Exhibit 10.13

CONFIDENTIAL TREATMENT REQUESTED

Final Execution Version

AMENDED AND RESTATED

COLLABORATIVE RESEARCH AND LICENSE AGREEMENT

By and Among

pSivida Corp.

pSivida US, Inc.

pSiMedica Limited

and

Pfizer Inc.

Dated June 14, 2011

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CONFIDENTIAL TREATMENT REQUESTED

TABLE OF CONTENTS

 

              Page  

1.

 

Definitions

     1   

2.

 

Management of the Development Program

     13     

2.1.

   Joint Steering Committee      13     

2.2.

   Decision-Making      13     

2.3.

   Dispute Resolution      14     

2.4.

   Meetings      14     

2.5.

   Minutes      14     

2.6.

   JSC Functions and Powers      15     

2.7.

   Independence      15   

3.

 

Development

     16     

3.1.

   Pre-POC Development Plan      16     

3.2.

   Development Costs Prior to Proof-of-Concept      16     

3.3.

   Ceasing Development Prior to Proof of Concept      16     

3.4.

   Achievement of Proof-of-Concept      17     

3.5.

   Funding Option Notice      17     

3.6.

   PFIZER Funding Option      18     

3.7.

   Cooperation      20     

3.8.

   Conduct of Development      20     

3.9.

   Development Plan Records      20     

3.10.

   Reports      20     

3.11.

   Termination of Development Plans      21   

4.

 

Licenses

     21     

4.1.

   License to PFIZER      21     

4.2.

   License to PSIVIDA      23     

4.3.

   Retained Rights      24   

5.

 

Diligence, Regulatory Approvals and Manufacturing/Supply

     24     

5.1.

   Diligence      24   

 

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5.2.

   Regulatory Affairs      24     

5.3.

   Recalls or Other Corrective Action      26     

5.4.

   Manufacturing and Supply—General      26     

5.5.

   Manufacture and Supply—Clinical Supplies      27     

5.6.

   Commercialization/Pricing      28     

5.7.

   Disclosure of Technology by PSIVIDA      28     

5.8.

   Disclosure of Technology by PFIZER      28   

6.

 

Fees, Milestones and Royalties

     28     

6.1.

   Upfront Payment      28     

6.2.

   Product Milestone Payments      28     

6.3.

   Milestone Payments Generally      30     

6.4.

   PFIZER Royalty Payments      31     

6.5.

   Generic Products      31     

6.6.

   Duration of Royalty Payments      31     

6.7.

   Notices of Termination      31   

7.

 

Accounting and Procedures for Payment

     31     

7.1.

   Inter-Company Sales      31     

7.2.

   Currency      32     

7.3.

   Royalty Payments      32     

7.4.

   Method of Payments      32     

7.5.

   Inspection of Records      32     

7.6.

   Tax Matters      33   

8.

 

Patents and Infringement

     34     

8.1.

   Disclosure and Ownership of Program Technology and Program Patent Rights     
34     

8.2.

   Prosecution and Maintenance of PSIVIDA Patent Rights and PSIVIDA Program
Patent Rights in the Territory      34     

8.3.

   Enforcement of PSIVIDA Patent Rights and PSIVIDA Program Patent Rights     
36     

8.4.

   Prosecution and Maintenance of PFIZER Program Patent Rights in the Territory
     37     

8.5.

   Enforcement of PFIZER Program Patent Rights      38     

8.6.

   Patent Term Extension      40     

8.7.

   Orange Book Listings      40   

 

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8.8.

   Patent Invalidity Claim with Respect to PSIVIDA Patent Rights and PSIVIDA
Program Patent Rights      40     

8.9.

   Patent Invalidity Claim with Respect to PFIZER Program Patent Rights      41
    

8.10.

   Notification of Third Party Claim      41     

8.11.

   Third Party Royalty Obligations      42   

9.

 

Confidentiality; Publication

     43     

9.1.

   Confidential Information      43     

9.2.

   Disclosure of Agreement Terms      44     

9.3.

   Other Disclosures      45     

9.4.

   Filing, Registration or Notification of the Agreement      46   

10.

 

Representations and Warranties

     46     

10.1.

   PSIVIDA Representations and Warranties      46     

10.2.

   PFIZER Representations and Warranties      49     

10.3.

   Disclaimer of Warranty      51   

11.

 

Additional Covenants

     51   

12.

 

Term

     52   

13.

 

Termination

     52     

13.1.

   Termination Rights      52     

13.2.

   Accrued Obligations      53     

13.3.

   Effect of Termination      54     

13.4.

   Bankruptcy      58     

13.5.

   Change of Control      58     

13.6.

   Breach Remedy      59   

14.

 

Indemnification and Insurance

     59     

14.1.

   Indemnification      59     

14.2.

   Losses      60     

14.3.

   Insurance      60     

14.4.

   Defense Procedures; Procedures for Third Party Claims      61     

14.5.

   Disclaimer of Liability for Consequential Damages      63     

14.6.

   SOLE REMEDY      63   

15.

 

Governing Law and Jurisdiction

     63     

15.1.

   Governing Law      63   

 

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15.2.

   Jurisdiction      63   

16.

 

Miscellaneous

     64     

16.1.

   Termination of Prior Agreements      64     

16.2.

   Force Majeure      64     

16.3.

   Reserved Rights; Non-Exclusivity      65     

16.4.

   Severability      65     

16.5.

   Waivers      66     

16.6.

   Entire Agreements; Amendments      66     

16.7.

   Survival      66     

16.8.

   Assignment      66     

16.9.

   Independent Contractor      67     

16.10.

   Notices      67     

16.11.

   Third Party Beneficiaries      68     

16.12.

   Binding Effect      68     

16.13.

   Counterparts      68     

16.14.

   Headings      68   

 

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AMENDED AND RESTATED

COLLABORATIVE RESEARCH AND LICENSE AGREEMENT

This Amended and Restated Collaborative Research and License Agreement (the
“Agreement”), dated as of June 14, 2011 (the “Effective Date”), is made by and
among pSivida Corp., a Delaware corporation with offices located at 400 Pleasant
Street, Watertown, Massachusetts, 02472, pSivida US, Inc., a Delaware
corporation with offices located at 400 Pleasant Street, Watertown,
Massachusetts 02472, pSiMedica Limited, a United Kingdom limited company with
offices located at Malvern Hills Science Park, Geraldine Road, Malvern,
Worcestershire, WR14 3SZ (collectively, “PSIVIDA”) and Pfizer Inc., a Delaware
corporation with offices located at 235 East 42nd Street, New York, New York,
10017 (“PFIZER”). PSIVIDA and PFIZER are sometimes referred to herein
individually as a “Party” and collectively as the “Parties.”

WHEREAS, PSIVIDA owns or otherwise controls certain patents, patent
applications, technology, know-how and scientific and technical information
relating to formulations for drug delivery and compatible devices;

WHEREAS PFIZER has extensive experience and expertise in the development and
commercialization of pharmaceutical products;

WHEREAS, PFIZER and pSivida Inc. (now pSivida US Inc.) and pSivida Corp. (as
successor to pSivida Limited) are currently party to a Collaborative Research
and License Agreement dated April 3, 2007 (the “Prior Agreement”);

WHEREAS PFIZER and PSIVIDA wish to enter into this Agreement to amend and
restate the Prior Agreement as of the Effective Date;

NOW, THEREFORE, in consideration of the mutual covenants and agreements provided
herein, PSIVIDA and PFIZER hereby agree as follows:

 

1. Definitions.

1.1 “Accused Device” shall have the meaning assigned to it in Section 8.3.2.

1.2 “Affiliate” means any entity directly or indirectly controlled by,
controlling, or under common control with, a Party to this Agreement, but only
for so long as such control shall continue. For purposes of this definition,
“control” (including, with correlative meanings, “controlled by”, “controlling”
and “under common control with”) means (a) possession, direct or indirect, of
the power to direct or cause direction of the management or policies of an
entity (whether through ownership of securities or other ownership interests, by
contract or otherwise), or (b) beneficial ownership of at least fifty percent
(50%) of the voting securities or other ownership interest (whether directly or
pursuant to any option, warrant or other similar arrangement) or other
comparable equity interests of an entity.

1.3 “Alimera” means Alimera Sciences, Inc.

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1.4 “Alimera Agreement” means the Amended and Restated Collaboration Agreement
between pSivida, Inc. (f/k/a Control Delivery Systems, Inc.) and Alimera dated
as of March 14, 2008 as in existence and effect as of the Effective Date.

1.5 “Antecedent Product” means, with respect to a specific Generic Product,
(a) in the United States, the Product referenced as the listed drug for a new
drug application that is submitted pursuant to Section 505(j) of the FDCA and
(b) in any country outside the United States, the Product referenced in an
analogous manner under an analogous application process.

1.6 “B&L” means Bausch & Lomb Incorporated.

1.7 “B&L Agreement” means the Amended and Restated License Agreement between
Control Delivery Systems, Inc. (presently, PSIVIDA) and B&L dated as of
December 9, 2003 as in existence and effect on the Effective Date.

1.8 “Business Day” means a day other than a Saturday, Sunday, or bank or other
public holiday in New York, New York or Boston, Massachusetts.

1.9 “Change of Control” means, with respect to a Party or its parent
corporation, (a) a merger or consolidation of such Party or such parent
corporation with a Third Party which results in the voting securities of such
Party or such parent corporation outstanding immediately prior thereto ceasing
to represent at least fifty percent (50%) of the combined voting power of the
surviving entity immediately after such merger or consolidation, or (b) a
transaction or series of related transactions in which a Third Party, together
with its Affiliates, becomes the beneficial owner of fifty percent (50%) or more
of the combined voting power of the outstanding securities of such Party or such
parent corporation, or (c) the sale or other transfer to a Third Party of all or
substantially all of such Party’s assets or business or substantially all of
such Party’s ophthalmic assets or business.

1.10 “Clinical IP” means (a) all preclinical and clinical protocols, studies,
data, results, study-related forms, materials (excluding solely the Compound)
and reports (e.g., investigator brochures, informed consent forms, data safety
monitoring board related documents, patient recruitment related materials,
biocompatibility studies, animal studies, safety studies, and chemistry,
manufacturing and control data) resulting from any preclinical or clinical study
or trial of the Product or generated in the course of the Development Program,
(b) any certificates of any audit of any such preclinical or clinical study or
trial, any record or report of any audit of such preclinical or clinical study
or trial containing a finding that involves the absence or failure of a critical
process, system or related component, a key internal control and/or an issue
with considerable risk to a Party and which warrants immediate remediation to
address, and any other audit record or report of such preclinical or clinical
study to the extent necessary to respond to a request, requirement, or order by
a Government Authority, upon the request of the Party that is the subject of the
Government Authority’s request, requirement, or order, and (c) all INDs, NDAs,
any unfiled applications, components or materials normally associated with an
IND or NDA, regulatory filings or applications comparable to INDs or NDAs in any
foreign jurisdictions, drug master files, and other regulatory applications and
Regulatory Approvals regarding the Product (excluding any of the foregoing
relating to the Compound apart from the Product).

 

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1.11 “Clinical Trials” means all Phase I/II Clinical Trials, Phase II Clinical
Trials and Phase III Clinical Trials, or such analogous studies and trials of a
medical device as are intended to establish scientifically valid evidence to be
submitted in an application to a Regulatory Authority for the Product.

1.12 “Clinical Supply Requirements” means the quantities of the Compound or
Product that are required for the conduct of Clinical Trials or Non-NDA Trials.

1.13 “Cost of Clinical Supplies” means the out-of-pocket costs that a Party pays
to Third Parties for the manufacture and supply of Clinical Supply Requirements
pursuant to this Agreement.

1.14 “Commence” or “Commencement” when used with respect to a clinical trial,
means the first dosing of the first patient for such trial.

1.15 “Commercially Reasonable Efforts” means those efforts and resources
consistent with the usual practice of a Party in pursuing the development or
commercialization of its own products that are of similar market potential as
the Product in the Field, taking into account all relevant factors including
resource and workload constraints, product labeling or anticipated labeling,
present and future market potential, past performance of the Product in the
Field and such Party’s own products that are of similar market potential,
financial return, medical and clinical considerations, present and future
regulatory environment and competitive market conditions, all as measured by the
facts and circumstances at the time such efforts are due.

1.16 “Compound” means latanoprost, which has the chemical name:
isopropyl-(Z)-7[(1R,2R,3R,5S)3,5-dihydroxy-2-[(3R)-3-hydroxy-5-phenylpentyl]cyclopentyl]-5-heptenoate)
and is also known as 13, 14-dihydro-17-phenyl-18, 19, 20-trinor PGF2alpha
isopropyl ester, and free acid(s) and salt(s) thereof.

1.17 “Confidential Information” means either the PFIZER Confidential Information
or the PSIVIDA Confidential Information, or both, as the context may require.

1.18 “Control” or “Controlled” means, with respect to any intellectual property
right, that the Party (i) owns or (ii) has a license to such intellectual
property right and has the ability to grant the other Party access, a license,
or a sublicense (as applicable) to such intellectual property right as provided
herein, without violating the terms of any agreement or other arrangement with
any Third Party existing at the time such Party would be first required
hereunder to grant the other Party such access, license or sublicense (such
ability, the “Right to Grant a Sublicense”).

1.19 “Courts” shall have the meaning assigned to it in Section 15.2.

1.20 “Development Plans” means the Pre-POC Development Plan and the PFIZER
Development Plan.

1.21 “Development Program” means the clinical, regulatory, development and
associated activities for a Product conducted under this Agreement and the Prior
Agreement.

 

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1.22 “Development Term” means the period commencing on the Effective Date and
ending on the date of the First Commercial Sale.

1.23 “Device” means a bioerodible device for injection or implantation in or
adjacent to the eye that has a core, which core contains a drug, and which core
is completely or partially surrounded by a polymer layer or tube.

1.24 “Excluded PSIVIDA Affiliate IP” shall mean any Patent Rights and Technology
Controlled by any Third Party that becomes an Affiliate of PSIVIDA following a
Change of Control of PSIVIDA, to the extent, but only to the extent, that such
Patent Rights or Technology: (i) are Controlled by such future Affiliate of
PSIVIDA at the time such Affiliate becomes an Affiliate of PSIVIDA (other than
pursuant to any license or other grant of rights by PSIVIDA or any other
Affiliate of PSIVIDA to such future Affiliate) or (ii) are subsequently
Controlled by such Affiliate but are developed independently of and without the
use of any Patent Rights and Technology Controlled by PSIVIDA as of or prior to
the time such Affiliate becomes an Affiliate of PSIVIDA.

1.25 “Faber” means Faber Research LLC.

1.26 “Faber Agreement” means the License Agreement by and between Faber Research
LLC and pSivida Limited dated January 3, 2007 and as in existence and effect as
of the Effective Date.

1.27 “FDA” means the United States Food and Drug Administration or any successor
agency thereto.

1.28 “FDCA” means the U.S. Federal Food, Drug and Cosmetic Act, as amended, and
the regulations promulgated thereunder.

1.29 “Field” means the treatment, control or prevention of any ophthalmic
disease or condition in humans excluding uveitis.

1.30 “Firm Order” has the meaning assigned to it in Section 5.5.2.

1.31 “Final Report” has the meaning assigned to it in Section 3.4.

1.32 “Formulation” means a solid, solution or suspension suitable for the ocular
delivery of the Compound for use with the Device.

1.33 “First Commercial Sale” means the first shipment of a Product in commercial
quantities for commercial sale by PFIZER, its Affiliates or its sublicensees to
a Third Party in an arm’s length transaction in a country in the Territory after
receipt by PFIZER of the first Regulatory Approval for such Product in such
country.

1.34 “Funding Option Notice” has the meaning assigned to it in Section 3.5.

1.35 “Generic Product” means a Device that (i) is sold by a Third Party that is
not a licensee or sublicensee of a Party or its Affiliates, or any of their
licensees or sublicensees, under

 

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a marketing authorization granted by a Regulatory Authority to such Third Party;
(ii) contains the Compound as its sole active pharmaceutical ingredient; and
(x) for purposes of the United States, is approved under an abbreviated new drug
application that is submitted pursuant to Section 505(j) of the FDCA (or any
successor thereto) and that references a Product as its listed drug or (y) for
purposes of a country outside the United States, is approved by the applicable
Regulatory Authority under an analogous application process.

1.36 “Glaucoma” means any of a group of neuropathies (including without
limitation primary open angle glaucoma, angle closure glaucoma and normal
tension glaucoma) or conditions where the goal of treatment is to reduce
intraocular pressure.

1.37 “Governmental Authority” means any court, agency, department, authority or
other instrumentality of any nation, state, county, city or other political
subdivision.

1.38 “Government Official” has the meaning assigned to it in Section 10.1.9.

1.39 “HSR Act” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.

1.40 “HSR Filing” shall mean filings by PFIZER and PSIVIDA with the United
States Federal Trade Commission and the Antitrust Division of the United States
Department of Justice of a Notification and Report Form for Certain Mergers and
Acquisitions (as that term is defined in the HSR Act) with respect to the
matters set forth in this Agreement, together with all required documentary
attachments thereto.

1.41 “HSR Clearance Date” shall mean the earliest date on which the Parties have
actual knowledge that all applicable waiting periods under the HSR Act with
respect to the transactions contemplated hereunder have expired or have been
terminated.

1.42 “IND” means the Investigational New Drug Application or, if applicable, the
Investigational Device Exemption application, filed with FDA, or a similar
application filed with an applicable Regulatory Authority outside of the United
States.

1.43 “Indemnified Party” shall have the meaning assigned to it in Section 14.4.

1.44 “Indemnifying Party” shall have the meaning assigned to it in Section 14.4.

1.45 “Infringer” has the meaning assigned to it in Section 8.3.2.

1.46 “Joint Steering Committee” and “JSC” have the meaning assigned to them in
Section 2.1.

1.47 “Kentucky Study Agreement” means the means the Investigator Initiated
Research Agreement dated as of June 1, 2010 among PFIZER, PSIVIDA and the
University of Kentucky Research Foundation.

1.48 “Laws” means all laws, statutes, rules, regulations, orders, judgments
and/or ordinances of any Governmental Authority.

 

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1.49 “Litigation Condition” shall have the meaning assigned to it in
Section 14.4.1.

1.50 “Losses” shall have the meaning assigned to it in Section 14.2.

1.51 “Major EU Countries” means the United Kingdom, Spain, Italy, France and
Germany.

1.52 “Market Penetration” shall mean, with respect to a Product, on a
country-by-country and Product-by-Product basis, (a) the quantity of all Generic
Products for which such Product is the Antecedent Product sold in the applicable
country divided by (b) the total quantity of such Antecedent Product and all
such Generic Product sold in the applicable country (quantity of product sold
based on data provided by IMS International or, if such data is not available
from IMS International, such other reliable data source as reasonably determined
by PFIZER and reasonably agreed by PSIVIDA).

1.53 “NDA” means a New Drug Application or a Biological License Application
filed with the FDA in accordance with the FDCA with respect to a pharmaceutical
or biologic product or a similar application filed with an applicable Regulatory
Authority outside of the United States (including any supra national agency such
as the European Union) for the purpose of obtaining approval to market and sell
a pharmaceutical or biological product in such jurisdiction in the Territory.

1.54 “Net Sales” means with respect to a Product, the gross amount invoiced by
PFIZER, its Affiliates and its sublicensees of such Product to Third Parties,
less, without duplication, the following to the extent actually invoiced, paid,
granted or accrued: sales returns and allowances, trade, quantity and cash
discounts and adjustments granted on account of billing errors, rejected goods,
damaged or defective goods, recalls, returns, rebates, chargeback rebates,
reimbursements or similar payments granted or given to wholesalers or other
distributors, buying groups, health care insurance carriers or other
institutions; adjustments arising from consumer discount programs or other
similar programs; customs or excise duties, sales tax, consumption tax, value
added tax, and other taxes (except income taxes) or duties relating to sales;
any reductions of payment in respect of sales to the United States government,
any state government or any foreign government, or to any other Governmental
Authority, or with respect to any government-subsidized program or managed care
organization (provided that any reductions, discounts or adjustments that apply
collectively to multiple products including the Product shall be allocated pro
rata to the amounts invoiced for Products); and freight and insurance (to the
extent that PFIZER bears the cost of freight and insurance for a Product). Net
Sales shall be determined from books and records maintained in accordance with
generally acceptable accounting principles in the United States, as consistently
applied by PFIZER with respect to sales of all its pharmaceutical or biologic
products.

