Exhibit 10.1


 


[
* ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act
of 1934, as amended.


 


COLLABORATION AND LICENSE
AGREEMENT


 


This Collaboration and License Agreement (this “Agreement”) is entered into as of August 27, 2009 (the “Signing Date”), by and between Facet Biotech Corporation, a
Delaware corporation having a principal place of business at 1500 Seaport
Blvd., Redwood City, California 94063 (“Facet”) and
Trubion Pharmaceuticals, Inc., a Delaware corporation having a principal
place of business at 2401 4th Avenue, Suite 1050, Seattle, Washington
98121 (“Trubion”).  Facet and Trubion may each be referred to
herein individually as a “Party” and
collectively as the “Parties”.


 


WHEREAS, Facet and Trubion are engaged in the research
and development of pharmaceutical products;


 


WHEREAS, Trubion has developed a proprietary compound
known as TRU-016 directed at the CD37 Antigen (as defined below) and shall
initially manufacture such compound for the collaboration; and


 


WHEREAS, Facet and Trubion desire to collaborate on
the research, development and commercialization of products directed at the
CD37 Antigen (as defined below) as provided herein.


 


NOW THEREFORE, in consideration of the mutual promises
and covenants set forth below and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Parties hereby
agree as follows:


 


1.                                      DEFINITIONS.


 


1.1          “AAA” has the
meaning set forth in Section 15.3.


 


1.2          “Acquired Party” has the meaning set forth in Section 7.3.


 


1.3          “Affiliate(s)” means, with respect to any Person, any other Person
which controls, is controlled by or is under common control with such Person
for so long as such control exists.  For
the purposes of this definition, the word “control” (including, with
correlative meaning, the terms “controlled by” or “under the common control
with”) means the actual power, either directly or indirectly through one or
more intermediaries, to direct or cause the direction of the management and
policies of such entity, whether by the ownership of more than fifty percent
(50%) of the voting stock of such entity, or by contract or other means.


 


1.4          “Audited Party”
has the meaning set forth in Section 9.9(b).


 


1.5          “Auditing Party”
has the meaning set forth in Section 9.9(b).


 


1.6          “Bankrupt Party”
has the meaning set forth in Section 14.7.


 

















 


1.7          “BLA” means a
Biologic License Application, as defined in the United States Public Health
Service Act, as amended, and applicable regulations promulgated thereunder by
the FDA.


 


1.8          “Bulk API” means
the active pharmaceutical ingredient form of a Product in bulk form.


 


1.9          “Business Day” means a day other than a Saturday, Sunday, or bank or
other public holiday in the State of Washington or California.


 


1.10        “Calendar Quarter” means, for each Calendar Year, the respective periods
of three (3) consecutive calendar months ending on March 31, June 30,
September 30 or December 31.


 


1.11        “Calendar Year” means, for the first calendar year, the period
commencing on the Signing Date and ending on December 31 of the calendar
year during which the Signing Date occurs, and each successive period beginning
on January 1 and ending twelve (12) consecutive calendar months later
on December 31.


 


1.12        “CD37 Antigen” means the human protein antigen that is known as CD37,
and identified as a full length CD37 protein antigen in GenBank, and identified
as of the Signing Date by GenBank Accession Nos. [ * ].


 


1.13        “CD37 Competitor”
means a Third Party who is at the applicable time Developing or
Commercializing a protein therapeutic that [ * ] the [ * ] (or [ * ]) [ * ] the
[ * ] of [ * ] and wherein such protein therapeutic is [ * ] or [ * ] or being
[ * ] to [ * ] through [ * ] to the [ * ] (or [ * ]).


 


1.14        “Change of Control”
means, with respect to a Party: (i) the sale of all or substantially all
of such Party’s assets or business relating to this Agreement; (ii) a
merger, reorganization, or consolidation involving such Party in which the
voting securities of such Party outstanding immediately prior thereto cease to
represent at least fifty percent (50%) of the combined voting power of the
surviving entity immediately after such merger, reorganization, or
consolidation; or (iii) a Person or group of Persons, acting in concert
acquire more than fifty percent (50%) of the voting equity or management
control of such Party.


 


1.15        “CHMP” means the
Committee for Medicinal Products for Human Use that is responsible for
preparing the opinions on all questions concerning medicinal products for human
use for the European Medicines Agency, or any successor thereto.


 


1.16        “Clinical Costs”
means all costs incurred by or on behalf of a Party that are directly
attributable and reasonably allocated to the conduct of Clinical Trials of a
Collaboration Product, or Clinical Trials of a [ * ] that were [ * ] to the [ *
] to the extent that such costs [ * ] the [ * ] for in the [ * ] that was [ * ]
on the [ * ], in the Field in the Territory, whether alone or in combination
with another product or agent. [ * ], Clinical Costs shall consist of the
following: (a) the preparation for and conduct of Clinical Trials (except
for related Manufacturing Costs otherwise included in Development Costs); (b) data
collection and analysis, and report writing; and (c) clinical laboratory
work. Notwithstanding the above, Clinical Costs shall exclude costs


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


2

















 


incurred in connection with Phase IV Clinical
Studies for purposes other than label expansion and Regulatory Approval, and
post-marketing surveillance activities, which shall be considered Sales and
Marketing Costs.  Clinical Costs shall be
calculated in accordance with GAAP, consistently applied with allocations by a
Party calculated in accordance with a methodology [ * ] (which methodology
shall be consistent with GAAP) and based upon [ * ] by [ * ] (i.e., not to [ *
] costs to [ * ] of [ * ] when [ * ] to costs for [ * ] by [ * ]).


 


1.17        “Clinical Trial”
means any human clinical trial of a Product.


 


1.18        “Collaboration”
has the meaning set forth in Section 2.1.


 


1.19        “Collaboration Inventions”
has the meaning set forth in Section 10.1(a).


 


1.20        “Collaboration Product”  means a Product with respect to
which neither Party has exercised the Opt-Out Option, nor has been deemed to
have exercised its Opt-Out Option under Section 14.2(b).


 


1.21        “Combination Product” means any product containing as active ingredients
both (a) a Royalty Product and (b) one or more other pharmaceutically
active compounds or substances.


 


1.22        “Commercialization Budget”
means the budget of Commercialization Costs set forth in the Commercialization
Plan to be incurred by the Parties in connection with the performance of the
Commercialization Plan.


 


1.23        “Commercialization Costs”
means all costs incurred by or on behalf of a Party in performing its
obligations under the then-current Commercialization Plan that are directly
attributable and reasonably allocated to the Commercialization of a
Collaboration Product in the Field in the Territory. [ * ], Commercialization
Costs shall consist of: (a) Manufacturing Costs for a Collaboration
Product for commercial sale; (b) Sales and Marketing Costs; (c) costs
associated with Medical Education Activities incurred after the First
Commercial Sale of the applicable Collaboration Product, and other ancillary
services to the foregoing; (d) Distribution Costs; (e) subject to Section 8.7,
payment to a Third Party under a Future Third Party License incurred after the
First Commercial Sale of the applicable Collaboration Product; (f) Trademark
Costs incurred after the First Commercial Sale of the applicable Collaboration
Product; (g) patent costs described in Section 10.3(b)(i); and (h) patient
assistance and indigent/expanded access programs with respect to a
Collaboration Product.  Commercialization
Costs shall specifically exclude general corporate and administrative overhead
of each Party.  In the calculation of
Commercialization Costs, a Party’s FTE effort shall be calculated at the FTE
Rate. Commercialization Costs shall be calculated in accordance with GAAP,
consistently applied with allocations by a Party calculated in accordance with
a methodology [ * ] (which methodology shall be consistent with GAAP) and based
upon [ * ] by [ * ] (i.e., not to [ * ] costs to [ * ] of [ * ] when [ * ] to [
* ] costs for [ * ] of [ * ]).


 


1.24        “Commercialization Plan”
means the written plan for the Commercialization of a Collaboration Product
described in Section 5.2.


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


3

















 


1.25        “Commercialize”
means to promote, market, distribute, sell (and offer for sale or contract to
sell) or provide product support for a Product, including by way of example: (a) detailing
and other promotional activities in support of a Product; (b) advertising
and public relations in support of a Product, including market research,
development and distribution of selling, advertising and promotional materials,
field literature, direct-to-consumer advertising campaigns, media/journal
advertising, and exhibiting at seminars and conventions; (c) developing
reimbursement programs and information and data specifically intended for
national accounts, managed care organizations, governmental agencies (e.g.,
federal, state and local), and other group purchasing organizations, including
pull-through activities; (d) conducting Medical Education Activities and
journal advertising; and (e) conducting Phase IV Clinical Studies for
purposes other than label expansion and Regulatory Approval, and post-marketing
surveillance activities. For clarity, “Commercializing”
and “Commercialization” have a correlative
meaning.


 


1.26        “Commercial Supply
Agreement” has the meaning set forth in Section 6.5.


 


1.27        “Committee”  means the JSC, the JDC, the JCC, the JFC, the JPC, or any
other committee established by the JSC in accordance with the terms of this
Agreement.


 


1.28        “Competing Program” has the meaning set forth in Section 8.5.


 


1.29        “Confidential Information”
of a Party means all Know-How or other information, including, without
limitation, proprietary information and materials (whether or not patentable)
regarding such Party’s technology, products, business information or objectives,
that is communicated in any way or form by such Party to the other Party
pursuant to this Agreement, and that is identified as confidential at the time
of disclosure; provided  that,
information not identified as confidential by the disclosing Party shall be
deemed to be Confidential Information of the disclosing Party if the receiving
Party knows, or should have had a reasonable expectation, that such information
communicated by the disclosing Party is confidential or proprietary information
of the disclosing Party.  Notwithstanding
the foregoing, all Know-How and information [ * ] by [ * ] in the [ * ] of [ *
] and [ * ] under [ * ] shall be deemed Confidential Information of [ * ].  All confidential information disclosed by
either Party pursuant to that certain Mutual Non-Disclosure Agreement between
the Parties dated December 22, 2008 (the “Non-Disclosure
Agreement”) that is related to the subject matter of this Agreement
shall be deemed to be such Party’s Confidential Information hereunder.  The terms and conditions of this Agreement
shall be considered Confidential Information of both Parties.


 


1.30        “Consolidated Party” and “Consolidation Party” shall
have the respective meanings set forth in Section 9.9(e).


 


1.31        “Control” or “Controlled”
means, with respect
to any item of Know-How, Patent Rights, or other intellectual property right,
the possession (whether by ownership or license, other than a license granted
by one Party to the other pursuant to this Agreement) by a Party of the ability
to grant to the other Party access, a license or a sublicense (as applicable),
or to extend other rights as provided in this Agreement, to such intellectual
property right, without violating the terms of any agreement or other
arrangements with any Third Party existing at the 


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


4

















 


time such Party would be first required to
grant any such access, license or sublicense under this Agreement.


 


1.32        “Co-Commercialization” means the joint Commercialization of a Collaboration
Product in the Field, in the Territory by both Parties under the terms of this
Agreement.  “Co-Commercialize,” when
used as a verb, means to engage in such Co-Commercialization.


 


1.33        “Co-Development” means the joint Development of a Collaboration Product
in the Field, in the Territory by both Parties under the terms of this
Agreement.  “Co-Develop,” when
used as a verb, means to engage in such Co-Development.


 


1.34        “Detail” or “Detailing”  means an interactive presentation (whether face-to-face or
via live videoconferencing, including over the Internet) by a Party’s sales
representative, to one or several medical professional(s) having
prescribing authority in the applicable territory in the Field, as well as to
other mutually agreed individuals or entities that have the ability to impact
or influence prescribing decisions in the applicable territory in the Field,
where the principal objective of such presentation is to emphasize the features
and function of such Collaboration Product in the Field in compliance with
applicable Laws.  A Detail does not
include a reminder or sample drop or a non-interactive webcast or similar
presentation.


 


1.35        “Development” or “Develop”
means research,
pre-clinical and clinical drug development activities pertaining to a Product, including,
without limitation, toxicology, pharmacology, test method development,
stability testing, process development, formulation development, delivery
system development, quality assurance and quality control development,
statistical analysis, clinical studies (including pre- and post-approval
studies), regulatory affairs, pharmacovigilance and Regulatory Approval and
clinical study regulatory activities (including regulatory activities directed
to obtaining pricing and reimbursement approvals). Development shall include
development and regulatory activities for additional indications for a Product
after Regulatory Approval of such Product, but shall exclude Phase IV Clinical
Studies for purposes other than label expansion and Regulatory Approval and post-marketing
surveillance activities.


 


1.36        “Development Budget”
means the budget for Development Costs set forth in the Development Plan which
shall include a detailed budget for the first year thereof, which budget shall
be allocated between the Parties on a [ * ] basis, and a forecast for the
subsequent [ * ] years.


 


1.37        “Development Costs”  means the costs incurred by or on behalf of a Party in
performing its obligations under the then-current Development Plan, that are
directly attributable and reasonably allocated to the Development of a
Collaboration Product, or Clinical Trials of a [ * ] that were [ * ] to the [ *
] to the extent that such costs [ * ] the [ * ] for in the [ * ] that was [ * ]
on the [ * ], in the Field in the Territory, and that are directed to achieving
or maintaining Regulatory Approval of such Collaboration Product or Royalty
Product.  The Development Costs shall
include amounts, without mark-up, that a Party pays to Third Parties involved
in such Development of a Collaboration Product, and all internal costs incurred
by a Party in connection with such Development of such Collaboration Product. [
* ], Development Costs include the following: (a) preclinical costs, such
as toxicology and the creation of product assays such as those for
pharmacokinetic and immunogenicity testing; (b) formulation development,
process 


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


5

















 


development, test method development,
delivery system development, stability testing and statistical analysis; (c) Clinical
Costs; (d) costs associated with Medical Education Activities incurred
prior to the First Commercial Sale of the applicable Collaboration Product, and
other ancillary services to the foregoing, (e) Manufacturing Costs for a
Collaboration Product for use in preclinical and clinical activities including
the manufacture, purchase or packaging of comparators or placebo for use in
Clinical Trials of a Collaboration Product (with the manufacturing costs for
comparators or placebo to be determined in the same manner as Manufacturing
Costs are determined for any Collaboration Product), as well as the direct
costs and expenses of disposal of drugs and other supplies used in such
clinical studies; (f) subject to Section 8.7, payment to a Third
Party under a Future Third Party License incurred prior to the First Commercial
Sale of the applicable Collaboration Product; (g) losses incurred in
connection with claims set forth in Section 13.5, to the extent provided
therein; (h) development of the Manufacturing process for a Collaboration
Product (including with respect to any excipients or adjuvants included in such
Collaboration Product) and related scale-up, manufacturing process validation,
manufacturing process improvements, and qualification and validation of Third
Party contract manufacturers; (i) regulatory expenses relating to
Development activities for the purpose of obtaining Regulatory Approval for an
indication for a Collaboration Product; (j) patent costs described in Section 10.3(b)(i);
(k) Trademark Costs incurred prior to the First Commercial Sale of the
applicable Collaboration Product; and (l) other out-of pocket
Collaboration Product Development expenses that meet the criteria set forth
above in this Section 1.37 including, without limitation institutional and
advisory review boards, investigator meetings, quality of life studies,
epidemiology and outcomes research. For clarity, scale-up and validation costs
as described in clause (h) above will be considered Development Costs
until commercial Collaboration Product that is eligible for sale has been
manufactured. Development Costs shall specifically exclude general corporate
and administrative overhead of each Party. In the calculation of Development
Costs, a Party’s FTE effort shall be calculated at the FTE Rate.  Development Costs shall be calculated in
accordance with GAAP, consistently applied with allocations by a Party
calculated in accordance with a methodology [ * ] (which methodology shall be
consistent with GAAP) and based upon [ * ] by [ * ] (i.e., not to [ * ] costs
to [ * ] of [ * ] when [ * ] to [ * ] costs for [ * ] of [ * ]).


 


1.38        “Development Plan” means the written plan for the Development of a
Collaboration Product described in Section 3.3.


 


1.39        “Diligent Efforts” means, with respect to the efforts
to be expended by any Party with respect to any objective, those [ * ], [ * ],
[ * ] efforts to accomplish such objective as such Party would [ * ] use to
accomplish a [ * ] under [ * ]. With respect to any objective relating to the
Development and/or Commercialization of a Product by any Party, “Diligent
Efforts” means those efforts and resources [ * ] by [ * ] with respect to a [ *
] or [ * ] by [ * ] which [ * ] is [ * ] in its [ * ] or [ * ] and is of [ * ]
in the [ * ] taking into account [ * ], [ * ], [ * ], the [ * ] of all [ * ] in
the [ * ], the [ * ] and other [ * ] of the [ * ], the [ * ] of [ * ] given the
[ * ] involved, the [ * ] of the [ * ] including the [ * ] to [ * ] of [ * ] or
other [ * ], [ * ] and other relevant factors. 
Diligent Efforts shall be determined on a [ * ] and [ * ] basis for a
particular [ * ], and it is anticipated that the [ * ] of [ * ] shall be [ * ]
for [ * ], and shall [ * ], reflecting [ * ] in the [ * ] of the [ * ] and the
[ * ] involved.  Diligent Efforts requires
a Party to: (a) [ * ] for such [ * ] to specific [ * ] who are [ * ] for
the [ * ] and [ * ] such [ * ] on an [ * ] basis, (b) [ * ] and [ * ] to [
* ] and [ * ] for [ * ] such [ * ], and (c) [ * ] and [ * ] and [ * ] to [
* ] with respect to such [ * ].


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


6

















 


1.40        “Distribution Costs”
means the costs, excluding general corporate and administrative overhead,
incurred by or on behalf of a Party that are directly attributable and
reasonably allocated to the distribution of a Collaboration Product in the
Field in the Territory for Commercialization purposes, including, unless
otherwise determined by the JSC: (a) handling and transportation to
fulfill orders with respect to a Collaboration Product in the Territory to the
extent such costs are not included in one or more items listed in Section 1.92
(a)-(d); (b) customer services, including order entry, billing and
adjustments, inquiry and credit and collection with respect to a Collaboration
Product in the Territory; and (c) costs of storage and distribution of
Collaboration Products for sale in the Territory.  Distribution Costs shall be calculated in
accordance with GAAP, consistently applied with allocations by a Party
calculated in accordance with a methodology [ * ] (which methodology shall be
consistent with GAAP) and based upon [ * ] by [ * ] (i.e., not to [ * ] costs
to [ * ] of a [ * ] when [ * ] to [ * ] costs for [ * ] of [ * ]).


 


1.41        “Dollars” or “$”
means the legal tender of the United States.


 


1.42        “Drug Approval Application”
means a NDA, BLA, or any MAA.


 


1.43        “End-of-Phase 2 Meeting”
means a meeting with FDA, the purpose of which is to determine the safety of
initiating a first Phase III Clinical Study, to evaluate the Phase III Clinical
Study plan and protocols and the adequacy of current studies and plans to
assess pediatric safety and effectiveness, and to identify any additional
information necessary to support a Drug Approval Application for the uses under
investigation, as further defined in 21 C.F.R. 312.47(b)(1), as amended from
time to time, or the corresponding foreign equivalent.


 


1.44        “European Union”
or “EU” means all of the European Union
member states as of the applicable time during the Term.


 


1.45        “Executive Officers” means the Chief Executive Officer of Facet (or an
executive officer of Facet designated by such Chief Executive Officer) and the
Chief Executive Officer of Trubion (or an executive officer of Trubion
designated by such Chief Executive Officer).


 


1.46        “Existing Inventory” has the meaning set forth in Section 7.5(b)(vi).


 


1.47        “Facet Applied Know-How”
means the Facet Know-How applied, [ * ] the [ * ] or the [ * ] of [ * ] of [ *
] by [ * ] under Section [ * ] or by [ * ] under Section [ * ], as
applicable, or [ * ] the [ * ] or the [ * ] of [ * ], as applicable, to the
extent [ * ] of Facet Know-How was [ * ] in the [ * ] of the [ * ] or the [ *
], as applicable, to the Development, Manufacture, use, importation or
Commercialization of (a) in the case of an Opt-Out, a Royalty Product in
the Field that, [ * ] the [ * ], is in [ * ] or is being [ * ] in the [ * ], or
(b) in the case of a termination of this Agreement by [ * ] under Section [
* ] or by [ * ] under Section [ * ], a Product in the Field that, [ * ]
the [ * ] of [ * ], is in [ * ] or is being [ * ] in the [ * ].


 


1.48        “Facet Applied Patent
Rights” means the Facet Patent Rights that claim [ * ], [ * ] or [ *
], or that would otherwise be infringed, absent a license, by [ * ], [ * ] or [
* ] (a) in the case of an Opt-Out, a Royalty Product in the Field that, [
* ] the [ * ], is in [ * ] or is being [ * ] in the [ * ], as such Royalty
Product [ * ] of such [ * ] or, for a Royalty Product in [ * ], is [ * ] as [ *



 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


7

















 


] in the [ * ] of the [ * ], or (b) in
the case of a termination of this Agreement by [ * ] under Section [ * ],
a Product that, [ * ] the [ * ] of [ * ], is in [ * ] or is being [ * ] in the
[ * ], as such Product [ * ] of such [ * ], or, for a Product in [ * ], is [ *
] as [ * ] in the [ * ] of the [ * ] of [ * ].


 


1.49        “Facet Applied
Technology” means the
Facet Applied Know-How and Facet Applied Patent Rights.


 


1.50        “Facet Collaboration Patent Rights” means  Facet Patent Rights that (a) claim a
Collaboration Invention generated solely by Facet, or its Affiliate(s),
including through their employees, agents or independent contractors, and (b) are
not Facet Product Patent Rights.


 


1.51        “Facet Know-How” means any Know-How that (a) is a [ * ] by Facet,
or its Affiliate(s), including through their employees, agents or independent
contractors, or is otherwise [ * ] by Facet and/or its Affiliate(s); and (b) is
[ * ] for the Development, Manufacture, use, importation or Commercialization
of Products in the Field. For clarity, the use of “Affiliate” in this
definition shall exclude any Third Party that becomes an Affiliate due to a
Third Party’s acquisition of Facet, except as provided in Section 16.1.


 


1.52        “Facet Patent Right” means a Patent Right that (a) claims a [ * ] by
Facet, or its Affiliate(s), including through their employees, agents or
independent contractors, or is Facet’s [ * ] in a [ * ] or is otherwise [ * ]
by Facet and/or its Affiliates; and (b) claims the [ * ] or [ * ] one or
more Products in the Field or that would otherwise be infringed, absent a
license, by the [ * ] or [ * ] any Products in the Field.  For
clarity, the use of “Affiliate” in this definition shall exclude any Third
Party that becomes an Affiliate due to a Third Party’s acquisition of Facet,
except as provided in Section 16.1.


 


1.53        “Facet Product Patent
Rights” means those Facet Patent Rights that claim the [ * ], [ * ]
or [ * ] one or more Products in the Field, and do not claim the [ * ], [ * ]
or [ * ] of any [ * ] that is [ * ].


 


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


 


1.55        “FD&C Act” means the United States Federal Food, Drug, and
Cosmetic Act (21 U.S.C. § 301 et seq.), as amended, and the rules and
regulations promulgated thereunder.


 


1.56        “Field” means
all human and animal applications.


 


1.57        “First Commercial Sale” means, with respect to a given Product in the Field
and any country in the Territory, the first sale or transfer for value of such
Product under this Agreement by either Party or its Affiliates or permitted
sublicensees to a Third Party for end use or consumption in such country
following receipt of Regulatory Approval from the appropriate Regulatory
Authority permitting commercial sale of such Product in such country.  First Commercial Sale excludes any sale or
other distribution for use in a Clinical Trial or other Development activities.


 


1.58        “FTE” means the
equivalent of a full-time individual’s work, currently [ * ] hours per year for
a twelve (12) month period, on Development or Commercialization of
Collaboration 


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


8

















 


Products. In the case that any full time
personnel of a Party works partially on the Development or Commercialization of
Collaboration Products and partially on other work outside this Agreement in a
given fiscal year, then the full-time equivalent to be attributed to such
individual’s work hereunder shall be equal to the percentage of such individual’s
total work time in such fiscal year that such individual spent working on
activities related to the Development or Commercialization of Collaboration
Products.  In the event that any
part-time personnel of a Party works on the Development or Commercialization of
Collaboration Products, the full time equivalent to be attributed to such work
shall reflect appropriate adjustment for such personnel’s reduced total work
time relative to full time personnel. FTE efforts shall not include general
corporate and administrative overhead. Each Party shall track FTEs using its
standard practice and normal systems and methodologies as approved by the JFC.


 


1.59        “FTE Rate” means the partially burdened FTE personnel cost incurred by a Party,
which for purposes of this Agreement shall initially be set at an annual rate
of [ * ] per FTE. Commencing with the Calendar Year [ * ], the FTE Rate shall
be [ * ] by [ * ].


 


1.60        “Future Third Party License” has the meaning set forth in Section 8.7.


 


1.61        “GAAP” means
United States generally accepted accounting principles, consistently applied,
in accordance with the rules and guidance of the United States Securities
and Exchange Commission.


 


1.62        “Good Clinical Practices”
or “GCP” means the then-current good
clinical practice standards, practices and procedures promulgated or endorsed
by FDA as set forth in the guidelines entitled “Guidance for Industry E6 Good
Clinical Practice: Consolidated Guidance,” including related regulatory
requirements imposed by FDA, and comparable regulatory standards, practices and
procedures in jurisdictions outside the United States, in each case as they may
be updated from time to time.


 


1.63        “Good Laboratory Practices”
or “GLP” means the then-current good
laboratory practice standards promulgated or endorsed by FDA as defined in 21
C.F.R. Part 58, and comparable regulatory standards in jurisdictions
outside the United States, in each case as they may be updated from time to
time.


 


1.64        “Good Manufacturing
Practices” or “GMP” means the
then-current good manufacturing practices required by FDA, as set forth in the
FD&C Act and the regulations promulgated thereunder, for the manufacture
and testing of pharmaceutical materials, and comparable Laws applicable to the
manufacture and testing of pharmaceutical materials in jurisdictions outside
the United States, including without limitation the guideline promulgated by
the International Conference on Harmonization designated ICH Q7A, entitled “Q7A
Good Manufacturing Practice Guidance for Active Pharmaceutical Ingredients” and
the regulations promulgated thereunder, in each case as they may be updated
from time to time.


 


1.65        “Governmental Authority”
means any multi-national, federal, state, local, municipal or other government
authority of any nature (including any governmental division, subdivision,
department, agency, bureau, branch, office, commission, council, court or other
tribunal).


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


9

















 


1.66        “ICH” has
the meaning set forth in Section 4.7.


 


1.67        “IND” means an Investigational New Drug
Application, as defined in the FD&C Act, that is required to be filed with
FDA before beginning clinical testing of a Product in human subjects, or an
equivalent foreign filing.


 


1.68        “Initial Development Plan”
has the meaning set forth in Section 3.3(b).


 


1.69        “Joint Commercialization Committee” or “JCC” has the meaning set forth in Section 2.1(a).


 


1.70        “Joint Development Committee” or “JDC”  has the meaning set forth in Section 2.1(a).


 


1.71        “Joint Finance Committee” or “JFC”  has the meaning set forth in Section 2.1(a).


 


1.72        “Joint Invention”
has the meaning set forth in Section 10.1(c).


 


1.73        “Joint Patent Committee”
or “JPC” has the meaning set forth in Section 2.1(a).


 


1.74        “Joint Patent Right” means a Patent Right that claims a Joint
Invention.


 


1.75        “Joint Steering Committee” or
“JSC”  has the meaning set forth in Section 2.1(a).


 


1.76        “Know-How” means any data, results, and information of any type whatsoever, in any
tangible or intangible form, including, without limitation, know-how, trade
secrets, practices, techniques, methods, processes, inventions, developments,
specifications, formulations, formulae, materials or compositions of matter of
any type or kind (patentable or otherwise), software, algorithms, marketing
reports, clinical and non-clinical study reports, regulatory submission
summaries and regulatory submission documents, expertise, technology, test data
including pharmacological, biological, chemical, biochemical, toxicological,
and clinical test data, analytical and quality control data, stability data,
studies and procedures.


 


1.77        “Laws” means all
relevant laws, statutes, rules, regulations, guidelines, ordinances and other
pronouncements having the effect of law of any federal, national,
multinational, state, provincial, county, city or other political subdivision,
domestic or foreign.


 


1.78        “Lead Commercialization
Party” has the meaning set forth in Section 5.1.


 


1.79        “Lead Development Party”
has the meaning set forth in Section 3.2.


 


1.80        “Lead Manufacturing Party”
has the meaning set forth in Section 6.1.


 


1.81        “Lead Regulatory Party”
has the meaning set forth in Section 4.1.


 


1.82        “Major European Countries”
means [ * ], and the [ * ].


 






[
* ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act
of 1934, as amended.


 


10
















 


1.83        “Major Market Countries”
means the United States, [ * ] Major European Countries, and [ * ].


 


1.84        “Manufacturing” or “Manufacture” means activities
directed to producing, manufacturing, processing, filling, finishing,
packaging, labeling, quality assurance testing and release, shipping and
storage of a Product.


 


1.85        “Manufacturing Costs”
means the costs incurred by or on behalf of a Party that are directly
attributable and reasonably allocated to the Manufacturing of Collaboration
Products. [ * ], Manufacturing Costs shall consist of (a) if the
Collaboration Product is manufactured by a Third Party manufacturer, (i) a
Party’s [ * ] cost (expressed in the case of [ * ] on a [ * ] basis) of
manufacturing, processing, testing, filling, finishing, packaging and labeling
such Collaboration Product, and (ii) any costs incurred by such Party for
[ * ] and [ * ] in accordance with the Development Plan or the
Commercialization Plan, as applicable; or (b) if the Collaboration Product
is manufactured by a Party, the [ * ] cost of manufacturing, processing,
testing, filling, finishing, packaging and labeling such Collaboration Product,
including without limitation raw materials, direct labor and benefits, and the
[ * ] of [ * ].  For clarity, the [ * ] cost referenced under subsection (b) above
shall be calculated on a [ * ] basis (with reasonable [ * ] and [ * ]) with the
[ * ] to [ * ] representing the [ * ] of [ * ] or [ * ] of [ * ] or [ * ] as a
[ * ] of the [ * ] of [ * ] or [ * ], including those of [ * ], that [ * ] in [
* ] during a [ * ].  Manufacturing Costs
shall be calculated in accordance with GAAP, consistently applied with
allocations by a Party calculated in accordance with a methodology [ * ] (which
methodology shall be consistent with GAAP) and based upon [ * ] by [ * ] (i.e.,
not to [ * ] costs to [ * ] of [ * ] when compared to [ * ] costs for [ * ] of
[ * ].


 


1.86        “Marketing Authorization
Application” or “MAA” means an
application for Regulatory Approval (but excluding Pricing Approval) in any particular
jurisdiction other than the United States.


 


1.87        “Marks” means
trade marks, service marks, trade names, service names, logos, slogans, tag
lines, trade dress, and Internet domain names and addresses.


 


1.88        “Medical Education Activities” means activities designed to ensure or
improve appropriate medical use of, conduct medical education of, or further
research regarding, a Collaboration Product sold or to be sold in the
Territory, including by way of example: (a) activities of medical
sales liaisons; (b) grants to support continuing medical education,
symposia, or research related to a Collaboration Product in the Territory
(excluding Phase IV Clinical Studies, which, with respect to a Collaboration
Product, shall be considered Sales and Marketing Costs if conducted for a
purpose other than label expansion or Regulatory Approval and otherwise shall
be considered Development Costs); (c) development, publication and
dissemination of publications relating to a Collaboration Product in the
Territory, as well as medical information services provided in response to
inquiries communicated via sales representatives or received by letter, phone
call or email; and (d) conducting advisory board meetings or other
consultant programs, the purpose of which is to obtain advice and feedback
related to the Development or Commercialization of a Collaboration Product in
the Territory.


 


1.89        “Milestone Payment”
has the meaning set forth in Section 9.3.


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


11

















 


1.90        “Multi-Specific Product” means a SMIP or other protein
therapeutic that binds to the CD37 Antigen (or a portion thereof) and binds to
one or more additional biological targets that are not part of the CD37
Antigen, in each case [ * ] of [ * ] and wherein such SMIP or protein
therapeutic is [ * ] or [ * ] or [ * ] to [ * ] a [ * ] through [ * ] the [ * ]
(or a [ * ]) and a [ * ] through [ * ] the [ * ].


 


1.91        “NDA” means a New Drug Application, as defined in the
FD&C Act and the regulations promulgated thereunder by the FDA.


 


1.92        “Net Sales”
means all amounts invoiced on sales of Royalty Products by a Party, its
Affiliates or permitted sublicensees to Third Parties, less the following
deductions actually allowed or taken by such Third Parties and not otherwise
recovered by or reimbursed to the seller whose sales are being measured:


 


(a)           trade, quantity or volume, and cash discounts,
including amounts paid or credited to customers under distribution and channel
services agreements;


 


(b)           credits, rebates and chargebacks (including those to
managed-care entities and government agencies), allowances for bad debt not to
exceed [ * ] and allowances to customers on account of rejection or returns or
retroactive price reductions;


 


(c)           freight, postage and transportation charges, including
handling and insurance to the extent
added to the sales price and set forth separately as such in the total amount
invoiced; and


 


(d)           sales (such as VAT or its equivalent) and excise
taxes, other consumption taxes and customs duties to the extent added to the sales price and set forth separately as such
in the total amount invoiced.


 


Sales between a Party and its Affiliates or permitted
sublicensees for resale shall be excluded from the computation of Net
Sales.  In any other sale of Royalty
Products that is made on other than arms’-length terms, the amounts invoiced
shall be deemed, for purposes of this definition, to be no less than the amount
that would be invoiced in a substantially contemporaneous, arms’-length
transaction.


 


In the event a Royalty Product is sold in a country as
part of a Combination Product, for purposes of determining payments due a Party
under this Agreement, Net Sales of Combination Products shall be calculated by
multiplying the Net Sales of the Combination Product by the fraction A over
A+B, in which A is the Gross Selling Price of the Royalty Product when such
Royalty Product is sold in the relevant country in substantial quantities where
the Royalty Product is the sole therapeutically active ingredient during the
applicable accounting period in which the sales of the Royalty Product were
made, and B is the Gross Selling Price of the other therapeutically active
ingredients contained in the Combination Product sold separately in the
relevant country in substantial quantities during the accounting period in
question.  All Gross Selling Prices of
the therapeutically active ingredients of the Royalty Product and Combination
Products shall be calculated as the average Gross Selling Price of the
therapeutically active ingredients in such products in the relevant country
during the applicable accounting period for which the Net Sales are being
calculated.  In the event that no
separate sale of either the Royalty 


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


12

















 


Product as the sole therapeutically active ingredient
or the other therapeutically active ingredients of the Combination Product are
made in the relevant country during the accounting period in which the sale was
made or if the Gross Selling Price for a particular therapeutically active
ingredient cannot be determined for an accounting period, Net Sales allocable
to the Royalty Product and Combination Product shall be determined by mutual
agreement reached in good faith by the Parties prior to the end of the
accounting period in question based on an equitable method of determining same
that takes into account the relative contribution of each therapeutically
active ingredient in the Combination Product, and relative value to the end
user of each therapeutically active ingredient. 
For purposes of this definition, “Gross Selling Price”
means the gross price at which an active ingredient is sold to a Third Party,
before discounts, deductions, credits, taxes or allowances.


 


1.93        “Non-Clinical Studies” means all non-human studies of Products.


 


1.94        “Non-Opt-Out Party” means the Party which receives an Opt-Out
Notice pursuant to Section 7.2,
7.3 or 8.5 or provides a written notice of continuation to the breaching Party
pursuant to Section 14.2(b).


 


1.95        “Opt-Out Effective Date” has the meaning set forth in Section 7.4.


 


1.96        “Opt-Out Notice” has the meaning set forth in Section 7.1.


 


1.97        “Opt-Out Option” has the meaning set forth in Section 7.1.


 


1.98        “Opt-Out Party” means the Party which has exercised its Opt-Out
Option pursuant to Sections 7.2, 7.3 or 8.5 or which is deemed to have
exercised its Opt-Out Option pursuant to Section 14.2(b).


 


1.99        “Opt-Out Product” has the meaning set forth in Section 7.2.


 


1.100      “Patent Rights” means any and all (a) patents; (b) pending
patent applications, including, without limitation, all provisional
applications, substitutions, continuations, continuations-in-part, divisions,
renewals, and all patents granted thereon, (c) all patents-of-addition,
reissues, reexaminations and extensions or restorations by existing or future
extension or restoration mechanisms, including, without limitation,
supplementary protection certificates or the equivalent thereof, (d) inventor’s
certificates, and (e) all United States and foreign counterparts of any of
the foregoing.


 


1.101      “Person” means an individual, sole proprietorship, partnership, limited
partnership, limited liability partnership, corporation, limited liability
company, business trust, joint stock company, trust, incorporated association,
joint venture or similar entity or organization, including a government or
political subdivision, department or agency of a government.


 


1.102      “Pharmacovigilance
Agreement” has the meaning set forth in Section 4.12.


 


1.103      “Phase I Clinical Study” means a study of a Product in the Field in human
subjects with the endpoint of determining initial tolerance, safety or
pharmacokinetic information 


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


13

















 


in single dose, single ascending dose,
multiple dose and/or multiple ascending dose regimens, which is prospectively
designed to generate sufficient data (if successful) to commence a Phase II
Clinical Study of such Product, as further defined in 21 C.F.R. 312.21(a), as
amended from time to time, or the corresponding foreign regulations.


 


1.104      “Phase II Clinical Study” means a study of a Product in the Field in human
patients to determine initial efficacy and dose range and/or regimen finding
before embarking on Phase III Clinical Studies, as further defined in 21
C.F.R. 312.21(b), as amended from time to time, or the corresponding foreign
regulations.


 


1.105      “Phase III Clinical Study” means a pivotal study (whether or not denominated a “Phase III”
clinical study under applicable regulations) in the Field in human patients
with a defined dose or a set of defined doses of a Product designed to
ascertain efficacy and safety of such Product for the purpose of enabling the
preparation and submission of Drug Approval Applications to the competent
Regulatory Authorities in a country of the Territory, as further defined in 21
C.F.R. 312.21(c), as amended from time to time, or the corresponding foreign
regulations.


 


1.106      “Phase IV Clinical Study” means a product support clinical trial
of a Product that is commenced after receipt of Regulatory Approval in the
country where such trial is conducted. A Phase IV Clinical Study may include
epidemiological studies, modeling and pharmacoeconomic studies, “post-marketing
surveillance trials” and investigator-sponsored Clinical Trials studying a
Product that are approved by the JCC and that otherwise fit the foregoing
definition.


 


1.107      “Pre-BLA Meeting” means a meeting with FDA, the primary
purpose of which is to uncover any major unresolved problems, to identify those
studies that the sponsor is relying on as adequate and well-controlled to
establish the drug’s effectiveness, to identify the status of ongoing or needed
studies adequate to assess pediatric safety and effectiveness, to acquaint FDA
reviewers with the general information to be submitted in the marketing
application (including technical information), to discuss appropriate methods
for statistical analysis of the data, and to discuss the best approach to the
presentation and formatting of data in the marketing application, as further
defined in 21 C.F.R. 312.47(b)(2), as amended from time to time, or the
corresponding foreign equivalent.


 


1.108      “Pricing Approval”
means such approval, agreement, determination or governmental decision
establishing prices for the Products that can be charged to consumers and shall
be reimbursed by Governmental Authorities in regulatory jurisdictions where the
Governmental Authorities or Regulatory Authorities approve or determine pricing
of pharmaceutical products for reimbursement or otherwise.


 


1.109      “Product” means any SMIP or other protein therapeutic that binds to the CD37
Antigen (or a [ * ]) [ * ] of [ * ] and wherein such SMIP or protein
therapeutic is [ * ] or [ * ] or [ * ] to [ * ] its [ * ] through [ * ] the [ *
] (or a [ * ]), including without limitation TRU-016 [ * ] any [ * ] Products.


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


14

















 


1.110      “Product Labeling”
means (a) the full prescribing information for a Collaboration Product
approved in the Field by the applicable Regulatory Authority, and (b) all
labels and other written, printed or graphic information included in or placed
upon any container, wrapper or package insert used with or for the
Collaboration Product in the Field.


 


1.111      “Product Profit” means (a) gross sales of
Collaboration Products (i.e. all amounts invoiced on sales of Collaboration
Products by a Party or its Affiliates), less (b) Commercialization Costs,
and (c) deductions for items listed in 1.92(a)-(d) to the extent
actually allowed or taken by the Lead Commercialization Party and not otherwise
recovered by or reimbursed to the Lead Commercialization Party.  For sake of clarity, Product Profit shall be
determined prior to application of any income taxes.


 


1.112      “Promotion” means the marketing and advertising of a
Collaboration Product in the relevant Field in the applicable territory in
accordance with the relevant Commercialization Plan, including medical
education, information and communication, market development and medical
liaison activities, but not including Detailing.  “Promote,” when used as a verb, means
to engage in such Promotion.


