actual Cost of Manufacturing for such period.
The Cost Report shall be delivered by XOMA US to Baxter within thirty days
following the end of such six month period.
2.4.2. Within five business days of delivery to Baxter of the Cost Report,
XOMA US shall prepare a statement detailing (i) the actual amounts paid by
Baxter for purchases of Product during such period ("Invoiced Cost") (ii) the
amounts payable with respect to purchases of Product during such period based
upon the actual Cost of Manufacturing set forth in the Cost Report ("Verified
Cost") and (iii) the amounts due to or from Baxter with respect to the
difference between the Invoiced Cost and Verified Cost for purchases of Product
during such period ("Cost Adjustment") Baxter or XOMA US, as applicable, shall
pay, without the accrual of any interest, the Cost Adjustment within thirty days
of receipt of such statement. The Verified Cost per unit shall be the Invoiced
Cost per unit for the next following six month period; provided, that in the
event of any unanticipated, material change in the Cost of Manufacturing, the
parties will negotiate in good faith appropriate adjustments thereto.
2.4.3. Baxter shall have the right, exercisable within ninety days of
receipt of the Cost Report, to have the Cost Report audited, by an independent
accounting firm of nationally recognized standing, selected by Baxter and
reasonably acceptable to XOMA US. Baxter and XOMA US shall cooperate with
respect to such audit, including, making all reasonably requested information
available. Baxter and XOMA US shall negotiate to resolve any dispute with
respect to such Cost Report. Any unresolved disputes shall be resolved by the
Project Core Team and if not so resolved shall be referred to the Relationship
Oversight Committee. Within ten days of resolution of any issues raised by such
audit, XOMA US shall prepare a revised Cost Report based upon such audited
Verified Cost.
2.5 Payment Terms. Payment to XOMA US for any supply of Product or Bulk
Product shall be due and payable thirty days after invoice by XOMA US to Baxter
of such Product or Bulk Product, as applicable. Invoices shall be rendered only
after shipment of Product or Bulk Product, as applicable, to the facility or
facilities designated by Baxter.
2.6 Product Supply. XOMA US shall supply exclusively all of Baxter's
requirements of Product and Bulk Product, in accordance with Sections 2.7 and
2.8, to enable Baxter to manufacture the Products. XOMA US' supply obligations
shall be limited to the current reasonable capacity of XOMA US's manufacturing
facility If XOMA US is unable to supply all of its customers' demand for Product
and similar compounds, XOMA US shall
6
allocate its available supply among customers pro rata based upon forecasted
demand for such calendar year and each calendar quarter. XOMA US and Baxter each
understand that the supply of Product and Bulk Product under this Agreement will
likely be the first commercial supply by XOMA US of Product for any field. When
the forecasts delivered pursuant to Section 2.7 indicate that demand will exceed
capacity, the parties will use commercially reasonable efforts to determine an
appropriate means of expanding capacity.
2.7 Orders; Forecasts. Within sixty days following the Effective Date,
Baxter and XOMA US shall agree upon a firm order for the amount of Product and
Bulk Product (specifying which) to be delivered during the calendar quarter
ending June 30, 2000 and a quarter-by-quarter demand forecast for the year
ending June 30, 2001. No later than ninety days prior to the beginning of each
subsequent calendar quarter Baxter shall provide XOMA US with Baxter's firm
order for the amount of Product and Bulk Product (specifying which) to be
delivered during such calendar quarter and its revised quarter-by-quarter
forecast for the amount of Product and Bulk Product (specifying which) it will
desire for delivery in each of the three calendar quarters immediately
thereafter; provided, that (a) if the total of Baxter's firm orders for delivery
in any calendar quarter (including any excess quantities carried forward from
preceding quarters) is less than [*] of its most recent estimate for such
quarter, Baxter shall be required to purchase at least [*] of the estimate, (b)
if the total of Baxter's firm order for delivery in any calendar quarter
(including any excess quantities carried forward from preceding quarters)
exceeds [*] of its most recent estimate for such quarter, XOMA US shall have no
obligation to deliver until the following quarter quantities in excess of [*] of
the estimate, and (c) in any such revised forecast, the estimate therein for the
first, second and third calendar quarters immediately following the calendar
quarter for which a firm order is then provided shall not vary by more than [*]
from the most recent estimate for such quarter; provided, further, that in no
event shall XOMA US be required to deliver in excess of 100% of its
manufacturing capacity in any calendar quarter. XOMA US shall ship Product in
unlabeled vials or, if requested by Baxter, Bulk Product, to a facility or
facilities designated by Baxter within each such quarter after the receipt of
such purchase order from Baxter. Title to the Product or Bulk Product, as
applicable, shall pass to Baxter upon receipt by Baxter at such facility. XOMA
US shall use commercially reasonable efforts to build inventory in anticipation
of purchase orders, consistent with Baxter's forecast.