If the Product is sold as part of a bundle of distinct products (i.e., one price
is charged for a number of distinct products), the Net Sales for the Product
shall be, on a country-by-country basis, the greater of (a) the gross amount
invoiced by PFIZER its Affiliates and its sublicensees of such bundle to Third
Parties in such country, multiplied by the ratio of the list price for such
Product in such country to the sum of the list prices for each product in such
bundle in such country (by way of example, if the list price for such Product
when sold separately is $10, and

 

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the sum of the list prices for each product in such bundle when sold separately
is $40, then the Net Sales attributable to the Product when sold as part of the
bundle would be twenty five percent (25%) of the Net Sales of the bundle of
products sold) and (b) the number of units of the Product sold by PFIZER, its
Affiliates and its sublicensees in such country to Third Parties as part of a
bundle, multiplied by the average gross amount invoiced to Third Parties during
the relevant PFIZER Quarter for a unit of the Product sold separately in such
country (i.e., on a stand-alone basis solely for monetary consideration), or, in
the absence of such transactions, the fair market value for the Product, in each
case less, without duplication, the deductions described above.

1.55 “Non-NDA Trial” means any clinical trial, or part of a clinical trial, for
the Product that is not designed or required to procure data necessary for the
acceptance of filing an NDA. Non-NDA Trials may be conducted before or after the
filing of an NDA, before Regulatory Approval for the Product or at any time
after Regulatory Approval for the Product.

1.56 “Non-Sequential Milestone” shall have the meaning assigned to it in
Section 6.3.1.

1.57 “Patent Costs” means the fees and costs associated with filing, prosecution
and maintenance of Patent Rights in the Territory.

1.58 “Patent Rights” means all patents and patent applications, whether domestic
or foreign, including all continuations, continuations-in-part, divisionals,
provisionals and renewals, and letters of patent granted with respect to any of
the foregoing, patents of addition, supplementary protection certificates,
registration or confirmation patents and all reissues, re-examination and
extensions thereof. In all cases, inventorship will be determined in accordance
with U.S. law.

1.59 “Patient Outcomes Tool” means a method for identifying clinical trial
subjects, which method meets the following criteria: (a) such method is intended
to be used in both a clinical trial and clinical use setting; (b) such method
does not require the performance of significant additional activities besides
completion of a brief questionnaire and clinical status observations; (c) such
method is actually used in a Phase II Clinical Trial of the Product except as
otherwise provided in this Section 1.59; and (d) if such method is used in a
Phase II Clinical Trial, the use of such method in such Phase II Clinical Trial
is intended to (i) demonstrate the utility of such method and (ii) provide
evidence of the validity of such method and its appropriateness for use in a
Phase III Clinical Trial. Notwithstanding anything to the contrary in this
Agreement, the foregoing requirements shall not apply if (x) compliance with
applicable Law renders compliance with such requirement impracticable or
impossible; (y) compliance with such requirement is not authorized by any
Governmental Authority or Regulatory Authority or is not consistent with a
Regulatory Approval; or (z) compliance with such requirement is prohibited by,
or would impede, delay or adversely impact the approval of the Product by, any
Governmental Authority or Regulatory Authority.

1.60 “Person” means an individual, corporation, partnership, company, joint
venture, unincorporated organization, limited liability company or partnership,
sole proprietorship,

 

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association, bank, trust company or trust, whether or not legal entities, or any
Governmental Authority.

1.61 “PFIZER Confidential Information” means all information relating to PFIZER
Technology or PFIZER Program Technology, as well as any other information
regarding the technology, business and operations of PFIZER of any of its
Affiliates, that is or has been disclosed (whether orally or in writing) by
PFIZER or its Affiliates to PSIVIDA or its Affiliates to the extent that such
information is not (i) as of the date of disclosure known to PSIVIDA or its
Affiliates; or (ii) disclosed in published literature, or otherwise generally
known to the public through no breach by PSIVIDA of this Agreement; or
(iii) obtained by PSIVIDA or its Affiliates from a Third Party free from any
obligation of confidentiality to PFIZER; or (iv) independently developed by
PSIVIDA or its Affiliates without use of the PFIZER Confidential Information; or
(v) required to be disclosed under Law; provided that, in the case of (v),
PSIVIDA provides PFIZER prior notice (to the extent practicable) of such
disclosure and agrees to cooperate, at the request and sole expense of PFIZER,
with PFIZER’s efforts to preserve the confidentiality of such information.

1.62 “PFIZER Controlled Intellectual Property” means the Patent Rights and
Technology Controlled by PFIZER or any of its Affiliates as of the date of a
termination described in Section 13.3.2 that are necessary to develop, make,
sell, offer for sale, use and import the Product in substantially the form the
Product exists on such date of termination, but not including PFIZER Technology,
the PFIZER Program Technology, the PFIZER Program Patent Rights, the PFIZER
Patent Rights, and Clinical IP Controlled by PFIZER or any of its Affiliates.

1.63 “PFIZER Development Plan” means, with respect to the Product, a strategy
and planning document for all research and development activities to be
conducted pursuant to this Agreement up to and including filing an NDA, which
document shall describe in reasonable detail the Commercially Reasonable Efforts
activities to be undertaken by PFIZER (including Clinical Trials, seeking
Regulatory Approvals and manufacturing activities) and the expected timing of
each activity.

1.64 “PFIZER Option Date” shall have the meaning assigned to it in
Section 3.6.1.

1.65 “PFIZER Patent Rights” means the Patent Rights set forth on Schedule 1.65
and any Patent Rights that may issue from or claim priority to or through the
Patent Rights set forth on Schedule 1.65.

1.66 “PFIZER Program Patent Rights” means Program Patent Rights (other than
PSIVIDA Program Patents Rights) that are determined by United States law to be
owned by PFIZER or any of its Affiliates, including without limitation the
Program Patent Rights set forth on Schedule 1.66 and any Program Patent Rights
that may issue from or claim priority to or through the Program Patent Rights
set forth on Schedule 1.66.

1.67 “PFIZER Program Technology” means Program Technology (other than PSIVIDA
Program Technology) that is determined by United States law to be owned by
PFIZER or any of its Affiliates and includes relevant PFIZER Confidential
Information.

 

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1.68 “PFIZER Quarter” means (A) for the first three (3) quarters in any calendar
year, the three (3) successive thirteen (13) week periods (i) with respect to
the United States, commencing on January 1 of any calendar year, and (ii) with
respect to any country in the Territory other than the United States, commencing
on December 1 of any calendar year, and (B) for the fourth (4th) quarter in any
calendar year, the period commencing on the day after the end of the third
successive thirteen (13) week period in (A) above and (i) with respect to the
United States, ending on December 31 of any calendar year, and (ii) with respect
to any country in the Territory other than the United States, ending on
November 30 of any calendar year.

1.69 “PFIZER Technology” means any Technology and know-how (including Pfizer
Confidential Information) owned, licensed or otherwise Controlled by PFIZER or
any of its Affiliates as of the Effective Date.

1.70 “PFIZER Year” means the twelve (12) month period (i) with respect to the
United States, commencing on January 1 of any calendar year, and (ii) with
respect to any country in the Territory other than the United States, commencing
on December 1 of any calendar year.

1.71 “Phase I/II Clinical Trial” means a first in human clinical trial that is
primarily intended to test the safety of the Product for a specific indication
in patients with the disease or condition under study, or an analogous study or
trial of a medical device intended to evaluate scientifically valid evidence to
be submitted in an application to a Regulatory Authority for the applicable
Product.

1.72 “Phase II Clinical Trial” means a Phase II Clinical Trial that is primarily
intended to evaluate the effectiveness and dosing regimen for use in a Phase III
Clinical Trial of a Product for a specific indication or an analogous study or
trial of a medical device intended to establish scientifically valid evidence to
be submitted in an application to a Regulatory Authority for the applicable
Product.

1.73 “Phase III Clinical Trial” means a clinical trial intended to meet the
requirements for approval of an NDA for the Product, or an analogous study or
trial of a medical device intended to establish scientifically valid evidence to
be submitted in an application to a Regulatory Authority for the Product.

1.74 “Pre-POC Development Plan” means the plan prepared by PSIVIDA setting forth
research and development activities to be conducted prior to and including
Proof-of-Concept. Such plan will include details regarding the development
activities for the Phase II Clinical Trials for the Product and the development
of the Patient Outcomes Tool, which activities will include those summarized on
Schedule 1.74.

1.75 “Price Approval” means, in any country where a Governmental Authority
authorizes reimbursement for, or approves or determines pricing for,
pharmaceutical products, receipt (or, if required to make such authorization,
approval or determination effective, publication) of such reimbursement
authorization or pricing approval or determination (as the case may be).

1.76 “Product” means a Device that meets all of the following criteria: (A) it
has a core within a polymer tube, which core contains the Compound and no other
active ingredient, (B) it

 

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receives Regulatory Approval or is designed to receive Regulatory Approval to
deliver the Compound and no other active ingredient by subconjunctival injection
and no other delivery method, (C) it is bioerodible, and (D) [*]. For the
avoidance of doubt, Product shall not include the following: (i) the “First
Generation Exclusive Licensed Product” and the “Vitrasert Licensed Product,”
each as defined under the B&L Agreement, and (ii) the “First Product,”
“Product,” “Excluded Product,” or “Option Product” (to the extent PSIVIDA has
granted a license covering such Option Product pursuant to Section 5.8 of the
Alimera Agreement), each as defined under the Alimera Agreement.

1.77 “Program Patent Rights” means all Patent Rights that cover Program
Technology and includes PSIVIDA Program Patent Rights and PFIZER Program Patent
Rights. For the avoidance of doubt, Program Patent Rights shall not include CDS
Improvements (as defined in the Alimera Agreement).

1.78 “Program Technology” means Technology relating to the Product that is or
was (a) invented, created or developed by officers, employees or agents of, or
consultants to, PSIVIDA or any of its Affiliates, alone or jointly with Third
Parties, in the course of conducting activities under the Development Program,
(b) jointly invented, created or developed by officers, employees or agents of,
or consultants to, both PSIVIDA and PFIZER or any of their respective Affiliates
or sublicensees, in each case, alone or jointly with Third Parties, in the
course of conducting activities under the Development Program, (c) invented,
created or developed by officers, employees or agents of, or consultants to,
PFIZER or any of its Affiliates or sublicensees, alone or jointly with Third
Parties, in the course of conducting activities under the Development Program,
or (d) acquired by purchase, license, assignment or other means from Third
Parties by PSIVIDA or any of its Affiliates, by PSIVIDA and PFIZER or any of
their respective Affiliates or by PFIZER or any of its Affiliates, in each case,
alone or jointly with Third Parties, in order for such Party (or Parties) to
perform obligations under the Development Program. For the avoidance of doubt,
Program Technology shall not include CDS Improvements (as defined in the Alimera
Agreement).

1.79 “Proof-of-Concept” means the time when a Phase II Clinical Trial for the
Product that includes the activities set forth in Schedule 1.74 has been
completed.

1.80 “PSIVIDA Confidential Information” means all information relating to
PSIVIDA Technology or PSIVIDA Program Technology, as well as any other
information regarding the technology, business and operations of PSIVIDA or any
of its Affiliates, that is or has been disclosed (whether orally or in writing)
by PSIVIDA or any of its Affiliates to PFIZER or its Affiliates to the extent
that such information is not (i) as of the date of disclosure to PFIZER, known
to PFIZER or its Affiliates; or (ii) disclosed in published literature, or
otherwise generally known to the public through no breach by PFIZER of this
Agreement; or (iii) obtained by PFIZER or its Affiliates from a Third Party free
from any obligation of confidentiality to PSIVIDA; or (iv) independently
developed by PFIZER or its Affiliates without use of the PSIVIDA Confidential
Information; or (v) required to be disclosed under Law; provided that, in the
case of (v), PFIZER provides PSIVIDA prior notice (to the extent practicable) of
such disclosure and agrees to cooperate, at the request and sole expense of
PSIVIDA, with PSIVIDA’s efforts to preserve the confidentiality of such
information.

 

 

* Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

 

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1.81 “PSIVIDA Controlled Intellectual Property” means the Patent Rights and
Technology Controlled by PSIVIDA or any of its Affiliates as of the PFIZER
Option Date that are necessary to develop, make, sell, offer for sale, use and
import the Product in substantially the form the Product exists on the PFIZER
Option Date, but not including the Excluded PSIVIDA Affiliate IP, PSIVIDA
Technology, the PSIVIDA Program Technology, the PSIVIDA Program Patent Rights,
the PSIVIDA Patent Rights, Clinical IP Controlled by PSIVIDA or any of its
Affiliates and the PSIVIDA Confidential Information.

1.82 “PSIVIDA Patent Rights” means the Patent Rights set forth on Schedule 1.82
and any Patent Rights that may issue from or claim priority to or through the
Patent Rights listed on Schedule 1.82.

1.83 “PSIVIDA Program Patent Rights” means (a) all Program Patent Rights to the
extent that that they claim (i) modifications, improvements and advancements to
the Device (but not including Program Patent Rights that solely and specifically
claim improvements to the Device with the Compound), (ii) methods of manufacture
or monitoring the Device (but not including Program Patent Rights that solely
and specifically claim methods of manufacturing or monitoring the Device with
the Compound); (iii) the Device with any composition of matter (but not
including Program Patent Rights that solely and specifically claim the Device
with the Compound); and (iv) method of use claims except for method of use
claims that solely and specifically claim (A) the Device with the Compound or
(B) Formulations with respect to the Compound, in each case (i)-(iv) regardless
of the identity of the inventors; and (b) Program Patent Rights that are
determined by United States law to be owned by PSIVIDA or any of its Affiliates,
and including without limitation the Program Patent Rights set forth on Schedule
1.83.

1.84 “PSIVIDA Program Technology” means (a) all Program Technology to the extent
that it relates to (i) modifications, improvements and advancements to the
Device (but not including Program Technology that solely and specifically
relates to improvements to the Device with the Compound), (ii) methods of
manufacture or monitoring the Device (but not including Program Technology that
solely and specifically relates to methods of manufacturing or monitoring the
Device with the Compound); (iii) the Device with any composition of matter (but
not including Program Technology that solely and specifically relates to the
Device with the Compound); and (iv) method of use claims except for method of
use claims that solely and specifically claim (A) the Device with the Compound
or (B) Formulations with respect to the Compound, in each case
(i)-(iv) regardless of the identity of the inventors; and (b) Program Technology
that is determined by United States law to be owned by PSIVIDA or any of its
Affiliates.

1.85 “PSIVIDA Reserved Interests” shall have the meaning assigned to it in
Section 16.3.1.

1.86 “PSIVIDA Technology” means any Technology owned or otherwise Controlled by
PSIVIDA or any of its Affiliates as of the Effective Date.

1.87 “PSIVIDA Valid Claim” means any claim from (a) an issued and unexpired
patent included within the PSIVIDA Patent Rights or PSIVIDA Program Patent
Rights that has not been revoked or held unenforceable or invalid by a final
decision of a court or other

 

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Governmental Authority of competent jurisdiction, unappealable or unappealed
within the time allowed for appeal or that has not been disclaimed, denied or
admitted to be invalid or unenforceable through reissue or disclaimer or
otherwise; or (b) a patent application included within the PSIVIDA Patent Rights
or PSIVIDA Program Patent Rights; provided however, that such a claim from a
patent application has not been canceled, withdrawn, or abandoned [*]. If a
claim of a patent application ceases to be a PSIVIDA Valid Claim under item
(b) because of the passage of time and later issues as part of a patent within
item (a), then it shall again be considered to be a PSIVIDA Valid Claim
effective as of the earlier of the grant, allowance or issuance of such patent.

1.88 “Regulatory Approval” means any and all approvals, with respect to any
jurisdiction, or authorizations (other than Price Approvals) of a Regulatory
Authority, that are necessary for the commercial manufacture, distribution, use,
marketing or sale of a pharmaceutical product in such jurisdiction.

1.89 “Regulatory Authority” means, in respect of a particular country or
jurisdiction, the Governmental Authority having responsibility for granting
Regulatory Approvals in such country or jurisdiction.

1.90 “Representatives” shall have the meaning assigned to it in Section 14.1.1.

1.91 “Right of Reference” means the right of a Party and its licensees or
designees to reference or cross-reference Clinical IP in any regulatory
applications or filings.

1.92 “Right to Grant a Sublicense” shall have the meaning assigned to it in
Section 1.18.

1.93 “Royalty Term” means, on a country-by-country and Product-by-Product basis,
the period commencing upon First Commercial Sale of a Product in a country and
ending upon the later to occur of: (i) the date on which such Product is no
longer covered by a PSIVIDA Valid Claim in such country; and (ii) [*] from the
date of First Commercial Sale of such Product in such country.

1.94 “Technology” means all inventions, materials, technology, data, technical
and scientific information, know-how, expertise and trade secrets, and
intellectual property rights embodying any of the foregoing, but excluding any
Patent Rights.

1.95 “Term” means the period of time commencing on the Effective Date and ending
on the earlier of (a) the last to expire Royalty Term or (b) the effective date
of termination of this Agreement pursuant to the terms hereof.

1.96 “Territory” means the entire world.

1.97 “Third Party” means any person or entity other than PFIZER, PSIVIDA, or any
of their respective Affiliates.

1.98 “Third Party Claim” shall have the meaning assigned to it in Section 14.4.

 

 

* Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

 

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1.99 Construction. Except where expressly stated otherwise in this Agreement,
the following rules of interpretation apply to this Agreement: (i) “include”,
“includes” and “including” are not limiting and mean include, includes and
including, without limitation; (ii) definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms;
(iii) references to an agreement, statute or instrument mean such agreement,
statute or instrument as from time to time amended, modified or supplemented;
(iv) references to a person are also to its permitted successors and assigns;
(v) references to an “Article”, “Section”, “Exhibit” or “Schedule” refer to an
Article or Section of, or any Exhibit or Schedule to, this Agreement unless
otherwise indicated; (vi) the word “will” shall be construed to have the same
meaning and effect as the word “shall”; (vii) the word “any” shall mean “any and
all” unless otherwise indicated by context and (viii) references to “dollars” or
“$” shall refer to United States Dollars.

 

2. Management of the Development Program.

 

  2.1. Joint Steering Committee. The research and development activities
conducted under this Agreement shall be overseen by a joint research committee
composed of two (2) (or such larger number mutually agreed to by the Parties)
representatives from each Party (the “Joint Steering Committee” or “JSC”). An
alternate member designated by a Party may serve temporarily in the absence of a
permanent member of the JSC for such Party. Each Party shall designate one of
its representatives as a co-chair of the JSC. The co-chairs of the JSC shall be
jointly responsible for setting the agenda for each meeting, and each co-chair
will be responsible for chairing alternating JSC meeting. From time to time, the
JSC may establish subcommittees or subordinate committees (that may or may not
include members of the JSC itself) to oversee particular projects or activities,
and such subcommittees or subordinate committee shall be constituted and shall
operate as the JSC agrees. After the First Commercial Sale of the Product the
JSC shall be disbanded. The initial members of the JSC shall be designated by
each Party promptly after the Effective Date. For the avoidance of doubt,
following the PFIZER Option Date, the Parties agree that PSIVIDA’s participation
in the JSC is not an obligation, and PSIVIDA may, in its discretion, participate
or not participate from time to time.

 

  2.2. Decision-Making. Except as otherwise set forth in this Agreement, all
decisions of the JSC made pursuant to this Agreement shall be made by consensus;
provided, however, that:

 

  2.2.1. PSIVIDA shall have final decision-making authority (if unresolved after
escalation to members of senior management as set forth in Section 2.3) with
respect to research and development activities for the Product at any time prior
to the PFIZER Option Date.

 

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  2.2.2. Following the PFIZER Option Date, PFIZER shall have final
decision-making authority (if unresolved after escalation to members of senior
management as set forth in Section 2.3) with respect to research and development
activities for the Product.

 

  2.3. Dispute Resolution. The representatives of each Party on the JSC shall
each have one vote and no vote shall be taken at a meeting of the JSC unless all
members of the JSC are present and participating in the vote. In the event a
matter is not resolved by unanimous consent of the JSC, or in the event the
Parties are unable to agree upon matters relating to a Development Plan, the
matter shall be referred to senior management of the Parties for resolution. In
the event such members of senior management are unable to resolve the dispute
within fifteen (15) days of such referral, the Party having final
decision-making authority pursuant to Section 2.2 shall make the final decision
on such matter.

 

  2.4. Meetings. The JSC shall hold meetings at such times and places as shall
be determined by the co-chairs of the JSC (it being expected that any in-person
meetings will alternate between the appropriate offices of each Party), but in
no event shall such meetings be held less frequently than once every calendar
quarter during the Development Term. The JSC may:

 

  2.4.1. conduct meetings in person, by videoconference or by telephone
conference; and

 

  2.4.2. invite other personnel of the Parties to attend meetings of the JSC as
appropriate to the agenda for such meeting, after giving advance notice to the
other Party.