 


1.113      “Promotional Materials”
means all sales representative training materials and all written, printed,
graphic, electronic, audio or video presentations of information, including,
without limitation, journal advertisements, sales visual aids, formulary
binders, reprints, direct mail, direct-to-consumer advertising, internet
postings, broadcast advertisements and sales reminder aides (for example, note
pads, pens and other such items) intended for use or used by or on behalf of
the Parties or their Affiliates or permitted sublicensees in connection with
any Promotion of a Collaboration Product, in the Field, in the Territory (all
to the extent applicable for the Commercialization in the Territory), but excluding
Product Labeling.


 


1.114      “Pursuit Notice”
has the meaning set forth in Section 7.5(b).


 


1.115      “Recall” has the
meaning set forth in Section 5.10.


 


1.116      “Regulatory Approval” means the technical, medical and scientific licenses,
registrations, authorizations and approvals (including, without limitation,
approvals of Drug Approval Applications, supplements and amendments, pre- and
post- approvals, Pricing Approvals, and labeling approvals) of any national,
supra-national, regional, state or local regulatory agency, department, bureau,
commission, council or other governmental entity, necessary for the commercial
Manufacture, distribution, marketing, promotion, offer for sale, use, import,
export and sale of Product(s) in a regulatory jurisdiction in the Field,
in the Territory.  For the sake of
clarity, Regulatory Approval shall [ * ] have been [ * ] in a country [ * ] the
[ * ] until any applicable [ * ] have [ * ] in such country.  Regulatory Approval of a Product shall [ * ]
have been [ * ] in the [ * ] upon [ * ] of [ * ] for such Product in the [ * ].


 


1.117      “Regulatory Authorit(y/ies)” means any national (e.g.,
FDA), supra-national (e.g., the
European Commission, the Council of the European Union, or the European Agency
for the Evaluation of Medicinal Products); regional, state or local regulatory
agency, department, bureau, commission, council or other governmental entity in
each country of the Territory that 


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


15

















 


governs the Regulatory Approval for a Product
in the Field in such applicable regulatory jurisdiction.


 


1.118      “Regulatory Exclusivity” means any exclusive marketing rights or data
exclusivity rights conferred by any Regulatory Authority with respect to a
Product other than patents, including, without limitation, rights conferred in
the United States under the Hatch-Waxman Act or the FDA Modernization Act of
1997 (including pediatric exclusivity), or rights similar thereto outside the
United States.


 


1.119      “Regulatory Materials”
means regulatory applications, submissions, notifications, registrations,
Regulatory Approvals or other submissions made to or with a Regulatory
Authority that are necessary or reasonably desirable in order to Develop,
Manufacture, and Commercialize the Products in a particular country, territory
or possession. Regulatory Materials include, without limitation, INDs, Drug
Approval Applications, and amendments and supplements for any of the foregoing,
and applications for Pricing Approvals.


 


1.120      “Royalty Period” means the period of time beginning on the date of the
First Commercial Sale of a Royalty Product, in the Field, in a particular
country in the Territory and, on a Royalty Product-by-Royalty Product and
country-by-country basis, extending until the later of (i) the date on which
the last Valid Claim included within the Trubion Patent Rights and the Facet
Applied Patent Rights ceases to be a Valid Claim, which Valid Claim would be
infringed by [ * ] or [ * ] such Royalty Product in such country, (ii) the
expiration of any Regulatory Exclusivity granted with respect to such Royalty
Product in such country and (iii) the [ * ] year anniversary of the First
Commercial Sale of such Royalty Product in such country.


 


1.121      “Royalty Product”  means a Product with respect to
which a Party has exercised or is deemed to have exercised the Opt-Out Option
and the other Party has provided or is deemed to have provided a Pursuit Notice
in accordance with Section 7.5(b) or 14.2(b).


 


1.122      “Sales and Marketing Costs”  means the direct costs that are directly attributable and
reasonably allocated to the sales and marketing of a Collaboration Product in
Field in the Territory.  [ * ], Sales and
Marketing Costs shall consist of: (a) activities directed to the
advertising and marketing of a Collaboration Product in the Territory; (b) professional
education (to the extent not performed by sales representatives), including
launch meetings; (c) costs of advertising, public relations and medical
education agencies with respect to a Collaboration Product in the Territory; (d) peer-to-peer
activities with respect to a Collaboration Product in the Territory, such as
continuing medical education, grand rounds, and lunch and dinner meetings; (e) speaker
programs with respect to a Collaboration Product in the Territory, including
the training of such speakers; (f) grants to support continuing medical
education or research (excluding costs associated with Clinical Trials other
than Phase IV Clinical Studies for a Collaboration Product for purposes other
than label expansion and Regulatory Approval); (g) development,
publication and dissemination of publications with respect to a Collaboration
Product in the Territory; (h) developing, obtaining and providing training
with respect to a Collaboration Product in the Territory, as well as training
packages, promotional literature, promotional materials and other selling
materials with respect to a Collaboration Product in the Territory; (i) developing
and performing market research with respect to a Collaboration Product in the
Territory; (j) conducting symposia and opinion leader development
activities with respect 


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


16

















 


to a Collaboration Product in the Territory; (k) developing
reimbursement programs with respect to a Collaboration Product in the
Territory; (l) developing information and data specifically intended for
national accounts, managed care organizations and group purchasing
organizations with respect to a Collaboration Product in the Territory; (m) losses
incurred in connection with claims set forth in Section 13.5, to the
extent provided therein; (n) costs of transporting, housing and
maintaining sales representatives for training with respect to a Collaboration
Product in the Territory; (o) conducting Phase IV Clinical Studies for
Collaboration Products for purposes other than label expansion and Regulatory
Approval; and (p) administration, operation and maintenance of the sales
force that promotes a Collaboration Product in the Territory, sales bulletins
and other communications, sales meetings, specialty sales forces, consultants,
call reporting and other monitoring/tracking costs, district and regional sales
management, home office personnel who support the sales force.  Sales and Marketing Costs shall include costs
of such activities that are undertaken at any time during the Term (including
prior to the initial Regulatory Approval of a Collaboration Product in the
Territory).  Sales and Marketing Costs
shall be calculated in accordance with GAAP, consistently applied with
allocations by a Party calculated in accordance with a methodology [ * ] (which
methodology shall be consistent with GAAP) and based upon [ * ] by [ * ] (i.e.,
not to [ * ] costs to [ * ] of a [ * ] when compared to [ * ] costs for [ * ]
of [ * ]).


 


1.123      “SMIP(s)” or “small modular immuno-pharmaceutical(s)”
means a single chain polypeptide that (i) is [ * ] having [ * ] and [ * ]
or a [ * ] of such [ * ], (ii) binds with specificity to a target antigen,
(iii) has a binding domain, and (iv) may have an effector domain
which may or may not have effector function, including, but not limited to, any
[ * ] or [ * ] thereof, any [ * ] or [ * ] thereof, any [ * ] or [ * ] thereof,
and any other [ * ] or [ * ].


 


1.124      “Subcommittee”
has the meaning set forth in Section 2.7(a).


 


1.125      “Term” has the
meaning set forth in Section 14.1.


 


1.126      “Territory” means worldwide.


 


1.127      “Third Part(y/ies)” means any Person(s) other than Facet and its
Affiliates or Trubion and its Affiliates.


 


1.128      “Trademark Costs”
mean the fees and expenses paid to outside counsel and other Third Parties,
direct costs of in-house counsel and filing and maintenance expenses, in each
case incurred in connection with the establishment and maintenance of rights
under Marks applicable to Collaboration Product in the Territory, including
costs of trademark filing and registration fees, actions to enforce or maintain
a trademark and other trademark proceedings. 
Trademark Costs shall be calculated in accordance with GAAP,
consistently applied with allocations by a Party calculated in accordance with
a methodology [ * ] (which methodology shall be consistent with GAAP) and based
upon [ * ] by [ * ] (i.e., not to [ * ] costs of [ * ] to a [ * ] when compared
to [ * ] costs for [ * ] of [ * ]).


 


1.129      “Transition Assistance”
shall have the meaning set forth in Section 7.5(b)(iii).


 


1.130      “TRU-016” means the humanized SMIP directed against the CD37
Antigen that is currently designated by Trubion as “TRU-016,” as
further described on Exhibit A.


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


17

















 


1.131      “Trubion Know-How” means any Know-How Controlled as of the Signing Date
or thereafter during the Term by Trubion and/or its Affiliate(s) and [ * ]
for the Development, Manufacture, use, importation or Commercialization of
Products in the Field. For clarity, the use of “Affiliate” in this definition
shall exclude any Third Party that becomes an Affiliate due to a Third Party’s
acquisition of Trubion, except as provided in Section 16.1.


 


1.132      “Trubion Core Patent Rights” means those Trubion Patent Rights
that are not Trubion Product Patent Rights. 
As of the
Signing Date, the Patent Rights listed in Schedule 1.132 are Trubion
Core Patent Rights.


 


1.133      “Trubion Patent Rights” means Patent Rights that are Controlled as of the
Signing Date or thereafter during the Term by Trubion and/or its Affiliate(s) (including
without limitation Trubion’s interest in Joint Patent Rights) and that claim [
* ] or [ * ] one or more Products in the Field or that would otherwise be infringed,
absent a license, by the [ * ] or [ * ] any Products in the Field. For clarity,
the use of “Affiliate” in this definition shall exclude any Third Party that
becomes an Affiliate due to a Third Party’s acquisition of Trubion except as
provided in Section 16.1.


 


1.134      “Trubion Product Patent Rights” means those Trubion Patent Rights that
claim the composition of matter, manufacture or use of one or more Products in
the Field, and do not claim the composition of matter, manufacture or use of
any other product that is not a Product. 
As of the Signing Date, the Patent Rights listed in Schedule 1.134
are Trubion Product Patent Rights.


 


1.135      “United States”
or “U.S.” means the United States of
America and its possessions and territories.


 


1.136      “Valid Claim” means a claim that (a) in the case of any
unexpired patent, such claim shall not have been dedicated to the public,
disclaimed, nor held invalid or unenforceable by a court or government agency
of competent jurisdiction in an unappealed or unappealable decision, or (b) in
the case of any patent application, such claim (i) shall not have been
cancelled, withdrawn or abandoned, without being refiled in another application, in the
applicable jurisdiction, (ii) shall not have been finally rejected by an
administrative agency or other governmental action from which no appeal can be
taken, and (iii) shall not have been pending (including in any [ * ]) for
more than [ * ] from its filing date.  If
a claim of a patent application that ceased to be a Valid Claim under (b) due
to the passage of time later issues as part of a patent described within (a) then it
shall again be considered to be a Valid Claim effective as of the issuance of
such patent.


 


2.                                      COLLABORATION MANAGEMENT.


 


2.1          General. The Parties desire and intend to
establish a collaboration with respect to the Development, Manufacture and
Commercialization of Collaboration Products in the Field in the Territory on an
exclusive basis under the terms of this Agreement (“Collaboration”).
Unless and until a Party exercises or is deemed to have exercised its Opt-Out
Option in respect of one or more Collaboration Products, each Party shall
participate in the clinical development of TRU-016 in the Field, in the
Territory and in the preclinical and clinical development of Collaboration 


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


18

















 


Products other than TRU-016 in the Field, in
the Territory pursuant to an agreed-upon Development Plan with respect to each
such Collaboration Product, as further described below. The Parties shall share
equally the costs incurred in connection with the performance of each
Development Plan, as set forth in, and in accordance with, Article 3.  The Parties shall Co-Commercialize such
Collaboration Products in the Field and share profits equally, subject to the
payment obligations in Article 9 and the other terms of this Agreement. If
either Party elects to exercise its Opt-Out Option for a Collaboration Product
as provided for under Article 7 or Section 8.5, or is deemed to have
exercised its Opt-Out Option under Section 14.2(b), and if the other Party
so elects, such other Party shall continue and be solely responsible for the
Development, Manufacturing and Commercialization of such Product at its cost
and expense pursuant to Section 7.5(b), and shall have the exclusive right
to Develop, Manufacture and Commercialize such Product as a Royalty Product in
the Field in the Territory, subject to payments with respect to such Royalty
Product pursuant to Article 9 and the other terms of this Agreement.


 


(a)           Role of Committees. 
Subject to Section 2.1(b) and the other terms and conditions
of this Agreement, the Parties shall establish: five (5) specialized joint
committees consisting of: (A) one to set the goals and strategy and
approve the budgets for the Development, Manufacture and Commercialization of
Collaboration Products and to oversee the other committees (such committee, the
“Joint Steering Committee” or “JSC”); (B) one to focus on
Development, Manufacturing (for Development purposes) and Regulatory Approval
of Collaboration Products and other regulatory matters (such committee, the “Joint Development Committee” or “JDC”); (C) one to focus on
Commercialization of Collaboration Products (such committee, the “Joint Commercialization
Committee” or “JCC”); (D) one to focus on financial matters (such committee,
the “Joint Finance Committee” or “JFC”); and (E) one to focus on intellectual property
matters (such committee, the “Joint Patent
Committee” or “JPC”).  Each Committee shall have the responsibilities and
authority allocated to it in this Article 2 and elsewhere in this
Agreement.


 


(b)           Limitations on the Authority of
Committees. 
Notwithstanding the Committee structure established pursuant to Section 2.1(a) to
oversee the Collaboration, each Party shall retain the rights, powers and
discretion granted to it under this Agreement, and no such rights, powers, or
discretion shall be delegated to or vested in a Committee unless such
delegation or vesting of rights is expressly provided for in this Agreement or
the Parties expressly so agree in writing.  Without limiting the
generality of the foregoing, no Committee shall have any authority or
jurisdiction to: (i) amend, modify, or waive compliance with this
Agreement, any of which shall require mutual written agreement of the Parties; (ii) interpret
this Agreement, or determine whether or not a Party has met its diligence or
other obligations under the Agreement or whether or not a breach of this
Agreement has occurred; (iii) make any decision on any matter that this
Agreement expressly states is an option or election to be made by a Party; (iv) make
any retroactive updates, amendments and modifications to, or waivers of
provisions of, a Development Plan or Commercialization Plan, any of which shall
require the mutual agreement of the Parties; or (v) such other matters as
are reserved to the consent, approval, agreement or other decision-making
authority of one or both Parties in this Agreement and that are not required by
this Agreement to be considered by a Committee prior to the exercise of such
consent, approval or other decision-making authority.  Notwithstanding the foregoing, neither Party
shall be restricted from bringing before any appropriate Committee for 


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


19

















 


discussion any matter relating to the
Collaboration that it believes warrants discussion between the Parties through
the Committees, provided that the
consideration of any such matter by any Committee shall not infringe or limit
the exercise of a Party’s right of consent or approval or other decision-making
authority granted to it by this Agreement, nor shall any such consideration, as
contemplated by this sentence, subject any such right of consent or approval or
other decision-making authority to any dispute resolution mechanism provided
for in Section 2.7 or Article 15 or elsewhere in this Agreement.


 


(c)           Representatives. 
Each Party shall designate representatives to each Committee as provided
for in Sections 2.2-2.6 below. Each representative may serve on more than one
Committee as appropriate in view of the individual’s expertise.


 


2.2          Joint Steering Committee.


 


(a)           Purpose; Formation.  Within [ * ] after the Signing Date, the Parties shall establish a Joint
Steering Committee that shall monitor and coordinate communication regarding
the Parties’ performance under this Agreement to Develop, obtain Regulatory
Approval for, Manufacture, and Commercialize Collaboration Products in the
Field in the Territory. The JSC shall
have only the powers assigned expressly to it in this Section 2.2 and
elsewhere in this Agreement, and the JSC shall not have any power to amend,
modify or waive compliance with this Agreement.


 


(b)           Composition.  Each Party shall initially appoint three (3) representatives
to the JSC, each of whom will be an officer or employee of such Party and will
have sufficient seniority within the applicable Party to make decisions arising
within the scope of the JSC’s responsibilities. The JSC may change its size from time to time by mutual consent of
its members. Each Party may replace its JSC representatives at any time upon
written notice to the other Party. The JSC may invite non-members (including
consultants and advisors of a Party who are under an obligation of
confidentiality consistent with this Agreement) to participate in the
discussions and meetings of the JSC, provided that
such participants shall have no voting authority at the JSC. The JSC shall have
a chairperson. Each Party shall have the right, on an alternating Calendar Year
basis, to select from among its JSC representatives a representative to serve
as the chairperson of the JSC during such Calendar Year.  Such Party shall have the right during such
Calendar Year to replace the chairperson of the JSC with one of its other JSC
representatives. The initial chairperson shall be designated by [ * ]. The role
of the chairperson shall be to convene and preside at meetings of the JSC, to
prepare agendas (with due input from the other Party’s representatives),
circulate agendas and to ensure the preparation of meeting minutes, but the
chairperson shall have no additional powers or rights beyond those held by the
other JSC representatives.


 


(c)           Specific
Responsibilities.  In addition to its overall responsibility for
monitoring and providing a forum to discuss and coordinate the Parties’
activities under this Agreement, the JSC shall in particular:


 


(i)            oversee the collaborative
activities of the Parties under this Agreement, create and review the overall strategy for
Developing and seeking Regulatory


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


20
















 


Approval for,
Manufacturing, and Commercializing Collaboration Products, in the Field in the
Territory;


 


(ii)                                receive and discuss reports from the JDC,
the JCC, the JFC, and the JPC, and provide guidance thereto, approve the
Development Plan(s) (including the Development Budget(s)) and the
Commercialization Plan(s) (including the Commercialization Budget(s)), and any
amendments thereto;


 


(iii)                            establish such additional joint
subcommittees as it deems necessary to achieve the objectives and intent of
this Agreement;


 


(iv)                               attempt to resolve issues presented to it
by, and disputes within, the JDC, the JCC, the JFC, and the JPC, or any other
committee;


 


(v)                                   review and
approve decisions to terminate Development on any Collaboration Product,
including with respect to specific indications;


 


(vi)                               discuss and
decide whether to Develop Collaboration Products (other than TRU-016) and for
which indications;


 


(vii)                           select the Lead
Development Party, Lead Regulatory Party, Lead Manufacture Party, and Lead
Commercialization Party, and review and approve any changes thereto;


 


(viii)                       review and
approve the manufacturing plan for [ * ] and [ * ] or [ * ] with associated
budget, resource allocation and regulatory plans;


 


(ix)                              review and
approve (A) inclusion of any costs not specifically enumerated in the
definitions of Development Costs or Commercialization Costs or any component
thereof, and (B) any costs incurred by a Party that exceed that the portion of
the applicable Development Budgets or Commercialization Budgets allocated to
such Party with respect to the relevant Calendar Quarter by more than [ * ];


 


(x)                                  review and approve any changes to the
specific responsibilities of the JDC, the JCC, the JFC, and the JPC;


 


(xi)                              discuss and make determinations regarding
material safety issues with respect to the Collaboration Product; and


 


(xii)                          perform such other functions as
appropriate to further the purposes of this Agreement as allocated to it in
writing by the Parties.


 


(d)                                  Meetings.  Unless the
Parties mutually agree in writing to a different frequency, the JSC shall hold at least [ * ]
meetings per year (at least [ * ] of which shall be held in person) on such dates and at such
times each year as it elects.  The
meetings of the JSC shall alternate between the Parties’ business locations or
as otherwise decided by the JSC. 
Meetings of the JSC shall be effective only if at least two (2) representatives
of each Party are present or participating. Each Party shall bear the expense
of its respective members’ participation in JSC


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


21

















 


meetings. The chairperson
of the JSC shall be responsible for preparing and issuing minutes of each such
meeting within [ * ] thereafter. Such minutes shall not be finalized until each
Party reviews and confirms the accuracy of such minutes in writing; provided that any minutes shall be deemed approved unless a
member of the JSC objects to the accuracy of such minutes within [ * ] after
the circulation of the minutes by the chairperson of the JSC.


 


(e)                                  Decision-Making. 
The JSC shall act by consensus. The representatives from each Party will
have, collectively, one (1) vote on behalf of that Party. If the JSC cannot
reach consensus on an issue that
comes before the JSC and over which the JSC has oversight, then such matter
shall be resolved in accordance with Section 2.7.


 


2.3                               Joint Development Committee.


 


(a)                                  Formation and
Composition.  Within [ * ]
after the Signing Date, the Parties shall establish a Joint Development Committee that shall oversee the Development and
Manufacture (for Development) of Collaboration Products in Field in the
Territory in accordance with the Development Plans for such Collaboration Products and to coordinate
the Development and related Manufacturing activities of the Parties with respect
to such Collaboration Products. Each Party shall initially appoint three (3) representatives
to the JDC, each of whom will be an officer or employee of such Party and will
have knowledge and expertise in the Development or Manufacture of products similar
to the Collaboration Products and
sufficient seniority within the applicable Party to make decisions arising
within the scope of the JDC’s responsibilities. The JDC may change its size
from time to time by mutual consent of its members. Each Party may replace its
JDC representatives at any time upon written notice to the other Party. The JDC
may invite non-members (including consultants and advisors of a Party who are
under an obligation of confidentiality consistent with this Agreement) to
participate in the discussions and meetings of the JDC, provided
that such participants shall have no voting authority at the JDC. The JDC shall
have a chairperson.  Each Party shall have the right, on an
alternating Calendar Year basis, to select from among its JDC representatives a
representative to serve as the chairperson of the JDC during such Calendar
Year.  Such Party shall have the right
during such Calendar Year to replace the chairperson of the JDC with one of its
other JDC representatives. The initial chairperson shall be designated by [ * ]. The role of
the chairperson shall be to convene and preside at meetings of the JDC, to
prepare agendas (with
due input from the other Party’s representatives), circulate agendas and to
ensure the preparation of meeting minutes, but the chairperson shall have no
additional powers or rights beyond those held by the other JDC representatives.


 


(b)                                  Specific
Responsibilities.  In addition
to its general responsibilities set forth in Section 2.3(a), the JDC shall in
particular:


 


(i)                                    discuss, prepare and approve for
submission to the JSC annual and interim amendments to the Development Plan and
the Development Budget for each Collaboration Product;


 


(ii)                                oversee the implementation of the
Development Plan for each Collaboration Product;


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


22

















 


(iii)                            implement the overall strategy for
Development and Manufacturing (for Development) of Collaboration Products,
create, implement and review the design and objectives of all Clinical Trials
and Non-Clinical Studies conducted under each Development Plan;


 


(iv)                               decide whether and when to initiate or
discontinue, and oversee the conduct of, any Clinical Trial and any
Non-Clinical Study under each Development Plan;


 


(v)                                   allocate budgeted resources and determine
priorities for each Clinical Trial and Non-Clinical Study under each
Development Plan;


 


(vi)                               establish procedures for each Party to
access records, data and Know-How and related financial information of the
other Party with respect to work performed under the Development Plan; and


 


(vii)                           perform such other functions as may be
appropriate to further the purposes of this Agreement, as directed by the JSC.


 


(c)                                  Meetings. 
Unless the Parties mutually agree in writing to a different frequency,
the JDC shall hold at least [ * ] meetings per year (at least [ * ] of which
shall be held in person) on such dates at such times each year as it
elects.  The meetings of the JDC shall
alternate between the Parties’ business locations or as otherwise decided by
the JDC.  Meetings of the JDC shall be
effective only if at least two (2) representatives
of each Party are present or participating. Each Party shall bear the expense
of its respective members’ participation in JDC meetings. The chairperson of
the JDC shall be responsible for preparing and issuing minutes of each such
meeting within [ * ] days thereafter. Such minutes shall not be finalized until
each Party reviews and confirms the accuracy of such minutes in writing; provided that any minutes shall be deemed approved unless a
member of the JDC objects to the accuracy of such minutes within [ * ] days
after the circulation of the minutes by the chairperson of the JDC.


 


(d)                                  Decision-Making.  The JDC shall act by consensus. The
representatives from each Party will have, collectively, one (1) vote on behalf
of that Party. If the JDC cannot reach consensus
on an issue that comes before the JDC and over which the JDC has oversight,
then such matter shall be resolved in accordance with Section 2.7.


 


2.4                               Joint Commercialization
Committee.


 


(a)                                  Formation and Composition. 
At such time as determined by the JSC, but in any event not later than [
* ] following the [ * ] of the [ * ], the Parties shall establish a Joint
Commercialization Committee that shall oversee the Commercialization and
Manufacturing (for Commercialization) of Collaboration Products. Each Party
shall initially appoint three (3) representatives to the JCC, each of whom will
be an officer or employee of such Party and will have knowledge and expertise
in the Commercialization and Manufacturing of products similar to the
Collaboration Products and sufficient seniority within the applicable Party to
make decisions arising with the scope of the JCC’s responsibilities. The JCC
may change its size from time to time by mutual consent of its members. Each
Party may replace its JCC representatives at any time upon written notice to
the other Party. The JCC may invite non-members (including consultants and
advisors of a Party who are under an obligation of


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


23

















 


confidentiality
consistent with this Agreement) to participate in the discussions and meetings
of the JCC, provided that such participants shall
have no voting authority at the JCC. The JCC shall have a chairperson. Each
Party shall have the right, on an alternating Calendar Year basis, to select
from among its JCC representatives a representative to serve as the chairperson
of the JCC during such Calendar Year. 
Such Party shall have the right during such Calendar Year to replace the
chairperson of the JCC with one of its other JCC representatives. The role of
the chairperson shall be to convene and preside at meetings of the JCC, to
prepare agendas (with due input from the other Party’s representatives),
circulate agendas and to ensure the preparation of meeting minutes, but the
chairperson shall have no additional powers or rights beyond those held by the
other JCC representatives.


 


(b)                                  Specific
Responsibilities.  In addition to its general responsibilities
set forth in Section 2.4(a), the JCC shall in particular:


 


(i)                                    discuss, prepare and approve for
submission to the JSC the Commercialization Plan and the Commercialization
Budget for each Collaboration Product, and any amendment thereto;


 


(ii)                                allocate, in a manner consistent with the
Commercialization Plan, primary responsibility as between the Parties for tasks
relating to Commercialization of Collaboration Products on a Product-by-Product
basis;


 


(iii)                            oversee the implementation of the
Commercialization Plan for each Collaboration Product;


 


(iv)                               review and discuss the Commercialization
activities of each Party with respect to each Collaboration Product in the
Territory;


 


(v)                                   review and update sales forecasts for
Collaboration Products at least quarterly;


 


(vi)                               review strategies for obtaining,
maintaining, defending and enforcing trademark protection for Collaboration
Products;


 


(vii)                           review, discuss, coordinate and approve
the Parties’ medical affairs activities (the responsibility for which may be
delegated by the JCC to a subcommittee of the JCC that is comprised of medical
representatives of the Parties); and


 


(viii)                       perform such other functions as may be
appropriate to further the purposes of this Agreement, as directed by the JSC.


 


(c)                                  Meetings.  Unless the
Parties mutually agree in writing to a different frequency, the JCC shall hold at least [ * ]
meetings per year (at least [ * ] of which shall be held in person) on such
dates at such times each year as it elects. 
The meetings of the JCC shall alternate between the Parties’ business
locations or as otherwise decided by the JCC. 
Meetings of the JCC shall be effective only if at least two (2) representatives
of each Party are present or participating. Each Party shall bear the expense
of its respective members’ participation in JCC meetings. The chairperson of
the JCC shall be responsible for preparing and issuing minutes of


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


24

















 


each such meeting within
[ * ] thereafter. Such minutes shall not be finalized until each Party reviews
and confirms the accuracy of such minutes in writing; provided
that any minutes shall be deemed approved unless a member of the JCC objects to
the accuracy of such minutes within [ * ] after the circulation of the minutes
by the chairperson of the JCC.


 


(d)                                  Decision-Making. The JCC shall act by consensus. The
representatives from each Party will have, collectively, one (1) vote on behalf
of that Party. If the JCC cannot reach consensus on an issue that comes before
the JCC and over which the JCC has oversight, then such matter shall be
resolved in accordance with Section 2.7.


 


2.5                               Joint Finance Committee.


 


(a)                                  Formation and Purpose. 
Within [ * ] after the Signing Date, the Parties shall create a Joint
Finance Committee that shall operate under the direction of the JSC to provide
services to and consult with the JDC and the JCC in order to address the
financial, budgetary and accounting issues that arise in connection with the
Development Plans and Commercialization Plans. 
Additionally, the JFC will lead the economic analyses to help drive
decisions regarding the collaborative activities of the Parties under this
Agreement, and lead the reporting and reconciliation processes outlined in Section
3.7 and Section 9.4. The JFC shall operate by the procedures set forth in this Section
2.5 and in Section 2.7.


 


(b)                                  Membership of the JFC. 
Each Party shall appoint two (2) representatives to the JFC each of
whom will be an officer or employee of such Party and will have appropriate
knowledge and expertise and sufficient seniority within the applicable Party to
make decisions arising within the scope of the JFC’s responsibilities.  Each Party may replace any or all of its JFC
representatives at any time upon prior written notice to the other Party.  Such representatives will include individuals
with expertise and responsibilities in the areas of accounting, cost
allocation, budgeting and financial reporting.


 


(c)                                  Specific Responsibility of the
JFC.  In addition to its general responsibilities
set forth in Section 2.5(a), the JFC shall, in particular:


 


(i)                                    coordinate with the JSC and other
Committees as applicable regarding the preparation and submission of the
Development Budget and the Commercialization Budget to the JSC for review and
approval;


 


(ii)                                develop specific schedules, procedures
and methods to implement the financial reporting and reconciliation provisions
of this Agreement, such schedules, procedures and methods to implement the
provisions of Section 3.7 and Section 9.4 shall, unless otherwise
determined by the JSC, be developed within [ * ] after the Signing Date;


 


(iii)                            review and update financial forecasts,
which shall be updated at least quarterly for the remainder of each Calendar
Year unless otherwise determined by the JSC, to ensure that Development Costs
and Commercialization Costs incurred or projected to be incurred by each Party
are within the approved Development Budget and Commercialization Budget,
respectively;


 


(iv)                               coordinate and agree upon the
calculations, allocations and reports


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


25

















 


by each Party of
Development Costs, Commercialization Costs, and Product Profit; and


 


(v)                                   perform such other functions as
appropriate to further the purposes of this Agreement as determined by the JSC.


 


(d)                                  Meetings of the JFC. 
The JFC shall meet as frequently as members of the JSC determine is
required (but in no event, less frequently than [ * ] times every Calendar
Year), on such dates and at such times as agreed to by the Parties, with all
scheduled in-person meetings to alternate between a Trubion site and a Facet
site as designated by the respective Party prior to such meeting, or at other
locations as determined by the JFC.  All
meetings shall be held in person or by audio or videoconference.  Additional representatives or consultants,
who are under an obligation of confidentiality consistent with this Agreement,
may be invited to attend JFC meetings from time to time by agreement of the
JFC.  Each Party shall be responsible for
its own expenses for participating in the JFC. 
Meetings of the JFC shall be effective only if at least one
representative of each Party is present or participating.


 


(e)                                  Decision-Making. 
The JFC shall act by consensus. The representatives from each Party will
have, collectively, one (1) vote on behalf of that Party. If the JFC
cannot reach consensus on an issue that comes before the JFC and over which the
JFC has oversight, then such matter shall be resolved in accordance with Section 2.7.


 


2.6                               Joint Patent Committee.


 


(a)                                  Formation and Purpose.  Within [ * ] after the Signing Date, the Parties shall
create a Joint Patent Committee.  The
purposes of the JPC shall be to prepare, file and prosecute the Trubion Product
Patent Rights, Facet Product Patent Rights and Joint Patent Rights, as described
in and subject to the terms of Article 10. 
The JPC shall operate by the procedures set forth in this Section 2.6
and Section 2.7.


 


(b)                                  Membership of the JPC. 
Each Party shall appoint one (1) representative to the JPC who will
be an officer or employee of such Party and will have appropriate knowledge and
expertise and sufficient seniority within such Party to make decisions arising
within the scope of the JPC’s responsibilities. 
Each Party may replace its representative at any time upon prior written
notice to the other Party.


 


(c)                                  Specific Responsibilities of the
JPC.  In addition to its general responsibilities set forth
in Section 2.6(a), the JPC shall, in particular be responsible for:


 


(i)                                    managing the filing and prosecution of
Trubion Product Patent Rights, Facet Product Patent Rights and Joint Patent
Rights as described in and subject to the terms of Article 10;


 


(ii)                                making decisions with respect to certain
claims in the Trubion Core Patent Rights as described in and subject to the
terms of Article 10;


 


(iii)                            keeping updated lists of the Trubion Core
Patent Rights, Trubion Product Patent Rights, Facet Product Patent Rights and
Facet Patent Rights that would be [ * ] in


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


26

















 


the event of [ * ] or [ *
] of [ * ] that reflect newly filed patent applications and claim amendments];


 


(iv)                               reviewing invention disclosures in
accordance with the terms of Article 10;


 


(v)                                   reviewing licensing and enforcement
activities and conflicts involving intellectual property rights, and making
appropriate recommendations to the JSC regarding such matters;


 


(vi)                               providing advice, periodic updates and
reports to the JSC regarding intellectual property matters;


 


(vii)                           using reasonable and customary efforts to
monitor and timely analyze freedom to operate and other intellectual property
related issues relating to Collaboration Products;


 


(viii)                       using good faith efforts to keep the
Parties informed as to material developments with respect to the prosecution
of, and any adversarial proceedings involving intellectual property rights, to
the extent a Party’s representative on the JPC concludes that such prosecution
or proceeding directly affects a Collaboration Product; and


 


(ix)                              performing such other functions as
appropriate to further the purposes of this Agreement as determined by the JSC.


 


(d)                                  Meetings of the JPC. 
The JPC shall communicate on such dates and at such times as agreed upon
by its members but in no event, less frequently than once every other Calendar
Quarter.  Meetings may be held in person
or by audio or video conference.  The JPC
may permit visitors who are under an obligation of confidentiality consistent
with this Agreement to attend meetings of the JPC.  Each Party shall be responsible for its own
expenses for participating in the JPC. 
Meetings of the JPC shall be effective only if the representative of
each Party is present or participating.


 


(e)                                  Decisions. 
Subject to Article 10 below, any approval, determination or other
action of the JPC shall require agreement of both members of the JPC. In the
event that a decision cannot be reached by the JPC, then the matter shall be
referred to the respective senior management of the in-house legal department
of each Party.  In the event such senior
management is unable to resolve the matter, then the matter will be resolved
pursuant to Section 2.7 and Article 15.


 


2.7                               Resolution of Committee Disputes.


 


(a)                                  Within Subcommittees.  All decisions within the JDC, the JCC, the JFC, the
JPC, and any other Committee created by the JSC (each, a “Subcommittee”) shall be made by consensus,
and if a dispute arises which cannot be resolved within such Subcommittee, then
the representatives of either Party may cause such matter to be referred to the
JSC for resolution as provided in Section 2.7(b).


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


27

















 


(b)                                  Within The JSC.  All decisions within the JSC (whether originating
there, or referred to it by a Subcommittee) shall be made by consensus. If a
matter is referred by a Subcommittee to the JSC, the JSC shall use good faith
efforts to resolve promptly such matter. If the JSC is unable to reach
consensus on any issue, either Party may elect to submit such issue to the
Parties’ Executive Officers in accordance with Section 2.7(c).


 


(c)                                  Referral To Executive
Officers.  If a Party makes an election under Section
2.7(b) to refer a matter to the Executive Officers, the JSC shall submit in
writing the respective positions of the Parties to the Executive Officers. Such
Executive Officers shall use good faith efforts to resolve promptly such
matter, which good faith efforts
shall include at least one [ * ] meeting between such Executive Officers within
[ * ] after the JSC’s submission of such matter to them. If the Executive
Officers are unable to reach consensus on any such matter within [ * ] after
the referral of such matter to the Executive Officers, then the dispute shall
be resolved through arbitration as provided for (a) under Section 15.3(c), with
respect to disputes regarding: (i) the [ * ], (ii) [ * ] and related [ * ] and
[ * ] thereto, (iii) [ * ] and related [ * ] and [ * ] thereto, (iv) whether
and when to [ * ] a [ * ] (which may be a [ * ], [ * ] or a [ * ]) for the [ *
] of a [ * ], (v) whether and when to [ * ] a [ * ], (vi) determination of the
identity of a [ * ], [ * ], [ * ], and [ * ], and (v) the appointment of a
Party to [ * ] the [ * ] or [ * ] thereto;  or (b) under Section
15.3(b), with respect to all other disputes.


 


2.8                               Discontinuation of
Participation on a Committee.  Either Party may, in its sole discretion,
terminate its participation on a Committee by providing to the other Party
written notice of its intention to no longer participate in such Committee,
which may be made upon [ * ] written notice at any time during the Co-Development
or Co-Commercialization period. In the event a Party has provided written
notice as referred to in this Section 2.8, the Party electing to terminate
its participation shall have no further rights with respect to the decisions
otherwise subject to determination by the Committee and the notified Party
shall control any decisions that were previously the responsibility of the
Committee.


 


3.                                      DEVELOPMENT.


 


3.1                               Overview. 
As stated in greater detail in this Article 3, the Parties will
Co-Develop each Collaboration Product in the Field throughout the Territory
pursuant to a Development Plan and will share equally the associated
Development Costs.


 


3.2                               Development Responsibilities.  The JSC shall select the lead development party (“Lead Development Party”)
for each Clinical Trial of a Collaboration
Product, provided that Trubion shall be the
initial Lead Development Party for all Clinical Trials and Non-Clinical Studies of TRU-016 that are on-going as of the Signing Date. The
JSC shall, in allocating Lead Development Party responsibilities between the
Parties: (a) endeavor to take advantage of the respective resources,
capabilities and expertise of Facet and Trubion; (b) endeavor to (i) maintain,
to the extent reasonably practical and appropriate, continuity in functions and
commitments of personnel and physical resources of the Parties, (ii) avoid
duplication of efforts by the Parties and (iii) foster efficient use by the
Parties of resources and personnel, consistent with this Agreement and the
Development Plan and Development Budget; and (c) act in the best interests of
the Collaboration. The Lead Development Party shall be responsible for
implementing the Development Plan with respect to the applicable Clinical
Trial, provided that


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


28

















 


the other Party shall perform all tasks with
respect to such Clinical Trial that are allocated to it pursuant to the
Development Plan and may direct and conduct certain additional Development
activities not specifically allocated to either Party pursuant to the
Development Plan, if the JDC agrees upon such allocation.  The Lead Development Party shall not have the
right to change the Development Plan or to make changes to the Clinical
Trial protocol or the statistical analysis plan or make changes that affect study design or Clinical Trial strategy (any of
the foregoing actions falling under the authority of the JDC or JSC, as
applicable).


 


3.3                               Development Plan.


 


(a)                                  Scope. The Development of Collaboration Products
shall be governed by development plans (each, a “Development
Plan”), which, unless otherwise determined by the JSC, shall be
Collaboration Product-specific, indication-specific, multi-year and world-wide
(i.e., it shall cover the Development of each such Collaboration Product for
use in the U.S., Japan, each of the Major European Countries and the EU as a
whole, and the remaining countries in the Territory). Each Development Plan
may, as determined by the JSC: (i) provide a planned Development program that
is designed to generate the non-clinical, clinical and regulatory information
required for submitting Drug Approval Applications and to obtain Regulatory
Approvals for the relevant indications in the Territory; (ii) indicate the
initial indications that will be pursued with respect to such Collaboration
Product; (iii) address the target product profile for each Collaboration
Product for each indication, as periodically updated; (iv) specify all
material Development activities per indication to be performed for such
Collaboration Product for such year, including without limitation, Clinical
Trial protocols, additional preclinical tests (including any and all
carcinogenicity and toxicology studies), Collaboration Product manufacturing
plan including production and supply, and stability studies, enrollment
numbers, submission dates and estimated dates of meetings with FDA for such
Collaboration Product; (v) set forth the target timelines for each indication
with respect to such Development activities; (vi) include a forecast of
the amount of Bulk API or finished Collaboration Product needed for such
Development activities; and (vii) assign tasks to each Party with respect
to the performance of the Development activities contemplated by such
Development Plan.  Each Development Plan
shall include a Development Budget. Each Development Plan and updates thereof
shall be prepared by the Party appointed by the JDC, with input from the
other Party’s key clinical development personnel, and submitted pursuant to the procedures set forth in
clause (c) below to the JDC for review and submission to the JSC for approval.


 


(b)                                  Initial Development
Plan.  A draft of the initial Development Plan, together with
associated initial Development Budget, for TRU-016 is attached hereto as Exhibit B
(the “Initial Development Plan”).  The Parties shall make good faith efforts to
agree upon the definitive Initial Development Plan and have it appropriately
approved by the JSC within [ * ] after the Signing Date.


 


(c)                                  Updates to the
Development Plan.  On an annual basis (no later than [ * ]
of each Calendar Year), the Party appointed by the JDC shall prepare amendments to
each then-current Development
Plan and each Development Budget.  Each
such amended Development Plan shall cover the next Calendar Year and shall contain a corresponding
Development Budget.  Each such updated
and amended Development Plan shall reflect any changes, re-prioritization of
studies within, reallocation of resources with respect to, or additions


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


29

















 


to Development of the
applicable Collaboration Product.  The
amended Development Plan and Development Budget shall be submitted to the JDC
for review and, following such review, to the JSC for its review and approval.  Once approved by the JSC, the amended Development Plan and Development Budget  shall become effective on January 1 of
each Calendar Year and shall be in full force throughout such Calendar Year
unless further amended in accordance with this Section 3.3(c).  In any event, any amended or updated Development
Plan and Development Budget shall supersede the previous Development Plan and
Development Budget.


