**Exhibit 10.15**

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BYBRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF1934, AS AMENDED.

 

 

 

**RESTRUCTUREDAND RESTATED HspE7 COLLABORATION AGREEMENT**

 

 

**AMONG**

 

 

**STRESSGENDEVELOPMENT CORPORATION AND**

 

**STRESSGENBIOTECHNOLOGIES CORPORATION**

 

 

**AND**

 

**F.HOFFMANN-LAROCHE LTD AND HOFFMANN-LA ROCHE INC.**

 

 

**December 1,2003**

 

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This **RESTRUCTURED AND RESTATED****HSPE7COLLABORATION AGREEMENT**(“**Agreement**”) is made as of December 1,2003 (the “**Effective Date**”) by and among, on the one hand, **STRESSGENDEVELOPMENT CORPORATION,**a Barbados corporation, with its principaloffice at Whitepark House, White Park Road, P.O. Box 806E, Bridgetown, Barbados(“**Stressgen**”),and **STRESSGENBIOTECHNOLOGIES CORPORATION,**a corporation organized under the lawsof Yukon Territory, Canada, with its principal office at #350 – 4243 GlanfordAvenue, Victoria, BC Canada V8Z 4B9 (“**SBC**”), and, on the other hand, **F.HOFFMANN-LAROCHE LTD,**a Swiss corporation, with its principal office atGrenzacherstrasse 124, CH-4070-Basel Switzerland and **HOFFMANN-LA ROCHE INC.,**a NewJersey corporation, with its principal office at 340 Kingsland Street, Nutley, NewJersey 07110 (collectively, “**Roche**”).

 

**RECITALS**

 

**1.****                                     **Stressgenand SBC own intellectual property rights related to, among other products,HspE7 (as defined below), which is now in Phase II clinical trials.

 

**2.****                                     **Rochehas expertise in the development and commercialization of pharmaceuticalproducts.

 

**3.****                                     **Roche,Stressgen and SBC have entered into that certain HspE7 Collaboration Agreement,effective June 21, 2002, pursuant to which the Parties were to co-developHspE7 for certain specified indications, share in the development costsassociated therewith, and have Roche commercialize HspE7 worldwide (the “**Prior Agreement**”).

 

**4.****                                     **TheParties now desire to restructure their collaborative efforts with respect toHspE7, to provide that Stressgen take the lead in the manufacture, continuedclinical development and commercialization of HspE7 for certain indications,that Roche be granted an exclusive option to obtain exclusive, worldwide rightsto such product, and that Roche be granted a license to develop and commercializea second generation

 

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HspE7 product for certain indications, and have prepared this Agreementto govern such restructured arrangement.

 

**AGREEMENT**

 

**NOW, THEREFORE,**inconsideration of the premises and the mutual covenants and agreements containedin this Agreement, the Parties, intending to be legally bound, do hereby agreeas follows:

 

**ARTICLE 1DEFINITIONS**

 

The followingcapitalized terms, whether used in the singular or the plural, shall have thefollowing meanings as used in this Agreement unless otherwise specificallyindicated:

 

**1.1****                               “Affiliate”**shall mean (a) an entity which owns, directly or indirectly, acontrolling interest in a Party, by stock ownership or otherwise, (b) anyentity which a Party owns a controlling interest, by stock ownership orotherwise; or (c) any entity, under direct or indirect common control of aParty.  For purposes of this paragraph,“controlling interest” and “control” mean ownership of greater than fiftypercent (>50%) of the votingstock permitted to vote for the election of the board of directors or any otherarrangement resulting in control or the right to control the management and theaffairs of the Party.  For purposes ofthis Agreement, Genentech, Inc., 1 DNA Way, South San Francisco, California,and Chugai Pharmaceutical Company, Ltd., 1-9 Kyobashi 2-chome, Chuo-ku, Tokyo,104-8301, Japan, shall not be deemed an Affiliate of Roche.

 

**1.2****                               “BLAFiling”**shall mean a Biologics Licensing Application or New DrugApplication filed with the FDA, or the equivalent application to the equivalentagency in any other country, the filing of which is necessary to market andsell a Target Product, including all amendments and supplements to any of theforegoing.

 

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**1.3****                               “Control”**shall mean, with respect to any information or intellectual property right,possession by a Party of the ability (whether by ownership, license orotherwise) to grant access, a license or a sublicense to such information orintellectual property right without violating the terms of any agreement orother arrangement with any Third Party as of the time such Party would first berequired hereunder to grant the other Party such access, license or sublicense.

 

**1.4****                               “ConfidentialInformation”**shall have the meaning set forth in **Section 12.1**.

 

**1.5****                               “DiligentEfforts”**shall mean the use of at least an equivalent degree of effort andresources consistent with the exercise of prudent scientific and business judgment,as applied to other pharmaceutical products of similar potential and marketsize by the Party in question, and reflecting the competitive environment forthe development and marketing of a Target Product.

 

**1.6****                               “ExecutiveOfficers”**shall mean, for Roche, the Head of the Roche Pharma Division (ora designee), and for Stressgen, the Chief Executive Officer of Stressgen (or adesignee).

 

**1.7****                               “FDA”**shall mean the United States Food and Drug Administration.

 

**1.8****                               “First Generation Product”**shallmean any version of a product containing HspE7, developed by or on behalf ofStressgen initially for the treatment of one or more Non-GW Indications.

 

**1.9****                              **“**FirstGeneration Product License Agreement”** shall have the meaning setforth in Section 4.4.