 

  2.5. Minutes. At each meeting, the JSC shall elect a secretary who will
prepare minutes after each meeting, reporting in reasonable detail the actions
taken by the JSC during such meeting, issues requiring resolution, and
resolutions of previously reported issues. Such minutes are to be reviewed and,
if reasonably complete and accurate, signed by one JSC member from each Party.
The secretary shall revise such minutes as necessary to obtain such signatures.

 

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  2.6. JSC Functions and Powers. The research and development activities of the
Parties performed in accordance with this Agreement shall be managed only to the
extent set forth herein, unless otherwise agreed to by the Parties in writing.
The JSC shall foster the collaborative relationship between the Parties in order
to assist each Party in fulfilling its obligations under the Development Plans,
and shall in particular have the functions and powers set forth below.

 

  2.6.1. With respect to the Product, the JSC shall:

 

  (a) encourage and facilitate ongoing cooperation and information exchange
between the Parties;

 

  (b) monitor the progress of the Development Plans and the Parties’ diligence
in carrying out their responsibilities thereunder; provided, however, that the
JSC shall not have the authority to make any determination that either Party is
in breach of its obligations under a Development Plan or this Agreement;

 

  (c) review and comment on the Development Plans; and

 

  (d) perform such other functions as appropriate to further the purposes of
this Agreement as mutually determined by the Parties.

 

  2.6.2. For the avoidance of doubt, the JSC shall have no power to amend this
Agreement or a Development Plan and shall have only such powers as are
specifically delegated to it in this Agreement.

 

  2.7. Independence. Subject to the terms of this Agreement, the activities and
resources of each Party shall be managed by such Party, acting independently and
in its individual capacity. The relationship between PSIVIDA and PFIZER is that
of independent contractors and neither Party shall have the power to bind or
obligate the other Party in any manner, other than as is expressly set forth in
this Agreement. PSIVIDA and PFIZER are not joint venturers, partners, principal
and agent, employer and employee, and have no other relationship other than
independent contracting parties.

 

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3. Development.

 

  3.1. Pre-POC Development Plan. Commencing on the first anniversary of the
Effective Date and on or prior to each anniversary thereafter until the PFIZER
Option Date, and at such additional times as PSIVIDA in its sole discretion may
choose, PSIVIDA shall update the Pre-POC Development Plan.

 

  3.2. Development Costs Prior to Proof-of-Concept. PSIVIDA shall use
Commercially Reasonable Efforts to conduct, directly or through its agents and
contractors, the activities set forth in the Pre-POC Development Plan at
PSIVIDA’s sole expense, unless PSIVIDA elects to cease development under
Section 3.3.

 

  3.3. Ceasing Development Prior to Proof of Concept. PSIVIDA may elect to cease
development at any time after the first anniversary of the Effective Date but
prior to Proof-of-Concept. PSIVIDA shall notify PFIZER of such election. After
providing such notice, PSIVIDA shall have no further obligations with respect to
the Product under this Agreement. PFIZER shall have the right to elect to solely
fund further development and commercialization of the Product, provided that
PFIZER makes such election and notifies PSIVIDA no later than sixty (60) days
after receiving notice from PSIVIDA pursuant to this Section 3.3, such notice by
PFIZER to be deemed a Funding Option Notice. In the event PFIZER submits a
Funding Option Notice as set forth in the preceding sentence, the terms of
Section 3.6 shall apply, including the obligation to make the payments pursuant
to Section 3.6.1, as well as all other terms of this Agreement that apply to the
Product; provided, however, that if PSIVIDA elects to cease development prior to
achieving Proof-of-Concept for the Product and PFIZER submits such Funding
Option Notice, all amounts otherwise payable by PFIZER under Section 3.6.1 or
Section 6 shall be reduced by [*]. In the event PFIZER does not submit a Funding
Option Notice with respect to the Product, neither Party shall have any further
rights or obligations under this Agreement and the Agreement shall automatically
terminate at the end of the sixty-day election period, after which termination
nothing in this Agreement shall be construed as limiting PSIVIDA’s right, alone
or with or through other Persons, to develop, manufacture and commercialize the
Product, which development, manufacturing and commercialization activities shall
not be subject to this Agreement; provided, however, that if PSIVIDA provides
the notice referred to

 

 

* Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

 

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  in this Section 3.3 but does not actually cease all development activities
with respect to the Product for at least one year, this Agreement shall not
terminate as set forth above and all rights of PFIZER under this Agreement shall
remain in effect notwithstanding the foregoing.

 

  3.4. Achievement of Proof-of-Concept. Promptly after PSIVIDA determines that
the Product has reached Proof-of-Concept, PSIVIDA shall provide to PFIZER a
written report (a “Final Report”) setting forth the following information for
such Product:

 

  (a) A statement that the Product has achieved Proof-of-Concept;

 

  (b) A summary of relevant Clinical IP for the Product in PSIVIDA’s possession
and Control (including Clinical IP generated by Third Parties under any services
arrangement with PSIVIDA);

 

  (c) Copies of any correspondence and official meeting minutes with Regulatory
Authorities with respect to the Product;

 

  (d) All pre-specified safety and efficacy analyses as outlined in the Clinical
Trial protocols and statistical analysis plans; and

 

  (e) A summary of any research or development programs in Glaucoma then being
conducted by PSIVIDA itself or through a contract service provider or
consultant, but excluding programs being conducted by PSIVIDA with a Third Party
to which PSIVIDA has granted development and commercialization rights or
licenses.

Notwithstanding any other provisions of this Agreement, in the event the Parties
disagree whether the Product has achieved Proof-of-Concept, PSIVIDA may elect to
continue developing the Product, and, if PSIVIDA so elects and Commences a Phase
III Clinical Trial, then the Product will be deemed to have achieved
Proof-of-Concept for purposes of this Section 3.4 and PSIVIDA will deliver
another or an updated Final Report to PFIZER, in which case Section 3.5 shall
apply, and if PFIZER subsequently submits a Funding Option Notice, PFIZER shall
pay to PSIVIDA both the Event Milestone payment of [*] for Commencement of the
first Phase III Clinical Trial for the Product described in Section 6.2.1 and
the payment of $20 million described in Section 3.6.1, both at such time as the
payment under Section 3.6.1 is due.

 

  3.5. Funding Option Notice. Within ninety (90) days following

 

 

* Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

 

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  PFIZER’s receipt of a Final Report, PFIZER shall notify PSIVIDA in writing of
(a) PFIZER’s election to solely fund further development and commercialization
of the Product as further set forth in this Agreement (the “Funding Option
Notice”); or (b) PFIZER’s determination that it will not solely fund such
further development and commercialization of the Product. From the Effective
Date until the earlier of the end of such ninety (90) day time period (the
“Option Notice Period”) or PFIZER providing notification pursuant to
Section 3.5(a) or 3.5(b), PSIVIDA shall not (x) disclose the Final Report or any
of its contents to any Third Party except as may be required by applicable Law
or (y) enter into any agreement with a Third Party pursuant to which PSIVIDA
grants or conveys to such Third Party licenses, rights, options or other legal
interests to develop and or commercialize the Product in the Field or uveitis or
engage in any discussions with any Third Party with respect to any such
agreement. In the event PFIZER fails to submit a Funding Option Notice during
the Option Notice Period, this Agreement shall automatically terminate at the
end of the Option Notice Period, after which time nothing in this Agreement
shall be construed as limiting PSIVIDA’s right, alone or with or through other
Persons, to develop, manufacture and commercialize the Product, which
development, manufacturing and commercialization activities shall not be subject
to this Agreement.

 

  3.6. PFIZER Funding Option. The terms of this Section 3.6 shall apply if
PFIZER submits to PSIVIDA a Funding Option Notice.

 

  3.6.1. Within forty-five (45) days of PFIZER submitting to PSIVIDA a Funding
Option Notice, PFIZER shall pay to PSIVIDA Twenty Million Dollars ($20,000,000),
provided, however, that if PFIZER determines that an HSR Filing with respect to
this Agreement is required to be made under the HSR Act, it shall so notify
PSIVIDA and in such case PFIZER shall make such payment within forty-five
(45) days after the HSR Clearance Date. The date on which PFIZER makes such
payment in full shall be the “PFIZER Option Date.”

 

  3.6.2. Following the submission of the Funding Option Notice, PFIZER shall
have sole authority and discretion with respect to developing and
commercializing the Product at PFIZER’s sole expense, subject to Section 5.1.

 

  3.6.3.

Within fifteen (15) days after the PFIZER Option Date, PSIVIDA shall (i) use
Commercially Reasonable Efforts to transfer ownership of all regulatory filings
and Regulatory Approvals that relate solely to the Product to PFIZER;
(ii) deliver to PFIZER a copy of all Clinical IP in PSIVIDA’s (or any of its
Affiliates’) possession and Control (including Clinical IP generated by Third
Parties under any services arrangement) related to the Product, if any, in the
same form in which PSIVIDA (or such Affiliate) maintains such data;
(iii) provide PFIZER

 

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  with copies of any then-existing documentation and technical information, in
the form and format in which such materials are maintained by PSIVIDA or any of
its Affiliates in the ordinary course of its business, that are necessary for
the manufacture of the Product, which documentation and technical information
shall include (A) copies of flow charts of the manufacturing procedures and work
instructions related to manufacturing the Product, (B) a list of all equipment,
including the source of the equipment, utilized in the production of the
Product, (C) copies of all current specifications for the Product, (D) copies of
all standard operating procedures for the manufacturing procedures to be
transferred, (E) all environmental conditions necessary to manufacture the
Product and copies of any existing external environmental impact studies based
on the materials or methods employed in the manufacturing method to be
transferred, and (F) such other documentation as the Parties may mutually agree,
in each case of the foregoing subsections (iii) and (A) through (F), that are in
PSIVIDA’s or any of its Affiliates’ possession and Control (including any of the
foregoing that are generated by Third Parties under any services arrangement)
and are necessary to manufacture Products; and (iv) deliver to PFIZER, in the
same form in which PSIVIDA or any of its Affiliates maintains such items, copies
of all regulatory reports, records, correspondence and other regulatory
materials in PSIVIDA’s or any of its Affiliates’ possession and Control related
solely to such Product and any Regulatory Approval therefor (including any of
the foregoing that are generated by Third Parties under any services
arrangement), including, if applicable, any information contained in the global
safety database established and maintained by PSIVIDA or any of its Affiliates.

 

  3.6.4. Within sixty (60) days after the PFIZER Option Date, PFIZER shall
prepare and deliver to PSIVIDA the PFIZER Development Plan. PFIZER shall update
the PFIZER Development Plan and deliver such updated PFIZER Development Plan to
PSIVIDA on each anniversary date of the PFIZER Option Date up to the date of the
First Commercial Sale of the Product if PFIZER has made any material changes to
such plan during the prior year. PFIZER shall also deliver a copy of the
then-current PFIZER Development Plan to PSIVIDA promptly after PSIVIDA’s
request. In the event of an inconsistency or discrepancy between the PFIZER
Development Plan and this Agreement, the terms of this Agreement shall prevail.

 

  3.6.5.

If PFIZER notifies PSIVIDA pursuant to Section 3.6.1 that an HSR Filing is
required, each of PFIZER and PSIVIDA shall, within fifteen (15) Business Days
after such notice from PFIZER (or such later time as may be agreed to in writing
by the Parties), file with the United States Federal Trade Commission and the
Antitrust Division of the United States Department of Justice, any HSR Filing
required of it

 

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CONFIDENTIAL TREATMENT REQUESTED

 

  with respect to the transactions contemplated hereby. The Parties shall
cooperate with one another to the extent necessary in the preparation of any
such HSR Filing. Each Party shall be responsible for its own costs and expenses
(other than filing fees, which shall be paid by PFIZER) associated with any HSR
Filing.

 

  3.7. Cooperation. Each Party shall use Commercially Reasonable Efforts to
cooperate with the other Party in connection with all activities to be performed
pursuant to this Section 3. PFIZER will provide reasonable support to PSIVIDA
with respect to the development of the Patient Outcomes Tool, including by
making available (through telephonic or electronic means) to PSIVIDA a PFIZER
employee who is expert in the development of patient outcomes tools for
consultation and review of documents for up to one hundred hours prior to the
delivery of a Funding Option Notice by PSIVIDA.

 

  3.8. Conduct of Development. The Parties shall perform all activities under
this Agreement and the Development Plans in compliance in all material respects
with the requirements of applicable Laws and each Party will use Commercially
Reasonably Efforts to achieve the objectives of the Development Plans
efficiently and expeditiously. For the avoidance of doubt, a Party, unless it
agrees otherwise, shall have no obligation to undertake any development activity
allocated to it in any Development Plan prepared by the other Party.

 

  3.9. Development Plan Records. Each Party shall maintain complete and accurate
records of all work conducted under the Development Plans and all results, data
and developments made pursuant to its efforts under the Development Plans. Such
records shall reflect work done and results achieved in the performance of the
Development Plans in sufficient detail and in a manner appropriate for patent
and regulatory purposes. Subject to bona fide confidentiality obligations to a
Third Party, the other Party shall have the right to request copies of such
records at reasonable times and upon reasonable notice to the extent necessary
or useful for such Party to perform its other obligations under this Agreement,
or to secure or enforce patents licensed under this Agreement as permitted under
this Agreement.

 

  3.10.

Reports. Each Party shall report to the JSC no less than once per calendar
quarter, and such reports shall consist of a written progress report summarizing
the work performed under the Development Plans, data obtained in connection with
the Product and other material information regarding the Product since the
previous report. The JSC shall define the format and the nature of the content
of such quarterly reports, which format and nature shall be reasonably
acceptable to both Parties. Beginning six months after the date

 

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  of the First Commercial Sale of the Product and once per year thereafter,
PFIZER shall provide PSIVIDA with a written report describing development and
regulatory activities for the Product undertaken during the previous year, if
any, and such activities planned for the next year, if any, including any
planned and actual submissions for Regulatory Approval.

 

  3.11. Termination of Development Plans. The Development Plans shall
automatically terminate on the effective date of any termination of this
Agreement. Additionally, the Pre-POC Development Plan may terminate as
specifically set forth in this Section 3.

 

4. Licenses.

 

  4.1. License to PFIZER. Subject to the terms of this Agreement and except to
the extent rights granted hereunder were granted under Sections 2.1.1 or 2.1.2
of the B&L Agreement, or under Sections 4.1, 5.1, 5.4 and 5.8 of the Alimera
Agreement, or include rights that PSIVIDA is otherwise obligated not to convey
to a Third Party under Sections 2.3, 2.4 and 2.5 of the B&L Agreement, or under
Sections 4.1, 5.1, 5.4 and 5.8 of the Alimera Agreement, PSIVIDA hereby grants,
and shall cause its Affiliates to grant, to PFIZER, and PFIZER hereby accepts:

 

  4.1.1. subject to PSIVIDA’s retained rights pursuant to Section 4.3, an
exclusive (even as to PSIVIDA and its Affiliates), royalty-bearing license, with
the right to sublicense, under the PSIVIDA Technology, the PSIVIDA Program
Technology, the PSIVIDA Program Patent Rights, the PSIVIDA Patent Rights, the
Clinical IP Controlled by PSIVIDA or any of its Affiliates and the PSIVIDA
Confidential Information, to research, develop, make, have made, use, sell,
import or otherwise exploit the Product only in the Field in the Territory
following the PFIZER Option Date; and

 

  4.1.2. a non-exclusive, royalty-free, worldwide license, with the right to
sublicense, under the PSIVIDA Technology, the PSIVIDA Program Technology, the
PSIVIDA Program Patent Rights, the PSIVIDA Patent Rights, the Clinical IP
Controlled by PSIVIDA or any of its Affiliates and the PSIVIDA Confidential
Information, solely for PFIZER to perform its obligations hereunder that are
required to be performed prior to the PFIZER Option Date.

 

  4.1.3.

following the PFIZER Option Date, a non-exclusive, royalty-free (except as set
forth below), world-wide license, with the right to sublicense, under and to all
PSIVIDA Controlled Intellectual Property, solely to develop, make, have made,
sell, offer for sale, use and import the Product; provided that such license
shall continue only so long as

 

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CONFIDENTIAL TREATMENT REQUESTED

 

  (a) PFIZER elects to accept such license, and (b) if any such PSIVIDA
Controlled Intellectual Property is licensed to PSIVIDA from a Third Party
(“Third Party Licensor”), PFIZER agrees in writing to comply with, and
thereafter fulfills, all non-financial obligations of PSIVIDA to such Third
Party Licensors applicable to sublicensees under the applicable license
agreements and all royalties and other payments payable to such Third Party
Licensors under the applicable Third Party license arising solely from the
sublicense grant under this Section or from activities conducted by PFIZER or
its Affiliates or its sublicensees pursuant to such sublicenses. Without
limiting the foregoing, PSIVIDA shall disclose such obligations, royalties and
other payments to PFIZER in advance of PFIZER taking such sublicense and, if
PFIZER elects to take such sublicense, PFIZER shall pay such disclosed royalties
and other payments that become payable on and after the PFIZER Option Date
either, at PSIVIDA’s option and direction, to PSIVIDA reasonably before the
amounts are due so that PSIVIDA can make timely payment to the Third Party
Licensor, or to the Third Party Licensor in a timely fashion, provided if PFIZER
fails at any time to make timely payment of such disclosed royalties and other
payments to PSIVIDA or the Third Party Licensor, PFIZER’s license rights
hereunder shall terminate upon thirty (30) days notice from PSIVIDA unless
PFIZER cures such non-payment during such period. PFIZER’s payment of such
disclosed royalties and other payments under this Section 4.1.3 shall be limited
to only those attributable to the development, making, having made, selling,
offering for sale, using and importing the Product. In addition, PFIZER shall be
responsible for the payment of such disclosed royalties and other payments under
this Section 4.1.3 on a pro-rata basis as may be appropriate in the case where
PSIVIDA has granted sublicenses to additional Third Party sublicensees. To the
extent certain rights would be PSIVIDA Controlled Intellectual Property but for
the fact that PSIVIDA does not have a Right to Grant a Sublicense with respect
to such rights, PSIVIDA shall not bring (and shall not authorize or directly
assist an Affiliate of PSIVIDA or a Third Party to bring, except as may be
required under any contractual obligation of PSIVIDA) any action against PFIZER
or any of its Affiliates, or a sublicensee of PFIZER’s rights related to the
Product, alleging misappropriation, misuse, or infringement of such rights
arising from PFIZER or such Affiliate or sublicensee researching, developing,
making, having made, using, selling, importing or otherwise exploiting the
Product. For the purpose of clarity, PSIVIDA has no obligation to maintain
Control of any rights for the purposes of this Section.

Notwithstanding anything to the contrary in this Agreement, (i) the Parties
agree and acknowledge that, under the B&L Agreement and the Alimera Agreement,
PSIVIDA has granted certain rights to B&L and Alimera, respectively, both
exclusively and nonexclusively, and has agreed not to grant

 

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CONFIDENTIAL TREATMENT REQUESTED

 

certain licenses or other rights to Third Parties; and (ii) to the extent any
rights granted hereunder have been granted under the B&L Agreement or the
Alimera Agreement or are restricted pursuant to a covenant not to convey under
the B&L Agreement or Alimera Agreement, such rights shall not be and are not
granted to PFIZER under this Agreement.

 

  4.2.