2.8 Warranties. XOMA US represents and warrants that all Product supplied
to Baxter hereunder shall (a) conform with the applicable Product Specifications
as of the time the Product is received by Baxter, (b) will not be adulterated or
misbranded within the meaning of the U.S. Food, Drug and Cosmetic Act and the
regulations thereunder and (c) shall be manufactured in accordance with
applicable regulations of the FDA and similar foreign regulators good
manufacturing practices. XOMA US shall deliver a certificate of analysis with
each lot of Product specifying the results of analysis to show conformance with
the applicable Product Specifications. Upon receipt, each lot of Product shall
be tested by Baxter (to the extent selected by Baxter in its sole discretion),
and thereafter Baxter shall provide XOMA US with written notice of its
acceptance or rejection of the lot. Each such lot shall be deemed accepted by
Baxter unless XOMA US receives written notice of rejection of the lot (due to
the failure of Product to comply with the Product Specifications as of the time
the lot was received by Baxter)
7
within thirty days after Baxter's receipt of the Product. At Baxter's option,
XOMA US shall replace any nonconforming Product at XOMA US's expense with a like
amount of the Product conforming to the Product Specifications. For purposes
hereof, replacement may include reprocessing of the Product, so long as such
reprocessing is mutually agreed upon by the parties and conforms to applicable
law and regulation, including FDA current good manufacturing practices and
compliance with applicable marketing authorizations. If XOMA US does not agree
with Baxter that the supplied lot fails to conform to the Product
Specifications, the matter may be submitted to an independent laboratory
acceptable to both parties in order to resolve the discrepancy in the analysis
of the Product rejected. The cost of assay by the independent laboratory shall
be borne by the party whose analysis was in error.
2.9 Recalls. If any Product, component or ingredient thereof must be
recalled by reason of failure to meet any requirement of the FDA or similar
foreign regulator or any other requirement of law in any country or XOMA US
voluntarily recalls Product from the market. XOMA US shall have the sole
responsibility to effect the recall. However, Baxter shall provide all
commercially reasonable assistance to XOMA US in connection with such recall.
Baxter shall be entitled to set off, against any payments due to XOMA US under
this Agreement, all costs reasonably expended by Baxter to effect, related to or
otherwise by virtue of the recall (including, but not limited to, the cost of
replacement product and recall notices) unless the recall is due to failure of
Baxter to package and label the Product. Baxter may suspend its obligations to
purchase Product under any outstanding purchase orders until the facts and
circumstances giving rise to the recall are resolved or cured to Baxter's
reasonable satisfaction. Baxter and XOMA US shall each use their good faith
efforts to resolve or cure the facts and circumstances giving rise to the recall
and promptly reinitiate production of Product in compliance with this Agreement.