 


3.4                               Standards of Conduct; Diligence.


 


(a)                                  Each Party shall perform the Development
activities for which it is responsible under the Development Plan in good
scientific manner and in compliance with applicable Laws, including without
limitation applicable GCP, GLP, and GMP. 
Each Party will keep the other Party fully informed regarding the
progress and results of such Party’s Development activities with respect to the
Collaboration Products through the JDC meetings on a quarterly basis and other
than through the JDC at such other time as necessary under the circumstances.


 


(b)                                  Each Party shall use Diligent Efforts to
execute and carry out the activities assigned to it in the Development Plan and
shall use Diligent Efforts to execute and carry out such activities within the
Development Budget; provided that
if a Party exceeds the portion of such Development Budget allocated to it with
respect to the relevant Calendar Quarter by greater than [ * ] without the
approval of the JSC, any amount in excess of such number shall not be
considered Development Costs and such Party shall be solely responsible for
payment of such excess.


 


(c)                                  The Parties shall cooperate in good faith
to establish appropriate and consistent medical information support relating to
Collaboration Products.


 


3.5                               Third Parties.


 


(a)                                  Contractors.  Any Third Party retained by a Party to perform
Development activities with respect to Collaboration Products must be approved
in advance in writing by the JSC, such approval not to be unreasonably withheld
or delayed, unless such Third Party and such activities are pre-existing
obligations listed in Schedule 3.7 or are specifically approved in the
Development Plan or Development Budget. 
Each Party shall remain liable for the performance of its obligations
hereunder which it delegates to such Third Parties.


 


(b)                                  Obligations with Respect to Third
Party Contracts.  Any Third Parties performing Development
activities hereunder shall be subject to confidentiality and non-use
obligations at least as stringent as those set forth in Article 11 with a
minimum duration of [ * ] and must comply with the terms of Section 10.1(c) with
respect to any invention or Know-How generated in the course of performing the
Development activities.  Unless otherwise
determined by the JSC, each Party shall include provisions in its contracts
with Third Parties entered into after the Signing Date and specifically related
to Development or Commercialization of a Collaboration Product that would
permit, in the event that such Collaboration Product becomes a


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


30
















 


Royalty Product (i) the
assignment of such contract by the Opt-Out Party to the Non-Opt-Out Party, or (ii)
the granting of a sublicense or equivalent right of access to the Non-Opt-Out
Party.


 


(c)                                  Intellectual Property. 
Neither Party shall knowingly introduce to any Collaboration Product any
Patent Right or Know-How that is not Controlled by such Party, except with the
prior approval of the JSC.


 


3.6                               Limitations on Development. 
After the Signing Date and during the Term, neither Party nor any of its
Affiliates shall, directly or through any Third Party, sponsor, conduct or
cause to be conducted, otherwise assist in, or supply any Collaboration Product
for use in connection with, or otherwise fund, any Clinical Trial of any
Collaboration Product outside of the Development Plan, without the prior
written consent of the other Party.


 


3.7                               Development Costs.


 


(a)                                  In general. 
All Development Costs incurred by either Party shall be borne by the
Parties as follows: Facet shall bear fifty percent (50%) of all Development
Costs and Trubion shall bear fifty percent (50%) of all Development Costs, provided that such costs were incurred pursuant to the
Development Plan, and either do not exceed the portion of the Development
Budget allocated to the applicable Party with respect to the relevant Calendar
Quarter by more than [ * ] or are otherwise approved by the JSC.  For clarity, any costs otherwise or
previously shared by the Parties shall not be double counted or otherwise included
as a Development Cost even if it meets such definition.


 


(b)                                  FTE Records and Calculations. 
Each Party shall record its FTE effort for the Development of each
Collaboration Product to the extent that such FTE efforts are included in
Development Costs that are, or may in the future be, shared under this
Agreement, and shall report such FTE effort to the JDC, on a Calendar Quarterly
basis, in each case in a manner that allocates such FTE effort to the extent
practicable to each applicable Collaboration Product.  Except to the extent provided herein, each
Party shall calculate and maintain records of FTE effort incurred by it in the
same manner as used for other products developed by such Party in accordance
with a methodology approved by the JSC. 
The JFC shall facilitate any reporting hereunder.


 


(c)                                  Other Expenses.  Any expenses incurred by a Party for Development
activities that do not fall within the definitions of Development Costs shall
be borne solely by such Party unless the JSC determines otherwise.


 


(d)                                  Pre-existing Obligations. Unless otherwise determined by the JSC,
any Third Party obligations of either Party in existence prior to the Signing
Date, such as [ * ] or other obligations described in Section [6.3], other than
those listed in Schedule 3.7 will not be considered Development Costs
and will not be subject to expense sharing. For the avoidance of doubt,
any [ * ] to the [ * ] will [ * ] to [ * ] (unless [ * ] by the [ * ]).


 


(e)                                  Reports. 
Each Party shall report to the other Party within [ * ] after the end of
each Calendar Quarter with regard to the Development Costs incurred by it
during such quarter.  Such report shall be prepared in accordance with
GAAP and shall specify in reasonable detail all expenses included in such
Development Costs during such quarter and shall be


 






[ * ] = Certain confidential information contained in this document,
marked by brackets, has been omitted and filed separately with the Securities
and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act
of 1934, as amended.


 


31

















 


accompanied by invoices,
and/or such other appropriate supporting documentation in accordance with the
procedures established by the JSC.  Each
Party’s report shall include, in addition to the Development Costs incurred by
it during the relevant Calendar Quarter a comparison of the amounts budgeted in
the Development Plan for such activities and the amounts incurred by such Party
for such activities.  The Parties shall
seek to resolve any questions related to such accounting statements within [ *
] following receipt by each Party of the other Party’s report hereunder. 
The JFC shall facilitate the reporting of Development Costs hereunder and the
resolution of any questions concerning such reports.  Each Party shall
have the right at reasonable times and upon reasonable prior notice to audit
the other Party’s records as provided in Section 9.9(b) to confirm the accuracy
of the other Party’s costs and reports with respect to Development Costs that
are shared under this Agreement.


 


(f)                                    Development Cost Accounts. 
Each Party shall charge all Development Costs as incurred by it or its
Affiliates on its books and records in accordance with GAAP to enable the
tracking of expenses incurred in connection with each Development Plan.  Each Party shall provide the other Party with
an interim quarterly report of monthly estimates for the current Calendar
Quarter charges within [ * ] after the end of the second calendar month in each
Calendar Quarter.


 


(g)                                 Reconciliation
Payment.  Within [ * ] after the end of each of the first three
Calendar Quarters and, for the last Calendar Quarter in a Calendar Year, within
[ * ] after the end of such quarter, the Party that has incurred less than its
share of such Development Costs shall make a reconciling payment to the other
Party to achieve the appropriate allocation of Development Costs provided for
in Section 3.7(a).


 


(h)                                 Records. 
Each Party shall keep detailed records of the Development Costs it
incurs, including all supporting documentation for such expenses.  Each Party shall keep such records for at
least [ * ] after the date that such expense was incurred.


 


(i)                                    General Procedures Apply.  Any reimbursement payments made pursuant to this Section 3.7
shall be subject to the general payment procedures set forth in Sections
9.6-9.9.


 


3.8                               Records, Reports and Information. 
Each Party shall maintain complete, current and accurate records of all
work conducted by it under the Development Plan and all data and other Know-How
resulting from such work. Such records shall fully and properly reflect all
work done and results achieved in the performance of the Development Plan in
sufficient detail and in good scientific manner appropriate for patent and
regulatory purposes. Each Party shall provide written reports to the JDC on its
Development and regulatory activities with the Collaboration Product pursuant
to the Development Plan on a quarterly basis at the end of each Calendar
Quarter, at a level of detail reasonably sufficient to enable the other Party
to determine the reporting Party’s compliance with its Diligent Efforts
obligations under Section 3.4.  Each
Party shall have the right to review any such records maintained by the other
Party at reasonable times and upon written request in accordance with
procedures established by the JDC.


 






[ * ] = Certain confidential information contained in this document,
marked by brackets, has been omitted and filed separately with the Securities
and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act
of 1934, as amended.


 


32

















 


4.                                      REGULATORY MATTERS.


 


4.1                               Transfer of Data and Regulatory
Materials.  The JDC shall determine the content and
manner for sharing data and Regulatory Materials between the Parties.  The lead Party for regulatory activities with
respect to a particular Collaboration Product in a particular country (such
Party, the “Lead Regulatory Party”), as
provided in Section 4.3, shall provide the other Party with copies of the
IND and of such other Regulatory Materials Controlled by the Lead Regulatory
Party, in each case with respect to Collaboration Products.  Specifically,
within [ * ] after the Signing Date, Trubion shall provide Facet with a copy of
all TRU-016 related Regulatory Materials in the form then existing, generated
as of the Signing Date and Controlled by Trubion.  The non-Lead Regulatory Party shall have the
right, without any additional consideration, to use any and all such data and
reports supplied by the Lead Regulatory Party under this Section 4.1 in
connection with the Development and/or Commercialization of any Collaboration
Products or Royalty Products in the Field, in the Territory in accordance with
the terms of this Agreement, including the incorporation of such data or
reports in any regulatory submissions.


 


4.2                               Ownership of Regulatory Dossier. 
The Lead Regulatory Party will own all regulatory filings for each
Collaboration Product in each country where such Party is the Lead Regulatory
Party in order to facilitate such Party’s interactions with Regulatory
Authorities in such country with respect to each such Collaboration
Product.  Trubion, as initial Lead
Regulatory Party for TRU-016 in the Unites States, will initially own all
Regulatory Materials for [ * ] in the [ * ], including all Regulatory Materials
related to [ * ] as of the [ * ]. 
Promptly upon the JSC’s decision to change the Lead Regulatory Party or
the delivery of a Pursuit Notice or a deemed Pursuit Notice if the Lead
Regulatory Party has exercised or has been deemed to have exercised its Opt-Out
Option pursuant to Article 7, Section 8.5 or Section 14.2(b),
the former Lead Regulatory Party shall transfer and assign to the other Party
(and the other Party hereby agrees to receive from the former Lead Regulatory
Party) all of the former Lead Regulatory Party’s right, title and interest to
the applicable regulatory filings.


 


4.3                               Lead Regulatory Party.  The Parties intend that each Development Plan shall
set forth the regulatory strategy approved by the JSC for the applicable
Collaboration Product. The JSC shall select the Lead Regulatory Party for each
Collaboration Product, provided that
Trubion shall be the initial Lead Regulatory Party for TRU-016 in the United
States and the JSC may change the Lead Regulatory Party for any Collaboration
Product at any time. The Lead Regulatory Party shall be responsible for the
implementation of such strategy in the applicable country.  The Lead Regulatory Party shall comply with
applicable Laws and other regulatory obligations related to the submission and
maintenance of any Regulatory Materials for Regulatory Approval of a
Collaboration Product, in the Field, in the applicable country(ies) of the
Territory.  The Party that is not the
Lead Regulatory Party shall have a participatory role in all material
regulatory activities that would have a potential impact on Collaboration
Products in the relevant country, including all interactions with Regulatory
Authorities.  All material regulatory
decisions (including the content of any regulatory filing or dossier,
pharmacovigilance reports, patient risk management strategies and plans,
Product Labeling and safety) will be made by the JSC and implemented by the
Lead Regulatory Party. Notwithstanding any other provision of this Agreement,
the decision to [ * ] any [ * ] for a [ * ] must be the result of consensus by
the JSC or, in the event that the JSC is unable to reach consensus with respect
to such a [ * ] decision


 






[ * ] = Certain confidential information contained in this document,
marked by brackets, has been omitted and filed separately with the Securities
and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act
of 1934, as amended.


 


33

















 


and the matter is
submitted to the Parties’ Executive Officers pursuant to Section 2.7(b),
the unanimous agreement of the Executive Officers pursuant to Section 2.7(c) to
[ * ] such [ * ]. If the Executive Officers are unable to reach consensus on
any such matter within the applicable [ * ] period, then the JSC will be deemed
to have decided not to [ * ] such [ * ]. 
In no event will a dispute regarding whether to [ * ] a [ * ] for a [ *
] be resolved through arbitration under Article 15.


 


4.4                               Regulatory Filings.


 


(a)                                  The Lead
Regulatory Party shall
prepare, for timely review by the JDC, all IND and BLA submissions (including
any supplements or modifications thereto, but excluding routine submissions
such as study site documentation and adverse event reports (i.e.,
not relating to serious adverse events as defined by applicable Law)) to the
applicable Regulatory Authority.  The other Party
shall have a right to review and comment upon (through its members of the JDC) all draft material regulatory filings, including without
limitation all correspondence to be submitted to the Regulatory Authority
related to Clinical Trial design, the content and subject matter of, and
strategy for, each Drug Approval Application, all proposed Product Labeling
(including the final Regulatory Authority-approved Labeling) and
post-Regulatory Approval labeling changes. 
The Lead
Regulatory Party shall accept and incorporate all reasonable comments provided
by the other Party.  Each Party shall promptly provide the
other with copies of all written or electronic communications received by it
from, or sent by it to, a Regulatory Authority including IND submissions and
amendments thereof, and all communications (other than routine communications)
with respect to obtaining and maintaining, Regulatory Approvals for a
Collaboration Product (it being understood that routine adverse event filings (i.e., not relating to serious adverse
events as defined by applicable Law) shall not fall within the meaning of
maintenance) and copies of all contact reports produced by such Party.  The Lead Regulatory Party shall be the sole
Party to initiate contact with any Regulatory Authorities regarding a
Collaboration Product, and shall initiate such contact at the reasonable request
of the other Party.


 


(b)                                  Notice of Regulatory Filing Requirements.  The Lead Regulatory Party shall provide
to the other Party, within [ * ] of discovery or receipt thereof by the Lead
Regulatory Party, notice of (i) any event with respect to any
Collaboration Product that triggers any Regulatory Authority filing
requirement, (ii) any additional requirements which the applicable
Regulatory Authority may impose with respect to obtaining or maintaining
Regulatory Approval for a Collaboration Product (including additional Clinical
Trials), and (iii) all Regulatory Authority inquiries with respect to a
Collaboration Product that require a response or for a which a response may be
advisable.  The JDC shall discuss in good
faith and on a timely basis determine the most effective and expeditious means
of responding to such Regulatory Authority filing requirements, additional
requirements or inquiries.


 


4.5                               Regulatory Meetings. 
The Lead Regulatory Party shall provide the other Party with notice of
all meetings, conferences, and discussions (including Regulatory Authority
advisory committee meetings and any other meeting of experts convened by the
Regulatory Authority concerning any topic relevant to a Collaboration Product,
as well as Collaboration Product labeling and post-Regulatory Approval Collaboration
Product labeling discussions with any Regulatory Authority) scheduled by the
Regulatory Authority concerning any pending Drug Approval Application or any
material regulatory matters relating to a Collaboration Product


 






[ * ] = Certain confidential information contained in this document,
marked by brackets, has been omitted and filed separately with the Securities
and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act
of 1934, as amended.


 


34

















 


within [ * ] after the
Lead Regulatory Party receives notice of the scheduling of such meeting,
conference, or discussion (or within such shorter period as may be necessary in
order to give the other Party a reasonable opportunity to participate in such
meetings, conferences and discussions). 
The other Party shall be entitled to be present at, and to participate
in, all such meetings, conferences or discussions.  Facet’s and Trubion’s respective members of
the JDC shall use reasonable efforts to agree in advance on the scheduling of
such meetings and on the objectives to be accomplished at such meetings,
conferences, and discussions and the agenda for the meetings, conferences, and
discussions with the Regulatory Authority.  The Lead Regulatory Party
shall reasonably attempt to include the other Party in any unscheduled, ad-hoc
meetings, conferences and discussions with the Regulatory Authority concerning
any pending IND, Drug Approval Application or any material regulatory matters
relating to a Collaboration Product, and will promptly copy
such other Party on a contact report.


 


4.6                               Regulatory Data. In accordance
with procedures established by the JDC, each Party shall provide to the other Party on a
timely basis access to or copies of all material pre-clinical and clinical data
generated or compiled pursuant to the Development Plan with respect to
Regulatory Materials maintained by such Party (via electronic copies of such
data in a form that may be analyzed and manipulated by the other Party).


 


4.7                               Common Database.  If
deemed appropriate by the JDC, the Parties will establish a common database to
be controlled, maintained and administered by the Party designated by the JDC
for the receipt, investigation, recordation, communication, and exchange (as
between the Parties) of data arising from Clinical Trials for Collaboration
Products.  The Parties shall agree upon guidelines and procedures for such
common database that shall be in accordance with, and enable the Parties to
fulfill their reporting obligations under applicable Law.  Furthermore,
such guidelines and procedures shall be consistent with relevant International
Council for Harmonisation (“ICH”)
guidelines.  The Parties’ costs incurred in connection with receiving,
investigating, recording, reviewing, communicating, and exchanging such data
shall be included as an element of Development Costs or as Commercialization
Costs, as applicable, calculated on a FTE cost (calculated at the FTE Rate) and
direct out-of-pocket cost basis.


 


4.8                               Rights of Reference.  Each Party shall have the right to cross
reference, file or incorporate by reference any regulatory filing or drug
master file (as defined in 21 C.F.R. 314.420, or as amended from time to time,
or the corresponding foreign equivalent) (and any data contained therein) for
any Collaboration Product, or any component thereof, made in any country in the
Territory (including all Regulatory Approvals) in order to support regulatory
filings that such Party is permitted to make under this Agreement for any
Collaboration Product or Royalty Product and to enable either Party to fulfill
its obligations under this Agreement to Develop, Manufacture or Commercialize
in the Territory any such Collaboration Product or Royalty Product.  Each
Party shall support the other, as may be reasonably necessary, in obtaining
Regulatory Approvals for each Collaboration Product and Royalty Product,
including providing necessary documents, or other materials required by
applicable Law to obtain Regulatory Approvals, in each case in accordance with
the terms and conditions of this Agreement.


 


4.9                               Costs and Expenses. 
Unless otherwise agreed by the JSC and subject to Section 3.4(b),
any costs required for the Parties to prepare, submit and maintain all
Regulatory Materials


 






[ * ] = Certain confidential information contained in this document,
marked by brackets, has been omitted and filed separately with the Securities
and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act
of 1934, as amended.


 


35

















 


in the Territory shall be
treated as Development Costs to the extent such costs are incurred in
accordance with the Development Plan and do not exceed the portion of the
Development Budget allocated to such regulatory activities to the applicable
Party with respect to the relevant Calendar Quarter by more than [ * ] or are
otherwise approved by the JSC.


 


4.10                        Consultation, Reporting and
Review.


 


(a)                                  Each Lead Regulatory Party shall keep the
other Party reasonably and regularly informed of the status of the preparation
of all Regulatory Materials, Regulatory Authority review of Regulatory
Materials, and Regulatory Approvals made by it for Collaboration Products in
the Field.


 


(b)                                  Each Lead Regulatory Party shall provide
the other Party, in a timely manner, with copies of all Regulatory Approvals it
receives for Collaboration Products in the Field.


 


(c)                                  Each Party shall provide the other Party,
in a timely manner, with copies of, and all information received by it pertaining
to, notices, questions, actions and requests from or by Regulatory Authorities
with respect to Collaboration Products, in the Field, or the testing,
manufacture, distribution or facilities in relation thereto, including without
limitation any notices of non-compliance with Laws in connection with
Collaboration Products in the Field (e.g., warning letters or other notices of
alleged non-compliance), audit notices, notices of initiation by Regulatory
Authorities of investigations, inspections, detentions, seizures or injunctions
concerning Collaboration Products (or their manufacture, distribution, or
facilities connected thereto), notice of violation letters (i.e., an untitled
letter), warning letters, service of process or other inquiries.


 


4.11                        Regulatory Inspection or Audit. 
If a Regulatory Authority in the Territory desires to conduct an
inspection or audit with regard to a Collaboration Product of a Party’s
facility or a facility under contract with a Party, or with regard to a Royalty
Product of the Opt-Out Party’s facility or a facility under contact with the
Opt-Out Party when the Opt-Out Party continues to supply the Royalty Product to
the Non-Opt-Out Party pursuant to Section 7.5(b)( vi), such Party shall
promptly notify the other Party.  In such
case, the audited Party shall permit and cooperate with such inspection or
audit, and shall cause the contract facility to permit and cooperate with such
Regulatory Authority during such inspection or audit. The other Party shall
have the right to have a representative observe such inspection or audit and
shall, if requested by the audited Party, assist the audited Party in preparing
for, facilitating or enabling such inspection or audit.  Following receipt of the inspection or audit
observations of such Regulatory Authority (a copy of which the audited Party
shall immediately provide to the other Party), the audited Party shall prepare
a draft response to any such observations, in consultation with the other
Party, and the Party that holds the Regulatory Materials in the applicable
country or territory shall prepare and file the final response with such
Regulatory Authority.  If the Regulatory
Authority is conducting an inspection or audit with regard to a Party’s
contract facility, such Party shall (subject to the terms of the applicable
contract with a Third Party manufacturer) cause its contract facility to
prepare, submit to both Parties for input, and file the final response
incorporating such input with such Regulatory Authority, and copy both Parties
on such submission.


 






[ * ] = Certain confidential information contained in this document,
marked by brackets, has been omitted and filed separately with the Securities
and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act
of 1934, as amended.


 


36

















 


4.12                        Pharmacovigilance Agreement. 
Subject to the terms of this Agreement, and at a date to be determined
by the JDC, Facet and Trubion shall define and finalize the actions the Parties
shall employ to protect patients and promote their well-being in a written
agreement (hereinafter referred to as the “Pharmacovigilance
Agreement”).  These
responsibilities shall include mutually acceptable guidelines and procedures
for the receipt, investigation, recordation, communication, and exchange (as
between the Parties) of adverse event reports, pregnancy reports, and any other
information concerning the safety of any Collaboration Product.  Such guidelines and procedures shall be in
accordance with, and enable the Parties to fulfill, local and national
regulatory reporting obligations to Governmental Authorities.  Furthermore, such agreed procedures shall be
consistent with relevant ICH guidelines, except where said guidelines may
conflict with existing local regulatory safety reporting requirements, in which
case local reporting requirements shall prevail.  The Pharmacovigilance Agreement will provide
for a worldwide safety database to be maintained by the Party appointed by the
JDC.  Each Party hereby agrees to comply
with its respective obligations under such Pharmacovigilance Agreement (as the
Parties may agree to modify it from time to time) and to cause its Affiliates
and permitted sublicensees to comply with such obligations.


 


5.                                      COMMERCIALIZATION.


 


5.1                               Overview. 
The Parties agree to collaborate with respect to the Commercialization
of Collaboration Products, in the Field, in the Territory as provided in this Article 5.
The JSC shall choose the Party, on a country-by-country and Collaboration Product-by-Collaboration
Product basis, with the greatest applicable Commercial capability with respect
to a particular Collaboration Product in a particular country as the lead
commercialization party (“Lead Commercialization
Party”) for such Collaboration Product in such country to coordinate
the implementation of the Commercialization Plan in accordance with the
allocation of responsibilities set forth therein.


 


5.2                               Commercialization Plan.


 


(a)                                  Scope.  The  Commercialization
of Collaboration Products shall be conducted pursuant to commercialization
plans (each, a “Commercialization Plan”), which,
unless otherwise determined by the JSC, shall be Collaboration
Product-specific, multi-year, world-wide, and shall set forth the anticipated
Commercialization activities (including market studies, launch plans, Detailing
and Promotion) and timelines, shall allocate responsibility for carrying out
such activities between Facet and Trubion, and shall include the
Commercialization Budget for such activities. 
Each Commercialization Plan may, as determined by the JSC, include a
lifecycle plan and the plan, with respect to each country, for: (i) Detailing
and Promotion activities for the applicable Collaboration Product for the next
[ * ] (as to the initial Commercialization Plan, the [ * ] following launch)
and timelines for performing such activities, (ii) target audience, (iii) anticipated
expenses, (iv) assumptions regarding product profile, (v) sales force
size, and (vi) Promotional efforts. Each Commercialization Plan shall
include a Commercialization Budget.  Each
Commercialization Plan and updates thereof shall be prepared by the Lead Commercialization Party in the
United States for such Collaboration Product, with review by and input
from the other Party’s key personnel for Commercialization and Manufacturing
activities, and
submitted pursuant to the procedures set forth in clauses (b) and (c) below
to the JCC for review and submission to the JSC for approval.


 






[ * ] = Certain confidential information contained in this document,
marked by brackets, has been omitted and filed separately with the Securities
and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act
of 1934, as amended.


 


37

















 


(b)                                  Initial Commercialization Plan. Promptly following the JSC’s request for
a Commercialization Plan for a particular Collaboration Product and at least [
* ] prior to the then-current date of expected Regulatory Approval for such
Collaboration Product in the Field, the Lead Commercialization Party in the
United States for such Collaboration Product, with strategic guidance from the
JSC, shall prepare the initial Commercialization Plan for such Collaboration
Product and submit such plan to the JCC for review and, following such review,
to the JSC for its review and approval. 
The Parties agree and acknowledge that any such Commercialization Plan
will reasonably allocate all Commercialization activities between the Parties,
giving equal consideration to each Party’s abilities when making such
allocation.


 


(c)                                  Updates to the
Commercialization Plan.  On an annual basis (no later than [ * ]
of each Calendar Year), the  Lead
Commercialization Party in the United States for such Collaboration Product
shall prepare amendments to the then-current Commercialization Plan and the
Commercialization Budget.  Such amended
Commercialization Plan shall cover the next Calendar Year and shall contain a corresponding
Commercialization Budget.  Such updated
and amended Commercialization Plan shall reflect any changes, re-prioritization
of activities within, reallocation of resources with respect to, or additions
to Commercialization of the applicable Collaboration Product.  The amended Commercialization Plan and
Commercialization Budget shall be submitted to the JCC for review and,
following such recommendation, to the JSC for its review and approval.  Once approved by the JSC, the amended Commercialization Plan and
Commercialization Budget  shall become effective on January 1 of each Calendar
Year and shall be in full force throughout such Calendar Year unless further
amended in accordance with this Section 5.2(c).  In any event, any amended or updated Commercialization
Plan and Commercialization Budget shall supersede the previous Commercialization
Plan and Commercialization Budget.


 


5.3                               Commercialization Reports.  Each Party will keep the JCC fully informed regarding
the progress and results of its Commercialization activities with respect to
Collaboration Products under this Agreement.


 


5.4                               Standards of Conduct.


 


(a)                                  Each Party shall perform, or shall ensure
that its Affiliates and permitted sublicensees and Third Party contractors
perform, all Commercialization activities assigned to it in a good scientific
and ethical business manner and in compliance with applicable Laws.


 


(b)                                  Each Party shall use Diligent Efforts to
execute and carry out the activities assigned to it in the Commercialization
Plan and each Party shall use Diligent Efforts to execute and carry out such
activities within the Commercialization Budget; provided
that if a Party exceeds the portion of the Commercialization Budget allocated
to it with respect to the relevant Calendar Quarter by greater than [ * ]
without the approval of the JSC, any amount in excess of such number shall not
be considered Commercialization Costs hereunder and such Party shall be solely
responsible for payment of such excess.


 


5.5                               Sales Force Training. 
The Lead Commercialization Party shall develop and conduct training
programs for the sales representatives of one or both Parties’ sales
representatives (depending on whether one or both Parties will be Detailing the
Collaboration


 






[ * ] = Certain confidential information contained in this document,
marked by brackets, has been omitted and filed separately with the Securities
and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act
of 1934, as amended.


 


38

















 


Product), specifically
relating to the Collaboration Products to be Commercialized.  Each Party agrees to utilize such training
programs on an ongoing basis to assure a consistent, focused promotional
strategy.


 


5.6                               Product Labeling and Promotional
Materials.  The JCC shall determine which Party shall be
responsible for designing and supplying the Product Labeling and Promotional
Materials for each Collaboration Product in the Territory.  Such responsible Party shall provide samples
of such labeling and materials to the JCC for review and consultation prior to
finalizing such materials for use by the Parties’ sales representatives.  The Parties shall describe in the applicable
Commercialization Plan how and the manner in which the Parties shall be
presented and described to the medical community in any Promotional Materials
and the placement of the names and logos of the Parties therein, in each case
as permitted by applicable Law and in accordance with the labeling for the
Collaboration Product approved by the applicable Regulatory Authority.


 


5.7                               Branding.  Each Collaboration Product Commercialized under this
Agreement shall be Commercialized under and in connection with the Marks
selected in accordance with Section 10.7. 
To the extent that a Party is granted rights under this Agreement to
Commercialize a Collaboration Product, it shall Commercialize such
Collaboration Product solely under and in connection with the Marks selected
and approved pursuant to the terms of Section 10.7 (except for Marks that
include, in whole or part, any corporate name or logo of such Party, which
Marks do not require such approval).


 


5.8                               Pricing.  The JSC will determine the selling price (including
volume discounts (including those available, without limitation, to managed
care providers, indemnity plans, unions, self insured entities, and government
payer, insurance or contracting programs such as Medicare, Medicaid, or the
United States Dept. of Veterans Affairs), rebates, and similar matters, credit
terms, and return policies) for all Collaboration Products Commercialized
hereunder.  The Lead Commercialization
Party for a particular Collaboration Product in a particular country shall have
the right and responsibility for proposing to the JCC for review and submission
to the JSC for approval the terms and conditions (and any updates and revisions
thereof) with respect to the sale of such Collaboration Product in such
country, including any terms and conditions relating to or affecting the price
at which the Collaboration Product shall be sold, discounts, any discount
attributable to payments on receivables, distribution of the Collaboration
Product, and credits, price adjustments, or other discounts and allowances to
be granted or refused.


 


5.9                               Booking of Sales.  The Lead Commercialization Party for a particular
Collaboration Product in a particular country will book sales in accordance
with GAAP including handling inventory, receivables, managing relationships
with the trade, returns, reimbursements, and charge-backs, trade-customer
complaints and inquiries with respect to such Collaboration Product in such
country.  For clarity, each Party’s
expenses in connection with the activities described in this Section 5.9
will be included as Sales and Marketing Costs or Distribution Costs, as
appropriate.


 


5.10                        Product Recalls.  Decisions with respect to recalls, withdrawals or
other corrective actions (“Recall”) with
respect to any Collaboration Product related to manufacturing or product
quality issues shall be handled in accordance with the Commercial Supply


 






[ * ] = Certain confidential information contained in this document,
marked by brackets, has been omitted and filed separately with the Securities
and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act
of 1934, as amended.


 


39

















 


Agreement.  Decisions with respect to any other Recall
related to any Collaboration Product shall be made only upon mutual agreement
of the Parties; provided, however,
that nothing herein shall [ * ] Party [ * ] or [ * ] any [ * ] (i) [ * ]
by a [ * ] or [ * ] or (ii) which in [ * ] is, or such Party [ * ] will [
* ], a [ * ] or [ * ] (under [ * ], or [ * ] of the [ * ]). The Parties shall
cooperate with respect to any actions taken or public statements made in
connection with any such Recall. Except as otherwise provided in this Section 5.10,
the Parties will share all costs of a Recall with respect to any Collaboration
Product as Sales and Marketing Costs. 
Notwithstanding the foregoing, a Party shall bear any and all costs of a
Recall, market withdrawal or other corrective action with respect to a
Collaboration Product in the Territory, including the Manufacturing Costs for
the Collaboration Product in question, to the extent the Recall is attributable
to the fault of such Party and results from (a) a grossly negligent or
reckless act or omission or intentional misconduct of such Party (or its
Affiliate, agent or permitted sublicensee), (b) in the case such Party is
the Lead Manufacturing Party, the failure of the Lead Manufacturing Party or
its Affiliate, agent or sublicensee to perform its responsibilities and
Manufacture the Collaboration Product in compliance with the specifications (as
set forth in the Commercial Supply Agreement), or with applicable Laws,
including applicable Good Manufacturing Practices, (c) any defect or
condition introduced by a Party, its Affiliates or permitted sublicensees
following delivery of the Collaboration Product from the Lead Manufacturing
Party or its contract manufacturer, into a Collaboration Product or its
packaging or labeling, or (d) a breach of any Laws or the terms of this
Agreement by such Party.


 


5.11                        Co-Promotion Agreement. 
In the event that both Parties have their own sales forces with
appropriate expertise or that the Parties otherwise agree to share promotional
responsibilities with respect to one or more Collaboration Products in one or
more countries, the Parties shall negotiate in good faith and enter into a
co-promotion agreement for such Collaboration Product in such countries to
implement the promotional activities contemplated in the Commercialization Plan
for such Collaboration Product in such country.


 


5.12                        Limitations on Commercialization. 
After the Signing Date and during the Term, neither Party nor any of its
Affiliates shall, directly or through any Third Party, Commercialize any
Collaboration Product outside of the Commercialization Plan, without the prior
written consent of the other Party.


 


6.                                      MANUFACTURING.


 


6.1                               Roles of the Parties.  The JSC shall select the lead manufacturing Party (“Lead Manufacturing Party”) for each Collaboration Product
and the Lead Manufacturing Party shall be responsible for the supply of the
Parties’ entire requirements of such Collaboration Product in accordance with
the terms set forth below.  Trubion shall
be the initial Lead Manufacturing Party for TRU-016.


 


(a)                                  Facet acknowledges that Trubion uses
Third Party manufacturers to Manufacture TRU-016, and Trubion confirms that it
shall be solely responsible for the performance of such Third Party
manufacturers until such time as the Parties determine to engage an alternate
or additional source of supply, or the Parties agree to amend such agreements
in accordance with Section 6.4.


 






[ * ] = Certain confidential information contained in this document,
marked by brackets, has been omitted and filed separately with the Securities
and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act
of 1934, as amended.


 


40
















 


(b)           Trubion shall promptly notify existing Third Party
manufacturers of execution of this Agreement, and, if Trubion proposes to
materially amend, or to extend the term of, any existing Product manufacturing
agreement with a Third Party, use Diligent Efforts to include Facet as a party
to such agreement or to provide Facet with third party beneficiary rights with
respect to such agreement and to allow for assignment of such agreement, or, if
such agreement also applies to products that are not Products, assignment of
all rights and obligations to the extent related to such Product, in each case
from Trubion to Facet without consent from such Third Party manufacturer.


 


6.2          Pre-Clinical and Clinical Supply. 
The Lead
Manufacturing Party with respect to a particular Collaboration Product shall,
by itself or through its Third Party contract manufacturers, timely supply all
quantities of such Collaboration Product agreed upon by the JDC as required by
the Parties to carry out all Development activities (pre-clinical and clinical)
for such Collaboration Product pursuant to the Development Plan. Such
quantities of Collaboration Product, and the schedule for such supply, shall be
confirmed and if necessary updated by the JDC in a manner consistent with the
Development Plan. Such supply shall be considered a Development Cost and
charged on an accrual basis; provided that
any [ * ] of [ * ] of the [ * ] shall [ * ] as [ * ].  [ * ] in [ * ] of the [ * ] shall [ * ] as [
* ] except when it is [ * ] to [ * ] or [ * ] after [ * ] by the [ * ]. The JSC shall, in allocating Lead Manufacturing Party
responsibilities between the Parties:  (a) endeavor
to take advantage of the respective resources, capabilities and expertise of
Facet and Trubion; (b) endeavor to (i) maintain, to the extent
reasonably practical and appropriate, continuity in functions and commitments
of personnel and physical resources of the Parties, (ii) avoid duplication
of efforts by the Parties and (iii) foster efficient use by the Parties of
resources and personnel, consistent with this Agreement and the applicable
then-current Development Plan and Development Budget; and (c) act in the
best interests of the Collaboration.  The Lead Manufacturing Party shall ensure
that all finished Collaboration Product supplied pursuant to the Development
Plan shall, when delivered, have been manufactured, handled and stored in
compliance with all agreed-upon specifications, then-current GMP requirements
and applicable Laws, including without limitation prohibitions on misbranding
and adulteration.  The Lead Manufacturing
Party shall reasonably determine the process for quantity orders, timing for
delivery and shipping terms to permit the Parties to fulfill their obligations
under the Development Plan.


 


6.3          Pre-existing Obligations  with Third-Party
Manufacturers.  Unless
otherwise determined by the JSC, any Third Party obligations in existence prior
to the Signing Date for manufacturing of TRU-016, such as manufacturing
capacity reservation, other than those listed in Schedule 3.7 will not
be considered Manufacturing Costs and will not be subject to expense sharing. For the
avoidance of doubt, any [ * ] to the [ * ] will [ * ] to [ * ] (unless [ * ] by
the [ * ]).


 


6.4          Alternative Supply Arrangements. 
Unless
otherwise determined by the JSC, in the event that:  (a) the Lead Manufacturing Party
proposes to enter into one or more new manufacturing agreements, (b) the
Lead Manufacturing Party proposes to materially amend, to renegotiate or to
renew its then existing Third Party manufacturing agreements, or (c) the
Lead Manufacturing Party notifies the JSC that capacity or quality under the
existing Third Party manufacturing agreements will not be sufficient to meet
the needs of the Parties under the Development Plan, the JSC shall determinate
the appropriate course of action, including a


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


41

















 


determination of whether
a second source of supply is appropriate. 
In any event, the Lead Manufacturing Party shall notify the other Party
and the JSC prior to entry into any such new, amended or renewed Third Party
manufacturing agreement, and the JSC shall review and approve the proposed
terms of such new, amended or renewed agreement; provided
that such agreement may include, as agreed upon by the JSC (i) attempting
to order in full lot or production run batches and otherwise reducing the
Manufacturing Cost of Collaboration Product, (ii) providing for sufficient
capacity and timely supply to satisfy the requirements of the then-current
Development Plan, (iii) having Facet and Trubion as parties (and in any
event third party beneficiaries) with respect to the rights and obligations
related to Collaboration Products pursuant to such Third Party agreement, (iv) ensuring
that in the event of the exercise or deemed exercise of an Opt-Out Option by a
Party, the remaining Party shall be the sole obligor pursuant to such Third
Party Agreement, (v) providing that the Parties shall have joint rights
and obligations under the agreement with respect to Collaboration Product, but
that one Party shall be designated as the “principal party” under such
agreement, (v) providing both Parties with the right to audit and inspect
such Third Party’s facilities on at least [ * ], which efforts shall be
coordinated between the Parties in the event both Parties desire to conduct
such audit and inspection, and (vi) providing for complete sharing of any
and all information under and the terms and conditions of such agreement
between the Parties.  The Lead
Manufacturing Party shall be responsible for negotiating the terms of such
agreement, with the other Party having consultation and review rights on the
terms of such Third Party agreement.


 


6.5          Commercial Supply Agreement.  Unless a Party has already exercised its
Opt-Out Option or is deemed to have exercised its Opt-Out Option under Section 14.2(b),
at least [ * ] prior to the anticipated commercial launch of a Collaboration
Product, the Parties shall negotiate in good faith and enter into a
manufacturing and supply agreement (the “Commercial Supply
Agreement”) governing the commercial supply of such Collaboration
Product. Such Commercial Supply Agreement shall contain customary terms
governing such manufacturing and supply relationships, but shall in any event
provide as follows:


 


(a)           Collaboration Product (i) shall meet the agreed
specification, then-current GMP and be manufactured in accordance with
applicable Laws including prohibitions on adulteration and misbranding, (ii) shall
be supplied by or on behalf of the Lead Manufacturing Party in a timely manner
consistent with established and agreed manufacturing and delivery schedules;
and (iii) shall be supplied at a cost equal to the Manufacturing Cost of
such Collaboration Product.


 


(b)           Upon a material and uncured breach by the Lead
Manufacturing Party of its supply obligations, the other Party shall have the
right to obtain the transfer and the Lead Manufacturing Party shall have the
obligation to (i) effect such transfer [ * ] to the other Party, without
undue delay, of any and all manufacturing technology reasonably necessary for
the Manufacture of the applicable Collaboration Product included in the Trubion
Know-How or included in the Facet Know-How that (x) has been applied to
the Manufacture of the applicable Collaboration Product prior to Facet ceasing
to be the Lead Manufacturing Party, or (y) is [ * ] in the [ * ] applied
to the Manufacture of the applicable Collaboration Product [ * ], as
applicable, not already in the other Party’s possession in the form and format
in which such Know-How is maintained by the Lead Manufacturing Party or its
Third Party manufacturers in the ordinary course of business, and to (ii) at
the other Party’s request, use Diligent Efforts to obtain an


 






[ * ] = Certain confidential information contained
in this document, marked by brackets, has been omitted and filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934, as amended.


 


42

















 


assignment of any Third
Party manufacturing agreement in each case as reasonably necessary to enable
the other Party to Manufacture or have Manufactured Collaboration Product in
accordance with the terms of this Agreement, provided,
however, that the Lead Manufacturing
Party shall be required to assign any such agreement solely to the extent
assignment is permitted by such agreement, provided that
the Lead Manufacturing Party uses Diligent Efforts to obtain any consent
necessary for such assignment, and the Lead Manufacturing Party is not required
to pay any consideration or commence litigation in order to effect an
assignment of any such agreement to the other Party. In the event the Lead
Manufacturing Party exercises or is deemed to have exercised its Opt-Out Option
pursuant to Article 7, Section 8.5 or Section 14.2(b), then
Sections 7.5(b)(iii) and 7.5(b)(x) shall apply.