License to PSIVIDA. Subject to the terms of this Agreement, PFIZER hereby
grants, and shall cause its Affiliates to grant, to PSIVIDA, and PSIVIDA hereby
accepts a non-exclusive, royalty-free (except as set forth below), worldwide
license, with the right to sublicense, under and to (a) the Clinical IP
Controlled by PFIZER or any of its Affiliates, PFIZER Technology, the PFIZER
Program Technology, the PFIZER Program Patent Rights, the PFIZER Patent Rights
and the PFIZER Confidential Information, solely for PSIVIDA to perform or have
others perform activities and exercise its rights under the Development Plans,
and (b) the Clinical IP Controlled by PFIZER or any of its Affiliates (i) to
research, develop, make, have made, use, sell, import or otherwise exploit any
product in any country in the world (other than a product prohibited under
Section 11.3), and (ii) to incorporate, disclose, use or exercise a Right of
Reference to such Clinical IP for any research, development or commercial
purpose (other than for a product prohibited under Section 11.3); provided that
in the case of (i) and (ii) such license shall not grant any rights under or to
the Product in the Territory in the Field or for uveitis for so long as PFIZER
has an exclusive license to the Product in the Field in the Territory under this
Agreement; provided further that, if PSIVIDA exercises its right under this
Section to sublicense such Clinical IP to a Third Party, the rights granted
under such sublicense may include only such Clinical IP as existed on the first
effective date of such sublicense between PSIVIDA and such Third Party and
PSIVIDA shall not provide or disclose to such Third Party or use for the benefit
or on behalf of such Third Party, directly or indirectly, any Clinical IP
arising or created after such date. With respect to the license granted under
clause (b) above, if any of the foregoing Clinical IP is licensed to Pfizer from
a Third Party (“Third Party Licensor”), PSIVIDA must agree in writing to comply
with, and thereafter must fulfill, all non-financial obligations of PFIZER to
such Third Party Licensors applicable to sublicensees under the applicable
license agreements and all royalties and other payments payable to such Third
Party Licensors under the applicable Third Party license arising solely from the
sublicense grant under this Section or from activities conducted by PSIVIDA or
its Affiliates or its sublicensees pursuant to such sublicenses. Without
limiting the foregoing, PFIZER shall disclose such obligations, royalties and
other payments to PSIVIDA in advance of PSIVIDA taking such sublicense and, if
PSIVIDA elects to take such sublicense, PSIVIDA shall pay such disclosed
royalties and other payments that become payable on and after the PFIZER Option
Date either, at PFIZER’s option and direction, to PFIZER reasonably before the
amounts are due so that PFIZER can make timely payment to the Third Party
Licensor, or to the Third Party Licensor in a timely fashion, provided if
PSIVIDA fails at any time to make

 

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CONFIDENTIAL TREATMENT REQUESTED

 

  timely payment of such disclosed royalties and other payments to PFIZER or the
Third Party Licensor, PSIVIDA’s license rights hereunder shall terminate upon
thirty (30) days notice from PFIZER unless PSIVIDA cures such non-payment during
such period. PSIVIDA’s payment of such disclosed royalties and other payments
under this Section 4.2 shall be limited to only those attributable to the
development, making, having made, selling, offering for sale, using and
importing the Product. In addition, PSIVIDA shall be responsible for the payment
of such disclosed royalties and other payments under this Section 4.2 on a
pro-rata basis as may be appropriate in the case where PFIZER has granted
sublicenses to additional Third Party sublicensees. From time to time upon
PSIVIDA’s request, PFIZER shall deliver to PSIVIDA a copy of all Clinical IP in
PFIZER’s or any of its Affiliates’ possession and Control (including Clinical IP
generated by Third Parties under any services arrangement) covered by the
foregoing grant but not previously provided to PSIVIDA, if any, in the same form
in which PFIZER or such Affiliate maintains such data.

 

  4.3. Retained Rights. Notwithstanding anything to the contrary in this
Section 4, each Party shall retain such rights as are necessary for such Party
to perform its obligations under this Agreement, including the Development
Plans.

 

5. Diligence, Regulatory Approvals and Manufacturing/Supply.

 

  5.1. Diligence.

 

  5.1.1. After the PFIZER Option Date, PFIZER shall use Commercially Reasonable
Efforts to develop the Product in accordance with the PFIZER Development Plan
for the Product, and to seek Regulatory Approval for and commercialize the
Product in the United States and the Major EU Countries.

 

  5.2. Regulatory Affairs.

 

  5.2.1.

Until the PFIZER Option Date, PSIVIDA shall determine all regulatory plans and
strategies for the Product and will own and be responsible for preparing,
seeking, submitting and maintaining all regulatory filings and Regulatory
Approvals for the Product, including preparing all reports necessary as part of
a regulatory filing or Regulatory Approval. Without limiting the generality of
the foregoing, PSIVIDA shall have the right, consistent with applicable law, to
amend the protocol for any Phase I/II Clinical Trial or Phase II

 

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  Clinical Trial conducted in connection with the Pre-POC Development Plan.
Notwithstanding the foregoing, in addition to or in lieu of Clinical Trials
sponsored by PSIVIDA, PSIVIDA may, in its sole discretion, authorize a Third
Party to sponsor Clinical Trials and to prepare and submit an IND to the FDA for
the Product.

 

  5.2.2. Following the PFIZER Option Date, PFIZER shall determine all regulatory
plans and strategies for the Product in the Territory and will own and be
responsible for preparing, seeking, submitting and maintaining all regulatory
filings and Regulatory Approvals for the Product, including preparing all
reports necessary as part of a regulatory filing or Regulatory Approval.

 

  5.2.3. During the Term of this Agreement, the Party responsible for submitting
regulatory filings (the “Regulatory Submission Party”) shall provide the other
Party (the “Regulatory Non-Submission Party”) with drafts of substantive
submissions it plans to make to FDA or other Regulatory Authority with respect
to the Product. The Regulatory Non-Submission Party may provide comments
regarding such submission prior to its submission, and the Regulatory Submission
Party shall consider in good faith incorporating such comments into the
submission. The Regulatory Submission Party shall provide the Regulatory
Non-Submission Party with copies of all substantive submissions it makes to, and
all correspondence it receives from, FDA or other Regulatory Authority with
respect to the Product. The Regulatory Submission Party shall provide the
Regulatory Non-Submission Party with reasonable advance notice of all meetings,
conferences, and discussions, whether in person or by teleconference (including,
but not limited to, advisory committee meetings and any other meeting of experts
convened by FDA or other regulatory authorities concerning any topic relevant to
such Product), scheduled with FDA or such other regulatory authorities
concerning any regulatory matters relating to such Product, and the Regulatory
Non-Submission Party shall have the right to participate in such meetings,
conferences or discussions and to confer with the Regulatory Submission Party in
advance on the scheduling of, the objectives to be accomplished at, and the
agenda and strategy for, such meetings, conferences, and discussions with FDA or
other regulatory authorities; provided, however, that, in the event that the
Parties have disagreement relating to such meetings, conferences and
discussions, the Regulatory Submission Party shall have the final
decision-making authority.

 

  5.2.4.

The Regulatory Submission Party shall provide the Regulatory Non-Submission
Party with a summary of any such meeting, conference or discussion the
Regulatory Non-Submission Party does not attend, or of any other material verbal
communication with a Regulatory Authority

 

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  with respect to the Product, promptly (and in any case within three
(3) Business Days) after it occurs, and generally shall keep the Regulatory
Non-Submission Party reasonably informed about the progress of the regulatory
approval process for the Product.

 

  5.3. Recalls or Other Corrective Action. After the PFIZER Option Date, PFIZER
shall promptly notify PSIVIDA of any material actions to be taken by PFIZER in
the Territory with respect to any recall or market withdrawal or other
corrective action related to the Product prior to such action, and, if
reasonably practicable under the circumstances, to permit PSIVIDA a reasonable
opportunity to consult with PFIZER with respect thereto. After the PFIZER Option
Date all costs and expenses with respect to a recall, market withdrawal or other
corrective action shall be borne by PFIZER.

 

  5.4. Manufacturing and Supply—General. The terms of this Section 5.4 shall
apply to the Party manufacturing or supplying Clinical Supply Requirements
pursuant to Section 5.5 (the “Manufacturing Party”).

 

  5.4.1. Capacity. The Manufacturing Party’s obligations to supply Products or
Compounds pursuant to Section 5.5 shall be limited to the supply of Clinical
Supply Requirements as specified in Section 5.5.1 or 5.5.2 and in each case
shall be subject to such Party’s actual capacity for the manufacture and supply
of such Products or Compounds. The Manufacturing Party shall use Commercially
Reasonable Efforts to notify the other Party in the event the forecasted or
ordered amount of Product or Compound is likely to exceed the Manufacturing
Party’s then-existing capacity for manufacturing such Product or Compound.

 

  5.4.2. Conforming Product. Upon delivery to the other Party, all Products and
Compounds supplied by the Manufacturing Party shall meet the reasonable
specifications provided in advance (in writing) by the other Party. For purposes
of this Section 5.4.2, “reasonable specifications” shall mean specifications
that may be met with the Manufacturing Party’s then-existing manufacturing
capabilities. In the event the Manufacturing Party is unable to provide Products
or Compounds meeting the reasonable specifications provided in advance in
writing by the other Party, the Manufacturing Party shall have the right to
obtain Compounds or Products, as applicable, from a Third Party supplier. The
non-Manufacturing Party shall provide reasonable cooperation, information and
assistance necessary in order for the Manufacturing Party to do so.

 

  5.4.3.

Title and Delivery. All Products and Compounds to be supplied pursuant to
Section 5.5 shall be delivered FCA (Manufacturing Party’s loading dock). The
receiving Party shall have the right to designate

 

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  the common carrier for shipments of Products and Compounds. Title, possession
and risk of loss for Products and Compounds shall pass to the receiving Party
upon delivery of Products and Compounds to the receiving Party’s designated
carrier.

 

  5.5. Manufacture and Supply—Clinical Supplies.

 

  5.5.1. Supply for Pre-POC Activities. PFIZER shall supply to PSIVIDA, at
PFIZER’s sole expense, [*] of Compound with a remaining shelf life expiring no
earlier than [*], for conducting activities under the Pre-POC Development Plan.
Such supply of Compound shall be shipped to PSIVIDA at a time and to a
destination that are mutually acceptable to the Parties.

 

  5.5.2. Supply of Product. After the PFIZER Option Date, PSIVIDA shall supply
to PFIZER, at PSIVIDA’s Cost of Clinical Supplies, all or a portion of PFIZER’s
Clinical Supply Requirements for the Product, in accordance with the PFIZER
Development Plan. For the avoidance of doubt, and subject to PFIZER’s obligation
to purchase such Clinical Supply Requirements as are set forth in the binding
portion of the rolling forecast for such Clinical Supply Requirements, PFIZER
shall have the right to procure all or any portion of its Clinical Supply
Requirements at its sole expense for the Product from a Third Party. On the
first Business Day of the second calendar month after the PFIZER Option Date and
thereafter on a monthly basis on the first Business Day of each calendar month
until PFIZER completes clinical trials for the Product (or such earlier date
that PFIZER notifies PSIVIDA that it no longer requires PSIVIDA to supply PFIZER
with Clinical Supply Requirements), PFIZER shall provide to PSIVIDA a twelve
(12) month rolling forecast for such Clinical Supply Requirements, the first
three (3) months of each forecast shall be binding. Along with each forecast
PFIZER shall deliver to PSIVIDA a purchase order in a form to be agreed by the
parties for the third (3rd) month of the forecast (each a “Firm Order”) (for
clarity, the first and second months of each forecast will be covered by earlier
submitted Firm Orders) this Section 5.5.2. provided however the quantity in each
Firm Order shall not be less than eighty percent (80%) nor more than one hundred
twenty percent (120%) of the quantity for any calendar month as most recently
updated in the Firm Order period of the most recent forecast, and, that
PSIVIDA’s obligations under this Section 5.5.2 are conditioned on PFIZER’s
timely supply of Compound to

 

 

* Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

 

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CONFIDENTIAL TREATMENT REQUESTED

 

  PSIVIDA at PFIZER’s sole expense. PFIZER may terminate the supply arrangement
described in this Section 5.5.2 upon ninety (90) days prior written notice

 

  5.6. Commercialization/Pricing. After the PFIZER Option Date, PFIZER shall be
solely responsible for commercial manufacturing, marketing, promoting, selling,
distributing and determining pricing and other terms of sale for the Product.

 

  5.7. Disclosure of Technology by PSIVIDA. During the Term at PFIZER’s
reasonable request, but in no event later than ten business (10) days following
such request, PSIVIDA will disclose to PFIZER or its designated Affiliates, all
documentation, manuals, tangible materials, protocols or standard operating
procedures or Clinical IP embodying PSIVIDA Technology relating to the Product
and PSIVIDA Program Technology relating to the Product that is reasonably
necessary for PFIZER to practice the licenses under this Agreement, including
such information from Third Parties to the extent permitted under any applicable
agreements.

 

  5.8. Disclosure of Technology by PFIZER. During the Term at PSIVIDA’s
reasonable request, but in no event later than ten business (10) days following
such request, PFIZER will disclose to PSIVIDA or its designated Affiliates, all
documentation, manuals, tangible materials, protocols, standard operating
procedures or Clinical IP embodying PFIZER Technology relating to the Product
and PFIZER Program Technology relating to the Product that is reasonably
necessary for PSIVIDA to practice the licenses under this Agreement, including
such information from Third Parties to the extent permitted under any applicable
agreements.

 

6. Fees, Milestones and Royalties.

 

  6.1. Upfront Payment. Within fifteen (15) days after the Effective Date,
PFIZER shall pay to PSIVIDA $2,300,000, which constitutes a payment for rights
granted with respect to the Product pursuant to this Agreement.

 

  6.2. Product Milestone Payments.

 

  6.2.1.

Event Milestone Payments. In consideration of the rights granted hereunder with
respect to the Product, and subject to the terms and conditions of this
Agreement, PFIZER shall pay to PSIVIDA

 

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CONFIDENTIAL TREATMENT REQUESTED

 

  the amount set forth in the table below opposite the corresponding event
milestone (each an “Event Milestone”) within forty-five (45) days after the
occurrence of such Event Milestone under this Agreement (each amount payable one
time only):

 

Event Milestone

   Event  Milestone
Payment   Commencement of the first Phase III Clinical Trial for the Product   
$ [*] million    First date of acceptance by FDA of the first NDA for the
Product (the “FDA Filing Milestone”)    $ [*] million    Receipt of the first
Regulatory Approval from the FDA for the Product (the “FDA First Indication
Approval Milestone”)    $ [*] million    Receipt of the first Regulatory
Approval from the FDA for the Product for the first indication that (a) is
different from any indication included in the Regulatory Approval from the FDA
with respect to which the FDA First Indication Approval Milestone became payable
and (b) is not Glaucoma    $ [*] million    Receipt of the first Regulatory
Approval and Price Approval, where applicable, for the Product in the first
Major EU Country (the “EU First Indication Approval”)    $ [*] million   
Receipt of the first Regulatory Approval and Price Approval, where applicable,
for the Product in the first Major EU Country for the first indication that (a)
is different from any indication included in the Regulatory Approval in the
Major EU Country with respect to which the EU First Indication Approval
Milestone became payable and (b) is not Glaucoma    $ [*] million   

 

  6.2.2. Sales Milestones. In addition to the Event Milestone Payments for the
Product, in consideration of the rights granted hereunder, and subject to the
terms and conditions of this Agreement, PFIZER shall pay to PSIVIDA the
following one-time payments within forty-five (45) days

 

 

* Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

 

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  after the end of the calendar year that most nearly coincides with the
applicable PFIZER Year in which aggregate Net Sales of the Product for all
indications in the Territory first reach the respective thresholds (each, a
“Sales Milestone”) indicated below:

 

Product Annual Net Sales in the Territory

   Sales Milestone Payment   Net Sales in a PFIZER Year exceed $[*] million    $
[*] million    Net Sales in a PFIZER Year exceed $[*] billion    $ [*] million
   Net Sales in a PFIZER Year exceed $[*] billion    $ [*] million    Net Sales
in a PFIZER Year exceed $[*] billion    $ [*] million   

 

  6.3. Milestone Payments Generally.

 

  6.3.1. The milestone payments set forth in this Section 6 shall be cumulative
rather than mutually exclusive. For the avoidance of doubt, if at any time the
FDA Filing Milestone or the FDA First Indication Approval Milestone (each a
“Non-Sequential Milestone”) for the Product occurs prior to the occurrence of
all Event Milestones set forth in the rows preceding such Non-Sequential
Milestone for the Product in the tables set forth above, PFIZER shall pay to
PSIVIDA the sum of (a) all Event Milestone Payments associated with Event
Milestones in rows preceding the Non-Sequential Event Milestone which have not
otherwise been paid by PFIZER, and (b) the FDA Filing Milestone or the FDA First
Indication Approval Milestone associated with the Non-Sequential Milestone.

 

  6.3.2. PFIZER’s payment of any Sales Milestone payment shall be accompanied by
a report identifying the Net Sales of the Product and the amount payable to
PSIVIDA. All such reports shall be kept confidential by PSIVIDA and not
disclosed to any other party, other than PSIVIDA’s accountants which shall be
obligated to keep such information confidential, and such information and
reports shall only be used for purposes of this Agreement.

 

 

 

* Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

 

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  6.4. PFIZER Royalty Payments. In addition to the payments under Sections
6.1-6.3, in consideration of the rights granted hereunder, and subject to the
terms and conditions of this Agreement, on a country-by-country basis during the
Royalty Term for each country in the Territory, PFIZER shall pay to PSIVIDA an
amount equal to [*] of Net Sales of the Product in a PFIZER Quarter in such
country. The Parties agree and acknowledge that the payment of royalties by
PFIZER to PSIVIDA for sales when there is no PSIVIDA Valid Claim covering the
Product shall represent consideration for the license granted to PFIZER for
PSIVIDA Technology pursuant to this Agreement.

 

  6.5. Generic Products. Any payments owed with respect to sales of a Product
pursuant to Section 6.4 shall be reduced by [*] for so long as one or more
Generic Products for which the Product is the Antecedent Product together
maintain [*] or greater Market Penetration in the Territory; with any such
reduction to be prorated appropriately for the then-current PFIZER Quarter.

 

  6.6. Duration of Royalty Payments. Payments under Section 6.4 shall continue
until the expiration of the Royalty Term. Thereafter PFIZER shall have a
non-exclusive, royalty-free, perpetual, irrevocable, worldwide license, with the
right to sublicense, under the PSIVIDA Technology and PSIVIDA Program Technology
to research, develop, make, have made, use, sell, import or otherwise exploit
the Product only in the Field in the Territory.

 

  6.7. Notices of Termination. In the event that this Agreement has been
terminated as permitted under Section 3 or Section 13, no further payments that
have not yet accrued under Section 6 shall become due following the effective
date of such termination.

 

7. Accounting and Procedures for Payment.

 

  7.1. Inter-Company Sales. Sales between or among PFIZER, its Affiliates or
sublicensees shall not be subject to royalties under Section 6.4. PFIZER shall
be responsible for the payment of royalties on Net Sales by or on behalf of its
Affiliates or sublicensees to Third Parties.

 

 

* Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

 

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  7.2. Currency. All royalty payments shall be computed and paid in United
States dollars. For the purposes of determining the amount of any Sales
Milestone Payments or royalties due for the relevant PFIZER Quarter, the amount
of Net Sales in any foreign currency shall be converted into United States
dollars in a manner consistent with the paying Party’s customary practices used
to prepare its audited financial reports; provided that such practices use a
widely accepted source of published exchange rates.

 

  7.3. Royalty Payments. PFIZER shall make royalty payments to PSIVIDA with
respect to each PFIZER Quarter within forty-five (45) days after the end of the
calendar quarter that most nearly coincides with such PFIZER Quarter, and each
payment shall be accompanied by a report identifying Net Sales and the amount
payable, as well as the computation thereof and the basis of any reductions
allowable under Section 6. Said reports shall be kept confidential by the
Parties and not disclosed to Third Parties, other than the Parties’ certified
public accountants which shall be obligated to keep such information
confidential, and such information and reports shall only be used for purposes
of this Agreement.

 

  7.4. Method of Payments. Each payment hereunder shall be made by electronic
transfer in immediately available funds via either a bank wire transfer, an ACH
(automated clearing house) mechanism, or any other means of electronic funds
transfer, at the paying Party’s election, to such bank account as the receiving
Party shall designate in a notice at least five (5) Business Days before the
payment is due. All payments under this Agreement shall bear interest from the
fifteenth (15th) day after the date due until paid at a rate equal to the thirty
(30)-day United States dollar LIBOR rate in effect on the date that payment was
due, as published by The Financial Times.

 

  7.5. Inspection of Records. PFIZER shall, and shall cause its Affiliates and
sublicensees to, keep accurate books and records setting forth gross sales of
the Product, Net Sales of the Product, and amounts payable hereunder to PSIVIDA
for the Product. Each Party shall, and shall cause its Affiliates and
sublicensees to, keep accurate books and records setting forth all other
payments and reimbursements due hereunder by one Party to the other. Each Party
shall permit, and shall cause its Affiliates and sublicensees to permit, the
other Party and independent certified public accountants employed by the other
Party (reasonably acceptable to the Party providing access to records) to
examine such books and records at any reasonable time, upon reasonable notice,
but not later than [*] years following the rendering date the

 

 

* Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

 

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  applicable payment under this Agreement is due. The foregoing right of
examination may be exercised only once during each twelve (12)-month period of
the Term. The Party being examined may require such accountants to enter into a
reasonably acceptable confidentiality agreement and such accountants shall
disclose to the examining Party only information that relates to the accuracy of
the payments due under this Agreement. The opinion of said independent
accountants regarding such reports and related payments shall be binding on the
Parties, other than in the case of manifest error. The examining Party shall
bear the cost of any such examination and review; provided that if the
examination shows an underpayment of royalties or other payments due under this
Agreement or an overstatement of amounts invoiced of more than ten percent
(10%) of the amount due for the applicable period, then the Party being examined
shall promptly reimburse the examining Party for all costs incurred in
connection with such examination. If any such examination reveals an
underpayment, the underpaying Party shall promptly pay the other Party the
amount of such underpayment. Any overpayment of royalties or other payments due
under this Agreement revealed by an examination shall be fully-creditable
against future payments due under this Agreement or if no future payments will
become due, the Party that received such overpayment shall promptly refund such
overpayment to the paying Party.