 

**1.10****                        “GWIndication”**shall mean treatment or prevention of any one or more of thefollowing diseases or disorders, caused by any type of the human papillomavirus: benign internal and external genital and perianal warts, including thoseurethral, intravaginal, cervical, rectal and intra-anal sites.

 

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**1.11****                        “HspE7”**shall mean a recombinant DNA-derived fusion protein containing (a) ahuman papilloma virus (HPV) type-16 E7 antigen, antigenic fragment or conjugatethereof and (b) a bacterial stress protein, including without limitation,a bacterial stress protein derived from the 65kDa heat shock protein of *Mycobacteriumbovis var. BCG* (Hsp65), where such bacterial stress protein iscoupled at the C-terminus to the E7 protein of the HPV type 16.

 

**1.12****                        “IND”**shall mean an application to the FDA, the filing of which is necessary tocommence clinical testing of Target Products in humans, or the equivalentapplication to the equivalent agency in any other country or group ofcountries.

 

**1.13****                        “Invention”**shall mean any invention or discovery, whether or not patentable, made as aresult of activities of a Party or the Parties pursuant to this Agreement, andwhich relates to a Target Product.  An“Invention” may be made by employees of Stressgen or SBC solely or jointly witha Third Party (a “**Stressgen Invention**”), by employees ofRoche solely or jointly with a Third Party (a “**Roche Invention**”), or jointlyby employees of Stressgen or SBC and Roche with or without a Third Party (a “**Joint Invention**”),in each instance as determined by U.S. laws of inventorship.

 

**1.14****                        “MITAgreement”** shall mean that certain License Agreement dated November 3,1992 between Massachusetts Institute of Technology and the Whitehead Institute(collectively “**MIT**”) and SBC, as amended.

 

**1.15****                        “NaïveGenital Warts Indication”** shall mean the GW Indication limited to treatingnaïve patients having warts that have had no prior drug, ablative or surgicaltreatment.

 

**1.16****                        “NetSales”** shall mean the amount remaining after deducting from Adjusted GrossSales an amount equal to [***] of Adjusted Gross Sales

 

As used herein, the term **“Adjusted Gross Sales”** shall mean the grossamount invoiced for sales of Target Products to Third Parties in the Territoryby a Party, its Affiliates and their respective sublicensees to Third Partiesthat are not Affiliates or

 

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sublicensees of the selling party, less the following items, asallocable to such Target Product (if not previously deducted from the amountinvoiced):

 

**(a)****                                 **volume(quantity) discounts;

 

**(b)****                                 **returnsand return reserves (including allowances actually given for spoiled, damaged,out-dated, rejected, returned Target Product, withdrawals and recalls;

 

**(c)****                                 **taxes,duties or other governmental tariffs, including value added or sales taxes,government mandated exceptional taxes and other taxes directly linked to thegross sales amount (other than income taxes); and

 

**(d)****                                 **rebates(including price reductions, rebates to social and welfare systems, chargebacksor reserves for chargebacks, cash rebate incentives, government mandatedrebates and similar types of rebates, for example P.P.R.S, Medicaid).

 

Notwithstandingthe foregoing, amounts received by a Party or its Affiliates or sublicenseesfor the sale of Target Product among a Party and its Affiliates or sublicenseesfor resale shall not be included in the computation of Net Sales hereunder.

 

**1.17****                        “Non-GWIndications”**shall mean treatment or prevention of any human disease ordisorder caused by any type of the human papilloma virus other than the GWIndication, including the treatment of recurrent respiratory papillomatosis (“**RRP**”),diagnosed cancer, benign and precancerous lesions, cervical dysplasia (CIN),anal dysplasia (AIN), or any orphan drug indication.

 

**1.18****                        “Option”**or**“The Option”** shall have themeaning set forth in **Section 4.1.**

 

**1.19****                        “Other HPVFusion Protein”**shall mean a fusion protein (or any nucleic acid sequencesand vectors and host cells containing nucleic acid sequences encoding suchprotein) that [***].

 

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**1.20****                        “Party”**shall mean, individually, on the one hand, Stressgen and SBC and on theother hand, Roche, and “**Parties**” shall mean collectively, Stressgenand SBC and Roche.

 

**1.21****                        “Patents”**shall mean (a) United States patents, re-examinations, reissues,renewals, extensions and term restorations, and foreign counterparts thereof,and (b) pending applications for United States patents, including, withoutlimitation, provisional applications, continuations, continuations-in-part,divisional and substitute applications, including, without limitation,inventors’ certificates, and (c) any and all foreign counterparts of (a)and (b).

 

**1.22****                        “PhaseII Clinical Trial”**shall mean the second phase of human clinical trialsrequired by the FDA to gain evidence of efficacy of Target Product in a targetpopulation, and to determine common short term side effects and risks forTarget Product, as described in 21 CFR 312.21(b), as it may be amended (or itssuccessor regulation).

 

**1.23****                        “PhaseIII Clinical Trial”**shall mean the third phase of human clinical trialsrequired by the FDA to gain evidence of efficacy of Target Product in a targetpopulation, and to obtain expanded evidence of safety for Target Product thatis needed to evaluate the overall benefit-risk relationship of Target Productand provide an adequate basis for physician labeling, as described in 21 CFR312.21(c), as it may be amended (or its successor regulation).