 


(c)           The Manufacturing Costs of commercial supplies of
Collaboration Product as well as the duty, freight, postage, shipping,
transportation, insurance, warehousing and handling charges actually allowed or
paid with regard to such Collaboration Product shall be included in the
calculation of cost of goods sold as part of Commercialization Costs.


 


6.6          Facility Audits.  The JDC shall propose and submit
to the JSC for approval a schedule for periodic audit and inspection of the
facilities of any Third Party contract manufacturer on at least an annual basis
subject to the terms of any applicable existing contract with a Third Party
contract manufacturer.  Pursuant to the
schedule approved by the JSC, or upon request of the JDC, the Lead
Manufacturing Party shall conduct an inspection or audit of the facilities of
such Third Party contract manufacturers. 
The Lead Manufacturing Party shall provide not less than [ * ] notice to
the other Party of any planned inspection and such other Party shall be
permitted to participate in any audit, provided that,
if the consent of the Third Party contract manufacturer is required under the
applicable contract to allow such other Party to participate in such audit, the
Lead Manufacturing Party shall use Diligent Efforts to obtain such consent. Any
inspection or audit requested by the JDC (other than pursuant to the schedule
approved by the JSC) shall be conducted no more frequently than [ * ] at a
given facility, and shall occur as promptly as possible following written
notice by the JDC of its desire for such inspection or audit, but in no event
shall such inspection commence later than [ * ] thereafter (unless such audit
is triggered by a material safety or GMP non-conformance issue, in which case
the audit may be conducted as frequently as necessary and the maximum notice
period shall be [ * ] if permitted under the applicable contract).  Costs associated with auditing shall be
Development Costs or Commercialization Costs as applicable.


 


6.7          Quality Agreement.  The Parties shall negotiate in good faith
and enter into a quality agreement governing the quality control, quality
assurance and validation of the commercial and clinical supply of Bulk API and
Product.


 


7.             OPT-OUT.


 


7.1          General. Each
Party shall have the right to opt-out of all of its rights and obligations to
Co-Develop and Co-Commercialize any Collaboration Product pursuant to Sections
7.2 and 7.3 below (an “Opt-Out Option”).
In addition, each Party may also exercise its Opt-Out Option pursuant to Section 8.5,
and may be deemed to have exercised its Opt-Out Option pursuant to Section 14.2(b).
The Opt-Out Party may exercise its Opt-Out Option pursuant


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


43

















 


to Sections 7.2, 7.3 or
8.5 by providing a written notice (an “Opt-Out Notice”)
to the Non-Opt-Out Party.


 


7.2          Opt-Out Option.  Each Party may, on a Product-by-Product
basis, exercise its Opt-Out Option with respect to any Collaboration Product by
providing an Opt-Out Notice to the other Party during one of the following
periods: (a) the period beginning with the [ * ] for such Collaboration
Product and ending [ * ] later; (b) the period beginning with the [ * ]
for such Collaboration Product and ending [ * ] later.  In addition, Trubion may, on a
Product-by-Product basis, exercise its Opt-Out Option with respect to any
Collaboration Product by providing an Opt-Out Notice to Facet at any time after
[ * ] after the [ * ] and prior to the [ * ] for such Collaboration
Product.  Each such Opt-Out Notice shall
identify the Collaboration Product for which the Opt-Out Party is exercising
the Opt-Out Option (the “Opt-Out Product”).  If a Party is deemed to have exercised its Opt-Out
Option pursuant to Section 14.2(b), all Collaboration Products shall be
deemed Opt-Out Products and Royalty Products.


 


7.3          Opt-Out Option Following Change of Control.  If either Party (the “Acquired
Party”) experiences a Change of Control, it shall inform the other
Party within [ * ] following the effectiveness of such Change of Control and it
shall use Diligent Efforts to arrange for the acquiring entity to discuss with
the other Party the acquiring entity’s (a) intentions with respect to the
Development and Commercialization of the Collaboration Products and (b) contemplated
proposals for amending the Development Plan and, if applicable,
Commercialization Plan for each Collaboration Product, and the other Party may
exercise its Opt-Out Option with respect to all Collaboration Products by
providing an Opt-Out Notice to the Acquired Party or its successor in interest
within [ * ] of such Change of Control and all Collaboration Products shall
become Opt-Out Products on the Opt-Out Effective Date.


 


7.4          Opt-Out Effective Date. An Opt-Out Option shall become effective [ * ] after
the Non-Opt-Out Party’s receipt of such Opt-Out Notice (the “Opt-Out Effective Date”). 
Notwithstanding the foregoing, if a Party, after uncured material
breach, is deemed to have exercised its Opt-Out Option pursuant to Section 14.2(b),
then both the date of the Opt-Out Notice and the Opt-Out Effective Date for
such Opt-Out Option shall be deemed to be the date on which the other Party
provides the notice under Section 14.2(b) to continue this Agreement
and all Collaboration Products shall become Royalty Products on such date.


 


7.5          Consequences of Opt-Out.


 


(a)           The Opt-Out Party’s obligations and rights to
Co-Develop and Co-Commercialize a particular Opt-Out Product shall terminate upon the
applicable Opt-Out Effective Date, and the Opt-Out Party shall have no liability for
Development Costs or Commercialization Costs incurred by the Non-Opt-Out Party
in respect of the Opt-Out Product(s) following the Opt-Out Effective Date,
provided, however,
that the Opt-Out Party shall remain liable for its share of (i) [ * ] for
all [ * ] for the [ * ] that were [ * ] to the [ * ] to the extent that such [
* ] for such [ * ] by [ * ] the [ * ] therefor in the [ * ] that was [ * ] on
the [ * ], (ii) all other [ * ] and all [ * ] with respect to the [ * ]
the [ * ] in accordance and consistent with the [ * ] or [ * ], as applicable
and [ * ], and (iii) all [ * ], including [ * ] and [ * ], [ * ] in
connection with [ * ] and [ * ] under Section [ * ], to the extent related
to [ * ], [ * ], [ * ] or [ * ] of the applicable [ * ] within the Field
anywhere in the Territory [ * ] the [ * ] and [ * ] the [ * ]


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


44

















 


for such activities for
which [ * ] is [ * ] under Section [ * ] or Section [ * ] and to the
extent provided in Section [ * ].


 


(b)           The Non-Opt-Out Party may, in its sole discretion,
elect to continue the Development and Commercialization of the Opt-Out Product
by notice (the “Pursuit Notice”) to the Opt-Out
Party.  If the [ * ] does not [ * ] a [ *
] with respect to [ * ] within [ * ] following the [ * ] of the [ * ], the [ *
] shall not [ * ] to [ * ] the [ * ] and [ * ] of the [ * ] and the [ * ] to
the [ * ] shall [ * ] with respect to that [ * ]. Notwithstanding the
foregoing, if a Party is deemed to have exercised its Opt-Out Option pursuant
to Section 14.2(b), then the Non-Opt-Out Party shall be deemed to have
provided a Pursuit Notice to the Opt-Out-Party by providing a written notice of
continuation of the Agreement pursuant to Section 14.2(b).  If the Non-Opt-Out Party delivers a Pursuit
Notice with respect to an Opt-Out Product [ * ] such [ * ] or is deemed to have
delivered such Pursuit Notice, such Opt-Out Product shall become a Royalty
Product, and:


 


(i)            the Non-Opt-Out Party shall be solely responsible, at
its sole cost and expense (except for those costs for which the Opt-Out Party
remains responsible pursuant to Section 7.5(a)) for the Development of
such Royalty Product, the preparation and filing of Regulatory Materials for
such Royalty Product, the receipt of Regulatory Approval for such Royalty
Product, and the Commercialization of such Royalty Product, in each case in the
Field in the Territory.  The Non-Opt-Out
Party shall use Diligent Efforts to Develop and obtain Regulatory Approval for
Royalty Products and to Commercialize such Royalty Products in the Field in the
Major Market Countries;


 


(ii)           the Non-Opt-Out Party will inform the Opt-Out Party of
the status of the Non-Opt-Out Party’s Development and Commercialization of
Royalty Products through [ * ] progress reports submitted in writing to the
Opt-Out Party, provided that if the Opt-Out Party remains responsible for the
costs of any [ * ] pursuant to Section 7.5(a), the Non-Opt-Out Party shall
additionally provide [ * ] reports and invoices with respect to such [ * ];


 


(iii)         the Opt-Out Party shall provide reasonable
consultation and assistance during a period of [ * ] following the Opt-Out
Party’s receipt of the Pursuit Notice or written notice of continuation of the
Agreement pursuant to Section 14.2(b), (“Transition
Assistance”) for the purpose of transferring or transitioning to the
Non-Opt-Out Party, (i) all Facet Applied Know-How or Trubion Know-How, as
applicable, which is reasonably necessary for the continued Development,
Manufacture or Commercialization of the Royalty Product not already in the
Non-Opt-Out Party’s possession in the form and format in which such Know-How is
maintained by the Opt-Out Party or its Affiliate or subcontractor in the
ordinary course of business, and (ii) at the Non-Opt-Out Party’s request,
the Opt-Out Party shall use Diligent Efforts to assign to the Non-Opt-Out Party
all then-existing Third Party agreements that relate solely to the Royalty
Product, in the Territory, in the Field and are reasonably necessary for the
Non-Opt-Out Party to continue researching, Developing, Manufacturing, or
Commercializing such Royalty Product in the Territory, in the Field; provided, however, that
the Opt-Out Party shall be required to assign any such agreement solely to the
extent assignment is permitted by such agreement provided that the Opt-Out
Party uses Diligent Efforts to obtain any consent necessary for such
assignment, and the Opt-Out Party is not required to pay any consideration or
commence litigation in order to effect an assignment of any such agreement to
the Non-Opt-Out Party;


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


45

















 


(iv)          the Opt-Out Party shall transfer and assign to the
Non-Opt-Out Party, in the form and format in which such materials are
maintained by the Opt-Out-Party in the ordinary course of business, all
Regulatory Materials for such Royalty Product, in the Territory, in the Field,
that are Controlled by the Opt-Out-Party or its Affiliates or permitted
sublicensees; the Non-Opt-Out Party shall have the right, without any
additional consideration, to use any and all such data and reports supplied by
the Lead Regulatory Party under this Section 7.5(b)(iv) or pursuant
to Section 4.1 in connection with the Development, Manufacture and/or
Commercialization of such Royalty Product in the Field, in the Territory in
accordance with the terms of this Agreement, including the incorporation of
such data or reports in any regulatory submissions; and the Opt-Out Party’s
rights to participate in regulatory activities and meetings shall terminate;


 


(v)            all Committees except the JPC shall cease to have any
rights, obligations or decision-making capabilities with respect to such
Royalty Product and, if there are no Collaboration Products still being pursued
at such time, shall disband until such time, if ever, that a Collaboration
Product is being pursued.  All decisions
that were made by such Committees under this Agreement with respect to the
Royalty Product prior to the Opt-Out Effective Date shall thereafter be made
solely by the Non-Opt-Out Party consistent with such Party’s obligations under Section 7.5(b)(i).
The JPC shall continue subject to Section 10.3 unless a Party has
exercised or is deemed to have exercised its Opt-Out Option in respect of all
Collaboration Products, in which case all decisions that were made by the JPC
prior to the Opt-Out Effective Date shall be made solely by the Non-Opt-Out
Party consistent with such Party’s obligations under Section 7.5(b)(i);


 


(vi)          if the Opt-Out Party is the Lead Manufacturing Party
of the Royalty Product(s), as part of and during the period of the Transition
Assistance (1) the Non-Opt-Out Party shall have the right to require the
Opt-Out Party to continue supplying Bulk API and finished Product for such
Royalty Product(s) under the terms of Article 6 for a period of up to
eighteen (18) months (provided that
the Non-Opt-Out Party shall use Diligent Efforts to find one or more
alternative suppliers for Bulk API and finished Product as soon as reasonably
possible following the exercise of the Opt-Out Option), and (2) the
Non-Opt-Out Party shall have the right to obtain transfer, and the
Opt-Out-Party shall have the obligation to effect transfer, without undue
delay, of any and all manufacturing technology included in the Facet Applied
Know-How or Trubion Know-How, as applicable, that is reasonably necessary to
enable the Non-Opt-Out Party to Manufacture, or have Manufactured such Royalty
Product(s). The Non-Opt-Out Party automatically owns one-half (1/2) of any or
all of the inventory in existence as of the Opt-Out Effective Date of Bulk API
and/or finished Product for such Royalty Product (such inventory, the “Existing Inventory”). 
In addition, the Non-Opt-Out Party shall have the right to purchase the
other half of the Existing Inventory from the Opt-Out Party by reimbursing the
Opt-Out Party for the Manufacturing Costs with respect to such Existing
Inventory. The Non-Opt-Out Party shall notify the Opt-Out Party within [ * ] after the Effective Opt-Out Date whether
the Non-Opt-Out Party elects to exercise such right to purchase the other half
of the Existing Inventory;


 


(vii)         the Opt-Out Party shall, as promptly as commercially
practicable, assign to the Non-Opt-Out Party all right, title and interest in
and to the Marks owned by the Opt-Out Party that were used or intended to be
used with the Royalty Products (excluding any


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


46

















 


such Marks that include,
in whole or part, any corporate name or logo of the Opt-Out Party or its
Affiliates or permitted sublicensees), including any goodwill associated
therewith. For the avoidance of doubt, only those Marks that have been (A) identified
as the single designated lead candidate Mark for a non-commercialized
Royalty Product, or (B) actually used in connection with a Commercialized
Royalty Product, shall be assigned. The Non-Opt-Out Party shall be responsible
for recording such assignment in the Territory with the appropriate
Governmental Authority and will bear all costs associated with such
assignment and recordation. The Opt-Out Party shall cooperate in facilitating
such assignment and recordation by timely executing all necessary documents
provided to it by the Non-Opt-Out Party;


 


(viii)        in lieu of the Product Profit payments it would have
received if the Opt-Out Party had not exercised its Opt-Out Option or the
Opt-Out Party had not been deemed to have exercised its Opt-Out Option under Section 14.2(b) with
respect to such Royalty Product, the Opt-Out Party shall receive from the
Non-Opt-Out Party royalties on the Net Sales of the Royalty Product(s) as
provided for under Section 9.5;


 


(ix)          the Opt-Out Party shall use Diligent Efforts to effect
the assignment or the granting of a sublicense or equivalent right of access to
the Non-Opt-Out Party, whether through novation or sublicensing of such
contracts or otherwise, of any and all rights under any contract between the
Opt-Out Party and any Third Party that are reasonably necessary for the Non-Opt-Out
Party to continue with Development or Commercialization of such Royalty
Product, and the Non-Opt-Out Party shall reasonably cooperate in connection
therewith, provided that if such assignment, novation or sublicense is not
permissible, the Parties shall discuss in good faith potential alternatives
that would enable the Non-Opt-Out Party to exercise at the Non-Opt-Out Party’s
expense (on a pass-through basis) the rights and perform the obligations of the
Opt-Out Party under such contracts with respect to such Royalty Product while
minimizing the continuing obligations of the Opt-Out Party under such contract
with respect to such Royalty Product, and, unless the Non-Opt-Out Party informs
the Opt-Out Party in writing that it is [ * ] in [ * ] such [ * ] and [ * ]
such [ * ] or it is [ * ] for the [ * ] to [ * ], the Opt-Out Party shall [ * ]
such [ * ] in [ * ] for the [ * ] of such [ * ] to [ * ] the [ * ] to [ * ]
with [ * ] or [ * ] of such [ * ]; and


 


(x)


 


a.             in the event of an Opt-Out pursuant to Section 7.2
or Section 8.5, the Non-Opt-Out Party shall reimburse the Opt-Out Party
for [ * ] of the reasonable expenses incurred by the Opt-Out Party in the
course of performing its transfer obligations pursuant to Sections 7.5(b)(iii),
7.5(b)(iv), 7.5(vi)(2) and 7.5(vii), provided that any request for
reimbursement of such expenses is accompanied by invoices, and/or such other
appropriate supporting documentation evidencing in reasonable detail the
expenses for which reimbursement is allowed under this Section 7.5(b)(x);
and


 


b.             in the event of an Opt-Out pursuant to Section 7.3,
the Non-Opt-Out Party shall reimburse the Opt-Out Party for [ * ] of the
reasonable expenses incurred by the Opt-Out Party in the course of performing
its transfer obligations pursuant to Sections 7.5(b)(iii), 7.5(b)(iv), 7.5(vi)(2) and
7.5(vii), provided that any request for reimbursement of such expenses is
accompanied by invoices, and/or such other appropriate


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


47

















 


supporting documentation
evidencing in reasonable detail the expenses for which reimbursement is allowed
under this Section 7.5(b)(x).


 


8.             LICENSES.


 


8.1          License to Facet.  Subject to the terms and conditions of
this Agreement, Trubion, effective as of the Signing Date, hereby grants to
Facet an exclusive license (exclusive even as to Trubion, except to the extent
necessary for Trubion to perform its obligations and exercise its rights under
this Agreement), with the right to grant sublicenses in accordance with the
provisions of Section 8.3, under the Trubion Patent Rights and Trubion
Know-How, to research Develop, use, make, Manufacture, import, export
distribute, market, offer for sale, sell and Commercialize Products, in the
Field, in the Territory in accordance with the terms of this Agreement.  Notwithstanding the foregoing, the rights
granted to Facet under this Section 8.1 shall terminate with respect to an
Opt-Out Product effective (a) as of the Opt-Out Effective Date for such
Product if Facet exercises or is deemed to have exercised its Opt-Out Option,
and (b) [ * ] after the [ * ] for such [ * ] if [ * ] its [ * ] pursuant
to Section [ * ] or [ * ] and [ * ] has [ * ] a [ * ] for such [ * ].  For clarity, the rights granted to Facet
under this Section 8.1 shall remain in full force and effect if Trubion is
deemed to have exercised its Opt-Out Option pursuant to Section 14.2(b).


 


8.2          Licenses to Trubion.


 


(a)           Subject to the terms and conditions of this Agreement,
Facet, effective as of the Signing Date, hereby grants to Trubion a license,
with the right to grant sublicenses in accordance with the provisions of Section 8.3,
under the Facet Patent Rights and the Facet Know-How, which license shall be
non-exclusive, except with respect to Facet’s interest in Joint Patent Rights for
which such license shall be co-exclusive, solely for the purpose of, and
limited to, Trubion’s exercise of its rights and performance of its obligations
under this Agreement, to Develop, use, make, Manufacture, import, export,
distribute, market, offer for sale, sell and Commercialize Collaboration
Products, in the Field, in the Territory in accordance with the terms of this
Agreement.


 


(b)           Subject to the terms and conditions of this Agreement,
Facet, effective as of the date of the delivery or deemed delivery of Trubion’s
Pursuit Notice with respect to an Opt-Out Product, hereby grants to Trubion an
exclusive, royalty-bearing license, with the right to grant sublicenses in
accordance with the provisions of Section 8.3, under the Facet Applied
Technology, to Develop, use, make, Manufacture, import, export, distribute,
market, offer for sale, sell and Commercialize such Royalty Product, in the
Field, in the Territory in accordance with the terms of this Agreement.


 


8.3          Sublicensing.


 


(a)           No Sublicensing.  Except as set forth in Sections 8.3(b) and
8.3(c), neither Party shall sublicense any of the rights granted to it under
this Agreement to
any Third Party without the prior written consent of the other
Party, provided that either Party may
sublicense such rights:  (i) to its
Affiliates, further provided that any such
sublicense to an Affiliate shall immediately terminate if and when such entity
ceases to be an Affiliate of such Party, and (ii)


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


48

















 


subject
to Sections 3.5(a) and 3.5(b), to subcontractors or consultants to perform
such Party’s assigned Development, Manufacturing or Commercialization
responsibilities under this Agreement with respect to Collaboration Products, further provided that (A) such
Party  remains
responsible for the work allocated to, and payment to, such subcontractors and
consultants to the same extent it would if it were doing such work itself, (B) such
sublicense shall be subject and subordinate to, and consistent with, the terms
and conditions of this Agreement, (C) such sublicense shall not in
any way diminish, reduce or eliminate any of such Party’s obligations under
this Agreement, and (D) such Party uses Diligent Efforts to include in
such sublicense agreement a provision which permits such Party to provide a
copy of such sublicense agreement to the other Party, which copy may be
redacted to exclude confidential information not related to the applicable
Collaboration Product.  Unless prohibited
by the terms of the sublicense, such Party shall provide the other Party with a
copy of each such sublicense agreement entered into after the Signing Date
within [ * ] after the execution thereof, which agreement may be redacted to
exclude confidential information not related to the applicable Collaboration
Product.


 


(b)           Joint Sublicense.  The Parties acknowledge that they may, upon mutual
agreement, both grant sublicenses to a Third Party with respect to a particular
Collaboration Product, including with respect to a particular country or
indication.


 


(c)           Upon Opt-Out. 
At any time after its delivery or deemed delivery of a Pursuit Notice
with respect to a particular Royalty Product, the Non-Opt-Out Party may grant
to one or more Third Parties sublicenses of some or all of the rights granted
to it under Section 8.1 or 8.2(b), as applicable, but only with respect to
such Royalty Product; provided  that the
Non-Opt-Out Party shall execute a written agreement with each such permitted
sublicensee, which sublicense (i) shall be subject and subordinate to, and
consistent with, the terms and conditions of this Agreement, (ii) shall
not in any way diminish, reduce or eliminate any of the Non-Opt-Out Party’s
obligations under this Agreement, (iii) shall require each such permitted
sublicensee to comply with all applicable terms of this Agreement, including to
keep books and records, and (iv) shall permit the Non-Opt-Out Party to
audit (either directly or through an independent auditor) such books and
records.  The Non-Opt-Out Party shall
provide the Opt-Out Party with a copy of each such sublicense agreement within
[ * ] after the execution thereof.  Such
copy may be redacted to exclude confidential, non-Royalty Product-related
information and financial information (other than such financial information
that is necessary for assessing the obligations to the Opt-Out Party under this
Agreement).  Upon the Opt-Out Party’s
request and at the Opt-Out Party’s expense, the Non-Opt-Out Party shall
exercise its right to conduct an audit of a sublicensee’s books and records pertaining
to the sale of the applicable Royalty Product under any such sublicense
agreement at the next time that conducting such an audit is permissible under
such sublicense agreement.  The
Non-Opt-Out Party shall provide the Opt-Out Party with a copy of the report of
the findings made in any such audit.  If
such audit reveals that such sublicensee has understated its Net Sales by [ * ]
or more, the Non-Opt-Out Party shall be responsible for the reasonable
out-of-pocket costs of the Opt-Out Party in conducting the audit.  The Non-Opt-Out Party shall remain
responsible for its obligations hereunder and for the performance of its
sublicensees (including, without limitation, making all payments due to the
Opt-Out Party by reason of any Net Sales of Royalty Product), and shall ensure
that any such sublicensees comply with all relevant provisions of this
Agreement.  In the event of any uncured
material breach by any sublicensee under a sublicense agreement that would
constitute a material breach of the Non-Opt-Out Party’s obligations under this
Agreement, the Non-Opt-Out Party


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


49

















 


will promptly inform the
Opt-Out Party in writing and shall take such action which in the Non-Opt-Out
Party’s reasonable business judgment will address such default; provided, however, any such uncured material breach by such
sublicensee of an obligation that would constitute a material breach of the
Non-Opt-Out Party’s obligations under this Agreement shall be deemed an uncured
material breach of the Non-Opt-Out Party hereunder unless the Non-Opt-Out Party
cures such material breach within the time provided under Section 14.2.


 


8.4          No Implied Rights.  Except as expressly provided in this Agreement,
neither Party shall be deemed by estoppel or implication to have granted the
other Party any license or other right with respect to any intellectual
property of such Party.


 


8.5          Exclusivity.  Except for the Development and
Commercialization of Products pursuant to the terms of this Agreement,
during the Term neither Party shall Develop or Commercialize any protein
therapeutic, including any [ * ], that binds to the CD37 Antigen (or a [ * ]) [
* ] of [ * ] and wherein such protein therapeutic is [ * ] or [ * ] to [ * ]
its [ * ] through [ * ] the [ * ] (or a [ * ]) (a “Competing
Program”).  In the event that, due to a Change of Control of a
Party, such Party, or its successor in interest, is conducting a Competing
Program during the Term of this Agreement, then such Party, or its successor in
interest, shall either (a) exercise its Opt-Out Option with respect to all
Collaboration Products by providing an Opt-Out Notice to the other Party; or (b) divest
such Competing Program to a Third Party, in each case within [ * ] of such
Change of Control.


 


8.6          [ * ].  Each Party shall promptly bring to the
attention of the JSC (or the other Party if there is no JSC in place at the
time) any [ * ] that such Party wishes to Develop and Commercialize during the
Term. Upon the recommendation of the JSC (or the mutual agreement of the
Parties if there is no JSC in place at the time), the Parties shall negotiate
in good faith an agreement to Develop and Commercialize such [ * ] on
commercially reasonable terms.


 


8.7          Third Party Licenses.  If the JPC
determines that it is advisable or necessary to obtain a license (“Future Third Party License”) to any intellectual property
right that is owned or controlled by a Third Party and is reasonably necessary
or useful to the Development, Manufacture, or Commercialization of a Collaboration
Product, the JPC shall so advise the JSC. 
If the JSC determines to seek a license, the JSC shall designate a Party
to negotiate the terms on which such a Third Party license would be granted and
to serve as the primary point of contact with the applicable Third Party
licensor following the execution of the license agreement.  Upon approval of the terms of such Future
Third Party License by the JSC, the designated Party may execute such Future
Third Party License and any payments that become due pursuant to a Future Third
Party License agreement executed pursuant to this Section 8.7 will be
treated as Development Costs or Commercialization Costs, as applicable, if
incurred prior to the Opt-Out Effective Date or after the Opt-Out Effective
Date but with respect to a Collaboration Product. If a Party delivers or is
deemed to have delivered a Pursuit Notice for a Collaboration Product, any
payments arising under a Future Third Party License from the Development,
Manufacturing or Commercialization of the applicable Royalty Product shall be
paid by such Non-Opt-Out Party, subject to Section 9.5(e)(iii).


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


50
















 


9.             CONSIDERATION.


 


9.1          Upfront Payment.  Facet shall pay to Trubion Twenty Million Dollars
($20,000,000.00) within ten (10) days after the Signing Date, which
payment shall be non-refundable and non-creditable.


 


9.2          Equity Investment. 
Facet and Trubion have entered into the Stock Purchase Agreement
attached hereto as Exhibit C, pursuant to which Facet will purchase
from Trubion and Trubion will sell to Facet Ten Million Dollars
($10,000,000.00) of newly issued shares of common stock of Trubion at a purchase
price per share equal to One Hundred Thirty-Five Percent (135%) of the average closing price of a share of
common stock of Trubion over the sixty (60) trading days prior to the Signing
Date provided that such purchase price (including the 35% premium) shall not be
greater than $[ * ]/share or lower than $[ * ]/share of common stock of Trubion.


 


9.3          Development Milestone Payments. 
Facet shall make milestone payments (each a “Milestone
Payment”) to Trubion based on the first achievement of each
milestone event in the Field, in the Territory for each Product as set forth in
this Section 9.3. No Milestone Payment shall be made twice with respect to
the same Product. For the purposes of this Section 9.3, two Products are
deemed the “same Product” if one Product
contains, as its active pharmaceutical ingredient, (i) the same [ * ] or [
* ] that is [ * ] in the [ * ], (ii) a [ * ] that is a [ * ] or [ * ] form
of the [ * ] or [ * ] that is [ * ] in the [ * ] or (iii) a [ * ] that is
a [ * ] or [ * ] form of a [ * ] or [ * ] from which the [ * ] in the [ * ] was
[ * ] or [ * ].  Facet shall pay to
Trubion the amounts set forth below, within [ * ] after the first achievement
of the corresponding milestone event with respect to the Product.  Each Milestone Payment is
non-refundable and non-creditable against any other payments due hereunder, provided that if the Development of a Product is abandoned,
any Milestone Payments made with respect to such abandoned Product may be
credited against the corresponding Milestone Payments payable on a Product
which achieves such milestones after the abandonment of the other Product. For
the purposes of this Section 9.3, the “[ * ]” of a Clinical Trial shall
occur upon the [ * ] of the [ * ] in such [ * ], “[ * ]” and “[ * ]” shall be [
* ] by the [ * ] in advance with respect to such [ * ] in the [ * ] or,
following [ * ] for the applicable [ * ], [ * ] by the [ * ] in advance with
respect to such [ * ] in [ * ] for the [ * ]. Notwithstanding anything to the
contrary in this Agreement, if Trubion is deemed pursuant to Section 14.2(b) to have
exercised its Opt-Out Option with respect to all Products on account of an
uncured material breach by Trubion, the amount of the milestone payments due
pursuant to this Section 9.3 with respect to milestone events achieved by
all Products after Facet has provided Trubion with written notice of
continuation in accordance with Section 14.2(b) shall be reduced by [
* ].


 


	
  Milestone Event

  	
   

  	
  Milestone

  Payment

  	
   

  
	
  [ * ] of the [ * ] (includes [ * ])

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [ * ] of the [ * ] in [ * ] (includes [ * ])

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [ * ] of the [ * ] in [ * ] (includes [ * ])

  	
   

  	
  $

  	
  [ * ]

  	
   

  



 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


51

















 


	
  [ * ] of [ * ] by [ * ] in [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [ * ] of [ * ] by [ * ] in [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [ * ] of [ * ] by [ * ] in [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  [ * ] of [ * ] by [ * ] in [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [ * ] of [ * ] by [ * ] in [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  [ * ] of [ * ] by [ * ] in [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [ * ] of the [ * ] for the [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [ * ] of the [ * ] for the [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [ * ] or [ * ] of the [ * ] in the [ * ] for the [
  * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [ * ] or [ * ] of the [ * ] in the [ * ] for the [
  * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  [ * ] of the [ * ] in [ * ] for the [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  



 


9.4          Sharing of Product Profit.


 


(a)           Allocation.  Facet and Trubion shall share equally in Product
Profit (which, for the avoidance of doubt, includes sharing of losses in a
given period if the calculation of Product Profit for such period is negative)
arising from the sale of each Collaboration Product in the Field in the
Territory.


 


(b)           FTE Records and Calculations. 
Each Party shall record its FTE effort for the Commercialization of each
Collaboration Product to the extent that such FTE efforts are included in
Commercialization Costs that are, or may in the future be, shared under this
Agreement, and shall report such FTE effort to the JCC, on a Calendar Quarterly
basis, in each case in a manner that allocates such FTE effort to the extent
practicable to each applicable Collaboration Product.  Except to the extent provided herein, each
Party shall calculate and maintain records of FTE effort incurred by it in the
same manner as used for other products commercialized by such Party in
accordance with a methodology approved by the JSC.  The JFC shall facilitate any reporting
hereunder.


 


(c)           Commercialization Costs Accounts. 
Each Party shall charge all Commercialization Costs as incurred by it or
its Affiliates on its books and records in connection with each Commercialization
Plan.  Each Party shall provide the other
Party with an interim quarterly report of monthly estimates for the current
Calendar Quarter charges within [ * ] after the end of the second calendar
month in each Calendar Quarter.


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


52

















 


(d)           Other Expenses.  Any expenses incurred by a Party for Commercialization
activities that do not fall within the definitions of Commercialization Costs
shall be borne solely by such Party unless the JSC determines otherwise. In
addition, each Party shall bear all costs incurred pursuant to the
Commercialization Plan, that exceed the portion of the Commercialization Budget
allocated to the Party with respect to the relevant Calendar Quarter by more
than [ * ] unless otherwise approved by the JSC.


 


(e)           Pre-existing Obligations. Unless otherwise determined by the JSC,
any manufacturing obligations in existence prior to the Signing Date, such as
manufacturing capacity reservation or other obligations described in Section 6.3,
other than those disclosed in writing by the obligated Party prior to the
Signing Date and specifically agreed upon by the Parties, will not be
considered Commercialization Costs and will not be subject to expense sharing.


 


(f)            Reporting.  Within [ * ] after the end of each Calendar
Quarter, commencing with the first Calendar Quarter in which the Parties are
implementing a Commercialization Plan for a particular Collaboration Product,
each Party shall report to the JCC and the JFC its gross sales and Commercialization
Costs for such Collaboration Product in the Territory.  In addition, each Party shall provide the JCC
and the JFC with a monthly statement on a Product-by-Product and
country-by-country basis of the amount of gross sales of Collaboration
Products.


 


(g)           Payment.  Within [ * ] after receipt of such reports, the JFC
shall provide for such Collaboration Product a consolidated financial statement
setting forth the Product Profit for such Collaboration Product and calculating
each Party’s fifty percent (50%) share of such Product Profit. Thereafter the
following remittance obligations shall apply for such Collaboration Product
depending on whether such Product Profit is positive or negative:


 


(i)            If there is positive Product Profit for such Calendar
Quarter, then one Party shall make a payment to the other Party within [ * ]
following delivery of the financial statement referenced above in an amount
that will cause each Party to have received an equal share of the Product
Profit for such Calendar Quarter.


 


(ii)           If there is negative Product Profit for such Calendar
Quarter, then one Party shall make a payment to the other Party so that each
Party will bear an equal share of the Product Profit for such Calendar
Quarter.  Such payment shall be made
within [ * ] following delivery of the financial statement referenced above.


 


(h)           Records. 
Each Party shall keep detailed records of the Commercialization Costs it
incurs, including all supporting documentation for such expenses, and remits
for payment. Each Party shall keep such records for at least [ * ] after the
date that such expense was incurred.


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


53

















 


9.5          Royalties.


 


(a)           Base Royalties.


 


(i)            Trubion Royalties.   Subject to Section 9.5(e), if Trubion has
exercised its Opt-Out Option pursuant to Section 7.2, Facet shall pay
Trubion royalties on the Net Sales of Royalty Products during the applicable
Royalty Period as follows:


 


	
  Date
  of Trubion Opt-Out Notice:

  	
   

  	
  Royalty Rate:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  At
  any time after [ * ] from the [ * ] and before the [ * ] for the [ * ]

  	
   

  	
  [ * ]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Within
  [ * ] after the [ * ] for [ * ]

  	
   

  	
  [ * ]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Within
  [ * ] after the [ * ] for [ * ]

  	
   

  	
  [ * ]

  	
  %

  



 


(ii)           Facet Royalties.   Subject to Section 9.5(e) if Facet
has exercised its Opt-Out Option pursuant to Section 7.2 Trubion shall pay
Facet royalties on the Net Sales of Royalty Products during the applicable
Royalty Period as follows:


 


	
  Date of Facet Opt-Out Notice:

  	
   

  	
  Royalty Rate:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Within [ * ] after the [ * ] for the [ * ]

  	
   

  	
  [ * ]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Within [ * ] after the [ * ] for [ * ]

  	
   

  	
  [ * ]

  	
  %

  



 


(b)           Royalties after Opt-Out due to
Competing Program.  Subject to Section 9.5(e), if the
Opt-Out Party exercised its Opt-Out Option pursuant to Section 8.5 (i.e.,
due to a Competing Program following a Change of Control of the Opt-Out Party),
the Non-Opt-Out Party shall pay the Opt-Out Party royalties on the Net Sales of
Royalty Products during the applicable Royalty Period, as follows:


 


	
  Date of Opt-Out Notice:

  	
   

  	
  Royalty Rate:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Before the [ * ] of the [ * ]

  	
   

  	
  [ * ]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  After the [ * ] of [ * ]

  	
   

  	
  [ * ]

  	
  %

  



 


(c)           Royalties after Opt-Out Following Change of Control. 
Subject to Section 9.5(e), if the Opt-Out Party exercised its
Opt-Out Option pursuant to Section 7.3 following a Change of Control of
the Non-Opt-Out Party, the Non-Opt-Out Party (or its successor in interest)
shall pay the Opt-Out Party royalties on the Net Sales of Royalty Products
during the applicable Royalty Period, as follows:


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


54

















 


	
  Date of Opt-Out Notice:

  	
   

  	
  Royalty Rate:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Before the [ * ] of the [ * ] for the [ * ]

  	
   

  	
  [ * ]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  After [ * ] of the [ * ] for the [ * ] and before
  the [ * ] for [ * ]

  	
   

  	
  [ * ]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  After the [ * ] for [ * ] and before the [ * ] for [
  * ]

  	
   

  	
  [ * ]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  After the [ * ] for [ * ] and before the [ * ] of [
  * ]

  	
   

  	
  [ * ]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  After the [ * ] of [ * ]

  	
   

  	
  [ * ]

  	
  %

  



 


(d)           Royalties after Opt-Out Following Uncured Breach.


 


(i) Trubion Royalties. 
Subject to Section 9.5(e), if Trubion is deemed pursuant to Section 14.2(b) to
have exercised its Opt-Out Option with respect to all Products on account of an
uncured material breach by Trubion, Facet shall pay Trubion royalties on the
Net Sales of Royalty Products during the applicable Royalty Period, as follows:


 


	
  Date of Trubion Deemed Opt-Out:

  	
   

  	
  Royalty Rate:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Before the [ * ] of the [ * ] for the [ * ]

  	
   

  	
  [ * ]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  After [ * ] of the [ * ] for the [ * ] and before
  the [ * ] for [ * ]

  	
   

  	
  [ * ]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  After the [ * ] for [ * ] and before the [ * ] for [
  * ]

  	
   

  	
  [ * ]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  After the [ * ] for [ * ] and before the [ * ] of [
  * ]

  	
   

  	
  [ * ]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  After the [ * ] of [ * ]

  	
   

  	
  [ * ]

  	
  %

  



 


(ii) Facet Royalties. 
Subject to Section 9.5(e), if Facet is deemed pursuant to Section 14.2(b) to
have exercised its Opt-Out Option with respect to all Products on account of an
uncured material breach by Facet, Trubion shall pay Facet royalties on the Net
Sales of Royalty Products during the applicable Royalty Period, as follows:


 


	
  Date of Facet Deemed Opt-Out:

  	
   

  	
  Royalty Rate:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Before the [ * ] of the [ * ] for the [ * ]

  	
   

  	
  [ * ]

  	
  %

  



 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


55
















 


	
  After [ *] of the [ *] for the [ *] and before the [ *] for [ *]

  	
   

  	
  [*]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  After the [ *] for [ *] and before the [ *] for [
  *]

  	
   

  	
  [*]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  After the [ *] for [ *] and before the [ *] of [
  *]

  	
   

  	
  [*]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  After the [ *] of [ *]

  	
   

  	
  [*]

  	
  %

  



 


(e)           Reduced Royalty Rate.


 


(i)            If a Royalty Product is generating Net
Sales in a country during the applicable Royalty Period at a time when there is
no Valid Claim covering such Royalty Product in such country of sale within the
Trubion Patent Rights or the Facet Applied Patent Rights, then the royalty rate
applicable to Net Sales of such Royalty Product in such country shall be
reduced by [ * ] percent ([ * ]%) of the applicable royalty rate set forth in Section 9.5(a)-(d).


 


(ii)           If a Royalty Product is generating Net Sales
in a country during the applicable Royalty Period at a time when a competing
product is being actively marketed and sold in such country, then the royalty
rate applicable to Net Sales of such Royalty Product in such country shall be
reduced by [ * ] percent ([ * ]%) of the applicable royalty rate set forth in Section 9.5(a)-(d).
For purposes of this Section 9.5(e)(ii), “competing
product” shall mean a third party protein therapeutic that (a) [
* ] the [ * ] (or a [ * ]) [ * ] of [ * ] and wherein such protein therapeutic
is [ * ] or [ * ] or [ * ] to [ * ] through [ * ] the [ * ] (or a [ * ]), and (b) is
[ * ] for the [ * ] the [ * ].


 


(iii)         The Non-Opt-Out Party may, subject to Section 9.5(e)(iv),
deduct from the royalties it would otherwise owe to the Opt-Out Party pursuant
to this Section 9.5 for Third Party licenses entered into after the
Signing Date, including Future Third Party Licenses, an amount equal to [ * ]
percent ([ * ]%) of the amounts paid to Third Parties in consideration for
intellectual property rights that the Non-Opt-Out Party reasonably believes are
necessary in connection with the Development, Manufacture or Commercialization
of a Royalty Product in the Field in the Territory.


 


(iv)          During the Royalty Period, the operation
of Sections [ * ] and [ * ] individually or in combination shall not reduce by
more than [ * ] percent ([ * ]%) the royalties that would otherwise have been
due under in Section 9.5(a)-(d).


 


(f)            Expiration of Royalty Period.  After the expiration of the Royalty Period for any
Royalty Product in any country in the Territory, no further royalties shall be
payable in respect of sales of such Royalty Product in such country and
thereafter the licenses granted to the Non-Opt-Out Party under Section 8.1
or 8.2, as applicable, with respect to such Royalty Product in such country
shall be fully paid-up, perpetual, irrevocable, royalty-free, non-exclusive
licenses.