 

  7.6. Tax Matters.

 

  7.6.1. VAT. It is understood and agreed between the Parties that any payments
made under this Agreement are inclusive of any value added or similar tax
imposed upon such payments.

 

  7.6.2. Tax Cooperation. The Parties agree to cooperate and produce on a timely
basis any tax forms or reports, including an IRS Form W-8BEN, reasonably
requested by the other Party in connection with any payment made under this
Agreement. Each Party further agrees to provide reasonable cooperation to the
other Party, at the other Party’s expense, in connection with any official or
unofficial tax audit or contest relating to payments made under this Agreement.

 

  7.6.3.

Withholding Tax Matters. In addition, in the event any of the payments made by
PFIZER pursuant to Section 6 become subject to withholding taxes under the Laws
of any jurisdiction, PFIZER shall deduct and withhold the amount of such taxes
for the account of PSIVIDA to the extent required by Law, such payment shall be
reduced by the amount of taxes deducted and withheld, and PFIZER shall pay the
amount of such taxes to the proper Governmental Authority in a timely manner and
promptly transmit to PSIVIDA an official tax certificate or other evidence of
such tax obligations, together with proof of payment from the relevant
Governmental Authority of all amounts deducted and withheld sufficient to enable

 

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  PSIVIDA to claim such payment of taxes. PFIZER shall act in good faith to
withhold taxes at the lowest rate allowed by the tax treaties applicable to the
payments made by PFIZER. PSIVIDA shall act in good faith to provide PFIZER with
any required documentation to enable PFIZER to withhold taxes at such rate. Any
such withholding taxes required under applicable Law to be paid or withheld
shall be an expense of, and borne solely by, PSIVIDA. Each Party will provide
the other Party with reasonable assistance, at such Party’s expense, to enable a
Party to recover such taxes as permitted by Law.

 

8. Patents and Infringement.

 

  8.1. Disclosure and Ownership of Program Technology and Program Patent Rights.
Each Party shall (and shall cause its Affiliates to) disclose to the other Party
all Program Technology or Program Patent Rights in writing promptly after they
are invented, created or developed or their significance is first appreciated,
and in any event no later than sixty (60) days prior to any public disclosure or
filing of a United States or international provisional or non-provisional patent
application disclosing or claiming such Program Technology or Program Patent
Rights. PSIVIDA shall have sole ownership of, and PFIZER shall and hereby does
assign to PSIVIDA, all rights, title and interest in any PSIVIDA Program
Technology and PSIVIDA Program Patent Rights, regardless of the identity of the
inventors. Inventorship and ownership of Program Technology and Program Patent
Rights other than PSIVIDA Program Technology and PSIVIDA Program Patent Rights
shall be determined by United States law. The Parties shall provide each other
with reasonable assistance to evidence, perfect or defend ownership of Program
Technology or Program Patent Rights as set forth in this Agreement, including
(i) executing any assignments and other documents requested by the other Party,
(ii) providing good faith testimony by affidavit, declaration or in person, and
(iii) assisting with filing or maintaining patents.

 

  8.2. Prosecution and Maintenance of PSIVIDA Patent Rights and PSIVIDA Program
Patent Rights in the Territory.

 

  8.2.1.

Filing, Prosecution, and Maintenance of PSIVIDA Patent Rights. PSIVIDA shall
have primary responsibility for and control over the preparation, filing,
prosecution, and maintenance of PSIVIDA Patent Rights and PSIVIDA Program Patent
Rights in the Territory. PSIVIDA shall have the authority to select patent
counsel, and to determine the form and content of such prosecution documents and
to make all decisions regarding whether to file, prosecute and maintain

 

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  patents and patent applications, and in which countries to do so. PSIVIDA
shall be [*] of the Patent Costs associated with the PSIVIDA Patent Rights and
PSIVIDA Program Patent Rights. PSIVIDA shall keep PFIZER reasonably informed
regarding the status of each patent or patent application included within
PSIVIDA Patent Rights and PSIVIDA Program Patent Rights in the Territory and
shall provide PFIZER with copies of all official correspondence (including, but
not limited to, applications, office actions, responses, etc.) relating to
prosecution and maintenance of these Patent Rights. PFIZER shall have the right
to review pending patent applications and other proceedings for, and to make
recommendations to PSIVIDA regarding, the prosecution of PSIVIDA Patent Rights
and PSIVIDA Program Patent Rights in the Territory relating to the Product;
provided that all final decisions regarding the prosecution and maintenance of
PSIVIDA Patent Rights and PSIVIDA Program Patent Rights shall be made by
PSIVIDA. Notwithstanding the foregoing, with respect to the PSIVIDA Program
Patent Rights, on and after the date that PFIZER submits a Funding Option
Notice, PSIVIDA agrees to act in good faith to cooperate and coordinate with
PFIZER, as reasonably requested, on the prosecution and maintenance of such
PSIVIDA Program Patent Rights.

 

  8.2.2. Abandonment of PSIVIDA Patent Rights or PSIVIDA Program Patent Rights.
PSIVIDA may, at its sole discretion, abandon any patent or pending patent
application, on a patent-by-patent or application-by-application basis, within
the PSIVIDA Patent Rights and PSIVIDA Program Patent Rights. PSIVIDA shall not
abandon prosecution or maintenance of any PSIVIDA Patent Rights or PSIVIDA
Program Patent Rights relating to the Product in the Territory without notifying
PFIZER in a timely manner of PSIVIDA’s intention and reason therefor and
providing PFIZER with reasonable opportunity to comment upon such abandonment
and to assume responsibility for prosecution or maintenance in the Territory of
such PSIVIDA Patent Rights and/or PSIVIDA Program Patent Rights at PFIZER’s sole
expense, provided, however, that such abandoned PSIVIDA Patent Rights or PSIVIDA
Program Patent Rights shall be excluded from the definition of PSIVIDA Valid
Claim for the purposes of the Royalty Term. The cancellation or amendment of a
claim or claims during the prosecution of a patent application, or during a
reissue or reexamination proceeding with respect to an issued patent, within the
PSIVIDA Patent Rights or PSIVIDA Program Patent Rights shall not in and of
itself constitute a discontinuance or abandonment under this Section.
Notwithstanding the foregoing, PFIZER’s rights under this

 

 

* Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

 

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CONFIDENTIAL TREATMENT REQUESTED

 

  Section 8.2.2 with respect to PSIVIDA Patent Rights and PSIVIDA Program Patent
Rights shall be subject to rights granted to Faber under the Faber Agreement,
including Section 4.1 thereof, to Alimera under the Alimera Agreement, including
the rights set forth in Section 7.1 and 7.2 thereof, and to B&L under the B&L
Agreement, including the rights set forth in Article 9 thereof.

 

  8.2.3. Information Disclosure; Cooperation. Subject to any limitations imposed
by the confidentiality obligations set forth in the Faber Agreement, Alimera
Agreement and the B&L Agreement, upon PFIZER’s request PSIVIDA shall disclose
and make available to PFIZER all material information controlled by PSIVIDA or
any of its Affiliates that is reasonably necessary for PFIZER to perform its
obligations and to exercise its rights under this Section 8. PSIVIDA agrees to
cooperate with PFIZER with respect to the preparation, filing, prosecution and
maintenance of patents and patent applications pursuant to this Section 8.

 

  8.3. Enforcement of PSIVIDA Patent Rights and PSIVIDA Program Patent Rights.

 

  8.3.1. Notification. During the Term, each of the Parties shall promptly
notify the other in the event they learn of any known infringement or suspected
infringement of any of the PSIVIDA Patent Rights or PSIVIDA Program Patent
Rights that cover the Product and shall provide the other Party with all
available evidence supporting said infringement or suspected infringement.

 

  8.3.2. Enforcement. [*], but not the obligation, to initiate or prosecute an
infringement or other appropriate suit or action against any Third Party who at
any time has infringed or is suspected of infringing (an “Infringer”) any of the
PSIVIDA Patent Rights or PSIVIDA Program Patent Rights. [*] shall give [*]
advance notice of its intent to file a suit against an Infringer of PSIVIDA
Patent Rights or PSIVIDA Program Patent Rights relating to the Product in the
Territory and the reasons therefor, and shall provide [*] with an opportunity to
make suggestions and comments regarding such filing; provided, however, that [*]
shall provide any such comments sufficiently in advance of any filing dates to
allow for consideration by [*], and further provided that it shall be within [*]
sole discretion whether to incorporate such suggestions or comments. [*] shall
keep [*] reasonably informed of the status and progress of such litigation. [*]
shall have the sole and exclusive right to select counsel for any such suit and
action and shall pay all expenses of

 

 

* Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

 

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  the suit, including, but not limited to, attorneys’ fees and court costs. With
respect to PSIVIDA Patent Rights and PSIVIDA Program Patent Rights relating to
the Product in the Territory, if [*] has not taken legal action or been
successful in obtaining cessation of the infringement within (a) ninety
(90) days from the date of notice by either Party under Section 8.3.1; or
(b) thirty (30) days after [*] notifies [*] that [*] would like to move for
injunctive relief; or (c) ten (10) days before the expiration of a period of
time set by applicable Law in which action must be taken with respect to the
alleged infringement (e.g., as may be required under the Hatch-Waxman Act and 35
USC §271), then, subject to the rights with respect to the PSIVIDA Patent Rights
granted to Faber under the Faber Agreement, including 4.2 thereof, to Alimera
under the Alimera Agreement, including Section 7.6 thereof, and to B&L under the
B&L Agreement, including Article 10 thereof, [*] shall have the right to bring
suit against an Infringer at [*] own expense. [*]

 

       [*]

 

  8.3.3. Upon request of the other Party, either Party shall join as a party to
or shall commence the suit on behalf of the other Party if required for
standing, at the other Party’s expense, and shall offer reasonable assistance to
the other Party in connection therewith at its own expense. Any damages,
royalties, settlement fees or other consideration for infringement resulting
from the suit shall be distributed as follows: (i) first, each Party shall be
reimbursed for its reasonable out-of-pocket costs paid in connection with the
proceeding; and (ii) thereafter, PFIZER will receive [*] and PSIVIDA will
receive [*] of any damages, royalties, settlement fees or other consideration.
Neither Party shall settle any such suit or otherwise consent to an adverse
judgment in any such suit that adversely affects the rights or interests of the
other Party under this Agreement, including, issues of validity of the PSIVIDA
Patent Rights or PSIVIDA Program Patent Rights, without the prior written
consent of the other Party.

 

  8.4. Prosecution and Maintenance of PFIZER Program Patent Rights in the
Territory.

 

  8.4.1. Filing, Prosecution, and Maintenance of PFIZER Program Patent Rights.
PFIZER shall have primary responsibility for and control over the preparation,
filing, prosecution, and maintenance of PFIZER Program Patent Rights. PFIZER
shall have the authority to select patent counsel, and to determine the form and
content of such prosecution documents

 

 

* Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

 

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  and to make all decisions regarding whether to file, prosecute and maintain
patents and patent applications, and in which countries to do so. PFIZER shall
be [*] of the Patent Costs associated with the PFIZER Program Patent Rights.
PFIZER shall keep PSIVIDA reasonably informed regarding the status of each
patent or patent application included within the PFIZER Program Patent Rights
and shall provide PSIVIDA with copies of all official correspondence (including,
but not limited to, applications, office actions, responses, etc.) relating to
prosecution and maintenance of these Patent Rights. PSIVIDA shall have the right
to review pending patent applications and other proceedings for, and to make
recommendations to PFIZER regarding the prosecution of PFIZER Program Patent
Rights; provided that all final decisions regarding the prosecution and
maintenance of PFIZER Program Patent Rights shall be made by PFIZER.

 

  8.4.2. Abandonment of PFIZER Program Patent Rights. PFIZER may, at its sole
discretion, abandon any patent or pending patent application, on a
patent-by-patent or application-by-application basis, within the PFIZER Program
Patent Rights. PFIZER shall not abandon prosecution or maintenance of any PFIZER
Program Patent Rights without notifying PSIVIDA in a timely manner of PFIZER’s
intention and reason therefor and providing PSIVIDA with reasonable opportunity
to comment upon such abandonment and to assume responsibility for prosecution or
maintenance of PFIZER Program Patent Rights at PSIVIDA’s sole expense. The
cancellation or amendment of a claim or claims during the prosecution of a
patent application, or during a reissue or reexamination proceeding with respect
to an issued patent, within the PFIZER Program Patent Rights shall not in and of
itself constitute a discontinuance or abandonment under this Section.

 

  8.4.3. Information Disclosure; Cooperation. Upon PSIVIDA’s request, PFIZER
shall disclose and make available to PSIVIDA all material information controlled
by PFIZER or any of its Affiliates that is reasonably necessary for PSIVIDA to
perform its obligations and to exercise its rights under this Section 8. PFIZER
agrees to cooperate with PSIVIDA with respect to the preparation, filing,
prosecution and maintenance of patents and patent applications pursuant to this
Section 8.

 

  8.5. Enforcement of PFIZER Program Patent Rights.

 

  8.5.1. Notification. During the Term, each of the Parties shall promptly
notify the other in the event they learn of any known infringement or suspected
infringement of any of the PFIZER Program Patent Rights that cover the

 

 

* Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

 

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  Product and shall provide the other Party with all available evidence
supporting said infringement or suspected infringement.

 

  8.5.2. Enforcement. PFIZER shall have the initial right, but not the
obligation, to initiate or prosecute an infringement or other appropriate suit
or action against an Infringer of any of the PFIZER Program Patent Rights.
PFIZER shall give PSIVIDA advance notice of its intent to file a suit against an
Infringer of PFIZER Program Patent Rights relating to the Product, and shall
provide PSIVIDA with an opportunity to make suggestions and comments regarding
such filing; provided, however, that PSIVIDA shall provide any such comments
sufficiently in advance of any filing dates to allow for consideration by
PFIZER, and further provided that it shall be within PFIZER’s sole discretion
whether to incorporatesuch suggestions or comments. PFIZER shall keep PSIVIDA
reasonably informed of the status and progress of such litigation. PFIZER shall
have the sole and exclusive right to select counsel for any such suit and action
and shall pay all expenses of the suit, including, but not limited to,
attorneys’ fees and court costs. With respect to PFIZER Program Patent Rights
relating to the Product, if PFIZER has not taken legal action or been successful
in obtaining cessation of the infringement within (a) ninety (90) days from the
date of notice by either Party under Section 8.5.1; or (b) thirty (30) days
after PSIVIDA notifies PFIZER that PSIVIDA would like to move for injunctive
relief; or (c) ten (10) days before the expiration of a period of time set by
applicable Law in which action must be taken with respect to the alleged
infringement (e.g., as may be required under the Hatch-Waxman Act and 35 USC
§271), then, PSIVIDA shall have the right to bring suit against an Infringer at
PSIVIDA’s own expense. This right of PSIVIDA to bring suit, as well as to
continue an existing suit, is also conditioned on all of the following
requirements:

 

       [*]

 

  8.5.3. Upon request of the other Party, either Party shall join as a party to
or shall commence the suit on behalf of the other Party if required for
standing, at the other Party’s expense, and shall offer reasonable assistance to
the other Party in connection therewith at its own expense. Any damages,
royalties, settlement fees or other consideration for infringement resulting
from the suit shall be distributed as follows: (i) first, each Party shall be
reimbursed for its reasonable out-of-pocket costs paid in connection with the
proceeding; and (ii) thereafter, PSIVIDA will receive [*] and PFIZER will
receive [*] of any damages, royalties, settlement fees or other consideration.

 

 

* Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

 

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  Neither Party shall settle any such suit or otherwise consent to an adverse
judgment in any such suit that adversely affects the rights or interests of the
other Party under this Agreement, including, issues of validity of the PFIZER
Program Patent Rights, without the prior written consent of the other Party

 

  8.6. Patent Term Extension. PFIZER shall have the exclusive right to seek, at
PFIZER’s expense, patent term extensions or supplemental patent protection,
including supplementary protection certificates, in the Territory in relation to
the Product under any of the PFIZER Patent Rights and PFIZER Program Patent
Rights. PFIZER and PSIVIDA shall cooperate in connection with all such
activities, and PFIZER, its agents and attorneys will give due consideration to
all timely suggestions and comments of PSIVIDA regarding any such activities;
provided that all final decisions shall be made by PFIZER.

 

  8.7. Orange Book Listings. With respect to filings of patent information with
FDA on Form 3542a or Form 3542 (and foreign equivalents) for issued patents for
the Product for which PFIZER applies for or holds an NDA, PFIZER shall have the
exclusive right and shall be solely responsible at its expense for fulfilling
its obligations under applicable Laws to list any applicable PSIVIDA Patent
Rights and PSIVIDA Program Patent Rights. PFIZER will be solely responsible for
any such filings and listings, and for any and all decisions with respect to
such filings and listings. Notwithstanding the foregoing, with respect to any
such form to be filed concerning any PSIVIDA Patent Rights, PFIZER shall provide
PSIVIDA with the opportunity to comment on the filing of such form by providing
a draft of such form to PSIVIDA at least five Business Days in advance of filing
such form with FDA and by making a good faith effort to incorporate any comments
received from PSIVIDA prior to filing such form with FDA.

 

  8.8. Patent Invalidity Claim with Respect to PSIVIDA Patent Rights and PSIVIDA
Program Patent Rights. During the Term, each of the Parties shall promptly
notify the other in the event of any legal or administrative action by any Third
Party against a PSIVIDA Patent Right or a PSIVIDA Program Patent Right of which
it becomes aware, including any nullity, revocation, reexamination or compulsory
license proceeding. [*] shall have the first right, but not the obligation, to
defend against any such action involving a PSIVIDA Patent Right or a PSIVIDA
Program Patent Right, [*].

 

 

* Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

 

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CONFIDENTIAL TREATMENT REQUESTED

 

  8.9. Patent Invalidity Claim with Respect to PFIZER Program Patent Rights.
During the Term, each of the Parties shall promptly notify the other in the
event of any legal or administrative action by any Third Party against a PFIZER
Program Patent Right of which it becomes aware, including any nullity,
revocation, reexamination or compulsory license proceeding. PFIZER shall have
the first right, but not the obligation, to defend against any such action
involving PFIZER Program Patent Right, in its own name, and the costs of any
such defense shall be at PFIZER’s expense. PSIVIDA, upon request of PFIZER,
agrees to join in any such action and to cooperate reasonably with PFIZER;
provided that PFIZER shall promptly reimburse all out-of-pocket expenses
(including reasonable counsel fees and expenses) actually incurred by PSIVIDA in
connection with such cooperation. [*] PFIZER, upon request of PSIVIDA, agrees to
join in any such action and to cooperate reasonably with PSIVIDA; provided that
PSIVIDA shall promptly reimburse all out-of-pocket expenses (including
reasonable counsel fees and expenses) actually incurred by PFIZER in connection
with such cooperation.

 

  8.10. Notification of Third Party Claim. Each Party shall promptly report in
writing to the other Party during the Term of this Agreement any claim or
allegation by any Third Party that the development or commercialization of the
Product infringes the intellectual property rights of any Third Party and shall
provide the other Party with all available evidence supporting said infringement
or suspected infringement.

 

  (a) PFIZER shall have the initial right, but not the obligation, to defend any
suit or action initiated by any Third Party alleging solely that the Product has
infringed, or is suspected of infringing any Third Party intellectual property
rights in the Territory. Upon PFIZER’s request, PSIVIDA shall join such suit or
action and shall offer reasonable assistance to PFIZER in connection therewith
at PFIZER’s expense. PFIZER shall give PSIVIDA advance notice of its intent to
defend any said suit and shall provide PSIVIDA with an opportunity to make
suggestions and comments regarding such defense; provided, however, that PSIVIDA
shall provide any such comments sufficiently in advance of any filing dates to
allow for consideration by PFIZER, and further provided that it shall be within
PFIZER’s sole discretion whether to incorporate such suggestions or comments.
PFIZER shall keep PSIVIDA reasonably informed of the status and progress of the
litigation. PFIZER shall have the sole and exclusive right to select counsel for
any such suit and action and shall pay all expenses of the suit, including, but
not limited to, attorneys’ fees and court costs. PFIZER shall have the right to
settle any such litigation and shall specifically have the

 

 

* Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

 

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  right, whether or not litigation commences, to negotiate a license or other
rights from any Third Party authorizing the use of Third Party intellectual
property rights in connection with the Product; provided, however, that PFIZER
shall not settle any such action, or otherwise consent to an adverse judgment in
any such action, or make any admission in any such license and negotiation that
adversely affects the rights or interests of PSIVIDA under this Agreement,
including, issues of validity of the PSIVIDA Patent Rights or PSIVIDA Program
Patent Rights, without the prior written consent of PSIVIDA. Any such license
shall be at arm’s length and otherwise on terms and conditions as may be deemed
appropriate in the reasonable business judgment of PFIZER. PFIZER shall provide
PSIVIDA with a copy of any such license promptly after its execution.