 

**1.24****                        “[***] Indication”**shall mean theGW Indication limited to [***].

 

**1.25****                        “RegulatoryApproval”**shall mean any and all approvals, licenses, registrations orauthorizations (including pricing and reimbursement approvals) of any nationalor international or local regulatory agency, department, bureau or othergovernmental entity, whether or not conditional, that are necessary for thecommercial sale of a Target Product in a regulatory jurisdiction in theTerritory and obtained as a result of activities under this Agreement.

 

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**1.26****                        “Second Generation Product”**shallmean any product containing HspE7, developed by or on behalf of Roche for theGW Indication, or where allowed pursuant to Section 6.8, a Non-GWIndication.

 

**1.27****                        “Startof Phase II”**shall mean the date that a patient is first dosed in a PhaseII Clinical Trial for Target Product, as a result of activities under thisAgreement

 

**1.28****                        “Startof Phase III”**shall mean the date that a patient is first dosed in a PhaseIII Clinical Trial for Target Product, as a result of activities under thisAgreement

 

**1.29****                        “StressgenKnow-How”**shall mean, to the extent necessary or useful for themanufacture, development or commercialization of Target Products in theTerritory, all data, knowledge and information Controlled by Stressgen or SBC,including, without limitation, materials, samples, manufacturing data,toxicological data, pharmacological data, clinical data, formulations,specifications, quality control testing data, market research, and submissionsand correspondence to and from governmental agencies with regard to TargetProducts, but excluding information contained within the Stressgen PatentRights.

 

**1.30****                        “StressgenPatent Rights”**shall****mean all Patents that Stressgen Controlsas of the Effective Date or during the Term, including, without limitation,Patents that claim Stressgen Inventions and/or Joint Inventions, which, in theabsence of the license granted, or to be granted pursuant to the Option, toRoche under this Agreement, would be infringed by the making, using, selling,offer for sale or importation of Target Products in the Territory.

 

**1.31****                        “TargetProduct”**shall mean either the First Generation Product and/or the SecondGeneration Product, as the context requires.

 

**1.32****                        “Term”**shall have the meaning set forth in **Section 15.1**.

 

**1.33****                        “Territory”**shall mean all countries of the world.

 

**1.34****                        “ThirdParty”**shall mean any Person other than a Party, its Affiliates andsublicensee.

 

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**1.35****                        “Trademarks”**shall mean all trademarks, trade names and trade dress owned or controlled byStressgen and used in connection with the sale by Stressgen under thisAgreement of First Generation Product in the Territory.

 

**1.36****                        “ValidClaim”**shall mean a claim in any (a) unexpired and issued StressgenPatent Right that has not been disclaimed, revoked or held invalid orunenforceable by a final unappealable decision of a court of government agencyof competent jurisdiction or (b) pending patent application that is aStressgen Patent Right which patent application has been on file with theapplicable patent office for no more than [***] years from the earliest date towhich the patent application claims its earliest priority.

 

**ARTICLE 2AMENDMENT AND RESTATEMENT OF PRIOR AGREEMENT**

 

The Prior Agreement is hereby amended and replaced in its entirety withthis Agreement.  As a result, alllicenses and rights conveyed to, and obligations undertaken by, either Partypursuant to the Prior Agreement are hereby terminated (except for any paymentobligations which accrued prior to the Effective Date) and replaced with thoselicenses, options, and obligations undertaken by the Parties pursuant to thisAgreement.  It is further understood andagreed that Confidential Information subject to the Prior Agreement shall beconsidered Confidential Information under the Agreement.

 

**ARTICLE 3****STRESSGEN RIGHTS TO FIRST GENERATION PRODUCT**

 

**3.1****                               StressgenRights.**  As of the Effective Date,Stressgen shall have all rights to, and be solely responsible for, but shallnot be obligated to undertake, all non-clinical and clinical development,process development and manufacture of the First Generation Product andobtaining Regulatory Approval therefor in the Territory, subject to therestrictions set forth in **Section 3.2**and **Article 4**.  Stressgen shall (a) be solelyresponsible for all interactions with Regulatory Authorities, (b) hold andown all INDs, BLAs and other filings for Regulatory Approval of the FirstGeneration Product in the

 

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Territory, and (c) have the sole right to market,sell and otherwise commercialize the First Generation Product in the Territoryand to book and retain all resulting sales, except as otherwise provided underthe First Generation Product License Agreement and **Article 4** of this Agreement if Roche exercises itsOption.  It is also understood andagreed that Stressgen shall have the right to into enter into discussions andnegotiations and to execute any agreement with any Third Party with respect tothe development of the First Generation Product anywhere in the Territory,notwithstanding the Option.

 

**3.2****                               GWIndication.**  If: (a) the Optionhas not lapsed, or (b) the Second Generation Product License remains ineffect, then Stressgen shall not develop the First Generation Product for theGW Indication; provided however, that Stressgen shall have at all times theright to [***].  If: (1) Rocheelects not to exercise the Option, or the Option lapses unexercised, and(2) the Second Generation Product License is terminated for any reason,then Stressgen shall have the right to develop the First Generation Product forany and all indications, including the GW Indication.

 

**3.3****                               Costs. **Stressgen shall be solely responsible for any and all costsincurred in connection with the development of the First Generation Product,except as otherwise provided under the terms of this Agreement and the FirstGeneration Product License Agreement if Roche exercises its Option.

 

**3.4****                               Assistance with Manufacture of BatchMaterial.**

 

**(a)****                                 **Inconnection with the transfer of manufacturing from Roche to Stressgen, ascommenced pursuant to the Prior Agreement, Roche has or shall, [***].  If Stressgen requests in writing that Rochemanufacture such material, Roche will provide to Stressgen [***].  Thereafter, should Stressgen desire thatRoche [***].  Upon such delivery,Stressgen shall [***] so provided to Stressgen.