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


56

















 


(g)           Cumulative Royalties.  The obligation to pay royalties under Section 9.5
shall be imposed only once with respect to a single unit of a Royalty Product,
regardless of how many Valid Claims included within the Trubion Patent Rights,
or Facet Applied Patent Rights would, but for this Agreement, be infringed by
the Manufacture, use, import, offer for sale or sale of such Royalty Product in
the countr(y)ies in the Territory of such Manufacture, use or sale.


 


(h)           Royalty Product Reports and
Payments.  During the Royalty Period, within [ * ] after
the end of each Calendar Quarter, the Non-Opt-Out Party shall deliver to the
Opt-Out Party a report setting forth for such Calendar Quarter the following
information, on a Royalty Product-by-Royalty Product and country-by-country
basis: (a) the gross sales amount (by the Non-Opt-Out Party, its
Affiliates and permitted sublicensees) for each Royalty Product sold in the
Field in the Territory, on a country-by-country basis; (b) the Net Sales
for each Royalty Product; and (c) the royalty amount due hereunder for the
sale of each Royalty Product.  No such
reports shall be due for any Royalty Product before the First Commercial Sale
of such Royalty Product in the Territory. 
The total royalty due for the sale of Royalty Products during such
Calendar Quarter shall be remitted at the time such report is made.


 


9.6          Taxes and
Withholding.  All payments due from one Party to
another under this Agreement will be made without any deduction or withholding
for or on account of any tax unless such deduction or withholding is required by applicable Laws to be
assessed against the receiving Party.  If
the paying Party is so required to deduct or withhold, the paying Party will (a) promptly
notify the receiving Party of such requirement, (b) pay to the relevant
authorities the full amount required to be deducted or withheld promptly upon
the earlier of determining that such deduction or withholding is required or
receiving notice that such amount has been assessed against the receiving
Party, (c) promptly forward to the receiving Party an official receipt (or
certified copy) or other documentation reasonably acceptable to the receiving
Party evidencing such payment to such authorities, and (d) otherwise
reasonably cooperate with the receiving Party in connection with the receiving
Party’s attempts to obtain favorable tax treatment and credit therefor (where
appropriate) in accordance with applicable Laws.


 


9.7          Currency.  All amounts payable and calculations hereunder shall
be in Dollars. Conversion of sales recorded in local currencies to Dollars will
be performed in a manner consistent with a Party’s normal practices used to
prepare its financial statements and consistent with GAAP, provided
that such practices use a widely accepted source of published exchange rates
(and are approved by the JCC as applicable).


 


9.8          Interest on Past Due
Payments.  If either Party fails to pay any payment
due under this Agreement on or before the date such payment is due, as provided
in this Agreement, such late payment shall bear interest, to the extent
permitted by applicable Law, at the [ * ] as [ * ] from time to time [ * ], effective
for the first date on which payment was delinquent and calculated on the number
of days such payment is overdue or, if such rate is [ * ], as [ * ] as the
Parties agree.


 


9.9          Maintenance of Records; Audits;
Consolidation.


 


(a)           Record Keeping.  Each Party shall keep accurate books and accounts of
record in accordance with GAAP in connection with the Development, Manufacture
and


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


57

















 


Commercialization of
Products, and the calculation of payments to be made under this Agreement in
sufficient detail to permit accurate determination of all amounts necessary for
verification of royalties and other payments to be paid from one Party to
another under this Agreement.  Each Party
shall maintain such records for a period of at least [ * ] after the end of the
Calendar Year in which they were generated.


 


(b)           Audits.  Upon thirty (30) days prior written notice, a Party
(the “Auditing Party”) may conduct and the other
Party (the “Audited Party”) shall permit an
independent certified public accounting firm of nationally recognized standing
selected by the Auditing Party and reasonably acceptable to the Audited Party,
to examine, at the Auditing Party’s sole expense, the relevant books and
records of the Audited Party as may be reasonably necessary to verify the
accuracy of (a) reports for Development Costs, (b) Manufacturing
Costs, (c) Commercialization Costs and (d) the reports submitted by
the Audited Party in accordance with this Agreement in connection with the
payment of royalties and other amounts hereunder.  An examination by the Auditing Party under
this Section 9.9(b) shall occur not more than once in any Calendar
Year and shall be limited to the pertinent books and records for any Calendar
Year ending not more than [ * ] before the date of the request.  The accounting firm shall be provided access
to such books and records at the Audited Party’s facility(ies) where such books
and records are normally kept and such examination shall be conducted during
the Audited Party’s normal business hours. 
The Audited Party may require the accounting firm to sign a standard
non-disclosure agreement before providing the accounting firm access to the
Audited Party’s facilities or records. 
Upon completion of the audit, the accounting firm shall provide both the
Audited Party and the Auditing Party a written report disclosing whether the
reports submitted by the Audited Party are correct or incorrect, whether the
amounts paid are correct or incorrect, and in each case, the specific details
concerning any discrepancies.  No other
information shall be provided to the Auditing Party.


 


(c)           Underpayments/Overpayments.  If such accounting firm concludes that additional
royalties or other payments were due to the Auditing Party, the Audited Party
shall pay to the Auditing Party the additional amounts within [ * ] of the date
the Audited Party receives such accountant’s written report so concluding.  If an underpayment exceeds [ * ] percent ([ *
]%) of the amounts that were to be paid to the Auditing Party, the Audited
Party also shall reimburse the Auditing Party for all costs and reasonable
out-of-pocket expenses incurred in conducting the audit.  If such accounting firm concludes that the
Audited Party overpaid the Auditing Party, the Auditing Party, within [ * ] of
the date the Auditing Party receives such account’s report so concluding, will
refund such overpayments to the Audited Party less the reasonable out-of-pocket
costs incurred by the Auditing Party in conducting the audit.


 


(d)           Confidentiality.  All financial information of the Audited Party with
respect to a Royalty Product which is subject to review under this Section 9.9
shall be deemed to be the Audited Party’s Confidential Information subject to
the provisions of Article 11, and the Auditing Party shall not disclose
such Confidential Information to any Third Party or use such Confidential
Information for any purpose other than verifying payments to be made by the
Audited Party with respect to such Royalty Product; provided, however, that such Confidential Information may be
disclosed by the Auditing Party to Third Parties only to the extent necessary
to enforce the Auditing Party’s rights under this Agreement. All financial
information of the Audited Party with respect to a Collaboration Product which
is subject to review under this


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


58

















 


Section 9.9 shall be
deemed to be the Confidential Information of both Parties subject to the provisions
of Article


 


(e)           Consolidation.  In the event that a Party is, in the opinion of its
independent registered accounting firm, reasonably required to consolidate or
otherwise report in the financial statements of such Party (the “Consolidating Party”), all or a portion of the financial
performance of the other Party (the “Consolidated Party”)
for any financial reporting periods, then the Consolidating Party shall
promptly notify the Consolidated Party of such determination in writing, and
the Consolidated Party agrees to cooperate and promptly provide reasonable
access to its books and records in order for the Consolidating Party to fulfill
its financial reporting obligations.


 


10.          INTELLECTUAL PROPERTY.


 


10.1        Ownership of Collaboration
Inventions.


 


(a)           The JPC shall, within a reasonable time
after the Signing Date, establish and oversee a mutually agreeable procedure
for (i) identifying and disclosing all inventions and Know-How generated
by one or both Parties, their Affiliates or their respective employees, agents,
or independent contractors in the course of conducting activities under this
Agreement (“Collaboration Inventions”); and (ii) determining
inventorship of each such Collaboration Invention, provided
that such determination shall be made in accordance with United States patent
laws.


 


(b)           Each Party shall solely own all
Collaboration Inventions invented solely by its and/or its Affiliates’
respective employees, agents and/or independent contractors.


 


(c)           All Collaboration Inventions invented jointly
by one or more employees, agents, or independent contractors of Trubion and/or
its Affiliates and one or more employees, agents, or independent contractors of
Facet and/or its Affiliates (collectively, “Joint
Inventions”) shall be owned jointly by the Parties in accordance
with joint ownership interests of co-inventors under United States patent laws
(that is, each Party shall have full rights to license, assign and exploit such
Joint Inventions (and any patents arising therefrom) anywhere in the world,
without any requirement of gaining the consent of, or accounting to, the other
Party), subject to the licenses granted herein and subject to any other
intellectual property held by such other Party.


 


(d)           This Agreement is intended by the Parties
to be entered into pursuant to 35 U.S.C. 103(c), as such section may be amended
from time to time.  For clarity,
Collaboration Inventions are intended by the Parties to be subject to 35 U.S.C.
103(c)(1) and this Agreement is intended by the Parties to be deemed a “joint
research agreement” as defined in 35 U.S.C. 103(c)(3), as such sections may be
amended from time to time.


 


10.2        Disclosure of Inventions.  Each Party shall promptly disclose to the JPC all
Collaboration Inventions, including all invention disclosures or other similar
documents submitted to such Party by its, or its Affiliates’ employees, agents
or independent contractors describing Collaboration Inventions.


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


59

















 


10.3        Prosecution of Patents.


 


(a)           Trubion Core Patent Rights. Except as otherwise provided in this Section 10.3,
as between the Parties, Trubion shall have the sole right and authority to
prepare, file, prosecute (including any oppositions, interferences, reissue
proceedings, reexaminations and post-grant proceedings) and maintain the
Trubion Core Patent Rights in any jurisdiction in the Territory, provided that
decisions regarding any claims within the Trubion Core Patent Rights that claim
the [ * ] or [ * ] of [ * ] or [ * ] in the [ * ] and do not claim the [ * ] or
[ * ] of [ * ] that is [ * ] shall be made by the JPC. Trubion shall provide
Facet (i) a reasonable opportunity to review and comment on such filing
and prosecution efforts regarding the Trubion Core Patent Rights in the
Territory; (ii) a copy of each material communication received from any
patent authority in the Territory regarding the Trubion Core Patent Rights, and
(iii) drafts of any material filings or material responses to be made to
such patent authorities a reasonable amount of time in advance of submitting
such filings or responses. If Trubion determines in its sole discretion to
abandon, cease prosecution or not maintain any Trubion Core Patent Right
anywhere in the Territory, then Trubion shall provide Facet written notice of such
determination at least [ * ] before any deadline for taking action to avoid
abandonment (or other loss of rights) and shall provide Facet with the
opportunity to prepare, file, prosecute and maintain such Trubion Core Patent
Right in the affected countries of the Territory on behalf of Trubion. If Facet
desires Trubion to file, in a particular jurisdiction in the Territory, a
Trubion Core Patent Right that claims priority to (or is based on the subject
matter of) another Trubion Core Patent Right, Facet shall provide written
notice to Trubion requesting that Trubion file such patent application in such
jurisdiction. If Facet provides such written notice to Trubion, Trubion shall
either (i) file and prosecute such patent application and maintain any
patent issuing thereon in such jurisdiction, or (ii) notify Facet that
Trubion does not desire to file such patent application and provide Facet with
the opportunity to file and prosecute such patent application and maintain any
patent issuing thereon on behalf of Trubion. Facet’s rights under this Section 10.3
with respect to any Trubion Core Patent Right licensed to Trubion by a Third
Party shall be subject to the rights of such Third Party to file, prosecute,
and/or maintain such Trubion Core Patent Right. 
Facet shall be responsible for [ * ] percent ([ * ]%) of the
out-of-pocket costs incurred by Trubion in the course of preparing, filing,
prosecuting and maintaining the Trubion Core Patent Rights and such costs shall
not be included in Development Costs or Commercialization Costs.  If Facet provides written notice to Trubion
that Facet is no longer interested in maintaining a license to a particular
Trubion Core Patent Right in a particular country, Facet will not be responsible
for any portion of the costs incurred by Trubion after the date of such notice
in connection with the preparation, filing, prosecution or maintenance of such
Trubion Core Patent Right in such country, and the license granted to Facet
under such Trubion Core Patent Right in such country shall terminate upon the
delivery of such notice.  If Facet
assumes responsibility for any Trubion Core Patent Rights, then all costs
incurred by Facet in the course of preparing, filing, prosecuting and
maintaining such Trubion Core Patent Rights shall be borne by Facet, without
reimbursement by Trubion, and such costs shall not be included in Development
Costs or Commercialization Costs.  If
Trubion has exercised or is deemed to have exercised its Opt-Out Option in respect
of all Products under this Agreement pursuant to Section 7.2, 7.3, 8.5 or
14.2(b), following the Opt-Out Effective Date, all costs incurred by Trubion in
the course of preparing, filing, prosecuting and maintaining the Trubion Core
Patent Rights shall be borne solely by Trubion. 
If Facet has exercised or is deemed to have exercised its Opt-Out Option
in respect of all Products under this Agreement pursuant to Section 7.2,
7.3, 8.5 or 14.2(b),


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


60
















 


following the Opt-Out
Effective Date, all costs incurred by Trubion in the course of preparing,
filing, prosecuting and maintaining the Trubion Core Patent Rights shall be
borne solely by Trubion and Facet shall not have any rights pursuant to this Section
10.3(a) with respect to the Trubion Core Patent Rights; provided,
however, if Facet notifies Trubion in writing within [ * ] following
the Opt-Out Effective Date, with respect to one or more Trubion Core Patent
Rights, that Facet will continue to be responsible for [ * ] percent ([ * ]%)
of the out-of-pocket costs incurred by Trubion in the course of preparing,
filing, prosecuting and maintaining such Trubion Core Patent Right(s), then
Facet will continue to have all rights set forth in this Section 10.3(a) with
respect to such Trubion Core Patent Right(s).


 


(b)                                  Trubion Product Patent Rights,
Facet Product Patent Rights and Joint Patent Rights.


 


(i)                                    This Section 10.3(b)(i) shall apply if
neither Party has exercised its Opt-Out Option, or is deemed to have exercised
its Opt-Out Option under Section 14.2(b). 
Decisions regarding the preparation, filing, prosecution, and
maintenance of Trubion Product Patent Rights, Facet Product Patent Rights and
Joint Patent Rights, as well as any claims within the Trubion Core Patent
Rights that claim the [ * ] or [ * ] of [ * ] or [ * ] in the [ * ] and do not
claim the [ * ] or [ * ] of [ * ] that is [ * ], in any jurisdiction in the
Territory shall be made by the JPC.  The
JPC shall designate a Party (the “Implementing Party”)
to be responsible, using its in-house counsel or outside patent counsel
reasonably acceptable to the other Party, to implement the decisions of the JPC
regarding the preparation, filing, prosecution, and maintenance of such Patent
Rights, provided that Trubion shall be the
Implementing Party for Trubion Product Patent Rights and Facet shall be the
Implementing Party for Facet Product Patent Rights.  The Implementing Party shall provide the JPC (i)
a reasonable opportunity to review and comment on such prosecution efforts
regarding such Patent Rights in the Territory, (ii) a copy of each material
communication received from any patent authority in the Territory regarding
such Patent Rights, and (iii) drafts of any material filings or material
responses to be made to such patent authorities a reasonable amount of time in
advance of submitting such filings or responses.  Each Party shall be responsible for fifty
percent (50%) of the out-of-pocket costs incurred by the Parties in the course
of preparing, filing, prosecuting and maintaining such Patent Rights and such
costs shall be included in Development Costs if incurred prior to First
Commercial Sale of a Collaboration Product or Commercialization Costs if
incurred after First Commercial Sale of a Collaboration Product.


 


(ii)                                This Section 10.3(b)(ii) shall apply if a
Party has exercised its Opt-Out Option, or is deemed to have exercised its
Opt-Out Option under Section 14.2(b), the Non-Opt-Out Party has delivered or is
deemed to have delivered a Pursuit Notice, and the Parties are not actively
Developing or Commercializing any Collaboration Products.  Subject to this Section 10.3(b)(ii), the
Non-Opt-Out Party shall make and implement decisions regarding the preparation,
filing, prosecution, and maintenance of Trubion Product Patent Rights, Facet
Product Patent Rights and Joint Patent Rights, as well as any claims within the
Trubion Core Patent Rights that claim the [ * ] or [ * ] of [ * ] or [ * ] in
the [ * ] and do not claim the [ * ] or [ * ] of [ * ] that is [ * ],  in any jurisdiction in the Territory.  The Non-Opt-Out Party shall provide the
Opt-Out Party: (i) a reasonable opportunity to review and comment on such
prosecution efforts regarding such Patent Rights in the Territory; (ii) a copy
of material communications from any patent authority in the Territory regarding
such Patent Rights; and (iii) drafts of any


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


61

















 


material filings or
material responses to be made to such patent authorities a reasonable amount of
time in advance of submitting such filings or responses. If the Non-Opt-Out
Party determines to abandon, cease prosecution or not maintain any such Patent
Right anywhere in the Territory, then it shall provide the Opt-Out Party
written notice of such determination at least [ * ] before any deadline for
taking action to avoid abandonment (or other loss of rights) and shall provide
the Opt-Out Party with the opportunity to assume the preparation, filing,
prosecution and maintenance of such Patent Right in the affected countries of
the Territory.  Each Party shall be
responsible for one hundred percent (100%) of the costs it incurs in the course
of preparing, filing, prosecuting and maintaining such Patent Rights and such
costs shall not be included in Development Costs or Commercialization Costs.


 


(iii)                            If a Party has exercised its Opt-Out
Option and the Non-Opt-Out Party has delivered a Pursuit Notice, but the
Parties still are actively Developing or Commercializing one or more
Collaboration Products (i.e. Products for which neither Party has exercised its
Opt-Out Option), then (i) the provisions of Section 10.3(b)(ii) shall apply to (1)
all Joint Patent Rights, Trubion Product Patent Rights and Facet Product Patent
Rights that claim the [ * ] or [ * ] of a [ * ] and [ * ] in each case in all
jurisdictions in the Territory and (2) all claims within the Trubion Core
Patent Rights that claim the [ * ] or [ * ] of [ * ] or [ * ] in the [ * ] and
do not claim the [ * ] or [ * ] of [ * ], and (ii) the provisions of Section 10.3(b)(i)
shall apply to (1) any other Joint Patent Right, Trubion Product Patent Rights
and Facet Product Patent Rights and (2) all claims within the Trubion Core
Patent Rights that claim the [ * ] or [ * ] of [ * ] or [ * ] in the [ * ] and
do not claim the [ * ] or [ * ] of [ * ].


 


(c)                                  Divisional Patent Application. 
At the request of Facet or at Trubion’s election, Trubion shall file a
continuation or divisional patent application of any Trubion Core Patent Right
that contains a claim that claims the [ * ] or [ * ] of [ * ] or [ * ] in the [
* ] and does not claim the [ * ] or [ * ] of [ * ] that is [ * ], including
U.S. Patent Application Serial Number [ * ], if permitted by applicable Laws,
shall pursue in such continuation or divisional patent applications claims
specifically directed to one or more Products and shall not pursue in such
continuation or divisional patent applications any claims specifically directed
to the product known as [ * ] or any other product that is not a Product.  Such continuation or divisional patent
applications shall be deemed Trubion Product Patent Rights.


 


(d)                                  Patents Licensed from Third
Parties.  If either Party licenses after the Signing
Date any Patent Rights from a Third Party and such Patent Rights qualify as
Trubion Patent Rights or Facet Product Patent Rights, then each Party’s rights
under this Section 10.3 with respect to such Patent Rights shall be subject to
the rights of such Third Party to prosecute, maintain and extend such Patent
Rights.


 


10.4                        Infringement Actions.


 


(a)                                  Notification of Litigation. 
In the event of the institution of any suit by a Third Party against
either Trubion or Facet or otherwise, in respect of patent infringement
involving the manufacture, use, sale, license, offer for sale, marketing,
import or export of a Product within the Field anywhere in the Territory, any
Party sued or to whom notice or knowledge of such proceeding shall arise, shall
promptly notify the other Party in writing.


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


62

















 


(b)                                  Information and Settlement. 
Each Party shall keep the other Party informed of the status of any
patent infringement litigation or settlement thereof concerning the Products
within the Field in the Territory.


 


10.5                        Enforcement of Patent Rights.


 


(a)                                  Notice and Consultation. 
If either Facet or Trubion becomes aware of any infringement, anywhere
in the Territory, of any issued patent within the Trubion Patent Rights, Facet
Product Patent Rights, Facet Collaboration Patent Rights, or Joint Patent Rights,
which infringing activity adversely affects or is reasonably expected to
adversely affect any Product, it will promptly notify the other Party in
writing to that effect and the Parties will consult with each other regarding
any actions to be taken with respect to such infringing activity.


 


(b)                                  Enforcement of Patent
Rights Before Opt-Out.  If neither Party has exercised or is
deemed to have exercised its Opt-Out Option, the Parties shall have the joint
right, but neither Party shall be obligated, to take action to obtain a
discontinuance of infringement or bring suit against a Third Party infringer of
(1) the Trubion Patent Rights, Facet Collaboration Patent Rights, or Facet
Product Patent Rights, [ * ] such infringement [ * ] a [ * ] (as [ * ] in Section
[ * ]) or (2) the Joint Patent Rights, [ * ] of the [ * ] of such
infringement.  If both Parties wish to so
enforce such Patent Rights, Trubion and Facet shall be jointly responsible for,
and shall bear equally, all the costs and expenses of any such suit brought by
them.  Any recoveries obtained by the
Parties as a result of any proceeding against such Third Party infringer shall
be allocated as follows:


 


(i)                                    Such recovery shall first be used to [ *
] of the [ * ] for [ * ] in [ * ] such [ * ] by [ * ]; and


 


(ii)                                The remainder of the recovery will be [ *
] the [ * ].


 


If one Party elects not to participate in the
infringement action and the Parties have not obtained a discontinuance of the
infringement of such Patent Rights, then the other Party shall have the right,
but not the obligation, to bring suit against such Third Party infringer of (3)
the Trubion Patent Rights, Facet Collaboration Patent Rights or Facet Product
Patent Rights, [ * ] such infringement [ * ] a [ * ] (as [ * ] in Section [ *
]) or (4) the Joint Patent Rights, [ * ] of the [ * ] of such infringement; provided in each case that
the pursuing Party shall bear all of the expenses of such suit.  The other Party will cooperate with the
pursuing Party in any such suit and shall have the right to consult with the
pursuing Party and to participate in and be represented by independent counsel
in such litigation at its own expense. 
Any recoveries obtained by the pursuing Party as a result of any such
proceeding against a Third Party infringer shall be allocated as follows:


 


(iii)                            Such recovery shall first be used to [ *
] the [ * ] for [ * ] by such [ * ], and, then, to [ * ] the [ * ] for [ * ] by
such [ * ];


 


(iv)                               [ * ] of the remainder of the recovery
shall [ * ] the [ * ] and [ * ] shall [ * ] the [ * ];


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


63

















 


(c)                                  Enforcement of Patent Rights
After Opt-Out.  If a Party has exercised or is deemed to have
exercised its Opt-Out Option with respect to a Collaboration Product under this
Agreement and the Non-Opt-Out Party has delivered or is deemed to have
delivered a Pursuit Notice and is pursuing the resulting Royalty Product, the
Non-Opt-Out Party shall have the first right, but not the obligation, to take
action to obtain a discontinuance of infringement or bring suit against a Third
Party infringer of (1) the Trubion Patent Rights, Facet Collaboration Patent
Rights or Facet Product Patent Rights that are licensed to the Non-Opt-Out
Party, [ * ] such infringement [ * ] a [ * ] (as [ * ] in Section [ * ]) or (2)
the Joint Patent Rights, [ * ] of the [ * ] of such infringement.  If the Non-Opt-Out Party does not wish to
enforce such Patent Rights, it shall timely notify the Opt-Out Party in writing
and the Opt-Out Party shall have the right, but not the obligation, to take
action to obtain a discontinuance of infringement or bring suit against a Third
Party infringer of (3) the Trubion Patent Rights, Facet Collaboration Patent
Rights or Facet Product Patent Rights that are licensed to the Non-Opt-Out
Party, [ * ] such infringement [ * ] a [ * ] (as [ * ] in Section [ * ]) or (4)
the Joint Patent Rights, [ * ] of the [ * ] of such infringement. The pursuing
Party shall bear all of the expenses of such suit.  The other Party will cooperate with the
pursuing Party in any such suit and shall have the right to consult with the
pursuing Party and to participate in and be represented by independent counsel
in such litigation at its own expense. 
Any recoveries obtained by the Parties as a result of any proceeding
against such Third Party infringer shall be allocated as follows:


 


(i)                                    Such recovery shall first be used to [ *
] the [ * ] for [ * ] by such [ * ], and, then, to [ * ] the [ * ] for [ * ] by
such [ * ]; and


 


(ii)                                The remainder of the recovery will be
allocated as follows:


 


a.                                       If the [ * ] is the [ * ], the remainder
shall be [ * ] as [ * ] of [ * ] by the [ * ];


 


b.                                       If the [ * ] is the [ * ], [ * ] of the
remainder of the recovery shall [ * ] and [ * ] shall [ * ] the [ * ].


 


(d)                                  Patents Licensed from Third Parties.
 If either Party licenses any Patent Rights
from a Third Party and such Patent Rights qualify as Trubion Patent Rights or
Facet Product Patent Rights, then each Party’s rights under this Section 10.5
with respect to such Patent Rights shall be subject to the rights of such Third
Party to enforce such Patent Rights against infringers.


 


10.6                        Patent Term Extensions.


 


(a)                                  All Products. 
The Parties hereto shall cooperate with each other and provide
reasonable assistance to each other to obtain a patent term extension, or its
equivalent anywhere in the Territory, including under 35 U.S.C. Section 156 and
its foreign counterparts, of any Trubion Patent Right, Facet Collaboration
Patent Rights or Facet Product Patent Right with respect to a Product.  Subject to Section 10.6(b), to the extent reasonably and legally
required in order to obtain any such extension in a particular country, each
Party shall make available to the other a copy of the necessary documentation
to enable such other Party to use the same for the purpose of obtaining the
extension in such country.


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


64

















 


(b)                                  Collaboration Products. 
The JPC shall make all patent term extension decisions with respect to a
Collaboration Product.  Each Party shall
consult with the other Party before applying for or obtaining any patent term
extension or related extension of rights, including supplementary protection
certificates and similar rights for any Trubion Patent Rights, Facet
Collaboration Patent Rights or Facet Product Patent Rights with respect to a
Collaboration Product.  Neither Party
shall proceed with such an extension until the Parties have agreed to a
strategy therefor (with any disagreements on such strategy to be resolved by
the JPC).


 


(c)                                  Royalty Products. 
The Non-Opt-Out Party shall make all elections with respect to obtaining
such patent term extension with respect to a Royalty Product for all Joint
Patent Rights, Trubion Product Patent Rights and Facet Product Patent Rights
that (i) claim the [ * ] or [ * ] of a [ * ] and [ * ] that is then [ * ] or [
* ] by the [ * ] and (ii) are licensed to the Non-Opt-Out Party.


 


10.7                        Trademarks.


 


(a)                                  The JCC shall decide on a
Product-by-Product basis which Party shall be responsible for the selection,
registration, maintenance and defense of all Marks for use in connection with
the sale or marketing of a Collaboration Product in the Field in the
Territory.  Such Party shall own such
Marks and shall grant the other Party a license with respect thereto to conduct
its obligations pursuant to the Commercialization Plan.  The Parties shall share equally all Trademark
Costs, which shall be Development Costs if incurred prior to the First
Commercial Sale of such Collaboration Product and Commercialization Costs if
incurred thereafter.  All uses of such
Marks shall be reviewed by the JCC and shall comply with all applicable Laws
and regulations (including, without limitation, those laws and regulations
particularly applying to the proper use and designation of trademarks in the
applicable countries).


 


(b)                                  The Non-Opting-Out Party shall be
responsible for the selection, registration, maintenance and defense of all
Marks for use in connection with the sale or marketing of the applicable
Royalty Product in the Field in the Territory, as well as all Trademark
Costs associated therewith.  Such Party shall own such
Marks.  All uses of such Marks shall
comply with all applicable Laws and regulations (including, without limitation,
those laws and regulations particularly applying to the proper use and
designation of trademarks in the applicable countries).


 


(c)                                  Neither Party shall, without the other
Party’s prior written consent, use any Mark or Marks that include, in whole or
part, any corporate name or logo of the other Party, or marks confusingly
similar thereto, in connection with such Party’s marketing or promotion of
Products under this Agreement, except as may be expressly authorized in a
co-promotion agreement between the Parties pursuant to Section 5.11 and except
to the extent required to comply with applicable Laws and regulations.


 


11.                               CONFIDENTIALITY.


 


11.1                        Confidentiality.


 


(a)                                  During the Term and [ * ] thereafter,
each Party shall not use or reveal or disclose to Third Parties any
Confidential Information of the other Party without first obtaining


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


65

















 


the written consent of
the other Party, except as may be otherwise provided in, or required in order
for a Party to fulfill its obligations or exercise its rights under this
Agreement.  This confidentiality
obligation shall not apply to such information that (i) is or becomes a matter
of public knowledge (other than by breach of this Agreement by the receiving
Party), (ii) the receiving Party can establish was already known to it or was in
its possession, other than under an obligation of confidentiality, at the time
of disclosure, (iii) is disclosed to the receiving Party, without any
restrictions on further disclosure, by a Third Party having the right to do so
and that did not obtain such information from the disclosing Party, or (iv) is
subsequently independently developed or discovered by employees or agents of
the receiving Party or its Affiliates who have had no access to such
Confidential Information. However, the [ * ] in [ * ] shall [ * ] to [ * ] by [
* ] under [ * ].  The Parties shall take
reasonable measures to assure that no unauthorized use or disclosure is made by
others to whom access to such information is granted.


 


(b)                                  Each Party may disclose Confidential
Information of the other Party to the extent such disclosure is reasonably
necessary in any of the following situations:


 


(i)                                    filing or prosecuting Trubion Patent
Rights, Facet Product Patent Rights or Joint Patent Rights;


 


(ii)                                regulatory filings and other filings with
Governmental Authorities (including Regulatory Authorities), including filings
with the SEC or FDA, with respect to a Product;


 


(iii)                            prosecuting or defending litigation;


 


(iv)                               complying with applicable Laws and
regulations, including regulations promulgated by securities exchanges, court
order, and administrative subpoena or order;


 


(v)                                   disclosure to its Affiliates, employees,
agents, sublicensees, and independent contractors, to the extent necessary for
the purposes of enabling the receiving Party to fulfill its obligations under
this Agreement, provided, the receiving Party
shall be responsible for breaches of the confidentiality obligations by such
Affiliate, employees, agents, and independent contractors, and provided  further that,
each disclosee must be bound by obligations of confidentiality and non-use at
least as equivalent in scope as those set forth in this Article 11 (except with
a minimum duration of [ * ] for independent contractors) prior to any such
disclosure;  and


 


(vi)                               disclosure of the material terms of this
Agreement and/or of any collaboration results or status reports (including
unblinded data from any Clinical Trials) to any bona fide potential or actual
investor, investment banker, acquirer, merger partner, sublicensee, or other
potential or actual financial or commercial partner; provided
that each disclosee must be bound by obligations of confidentiality and non-use
at least as equivalent in scope as those set forth in this Article 11 (except
with a minimum duration of [ * ]) prior to any such disclosure.


 


(c)                                  In the event it is necessary for a Party
to disclose Confidential Information of the other Party to comply with a court
order or administrative subpoena or order, such Party must first use its
reasonable efforts to obtain an order preserving the confidentiality of the 


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


66

















 


information and must give
the other Party timely notice of the contemplated disclosure to allow the other
Party to intervene to preserve the confidentiality of the information by, for
example, seeking an appropriate protective order.


 


11.2                        Scientific Information. 
During the Term, each Party will submit to the other Party for review
and approval all proposed academic, scientific and medical publications and
public presentations relating to Products within the Field for review in
connection with preservation of patent rights and/or to determine whether any
of such other Party’s Confidential Information should be modified or
deleted.  Written copies of such proposed
publications and presentations shall be submitted to the non-publishing Party
no later than [ * ] before submission for publication or presentation and the
non-publishing Party shall provide its comments with respect to such
publications and presentations within [ * ] of its receipt of such written
copy.  The publishing Party shall delay
the submission for publication or presentation for a period of up to [ * ] in
the event the non-publishing Party can demonstrate reasonable need for such
delay, including without limitation, the preparation and filing of patent
applications.  By mutual agreement, this
period may be further extended.  In
addition, upon the non-publishing Party’s request, the publishing Party shall
delete from the proposed submission any Confidential Information of the
non-publishing Party; provided, however, that with respect to a [ * ] or [ * ]
by the [ * ] regarding [ * ] data or information, the [ * ] shall [ * ] or [ *
] to the [ * ] or [ * ] of such [ * ].  Trubion
and Facet will each comply with standard academic practice regarding authorship
of scientific publications and recognition of contribution of other parties in
any publications relating to Products within the Field. Notwithstanding the
rest of this Section 11.2, the Opt-Out Party may not publish any academic,
scientific or medical publications or make any public presentations regarding
the Royalty Product without the prior written consent of the Non-Opt-Out Party.


 


11.3                        SEC Filings.  Before disclosing this Agreement or any
of the terms hereof pursuant to this Section 11.3, the Parties will consult
with each other and agree upon the terms of this Agreement to be redacted in
making any such disclosure. The Parties shall separately submit confidential
treatment request to the SEC but file the same redacted Agreement in such
filings. Notwithstanding the foregoing, either Party may disclose the terms of this Agreement and any
Confidential Information related to this Agreement, including, without
limitation, clinical data, to the extent required, in the reasonable opinion of
such Party’s legal counsel, to comply with applicable Laws, including, without
limitation, the rules and regulations promulgated by the United States
Securities and Exchange Commission (“SEC”),
including comment letters received from the SEC related to SEC periodic reports
and other filings.  .


 


11.4                        Public Announcements. 
The Parties will make a joint public announcement of this Agreement
substantially in the form of the draft press release reviewed and approved by
them prior to the signing of this Agreement. 
No other public announcement or other disclosure to Third Parties
concerning the terms of this Agreement shall be made, either directly or
indirectly, by either Party, except as may be legally required or as may be
required for financial reporting purposes, without first obtaining the written
approval of the other Party and agreement upon the nature and text of such
announcement or disclosure.


 


11.5                        Non-Solicitation.  Without the prior written consent of the other Party,
each of Trubion and Facet agrees that during the Term and for [ * ] thereafter,
neither it nor any of its


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


67

















 


Affiliates will directly
or indirectly solicit for purposes of hiring any person employed by the other
Party or any of its Affiliates or who was employed by the other Party or any of
its Affiliates within the then prior [ * ], or in any manner seek to induce any
such person to leave his or her employment; provided, however, that nothing in this Section 11.5 shall
prohibit Facet or Trubion, as the case may be, from hiring any employees of the
other who respond to general employment solicitations not targeted at employees
of a Party or any of its Affiliates, including general advertisements.


 


12.                               REPRESENTATIONS AND WARRANTIES.


 


12.1                        Representations of Trubion.  Trubion represents and warrants as of the Signing Date
that (i) it is a corporation or entity duly organized and validly existing
under the laws of the state or other jurisdiction of its incorporation or formation,
(ii) the execution, delivery and performance of this Agreement by Trubion has
been duly authorized by all requisite corporate action and does not require any
shareholder action or approval, (iii) it has the corporate power and authority
to execute and deliver this Agreement and to perform its obligations and to
grant the licenses granted by it to the other Party pursuant to this Agreement,
and (iv) the execution, delivery and performance by Trubion of this Agreement
and its compliance with the terms and provisions of this Agreement does not and
will not conflict with or result in a breach of any of the terms and provisions
of or constitute a default under (A) any agreement or instrument binding or
affecting it or the subject matter of this Agreement; (B) the provisions of its
charter or operative documents or bylaws; or (C) any order, writ, injunction or
decree of any court or governmental authority entered against it or by which
any of its property is bound except where such conflict, breach or default
would not materially impact (I) Trubion’s ability to meet its obligations
hereunder or (II) the rights granted to Facet hereunder.


 


12.2                        Additional Representations of
Trubion.  In addition, except as disclosed in
Schedule 12.2, Trubion hereby represents and warrants as of the Signing
Date that:


 


(a)                                  it has provided a complete and accurate
list of all Third Party vendor contracts and Third Party licenses in effect as
of the Signing Date to which Trubion or a Trubion Affiliate is a Party (i) that
are reasonably necessary for the Development, Manufacture or Commercialization
of TRU-016 or any other Product in the Field in the Territory in accordance
with the terms of this Agreement or (ii) pursuant to which Development,
Manufacture or Commercialization services are being provided or have been
ordered as of the Signing Date with respect to TRU-016 or any other Product in
the Field in the Territory, all such contracts and licenses are in full force
in accordance with their terms except as would not reasonably be expected to,
individually or in the aggregate, materially impair the ability of the Parties
to exercise the rights and perform the obligations under this Agreement and
Trubion is not in breach of any material term thereof;


 


(b)                                  except for the intellectual property
licensed to Trubion pursuant the license agreements listed in Schedule
12.2(b), it owns all right, title and interest in and to all of the Trubion
Patent Rights and Trubion Know-How; such license agreements do not and will not
require Trubion to make any royalty payments or other payments (other than
services fees or other payments not expressly identified as fees for the use of
intellectual property rights) to the


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


68

















 


applicable Third Party
licensors in consideration for the exercise of the rights licensed to Trubion
as of the Signing Date under such licenses;


 


(c)                                  it does not own
and has not licensed any intellectual property that in each case would
otherwise qualify as Trubion
Patent Rights or material Trubion Know-How that is reasonably necessary for the
Development, Manufacture, use, importation or Commercialization of Products in
the Field under the terms of this Agreement, but for the fact that such
intellectual property is not licensable to Facet hereunder and therefore not
Controlled by Trubion (and, due solely to such lack of Control despite owning
or holding a license thereto, does not meet the definition of Trubion Patent Rights or Trubion Know-How);


 


(d)                                  it has not received any written notice asserting
or alleging that the research or Development of any Product by or on behalf
Trubion prior to the Signing Date infringed or misappropriated the intellectual
property rights of any Third Party;


 


(e)                                  to Trubion’s knowledge, the Development,
Manufacture and Commercialization after the Signing Date of TRU-016 can be
carried out in the manner reasonably contemplated as of the Signing Date
without (i) infringing any Patent Rights owned or controlled by a Third Party
or (ii) misappropriating any Know-How owned or controlled by a Third Party; provided, however, that Trubion is not making any
representation or warranty pursuant to this Section 12.2(e) with respect to (1)
the [ * ] of [ * ] that were [ * ] of [ * ] from [ * ] to [
* ] (such [ * ], the “[ * ]”)] or (2) the [ * ] of [ * ] that were [ * ] of [ *
] from [ * ] to [ * ] (such [ * ], the “[ * ]”) ;


 


(f)                                    to Trubion’s knowledge, there is no
unauthorized use, infringement or misappropriation of any of the Trubion Patent
Rights or Trubion Know-How by any person;


 


(g)                                 to Trubion’s knowledge, it has not used
in the Development of TRU-016 any employee, agent or independent contractor who
has been debarred by any Regulatory Authority, or is the subject of debarment
proceedings by a Regulatory Authority;


 


(h)                                 there are no actions or proceedings
(including any inventorship challenges or interferences) pending or, to the
knowledge of Trubion, threatened with respect to (i) any of the Trubion Patent
Rights and Trubion Know-How or (ii) the Development or Manufacture of TRU-016;


 


(i)                                    it has made available to Facet a complete
and accurate copy of any IND and other related Regulatory Materials for TRU-016
and has not omitted any material data from such IND or Regulatory Materials;  and


 


(j)                                    no Regulatory Authority has,
to Trubion’s knowledge, commenced or threatened to initiate any action or
proceeding to refuse to file, reject, not approve, or withdraw any Regulatory
Material related to the Product(s), nor has Trubion received any notice to such
effect; and to Trubion’s knowledge, Trubion is not in violation of any
applicable Laws that could reasonably be expected to form the basis for such an
action; and


 


(k)                                Trubion believes in good faith, based upon due
inquiry, that the Development, Manufacture and Commercialization after the
Signing Date of TRU-016 can be


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


69

















 


carried out in the manner
reasonably contemplated as of the Signing Date without infringing (taking
into account the provisions of 35 U.S.C. Section 271(e)) the [ * ] (as defined in Section
[ * ] above) or the [ * ] (as defined in Section [ * ] above), provided that,
in the case of the [ * ], due inquiry means due inquiry given the length of
time since the date Trubion was made aware of the [ * ].


 


12.3                        Representations of Facet.  Facet represents and warrants as of the Signing Date
that (i) it is a corporation or entity duly organized and validly existing
under the laws of the state or other jurisdiction of its incorporation or
formation, (ii) the execution, delivery and performance of this Agreement by
Facet has been duly authorized by all requisite corporate action and does not
require any shareholder action or approval, (iii) it has the corporate power
and authority to execute and deliver this Agreement and to perform its obligations
and to grant the licenses granted by it to the other Party pursuant to this
Agreement, and (iv) the execution, delivery and performance by Facet of this
Agreement and its compliance with the terms and provisions of this Agreement
does not and will not conflict with or result in a breach of any of the terms
and provisions of or constitute a default under (A) any agreement or instrument
binding or affecting it or the subject matter of this Agreement; (B) the
provisions of its charter or operative documents or bylaws; or (C) any order,
writ, injunction or decree of any court or governmental authority entered
against it or by which any of its property is bound except where such conflict,
breach or default would not materially impact (I) Facet’s ability to meet its
obligations hereunder or (II) the rights granted to Trubion hereunder.