ARTICLE 3.
development
3.1 Relationship Oversight Committee.
3.1.1. Within thirty days of the Effective Date, XOMA US and Baxter will
establish a Relationship Oversight Committee to oversee and manage the
manufacturing and development activity contemplated by this Agreement. The
Relationship Oversight Committee will be composed of two representatives
appointed and replaced by XOMA US and two representatives appointed and replaced
by Baxter. Such representatives will be senior officers and/or managers of the
Company or the relevant business unit of Baxter. The chairperson of the
Relationship Oversight Committee shall be a Baxter representative. Any member of
the Relationship Oversight Committee may designate a substitute to attend and
perform the functions of that member at any meeting of the Relationship
Oversight Committee. The Relationship Oversight Committee will meet at least
once each calendar quarter, or at any frequency agreed by the Relationship
Oversight Committee, and will operate by consensus.
8
3.1.2. The Relationship Oversight Committee shall perform the following
functions:
a. determine the overall strategy for and monitor the manufacturing and
development activity in the manner contemplated by this Agreement;
b. formulate and review development plans proposed by the Project Core Team
and annual budgets formulated by the Project Core Team;
c. settle disputes or disagreements that are unresolved by the Project Core
Team unless otherwise indicated in this Agreement; and
d. perform such other functions as appropriate to further the purposes of
this Agreement as determined by the parties.
3.2 Project Core Team.
3.2.1. Within thirty days of the Effective Date, XOMA US and Baxter will
establish the Project Core Team to oversee all development of Products in the
Field, including, but not limited to, pre-clinical research, Clinical Trials,
manufacturing, regulatory filings, post-approval development studies and the
appropriate role for Baxter and XOMA US to play in development activities. The
Project Core Team will also monitor and review the commercialization of
Products, including annual forecasts of production requirements and Phase IV
clinical support. The Project Core Team will be composed of three
representatives appointed by each of XOMA US and Baxter. Such representatives
will include individuals with expertise and responsibilities in the areas of
pre-clinical development, clinical development, process development,
manufacturing, regulatory affairs or product development. Either XOMA US or
Baxter may replace any or all of its representatives at any time upon written
notice to the other party. Any member of the Project Core Team may designate a
substitute to attend and perform the functions of that member at any meeting of
the Project Core Team. The Project Core Team will meet at least once each
calendar quarter, or more frequently, as agreed by the Project Core Team. The
Project Core Team will operate by consensus; provided that if the Project Core
Team is unable to resolve a dispute regarding any issue presented to it, such
dispute shall be resolved by the Relationship Oversight Committee.
3.2.2. The Project Core Team shall, as soon as practicable, formulate its
first development plan and submit it for approval to the Relationship Oversight
Committee no later than sixty days after the Effective Date. The Project Core
Team will finalize each subsequent modification of the development plan at least
four months prior to the end of the then-current calendar year.
3.2.3. The Project Core Team shall develop, subject to existing clinical
and pre-clinical data, a plan for commencement of Clinical Trials testing one or
more Products in at least two clinical indications in the Field within two years
of the Effective Date. Such Clinical Trials need not be commenced
simultaneously.
9
3.3 Adverse Drug Events. The parties recognize that the holder of a
Regulatory Approval may be required to submit information and file reports to
various governmental agencies on compounds under clinical investigation,
compounds proposed for marketing, or marketed drugs. Information must be
submitted at the time of initial filing for investigational use in humans and at
the time of a request for market approval of a new drug. In addition,
supplemental information must be provided on compounds at periodic intervals and
adverse drug experiences must be reported at more frequent intervals depending
on the severity of the experience. Details of compliance with these
considerations shall be under the purview of the Project Core Team which shall
develop a standard operating procedure for handling and reporting of adverse
drug events.
3.4 Ownership of Regulatory Documents. All future INDs relating to Products
in the Field shall be filed in the name of Baxter and be the sole property of
Baxter, except in Japan where the regulatory process will be handled through an
in-country "caretaker" on behalf of XOMA US. After completion of this process in
Japan, any resulting regulatory approvals will be transferred to Baxter, as
appropriate.