 

  (b) If PFIZER does not defend a claim, suit or proceeding as set forth above
within ninety (90) days of the date PFIZER was reasonably aware or notified of
the Third Party claim alleging infringement (or within such shorter period as
may be necessary for submitting or filing a response), then PSIVIDA may, in its
sole discretion, elect to defend such claim, suit or proceeding, using counsel
of its own choice and the provisions of Section 8.10(a) shall apply as if the
term “PSIVIDA” were changed to “PFIZER” and the term “PFIZER” were changed to
“PSIVIDA”.

 

  8.11. Third Party Royalty Obligations. If PFIZER reasonably determines in good
faith that, in order to exercise the license granted by PSIVIDA in this
Agreement without infringing the Patent Rights of a Third Party, it is necessary
to obtain a license of Patent Rights from such Third Party (excluding any
license that is required to make, use, sell, offer for sale, supply, cause to be
supplied, or import the Compound in such country or to practice PFIZER
Technology or PFIZER Patent Rights), then the amount of PFIZER’s royalty
payments under Section 6.4 with respect to Net Sales for the Product in such
country shall be reduced by [*] of the amount of royalties on Net Sales payable
by PFIZER to such Third Party [*].

 

 

* Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

 

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9. Confidentiality; Publication.

 

  9.1. Confidential Information.

 

  9.1.1. PFIZER and PSIVIDA each agree that, except as permitted in this
Agreement, during the Term and for five (5) years after the Term, it will keep
confidential, and will cause its Affiliates to keep confidential, all of the
other Party’s Confidential Information that is disclosed to it, or to any of its
Affiliates. PFIZER and PSIVIDA each agree to take such action, and to cause its
Affiliates to take such action, to preserve the confidentiality of PSIVIDA
Confidential Information and PFIZER Confidential Information, respectively, as
it would customarily take to preserve the confidentiality of its own similar
types of confidential information.

 

  9.1.2. Each of PFIZER and PSIVIDA, agree, and agree to cause their respective
Affiliates, (i) to use PSIVIDA Confidential Information and PFIZER Confidential
Information, respectively, only as expressly permitted in this Agreement and
(ii) not to disclose PSIVIDA Confidential Information and PFIZER Confidential
Information, respectively, to any Third Parties under any circumstance without
the prior consent of the other Party, except as expressly permitted in this
Agreement.

 

  9.1.3.

Notwithstanding anything to the contrary in this Section 9, each Party or any of
its Affiliates may disclose the other Party’s Confidential Information (i) to
Governmental Authorities (a) to the extent desirable to obtain or maintain INDs
or Regulatory Approvals, and (b) in order to respond to inquiries, requests or
investigations relating to this Agreement; (ii) to such Party’s attorneys and
accountants; (iii) to other outside consultants, contractors, advisory boards,
managed care or other health care providers or organizations, and non-clinical
and clinical investigators, in each case to the extent desirable to develop,
register or market any Compound or Product pursuant to this Agreement or in
connection with the exercise of rights or performance of obligations under this
Agreement, provided that such Party shall obtain the same confidentiality
obligations from such Third Parties as it obtains with respect to its own
similar types of confidential information; (iv) in connection with filing or
prosecuting Patent Rights or trademark rights as permitted by this Agreement,
(v) in connection with prosecuting or defending litigation as permitted by this
Agreement, (vi) in connection with or included in scientific presentations and
publications relating to Compounds or Products, including abstracts, posters,
journal articles and the like, and (vii) to the extent necessary or desirable in
order to enforce its rights under

 

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  this Agreement.

 

  9.2. Disclosure of Agreement Terms. PSIVIDA or any of its Affiliates may issue
mutually acceptable press releases in connection with the execution of this
Agreement. Disclosure of the financial terms of this Agreement shall be made in
the form of a mutually acceptable press release on the Effective Date. Neither
Party nor any of its Affiliates shall disclose or describe the financial terms
of this Agreement in any way that is contrary to or inconsistent with the
substance of such press release or the Agreement, and neither Party nor any of
its Affiliates shall otherwise publically disclose any other terms of this
Agreement except as expressly set forth herein. Notwithstanding the foregoing
and notwithstanding Section 9.1, each Party or any of its Affiliates may
disclose this Agreement or its terms (a) to the extent required by Law, provided
that the disclosing Party provides the other Party notice (to the extent
practicable) of such disclosure and agrees to cooperate, at the request and sole
expense of the other Party, with the other Party’s efforts to preserve the
confidentiality of such information and (b) to any investors or potential
investors, lenders, and other potential financing sources, or to a Third Party
in connection with an investment or proposed investment, financing or proposed
financing, merger or acquisition, proposed merger or acquisition, a license or
proposed license of the technology or intellectual property licensed hereunder
and not prohibited hereunder, sale of assets or other similar transaction, and
to Affiliates, attorneys, accountants, stockholders, investment bankers,
advisers or other consultants in connection with the foregoing permitted
disclosures, in each case provided that the Person to which such disclosure is
made agrees to keep such information confidential on essentially the same terms
as set forth herein and to use such Confidential Information solely to evaluate
such investment, financing, acquisition, merger, license, sale or other
transaction, (c) to any stock exchange on which its stock is then listed to the
extent required by such exchange, provided that the disclosing Party shall
notify the other Party in advance of such disclosure to the extent reasonably
possible and otherwise complies with the provisions of Section 9.4, (d) to its
attorneys and accountants, and (e) to its consultants, advisors, contractors and
agents in connection with any of the foregoing permitted purposes, provided that
the Person to which such disclosure is made agrees, or is otherwise bound by
professional standards of conduct, to keep such information confidential on
essentially the same terms as set forth herein.

 

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  9.3.

Other Disclosures. Notwithstanding anything else herein but subject to
Section 3.5, both Parties and their respective Affiliates shall be entitled to
publicly disclose significant Product achievements of the type and by the means
customary for similarly situated companies. For the purpose of clarity, such
public disclosures with respect to a Product by PSIVIDA or any of its Affiliates
may include, (i) prior to the Pfizer Option Date, Commencement of Clinical
Trials, significant factual information with respect to Clinical Trials
including numbers of patients, centers, investigators, descriptions of
protocols, completion of enrollment and of treatment under Clinical Trials,
safety and efficacy data and other results of Clinical Trials, and filings with
and actions by Regulatory Authorities, and (ii) following the Pfizer Option
Date, Commencement of Clinical Trials, significant factual information with
respect to Clinical Trials including numbers of patients, number of centers,
number of investigators, high level descriptions of study design, completion of
enrollment and of treatment under Clinical Trials, top line safety and efficacy
data, and significant actions by Regulatory Authorities. For the purpose of
clarity, such public disclosures described in the first sentence of this Section
with respect to a Product by PFIZER or any of its Affiliates following the
PFIZER Option Date may include any of the disclosures described in the preceding
sentence. Prior to making public disclosure of the achievement of any such event
relating to a Product, including any results of Clinical Trials, the disclosing
Party will provide the other Party with a copy of such disclosure five
(5) Business Days in advance, or if such advance notice is not practicable under
the circumstances, as much advance notice as the disclosing Party practicably
can provide and shall take into account the good faith and reasonable comments
made by the other Party within such five (5) day period. Subject to the
foregoing provisions of this Section 9.3, and without limiting any rights under
Sections 9.2 and 9.4, each Party shall submit to the other Party for review and
approval (such approval not to be unreasonably be withheld or delayed) any
proposed academic, scientific or medical publication or public presentation (for
the purpose of clarity, not including public disclosures as described in the
first three sentences of this Section or filings with a Governmental Authority)
which contains the other Party’s Confidential Information. Such review and
approval will be conducted for the purposes of preserving the value of
intellectual property rights and determining whether any portion of the proposed
publication or presentation containing the other Party’s Confidential
Information should be modified or deleted for such purpose. Written copies of
such proposed publication or presentation required to be submitted hereunder
shall be submitted to the other Party no later than twenty (20) days before
submission for publication or presentation. The non-disclosing Party shall
provide its comments with respect to such publications and presentations within
fifteen (15) days of its receipt of such written copy. The review period may be
extended for an additional fifteen (15) days in the event the non-disclosing
Party can demonstrate reasonable need for such extension including for the
preparation and filing of patent applications. PSIVIDA and PFIZER will each
comply with standard academic practice regarding authorship of

 

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  scientific publications and recognition of contribution of other parties in
any publication.

 

  9.4. Filing, Registration or Notification of the Agreement. If a Party or any
of its Affiliates determines that it is required by Law to publicly file,
register or notify this Agreement with a Governmental Authority (it being agreed
that PSIVIDA or any of its Affiliates may file this Agreement with the
Securities & Exchange Commission), such Party or such Affiliate shall
(i) initially file a copy of this Agreement in form redacting the financial
terms and such other terms as are reasonably requested by the other Party (the
“Redacted Agreement”), (ii) request, and use Commercially Reasonable Efforts to
obtain, confidential treatment of all terms redacted from this Agreement, as
reflected in the Redacted Agreement, for a period of at least ten (10) years,
(iii) permit the other Party to review and comment upon such request for
confidential treatment and any subsequent correspondence with respect thereto at
least five (5) Business Days prior to its submission to such Governmental
Authority, provided that any comments shall be made within three (3) Business
Days of receipt, (iv) promptly deliver to the other Party any written
correspondence received by it or its representatives from such Governmental
Authority with respect to such confidential treatment request and promptly
advise the other Party of any other communications between it or its
representatives with such Governmental Authority with respect to such
confidential treatment request, (v) upon the written request of the other Party,
request an appropriate extension of the term of the confidential treatment
period, and (vi) if such Governmental Authority requests any changes to the
redactions set forth in the Redacted Agreement, use Commercially Reasonable
Efforts to support the redactions in the Redacted Agreement as originally filed
and shall not agree to any changes to the Redacted Agreement without first
discussing such changes with the other Party and taking the other Party’s
comments into consideration when deciding whether to agree to such changes. Each
Party and its Affiliates shall be responsible for its own legal and other
external costs in connection with any such filing, registration or notification.

 

10. Representations and Warranties.

 

  10.1. PSIVIDA Representations and Warranties. As of the Effective Date,
PSIVIDA hereby represents and warrants to PFIZER as follows:

 

  10.1.1.

PSIVIDA has the corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder, and the execution, delivery
and performance of this Agreement by PSIVIDA have been duly and validly
authorized and approved by proper

 

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  corporate action on the part of PSIVIDA, and PSIVIDA has taken all other
action required by Law, its certificate of incorporation, by-laws or other
organizational documents or any agreement to which it is a party or to which it
may be subject required to authorize such execution, delivery and performance.
Assuming due authorization, execution and delivery on the part of PFIZER, this
Agreement constitutes a legal, valid and binding obligation of PSIVIDA,
enforceable against PSIVIDA in accordance with its terms.

 

  10.1.2. The execution and delivery of this Agreement by PSIVIDA and the
performance by PSIVIDA contemplated hereunder does not and will not violate any
Laws or any order of any court or Governmental Authority.

 

  10.1.3. Neither the execution and delivery of this Agreement nor the
performance hereof by PSIVIDA requires PSIVIDA to obtain any permits,
authorizations or consents from any Governmental Authority (other than any
Regulatory Approvals relating to performance of the Development Plan or the
manufacture, use, importation or sale of the Product) or from any other person,
firm or corporation, and such execution, delivery and performance will not
result in the breach of or give rise to any right of termination under any
agreement or contract to which PSIVIDA or any of its Affiliates is a party or to
which it may be subject, except for those breaches or rights that would not
adversely affect the ability of PSIVIDA to perform its obligations under this
Agreement.

 

  10.1.4. [*], the patents encompassed within the PSIVIDA Patent Rights and the
PSIVIDA Program Patent Rights as of the Effective Date, are, or, upon issuance,
will be, valid and enforceable patents and no Third Party is (i) infringing any
such Patent Rights relating to the Device as of the Effective Date or (ii) has
challenged the extent, validity or enforceability of such Patent Rights
(including by way of example through the institution or written threat of
institution of interference, nullity or similar invalidity proceedings before
the United States Patent and Trademark Office or any analogous foreign entity).

 

  10.1.5. Schedule 10.1.5 contains a complete and correct list of all patents
and patent applications owned by or otherwise Controlled by PSIVIDA or any of
its Affiliates (and indicating which entity owns or Controls each patent and
patent application and which are owned and which are Controlled) that are
included within PSIVIDA Patent Rights and PSIVIDA Program Patent Rights.

 

 

* Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

 

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  10.1.6. To the knowledge of PSIVIDA, PSIVIDA or its relevant Affiliate is the
sole legal and beneficial owner of all the PSIVIDA Patent Rights and PSIVIDA
Technology, free of any lien, encumbrance, charge, security interest, mortgage
or other similar restriction, and no person, firm, corporation, governmental
agency, or other entity (including any Affiliate of PSIVIDA) has any right,
interest or claim in or to, and neither PSIVIDA nor any of its Affiliates has
entered into any agreement granting to any Third Party (including any academic,
governmental organization or agency) any right, interest or claim in or to, any
PSIVIDA Patent Rights or PSIVIDA Technology, which would conflict with the
licenses and rights granted to Pfizer hereunder.

 

  10.1.7. Neither PSIVIDA nor any of its respective employees nor, to the best
knowledge of PSIVIDA, its agents, in their capacity as such, have been debarred
by the FDA, pursuant to 21 U.S.C. §§ 335(a) or (b), or been charged with or
convicted under United States law for conduct relating to the development or
approval, or otherwise relating to the regulation of Product under the Generic
Drug Enforcement Act of 1992, disqualified from receiving investigational new
drugs or devices under 21 CFR 312.70 or 812.119, or debarred, disqualified, or
convicted under or for any equivalent or similar applicable foreign law, rule,
or regulation.

 

  10.1.8. There is no action, claim, demand, suit, proceeding, arbitration,
grievance, citation, summons, subpoena, inquiry or investigation of any nature,
civil, criminal, regulatory or otherwise, in law or in equity, pending or, to
the knowledge of PSIVIDA, threatened against PSIVIDA or any of its Affiliates in
connection with the PSIVIDA Patent Rights, PSIVIDA Technology, PSIVIDA Program
Patent Rights or PSIVIDA Program Technology or relating to the transactions
contemplated by this Agreement.

 

  10.1.9.

PSIVIDA has not and will not directly or indirectly offer or pay, or authorize
such offer or payment, of any money or anything of value to improperly seek, or
corruptly seek to influence any Government Official, and, if PSIVIDA is itself a
Government Official, has not accepted, and will not accept in the future, such a
payment. Further, PSIVIDA undertakes to update the representations and
warranties herein if (during the term of this Agreement) PSIVIDA, or any of the
employees, individuals, or subcontractors who will be primarily responsible for
performing under this Agreement, or a relative of such an employee or individual
or subcontractor, becomes a Government Official. PSIVIDA will comply with Pfizer
Inc.’s Anti-Bribery and Anti-Corruption Principles as set out in Exhibit A
attached hereto in connection with its activities pursuant to this Agreement.
For purposes of this Agreement, a “Government Official” is defined as: (i) any
elected or appointed Government Official (e.g., a member of a

 

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  ministry of health); (ii) any employee or person acting for or on behalf of a
government official, agency, or enterprise performing a governmental function;
(iii) any political party, officer, employee, or person acting for or on behalf
of a political party or candidate for public office; or (iv) an employee or
person acting for or on behalf of a public international organization; where
“government” is meant to include all levels and subdivisions of non-US
governments (i.e., local, regional, or national and administrative, legislative,
or executive).

 

  10.1.10. PSIVIDA is not a healthcare professional and is not an appointed
agent or expert of any public authority.

 

  10.2. PFIZER Representations and Warranties. As of the Effective Date, PFIZER
hereby represents and warrants to PSIVIDA as follows:

 

  10.2.1. PFIZER has the corporate power and authority to execute and deliver
this Agreement and to perform its obligations hereunder, and the execution,
delivery and performance of this Agreement by PFIZER have been duly and validly
authorized and approved by proper corporate action on the part of PFIZER, and
PFIZER has taken all other action required by Law, its certificate of
incorporation or by-laws, or any agreement to which it is a party or to which it
may be subject, required to authorize such execution, delivery and performance.
Assuming due authorization, execution and delivery on the part of PSIVIDA, this
Agreement constitutes a legal, valid and binding obligation of PFIZER,
enforceable against PFIZER in accordance with its terms.

 

  10.2.2. The execution and delivery of this Agreement by PFIZER and the
performance by PFIZER contemplated hereunder does not and will not violate any
Laws or any order of any court or Governmental Authority.

 

  10.2.3. Neither the execution and delivery of this Agreement nor the
performance hereof by PFIZER requires PFIZER to obtain any permits,
authorizations or consents from any Governmental Authority (other than any
Regulatory Approvals relating to the manufacture, use, importation or sale of
the Product) or from any other person, firm or corporation, and such execution,
delivery and performance will not result in the breach of or give rise to any
right of termination under any agreement or contract to which PFIZER or any of
its Affiliates is a party or to which it may be subject, except for those
breaches or rights that would not adversely affect the ability of PFIZER to
perform its obligations under this Agreement.

 

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  10.2.4. [*], the patents encompassed within the PFIZER Program Patent Rights
are, or upon issuance will be, valid and enforceable patents and no Third Party
(i) is infringing any such Patent Rights relating to the Device as of the
Effective Date or (ii) has challenged the extent, validity or enforceability of
such Patent Rights (including by way of example through the institution or
written threat of institution of interference, nullity or similar invalidity
proceedings before the United States Patent and Trademark Office or any
analogous or foreign entity).

 

  10.2.5. To the knowledge of PFIZER, PFIZER or its relevant Affiliate is the
sole legal and beneficial owner of all the PFIZER Patent Rights and PFIZER
Technology, free of any lien, encumbrance, charge, security interest, mortgage
or other similar restriction, and no person, firm, corporation, governmental
agency, or other entity (including any Affiliate of PFIZER) has any ownership
right, interest or claim in or to, any PFIZER Patent Rights or PFIZER
Technology.

 

  10.2.6. Neither PFIZER nor any of its respective employees nor, to the best
knowledge of PFIZER, its agents, in their capacity as such, have been debarred
by the FDA, pursuant to 21 U.S.C. §§ 335(a) or (b), or been charged with or
convicted under United States law for conduct relating to the development or
approval, or otherwise relating to the regulation of Product under the Generic
Drug Enforcement Act of 1992, disqualified from receiving investigational new
drugs or devices under 21 CFR 312.70 or 812.119, or debarred, disqualified, or
convicted under or for any equivalent or similar applicable foreign law, rule,
or regulation.

 

  10.2.7. There is no action, claim, demand, suit, proceeding, arbitration,
grievance, citation, summons, subpoena, inquiry or investigation of any nature,
civil, criminal, regulatory or otherwise, in law or in equity, pending or, to
the knowledge of PFIZER threatened against PFIZER or any of its Affiliates
(except to the extent disclosed pursuant to Section 10.2.4) relating to the
PFIZER Program Patent Rights, PFIZER Program Technology, PFIZER Technology or
transactions contemplated by this Agreement.

 

  10.2.8. PFIZER has not and will not directly or indirectly offer or pay, or
authorize such offer or payment, of any money or anything of value to improperly
seek, or corruptly seek to influence any Government Official, and, if PFIZER is
itself a Government Official, has not accepted, and will not accept in the
future, such a payment. Further, PFIZER undertakes to update the representations
and warranties herein

 

 

* Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

 

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  if (during the term of this Agreement) PFIZER, or any of the employees,
individuals, or subcontractors who will be primarily responsible for performing
under this Agreement, or a relative of such an employee or individual or
subcontractor, becomes a Government Official. PFIZER will comply with its
Anti-Bribery and Anti-Corruption Principles as set out in Exhibit A attached
hereto in connection with its activities pursuant to this Agreement.