 

**(b)****                                 **Oncethe obligations of subsection (iv) of **Section 3.4(a)**above have been fulfilled, Roche shall have [***].  To support manufacturing transfer to a contract manufacturer ofStressgen’s choice, Roche shall [***] the use of such material,

 

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unless such liability results from a failure by Rocheto manufacture in accordance with the master production records.  [***].

 

**3.5****                               RocheRight to Review BLA.**  Promptly afterStressgen submits a BLA Filing for the First Generation Product, Stressgenshall notify Roche in writing.  Upon thereasonable request of Roche, Stressgen shall make available to Roche a copy ofsuch BLA filing, including all submitted documentation, in either electronic orprinted form, as available.  Roche shallbe permitted to conduct reasonable due diligence, upon reasonable notice toStressgen, with respect to the First Generation Product beginning at the timeit is provided with notice of the BLA Filing and continuing until [***] afterthe BLA Approval Date (defined in Section 4.2 below).

 

**ARTICLE 4ROCHE OPTION TO FIRST GENERATION PRODUCT**

 

**4.1****                               Option Grant.**  Subject to **Sections 4.7**and **4.9**, Stressgen hereby grantsto Roche an exclusive option (the “**Option**”)to enter into the First Generation Product License Agreement.

 

**4.2****                               Option Exercise Period**.  Upon the first approval by the FDA of theBLA for the First Generation Product (the “**BLAApproval Date**”), Stressgen shall notify Roche in writing.  Commencing on the date Roche receives noticeof the BLA Approval Date, Roche shall have a period of [***] (“**Notice Period**”) within which to notify Stressgen in writing whether Rochedesires either (a) to immediately exercise the Option, or (b) toextend the period of time in which to so exercise the Option until [***] (the “**Extension Date**”).  During the Notice Period, Roche shall have the right to continuethe due diligence commenced prior to the BLA filing under **Section 3.5**.  If Roche so notifies Stressgen that it does not desire toexercise the Option, or if during the Notice Period Roche fails to notifyStressgen in writing that it desires to extend the period of time in which toexercise the Option, then the Option shall terminate.

 

**4.3****                               Exercise of Option**.  If during the Notice Period Roche notifiesStressgen that it desires to immediately exercise the Option, then Roche shallexercise the Option

 

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by paying to Stressgen the Option Exercise Fee withinthirty (30) days after the end of the Notice Period.

 

If during the NoticePeriod Roche notifies Stressgen that it desires to extend the period of time inwhich to so exercise the Option until the Extension Date, then Roche shallexercise such right by paying to Stressgen a one-time, nonrefundable,non-creditable amount of [***] within thirty (30) days after the end of theNotice Period.  In such instance, Rochemay subsequently exercise the Option by paying to Stressgen the Option ExerciseFee on or before the Extension Date.

 

**4.4****                               Effect of Option Exercise; First GenerationProduct License Agreement. **IfRoche exercises the Option, then the Parties agree immediately thereafter [***]Appendix A shall nonetheless be binding upon the Parties, and shall serve asthe First Generation Product License Agreement.

 

**4.5****                               Stressgen Right to Book Sales. **Stressgen shall have the right,notwithstanding Roche’s exercise of the Option, to sell all First GenerationProduct in the United States and Canada for a period of three (3) full yearsfollowing the later of (a) BLA Approval for the First Generation Product,or (b) if Roche has extended the Option pursuant to **Section 4.2,**the date of exercise ofthe Option by Roche (the “**Stressgen SalesPeriod**”).  During theStressgen Sales Period, Stressgen shall be solely responsible for allactivities related to selling the First Generation Product, at its own expense,including taking orders, booking all sales, distributing the First GenerationProduct, and handling invoicing, inventory, receivables, managing relationshipswith the trade, returns, reimbursements, and charge-backs, customer complaintsand inquiries with respect to the First Generation Product.

 

**4.6****                               Stressgen Rights to Promote after Exercise ofOption**.  If Roche exercisesthe Option, then Stressgen shall retain the right, but not the obligation,following the Stressgen Sales Period, to promote the First Generation Productin the United States to physicians prescribing for treatment of RRP; provided, however, that Stressgen shallinform Roche in writing [***]of its intention to exercise such right.* *Stressgen shall also retain the right, but not theobligation, to co-promote with Roche

 

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the First Generation Product in the United States tophysicians prescribing for**any other Non-GW Indications (to be morefully described in the First Generation Product License Agreement and acommercialization plan to be agreed upon by the Joint CommercializationCommittee described in Appendix A). Stressgen shall be responsible for the training and compensation of allStressgen sales representatives devoted to promoting the First GenerationProduct, and Roche shall provide Stressgen with appropriate promotionalmaterials for such co-promotion efforts, at no cost to Stressgen.