 


12.4                        Disclaimer.  EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN SECTIONS
12.1, 12.2 AND 12.3, THE PARTIES MAKE NO REPRESENTATIONS AND EXTEND NO
WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, AND PARTICULARLY THAT
PRODUCTS WILL BE SUCCESSFULLY DEVELOPED HEREUNDER, AND IF PRODUCTS ARE
DEVELOPED, WITH RESPECT TO SUCH PRODUCTS, THE PARTIES DISCLAIM ALL IMPLIED
WARRANTIES OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.


 


12.5                        Mutual Covenant. Each Party covenants to the other Party
that it shall at all times comply in all material respects with all applicable
Laws relating to its activities under this Agreement.


 


13.                               LIABILITY AND INDEMNIFICATION.


 


13.1                        Limitation on Liability.  Except for breaches of Section 8.5 or Article 11,
neither Party shall be liable to the other Party under this Agreement for any
indirect, incidental, punitive, exemplary, special or consequential damages of
any kind whatsoever sustained as a result of a breach of this Agreement; provided, however, that
this limitation will not reduce or affect the Parties’ obligations in respect
of Third Party claims under Section 13.2 or Section 13.3.


 


13.2                        Mutual Indemnification. 
Each Party shall defend, indemnify and hold harmless the other Party and
its Affiliates and their officers, directors, shareholders, employees, agents,
representatives, successors and assigns from and against all Third Party
claims, complaints, recall obligations and liabilities, or lawsuits for damages
(collectively referred to as “Claims”)
arising out of (i) any negligent act or omission, or willful wrongdoing by the
indemnifying Party,


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


70
















 


its Affiliate or
sublicensees in the performance of this Agreement, (ii) the failure by the
indemnifying Party, its Affiliate or sublicensees to comply with any applicable
Law or governmental requirement, and/or (iii) any breach of any representation
or warranty of the indemnifying Party contained in this Agreement.  The indemnifying Party shall not be obligated
under this Section 13.2 to the extent that the Claim was the result of the
non-performance, negligence or willful misconduct of the indemnified Party or
anyone acting on behalf of the indemnified Party, including its Affiliates and
sublicensees, and its and their officers, directors, shareholders, employees,
agents, representatives, successors and assigns.


 


13.3        Indemnification After Opt-Out.  In addition to its obligations under Section 13.2, if
a Party has exercised or is deemed to have exercised its Opt-Out Option with
respect to a Product and the Non-Opt-Out Party has delivered or is deemed to
have delivered a Pursuit Notice with respect thereto, the Non-Opt-Out Party
shall defend, indemnify and hold harmless the Opt-Out Party and its Affiliates
and their officers, directors, shareholders, employees, agents,
representatives, successors and assigns from and against all Claims arising out
of the Development, manufacture, use, handling, storage, promotion, use, sale,
license, offer for sale, marketing, import or export of such Royalty Product
(other than to the extent the Opt-Out Party is responsible for the Claim under Section
13.2) on or after the Opt-Out Effective Date. 
The Non-Opt-Out Party shall not be obligated under this Section 13.3 to
the extent that the Claim was the result of the nonperformance, negligence or
willful misconduct of the Opt-Out Party or anyone acting on behalf of the
Opt-Out Party, including its Affiliates or sublicensees, and their officers,
directors, shareholders, employees, agents, representatives, successors and
assigns.


 


13.4        Limitations on Indemnification.  The obligations to indemnify, defend, and hold
harmless set forth in Sections 13.2 and 13.3 shall be contingent upon the Party
seeking indemnification (the “Indemnitee”): (i)
notifying the indemnifying Party of a claim, demand or suit within ten (10) days
of receipt of same; provided, however, that Indemnitee’s failure or delay in providing
such notice shall not relieve the indemnifying Party of its indemnification
obligation except to the extent the indemnifying Party is prejudiced thereby; (ii)
allowing the indemnifying Party and/or its insurers the right to assume direction
and control of the defense of any such claim, demand or suit; (iii) using its [
* ] to cooperate with the indemnifying Party and/or its insurers, at the
indemnifying Party’s expense, in the defense of such claim, demand or suit; and
(iv) agreeing not to settle or compromise any claim, demand or suit without
prior written authorization of the indemnifying Party.  The Indemnitee shall have the right to
participate in the defense of any such claim, demand or suit referred to in
this Section 13.4 utilizing attorneys of its choice, at its own expense, provided, however, that
the indemnifying Party shall have full authority and control to handle any such
claim, demand or suit.


 


13.5        Other Third Party Claims.  In the event of the institution after the Signing Date
of any suit by a Third Party against either Trubion or Facet, in respect of the
Development, Manufacture, use, handling, storage, promotion, use, sale,
license, offer for sale, marketing, import or export of a Collaboration Product
within the Field anywhere in the Territory for such activities during the Term
for which neither Party is responsible under Section 13.2 or Section 13.3 the
Parties shall cooperate and jointly control the defense and settlement of the
suit and all out-of-pocket litigation expenses incurred by the Parties in the
defense or settlement of the suit as well as all damages awarded against a
Party or agreed to by the Parties in a settlement shall be considered
Development Costs, if incurred prior to the First Commercial Sale of such


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


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Collaboration
Product, or
Commercialization Costs, if incurred after the First Commercial Sale of such
Collaboration Product, or [ * ] under Section [ * ] if [ * ] the [ * ] or [ * ]
by a [ * ] of the [ * ] for the applicable [ * ].


 


13.6        Insurance.  During the Term and for a period of [ * ] after the
Term, or, in the case of a Party that has exercised or is deemed to have
exercised its Opt-Out Option in respect of all Products under this Agreement
until [ * ] after the final Opt-Out Effective Date, each Party shall obtain
and/or maintain, respectively, at its sole cost and expense, product liability
insurance in amounts, respectively, which are reasonable and customary in the
pharmaceutical industry for companies of comparable size and activities at the
respective place of business of each Party; provided that such amounts shall
not be less than [ * ] Dollars ($[ * ]) before the first dosing of the first
patient in the initial Phase III Clinical Study (or the transition to the
pivotal phase of a Phase II/III Clinical Study) of a Product and shall not be
less than [ * ] Dollars ($[ * ]) thereafter. 
Such product liability insurance shall insure against all liability,
including personal injury, physical injury, or property damage arising out of
the manufacture, sale, distribution, or marketing of the Collaboration Products
and the Royalty Products (solely in the event that the policy holder is the
Non-Opt-Out Party with respect thereto) in the Territory.  Each Party shall provide written proof of the
existence of such insurance to the other Party upon request.


 


14.                               TERM AND TERMINATION.


 


14.1        Term.  This Agreement shall become effective on the Signing
Date and, unless earlier terminated pursuant to this Article 14, shall expire
on a Product-by-Product and country-by-country basis (a) in respect of Royalty
Products, upon expiration of the Royalty Period for the Royalty Product in the
country and (b) in respect of Collaboration Products, at such time as Facet and
Trubion and their Affiliates and permitted sublicensees have all stopped
selling the Collaboration Product in the country and the Commercialization Plan
does not contemplate future sales of the Collaboration Product in the country
(the “Term”). 
If the Term or license has not been earlier terminated, upon the
expiration of the Term on a Product-by-Product and country-by-country basis,
the licenses granted to each Party hereunder shall, with respect to such
Product(s) and country(ies), upon and after such expiration, become
nonexclusive, royalty-free, paid-up and irrevocable.


 


14.2        Termination by Either Party for Breach.


 


(a)           Breach. Subject to Section 14.2(c), each Party
shall have the right to terminate this Agreement upon written notice to the
other Party if the other Party materially breaches its obligations under this
Agreement and, after receiving written notice from the non-breaching Party
identifying such material breach in reasonable detail, fails to cure such
material breach within [ * ] from the date of such notice (or within [ * ] from
the date of such notice in the event such material breach is solely based upon
the breaching Party’s failure to pay any amounts due hereunder); provided that
if such material breach is not reasonably subject to cure within the [ * ]
period from notice, then the breaching Party shall have an additional [ * ] to
effect such cure if it is undertaking Diligent Efforts to cure such breach and
shall have provided a written plan reasonably acceptable to the non-breaching Party
to cure such breach within such additional period.  Notwithstanding anything to the contrary in
this Agreement, the breaching Party shall not have the right to exercise its
Opt-Out Option pursuant to Section 7.2 and Facet shall not have 


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


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the right to terminate
the Agreement under Section 14.3 during the period between its receipt of the
notice of a material breach and its cure of such material breach or the
resolution of any dispute with respect thereto pursuant to Section 14.2(c);
provided that if such dispute is resolved in the favor of such alleged
breaching Party, such Party shall be entitled to exercise its Opt-Out Option
pursuant to Section 7.2 or, in the case of Facet, its right to terminate the
Agreement under Section 14.3 within [ * ] of such resolution if it was deprived
of the ability to exercise its Opt-Out Option on account of this sentence.


 


(b)           Continuation. If the non-breaching Party has the right
to terminate this Agreement under Section 14.2(a), then, instead of terminating
this Agreement, the non-breaching Party may elect to continue this Agreement by
notice to the breaching Party, provided, however, if the non-breaching Party elects to continue this
Agreement, upon written notice of continuation from the non-breaching Party,
then the breaching Party shall be deemed to have exercised its Opt-Out Option
and the notice pursuant to this Section 14.2(b) shall be deemed an “Opt-Out
Notice” and a “Pursuit Notice” with respect to all Products under this
Agreement regardless of whether such breach related to any particular Product
and the provisions of Section 7.5 shall apply with respect to all Products
under this Agreement and the breaching Party shall bear [ * ] percent ([ * ]%)
of the reasonable expenses incurred by the non-breaching Party in the course of
performing its transfer obligations pursuant to Sections 7.5(b)(iii),
7.5(b)(iv), 7.5(vi)(2) and 7.5(vii). The preceding sentence shall not in any
event limit in any manner the non-breaching Party’s other remedies for an
uncured material breach of this Agreement.


 


(c)           Disputed Breach. If the alleged breaching Party disputes
in good faith the existence or materiality of a breach specified in a notice
provided by the other Party in accordance with Section 14.2(a), and such
alleged breaching Party provides the other Party notice of such dispute and its
intention to seek arbitration or judgment by a court pursuant to Article 15
within such [ * ] period (or [ * ] period for failure to make any payment), then
the non-breaching Party shall not have the right to terminate this Agreement
under Section 14.2(a) unless and until an arbitrator or court, in accordance
with Article 15, has determined that the alleged breaching Party has materially
breached this Agreement and that such Party fails to cure such breach within [
* ] following such decision of such arbitrator or court (except to the extent
such breach involves the failure to make a payment when due, which breach must
be cured within [ * ] following such decision of such arbitrator or court). It
is understood and agreed that during the pendency of such dispute, all of the
terms and conditions of this Agreement shall remain in effect and the Parties
shall continue to perform all of their respective obligations hereunder.


 


14.3        Termination by Facet at Will.  Facet shall have the right to terminate this Agreement
in its entirety upon [ * ] prior written notice to Trubion, provided that, within eighteen (18) months after the Signing
Date, such notice shall only be effective if accompanied by the payment of a
termination fee equal to Ten Million Dollars ($10,000,000.00).  Notwithstanding anything to the contrary in
this Agreement, Facet shall have no right to terminate this Agreement pursuant
to the preceding sentence after Facet has been deemed to have exercised its
Opt-Out Option on account of an uncured breach pursuant to Section 14.2(b).


 


14.4        Effects of Termination by Facet at
Will.  Upon termination of this Agreement by Facet under Section
14.3, the following shall apply (in addition to any other rights and
obligations under this Agreement with respect to such termination):


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


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(a)           Licenses. The licenses granted in Article 8 shall
terminate. Notwithstanding the foregoing, Facet hereby grants to Trubion,
effective only upon such termination, a [ * ] license, with [ * ] to [ * ] of [
* ], under the [ * ] to Develop, make, have made, use, import, export, offer
for sale, sell and Commercialize any Products that are in active clinical
development or are Commercialized as of the date of termination for the Field
in the Territory, provided that if [ * ] in [ * ]
within [ * ] after the [ * ] of [ * ], [ * ] will [ * ] to [ * ], with [ * ] to
[ * ] of [ * ], under the [ * ] to [ * ] and [ * ] any [ * ] that are [ * ] or
are [ * ] as of the [ * ] of [ * ] for the [ * ] in the [ * ], upon [ * ] to [
* ] to be [ * ] in [ * ] by the [ * ], provided that
if the [ * ] are [ * ] to [ * ] the [ * ] for such [ * ] within [ * ], the [ *
] for such [ * ] shall be [ * ] by [ * ] pursuant to Section [15.3(c)]. In all
cases where any element of the Facet Applied Technology is licensed to Facet by
a Third Party, as a condition precedent for a license to be granted to Trubion
pursuant to this Section 14.4(a), Trubion shall be required to agree in writing
within [ * ] of the effective date of termination to pay any payments,
including royalties on sales by Trubion or its permitted sublicensees, that
accrue and become payable to such Third Party licensor after the effective date
of the license to Trubion. Facet will not be obligated to maintain any Third
Party license agreement in effect unless Trubion timely exercises its rights as
provided in the foregoing sentence or to grant sublicenses under this Section 14.4(a),
if Facet is prohibited from granting such sublicenses under its agreement(s) with
its licensor(s), but shall be required to use Diligent Efforts to obtain
permission to grant such a sublicense from any such licensor(s).


 


(b)           Marks. Facet shall, as promptly as commercially
practicable, assign to Trubion all of Facet’s right, title and interest in and
to the Marks used or to be used with the Products (excluding any such Marks
that include, in whole or part, any corporate name or logo of Facet or its
Affiliates or permitted sublicensees), including any goodwill associated
therewith. For the avoidance of doubt, only those Marks which have been (i) identified
prior to the effective date of termination of this Agreement as the single
designated lead candidate Mark for a non-commercialized Product, or (ii) actually
used in connection with a Commercialized Product, shall be assigned. Trubion
shall be responsible for recording such assignment in the Territory with the
appropriate Governmental Authority and will bear all costs associated with such
assignment and recordation. Facet shall cooperate in facilitating such
assignment and recordation by timely executing all necessary documents provided
to it by Trubion.


 


(c)           Regulatory Materials. Facet shall transfer and assign to
Trubion in the form and format in which such materials are maintained by Facet
in the ordinary course of business, all Regulatory Materials for Products in
the Territory that are Controlled by Facet or its Affiliates or permitted sublicensees.


 


(d)           Transition Assistance. Facet shall, [ * ], provide Transition Assistance for the purpose
of transferring or transitioning to Trubion, (i) in the form and format in
which such Facet Applied Know-How is maintained by Facet in the ordinary course
of business, all Facet Applied Know-How not already in Trubion’s possession,
and (ii) at Trubion’s request, all then-existing Third Party agreements
relating solely to Products hereunder and that Facet is able, using Diligent
Efforts to, assign to Trubion, in each case, to the extent reasonably necessary
for Trubion to continue researching, Developing, Manufacturing, or
Commercializing Products, provided, however, that Facet shall be required to assign any such
agreement solely to the extent assignment is permitted by such agreement, and
Facet is not required to pay any consideration or commence litigation in order
to effect an assignment of any such agreement to Trubion.


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


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(e)           Remaining Inventories. Trubion shall have the right to purchase
from Facet [ * ] (less any portion of the cost previously shared by Trubion as
a Development Cost or Commercialization Cost) any or all of the inventory of
Bulk API and/or Products held by or for Facet or its Affiliates as of the
effective date of termination pursuant to the terms of this Agreement or the
Commercial Supply Agreement, as applicable. Trubion shall notify Facet within [
* ] after the effective date of termination whether Trubion elects to exercise
such right.


 


14.5        Effect of Termination by Trubion for
Uncured Breach.  Upon termination of this Agreement by Trubion
under Section 14.2(a), the licenses granted under Article 8 shall
terminate.  Notwithstanding the
foregoing, Facet hereby grants Trubion, effective only upon such termination, a
[ * ] license, with [ * ] to [ * ] of [ * ], under [ * ], to Develop, make,
have made, use, import, export, offer for sale, sell and Commercialize any
Products that are [ * ] or are [ * ] as of the [ * ] of [ * ] for the [ * ] in the
[ * ].  In addition, Facet shall comply
with Section 14.4(c).


 


14.6        Other Remedies. 
Termination or expiration of this Agreement for any reason shall not
release either Party from any liability or obligation that already has accrued
prior to such expiration or termination, nor affect the survival of any
provision of this Agreement to the extent it is expressly stated to survive
such termination. Termination or expiration of this Agreement for any reason
shall not constitute a waiver or release of, or otherwise be deemed to
prejudice or adversely affect, any rights, remedies or claims, whether for
damages or otherwise, that a Party may have hereunder or that may arise out of
or in connection with such termination or expiration.


 


14.7        Rights in Bankruptcy. 
All rights and licenses granted under or pursuant to this Agreement by
Trubion and Facet are, and shall otherwise be deemed to be, for purposes of Section
365(n) of the United States Bankruptcy Code, licenses of rights to “intellectual
property” as defined under Section 101 of the United States Bankruptcy Code.
The Parties agree that each Party, as licensee of certain rights under this
Agreement, shall retain and may fully exercise all of its rights and elections
under the United States Bankruptcy Code. The Parties further agree that, in the
event of the commencement of a bankruptcy proceeding by or against a Party
(such Party, the “Bankrupt Party”)
under the United States Bankruptcy Code, (a) the other Party shall be entitled
to a complete duplicate of (or complete access to, as appropriate) any
intellectual property licensed to such other Party and all embodiments of such
intellectual property, which, if not already in such other Party’s possession,
shall be promptly delivered to it (x) upon any such commencement of a
bankruptcy proceeding upon such other Party’s written request therefor, unless
the Bankrupt Party elects to continue to perform all of its obligations under
this Agreement or (y) if not delivered under clause (x), following the
rejection of this Agreement by the Bankrupt Party upon written request therefor
by the other Party and (b) the Bankrupt Party shall not interfere with the
other Party’s rights to intellectual property and all embodiments of
intellectual property, and shall assist and not interfere with the other Party
in obtaining intellectual property and all embodiments of intellectual property
from another entity. The “embodiments” of intellectual property includes all
tangible, intangible, electronic or other embodiments of rights and licenses
hereunder, including all compounds and products embodying intellectual
property, Products, filings with Regulatory Authorities and related rights and
Trubion Know-How in the case that Trubion is the Bankrupt Party and Facet
Applied Know-How in the case Facet is the Bankrupt Party.


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


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14.8        Continuing Rights and Obligations.  Termination or expiration of this Agreement shall not
affect rights or obligations of the Parties under this Agreement that have accrued
prior to the date of termination or expiration of this Agreement.
Notwithstanding anything to the contrary, the following provisions shall
survive and apply after expiration or termination of this Agreement: Sections [
* ], and [ * ], Article [ * ] (other than Section [ * ]), Article [ * ] (other
than Section [ * ]), Article [ * ], Sections [ * ] (only with respect to the [
* ]), [ * ], and [ * ], Article [ * ], and Article [ * ]. In addition, the
other applicable provisions of Article 9 shall survive to the extent required
to make final reimbursements, reconciliations or other payments with respect to
Product Profits, Net Sales and costs and expenses incurred or accrued prior to
the date of termination or expiration. Furthermore, any other provision required
to interpret or to enforce the Parties’ remaining rights and obligations under
this Agreement shall also survive, but only to the extent required for the full
observation and performance of this Agreement. All provisions not surviving in accordance with the
foregoing shall terminate upon expiration or termination of this Agreement and
be of no further force and effect.


 


15.                               DISPUTE RESOLUTION; LIABILITY.


 


15.1        General.  Any controversy, claim or dispute arising out of or
relating to this Agreement shall be settled, if possible, through good faith
negotiations between the Parties.  If,
however, the Parties are unable to settle such dispute after good faith
negotiations, the matter shall be referred to the Executive Officers to be
resolved by negotiation in good faith as soon as is practicable but in no event
later than [ * ] after referral.


 


15.2        Failure of Executive Officers to
Resolve Dispute.  If the Executive Officers are unable to
settle the dispute after good faith negotiation in the manner set forth above
or in Section 2.7, the matter (a) shall
be resolved in accordance with Section 15.3, and (b) either Party may
seek injunctive or other equitable relief in any court in any jurisdiction
where appropriate.


 


15.3        Arbitration. 
Matters under Section 15.2 which are to be resolved through binding
arbitration shall be settled by traditional arbitration or, for matters
specifically identified in Section 2.7(c)(a), baseball arbitration, in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association (“AAA”) then in effect, except to
the extent such rules are inconsistent with this Section 15.3. The proceedings
and decisions of the arbitrators shall be confidential, final and binding on
the Parties, and judgment upon the award of such arbitrator(s) may be entered
in any court having jurisdiction thereof.


 


(a)           The arbitration shall take place in [ * ] (if [ * ])
or [ * ] (if [ * ]).


 


(b)           Traditional arbitration shall be conducted by an
arbitration panel consisting of three (3) independent arbitrators, and the
award or decision shall be rendered by a majority of the members of the
arbitration panel.  Each arbitrator shall
have not less than fifteen (15) years of experience in the biotechnology or
pharmaceutical industry and subject matter expertise with respect to the matter
subject to arbitration.  Each Party shall
appoint one arbitrator, and the third arbitrator shall be selected jointly by
the two arbitrators appointed by the Parties, unless the Parties otherwise
agree as to the identity of the third arbitrator.  If the two arbitrators appointed by the
Parties are unable to agree upon the third arbitrator within [ * ] of any
request for arbitration, such arbitrator shall be selected by the AAA.  Any arbitrator chosen hereunder


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


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shall have educational
training and industry experience sufficient to demonstrate a reasonable level
of scientific, financial, medical and industry knowledge relevant to the
particular dispute.  The written decision
of the arbitrators shall state the panel’s findings of material facts and the
grounds for its conclusions and shall be final, conclusive and binding on the
Parties and enforceable by any court of competent jurisdiction.


 


(c)           Baseball Arbitration will be conducted by one (1) arbitrator
who shall be reasonably acceptable to the Parties and who shall be appointed in
accordance with AAA rules.  If the
Parties are unable to select an arbitrator within [ * ] of the notice that
initiated the baseball arbitration, then the arbitrator shall be appointed in
accordance with AAA rules. Any arbitrator chosen hereunder shall have
educational training and industry experience sufficient to demonstrate a
reasonable level of scientific, financial, medical and industry knowledge
relevant to the particular dispute. Within [ * ] after the selection of the
arbitrator, each Party shall submit to the arbitrator and the other Party a
proposed resolution of the dispute that is the subject of the arbitration,
together with any relevant evidence in support thereof (the “Proposals”).  Within [
* ] after the delivery of the last Proposal to the arbitrator, each Party may
submit a written rebuttal of the other Party’s Proposal and may also amend and
re-submit its original Proposal.  The Parties
and the arbitrator shall meet within [ * ] after the Parties have submitted
their final Proposals (and rebuttals, if any), at which time each Party shall
have [ * ] to argue in support of its Proposal. 
The Parties shall not have the right to call any witnesses in support of
their arguments, nor compel any production of documents or take any discovery
from the other Party in preparation for the meeting. Within [ * ] after such
meeting, the arbitrator shall select one of the final Proposals so submitted by
one of the Parties as the resolution of the dispute, but may not alter the
terms of either final Proposal and may not resolve the dispute in a manner
other than by selection of one of the submitted final Proposals. If a Party
fails to submit a Proposal within the initial [ * ] time frame set forth in the
fourth sentence of this Section 15.3(c), the arbitrator shall select the
Proposal of the other Party as the resolution of the dispute. Any time period
set forth in this Section 15.3(c) may be extended by mutual agreement of the
Parties.


 


(d)           Each Party shall bear its own costs and expenses
(including legal fees and expenses) relating to the arbitration proceeding,
except that the fees of the arbitrator(s) and other related costs of the
arbitration shall be shared equally by the Parties, unless the arbitrator(s) determine(s)
that a Party has incurred unreasonable expenses due to vexatious or bad faith
positions taken by the other Party, in which event the arbitrator(s) may make
an award of all or any portion of such expenses so incurred.


 


(e)           The arbitrator(s) shall be required to render their
decision in writing and to comply with, and their award shall be limited by,
any express provisions of this Agreement relating to damages or the limitation
thereof. No arbitrator shall have the power to award punitive damages under
this Agreement regardless of whether any such damages are contained in a
Proposal, and such award is expressly prohibited.


 


15.4        Patent and Trademark Disputes.  Notwithstanding Section 15.2, any dispute, controversy
or claim relating to the scope, validity, enforceability or infringement of any
Patent Rights or trademark rights covering the manufacture, use, importation,
offer for sale or sale of Products shall be submitted to a court of competent
jurisdiction in the country in which such Patent Rights or trademark rights
were granted or arose.


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


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16.                               MISCELLANEOUS.


 


16.1        Assignment.  Except as provided in subsections (a) and (b)
below, neither this Agreement
nor any interest hereunder shall be assignable by either Party, without the
prior written consent of the other Party, which consent shall not be
unreasonably withheld or delayed. This Agreement shall be binding upon the
successors and permitted assigns of the Parties, and the name of a Party
appearing herein shall be deemed to include the names of such Party’s
successors and permitted assigns to the extent necessary to carry out the
intent of this Agreement.  In addition to
the foregoing, each Party may assign its right, in whole or part, to receive
payments under this Agreement.  Any
assignment not in accordance with this Section 16.1 shall be void.
Notwithstanding anything to the contrary in this Agreement, in the event that a
Party undergoes an acquisition by a Third Party, no intellectual property
rights of the Third Party assignee, acquiror or successor of such Party or any
Affiliate of such Third Party shall be included in the subject matter licensed
hereunder, to the extent that such intellectual property rights were held by
the Third Party prior to the acquisition, or are created outside of any
activities under this Agreement by personnel who were not employees of the
acquired Party at the time of the acquisition. Notwithstanding anything to the
contrary in this Agreement, in the event that a Party makes an assignment
pursuant to subsection (b) below to a Third Party, no intellectual property
rights of the Third Party assignee or any Affiliate of such Third Party shall
be included in the subject matter licensed hereunder, to the extent that such
intellectual property rights were held by the Third Party prior to the
assignment, or are created outside of any activities under this Agreement by
personnel who were not employees of the assigning Party at the time of the
assignment.


 


(a)           Each Party may assign all of its rights and delegate
all of its obligations under this Agreement without the other Party’s consent
to an Affiliate or to a successor to substantially all of the business of such
Party to which this Agreement relates, whether in merger, sale of stock, sale
of assets or other transaction.


 


(b)           Each Party may assign all of its rights and delegate
all of its obligations under this Agreement without the other Party’s consent
to a Third Party who is not a successor to such Party as described in Section 16.1(a),
if such Third Party is not a CD37 Competitor, provided that: (i) before
commencing negotiations with such a Third Party for such an assignment, the
assigning Party shall notify the other Party, and the Parties shall have [ * ]
to negotiate in good faith a non-binding term sheet setting forth the principal
terms and conditions under which the assigning Party would assign such rights
and delegate such obligations to the other Party.  If the Parties agree on such non-binding term
sheet within the [ * ]-period, then the Parties shall have an additional time
period, not to exceed [ * ] from the receipt of the notice from the assigning
Party, to enter into a definitive agreement based on the terms of the
non-binding term sheet. Notwithstanding anything to the contrary above, the
assigning Party shall at all times be free to engage in concurrent negotiations
with one or more Third Parties but shall not conclude an assignment with a
Third Party during the [ * ] period described above during which the Parties
are negotiating the term sheet and/or during the [ * ] period described above
during which the Parties are negotiating the definitive agreement; and (iii) the assigning Party shall
also assign or otherwise grant a license to such Third Party assignee to all of
its Patent Rights and Know-How under its Control that are specific to the
Products, and grant to such Third Party assignee all other rights and deliver
to such Third Party assignee all information and materials in


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


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each case that is
reasonably necessary for such Third Party assignee to perform the assigning
Party’s obligations under this Agreement.


 


16.2        Further Actions.  Each Party agrees to execute, acknowledge and deliver
such further instruments, and to do all such other acts, as may be necessary or
appropriate in order to carry out the purposes and intent of this Agreement.


 


16.3        Government Approvals.  Trubion and Facet will cooperate and use respectively
Diligent Efforts to make all registrations, filings and applications, to give
all notices and to obtain as soon as practicable all governmental or other
consents, transfers, approvals, orders, qualifications authorizations, permits
and waivers, if any, and to do all other things necessary or desirable for the
consummation of the transactions as contemplated hereby.


 


16.4        Force Majeure.  Neither Party shall be liable to the other for delay
or failure in the performance of the obligations on its part contained in this
Agreement if and to the extent that such failure or delay is due to
circumstances beyond its control which it could not have avoided by the
exercise of reasonable diligence.  It
shall notify the other Party promptly should such circumstances arise, giving
an indication of the likely extent and duration thereof, and shall use all
Diligent Efforts to resume performance of its obligations as soon as
practicable; provided, however, that neither Party shall be required to
settle any labor dispute or disturbance.


 


16.5        Correspondence and Notices.


 


(a)           Ordinary Notices.  Correspondence, reports, documentation, and any other
communication in writing between the Parties in the course of ordinary
implementation of this Agreement shall be delivered by hand, or sent by
facsimile transmission, email or airmail to the employee or representative of
the other Party who is designated by such other Party to receive such written
communication.


 


(b)           Extraordinary Notices.  Extraordinary notices and other communications
hereunder (including without limitation, any notice of force majeure, breach,
termination, change of address, etc.) shall be in writing and shall be deemed
given if delivered personally or by facsimile transmission (receipt verified),
mailed by registered or certified mail (return receipt requested), postage
prepaid, or sent by nationally recognized express courier service, to the
Parties at the following addresses (or at such other address for a Party as
shall be specified by like notice; provided, however, that notices of a change of address shall
be effective only upon receipt thereof):


 


All
correspondence to Facet shall be addressed as follows:


 


Facet
Biotech Corporation


1500
Seaport Blvd.


Redwood
City, CA 94063


Attn:
Chief Executive Officer


Fax:
(650) 454-2000


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


79

















 


with a copy to:


 


Facet
Biotech Corporation


1500
Seaport Blvd.


Redwood
City, CA 94063


Attn:
General Counsel


Fax:
(650) 454-2000


 


and a copy to:


 


Cooley
Godward Kronish LLP


Five
Palo Alto Square


3000 El Camino Real


Palo Alto, CA 94306-2155


Attn:
Glen Sato


Fax:
(650) 849-7400


 


All
correspondence to Trubion shall be addressed as follows:


 


Trubion
Pharmaceuticals, Inc.


2401
4th Avenue


Suite
1050


Seattle,
Washington 98121


Attn:
President & CEO


Fax:
(206) 838-0503


 


with
a copy to:


 


Trubion
Pharmaceuticals, Inc.


2401
4th Avenue


Suite
1050


Seattle,
Washington 98121


Attn:
General Counsel


Fax:
(206) 838-0503


 


and
a copy to: Fenwick & West LLP


1191
Second Avenue


10th
Floor


Seattle,
WA 98101


Attn:  Alan
C. Smith


Fax:  (206)
389-4511


 


16.6        Representation by Legal Counsel.  Each Party hereto represents that it has been
represented by legal counsel in connection with this Agreement and acknowledges
that it has participated in the drafting of this Agreement.  In interpreting and applying the terms and
provisions of this Agreement, the Parties agree that no presumption shall exist
or be implied against the Party which drafted such terms and provisions.


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


80
















 


16.7                        Amendment.  No amendment, modification or supplement of any
provision of this Agreement shall be valid or effective unless made in writing
and signed by a duly authorized officer of each Party.


 


16.8                        Waiver.  Except as expressly limited by the terms of
this Agreement, no
failure on the part of any Person to exercise any power, right, privilege or
remedy under this Agreement, and no delay on the part of any Person in
exercising any power, right, privilege or remedy under this Agreement, shall
operate as a waiver of such power, right, privilege or remedy; and no single or
partial exercise of any such power, right privilege or remedy shall preclude
any other or further exercise thereof or of any other power, right, privilege
or remedy. No provision of this Agreement shall be waived by any act, omission
or knowledge of a Party or its agents or employees except by an instrument in
writing expressly waiving such provision and signed by a duly authorized
officer of the waiving Party.  The waiver
by either of the Parties of any breach of any provision of this Agreement by
the other Party shall not be construed to be a waiver of any succeeding breach
of such provision or a waiver of the provision itself.


 


16.9                        Severability.  If any clause or portion thereof in this Agreement is
for any reason held to be invalid, illegal or unenforceable, the same shall not
affect any other portion of this Agreement, as it is the intent of the Parties
that this Agreement shall be construed in such fashion as to maintain its existence,
validity and enforceability to the greatest extent possible.  In any such event, this Agreement shall be
construed as if such clause of portion thereof had never been contained in this
Agreement, and there shall be deemed substituted therefor such provision as
will most nearly carry out the intent of the Parties as expressed in this
Agreement to the fullest extent permitted by applicable Law.


 


16.10                 Construction


 


(a)                                  The descriptive headings of this
Agreement are for convenience only, and shall be of no force or effect in
construing or interpreting any of the provisions of this Agreement.


 


(b)                                  Any rule of construction to the effect
that ambiguities are to be resolved against the drafting party shall not be
applied in the construction or interpretation of this Agreement.


 


(c)                                  Except as otherwise indicated, all
references in this Agreement to “Articles”, “Sections,” “Exhibits” and “Schedules”
are intended to refer to Articles and Sections of this Agreement, and Exhibits
and Schedules to this Agreement.


 


16.11                 Governing Law.  This Agreement shall be governed by and interpreted in
accordance with the substantive laws of the State of California, without regard
to conflict of law principles thereof.


 


16.12                 Entire Agreement of the
Parties.  This Agreement constitutes and contains
the complete, final and exclusive understanding and agreement of the Parties
and cancels and supersedes any and all prior negotiations, correspondence,
understandings and agreements, whether oral or written, among the Parties
respecting the subject matter of this Agreement and thereof.  For clarity, the rights and obligations of
the Parties on and after the Signing Date with


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


81

















 


respect to disclosures
made under the Non-Disclosure Agreement that relate to the subject matter of
this Agreement shall be solely as set forth in this Agreement but the
Non-Disclosure Agreement shall remain in full force and effect with respect to
all other disclosures made thereunder.


 


16.13                 Independent Contractors.  Both Parties are independent contractors under this
Agreement.  Nothing herein contained
shall be deemed to create an employment, agency, joint venture or partnership
relationship between the Parties hereto or any of their agents or employees, or
any other legal arrangement that would impose liability upon one Party for the
act or failure to act of the other Party. 
Neither Party shall have any express or implied power to enter into any
contracts or commitments or to incur any liabilities in the name of, or on
behalf of, the other Party, or to bind the other Party in any respect
whatsoever.


 


16.14                 Counterparts.  This Agreement may be executed in any number of
counterparts, each of which need not contain the signature of more than one
Party but all such counterparts taken together shall constitute one and the
same agreement.  Any signature page delivered
by facsimile or electronic image transmission shall be binding upon the Parties
and shall be treated as if originals. Any Party that delivers a signature page by
facsimile or electronic image transmission shall deliver an original
counterpart to any other Party that requests such original counterpart.


 


{SIGNATURE PAGE FOLLOWS}


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


82

















 


IN WITNESS WHEREOF, duly authorized
representatives of the Parties have duly executed this Agreement as of the
Signing Date.


 


 


	
  FACET BIOTECH CORPORATION

  	
   

  	
  TRUBION
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By

  	
  /s/
  Faheem Hasnain

  	
   

  	
  By

  	
  /s/
  Peter A. Thompson

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Faheem
  Hasnain

  	
   

  	
  Name:

  	
  Peter
  A. Thompson

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  President
  and Chief Executive Officer

  	
   

  	
  Title:
  

  	
  President
  and Chief Executive Officer

  



 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


83

















 


List of Exhibits


 


	
  Exhibit
  A

  	
   

  	
  —
  TRU-016 Description

  
	
  Exhibit
  B

  	
   

  	
  —
  Initial Development Plan

  
	
  Exhibit
  C

  	
   

  	
  —
  Stock Purchase Agreement

  



 


List of Schedules


 


	
  Schedule
  1.132

  	
   

  	
  —
  Trubion Core Patent Rights

  
	
  Schedule
  1.134

  	
   

  	
  —
  Trubion Product Patent Rights

  
	
  Schedule
  3.7

  	
   

  	
  —
  Pre-existing Obligations

  
	
  Schedule
  12.2

  	
   

  	
  —
  Disclosure Schedule

  



 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


84

















 


Exhibit A (TRU-016
Description)


 


TRU-016 is a [ * ] composed of [ * ], the [ *
], the [ * ] and the [ * ].  The [ * ]
has [ * ] and [ * ] in a [ * ] by a [ * ], wherein the [ * ] are [ * ] from a [
* ] ([ * ]).  The [ * ] is [ * ] to the [
* ], the [ * ] and [ * ] of [ * ], through a [ * ].  TRU-016 [ * ] as [ * ] in [ * ] and has a [ *
] of approximately [ * ].


 


Amino
acid sequence:


 


[
* ]


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


85
















 


Exhibit B


 


Initial Development Plan


 


This
is the Initial Development Plan under the Collaboration and License Agreement
(the “Collaboration Agreement”), dated August 27, 2009, between
Facet Biotech Corporation (“Facet”) and Trubion Pharmaceuticals, Inc.
(“Trubion”).


 


TRU-016
Development Plan


 


All
protocols and development plans involving TRU-016 and amendments thereto will
be reviewed and approved in accordance with the Collaboration Agreement.  The [ * ] Trubion and Facet have agreed to
develop for TRU-016 are [ * ].  Trubion and
Facet shall make good faith efforts to agree upon the definitive Initial
Development Plan and have it appropriately approved by the JSC within [ * ]
after the Signing Date.  The Development
Plan will be reviewed and revised periodically and, if necessary, after [ * ]
in accordance with the terms of the Collaboration Agreement.


 


Clinical
Development Plan


 


[
* ] of TRU-016 is [ * ] and [ * ] are being [ * ] for [ * ] in [ * ].  The [ * ] clinical study [ * ] will be [ * ]
if possible, to examine the [ * ] of [ * ] and [ * ] in [ * ] in [ * ] setting;
additionally, the study will be [ * ] to allow [ * ] with [ * ] until [ * ].


 


[
* ] additional trials will be in [ * ]; [ * ] will be [ * ] with [ * ] and [ *
] will be [ * ] with [ * ] based on the [ * ] of these [ * ] in [ * ]
study.  The [ * ] additional study will
examine [ * ] of [ * ], [ * ] and possibly [ * ] or [ * ] in [ * ] in a [ * ]
setting.  The outline of the programs in
[ * ] and [ * ] are in the figures below. 
[ * ] criteria for [ * ] in [ * ] and [ * ] in [ * ] are described as a
way of example.  The exact criteria for [
* ] will be [ * ] in the field of [ * ] within the [ * ].


 


[
* ]


 


The
table below outlines the timing and costs of the [ * ] and [ * ] trials.  These are estimates and will require
refinement as the projects are developed. 
The costs are [ * ] and include [ * ], and [ * ]; [ * ] and [ * ] are [
* ].


 


	
  Trial

  	
   

  	
  Trial

  Start

  	
   

  	
  DBL

  	
   

  	
  Cost [ *
  ]

  	
   

  	
  Cost [ *
  ]

  	
   

  	
  Cost [ *
  ]

  	
   

  	
  Cost [ *
  ]

  	
   

  	
  Cost [ *
  ]

  	
   

  	
  Cost [ *
  ]

  	
   

  
	
  [ * ] Program

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $[ * ]

  	
   

  
	
  [
  * ], Phase [ * ] (Protocol [ * ])

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [
  * ], Phase [ * ], [ * ]; [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [
  * ], Phase [ * ], [ * ]; [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [
  * ], Phase [ * ]; [ * ]; [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ] Program

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [
  * ], Phase [ * ]; [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [
  * ], Phase [ * ], [ * ]; [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [
  * ], Phase [ * ]; [ * ]; [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  



 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


86

















 


In addition to studies
outlined above, [ * ] studies may be [ * ] by the [ * ].  These may include a [ * ] and [ * ] in [ * ]
with [ * ] or [ * ] to be conducted at appropriate times.


 


Studies in [ * ] and [ *
] ([ * ]) will be [ * ] after [ * ] are [ * ] from the [ * ].  It is possible that trials in [ * ] ([ * ])
and [ * ] ([ * ]) [ * ] could [ * ] in the [ * ] of [ * ].  [ * ] but [ * ] and are [ * ] from the [ *
].  Hence, these [ * ] may be a [ * ] in
[ * ].  The objective of [ * ] trials in
[ * ] and [ * ] would be to prove that [ * ] is [ * ].  Such [ * ] is necessary in order to [ * ] a [
* ] that [ * ] in [ * ], as [ * ] and [ * ] are required for these [ * ].


 


There are currently [ * ]
FTEs supporting [ * ] ([ * ], [ * ], [ * ]). 
[ * ] FTEs at [ * ] or [ * ] may be required to support the planned
studies in [ * ] and [ * ].