3.5 XOMA US Technical Assistance. XOMA US shall make available to Baxter,
on a reasonable consultation basis, such advice of its technical personnel as
may reasonably be requested by Baxter in connection with XOMA US' supply,
Baxter's purchase and the sale and marketing by Baxter of Products. Baxter
agrees to reimburse XOMA US for the reasonable and customary charges for the
time and expenses of such personnel when consulting for Baxter at Baxter's
facilities or at any place other than XOMA US' facilities. Baxter shall
reimburse XOMA US for reasonable travel expenses (coach class airfare in the
United States and business class airfare outside the United States, ground
transportation, lodging and meals) incurred by personnel of XOMA US at the
request of Baxter while rendering services hereunder. XOMA US shall, to the
extent reasonably requested by Baxter, transfer to Baxter the know how required
for quality control purposes, including, but not limited to, the transfer of
assays.
ARTICLE 4.
PAyments
4.1 Invoice Price. Baxter shall pay XOMA US for Product supplied under
Article 2 an invoice price of [*]
4.2 Development Costs. Baxter shall fund all costs of the Development
Program.
4.3 Signing Fee. Within five business days of date of execution and
delivery of this Agreement by the parties, Baxter shall pay $0.5 million to XOMA
US.
4.4 Meningococcemia Approvals.
10
4.4.1. Baxter shall pay $0.25 million to XOMA US within five business days
after written notice to Baxter of the acceptance by the FDA of a BLA for NEUPREX
for the Meningococcemia indication.
4.4.2. Baxter shall pay $0.5 million to XOMA US within five business days
after written notice to Baxter of the receipt of Regulatory Approval by the FDA
for NEUPREX for the Meningococcemia indication.
4.4.3. Baxter shall pay $0.5 million to XOMA US within five business days
after the written notice to Baxter of the receipt of Regulatory Approval by the
CEU for NEUPREX for the Meningococcemia indication.
4.5 Payments During HSR 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 Cahill
Gordon & Reindel and released to XOMA US, together with interest accrued
thereon, within one business day following receipt by Cahill Gordon & Reindel of
termination or expiration of the applicable waiting period under the HSR Act.
4.6 Audits.
4.6.1. XOMA US shall maintain, for at least three years from the date of
creation, accurate records and accounts of costs and sales of Product in order
to allow Baxter to determine the accuracy of the calculation of the Cost of
Manufacturing. Upon the written request of Baxter and not more than once in any
calendar year, XOMA US shall permit an independent certified public accounting
firm of nationally recognized standing, selected by Baxter and reasonably
acceptable to XOMA US, to have access during normal business hours to such of
the records of XOMA US 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 6.
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 from the date such payment
was originally due until the date paid. Any such audit of records shall be at
Baxter's expense; provided that in the event such audit discloses a negative
variance of more than five percent between the amounts paid and the amounts due
to XOMA US, XOMA US 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 US within five
business days of the following applicable events with respect to any Product
based on the number of
11
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 receipt of written notice of [*]
c. $[*] million upon receipt of written notice of [*]
d. $[*] million upon 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 receipt of written notice of [*]
c. $[*] million upon receipt of written notice of [*]
d. $[*] million upon receipt of written notice of [*]
4.7.3. At least [*] patients for such indication:
a. $[*] million upon receipt of written notice of [*]
b. $[*] million upon receipt of written notice of [*]
c. $[*] million upon receipt of written notice of [*]
d. $[*] million upon receipt of written notice of [*]
12
ARTICLE 5.
publication
During the term of this Agreement, XOMA US and Baxter each acknowledge the
other party's interest in publishing certain of its results to obtain
recognition within the scientific community and to advance the state of
scientific knowledge. Each party also recognizes the mutual interest in
obtaining valid patent protection and protecting business interests.