 

**4.7****                               Stressgen [***].**

 

**(a)****                                 **Notwithstandingthe grant to Roche of the Option, and the Second Generation DevelopmentLicense, commencing upon the Effective Date and extending until the earlierof:  (i) the exercise by Roche ofthe Option; or (ii) the receipt by Stressgen of [***], Stressgen shallhave the right to enter into discussions and negotiations and to execute anagreement [***]; *provided, however*,that in no event shall Roche have the right to [***]

 

**(b)****                                 **[***]  As used herein, an “Accepted Process” meansa process that (A) Stressgen represents in writing to Roche is the finalprocess for manufacture of the First Generation Product and intended to be theprocess it will use for commercial production of the First Generation Product,if approved; and (B) has been reviewed and accepted by the FDA for thecommencement of Phase III Clinical Trials of the First Generation Product.  Any amounts paid by Roche pursuant to **Sections 6.2** and **6.3** with respect to the Second GenerationDevelopment License [***]

 

**(c)****                                  Effect on Option. **If Stressgen [***] shall cause the immediatetermination of the Option with respect to that portion of the Territory [***]

 

**(d)****                                  Effect on Second Generation ProductLicense. **In addition, ifStressgen [***]****Stressgen shallhave the right, upon written notice to Roche, to terminate Roche’s license tothe Second Generation Product, as set forth in Article 6, as follows.  If Stressgen [***] prior to the time thatRoche has paid any amount to Stressgen pursuant to **Section 6.2**, Stressgen shall have the right to terminatethe

 

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Second Generation Development License (as defined inSection 6.1), without any payment to Roche.  If Stressgen [***] after the time that Roche has paid any amountto Stressgen pursuant to **Section 6.2**,but before Roche has paid to Stressgen the [***] payment due underSection 6.3, Stressgen shall have the right to terminate all of Roche’srights in and to the Second Generation Product as granted under **Section 6.1**, provided it pays to Rochean amount equal to [***] of all amounts paid by Roche to Stressgen pursuant to **Section 6.2.**

 

**4.8****                               Roche Promotion Rights During Stressgen SalesPeriod.**  If Roche exercisesthe Option and desires to participate in the promotion of the Product in theU.S. and/or Canada, at its own cost, during the Stressgen Sales Period, thenRoche shall so notify Stressgen, and Stressgen upon such notification shallmeet and negotiate in good faith: (a) a commercialization plan for theco-promotion of the Product by Roche and Stressgen in the United States and/orCanada during the remainder of the Stressgen Sales Period; and (b) amechanism for compensating Roche based upon [***].

 

**4.9****                               Stressgen Right to Terminate Option [***]**

 

**(a)****                                 **Duringthe period commencing upon the Effective Date and until the first to occur of(i) [***] (ii) [***] as defined below, or (iii) December 31, 2005,following the [***], Stressgen or its successor in interest shall have theright, upon written notice to Roche, to terminate the Option [***]; provided,that if, as of the effective date of such termination, [***].

 

**(b)****                                 **Asused in this Agreement, [***] shall mean either:

 

[***]

 

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**ARTICLE 5****RIGHTS TO OTHER FUSION PROTEINS**

 

**5.1****                               Option to Obtain Right of First Negotiationfor Cancer. **Upon reasonablerequest of Roche, Stressgen agrees to meet and negotiate with Roche the termsof a collaboration and/or license agreement with respect to the developmentand/or commercialization of one or more Other HPV Fusion Proteins, or fragmentsor conjugates thereof, for treatment of cancers related to or stemming from HPV(the “Cancer Rights”).  In addition,following the date on which Roche has paid to Stressgen at least [***]  pursuant to **Section 6.2**, and continuing until December 31, 2006,Roche shall have the option, upon written notice and payment of an additional[***] to Stressgen, to enter into exclusive negotiations with Stressgen withrespect to the Cancer Rights worldwide, for a period of one-hundred twenty(120) days following such written notice and payment, it being understood thatsuch agreement to negotiate does not imply any obligation on the part ofStressgen or Roche to consummate a transaction with respect to the CancerRights.

 

**5.2****                               Option to Obtain Right of First Negotiationfor HCV.**  Upon reasonablerequest of Roche, SBC agrees to meet and negotiate with Roche the terms of acollaboration and/or license agreement with respect to the development and/orcommercialization of one or more fusion proteins containing both a Hepatitis CVirus (HCV) antigen and a bacterial stress protein for treatment of Hepatitis C(the “HCV Rights”).  In addition,following the date on which Roche has paid to SBC at least [***] pursuant to **Section 6.2**, and continuing untilDecember 31, 2006, Roche shall have the option, upon written notice andpayment of an additional [***] to SBC, to enter into exclusive negotiationswith Stressgen with respect to the HCV Rights worldwide, for a period ofone-hundred twenty (120) days following such written notice and payment, itbeing understood that such agreement to negotiate does not imply any obligationon the part of SBC or Roche to consummate a transaction with respect to the HCVRights.

 

**5.3****                              **NotwithstandingRoche’s option to acquire the right to negotiate exclusively with Stressgen andSBC granted in Section 5.1 and 5.2, if:

 

**(a)****                                 **SBCundergoes [***], Stressgen or its successor in interest shall have the right,upon written notice to Roche, to terminate Roche’s options to obtain

 

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such exclusive negotiation rights under Sections 5.1and 5.2, to the extent such options are unexercised at the [***]; or

 

**(b)****                                 **Stressgenterminates the Second Generation Product License pursuant toSection 4.7(d), then the such termination shall cause the immediate terminationof Roche’s options to obtain such exclusive negotiation rights under Sections5.1 and 5.2, to the extent such options are unexercised as of [***]; or

 

**(c)****                                 **[***]of SBC and Stressgen, Stressgen shall have the right, upon written notice toRoche, to terminate Roche’s options to obtain such exclusive negotiation rightsunder Sections 5.1 and 5.2, to the extent such options are unexercised as ofthe execution of such Third Party Collaboration Agreement.  As used herein, [***] the technology and intellectual propertyControlled by SBC and Stressgen relating to the use of the immunostimulatorypowers of heat shock proteins and recombinant technology to fuse, or covalentlylink, a stress protein with a protein antigen to create a single hybrid proteindesigned to trigger the immune system to recognize that antigen.