 

  10.3. Disclaimer of Warranty. EXCEPT AS OTHERWISE EXPRESSLY STATED IN THIS
AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATION OR WARRANTY OF ANY KIND WITH
RESPECT TO COMPOUNDS, DEVICES, FORMULATIONS, PRODUCTS, PATENT RIGHTS, OR
TECHNOLOGY. EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION 10, EACH PARTY
EXPRESSLY DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT.

 

11. Additional Covenants.

 

  11.1. Each of PSIVIDA and PFIZER shall conduct, and shall use Commercially
Reasonable Efforts to cause its Affiliates to conduct, all its activities
contemplated under this Agreement in accordance with all applicable Laws of the
country in which such activities are conducted.

 

  11.2. [*]

 

  11.3. Non-Compete. Subject to the BMP Agreement, the B&L Agreement, the
Alimera Agreement, and Section 13.5, during the Royalty Term in any country,
PSIVIDA shall not, and shall cause its Affiliates not to, alone or in
collaboration with any Third Party, promote, sell, distribute or otherwise
commercialize in such country (a) any bioerodible Device delivering by
subconjunctival implant or injection the Compound, alone or together with
another active ingredient, in humans, (b) any bioerodible Device for the
treatment of Glaucoma in humans by a subconjunctival implant or injection that
contains a prostaglandin, or (c) any Product for uveitis, or grant any Third
Party the right to do any of the foregoing; provided, however, that the
foregoing shall not apply to prevent a Person that first becomes an Affiliate of
PSIVIDA after the Effective Date from developing, promoting, selling,
distributing or otherwise commercializing such a Device as long as such
developing, promoting, selling, distributing or otherwise commercializing does
not infringe PSIVIDA Patent Rights or PSIVIDA Program Patent Rights.

 

 

* Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

 

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  11.4. Kentucky Study Agreement. As soon as practicable after the Effective
Date, (a) PFIZER shall assign to PSIVIDA and PSIVIDA shall accept and assume all
of the rights and obligations of PFIZER under the Kentucky Study Agreement with
effect from and after the Effective Date and (b) the Parties shall take such
actions and execute such documents as are necessary to carry out such assignment
and assumption.

 

12. Term. This Agreement shall be effective as of the Effective Date and shall,
unless earlier terminated in accordance with Section 13, remain in effect until
the expiration of the Royalty Term.

 

13. Termination.

 

  13.1. Termination Rights. This Agreement may be terminated as follows:

 

  13.1.1. If either PFIZER or PSIVIDA materially breaches or materially defaults
in the performance or observance of any of its respective obligations under this
Agreement, and such breach or default is not cured within (a) in the event of a
failure of a Party to make a required payment under this Agreement, thirty
(30) days and (b) for all other breaches or defaults, sixty (60) days after the
giving of written notice by the other Party specifying such breach or default,
then such other Party shall have the right to terminate this Agreement by
providing the breaching Party written notice within thirty (30) days following
the expiration of such period (such termination to be effective upon receipt of
such termination notice). For the purpose of this Section 13.1.1, a material
breach or material default shall include a material inaccuracy in any warranty
or representation contained herein. In addition, PSIVIDA may terminate this
Agreement pursuant to Section 11.2.

 

  13.1.2. PFIZER may terminate this Agreement effective immediately upon notice
to PSIVIDA, if PSIVIDA breaches any of the representations and warranties set
forth in Section 10.1.9 or if PFIZER learns that improper payments are being or
have been made to Government Officials (as defined in Section 10.1.9) by PSIVIDA
with respect to services performed or activities undertaken either on behalf of
PSIVIDA or in connection with PSIVIDA’s provision of services to any other
party. Further, in the event of any termination referred to in the preceding
sentence, PSIVIDA shall not be entitled to any further payment, regardless of
any activities undertaken or agreements with additional Third Parties entered
into prior to termination, and PSIVIDA shall be liable for damages or remedies
as provided by law.

 

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  13.1.3. PSIVIDA may terminate this Agreement effective immediately upon notice
to PFIZER, if PFIZER breaches any of the representations and warranties set
forth in Section 10.2.8 or if PSIVIDA learns that improper payments are being or
have been made to Government Officials (as defined in Section 10.2.8) by PFIZER
with respect to services performed or activities undertaken either on behalf of
PFIZER or in connection with PFIZER’s provision of services to any other party.
Further, in the event of any termination referred to in the preceding sentence,
PFIZER shall not be entitled to any further payment, regardless of any
activities undertaken or agreements with additional Third Parties entered into
prior to termination, and PFIZER shall be liable for damages or remedies as
provided by law.

 

  13.1.4. If either Party is generally unable to meet its debts when due, or
makes a general assignment for the benefit of its creditors, or there shall have
been appointed a receiver, trustee or other custodian for such Party for all or
a substantial part of its assets, or any case or proceeding shall have been
commenced or other action taken by or against such Party in bankruptcy or
seeking the reorganization, liquidation, dissolution or winding-up of such Party
or any other relief under any bankruptcy, insolvency, reorganization or other
similar act or Law, and any such event shall have continued for sixty (60) days
undismissed, unstayed, unbonded and undischarged, then the other Party may, upon
notice to such Party, terminate this Agreement, such termination to be effective
upon such Party’s receipt of such notice.

 

  13.1.5. PFIZER, upon sixty (60) days’ written notice to PSIVIDA, shall have
the right, at PFIZER’s sole discretion, to terminate this Agreement.

 

  13.1.6. This Agreement shall terminate under the circumstances set forth in
Section 3.3 or Section 3.5

 

  13.1.7. In the event that the Parties make an HSR Filing under Section 3.6.5
hereof, this Agreement shall terminate (a) at the election of either Party
immediately upon notice to the other Party, in the event that the United States
Federal Trade Commission and/or the United States Department of Justice shall
seek or threaten or shall obtain a preliminary injunction under the HSR Act
against PFIZER and PSIVIDA to enjoin the transactions contemplated by this
Agreement, or (b) at the election of either Party, immediately upon notice to
the other Party, in the event that the HSR Clearance Date shall not have
occurred on or prior to ninety (90) days after the effective date of the HSR
Filing. Notwithstanding the foregoing, this Section 13.1.7 shall not apply in
the event that an HSR Filing is not required.

 

  13.2.

Accrued Obligations. Expiration or termination of this

 

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  Agreement for any reason (x) shall be without prejudice to a Party’s right to
receive all royalties accrued under Section 6 prior to the effective date of
such termination and to any other remedies that either Party may otherwise have
and (y) shall not release a Party hereto from any indebtedness, liability or
other obligation incurred hereunder by such Party prior to the date of
termination or expiration.

 

  13.3. Effect of Termination.

 

  13.3.1. Upon any termination of this Agreement pursuant to Section 13.1.1,
13.1.3, 13.1.4, 13.1.5, 13.1.6 or 13.1.7, all licenses granted herein to PFIZER
shall terminate. Upon any termination of this Agreement by PFIZER pursuant to
Section 13.1.1, 13.1.2 or 13.1.4 or upon any termination of this Agreement
pursuant to Section 13.1.6 or 13.1.7, all licenses granted herein to PSIVIDA
shall terminate, except for such licenses that survive as provided by
Section 16.7, and except as expressly set forth in Section 13.3.2.

 

  13.3.2. If PFIZER terminates this Agreement pursuant to Section 13.1.5 (other
than in the event (A) of any safety issue that would reasonably be expected to
have a material adverse effect on PFIZER’s ability to develop, manufacture or
commercialize the Product, as determined in good faith in the reasonable
judgment of PFIZER’s internal safety committee in accordance with PFIZER’s
standard internal procedures for evaluating such safety issues or (B) that a
Regulatory Authority or data monitoring review board has required termination or
suspension of a Clinical Trial for the Product or withdrawal of the Product from
any market on account of a safety issue), or this Agreement terminates pursuant
Section 13.1.6 or 13.1.7, or PSIVIDA terminates this Agreement pursuant to
Section 13.1.1 or 13.1.3 (but in no event if (x) any such termination results,
arises from or relates to, or is deemed to result, arise from or relate to, by
operation of law or otherwise, any termination or deemed termination hereof that
occurs during the course of any bankruptcy or other insolvency proceeding
involving PSIVIDA or (y) PSIVIDA rejects this Agreement pursuant to Sections
363, 365 or 1123 of Title 11 of the United States Code, as amended):

 

  (a)

PFIZER shall at PSIVIDA’s request, (i) use Commercially Reasonable Efforts to
transfer ownership of all regulatory filings and Regulatory Approvals that
relate solely to the Product to PSIVIDA or its designee; (ii) deliver to PSIVIDA
a copy of all Clinical IP in PFIZER’s or any of its Affiliates’ possession and
Control (including Clinical IP generated by Third Parties under any services
arrangement) related to the Product (and that does not relate solely to the
Compound), if any, in the same form in which PFIZER or such Affiliate maintains
such data; (iii) provide

 

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  PSIVIDA with copies of any then-existing documentation and technical
information, in the form and format in which such materials are maintained by
PFIZER or any of its Affiliates in the ordinary course of its business, that are
necessary for the manufacture of the Product, which documentation and technical
information shall include (A) [*], (B) [*], (C) [*], (D) [*], (E) [*] and
(F) such other documentation as the Parties may mutually agree, in each case of
the foregoing subsections (iii) and (A) through (F), that are in PFIZER’s or any
of its Affiliates’ possession and Control (including any of the foregoing that
are generated by Third Parties under any services arrangement) and are necessary
to manufacture Products; and (iv) deliver to PSIVIDA, in the same form in which
PFIZER or any of its Affiliates maintains such items, copies of all regulatory
reports, records, correspondence and other regulatory materials in PFIZER’s or
any of its Affiliates’ possession and Control related solely to such Product
(and not related solely to the Compound) and any Regulatory Approval therefor
(including any of the foregoing that are generated by Third Parties under any
services arrangement), including, if applicable, any information contained in
the global safety database established and maintained by PFIZER or any of its
Affiliates (provided that any good faith failure by PFIZER to provide immaterial
data, information, reports, records, correspondence or other materials to
PSIVIDA shall not be a breach of PFIZER’s obligations under this
Section 13.3.2).

 

  (b) PFIZER shall and hereby does grant to PSIVIDA (i) a non-exclusive,
royalty-free (except as set forth below in this paragraph), perpetual,
irrevocable, world-wide license, with the right to sublicense, under and to the
Clinical IP Controlled by PFIZER or any of its Affiliates, the PFIZER Patent
Rights, the PFIZER Technology, the PFIZER Program Technology and the PFIZER
Program Patent Rights, and (ii) the non-exclusive right to [*], in the case of
(i) and (ii) solely to develop, make, have made, sell, offer for sale, use and
import the Product. It is understood that

 

 

* Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

 

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  upon any termination, PSIVIDA will not obtain any rights to PFIZER Compounds,
PFIZER Patent Rights, PFIZER Technology, PFIZER Program Patent Rights or PFIZER
Program Technology except as expressly set forth in this Agreement. If any of
the foregoing are licensed to Pfizer from a Third Party (“Third Party
Licensor”), [*]. Without limiting the foregoing [*].

 

  (c) PFIZER shall and hereby does grant to PSIVIDA a non-exclusive,
royalty-free (except as set forth below in this paragraph), perpetual,
irrevocable, world-wide license, with the right to sublicense, under and to all
PFIZER Controlled Intellectual Property, solely to develop, make, have made,
sell, offer for sale, use and import the Product; provided that such license
shall continue only so long as (a) PSIVIDA elects to accept such license, and
(b) [*]

 

 

* Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

 

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CONFIDENTIAL TREATMENT REQUESTED

 

  [*]. Without limiting the foregoing, [*].

 

  13.3.3. Following any termination of this Agreement but subject to the
foregoing provisions of Section 13.3.2 each Party shall, upon request of the
other Party, return or destroy all Confidential Information

 

 

* Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

 

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  disclosed to it by the other Party pursuant to this Agreement or the Prior
Agreement, including all copies and extracts of documents, as promptly as
practicable following receipt of such request, except that one (1) copy may be
kept for the purpose of complying with continuing obligations under this
Agreement.

 

  13.3.4. In order to ensure the smooth transition of the development and/or
commercialization of the Product from PFIZER to PSIVIDA or a Third Party
designated by PSIVIDA, at PSIVIDA’s request, representatives of PFIZER and
PSIVIDA will meet to discuss in good faith a transition plan with respect to all
then-current as well as planned activities relating to the Product, consistent
with Section 13.3.2.

 

  13.4. Bankruptcy. All rights and licenses granted under or pursuant to this
Agreement by PSIVIDA are, and shall otherwise be deemed to be, for purposes of
Article 365(n) of the U.S. Bankruptcy Code, licenses of rights to “intellectual
property” as defined under Article 101 of the U.S. Bankruptcy Code. The Parties
agree that PFIZER, as licensee of such rights under this Agreement, shall retain
and may fully exercise all of its rights and elections under the U.S. Bankruptcy
Code. The Parties further agree that, in the event of the commencement of any
proceeding by or against PSIVIDA or any of its Affiliates under the U.S.
Bankruptcy Code, PFIZER shall be entitled to a complete duplicate of (or
complete access to, as appropriate) any such intellectual property and all
embodiments of such intellectual property, and, if not already in its
possession, PSIVIDA shall promptly deliver to PFIZER all such intellectual
property and all embodiments of such intellectual property (a) upon PFIZER’s
request any time following commencement of any such proceeding, unless PSIVIDA
elects to continue to perform all of its obligations under this Agreement or
(b) if not delivered under (a) above, upon PFIZER’s request any time following
the rejection of this Agreement by or on behalf of PSIVIDA.

 

  13.5.

Change of Control. PSIVIDA shall notify PFIZER promptly, but in no event later
than five (5) Business Days, following approval by PSIVIDA’s (or its parent
corporation’s) board of directors of any transaction that constitutes a Change
of Control; provided, however, that in the event such disclosure is prohibited
by applicable Law or PSIVIDA’s contractual obligations to a Third Party, PSIVIDA
shall have the right to delay such notification until five (5) Business Days
following the consummation of the applicable Change of Control. Effective upon
the consummation of such Change of Control, Section 3.4(e) shall be
automatically deleted from this Agreement and shall cease to be of any further
force or effect. PFIZER shall have the right upon sixty (60) days’ notice
following any such Change of Control, to elect that any one or more of the
following shall be deleted, in

 

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  whole or in part, from this Agreement: Sections 2.1 through 2.6 and 3.6.4, and
PFIZER’s obligations under Sections 3.9, 3.10, 5.2.3, 5.2.4, and 5.5.1. If
PFIZER makes any election as provided in this Section 13.5 to delete any
Section, each of the Parties hereto will enter into an appropriate and customary
written amendment and no Party shall have any further obligations with respect
to any such deleted Section. In the event that a transaction that constitutes a
Change of Control is approved by PSIVIDA’s board of directors but is not
consummated, any Section deleted by PFIZER pursuant to the foregoing shall
immediately and automatically be reinstated upon notice thereof by PSIVIDA to
PFIZER. For the avoidance of doubt, PFIZER shall be entitled, in its sole
discretion, to make the elections provided for in this Section 13.5 upon each
occurrence of a Change of Control.

 

  13.6. Breach Remedy. If an event occurs that gives rise to a right of
termination by PFIZER under Section 13.1.1 (as a result of an uncured breach by
PSIVIDA) and if PFIZER elects not to terminate this Agreement, any amounts
payable by PFIZER to PSIVIDA pursuant to Section 3.6.1 or Section 6 shall be
reduced to seventy percent (70%) (i.e., a thirty percent (30%) reduction) of the
amount that would otherwise have been payable under the terms of the Agreement
during the Term and PFIZER may elect that any one or more of the following shall
be deleted, in whole or in part, from this Agreement: Sections 2.1 through 2.6,
3.6.3 and 3.10, and PFIZER’s obligations under Sections 3.9, 5.2.3, 5.2.4 and
5.5.1. If PFIZER makes any election as provided in this Section 13.6 to delete
any Section, each of the Parties hereto will enter into an appropriate and
customary written amendment and no Party shall have any further obligations with
respect to any such deleted Section.

 

14. Indemnification and Insurance.

 

  14.1. Indemnification.

 

  14.1.1. PSIVIDA will indemnify, defend and hold PFIZER and PFIZER’s
Affiliates, and their respective directors, officers and employees
(collectively, “Representatives”), harmless from any and all Losses (as defined
below) incurred by any of them and which are not covered by an insurance policy
that result from:

 

  (a) the breach of any covenant, warranty or representation made by PSIVIDA
under this Agreement;

 

  (b) the negligence, recklessness, or willful misconduct of PSIVIDA or any of
its Affiliates; or

 

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  (c) any acts or omissions of PSIVIDA or any of its Affiliates, agents or
licensees in connection with the research, development or commercialization of
the Product.

PSIVIDA shall only be obligated to so indemnify, defend and hold PFIZER harmless
to the extent that such Losses do not result from the negligence, recklessness
or willful misconduct of PFIZER or its Affiliates, agents or licensees.

 

  14.1.2. PFIZER will indemnify, defend and hold PSIVIDA and PSIVIDA’s
Representatives, harmless from any and all Losses incurred by any of them and
which are not covered by an insurance policy that result from:

 

  (a) the breach of any covenant, warranty or representation made by PFIZER
under this Agreement;

 

  (b) the negligence, recklessness, or willful misconduct of PFIZER or any of
its Affiliates;

 

  (c) any acts or omissions of PFIZER or any of its Affiliates, agents or
licensees in connection with the research, development or commercialization of
the Product.

PFIZER shall only be obligated to so indemnify, defend and hold PSIVIDA harmless
to the extent that such Losses do not result from the negligence, recklessness
or willful misconduct of PSIVIDA or its Affiliates, agents or licensees.

 

  14.2. Losses. For purposes of this Agreement, “Losses” means any and all
costs, expenses, claims, losses, liabilities, damages, fines, royalties,
governmental penalties or punitive damages, deficiencies, interest, settlement
amounts, awards, and judgments, including any and all reasonable, out-of-pocket
costs and expenses properly incurred, as a result of a Third Party claim
(including reasonable, out-of-pocket attorneys’ fees and all other expenses
reasonably incurred in investigating, preparing or defending any litigation or
proceeding, commenced or threatened), in each case, net of any insurance
recovery received as a result of such Loss.

 

  14.3.

Insurance. Each Party shall maintain, and shall cause its Affiliates and each
sublicensee conducting activities under this Agreement to maintain, at such
Party’s, an Affiliate’s, or sublicensee’s sole expense, appropriate product
liability insurance coverage in amounts reasonably determined by the Party from
time to time but at least sufficient to insure against claims which may arise
from the performance of obligations or exercise of rights granted under this
Agreement or from indemnification obligations under this Section 14, but

 

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  in no event shall a Party’s insurance coverage be in an amount less than
$5,000,000 per occurrence and $10,000,000 annual aggregate (provided that (i) in
the case of PFIZER such coverage may be pursuant to a program of self-insurance
and (ii) in the case of an Affiliate that becomes an Affiliate of PSIVIDA
following the Effective Date, such Affiliate may (a) continue to operate under a
self-insurance plan that was in place at the time it became an Affiliate or
(b) adopt a self-insurance plan to the extent such plan is reasonable in light
of industry practices of Persons similarly situated to such Affiliate). The
policy of insurance shall contain a provision of non-cancellation except upon
the provision of thirty (30) days notice to the other Party. Each Party shall
maintain such insurance commencing on the Effective Date and for so long as it
continues to research, produce, develop, manufacture, distribute, sell or use
the Products, and thereafter for so long as each Party maintains insurance for
itself covering such manufacture or sales.

 

  14.4. Defense Procedures; Procedures for Third Party Claims. In the event that
any Third Party (in no event to include any Affiliate of any of the Parties)
asserts a claim with respect to any matter for which a Party (the “Indemnified
Party”) is entitled to indemnification hereunder (a “Third Party Claim”), then
the Indemnified Party shall promptly notify the Party obligated to indemnify the
Indemnified Party (the “Indemnifying Party”) thereof; provided, however, that no
delay on the part of the Indemnified Party in notifying the Indemnifying Party
shall relieve the Indemnifying Party from any obligation hereunder unless (and
then only to the extent that) the Indemnifying Party is prejudiced thereby.