Consequently, either party, its employees or consultants wishing to make a
publication (including any oral disclosure made without obligation of
confidentiality) relating to work performed by such party as part of the
Development Program (the "Publishing Party") shall transmit to the other party
(the "Reviewing Party") a copy of the proposed written publication at least
sixty days prior to submission for publication, or an outline of such oral
disclosure at least thirty days prior to presentation. The Reviewing Party shall
have the right (a) to propose modifications to the publication for patent or
other commercial reasons and (b) to request a reasonable delay in publication in
order to protect patentable information. Upon the expiration of sixty days, in
the case of proposed written disclosures, or thirty days, in the case of
proposed oral disclosures, from transmission to the Reviewing Party, the
Publishing Party shall be free to proceed with the written publication or the
presentation, respectively, unless the Reviewing Party has requested the delay
described above. If the Reviewing Party requests such a delay, the Publishing
Party shall delay submission or presentation of the publication for a period of
up to ninety days.
ARTICLE 6.
confidentiality
6.1 Nondisclosure Obligations. Except as otherwise provided in this Article
6, 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 6 information and data described in clause (a), (b) or (c) above
shall be referred to as "Information."
6.2 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 6 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
13
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.
6.3 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.
6.4 Terms of this Agreement. Baxter and XOMA US 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 US shall, prior to filing, and in
connection with any comments received thereto, consult with and consider the
views of Baxter with respect to any confidential treatment request made in
connection with the transactions contemplated by this Agreement.
6.5 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 7.
INDEMNIFICATION AND INSURANCE
7.1 Indemnification by Baxter. Baxter agrees to defend, indemnify and hold
harmless XOMA US, its agents and employees, against claims for loss, liability,
damage and costs (including, but not limited to, 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 of any Product (subject to XOMA US' obligations under
Section 7.2). XOMA US shall not be deemed to be a subcontractor of Baxter for
purposes of this Article 7.
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7.2 Indemnification by XOMA US. XOMA US agrees to defend, indemnify and
hold harmless Baxter, its agents and employees, against claims for loss,
liability, damage and costs (including, but not limited to, reasonable fees of
counsel, claims for personal injury or costs of recalls) (a) attributable to the
actions or omissions, if any, of XOMA US or its subcontractors in designing,
manufacturing (to the extent XOMA US or its subcontractors manufacture),
packaging, labeling, marketing, use or sale of any Product (subject to Baxter's
obligations under Section 7.1) or (b) resulting from the failure of such Product
to conform to the warranties set forth herein. Baxter shall not be deemed to be
a subcontractor of XOMA US for purposes of this Article 7.
7.3 Procedure. A party (the "Indemnitee") that intends to claim
indemnification under this Article 7 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 7 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 liability to the Indemnitee under this Article
7 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 7. 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.
7.4 Insurance. Baxter and XOMA US each shall obtain liability insurance
(but each party may self-insure to the extent reasonable given the financial
position of such 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 US intends to
increase its insurance coverage in connection with the commencement of
commercial sales of Product. Baxter and XOMA US 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 US
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 US 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
15
insurance covering the development, manufacture and sale of similar products.
Upon request, XOMA US shall furnish to Baxter a certificate of insurance
evidencing such insurance. Upon request, XOMA US 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 US' insurance but shall be
entitled to coverage under such policies to the extent of an loss arising out of
this Agreement. If XOMA US shall obtain coverage in excess of the self insured
loss limits retained by Baxter, Baxter shall name XOMA US as an additional
insured under Baxter's insurance policies insuring losses over Baxter's
self-insurance program up to the loss limits then held by XOMA US, but XOMA US
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.
ARTICLE 8.
TERM OF AGREEMENT
8.1 Termination of Supply Obligations. The parties obligations under
Section 2.1 of this Agreement shall continue in full force and effect for the
time commencing with the Effective Date and continuing until the third
anniversary of the Effective Date. Thereafter, the parties obligations under
Section 2.1 of this Agreement may be extended, at Baxter's option, after
consideration by Baxter of XOMA US' manufacturing capacity, including the "XOMA
V" facility, upon twelve months prior notice, for successive one year periods.