 

**ARTICLE 6****GRANT OF SECOND GENERATION PRODUCT RIGHTS TOROCHE**

 

**6.1****                               LicenseGrant to Roche.**  As of the EffectiveDate (a) Stressgen grants, and shall cause its Affiliates to grant, toRoche a non-exclusive, worldwide (excluding Canada) license, including alicense under the MIT Agreement, under the Stressgen Patent Rights and theStressgen Know-How to develop, manufacture, have manufactured, use, and importthe Second Generation Product for the GW Indication; and (b) SBC grants,and shall cause its Affiliates to grant, to Roche a non-exclusive license,including a license under the MIT Agreement, under the Stressgen Patent Rightsand the Stressgen Know-How to develop, manufacture, have manufactured, use, andimport the Second Generation Product in Canada for the GW Indication(collectively, the “**Second GenerationDevelopment License**”).  TheSecond Generation Development License shall terminate on March 31, 2005,unless extended

 

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as provided in **Sections 6.2**and **6.3**, or terminated as providedin **Sections 4.7(d) or 4.9**.

 

**6.2****                               RocheRight to Maintain License.**

 

**(a)****                                 **Onor before [***], Roche shall have the right to maintain the Second GenerationDevelopment License by either (i) paying to Stressgen [***] to maintainthe Second Generation Development License until [***], or (ii) paying toStressgen [***] to maintain the Second Generation Development License until theearlier of:  (A) Roche exercisingits rights under **Section 6.3**;or (B) [***], subject to **Sections 4.7**and **4.9**.  If Roche elects to maintain the SecondGeneration Development License under clause (a) of the preceding sentence,then, by paying to Stressgen an additional payment of [***], Roche shall havethe right to maintain the Second Generation Development License until theearlier of:  (1) Roche’s exercisingits rights under **Section 6.3**;or (2) the earlier to occur of (a) [***]; or (b) [***]; or (c) [***].

 

**(b)****                                 **IfRoche does not maintain its Second Generation Development License, eitherbecause (i) [***] it does not [***] or [***] Roche does not [***], thenthe Second Generation License shall terminate.

 

**6.3****                               Rightto Make Exclusive the Second GenerationDevelopment****License.**

 

**(a)****                                 **If the Second Generation DevelopmentLicense has been maintained beyond [***] as provided in **Section 6.2**, then, by payment toStressgen of the one-time, nonrefundable amount of [***] by no later than thefirst to occur of:  (i) [***]; or(ii) [***], Roche shall have the right to retain such license, which shallbecome an exclusive worldwide license, subject to Stressgen’s rights under **Sections 4.7**and**4.9**.

 

**(b)****                                 **IfRoche exercises its rights under this **Section 6.3**for payment of [***], Stressgen and SBC hereby grant to Roche theexclusive right to use, import, manufacture, or have manufactured the SecondGeneration Product; provided, however, that such grant shall in no way beconstrued as impinging or otherwise

 

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affecting the rights of Stressgen and SBC to use,import, manufacture or have manufactured the First Generation Product asprovided in **Article 3**.

 

**(c)****                                 **If the Second Generation DevelopmentLicense has been maintained beyond [***] as provided in **Section 6.2**, and Roche does not [***]by no later than the first to occur of: (i) [***]; or (ii) [***], then the Second GenerationDevelopment License shall terminate.

 

**6.4****                               MilestonePayments for Maintenance of Exclusive License.** If the Second Generation Development License has been madeexclusive as provided in **Section 6.3**,then Roche shall pay to Stressgen the following one-time, nonrefundable amountsindicated below, within thirty (30) days after the first occurrence for theLater Stage Second Generation Product of each of the following events for GWIndications and receipt of an invoice from Stressgen:  

 
| **Event**              |   | **Payment  (millions of  dollars)** |
|------------------------|--------|-------------------------------------|
|                   |   |                                |
| 1.  [***]         |   | [***]                               |
| 2.  [***]         |   | [***]                               |
| 3.  [***]         |   | [***]                               |
| 3.  [***]         |   | [***]                               |
| **Total:  ** |   | [***]                               |

 

Roche shall promptlynotify Stressgen in writing of the occurrence of the specified event for theSecond Generation Product.  Stressgenshall send Roche an invoice of the relevant amount, and Roche shall payStressgen the invoiced amount within thirty (30) days after receipt of theinvoice.  All payments set forth in this**Section 6.4** shall benon-creditable, except payment 3, of which [***] shall be creditable by Rocheagainst sales-based payments owed Stressgen pursuant to **Section 6.10**;

 

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provided, however, thatin no event shall the sales-based payments owed to Stressgen thereunder bereduced below [***] of that otherwise due and owing, subject to **Section 8.4**.  If Roche does not pay such milestone amount within such thirty(30) day period, then all rights granted under the Second GenerationDevelopment License shall terminate.

 

**6.5****                               ExclusiveCommercialization License. **If theSecond Generation Development License has been made exclusive as provided in **Section 6.3** and Roche timely makes allpayments set forth in **Section 6.4**,then effective only in such event, Stressgen hereby grants to Roche theexclusive right to use, sell, offer to sell, market, promote and otherwisecommercialize the Second Generation Product for the GW Indication, which suchlicense shall extend, on a country-by-country basis, until the last to expireValid Claim covering the manufacture, use, sale, offer for sale or importationof the Second Generation Product (the “**SecondGeneration Commercial License**”), unless earlier terminated asprovided hereunder.