 


Manufacturing
and Process Development Plans


 


Manufacturing
History


 


[ * ]
Product ([ * ] of [ * ])


 


The
[ * ] of [ * ] which is [ * ] in the [ * ] was manufactured at [ * ] ([ * ]) [
* ] ([ * ]), where about [ * ] of the product ([ * ]) were made in [ * ].


 


The
[ * ] and [ * ] used to produce this [ * ] were a [ * ] with the [ * ] and [ *
] using [ * ] of [ * ] and [ * ] with [ * ]. 
The [ * ] of [ * ] containing the [ * ] was prepared at [ * ] and
supplied to [ * ] ([ * ]) to prepare the [ * ] ([ * ]). The [ * ] was [ * ] by
[ * ] and is [ * ] at [ * ].


 


The manufacturing process (referred to as [ * ]) was [ * ]
at [ * ] and [ * ] to [ * ] for [ * ].  [
* ] standard [ * ] of [ * ] was generated at [ * ] in [ * ] during the [ * ] of
the [ * ] to [ * ].  Subsequently, [ * ]
manufactured the [ * ] of [ * ] in a [ * ], followed by [ * ], [ * ], and [ *
].  The [ * ] had a [ * ] of [ * ].  The ensuing overall recovery of [ * ] was [ *
], with a total of [ * ] of [ * ] generated.


 


The
[ * ] of this [ * ] of [ * ] was packaged as a [ * ] for [ * ].  Each of the [ * ] contains [ * ] of [ * ] (or
[ * ]) in the [ * ], as shown in the following table.  The [ * ] system is a [ * ], with a [ * ], [
* ] with an [ * ] with a [ * ].  The [ *
] are [ * ] at [ * ] at [ * ] ([ * ]).


 


Composition of [ * ], [ * ]


 


	
  Ingredient

  	
   

  	
  Reference

  	
   

  	
  Function

  	
   

  	
  Quantity
  (per mL)

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  



 


[ * ] of [ * ]


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


87

















 


A [ * ] process for [ * ]
was [ * ] to [ * ] the [ * ] and [ * ] the [ * ] of [ * ] at the [ * ] in [ *
].  The [ * ] by [ * ] was [ * ], to [ *
] it from the [ * ] ([ * ]) [ * ] in the [ * ]. 
The [ * ] and [ * ] system was [ * ] from [ * ].  The [ * ] based on the [ * ] ([ * ]) [ * ],
and [ * ] were [ * ] in [ * ] containing the [ * ] ([ * ]).  A [ * ] of the [ * ] was [ * ] at [ * ] and [
* ] to [ * ] to [ * ] and [ * ] an [ * ] for [ * ].  This [ * ] is [ * ] at [ * ] was [ * ] at [ *
] to [ * ] of [ * ] in [ * ].  [ * ]
process has [ * ] to the [ * ] procedure, [ * ] that the [ * ] was [ * ] to [ *
] to [ * ] from the [ * ].


 


To provide a product that
can be [ * ] and [ * ], a [ * ] for [ * ] was developed with [ * ] than [ *
].   The [ * ] was found to be [ * ] with
[ * ] of a [ * ] of [ * ] at [ * ] (or [ * ]) in a [ * ] of [ * ], [ * ], and [
* ] at a [ * ] of [ * ], as shown in the following table.


 


Composition of [ * ], [ * ]


 


	
  Ingredient

  	
   

  	
  Reference

  	
   

  	
  Function

  	
   

  	
  Quantity
  (per mL)

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  



 


Following the development
work, a [ * ] production of [ * ] was executed with the [ * ] process in [ * ]
at [ * ] in [ * ].  The [ * ] contained [
* ] of [ * ], or a total of [ * ] of [ * ]. 
The overall cumulative yield of the [ * ] was [ * ].


 


The [ * ] of [ * ] into [
* ] and its [ * ] into [ * ] was done at [ * ] ([ * ]) in [ * ].  The [ * ] of the [ * ] and the [ * ] of [ * ]
was [ * ], and the [ * ] of the [ * ] of [ * ] is [ * ].  A total of [ * ] were manufactured, and after
retaining some [ * ] for [ * ] and [ * ], [ * ] (for a total of [ * ] of [ * ])
are available for [ * ].  [ * ] of this [
* ] to [ * ] standard [ * ] by [ * ] and [ * ] has been established, and an [ *
] to [ * ] on [ * ] to pave the way for [ * ] the [ * ] to the [ * ].


 


Further [ * ] Plans


 


The current [ * ] process
with [ * ] of about [ * ] and [ * ] of [ * ] is suitable for [ * ] for [ * ]
and represnts the [ * ] for [ * ] of [ * ]. 
However, improvements to [ * ] and [ * ] are [ * ] to further [ * ] and
[ * ] in [ * ] manufacturing.  [ * ]
changes, such as [ * ] to [ * ] materials ([ * ], etc.), will [ * ].  Throughout these [ * ], the [ * ] of the
product from the [ * ] to the current [ * ] in [ * ] will be demonstrated.


 


Work
is currently under way in [ * ] to [ * ] the [ * ] of the [ * ] process.  So far, areas already successful have been:


·                  To [ * ] the [ * ] of [ * ] (currently at [ *
]) in the [ * ] process leading to the [ * ] to allow [ * ];


·                  To [ * ] the [ * ] of [ * ] in the [ * ] to
achieve [ * ]


·                  To design a process with [ * ] for [ * ].


 


With
some of these changes [ * ], a [ * ] process [ * ] in the [ * ] and of [ * ] to
[ * ] has already been demonstrated in [ * ] and will shortly be tested with [
* ].


 


The
[ * ] of the [ * ] process will also be examined.  Attempts are currently being made to:


·                  [ * ] the [ * ] to allow the [ * ].  [ * ] of [ * ] conditions is being pursued to
[ * ] the [ * ].


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


88

















 


·                  [ * ] the amount of [ * ] entering the [ * ]
by treating the [ * ] or [ * ] to further [ * ] the [ * ].


 


For
the drug product, [ * ] efforts will look into [ * ] of [ * ] in [ * ], and [ *
] through:


·                  [ * ] the product [ * ] to [ * ] and [ * ] in
[ * ] to get a [ * ] of [ * ] ([ * ] data indicate [ * ] of [ * ] or [ * ] are
[ * ]).  The need for this effort will be
assessed in light of the intended [ * ] in consulation with the program team.


·                  Assessing [ * ] of [ * ].  The current [ * ] capacity at [ * ] ([ * ])
is in the process of being [ * ] which would offer the possibility of [ * ].


·                  An evaluation of [ * ] data on [ * ] would be
done to assess [ * ] of a [ * ] should that be considered desirable for [ * ]
purposes.


 


In
the area of [ * ], the following [ * ] will be investigated as [ * ] to the [ *
] process:


·                  A [ * ] to determine [ * ] of the [ * ] in
various process [ * ], including [ * ] and [ * ];


·                  A [ * ];


·                  [ * ] methods to [ * ] current [ * ] methods


·                  A [ * ] method as [ * ] test;


·                  More [ * ] methods to characterize [ * ] and
[ * ] improvements.


·                  Other [ * ] for [ * ] characterization of [ *
] and [ * ] for various [ * ] evaluations [ * ] by [ * ] and [ * ] and [ * ]
for various [ * ] and [ * ]


 


Clinical
Drug [ * ]


 


The
current [ * ] drug product ([ * ], [ * ]) will be used in the Phase [ * ]
study. Additional drug product ([ * ]) from the [ * ] manufacturing process is
expected in [ * ]. [ * ] between the [ * ] and the [ * ] has been established
and an [ * ] for the [ * ] of [ * ] on [ * ]. The timing of [ * ] will depend
on [ * ] needs; at a minimum, a [ * ] in [ * ] will be [ * ] to [ * ] the [ * ]
in [ * ].


 


For
planning purposes, the best estimate of [ * ] at this time is assumed to be [ *
], for a total of [ * ].  The table on
the next page lists the projected material requirements for the [ * ] in [
* ].


 


[ * ]


 


	
  Study

  	
   

  	
  Start

  	
   

  	
  DBL

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [ * ]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
   

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
   

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
   

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total [ * ]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  No. of [ * ]:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [ * ]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [ * ]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  



 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


89

















 


[ * ]


 


Assumptions


 


[ * ]


 


[ * ]


 


The
current [ * ] for TRU-016 are [ * ]. Key inputs for [ * ] calculations are [ * ] and [ *
].  The current trial has reached a [ * ] so the [ * ] is if the [ * ]
does not [ * ] from that level.  The [ * ] range for [ * ] is estimated
around [ * ] per [ * ].  While considering these [ * ] variables, [ * ]
parameters have to be taken into account in estimating the [ * ].  For illustration purposes, calculations
below assume that the [ * ] is [ * ], [ * ] per [ * ], and the total [ * ] is [
* ] (for a [ * ]).  As the [ * ] and [ *
] will play an important role in determining the [ * ], the following table
focuses on these [ * ].


 


	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  Total [ * ] per [ * ]

  (including [ * ])

  	
   

  	
  [ * ] as a percentage

  of $[ * ]

  	
   

  
	
  [
  * ]

  	
   

  	
  [
  * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  [ * ]

  	
  %

  
	
  [
  * ]

  	
   

  	
  [
  * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  [ * ]

  	
  %

  
	
   

  	
   

  	
  [
  * ] (Currently [ * ])

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  [ * ]

  	
  %

  
	
  [
  * ]

  	
   

  	
  [
  * ] (per [ * ])

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  [ * ]

  	
  %

  
	
   

  	
   

  	
  [
  * ] (currently [ * ])

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  [ * ]

  	
  %

  



 


As
seen from the above estimates, the [ * ] are [ * ] and could be [ * ] by
implementing]the [ * ] and selecting a [ * ]. 
Since the process that will be [ * ] at [ * ] will [ * ] be the [ * ]
process, the decision for [ * ] will be made after careful, detailed discussion
regarding the [ * ] for [ * ].


 


[ * ]
and [ * ]


 


[
* ] and [ * ] activities have to be planned to meet the [ * ] time line.  The [ * ] of the [ * ] process will consist
of [ * ] testing of [ * ], during which [ * ] and [ * ] for the [ * ], and [ *
] will be identified and characterized, followed by the [ * ] of the [ * ] to [
* ] and [ * ] composed of [ * ] ([ * ] of up to [ * ]), [ * ] of [ * ], and [ *
] on both [ * ] and [ * ].  [ * ] will be
conducted [ * ] to [ * ].


 


The
[ * ] is expected to require [ * ] from the [ * ] of the [ * ] to [ * ] of the
[ * ], with the [ * ] studies [ * ] that.


 


The
estimated timeline, [ * ] requirements and [ * ] estimates for [ * ] are shown
in the Figure below based on [ * ] assumptions. 
Please note that [ * ] in [ * ] for [ * ] are [ * ] only in the [ * ],
although [ * ] would be [ * ] to [ * ] the [ * ] activities in the [ * ].  [ * ] indicated are estimates for [ * ] for
activities at [ * ] and [ * ].


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


90

















 


[ * ]*


 


[ * ]


 


*
[ * ] would be [ * ] to [ * ] the [ * ] activities.  [ * ] indicated are estimates for [ * ] for
activities at [ * ] and [ * ].


 


[ * ]


 


For
the purpose of [ * ], it is assumed that the [ * ] process with [ * ] in [ * ]
will be implemented for the [ * ] in [ * ]. 
Also, assuming the need for [ * ] along with [ * ], [ * ] are
planned.   In the table below, separate
estimates for [ * ] and [ * ] are shown for the [ * ].  These estimates were developed by [ * ] prior
to [ * ] and may [ * ] as a [ * ] a [ * ] in the [ * ].


 


[ * ] Process, [ * ] — [ * ] and [ * ]


 


	
  Timing

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  Activity

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  No. of [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
   

  	
   

  	
  [ * ]*

  	
   

  	
   

  	
   

  	
  [ * ]**

  	
   

  



 






*[ * ]


**[ * ]


 


Preclinical
Development Plan


 


The
purpose of the research program is to:


·                  provide [ * ] for [ * ] from [ * ] and other
[ * ] for [ * ] and [ * ]


·                  explore [ * ] of [ * ] and provide [ * ] for
[ * ] in the [ * ]


·                  [ * ] and [ * ] in clinical development by [
* ] patient populations responsive] or [ * ] to [ * ]


 


[ * ]


 


[ * ] of the [ * ]


 


Technology
exists at [ * ] to facilitate [ * ] of the [ * ] on [ * ] for [ * ].  The studies would employ either [ * ] or [ *
] of the [ * ] followed by [ * ] studies of [ * ].  Requirements for this approach would be the
identification of a [ * ] that allows for [ * ] and [ * ] of [ * ] to [ * ]
with [ * ].


 


[ * ] for [ * ]


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


91
















 


[ * ]


 


Studies
to date have shown that [ * ] from [ * ] in the [ * ] and [ * ] for [ * ] on [
* ] ([ * ]; [ * ] data). This work will be extended to a [ * ] of [ * ] from [
* ] and available [ * ]. ([ * ] are defined in this preclinical section as [ *
] from [ * ] without [ * ].)  [ * ]
activity will also be [ * ] with other [ * ] on [ * ] as has been done on [ *
].  (See table below.)


 


Studies [ * ] Activity [ *
] and [ * ]


 


	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  Scope of Work

  	
   

  	
  [ * ] 

  Resources

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  



 






Key
[ * ]


 


In
addition, previous studies have shown that [ * ] to [ * ] on [ * ] by a [ * ]
that is [ * ] from [ * ] and other [ * ] ([ * ]). These and further studies detailing
[ * ] of [ * ] will also be used to guide [ * ] of [ * ] to [ * ] with [ *
].  The timing for completion of the
studies in Table 1 is as follows:


 


·                  [ * ]: 
prior to [ * ] of the [ * ].


·                  [ * ]: 
prior to [ * ] of [ * ]


·                  [ * ]: 
prior to [ * ]


 


Finally,  [ * ] studies which include [ * ] should be
included to examine the [ * ] of [ * ] in the [ * ] responses.  In addition, [ * ] studies (e.g., [ * ]) of [
* ] to a variety of [ * ] should be conducted.


 


[ * ]


 


Previous
studies have shown that [ * ] has [ * ] activity on [ * ] when [ * ] to [ * ]
or [ * ].  These studies will be [ * ] to
[ * ] from [ * ] of [ * ] and also examined on [ * ].  In addition, studies suggest that [ * ] can [
* ] ([ * ]). [ * ] studies with [ * ] will be performed to see if the [ * ] of
[ * ] by [ * ] it [ * ] to this [ * ] to [ * ].


 


[ * ] —
[ * ] Studies


 


The
following table outlines the planned [ * ] of [ * ] activity and  [ * ]. The studies are designed to examine [ *
] in a [ * ] and when [ * ] serve as the [ * ] for [ * ].


 


[ * ] Activity


 


	
  [ *]

  	
   

  	
  [ * ]

  	
   

  	
  Resources

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]*

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  



 






* [ * ]


 


[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


 


92

















 


[ * ]
Drug [ * ] Studies


 


As
presented in the [ * ] section of this document, [ * ], particularly for [ * ],
will involve [ * ] of [ * ] in [ * ]. 
Therefore, [ * ] work has begun to provide [ * ] for [ * ] likely to [ *
].  The figure below shows the [ * ] results
of [ * ] with [ * ] on [ * ] of the [ * ] and on the [ * ].  [ * ] with [ * ] often giving [ * ] activity
and [ * ] have been [ * ].


 


[ * ] with [ * ] on [ * ] by [ * ] Analysis


 


[ * ]


 


The
tables below provide a summary of [ * ] experiments [ * ] and [ * ],
respectively.


 


[ * ] Drug [ * ] Studies


 


	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  Scope of work

  	
   

  	
  [ * ] 

  resources

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
   

  	
   

  



 






Key: [ * ]


 


[ * ] Drug [ * ] Studies


 


 


	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  Notes

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
   

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
   

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
   

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
   

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
   

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  



 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.


 


93

















 


Identification
of [ * ] for [ * ] Study


 


Typically,
attempts to identify [ * ] for [ * ] occur during the [ * ] of [ * ]
investigation as they require [ * ] of [ * ] prior to [ * ] with the [ * ] and
then [ * ] with [ * ].  [ * ] samples are
used to [ * ] the [ * ].  These studies
often require [ * ] and [ * ] such as [ * ], [ * ], [ * ], or [ * ] for [ * ]
in [ * ].


 


However,
[ * ] is [ * ] to [ * ] in [ * ] investigation and has [ * ] to [ * ] including
those from [ * ] in the [ * ].  Studies
will [ * ] to identify [ * ] of the [ * ] of [ * ] activity on [ * ] and then
test [ * ] these [ * ] also [ * ].  [ * ]
is creating [ * ] of these [ * ] for [ * ] studies.  A similar strategy is contemplated for [ * ]
such as [ * ].


 


If
the current studies of [ * ] activity [ * ] that [ * ] from some [ * ] to [ * ]
or in [ * ], then [ * ] will be [ * ] by:


 


·                  [ * ] whether the [ * ] has a
[ * ] with [ * ] and [ * ] for [ * ] in [ * ] and


·                  [ * ] with [ * ] (e.g. [ * ]) that have [ * ]
and [ * ] in place to [ * ] for [ * ] to [ * ].


 


The
[ * ] status and [ * ] would then be [ * ] for [ * ] from [ * ] were [ * ] with
[ * ] to [ * ] if the [ * ] of [ * ] do [ * ] with [ * ].


 


Additional
[ * ] studies that have been identified:


 


·                  Examine [ * ] data for [ * ] on [ * ] and [ *
] to [ * ] to [ * ] or [ * ] a [ * ] of [ * ].


·                  Examine [ * ] of [ * ] following [ * ] with [
* ] to [ * ] with [ * ] (in [ * ] in [ * ])


·                  [ * ] studies to [ * ] with [ * ] in [ * ]:


 


·                  Examine [ * ] and [ * ] in [
* ]


·                  Examine [ * ] and [ * ] in [
* ] (e.g., [ * ] and [ * ] for [ * ], or other [ * ]).


 


[ * ] —
[ * ]


 


[ * ]


[
* ]


[
* ]


 


Status:
[ * ].


 


[
* ] have been [ * ] with [ * ], the [ * ] of [ * ], for the purposes of
pursuing the following research:


 


1.               Further defining [ * ] in [ * ].


 


a.               Identification of [ * ] for [ * ].


b.              Investigation of the [ * ].


c.               Looking at [ * ] in [ * ] other [ * ],
including those that [ * ], namely [ * ] and [ * ].


 


2.               [ * ] model.


 


a.               [ * ] including in [ * ].


b.              Investigate [ * ].


c.               Investigate role of [ * ] and [ * ].


i.                  [ * ].


ii.               [ * ] of [ * ] such as with [
* ].


iii.            If a role for [ * ] is
determined, investigate the [ * ] of [ * ] in the model.


 


3.               [ * ] model


 


a.               Investigate [ * ] in a [ * ] model


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


94

















 


b.              Investigate [ * ] of [ * ].  If so, investigate whether this [ * ] for [ *
]


 


4.               Investigate whether [ * ] is [ * ] by [ * ]
than [ * ] due to [ * ].


 


5.               Investigate whether [ * ] and [ * ] show [ *
].


a.               If so, what is the [ * ]?  Possibly [ * ] or [ * ].


 


Results
from [ * ] were [ * ]:


 


Effect
of [ * ] on [ * ] in [ * ] via [ * ] of the [ * ], [ * ].


 


The
studies demonstrated that [ * ] in [ * ] occurs via [ * ] of [ * ]. This work
demonstrates that [ * ] utilizes a [ * ] of [ * ] in [ * ] other [ * ] for [ *
]. Additionally, the data provides a [ * ] for the [ * ] of [ * ] ([ * ])
observed to date in [ * ].


 


[ * ]


[
* ]


[
* ]


 


Status:
[ * ].


 


[
* ] will be [ * ] with [ * ], a [ * ]. 
This [ * ] is the [ * ] of the [ * ].


 


The
[ * ] has [ * ] objectives.


 


1.
The [ * ] activity of [ * ] will be studied [ * ] using [ * ] ([ * ]) and [ * ]
([ * ]) [ * ].


 


This
[ * ] has been developed to [ * ] as [ * ] and [ * ] represent a [ * ] of [ *
].  This [ * ] has been utilized
previously by [ * ] to examine the [ * ] of other [ * ] for [ * ], including [
* ] and [ * ] ([ * ]), [ * ] ([ * ]) and [ * ] ([ * ]).


 


2.
The effects of [ * ] will be tested [ * ] and [ * ] with [ * ] to [ * ] of [ *
] in [ * ].


 


[
* ] will be [ * ] with (and [ * ]) [ * ], [ * ] or [ * ] into [ * ] (carrying [
* ]).  [ * ] and [ * ] will be determined
utilizing appropriate [ * ].


 


[ * ]


[ * ]


 


Status:
[ * ].


 


[
* ] to use [ * ] technology to [ * ] some [ * ] 
and [ * ] in [ * ] to determine if [ * ] is [ * ] to [ * ].  Specifically, [ * ] and [ * ] will be
explored using [ * ] for [ * ] analysis of [ * ] (e.g. [ * ] or [ * ])


 


[ * ]


[
* ]


 


Status:
[ * ].  [ * ] plans to study the [ * ] of
[ * ] and whether [ * ] by [ * ] renders it [ * ] to [ * ] by [ * ].


 


[
* ] for [ * ] and [ * ] ([ * ])


 


The
major approach for [ * ] from [ * ] for [ * ] will involve [ * ] of [ * ] on [
* ] that have [ * ] and [ * ] of [ * ] between [ * ] and [ * ] on [ * ].  This [ * ] of [ * ] data that:


 


·                  [ * ] that [ * ] and [ * ] does [ * ] for the
[ * ] ([ * ]), with [ * ] on more [ * ] such as [ * ]


·                  and that [ * ] may also be [ * ] on [ * ]
such as [ * ] and some [ * ] and play a role in [ * ] ([ * ]; and [ * ] data on
[ * ])


 






[* ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


95

















 


Because
[ * ] may [ * ] in the [ * ] of [ * ] such as [ * ], and [ * ], [ * ] on [ * ]
could [ * ] of [ * ] from [ * ]. The following table outlines the [ * ]
studies.


 


Another
approach to [ * ] will be [ * ] of the [ * ] of [ * ] and [ * ] to [ * ] from [
* ] after [ * ] into [ * ].


 


[
* ] on [ * ] and the [ * ] of these studies, [ * ] demonstrating [ * ] on [ * ]
by [ * ] in the [ * ] of [ * ] will be [ * ] for [ * ] with [ * ].


 


Studies to Examine [ * ] and [ *
]


 


	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
   

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  *[ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
   

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  *[ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  *[ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
   

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]**

  	
   

  



 






*[ * ] studies for [ * ] will involve studies on [ *
] and [ * ].


 


**Given
that [ * ] does [ * ] with [ * ] or [ * ], examining [ * ] of [ * ] in [ * ] is
[ * ].  As [ * ],  [ * ] of [ * ] in the [ * ] would allow for
the [ * ] of [ * ] and other [ * ] (e.g., [ * ]) [ * ].  [ * ] at [ * ] would be [ * ].  However, [ * ] is [ * ] of a [ * ] that may
be [ * ] for [ * ] of experiments.


 


[
* ] studies will be undertaken to [ * ] the [ * ] by [ * ] can be [ * ] into [
* ].  [ * ] will be [ * ] to provide a [
* ].  The timing for [ * ] of these
studies is as follows:


 


·                  [ * ] studies:  Prior to [ * ]


·                  [ * ]:  Prior to [ * ]


 


[ * ] —
[ * ]


 


[ * ]


[
* ]


[
* ]


 


Status:
[ * ]


 


[
* ] will develop [ * ] and [ * ] ([ * ]) [ * ] and [ * ] in [ * ].  In addition, a [ * ] will be [ * ] and [ * ]
in [ * ] will be [ * ] in [ * ].  [ * ]
will be [ * ], including [ * ].


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


96

















 


[ * ]
Costs


 


Estimated
[ * ]


 


	
  Dept

  	
   

  	
   

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  [
  * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
   

  	
   

  	
  [ * ]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [
  * ]

  	
   

  	
  [
  * ]

  	
   

  
	
   

  	
   

  	
  [ * ]

  	
   

  	
  [
  * ]

  	
   

  	
  [
  * ]

  	
   

  	
  [
  * ]

  	
   

  	
  [
  * ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  



 


Estimated
[ * ] Costs ([ * ] $)


 


	
  Dept

  	
   

  	
   

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
   

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
   

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
   

  	
   

  	
  [ * ]

  	
   

  	
   

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
   

  	
   

  	
  [ * ]

  	
   

  	
   

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Total

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  



 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


97






 












 


EXHIBIT C


 


STOCK PURCHASE AGREEMENT


 


This Stock Purchase
Agreement (this “Agreement”) is made and entered into as of August 27,
2009 (the “Execution Date”) by and between Trubion Pharmaceuticals, Inc.,
a Delaware corporation having a principal place of business at 2401 4th Avenue,
Suite 1050, Seattle, Washington 98121 (including, unless the context
otherwise requires, its subsidiaries, the “Company”), and Facet Biotech
Corporation, a Delaware corporation having a principal place of business at
1500 Seaport Blvd., Redwood City, CA 94063 (“Purchaser”).  The Company and Purchaser are sometimes
referred to herein individually as a “Party” and collectively as the “Parties.”


 


RECITALS


 


WHEREAS, concurrently
herewith, the Company and Purchaser have entered into an arrangement whereby
Purchaser will license certain technology from the Company pursuant to that
certain Collaboration and License Agreement dated as of the Execution Date (the
“Collaboration Agreement”); and


 


WHEREAS, in connection
with the transactions contemplated by the Collaboration Agreement, the Company
and Purchaser each desire for Purchaser to purchase from the Company newly
issued shares of the Company’s common stock, $0.001 par value per share (the “Common
Stock”), in the amounts and on the terms and conditions set forth in this
Agreement.


 


AGREEMENT


 


NOW, THEREFORE, in
consideration of the foregoing recitals and the following mutual promises and
covenants, the Parties agree as follows:


 


1.                                      AUTHORIZATION
AND SALE OF SHARES


 


1.1                               Authorization. 
The Company has authorized the issuance and sale of the shares of Common
Stock pursuant to the terms and conditions of this Agreement.


 


1.2                               Issuance and Sale. 
Subject to the terms and conditions of this Agreement, on the Closing
Date (as defined in Section 2.1(a)),
the Company shall issue and sell to Purchaser, and Purchaser shall purchase
from the Company 2,243,649 shares of Common Stock (the “Shares”) for an
aggregate purchase price of Ten Million Dollars ($10,000,000).  In the event of any stock split, stock
dividend, combination of shares, recapitalization or other change in the
structure of the Company prior to the Closing Date that affects or relates to
the Common Stock, the number of Shares shall be adjusted proportionately.


 






[ * ] = Certain
confidential information contained in this document, marked by brackets, has
been omitted and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.


 


98

















 


2.                                      CLOSING;
CLOSING DELIVERIES


 


2.1                               Closing.


 


(a)                                  Closing Date. 
The closing of the purchase and sale of the Shares as contemplated in
this Agreement (the “Closing”) and the delivery of documents
contemplated to be delivered at the Closing shall take place at 10:00 a.m.
Pacific Time on the date which is 3 business days after the date on which all
conditions to the obligations of the Parties to consummate the transactions
hereunder regarding the Shares shall have been satisfied and/or waived, or such
other place or later time as Purchaser and the Company shall agree (the date on
which the Closing occurs being referred to herein as the “Closing Date”).


 


(b)                                  Location of Closing. 
The Closing shall be held at the Company’s principal offices, 2401 4th
Avenue, Suite 1050, Seattle, Washington 98121, or at such other place as
the Company and Purchaser may agree in writing.


 


2.2                               Closing Deliveries.


 


(a)                                  Deliveries by the Company. 
Subject to the terms and conditions of this Agreement, at the Closing
the Company shall deliver to Purchaser:


 


(i)                                    a copy of irrevocable instructions from
the Company to the Company’s stock transfer agent dated no later than the
Closing Date, which directs the Company’s transfer agent to prepare and deliver
to Purchaser a stock certificate representing the Shares as soon as practicable
following the Closing;


 


(ii)                                a legal opinion of counsel to the Company
in a form reasonably acceptable to counsel for Purchaser, dated as of the
Closing Date;


 


(iii)                            a certificate executed by the Company’s
Chief Executive Officer and Senior Vice President, General Counsel and
Corporate Secretary, dated as of the Closing Date, to the effect that the
conditions set forth in Sections 7.1(a) and
7.1(b) have been satisfied.


 


(b)                                  Deliveries by Purchaser. 
Subject to the terms and conditions of this Agreement, at the Closing,
Purchaser shall deliver to the Company:


 


(i)                                    Ten Million Dollars ($10,000,000) by wire
transfer in immediately available funds to such account as the Company may
notify Purchaser in writing (including by email) at least two trading days
prior to the Closing Date; and


 


(ii)                                a certificate executed by an executive
officer of Purchaser, dated as of the Closing Date, to the effect that the
conditions set forth in Sections 7.2(a) and
7.2(b) have been satisfied.


 


3.                                      REPRESENTATIONS
AND WARRANTIES OF THE COMPANY


 


3.1                               Representations and Warranties. 
Except as set forth in the Disclosure Schedule delivered by the Company
to Purchaser prior to the execution of this Agreement (the “Company Disclosure
Schedule”), and then to the extent the Company Disclosure Schedule
specifically 


 






[ * ] = Certain
confidential information contained in this document, marked by brackets, has
been omitted and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.


 


99

















 


identifies each exception
by specific subsection references (it being understood that any information
disclosed therein shall be deemed to be disclosed and incorporated in any other
section where such disclosure would be appropriate and reasonably apparent),
the Company hereby represents and warrants the following as of the Execution
Date and as of the Closing Date:


 


(a)                                  Corporate Organization and
Authority.  The Company:


 


(i)                                    is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware;


 


(ii)                                has the corporate power and authority to
own, lease and operate its properties and to carry on its business as now
conducted and as proposed to be conducted;


 


(iii)                            has the corporate power and authority to
enter into this Agreement and to carry out the transactions contemplated
herein; and


 


(iv)                               is qualified as a foreign corporation and
in good standing in all jurisdictions in which such qualification is required,
except for any such jurisdiction in which the Company’s failure to qualify
would not have a Material Adverse Effect (as defined in Section 3.1(c)(ii)).


 


(b)                                  Authorization. 
All necessary corporate action on the part of the Company for the
execution and delivery of this Agreement and the issuance and delivery of the
Shares being issued on the Closing Date has been taken.  This Agreement constitutes a valid and
legally binding obligation of the Company enforceable in accordance with its
terms.


 


(c)                                  No Conflicts; Required Filings.


 


(i)                                    The performance by the Company of this
Agreement and the transactions contemplated herein do not violate, conflict
with or constitute a default under, and will not result in any violation of, be
in conflict with or constitute a default under, with or without the passage of
time or the giving of notice of (1) any provision of the Company’s charter
or bylaws as in effect on the Execution Date and the Closing Date; (2) any
provision of any judgment, decree or order to which the Company is a party or
by which it or any of its properties is bound; (3) any contract,
obligation or commitment to which the Company is a party or by which it or any
of its properties is bound, which violation or default would, individually or
in the aggregate, have a Material Adverse Effect; or (4) any statute, rule or
governmental regulation applicable to the Company, which violation or default
would, individually or in the aggregate, (A) prevent or materially delay
consummation of the transaction contemplated under this Agreement, (B) otherwise
have a material adverse effect on the ability of the Company to perform its
obligations under this Agreement or (C) individually or in the aggregate,
result in any change, event, development, effect or condition that is or is
reasonably likely to be materially adverse to the assets, liabilities,
business, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole (each of the foregoing items in (A), (B) or
(C) being referred to herein as “Material Adverse Effect”).


 






[ * ] = Certain
confidential information contained in this document, marked by brackets, has
been omitted and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.


 


100

















 


(ii)                                The execution, delivery and performance
by the Company of this Agreement and the transactions contemplated herein do
not and will not require any consent, approval, authorization or permit of, or
filing with or without notification to, any governmental or regulatory
authority, United States or foreign, except for applicable requirements, if any,
of the Securities Act of 1933, as amended (the “Securities Act”) and the
Securities Exchange Act of 1934, as amended, including the rules and
regulations promulgated thereunder (the “Exchange Act”), or securities
laws of the various states of the United States (the “Blue Sky Laws”).


 


(d)                                  Capital Stock.


 


(i)                                    As of August 26, 2009 (the “Capitalization
Date”), the authorized capital stock of the Company consisted of
150,000,000 shares of Common Stock, $0.001 par value per share, of which
18,110,515 shares were issued and outstanding. 
As of the Capitalization Date, 2,403,375 shares of Common Stock were
reserved for issuance under outstanding stock options pursuant to the Company’s
stock option plans, and 1,780,016 shares were reserved for future issuance in
connection with the Company’s stock option plans.  All of the outstanding shares of the Company’s
capital stock are validly issued, fully paid and nonassessable and were issued
in compliance with all applicable federal and state securities laws, except as
would not have a Material Adverse Effect. 
Except as described above and as set forth in the SEC Reports (as
defined in Section 3.1(f)(i)), (1) the
Company has not agreed to register the sale of any of its securities under the
Securities Act and (2) there are no outstanding subscriptions, options,
warrants, calls, contracts, demands, commitments, conversion rights or other
agreements or arrangements of any character or nature whatever under which the
Company is or may be obligated to issue its Common Stock, preferred stock or
warrants, options or other securities exercisable for the purchase of,
convertible into or exchangeable or extinguishable for, Common Stock or
preferred stock.


 


(ii)                                The Company has reserved a sufficient
number of shares of Common Stock for issuance to Purchaser in accordance with
the Company’s obligations under this Agreement.


 


(iii)                            Except as disclosed in the SEC Reports,
there are no outstanding contractual obligations of the Company (1) restricting
the transfer of, (2) affecting the voting rights of, (3) requiring
the repurchase, redemption or disposition of, or containing any right of first
refusal with respect to, (4) requiring the registration for sale of, or (5) granting
any preemptive or antidilutive right with respect to, any Common Stock or any
capital stock of, or other equity interests of, the Company.  Except as disclosed in the SEC Reports, there
are no outstanding contractual obligations of the Company or any subsidiary of
the Company to provide material funds to, or make any material investment (in
the form of a loan, capital contribution or otherwise) in, any subsidiary of
the Company or any other person, other than guarantees by the Company of any
indebtedness or other obligations of any wholly-owned subsidiary of the Company.


 


(e)                                  Validity of Shares. 
The Shares issued on the Closing Date, when issued, sold and delivered
in accordance with the terms and for the consideration set forth in this
Agreement, shall be duly and validly issued and outstanding, fully paid, nonassessable
and free and clear of all security interests, pledges, mortgages, liens, taxes,
proxies, charges, adverse claims of ownership or use, and restrictions,
including preemptive rights, rights of first refusal and other 


 






[ * ] = Certain
confidential information contained in this document, marked by brackets, has
been omitted and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.


 


101

















 


similar rights,
restrictions on the resale, use, voting, receipt of income or other exercise of
any attributes of ownership and restrictions on transfer, defects of title or
other encumbrance of any kind or character entitling any person to purchase or
acquire an ownership interest in any of such Shares, other than restrictions on
transfer set forth in this Agreement and under federal and state securities
laws.


 


(f)                                    SEC Filings; Financial
Statements.


 


(i)                                    The Company has timely filed all forms,
reports and documents required to be filed by it with the Securities and
Exchange Commission (the “SEC”) and has heretofore made available to
Purchaser, in the form filed with the SEC, its: (1) most recent Annual
Report on Form 10-K and Quarterly Report on Form 10-Q; (2) most
recent proxy statement for the annual meeting of stockholders and (3) all
Current Reports on Form 8-K filed with the SEC since the date of the
Company’s most recent report on Form 10-Q, if any (collectively, the “SEC
Reports”).  The SEC Reports: (A) complied
as to form in all material respects in accordance with the requirements of the
Exchange Act and (B) did not at the time they were filed contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.  Except to the extent that information
contained in any SEC Report has been updated, revised, supplemented or amended
by a later-filed SEC Report, none of the SEC Reports contains, as of the
Execution Date or as of the Closing Date, as applicable, an untrue statement of
material fact or omits to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.  As of the date of this Agreement, no
subsidiary of the Company is subject to the reporting requirements of the
Exchange Act.


 


(ii)                                Each of the financial statements
(including, in each case, any notes thereto) contained in the SEC Reports
(collectively, the “Financial Statements”): (1) complied as to form
in all material respects with the published rules and regulations of the
SEC applicable thereto; (2) were prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods covered (except as may be indicated in the notes to such financial
statements or, in the case of unaudited statements, as permitted by Form 10-Q
of the SEC, and except that the unaudited financial statements may not contain
footnotes and are subject to normal and recurring year-end adjustments that did
not and will not, individually or in the aggregate, be material in amount); and
(3) fairly present the consolidated financial position of the Company as
of the respective dates thereof and the consolidated results of operations and
cash flows of the Company for the periods covered thereby.  The books and records of the Company have
been and are being maintained in accordance with applicable material legal and
accounting requirements.  The auditors
who have certified the financial statements of the Company contained in the SEC
Reports are registered public accounting firms as required by the Securities
Act and the Exchange Act and the rules and regulations under the
Securities Act and the Exchange Act. 
Except as disclosed in the SEC Reports or set forth in the Financial
Statements, and except for matters which are not, individually or in the
aggregate, reasonably expected to have a Material Adverse Effect, the Company
has no obligations or liabilities, whether or not accrued, contingent or
otherwise and whether or not required to be disclosed.


 






[ * ] = Certain
confidential information contained in this document, marked by brackets, has
been omitted and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.


 


102

















 


(g)                                 Absence of Certain Changes. 
Except as disclosed in the SEC Reports, since June 30, 2009, there
has been no event, occurrence or development that has had or that would
reasonably be expected to result in a Material Adverse Effect, and the Company
has not (i) varied its business plan or practices, in any material
respect, from past practices, (ii) entered into any material financing,
joint venture, license or similar arrangements or (iii) suffered or
permitted to be incurred any liability or obligation against any of its
properties or assets that would limit or restrict its ability to perform its
obligations hereunder.


 


(h)                                 Sarbanes-Oxley. 
There is and has been no failure on the part of the Company or any of
the Company’s directors or officers, in their capacities as such, to comply in
all material respects with any provision of the Sarbanes-Oxley Act of 2002 and
the rules and regulations promulgated in connection therewith (the “Sarbanes-Oxley
Act”), including Section 402 related to loans and Sections 302 and 906
related to certifications.


 


(i)                                    Disclosure Controls. The Company maintains “disclosure
controls and procedures” (as defined in Rule 13a-15(e) of the
Exchange Act) designed to ensure that information required to be disclosed by
the Company in reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the SEC’s rules and forms. The Company’s management (with the
participation of its principal executive officer and the principal financial
officer) have evaluated the effectiveness of the Company’s disclosure controls
and procedures as of the end of the period covered by the Company’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2008 and
as of the end of the periods covered by the Company’s Quarterly Reports on Form 10-Q
for the periods ended March 31, 2009 and June 30, 2009, and its
principal executive officer and principal financial officer have concluded that
such disclosure controls and procedures are effective to ensure that
information required to be disclosed by the Company in reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the rules and forms of the SEC.


 


(j)                                    Internal Control Over Financial
Reporting. The
Company maintains “internal control over financial reporting” (as defined in Rule 13a-15(f) of
the Exchange Act) that complies with the requirements of the Exchange Act and
has been designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. Except as
disclosed in the SEC Reports, there are no material weaknesses in the design or
operation of the Company’s internal control over financial reporting which are
reasonably likely to adversely affect the Company’s ability to record, process,
summarize and report financial information that have come to the attention of
the Company’s management.


 


(k)                                Private Offering. 
Subject to the accuracy of Purchaser’s representations set forth in Section 4.1(c), Section 4.1(f) and
Section 4.1(g), the offer, sale and
issuance of the Shares in accordance with the terms of this Agreement is in
compliance with all applicable laws, exempt from the registration requirements
of Section 5 of the Securities Act and exempt from applicable state
registration or qualification requirements, other than those with which the
Company has complied or will comply.


 






[ * ] = Certain
confidential information contained in this document, marked by brackets, has
been omitted and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.


 


103

















 


(l)                                    Subsidiaries. 
Except as disclosed in the SEC Reports, the Company does not presently
own or control, directly or indirectly, any interest in any other corporation,
partnership, trust, joint venture, association or other entity.