8.2 Other Termination Events. Except as provided in Section 8.1, either
party, at its option, may terminate this Agreement in whole but not in part,
upon the occurrence of any of the following:
8.2.1. 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.
8.2.2. 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
16
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.
8.2.3. 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.
8.3 Termination of this Agreement. Except as provided in Section 8.1,
either party shall have the right to terminate this Agreement if the License
Agreement shall have been rightfully terminated; provided, that such termination
shall be effective with respect to the non-terminating party's rights under this
Agreement only to the extent commercially consistent with any retained rights or
settlement under the License Agreement. This Agreement shall also terminate if a
portion of the License Agreement is terminated pursuant to Section 12.5 of the
License Agreement.
8.4 Effect of Expiration and Termination. Expiration or termination of this
Agreement shall terminate all rights granted hereunder but shall not relieve the
parties of any obligation accruing prior to such expiration or termination. The
provisions of Articles 5, 6 and 7 and Sections 10.2, 10.6.1, 10.7-10.11 shall
survive the expiration or termination of this Agreement.
17
ARTICLE 9.
CHANGE OF CONTROL
If the board of directors of XOMA (US) LLC 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 (US) LLC shall, or cause its
Affiliates to provide Baxter with an opportunity to make an offer to purchase
XOMA (US) LLC or its parent. Baxter shall have ten business days from the
receipt of notice from XOMA (US) LLC of such intended agreements or actions to
make an offer to acquire XOMA (US) LLC or its parent, as applicable. The
applicable board of directos shall in good faith, subject to their fiduciary
duties under applicable law, consider such offer.
ARTICLE 10.
MISCELLANEOUS
10.1 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
Attention: General Counsel
with a copy to: Baxter Healthcare Corporation
Hyland Immuno Recombinant SBU
550 North Brand Blvd.
Glendale, CA 91203
Attention: President
with a copy (which shall not constitute notice) to:
Brobeck, Phleger & Harrison LLP
550 So. Hope Street
Los Angeles, CA 90071
Attention: Richard S. Chernicoff
If to XOMA US: XOMA US (US) LLC
2910 Seventh Street
Berkeley, California 94710
Attention: General Counsel
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with a copy (which shall not constitute notice) to:
Cahill Gordon & Reindel
80 Pine Street
New York, NY 10005
Attention: Geoffrey E. Liebmann
10.2 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.
10.3 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.
10.4 Assignment. This Agreement may not be assigned or otherwise
transferred, nor, except as expressly provided hereunder, may any right or
obligations hereunder be assigned or transferred 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. 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 the business unit to which this Agreement relates; provided, that in
the case of XOMA US such assignee or transferee may not be a Baxter Competitor.
Any permitted assignee shall assume all obligations of its assignor under this
Agreement.
10.5 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.
10.6 Dispute Resolution.
10.6.1. Except as otherwise specifically provided herein, any disputes or
disagreements arising under the Agreement will be referred to the Relationship
Oversight
19
Committee for good faith resolution, for a period not to exceed thirty days. If
the Relationship Oversight Committee is unable to resolve a dispute regarding an
issue presented to it or arising in it by the end of such thirty-day period,
such dispute will be referred to the Chief Executive Officer of XOMA US 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.
10.6.2. The parties agree that any action under this Agreement may only be
brought in the Superior Court of the State of California or a United States
District Court in the State of California.
10.7 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.
10.8 Independent Contractors. XOMA US 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 US 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.
10.9Severability. 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.
10.10 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.
10.11 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
20
instrument duly executed by both parties hereto. No prior drafts of this
Agreement may be used in the construction or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
XOMA (US) LLC
By: /s/ Christopher J. Margolin
-------------------------------------------
Christopher J. Margolin
Vice President, General Counsel & Secretary
BAXTER HEALTHCARE CORPORATION
By: /s/ Charlotte A. Schwab
-------------------------------------------
Charlotte A. Schwab
Vice President
Global Business Development
Hyland Immuno Division
Schedule 1.27
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