 

**6.6****                               Diligent Efforts by Roche**.  Following Roche’s exercise of its rightsunder **Section 6.3**, Rocheagrees to use Diligent Efforts to develop, obtain Regulatory Approval for, andcommercialize the Second Generation Product. In the event Roche determines that Roche or its Affiliates is no longerable, or ceases to desire, to develop, obtain Regulatory Approval for, orcommercialize the Second Generation Product, for any reason, then Roche shallso notify Stressgen in writing, and the Second Generation Commercial Licenseshall terminate.

 

**6.7****                               Stressgen Development Assistance.**  Roche may request that Stressgen conductstudies with respect to Second Generation Product or other matters involvingcofactors or other antigens.  If Stressgenhas the capacity at the time of such request, then Stressgen shall perform suchstudies at an FTE rate of [***] per year.

 

**6.8****                               Rights to Expand Second Generation CommercialLicense to Non-GW Indications.** If Roche obtains the Second Generation Commercial License pursuant to **Section 6.5**, and in the further eventthat the [***], Roche shall have the right to so notify Stressgen in writingthat it desires to expand the Second Generation

 

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Commercial License to include the right to [***] forone or more Non-GW Indications. In such event, Stressgen agrees that it [***].

 

**6.9****                               Restrictions on Roche.**

 

**(a)****                                 **Unlessand until Roche obtains the right to develop the Second Generation Product forNon-GW Indications as provided under **Section 6.8**,Roche shall not itself, nor shall it permit any third party to, conduct anyclinical trials of the Second Generation Product for Non-GW Indications in theTerritory, or  market, promote oradvertise  the use of the Second GenerationProduct for Non-GW Indications in the Territory, or use any tradename,trademark or trade dress, in connection with the marketing and sale of theSecond Generation Product that is substantially similar to the Trademarks so asto create a likelihood of confusion in the market place as to the origin of theSecond Generation Product, absent an agreement in writing by the Parties to thecontrary.  It is expressly understoodand agreed by Roche that, even if Roche exercises the Option, the foregoingrestrictions shall remain in place unless otherwise agreed in writing byStressgen in order to permit Stressgen to recognize the anticipated economicvalue of its license to Roche of the First Generation Product pursuant to theOption and as contemplated under this Agreement.

 

**(b)****                                 **Rochehereby acknowledges that Articles II, V, VII, VIII, IX, X, XII, XIII and XV ofthe MIT Agreement shall be binding upon Roche, its Affiliates and theirrespective sublicensees as if each of them were a party to the MIT Agreement.  In particular, Roche agrees and understandsthat SBC’s exclusive rights, privileges and license under the MIT Agreement,and therefore Roche’s sublicense under the MIT Agreement shall terminate uponexpiration or abandonment of all issued patents and filed applications withinthe Patent Rights (as defined in the MIT Agreement), unless the MIT Agreementis earlier terminated in accordance with the provisions of the MITAgreement.  Roche hereby acknowledges that SBC’s license under the MIT Agreement isexpected to terminate on [***].

 

**(c)****                                 **TheSecond Generation Commercial License granted to Roche hereunder shall includethe right to grant sublicenses to its Affiliates and Third Parties

 

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under such rights and licenses, in whole or inpart.  If Roche grants such asublicense, Roche shall ensure that all of the applicable terms and conditionsof this Agreement shall apply to the Affiliate or Third Party sublicensee tothe same extent as they apply to Roche for all purposes.  Roche assumes full responsibility for theperformance of all obligations so imposed on such Affiliate or Third Partysublicensee and will itself account to Stressgen for all payments due underthis Agreement by reason of such sublicense. Any sublicenses granted under the Second Generation Commercial Licenseby Roche shall terminate upon the earlier of the termination of the SecondGeneration Commercial License or the termination of this Agreement.

 

**6.10****                        Target Product Sales-Based Payments.**  Following the first commercial sale of theSecond Generation Product in the Territory, Roche shall make payments toStressgen based upon Net Sales of Second Generation Product sold by Roche, itsAffiliates or sublicensees (the**“Roche Group**”)in the Territory as set forth in this **Section 6.10**,taking into account the adjustments as provided in **Article 8**.  Suchpayments shall be calculated by multiplying the following percentages by thefollowing incremental annual worldwide Roche Group Net Sales of the SecondGeneration Products in the Territory (all Net Sales amounts in $ US million):

 

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| **Incremental annual worldwide  Net Sales** |   | **Percent  (%) of Net Sales** |
|---------------------------------------------|--------|-------------------------------|
|                                        |   |                          |
| [***]                                       |   | [***]                         |
| [***]                                       |   | [***]                         |
| [***]                                       |   | [***]                         |
| [***]                                       |   | [***]                         |
| [***]                                       |   | [***]                         |

 

Such sales-based paymentsshall be due and owing, on a country-by-country basis, until the later of (i)expiration of the last to expire of the Stressgen Patent Rights containing aValid Claim in such country; or (ii) [***] from the First Commercial Sale ofthe Second Generation Product in such country; provided, however, that wherethe Second Generation Product is being sold under the Trademark, in the eventthe Parties so agreed to such use of the Trademark, Roche shall continue to oweto Stressgen sales based payments equal to [***] of the Net Sales of the SecondGeneration Product by the Roche Group.