 


(m)                              Permits; Compliance With Law. 
The Company is in possession of all material authorizations, licenses,
permits, certificates, approvals and clearances, and has submitted notices to,
all governmental entities (including all authorizations under the Federal Food,
Drug and Cosmetic Act of 1938, as amended (the “FDCA”), and the
regulations of the United States Food and Drug Administration (the “FDA”)
promulgated thereunder) necessary for the Company to own, lease and operate its
properties or other assets and to carry on its business in the manner described
in the SEC Reports (the “Company Permits”), and all such Company Permits
are valid, and in full force and effect, except where the failure to have, or
the suspension or cancellation of, or failure to be valid or in full force and
effect of, any of the Company Permits would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.  The Company is not in conflict with, or in
default or violation of, (1) any federal, state, local or foreign statute,
law, ordinance, regulation, rule, code, order, judgment, writ, stipulation,
award, injunction, decree or arbitration award or finding or rule of
common law applicable to the Company or by which any property or asset of the
Company is bound or affected, including, but not limited to, rules and
regulations promulgated by the FDA, laws, rules and regulations relating
to the protection of human health and safety, the environment or hazardous or
toxic substances and the Employee Retirement Income Security Act of 1974, as
amended, including the regulations and published interpretations thereunder
(each of the foregoing collectively referred to as “Law”) or (2) any
Company Permits, except in the case of the foregoing (1) or (2) for
any such conflicts, defaults or violations that would not, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect.


 


(n)                                 Intellectual Property. 
The Company owns or possesses adequate rights or licenses to use all
material trademarks, trade names, service marks, service mark registrations,
service names, patents, patent rights, copyrights, inventions, licenses,
approvals, governmental authorizations, trade secrets and rights (the “Proprietary
Rights”) necessary to conduct its business as described in the SEC Reports,
except where the failure to so own or possess such Proprietary Rights will not,
singularly or in the aggregate, have a Material Adverse Effect.  The Company takes commercially reasonable
security measures to provide adequate trade secret protection in its
non-patented technology.  Except as
disclosed in the SEC Reports, the Company does not have any knowledge of any
infringement by the Company of any Proprietary Rights of others which could
reasonably be expected to result in a Material Adverse Effect, and, except as
disclosed in the SEC Reports, there is no claim, action or proceeding being
made or brought against, or to the Company’s knowledge, being threatened
against, the Company regarding the infringement by the Company of the
Proprietary Rights of others that, if successful, could reasonably be expected
to have a Material Adverse Effect. 
Except as disclosed in the SEC Reports, the Company is not subject to
any judgment, order, writ, injunction or decree of any court or any Federal,
state, local, foreign or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, or any arbitrator, nor,
has it entered into or is a party to any contract which restricts or impairs
the use of any such Proprietary Rights in a manner which would have a Material
Adverse Effect.  The Company has
complied, in all material respects, with its respective contractual obligations
relating to the protection of the 


 






[ * ] = Certain
confidential information contained in this document, marked by brackets, has
been omitted and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.


 


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Proprietary Rights used
pursuant to licenses, except as would not have a Material Adverse Effect.  Except as disclosed in the SEC Reports, to
the knowledge of the Company, no person is infringing on or violating the
Proprietary Rights owned or used by the Company in a manner that could
reasonably be expected to have a Material Adverse Effect.


 


(o)                                  Environmental Laws. 
The Company (i) is in compliance with all applicable foreign federal,
state and local laws and regulations relating to the protection of human health
and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants (“Environmental Laws”), (ii) has
received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct its business and (iii) is in
compliance with all terms and conditions of any such permit, license or
approval where, in each of the three foregoing clauses, the failure to so comply
would have, individually or in the aggregate, a Material Adverse Effect.


 


(p)                                  NASDAQ Compliance. 
The Common Stock is registered pursuant to Section 12(b) of
the Exchange Act and is listed on the NASDAQ Global Market, and the Company has
taken no action designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or delisting the Common
Stock from the NASDAQ Global Market.


 


(q)                                  Contracts. 
Except as disclosed in the SEC Reports and except for matters which are
not reasonably likely to have a Material Adverse Effect, the contracts listed
as exhibits to the SEC Reports that are material to the Company are in full
force and effect, and neither the Company nor, to the Company’s knowledge, any
other party to such contracts is in material breach of or default under any of
such contracts.


 


(r)                                  No Manipulation of Stock. 
The Company has not taken and will not, in violation of applicable Law,
take any action outside the ordinary course of business designed to or that
might reasonably be expected to cause or result in unlawful manipulation of the
price of the Common Stock.


 


(s)                                  Taxes. 
The Company has filed all federal, state and local income and franchise
tax returns required to be filed and has paid all taxes due thereon, and no tax
deficiency has been determined adversely to the Company which has had (nor does
the Company have any knowledge of any tax deficiency which, if determined
adversely to the Company would reasonably be expected to have) a Material Adverse
Effect.


 


(t)                                    Title to Assets. 
The Company has good title to or a valid leasehold interest in all of
its properties that are material to its business, in each case free and clear
of any lien, charge, claim, security interest, encumbrance, right of first
refusal or other restriction (“Liens”), except for (1) statutory
liens not yet delinquent which are being contested in good faith by appropriate
proceedings, and liens for taxes not yet due, (2) pledges of assets in the
ordinary course of business to secure public deposits, (3) defects and
irregularities of title and encumbrances that do not materially impair the use
thereof for the purposes for which they are held, (4) mechanics’, materialmen’s,
workmen’s, repairmen’s, warehousemen’s, carriers’ and other similar liens
arising in the ordinary course of business, (5) properties and assets the
loss of which would not, 


 






[ * ] = Certain
confidential information contained in this document, marked by brackets, has
been omitted and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.


 


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individually or in the
aggregate, have a Material Adverse Effect, and (6) Liens disclosed in the
SEC Reports.


 


(u)                                 Transfer Taxes. 
All stock transfer or other taxes (other than income taxes) which are
required to be paid in connection with the sale and transfer of the Shares to
be sold to Purchaser hereunder will be, or will have been, fully paid or
provided for by the Company and all laws imposing such taxes will be or will
have been fully complied with.


 


(v)                                   Transactions With Affiliates. 
No relationship, direct or indirect, exists between or among the
Company, on the one hand, and the directors, officers or stockholders of the
Company, on the other hand, which is required to be described in the SEC
Reports which is not so described.


 


(w)                                No Brokers. 
The Company has taken no action which would give rise to any claim by
any person for brokerage commissions, finder’s fees or similar payments
relating to this Agreement.


 


(x)                                  Investment Company. 
The Company is not an “investment company” or an “affiliated person” of,
or “promoter” or “principal underwriter” for an investment company, within the
meaning of the Investment Company Act of 1940, as amended.


 


(y)                                  Private Placement. 
Neither the Company nor any of its subsidiaries or affiliates, nor any
person acting on its or their behalf, (i) has engaged in any form of
general solicitation or general advertising (within the meaning of Regulation D
under the Securities Act) in connection with the offer or sale of the Common
Stock, (ii) has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under any circumstances
that would require registration of the Shares under the Securities Act or (iii) has
issued any shares of Common Stock or shares of any series of preferred stock or
other securities or instruments convertible into, exchangeable for or otherwise
entitling the holder thereof to acquire shares of Common Stock which would be
integrated with the sale of the Shares to Purchaser for purposes of the
Securities Act or of any applicable stockholder approval provisions, including,
without limitation, under the rules and regulations of any exchange or
automated quotation system on which any of the securities of the Company are
listed or designated, nor will the Company or any of its subsidiaries or
affiliates take any action or steps that would require registration of any of
the Shares under the Securities Act or cause the offering of the Shares to be
integrated with other offerings. 
Assuming the accuracy of the representations and warranties of
Purchaser, the offer and sale of the Shares by the Company to Purchaser
pursuant to this Agreement will be exempt from the registration requirements of
the Securities Act.


 


(z)                                  Litigation. 
Except as disclosed in the SEC Reports, there is no legal action, suit,
arbitration or other legal, administrative, arbitration or governmental
proceeding pending or, to the Company’s knowledge, threatened against the
Company that could reasonably be expected to have a Material Adverse Effect.


 


(aa)                            Employees. 
Except as disclosed in the SEC Reports, (i) the Company is not
aware that any executive officer or key employee, or that any group of
executive officers or key employees, intends to terminate their employment with
the Company, (ii) the Company does not have any 


 






[ * ] = Certain
confidential information contained in this document, marked by brackets, has
been omitted and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.


 


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present intention to
terminate the employment of any executive officer, key employee or group of key
employees and (iii) the Company is in compliance with all federal, state,
local and foreign laws and regulations respecting employment and employment
practices, terms and conditions of employment and wages and hours, in each case
where such terminations or non-compliance could reasonably be expected to have
a Material Adverse Effect.


 


(bb)                            Application of Takeover
Protections.  There is no control share acquisition,
business combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provision under the Company’s charter
documents or the laws of its state of incorporation that is or could become
applicable to Purchaser as a result of Purchaser and the Company fulfilling
their obligations or exercising their rights under this Agreement, including,
without limitation, as a result of the Company’s issuance of the Common Stock
and Purchaser’s ownership of the Common Stock.


 


(cc)                            Reporting Status; Eligibility to
Use Form S-3.  The Common Stock is registered under Section 12(b) of
the Exchange Act.  The Company currently
meets the “registrant eligibility” requirements set forth in the general
instructions to Form S-3 to enable the registration of the Common Stock.


 


(dd)                            Disclosure. 
None of the representations or warranties of the Company contained
herein and the information contained in the Company Disclosure Schedule, when
taken as a whole, contains any untrue statement of a fact or omits to state a
fact required to be stated herein or therein necessary to make the statements
herein or therein, in light of the circumstances under which they were made,
not misleading, except for facts which are disclosed in the SEC Reports or are
not reasonably likely to have a Material Adverse Effect.


 


4.                                      REPRESENTATIONS
AND WARRANTIES OF PURCHASER; RESTRICTIONS ON TRANSFER OF THE SHARES


 


4.1                               Representations and Warranties. 
Purchaser hereby represents and warrants to the Company the following:


 


(a)                                  Authorization. 
All necessary corporate action on the part of Purchaser for the
execution, delivery and performance of its obligations under this Agreement and
for the consummation of the transactions contemplated hereby has been taken.  This Agreement constitutes a valid and
legally binding obligation of Purchaser enforceable in accordance with its
terms.


 


(b)                                  Corporate Organization and
Authority.  Purchaser is a corporation duly organized,
validly existing, and in good standing under the laws of the State of
Delaware.  Purchaser has the corporate
power, authority and capacity to execute and deliver this Agreement and to
perform its obligations under this Agreement and any document contemplated to
be delivered hereby.


 


(c)                                  Purchase Entirely for Own
Account.  This Agreement is made with Purchaser in
reliance upon Purchaser’s representation to the Company, which by Purchaser’s
execution of this Agreement Purchaser hereby confirms, that the Shares to be
purchased by Purchaser will be acquired for investment for Purchaser’s own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof. 
Purchaser has no present intention of


 






[ * ] = Certain
confidential information contained in this document, marked by brackets, has
been omitted and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.


 


107
















 


selling, granting any
participation in or otherwise distributing the same.  By executing this Agreement, Purchaser
further represents that Purchaser does not presently have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or
grant participations to such person or to any third person, with respect to any
of the Shares and Purchaser has not been formed for the specific purpose of
acquiring the Shares.


 


(d)           Restricted Securities.  Purchaser
understands that the Shares have not been, and will not be, registered under
the Securities Act, by reason of a specific exemption from the registration
provisions of the Securities Act, which depends upon, among other things, the
bona fide nature of the investment intent and the accuracy of Purchaser’s
representations as expressed in Section 4.1(c).  Purchaser understands that the Shares are “restricted
securities” under applicable U.S. federal and state securities laws and that,
pursuant to these laws, Purchaser must hold the Shares indefinitely unless they
are registered with the SEC and qualified by state authorities, or an exemption
from such registration and qualification requirements is available.  Purchaser further acknowledges that if an exemption
from registration or qualification is available, it may be conditioned on
various requirements including, but not limited to, the time and manner of
sale, the holding period for the Shares, and on requirements relating to the
Company that are outside of Purchaser’s control.


 


(e)           Legend.  Purchaser
understands that the Shares may bear the following legend:


 


THESE SECURITIES HAVE NOT
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD OR OTHERWISE TRANSFERRED, PLEDGED
OR HYPOTHECATED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH
SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.


 


(f)            Accredited Investor.  Purchaser is
an accredited investor as defined in Rule 501(a) of Regulation D
promulgated under the Securities Act.


 


(g)           Investment Experience.  Purchaser has
such knowledge and experience in financial and business matters that Purchaser
is capable of evaluating the merits and risks of the investment in the Shares.


 


(h)           Trading in Company Common Stock. 
Since January 1, 2009, except pursuant to this Agreement, neither
Purchaser nor any affiliate of Purchaser has directly, or indirectly through an
agent, broker, financial advisor or other third party, sold, bought, made any
short sale of, loaned, granted or received any option for the purchase or sale
of, or otherwise directly acquired or disposed of any securities of the
Company, whether on the NASDAQ Global Market or otherwise.


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


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5.             COVENANTS OF THE COMPANY


 


The Company covenants and
agrees with Purchaser that from and after the Execution Date:


 


5.1          Registration Rights.


 


(a)           At any time after the date that is six (6) months after the
Execution Date, upon the written request of Purchaser, the Company shall
prepare and file, as expeditiously as reasonably possible, a registration
statement under the Securities Act (“Registration Statement”) on Form S-3
(“Form S-3”) covering the resale of the Shares.  In the event that Form S-3 is
unavailable for such a registration, then the Company will (i) file a
Registration Statement on such form as is then available to effect a
registration of all of the Shares, and (ii) undertake to register the
Shares on Form S-3 as soon as such form is available, provided that the
Company shall maintain the effectiveness of the Registration Statement then in
effect until such time as a Registration Statement on Form S-3 covering
the Shares has been declared effective by the SEC.  The Company shall use its reasonable best
efforts to have the Registration Statement declared effective by the SEC as
soon as practicable.  On the business day
following the effective date of such Registration Statement, the Company shall
file with the SEC in accordance with Rule 424 under the Securities Act the
final prospectus to be used in connection with sales pursuant to such Registration
Statement. If for any reason the SEC does not permit all of the Shares to be
included in such Registration Statement, or for any other reason any Shares are
not then included in a Registration Statement filed pursuant to this Agreement,
then the Company shall prepare, and, as soon as practicable, file with the SEC
an additional Registration Statement covering the resale of all Shares not
already covered by an existing and effective Registration Statement for an
offering to be made on a continuous basis pursuant to Rule 415.  The Company shall use its reasonable best
efforts to cause each such Registration Statement to be declared effective
under the Securities Act as soon as possible. 
On the business day following the effective date of such Registration
Statement, the Company shall file with the SEC in accordance with Rule 424
under the Securities Act the final prospectus to be used in connection with
sales pursuant to such Registration Statement.


 


(b)           If, at any time before October 17, 2015, the Company decides to
register any of its securities for its own account or for the account of
others, then the Company will promptly give Purchaser written notice thereof
and will use its reasonable best efforts to include in such registration all or
any part of the Shares requested by Purchaser to be included therein.  This requirement does not apply to Company
registrations on Form S-4 or S-8 or their equivalents relating to equity
securities to be issued solely in connection with an acquisition of any entity
or business or equity securities issuable in connection with stock option or
other employee benefit plans.  Purchaser
must give its request for registration under this paragraph to the Company in
writing within 15 days after receipt from the Company of notice of such pending
registration.  If the registration for
which the Company gives notice is an underwritten public offering, the Company
will so advise Purchaser as part of the above-described written notice.  If the managing underwriter of any proposed
underwritten public offering advises the Company that the total amount of
shares of Common Stock that Purchaser and any other persons intend to include
in such offering exceeds the number that can be sold in such offering without
being likely to have an adverse effect on the price, timing or distribution of
the Common Stock offered or the market 


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


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for the Common Stock,
then the shares of Common Stock to be included in such underwritten offering
shall include the number of shares of Common Stock that such managing
underwriter advises the Company can be sold without having such adverse effect,
with such number to be allocated (i) first, among the Company and the
investors who are party to that certain Amended and Restated Investor Rights
Agreement, dated July 13, 2004 (the “Existing IRA”), by and among
the Company and the investors set forth on Exhibit A thereto, pursuant to
the terms thereof; (ii) second, to Purchaser; and (iii) third, to any
other person holding Company securities who may also be including any such
securities for sale in such underwritten offering.  No registration rights that further limit or
subordinate the rights of Purchaser to register the Shares will be granted by
the Company until one or more registration statements covering all of the
Shares have become effective.


 


(c)           The Company will file all reports required to be filed by the Company
with the SEC in a timely manner so as to preserve its eligibility for the use
of Form S-3.


 


5.2          Consents.  The Company
shall use its commercially reasonable efforts to procure, in a timely manner
upon reasonable terms and conditions, all consents and approvals, complete all
filings, registrations and certificates, and satisfy all other requirements
prescribed by Law, which are necessary to consummate the transactions
contemplated in this Agreement prior to the Closing Date.


 


5.3          Cooperation.  The Company
shall cooperate fully, completely and promptly with Purchaser in connection
with satisfying all conditions to, and effecting the transactions contemplated
by, this Agreement.


 


5.4          Commercially Reasonable Efforts. 
The Company shall use its commercially reasonable efforts to cause the
conditions set forth in Sections 7.1
and 7.3 to be satisfied on or prior to the
Closing Date.


 


5.5          Further Assurances.  The Company
agrees to use its commercially reasonable efforts to take, or cause to be
taken, any appropriate action, and do, or cause to be done, all things
necessary, proper or advisable under any applicable Law to consummate and make
effective the sale and assignment of the Shares contemplated by this Agreement
as promptly as practicable after the Execution Date.


 


5.6          Operation of Business.  The Company
agrees prior to the Closing to (a) maintain its existence in good standing
under applicable Law, (b) conduct its operations in all material respects
only in the ordinary and usual course of business consistent with past practice
and (c) not take any action or establish a record date for the taking of
any action with respect to any stock split, stock dividend, combination of
shares, recapitalization or other change in the structure of the Company which
affects or relates to the Common Stock.


 


5.7          Form D; Blue Sky Laws.  The Company
will timely file a Notice of Sale of Securities on Form D with respect to
the Shares, under Regulation D promulgated by the Commission under the
Securities Act.  The Company will, on or
before the Closing Date, take such action as it reasonably determines to be
necessary to qualify the Shares for sale to Purchaser under this 


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


110

















 


Agreement under
applicable securities (or “blue sky”) laws of the states of the United States
(or to obtain an exemption from such qualification).


 


5.8          Issuance of Certificates.  The Company
will, or will instruct its transfer agent to, issue certificates registered in
the name of Purchaser or its nominee, for the Shares.  All such certificates will bear the
restrictive legend described in Section 4.1(e),
except as otherwise specified in Section 5.9.  The Company will not give to its transfer
agent any instruction other than as described in this Section 5.8
and Section 5.9 and stop transfer
instructions to give effect to Section 4.1(e) (prior
to registration of the Shares under the Securities Act).  Nothing in this Section 5.8
and Section 5.9 affects in any way
Purchaser’s obligation to comply with all applicable prospectus delivery
requirements, if any, upon resale of the Shares.


 


5.9          Unrestricted Securities.  If, unless otherwise
required by applicable state securities laws, (a) the Shares represented
by a certificate have been registered under an effective Registration
Statement, (b) Purchaser and/or its nominee provides the Company and its
transfer agent with an opinion of counsel, in form, substance and scope
customary for opinions of counsel in comparable transactions, to the effect
that a public sale or transfer of such Shares may be made without registration
under the Securities Act and such sale may occur without restriction on the
manner of such sale or transfer, (c) such holder provides the Company and
its transfer agent with reasonable assurances that such Shares can be sold
under Rule 144 promulgated by the SEC pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC having substantially the same effect as
such Rule (“Rule 144”), or (d) the Shares represented by
a certificate can be sold without restriction as to the number of securities
sold under Rule 144, the Company will permit the transfer of the Shares,
and the Company will instruct its transfer agent to issue one or more
certificates, free from any restrictive legend, in such name and in such
denominations as specified by such holder. 
Notwithstanding anything herein to the contrary, the Shares may be
pledged as collateral in connection with a bona fide margin account or other
lending arrangement; provided, that such pledge will not alter the
provisions of this Section 5.9
with respect to the removal of restrictive legends.


 


6.             COVENANTS OF PURCHASER


 


Purchaser covenants and
agrees with the Company that from and after the Execution Date:


 


6.1          Consents.  Purchaser
shall use its commercially reasonable efforts to procure, in a timely manner
upon reasonable terms and conditions, all consents and approvals, complete all
filings, registrations and certificates, and satisfy all other requirements
prescribed by Law, which are necessary to consummate the transactions
contemplated in this Agreement.


 


6.2          Cooperation.  Purchaser
shall cooperate fully, completely and promptly with the Company in connection
with satisfying all conditions to, and effecting the transactions contemplated
by, this Agreement.


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


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6.3          Commercially Reasonable Efforts. 
Purchaser shall use its commercially reasonable efforts to cause the
conditions set forth in Section 7.2
and Section 7.3 to be satisfied on or
prior to the Closing Date.


 


6.4          Further Assurances.  Purchaser agrees
to use its commercially reasonable efforts to take, or cause to be taken, any
appropriate action, and do, or cause to be done, all things necessary, proper
or advisable under any applicable Law to consummate and make effective the sale
and assignment of the Shares contemplated by this Agreement as promptly as
practicable after the Execution Date.


 


7.             CLOSING CONDITIONS


 


7.1          Conditions to Obligations of Purchaser at Closing. 
At the Closing, the obligation of Purchaser to purchase the Shares shall
be subject to the satisfaction or Purchaser’s waiver, on or prior to the
Closing Date, of each of the following conditions:


 


(a)           Each of the representations and warranties of the Company contained in
this Agreement shall be true and correct in all material respects.


 


(b)           All covenants, agreements and conditions contained in this Agreement to
be performed by the Company on or prior to the Closing Date shall have been
performed or complied with in all material respects at or prior to the Closing
Date.  The Company shall have obtained
any and all consents and waivers necessary or appropriate for the consummation
of the transactions contemplated by this Agreement.


 


(c)           Purchaser shall have received each of the documents to be delivered to
it pursuant to Section 2.2(a).


 


(d)           The Company shall have executed and delivered this Agreement and the
Collaboration Agreement, such agreements shall be in full force and effect.


 


(e)           The holders of at least a majority of the shares of Common Stock that
constitute Registrable Securities (as defined in the Existing IRA) shall have
consented to the Company granting to the Purchaser the registration rights
contained in Section 5.1 of this Agreement.


 


7.2          Conditions to Obligations of the Company at the Closing. 
At Closing, the obligation of the Company to sell and issue the Shares
shall be subject to the satisfaction or the Company’s waiver, on or prior to
the Closing Date, of each of the following conditions:


 


(a)           Each of the representations and warranties of Purchaser contained in
this Agreement shall be true and correct in all material respects.


 


(b)           All covenants, agreements and conditions contained in this Agreement to
be performed by Purchaser on or prior to the Closing Date shall have been
performed or complied with in all material respects at or prior to the Closing
Date.


 


(c)           The Company shall have received each of the documents to be delivered
to it pursuant to Section 2.2(b).


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


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(d)           Purchaser shall have executed and delivered this Agreement and the
Collaboration Agreement, such agreements shall be in full force and effect.


 


(e)           The holders of at least a majority of the shares of Common Stock that
constitute Registrable Securities shall have consented to the Company granting
to the Purchaser the registration rights contained in Section 5.1 of this
Agreement.


 


7.3          Conditions to Obligations of Each Party. 
At the Closing, the obligation of Purchaser to purchase the Shares and
the obligation of the Company to sell and issue the Shares to be sold and
issued at the Closing shall be subject to the satisfaction or waiver, on or
prior to the Closing Date, of each of the following conditions:


 


(a)           All statutory requirements for the valid consummation by the Parties of
the transactions contemplated in this Agreement to be consummated at the
Closing shall have been fulfilled, and all consents, authorizations, permits,
waivers and approvals (including of all U.S. federal, state and local and
non-U.S. governmental agencies and authorities) required to be obtained in
order to permit the consummation by Parties of the transactions contemplated by
this Agreement to be consummated at the Closing shall have been obtained.


 


(b)           No action or claim shall be pending or threatened before any court or
quasi-judicial or administrative agency of any federal, state, local or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling or charge would (i) prevent consummation
of any of the transactions contemplated by this Agreement, (ii) cause any
of the transactions contemplated by this Agreement to be rescinded following
consummation or (iii) have the effect of making illegal the purchase of,
or payment for, any of the Shares by Purchaser.


 


(c)           There shall be no temporary restraining order, preliminary injunction
or permanent injunction or other order preventing the consummation of the
transaction contemplated by this Agreement to be completed at the Closing
issued by any court that remains in effect.


 


8.             TERMINATION


 


8.1          Termination.  This Agreement
may be terminated:


 


(a)           at any time by the mutual written consent of the Company and Purchaser;


 


(b)           by the Company, on the one hand, or Purchaser, on the other hand, by
written notice to the other Party, if the Closing shall not have been
consummated on or before September 18, 2009, unless the failure to
consummate the Closing on or prior to such date is the result of a default
under this Agreement by the Party seeking to terminate this Agreement pursuant
to the terms of this Section 8.1(b);


 


(c)           at any time by Purchaser upon written notice to the Company if (i) the
Company fails to perform any of its covenants or agreements contained herein in
any material respect and such breach shall not have been cured within twenty
(20) business days of the delivery of written notice by Purchaser to the
Company of such breach, or (ii) any of the conditions to Purchaser’s 


 






[ * ] =
Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.


 


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obligation to consummate
the transactions provided for herein shall have become impossible to satisfy;


 


(d)           by the Company upon written notice to Purchaser if (i) Purchaser
fails to perform any of its covenants or agreements contained herein in any
material respect and such breach shall not have been cured within twenty (20)
business days of the delivery of written notice by the Company to Purchaser of
such breach, or (ii) any of the conditions to the Company’s obligation to
consummate the transactions provided for herein shall have become impossible to
satisfy; and


 


(e)           by Purchaser or the Company (the “Terminating Party”) if (i) any
proceeding seeking liquidation, reorganization or other relief with respect to
the other Party under any bankruptcy, insolvency or other similar Law now or
hereafter in effect has not been dismissed within sixty (60) days after the
commencement thereof, (ii) such other Party is adjudged as bankrupt or
insolvent, or a final and non-appealable order for relief under any bankruptcy,
insolvency or other similar Law now or hereafter in effect has been entered
against such other Party, (iii) the other Party has filed a voluntary
petition under any bankruptcy, insolvency or other similar Law or under the
reorganization provisions of any such Law seeking liquidation, reorganization
or other relief under any bankruptcy, insolvency or other similar Law now or
hereafter in effect, (iv) the other Party executes and delivers a general
assignment for the benefit of creditors, (v) the other Party seeks,
consents to or acquiesces in the appointment of a trustee, receiver or
liquidator for such other Party or for all or any substantial part of such
other Party’s properties, (vi) the other Party files an answer or other
pleading admitting or failing to contest the material allegations of a petition
filed against such other Party in any proceeding of the nature described in
clause (ii) above, (vii) the other Party is unable to confirm in
writing that it is, following a request by the Terminating Party upon 48 hours
notice (or otherwise indicates that it is not), able to pay its debts as they
mature, (viii) the appointment without the other Party’s consent or
acquiescence of a trustee, receiver or liquidator has not been vacated or
stayed within ninety (90) days of such appointment, or (ix) an appointment
referred to in clause (viii) above is not vacated within ninety (90) days
after the expiration of any such stay.


 


8.2          Effect of Termination.  In the event
that this Agreement shall be terminated pursuant to Section 8.1,
all further obligations of the parties hereto under this Agreement (other than
pursuant to Section 10.9, which shall continue
in full force and effect) shall terminate without further liability or
obligation of either Party to the other Party hereunder; provided
that, no Party shall be released from liability accrued hereunder
prior to the date of termination.


 


9.             SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS; INDEMNIFICATION


 


9.1          Survival.  Each of the
parties’ representations, warranties, covenants and agreements set forth in
this Agreement shall survive the Closing for the full applicable statute of
limitations.


 


9.2          Indemnity by the Company.  The Company
shall indemnify and hold Purchaser and its affiliates and its and their
officers, directors and agents (the “Purchaser Indemnitees”) harmless
from and against, and shall pay to Purchaser the full amount of, any loss,
claim, damage, liability or expense (including reasonable attorneys’ fees)
(hereafter referred to as a “Claim”) resulting to 


 






[ * ] =
Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.


 


114

















 


a Purchaser Indemnitee
from any inaccuracy in any representation or warranty as of the Closing Date or
any breach of any covenant or agreement, by the Company contained in this
Agreement.


 


9.3          Indemnity by Purchaser.  Purchaser
shall indemnify and hold the Company harmless from and against, and shall pay
to the Company and its affiliates and its and their officers, directors and
agents (the “Company Indemnitees”) the full amount of, any Claim
resulting to a Company Indemnitee from any inaccuracy in any representation or
warranty, or any breach of any covenant or agreement, by Purchaser contained in
this Agreement.


 


9.4          Remedies.  Upon the
occurrence of any event for which the Company or Purchaser is entitled to
indemnification under this Agreement, such party shall have all the rights and
remedies in Law and in equity available to it.


 


10.          MISCELLANEOUS


 


10.1        Entire Agreement; Amendment.  This Agreement
constitutes the entire Agreement between the Parties with respect to the within
subject matter and supersedes all previous Agreements, whether written or
oral.  This Agreement shall not be
changed or modified orally, but only by an instrument in writing signed by both
Parties.


 


10.2        Governing Law; Choice of Law.  This Agreement
and the validity, performance, construction and effect of this Agreement shall
be governed in all respects by the laws of the State of Delaware, excluding its
provisions governing the conflict of laws.


 


10.3        Assignment.  This Agreement
may not be assigned by either Party without the prior written consent of the
other, except that, (a) Purchaser may assign this Agreement to an “affiliate”
(as such term is defined in Rule 501(b) of Regulation D promulgated
under the Securities Act) of Purchaser and (b) the Company may assign this
Agreement to a party that acquires all or substantially all of the Company’s
business, whether by merger, sale of assets or otherwise.  A merger, consolidation or other
reorganization shall be deemed to constitute an assignment.  Any assignment in contravention of this Section 10.3
shall be void.


 


10.4        Notices.  Any notices
required or permitted hereunder shall be given to the appropriate Party at the
address specified below or at such other address as the Party shall specify in
writing.  Such notice shall be in writing
sent by:  (i) certified mail,
postage prepaid, return receipt requested; (ii) nationally recognized
courier service; or (iii) facsimile. 
Notice shall be deemed given (a) if sent by certified mail, on the
earlier of the date the return receipt is signed or on the third business day
(fifth business day if sent internationally) after the notice is mailed; (b) if
sent by nationally recognized courier service, on the day the notice is
delivered according to the records of such courier service; or (c) if sent
by facsimile, upon the date such notice is transmitted by facsimile, provided
that such transmission is subsequently confirmed by a hard copy sent by
nationally recognized courier service within twenty-four (24) hours of the
transmission.


 


	
  For
  Company:

  	
  Facet
  Biotech Corporation

  
	
   

  	
  1500
  Seaport Blvd.

  
	
   

  	
  Redwood
  City, CA  94063

  



 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


115

















 


Attn:
General Counsel


Facsimile:
(650) 454-2000


 


with
a copy to:


 


Cooley
Godward Kronish LLP


Five
Palo Alto Square


3000 El Camino Real


Palo Alto, CA 
94306-2155


Attn:
Glen Sato


Facsimile:
(650) 849-7400


 


For Purchaser:                                                                   Trubion
Pharmaceuticals, Inc.


2401
4th Avenue


Suite 1050


Seattle,
WA 98121


Attn:
General Counsel


Facsimile:
(206) 838-0503


 


with
a copy to:


 


Fenwick &
West LLP


1191
Second Avenue


10th
Floor


Seattle,
WA  98101


Attn:  Alan C. Smith


Facsimile:  (206) 389-4511


 


10.5        Waiver.  The failure of either Party to
assert a right hereunder or to insist upon compliance with any term or
condition of this Agreement shall not constitute a waiver of that right or
excuse a similar subsequent failure to perform any such term or condition by
the other Party.  None of the terms,
covenants and conditions of this Agreement can be waived except by the written
consent of the Party waiving compliance.


 


10.6        No Third-Party Beneficiary.  This Agreement
is for the benefit of, and may be enforced only by, the Company and Purchaser
and their respective successors and permitted transferees and assignees, and is
not for the benefit of, and may not be enforced by, any third party.


 


10.7        Finder’s Fees.


 


(a) The
Company hereby agrees to indemnify and to hold Purchaser and its affiliates and
agents harmless from and against any costs, expenses or liability for any
commission or compensation in the nature of a finder’s fee to any investment
banker, finder, broker or other person or firm (including legal fees and other
costs and expense of defending against such liability or asserted liability)
resulting from or arising out of acts or alleged acts of the Company, its
affiliates or its or their representatives.


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


116

















 


(b) Purchaser
(i) represents and warrants that it has retained no investment bankers,
finders or brokers in connection with the transactions contemplated by this
Agreement and (ii) hereby agrees to indemnify and hold the Company
harmless from and against any costs, expenses or liability for any commission
or compensation in the nature of a finder’s fee to any investment banker,
finder, broker or other person or firm (including legal fees and other costs
and expense of defending against such liability or asserted liability)
resulting from or arising out of acts or alleged acts of Purchaser, its
affiliates or its or their representatives.


 


10.8        Expenses.  The Company
and Purchaser shall each bear its respective expenses and legal fees incurred
with respect to the negotiation, execution, delivery and performance of this
Agreement and the transactions contemplated hereby.


 


10.9        Counterparts.  This Agreement
may be executed in counterparts, all of which taken together shall be regarded
as one and the same instrument. 
Execution and delivery of this Agreement by exchange of facsimile copies
bearing the facsimile signature of a Party hereto shall constitute a valid and
binding execution and delivery of this Agreement by such Party.  Such facsimile copies shall constitute
enforceable original documents.


 


10.10      Severability.  If any
provision of this Agreement is declared invalid by a court of last resort or by
any court from the decision of which an appeal is not taken within the time
provided by Law, then and in such event, this Agreement will be deemed to have
been terminated only as to the portion thereof that relates to the provision
invalidated by that decision, but this Agreement, in all other respects will
remain in force; provided, however,
that if the provision so invalidated is essential to this Agreement as a whole,
then the Parties shall negotiate in good faith to amend the terms of this
Agreement as nearly as practical to carry out the original intent of the
Parties.


 


10.11      Time of the Essence.  Time is of the
essence for purposes of this Agreement.


 


10.12      Rules of Interpretation.  Within this
Agreement (a) a reference to any individual, firm, trust, corporation,
partnership, limited liability company, governmental entity or business
organization includes such entity’s permitted successors and permitted assigns;
(b) the words “include,” “includes” and “including” are not limiting; (c) references
to any document, instrument or agreement (i) shall include all exhibits,
schedules and other attachments thereto, (ii) shall include all documents,
instruments or agreements issued or executed in replacement thereof, and (iii) shall
mean such document, instrument or agreement, or replacement thereof, as
amended, modified and supplemented from time to time and in effect at any given
time; (d) the words “hereof,” “herein” and “hereunder” and words of
similar import when used shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; and (e) the headings used in
this Agreement have been inserted for convenience only, and they are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.


 


(Signature
page follows.)


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


117

















 


IN WITNESS WHEREOF, the
Parties have executed this Agreement by their duly authorized representatives
as of the Execution Date.


 


	
  COMPANY:

  	
  PURCHASER:

  
	
   

  	
   

  
	
  TRUBION PHARMACEUTICALS, INC.

  	
  FACET
  BIOTECH CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Peter A. Thompson

  	
   

  	
  By:

  	
  /s/
  Faheem Hasnain

  
	
   

  	
  Peter
  A. Thompson, M.D., FACP

  	
   

  	
   

  	
  Faheem
  Hasnain

  
	
   

  	
  President
  and Chief Executive Officer

  	
   

  	
   

  	
  President
  and Chief Executive Officer

  



 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


118






 


 












 


Schedule 1.132 (Trubion Core Patent Rights)


 




	
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[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


119

















 




	
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  Status

  	
   

  
	
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[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


120

















 




	
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[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


121

















 




	
  TRBN Ref.

  	
   

  	
  Country

  	
   

  	
  App / Patent No.

  	
   

  	
  Status

  	
   

  
	
  [ * ]

  	
   

  	
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  [ * ]

  	
   

  	
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[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


122

















 


Schedule 1.134 (Trubion Product Patent Rights)


 


	
  TRBN Ref.

  	
   

  	
  Country

  	
   

  	
  App / Patent No.

  	
   

  	
  Status

  	
   

  
	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
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  [ * ]

  	
   

  	
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  [ * ]

  	
   

  	
  [ * ]

  	
   

  



 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


123






 












 


Schedule 3.7 (Pre-existing
Obligations)


 


·                  [ * ] Manufacturing Services Agreement, dated
[ * ], as amended [ * ] and [ * ]


·                  [ * ] Research Evaluation Agreement, dated [
* ], as amended [ * ]


·                  [ * ] Supply Agreement, dated [ * ]


·                  [ * ] Services Agreement dated [ * ]


·                  [ * ] Quality Agreement, dated [ * ]


·                  [ * ] Development and Manufacturing Services
Agreement, dated [ * ], as amended [ * ] and [ * ], and [ * ] dated [ * ].


·                  [ * ] Services Agreement, dated [ * ] and [ *
] (the “[ * ]”) [ * ] to the [ * ] dated [ * ] and [ * ] to the [ * ] dated [ *
].


·                  [ * ] Services Agreement dated [ * ] as
amended [ * ]


·                  [ * ] Services Agreement dated [ * ],
including [ * ] Agreement dated [ * ] (the “[ * ]”), [ * ] to the [ * ] dated [
* ]


·                  [ * ] Supply


·                  [ * ] Purchase Order [ * ]


·                  [ * ] Service Agreement dated [ * ]


·                  [ * ] Laboratory Services Agreement dated [ *
] and amended


·                  [ * ] Exemplar Quotes [ * ] and [ * ]


·                  [ * ] Agreement, dated [ * ] and [ * ] dated
[ * ] and [ * ] dated [ * ]


·                  [ * ] Services Agreement dated [ * ] and [ *
]


·                  [ * ] Consulting Agreement dated [ * ]


·                  [ * ] Consulting Agreement dated [ * ]


·                  [ * ] Consulting Services Agreement dated [ *
]


·                  [ * ] Consulting Services Agreement dated [ *
]


·                  [ * ] Consulting Services Agreement dated [ *
]


·                  [ * ] Consulting Services Agreement dated [ *
]


·                  [ * ] Consulting Agreement dated  [ * ]


·                  [ * ] Consulting Services Agreement dated [ *
] as amended by Amendment No. 1 dated [ * ]


·                  [ * ] Consulting Services Agreement dated [ *
] as amended [ * ]


·                  [ * ] Consulting Services Agreement dated [ *
]


·                  [ * ] Consulting Agreement dated [ * ]


·                  [ * ] Consulting Agreement dated [ * ]


·                  [ * ] Consulting Services Agreement dated [ *
]


·                  [ * ] Consulting Services Agreement dated [ *
]


·                  [ * ] Consulting Services Agreement dated [ *
]


·                  [ * ] Clinical Trial Agreement dated [ * ] as
amended [ * ] and [ * ]


·                  [ * ] and [ * ] Clinical Trial Agreement dated [ * ] as amended [ *
]


·                  [ * ] Clinical Trial Agreement dated [ * ],
2008] as amended [ * ]


·                  [ * ] dated [ * ] as amended [ * ]


·                  [ * ] Clinical Trial Agreement dated [ * ]


·                  [ * ] Clinical Trial Agreement dated [ * ]


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


124

















 


 Schedule
12.2 (Disclosure Schedule)


 


[ * ]


 


·                  [ * ] Research Evaluation Agreement, dated [
* ], as amended [ * ] (subject to the [ * ] of [ * ] under [ * ])


·                  [ * ] Manufacturing Services Agreement, dated
[ * ], as amended [ * ] and [ * ] (subject to the [ * ] of [ * ] under Section 
[ * ])


·                  [ * ] Material Transfer Agreement dated [ * ]


·                  [ * ] Supply Agreement, dated [ * ]


·                  [ * ] Development and Manufacturing Services
Agreement, dated [ * ], as amended [ * ] and [ * ] (subject to the [ * ] of [ *
] under Section [ * ])


·                  [ * ] Services Agreement dated [ * ],
including [ * ] dated [ * ] (the “[ * ]”), [ * ] to the [ * ] dated [ * ] and [
* ] — [ * ] under [ * ]


·                  [ * ] Consulting Agreement dated  [ * ]


·                  [ * ] Consulting Agreement dated [ * ] as
amended [ * ]


 


[ * ]


 


·                  [ * ] Material Transfer Agreement dated [ * ],
as amended [ * ], [ * ] and [ * ]


·                  [ * ] Amended and Restated Material Transfer
Agreement dated [ * ]


·                  [ * ] Services Agreement dated [ * ]


·                  [ * ] License Agreement dated [ * ]


 


[
* ] [ * ] has [ * ] to [ * ] or other [ * ] from the [ * ]:


 


[ * ] ([ * ] and [ * ])


 


[ * ] ([ * ] and [ * ])


 


[ * ], on [ * ] ([ * ])


 


[ * ]


 


[ * ] Reference is
made to the disclosure under subsection [ * ] of this Schedule 12.2.


 






[ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


125