 

  14.4.1. The Indemnifying Party shall have the right, exercisable by notice to
the Indemnified Party within ten (10) Business Days after receipt of notice from
the Indemnified Party of the commencement of or assertion of any Third Party
Claim, to assume direction and control of the defense, litigation, settlement,
appeal or other disposition of the Third Party Claim (including the right to
settle the claim solely for monetary consideration) with counsel selected by the
Indemnifying Party and reasonably acceptable to the Indemnified Party; provided
that (i) the Indemnifying Party has sufficient financial resources, in the
reasonable judgment of the Indemnified Party, to satisfy the amount of any
adverse monetary judgment that is sought, (ii) the Third Party Claim seeks
solely monetary damages and (iii) the Indemnifying Party expressly agrees in
writing that as between the Indemnifying Party and the Indemnified Party, the
Indemnifying Party shall be solely obligated to satisfy and discharge the Third
Party Claim in full (the conditions set forth in clauses (i), (ii) and
(iii) above are collectively referred to as the “Litigation Conditions”).

 

  14.4.2.

Within ten (10) Business Days after the Indemnifying Party has given notice to
the Indemnified Party of its exercise of its right to defend a

 

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  Third Party Claim, the Indemnified Party shall give notice to the Indemnifying
Party of any objection thereto based upon the Litigation Conditions. If the
Indemnified Party reasonably so objects, the Indemnified Party shall continue to
defend the Third Party Claim, at the expense of the Indemnifying Party, until
such time as such objection is withdrawn. If no such notice is given, or if any
such objection is withdrawn, the Indemnifying Party shall be entitled, at its
sole cost and expense, to assume direction and control of such defense, with
counsel selected by the Indemnifying Party and reasonably acceptable to the
Indemnified Party. During such time as the Indemnifying Party is controlling the
defense of such Third Party Claim, the Indemnified Party shall cooperate, and
shall cause its Affiliates and agents to cooperate upon request of the
Indemnifying Party, in the defense or prosecution of the Third Party Claim,
including by furnishing such records, information and testimony and attending
such conferences, discovery proceedings, hearings, trials or appeals as may
reasonably be requested by the Indemnifying Party. In the event that the
Indemnifying Party does not satisfy the Litigation Conditions or does not notify
the Indemnified Party of the Indemnifying Party’s intent to defend any Third
Party Claim within ten (10) Business Days after notice thereof, the Indemnified
Party may (without further notice to the Indemnifying Party) undertake the
defense thereof with counsel of its choice and at the Indemnifying Party’s
expense (including reasonable, out-of-pocket attorneys’ fees and costs and
expenses of enforcement or defense). The Indemnifying Party or the Indemnified
Party, as the case may be, shall have the right to join in (including the right
to conduct discovery, interview and examine witnesses and participate in all
settlement conferences), but not control, at its own expense, the defense of any
Third Party Claim that the other Party is defending as provided in this
Agreement.

 

  14.4.3.

The Indemnifying Party shall not, without the prior written consent of the
Indemnified Party, enter into any compromise or settlement or consent to the
entry of any judgment with respect to any claim or Loss (a) that does not
release Indemnified Party from all liability with respect to such claim or Loss
or (b) which may materially adversely affect Indemnified Party or under which
Indemnified Party would incur any obligation, commitment to act or forbear from
taking any action, or liability, other than one as to which Indemnifying Party
has an indemnity obligation hereunder. The Indemnified Party shall have the sole
and exclusive right to settle any Third Party Claim, on such terms and
conditions as it deems reasonably appropriate, to the extent such Third Party
Claim involves equitable or other non-monetary relief, but shall not have the
right to settle such Third Party Claim to the extent such Third Party Claim
involves monetary damages without the prior written consent of the Indemnifying
Party. Each of the Indemnifying Party and the Indemnified Party shall not make
any

 

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  admission of liability in respect of any Third Party Claim without the prior
consent of the other Party, and the Indemnified Party shall use Commercially
Reasonable Efforts to mitigate losses arising from the Third Party Claim.

 

  14.5. Disclaimer of Liability for Consequential Damages. IN NO EVENT SHALL ANY
PARTY OR ANY OF ITS RESPECTIVE AFFILIATES BE LIABLE UNDER THIS AGREEMENT FOR
SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER IN CONTRACT,
WARRANTY, TORT, NEGLIGENCE, STRICT LIABILITY OR OTHERWISE, INCLUDING LOSS OF
PROFITS OR REVENUE, SUFFERED BY PFIZER, PSIVIDA OR ANY OF THEIR RESPECTIVE
REPRESENTATIVES, EXCEPT TO THE EXTENT OF ANY SUCH DAMAGES PAID TO A THIRD PARTY
IN CONNECTION WITH A THIRD PARTY CLAIM; PROVIDED THAT THIS SECTION SHALL NOT
RELIEVE EITHER PARTY FROM ITS PAYMENT OBLIGATIONS UNDER THIS AGREEMENT.

 

  14.6. SOLE REMEDY. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT AND EXCEPT
FOR ANY EQUITABLE REMEDIES THAT MAY BE AVAILABLE TO A PARTY, INDEMNIFICATION
PURSUANT TO THIS SECTION 14 SHALL BE THE SOLE AND EXCLUSIVE REMEDY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER LEGAL THEORY) AVAILABLE TO PSIVIDA OR
PFIZER FOR THE MATTERS COVERED THEREIN.

 

15. Governing Law and Jurisdiction.

 

  15.1. Governing Law. This Agreement shall be governed by and construed in
accordance with the substantive laws of the State of New York, without regard to
conflicts of law rules.

 

  15.2.

Jurisdiction. With the exception of those matters referred for resolution by
independent accountants under Section 7.5, in the event of any controversy,
claim or counterclaim arising out of or relating to this Agreement, the Parties
shall first attempt to resolve such controversy or claim through good faith
negotiations for a period of not less than thirty (30) days following
notification of such controversy or claim to the other Party. If such
controversy or claim cannot be resolved by means of such negotiations during
such period, then such controversy or claim shall be resolved by the United
States District Court for the Southern District of New York or a local court
sitting in New York, New York (collectively, the “Courts”). Each Party
(a) irrevocably submits to

 

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  the exclusive jurisdiction in the Courts for purposes of any action, suit or
other proceeding relating to or arising out of this Agreement and (b) agrees not
to raise any objection at any time to the laying or maintaining of the venue of
any such action, suit or proceeding in any of the Courts, irrevocably waives any
claim that such action, suit or other proceeding has been brought in an
inconvenient forum and further irrevocably waives the right to object, with
respect to such action, suit or other proceeding, that such Court does not have
any jurisdiction over such party. In the event of any action, suit or other
proceeding pursuant to this Section 15.2, either Party may effect service of
process by providing a complaint and/or summons or other court filing to the
other Party pursuant to Section 16.10. Any defenses based on adequacy of service
of process, other than breach of Section 16.10 are waived.

 

16. Miscellaneous.

 

  16.1. Termination of Prior Agreements. The Parties agree that: (a) this
Agreement shall supersede the Prior Agreement, which shall be and hereby is
terminated as of the Effective Date; (b) notwithstanding any provisions of the
Prior Agreement to the contrary, no rights, obligations or liabilities of the
Parties under the Prior Agreement shall survive this termination except for
rights, obligations and liabilities of both Parties under Section 9
(Confidentiality), Section 14 (Indemnification), and other sections, exhibits,
or definitions referenced therein; and (c) as of the Effective Date, all payment
and performance obligations, except for the assignment of rights from PSIVIDA to
PFIZER related to United States Provisional Patent Application [*], owed by each
Party under the Prior Agreement (including any payments that were due and
payable prior to the Effective Date) to the other Party are hereby deemed fully
paid and performed by such owing Party.

 

  16.2. Force Majeure. Neither Party hereto shall be liable to the other Party
(except for payment obligations set forth in this Agreement, each of which shall
remain in effect) for any losses or damages attributable to a default in or
breach of this Agreement that is the result of war (whether declared or
undeclared), acts of God, revolution, acts of terror, fire, earthquake, flood,
pestilence, riot, enactment or change of Law (following the Effective Date),
accident(s), labor trouble, or shortage of or inability to obtain material
equipment or transport or any other cause beyond the reasonable control of such
Party; provided that if such a cause occurs, then the Party affected will
promptly notify the other Party of the nature and likely result and duration (if
known) of such cause and use Commercially Reasonable Efforts to reduce the

 

 

* Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

 

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  effect. If the event lasts for a period of longer than three (3) months, the
Parties shall meet and discuss appropriate remedial measures.

 

  16.3. Reserved Rights; Non-Exclusivity.

 

  16.3.1. All rights and interests not expressly granted to PFIZER are reserved
by PSIVIDA (the “PSIVIDA Reserved Interests”) for itself, its Affiliates and
partners (other than PFIZER) and other licensees and sublicensees, including,
but not limited to, the rights to use, enter into agreements or grant licenses
under the PSIVIDA Patent Rights, PSIVIDA Program Patent Rights, PSIVIDA
Technology, PSIVIDA Program Technology or any other technology owned, licensed
or controlled by PSIVIDA or any of its Affiliates to make, have made, use, offer
to sell, sell, have sold and import products (other than the Product in the
Territory in the Field or for uveitis for so long as PFIZER has an exclusive
license to the Product in the Field in the Territory under this Agreement). It
shall not be a breach of this Agreement for PSIVIDA, acting directly or
indirectly, to exploit the PSIVIDA Reserved Interests in any manner anywhere in
or outside of the Territory, whether or not such activity is competitive with
the activities of PFIZER, including the research, development and
commercialization or licensing to others to research, develop and commercialize
products (other than the Product in the Territory in the Field or for uveitis in
the Territory for so long as PFIZER has an exclusive license to the Product in
the Field in the Territory under this Agreement).

 

  16.3.2. Subject to Section 13.3.3, except as otherwise expressly provided in
this Agreement, for the avoidance of doubt, PFIZER shall be free to use, enter
into an agreement with and grant licenses to any Third Party or Third Parties
under the PFIZER Patent Rights, the PFIZER Program Patent Rights, the PFIZER
Technology or the PFIZER Program Technology or any other technology owned,
licensed or Controlled by PFIZER or any of its Affiliates to research, develop
and commercialize any and all products, and it shall not be a breach of this
Agreement for PFIZER, acting directly or indirectly, to engage in any activities
competitive with the activities of PSIVIDA, including the research, development
and commercialization of products and other drug delivery devices.

 

  16.4.

Severability. If and solely to the extent that any provision of this Agreement
shall be invalid or unenforceable, or shall render this entire Agreement to be
unenforceable or invalid, such offending provision shall be of no effect and
shall not affect the validity of the remainder of this Agreement or any of its
provisions; provided, however, the Parties shall use their respective

 

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  Commercially Reasonable Efforts to replace the invalid provisions in a manner
that best accomplishes the original intentions of the Parties.

 

  16.5. Waivers. Any term or condition of this Agreement may be waived at any
time by the Party that is entitled to the benefit thereof, but no such waiver
shall be effective unless set forth in a written instrument duly executed by or
on behalf of the Party or Parties waiving such term or condition. Neither the
waiver by any Party of any term or condition of this Agreement nor the failure
on the part of any Party, in one or more instances, to enforce any of the
provisions of this Agreement or to exercise any right or privilege, shall be
deemed or construed to be a waiver of such term or condition for any similar
instance in the future or of any subsequent breach hereof. All rights, remedies,
undertakings, obligations and agreements contained in this Agreement shall be
cumulative and none of them shall be a limitation of any other remedy, right,
undertaking, obligation or agreement.

 

  16.6. Entire Agreements; Amendments. This Agreement sets forth the entire
agreement and understanding between the Parties as to the subject matter hereof
and supersedes all agreements or understandings, verbal or written, made between
PSIVIDA and PFIZER before the date hereof with respect to the subject matter
hereof, including the Confidentiality Agreement between the Parties, dated
February 2, 2007, the Feasibility Study Agreement dated December 22, 2006 and
the Collaborative Research and License Agreement dated April 3, 2007. All
Confidential Information disclosed prior to the Effective Date will be deemed to
have been disclosed pursuant to this Agreement. None of the terms of this
Agreement shall be amended, supplemented or modified except in writing signed by
the Parties.

 

  16.7. Survival. The provisions of Section 1 (Definitions), 4.2(b), 5.2
(Regulatory Affairs), 7.5 (Inspection of Records), 8.1 (Disclosure and Ownership
of Program Technology and Program Patent Rights), 9.1 (Confidential
Information), 9.2 (Disclosure of Agreement Terms), 9.4 (Filing, Registration or
Notification of the Agreement), 13 (Termination), 14 (Indemnification and
Insurance), 15 (Governing Law and Jurisdiction) and 16 (Miscellaneous), as well
as any other Sections or defined terms referred to in such Sections or necessary
to give them effect shall survive termination or expiration of this Agreement
and remain in force until discharged in full. Furthermore, any other provisions
required to interpret and enforce the Parties’ rights and obligations or to wind
up their outstanding obligations under this Agreement shall survive to the
extent required.

 

  16.8.

Assignment. Neither this Agreement nor any rights or obligations of

 

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  either Party to this Agreement may be assigned or otherwise transferred by
either Party without the consent of the other Party; provided, however, either
Party may, without such consent, assign this Agreement, in whole or in part:
(i) to any of its respective Affiliates; (ii) to any transferee of all or
substantially all of such Party’s assets or business or all or substantially all
of such Party’s ophthalmic assets or business, or (iii) in connection with a
Change of Control of such Party; provided that such assigning Party shall remain
jointly and severally liable with such assignee or transferee in respect of all
obligations so assigned. Any purported assignment in violation of this
Section 16.8 shall be void. Any permitted assignee shall assume all obligations
of its assignor under this Agreement.

 

  16.9. Independent Contractor. The relationship between PSIVIDA and PFIZER is
that of independent contractors. PSIVIDA and PFIZER are not joint venturers,
partners, principal and agent, employer and employee, and have no other
relationship other than independent contracting parties.

 

  16.10. Notices. Each communication and document made or delivered by one Party
to another under this Agreement shall be made in the English language. All
notices, consents, approvals, requests or other communications required
hereunder given by one Party to the other hereunder shall be in writing and made
by registered or certified air mail, facsimile, express overnight courier or
delivered personally to the following addresses of the respective Parties:

 

If to PSIVIDA: PSIVIDA Inc.

     400 Pleasant Street

     Watertown, MA 02472

     Attention: President

     Fax: (617) 926-5050

 

with a copy to: PSIVIDA Inc.

     400 Pleasant Street

     Watertown, MA 02472

     Attention: General Counsel

     Fax: (617) 926-5050

 

with a copy to: Ropes & Gray LLP

     800 Boylston Street

     Boston, MA 02199

     Attention: Susan Galli, Esq.

 

     Invoices should be sent to PSIVIDA as directed by PSIVIDA.

 

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If to PFIZER: Pfizer Inc.

     235 East 42nd Street

     New York, New York 10017-5755

     U.S.A.

     Attention: Senior Vice President Worldwide Business Development

 

with a copy to: Pfizer Inc.

     235 East 42nd Street

     New York, New York 10017-5755

     U.S.A.

     Attention: General Counsel

 

     Invoices should be sent to PFIZER as directed by PFIZER.

Notices hereunder shall be deemed to be effective (a) upon receipt if personally
delivered, (b) on the tenth (10th) Business Day following the date of mailing if
sent by registered or certified air mail; (c) on the second (2nd) Business Day
following the date of transmission or delivery to the overnight courier if sent
by facsimile or overnight courier. A Party may change its address listed above
by sending notice to the other Party in accordance with this Section 16.10.

 

  16.11. Third Party Beneficiaries. None of the provisions of this Agreement
shall be for the benefit of or enforceable by any Third Party, including any
creditor of either Party. No Third Party shall obtain any right under any
provision of this Agreement or shall by reason of any such provision make any
claim in respect of any debt, liability or obligation (or otherwise) against
either Party.

 

  16.12. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the Parties hereto and their respective heirs, successors and
permitted assigns.

 

  16.13. Counterparts. This Agreement may be executed in any two or more
counterparts, including by facsimile or by electronic scan copies delivered by
email, each of which, when executed, shall be deemed to be an original and all
of which together shall constitute one and the same document.

 

  16.14. Headings. Headings in this Agreement are included herein for ease of
reference only and shall have no legal effect. References to the parties,
Sections, Schedules, and Exhibits are to the parties, Sections, Schedules and
Exhibits to and of this Agreement unless otherwise specified.

[Signature page follows.]

 

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IN WITNESS WHEREOF the Parties hereto have caused this Agreement to be executed
by their duly authorized officers upon the date set out above.

 

PSIVIDA CORP.     PFIZER INC. For itself and as successor to pSivida Limited    
By:   /s/ Paul Ashton     By:   /s/ Adam Woodrow Name:   Paul Ashton     Name:  
Adam Woodrow Title:   President and CEO     Title:   VP Commercial Development
PSIVIDA US, INC.     Formerly known as pSivida, Inc.     By:   /s/ Paul Ashton  
    Name:   Paul Ashton       Title:   President and CEO       PSIMEDICA LIMITED
    By:   /s/ Paul Ashton       Name:   Paul Ashton       Title:   Director    
 

 

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Schedule 1.65

PFIZER Patent Rights

[*]

 

 

* Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

 

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CONFIDENTIAL TREATMENT REQUESTED

 

Schedule 1.66

PFIZER Program Patent Rights

All right, title and interest to [*].

 

 

* Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

 

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Schedule 1.74

Phase II Activities

[*]

 

 

* Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

 

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CONFIDENTIAL TREATMENT REQUESTED

 

Schedule 1.82

PSIVIDA Patent Rights

[*]

 

 

* Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

 

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CONFIDENTIAL TREATMENT REQUESTED

 

Schedule 1.83

PSIVIDA Program Patent Rights

All right, title and interest to [*].

 

 

* Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

 

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CONFIDENTIAL TREATMENT REQUESTED

 

Schedule 10.1.5

Scheduled PSIVIDA Patent Rights

[*]

pSivida US, Inc., owns all right, title and interest to [*].

 

 

* Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

 

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Exhibit A

FCPA

PFIZER ANTI-BRIBERY AND ANTI-CORRUPTION PRINCIPLES

Pfizer Corporate Policy # 201 (Lawful and Ethical Behavior) provides that Pfizer
colleagues must conduct all Pfizer business in a lawful and ethical manner, in
accordance with applicable laws and regulations, including the U.S. Foreign
Corrupt Practices Act of 1977 (the “FCPA”). The FCPA prohibits making,
promising, or authorizing the making of a corrupt payment or providing anything
of value to a government official to induce that official to make any
governmental act or decision to assist a company in obtaining or retaining
business. The FCPA also prohibits a company or person from using another company
or individual to engage in any of the foregoing activities. As a U.S. company,
Pfizer must comply with the FCPA and could be held liable as a result of acts
committed anywhere in the world by a Pfizer consultant, agent, or
representative, or even by a company acting on behalf of Pfizer (“Business
Associates”). Therefore, Pfizer requires all of its Business Associates to
conduct their Pfizer-related work in accordance with these principles.

Definition of a Government Official

Under Pfizer’s policies, “government official” is broadly interpreted and
includes: (i) any elected or appointed government official (e.g., a member of a
ministry of health); (ii) any employee or person acting for or on behalf of a
government official, agency, or enterprise performing a governmental function;
(iii) any political party, officer, employee, or person acting for or on behalf
of a political party or candidate for public office; or (iv) an employee or
person acting for or on behalf of a public international organization (e.g., the
United Nations). “Government” is meant to include all levels and subdivisions of
governments (i.e., local, regional, or national and administrative, legislative,
or executive). Because this definition of “government official” is so broad, it
is likely that Business Associates will interact with a government official in
the ordinary course of their business on behalf of Pfizer. For example, doctors
employed by state-owned hospitals could be considered “government officials”
under Pfizer’s policies.

FCPA, Anti-Corruption and Anti-Bribery Principles

Business Associates may not directly or indirectly make, promise, or authorize
the making of a corrupt payment or provide anything of value to any government
official to induce that government official to make any governmental act or
decision to help Pfizer obtain or retain business. Business Associates may never
make a payment to or offer a government official any item or benefit, regardless
of value, as an improper inducement for such government official to

 

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CONFIDENTIAL TREATMENT REQUESTED

 

approve, reimburse, prescribe, or purchase a Pfizer product, to influence the
outcome of a clinical trial, or otherwise improperly to benefit Pfizer’s
business activities.

Understand and Follow Local Laws

Business Associates need to understand whether local laws, regulations, or
operating procedures (including requirements imposed by government entities such
as state-owned hospitals or research institutions) impose any limits,
restrictions, or disclosure requirements on compensation, financial support,
donations, or gifts that may be provided to government officials. Business
Associates must take into account and comply with any applicable restrictions in
conducting their Pfizer-related activities. If a Business Associate is uncertain
as to the meaning or applicability of any identified limits, restrictions, or
disclosure requirements with respect to interactions with government officials,
that Business Associate should consult with his or her primary Pfizer contact
before undertaking their activities.

 

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