 

**ARTICLE 7****PAYMENTS UPON EXERCISE OF THE OPTION**

 

**7.1****                               Option Exercise Fee.**  To exercise the Option, Roche shall pay toStressgen [***] (the “**Option Exercise Fee**”)by wire transfer to such bank as Stressgen designates.

 

**7.2****                               First Generation Product Development EventPayments.**

 

**(a)****                                 **IfRoche exercises the Option, then Roche shall pay to Stressgen the followingone-time, nonrefundable and non-creditable amounts, within thirty (30) daysafter the first occurrence of each of the following events and receipt of aninvoice from Stressgen (except as may be otherwise provided inSection 7.2(b), with respect to

 

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the achievement by the First Generation Product of therespective event after Option exercise:

 
| **Event****** |                     | **Payment   (millions of dollars)** |   |
|---------------|--------------------------|-------------------------------------|--------|
| 1.            | [Intentionally  Omitted] |                                |   |   |
| 2.            | [***]                    |                                | [***]  |   |
| 3.            | [***]                    |                                | [***]  |   |
| 4.            | [***]                    |                                | [***]  |   |
| 5.            | [***]                    |                                | [***]  |   |
| 6.            | [***]                    |                                | [***]  |   |
| 7.            | [***]                    |                                | [***]  |   |
| 8.            | [***]                    |                                | [***]  |   |
|          | **Total:**               |                                |   | [***] |   |
|               |                          |                                     |        |  |  |

 

**(b)****                                 **Notwithstandingthe foregoing, if US Regulatory Approval for the first GW Indication is limitedto either the [***] or the [***], then the [***] referred to above shall beadjusted to be as follows:  (i) inthe case of the [***] only, [***]; and (ii) in the case of the [***] only,[***].  If one of the mentionedindications not approved at such time is later approved, then Roche shall atthe time of approval pay a separate event payment to Stressgen equal to thedifference between [***] and the amount already paid for the first of the [***]or the [***] to be approved, such payment being due thirty (30) days afterreceipt by Roche of an invoice from Stressgen.

 

**(c)****                                 **IfRoche elects to extend the period of time in which to exercise its Optionpursuant to Section 4.2, and if, during the period extending from theNotice Period to the Extension Date, Stressgen has a Start of Phase III Clinical Trial with 

 

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respect to the First Generation Product for eitherAIN, CIN, Leep Failure, or HIV positive Patients, then Stressgen shall soinform Roche, and such trial shall be deemed [***].

 

**7.3****                               CommercialSuccess Payments**.  Roche shall payto Stressgen the following one time, nonrefundable and non-creditable amounts,within thirty (30) days after the amount of cumulative worldwide Net Sales ofFirst Generation Products, Second Generation Products, or both, whichever isthe first to reach such Net Sales levels, referred to in the chart below hasbeen achieved by the Roche Group:

 

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| **Commercial Event**                                                                    |   | **Amount  (millions  of dollars)** |
|-----------------------------------------------------------------------------------------|--------|------------------------------------|
| Aggregate Net Sales of Target Products in the  Territory equal [***] in a calendar year |   | [***]                              |
| Aggregate Net Sales of Target Products in the  Territory equal [***] in a calendar year |   | [***]                              |
| Aggregate Net Sales of Target Products in the  Territory equal [***] in a calendar year |   | [***]                              |
| Aggregate Net Sales of Target Products in the  Territory equal [***] in a calendar year |   | [***]                              |

 

Notwithstanding anything herein to the contrary, Roche shall make eachof such payments in this **Section 7.3**only once for the first occurrence of a respective event, whether for the FirstGeneration Product alone, the Second Generation Product alone, or thecombination of the Target Products.  IfNet Sales by the Roche Group in a given calendar year surpass more than onemilestone event [***], then Stressgen shall be paid both milestones achievedduring such calendar year.  No sales byStressgen during the Stressgen Sales Period shall be included for purposes ofdetermining the payments due under this **Section 7.3**.

 

**7.4****                               First Generation Product Sales-Based Paymentsto Stressgen.**

 

**(a)****                                 **IfRoche exercises the Option, then commencing on the date Roche commences sellingFirst Generation Product following the Stressgen Sales Period, Roche shall makepayments to Stressgen based upon the Net Sales of First Generation Product soldby the Roche Group within the U.S. and Canada, as set forth in this **Section 7.4**, taking into account theadjustments as provided in **Article 8**.  In particular, Roche shall pay to Stressgensales-based payments calculated by multiplying [***] by the annual Roche GroupNet Sales of First Generation Product in the U.S. and Canada, which such NetSales shall be subject to adjustment as provided in

 

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**Section 7.4(b)**and **Article 8**.  In addition, following exercise by Roche ofthe Option, and commencing on the date Roche first sells First GenerationProduct in a country outside the U.S. and Canada, Roche shall pay to Stressgensales-based payments calculated by multiplying [***] by the annual Roche GroupNet Sales of First Generation Product outside the U.S. and Canada, which suchNet Sales shall be subject to adjustment as provided in **Article 8.**

 

**(b)****                                 **Notwithstandingthe rates set forth in Section 7.4(a), if aggregate Net Sales for the lasttwelve (12) month period of the Stressgen Sales Period are not equal to orgreater than [***], Roche shall make payments to Stressgen based upon Net Salesof the First Generation Product sold by the Roche Group in the U.S. and Canadaas set forth in this **Section 7.4(b)**,taking into account the adjustments as provided in **Article 8**.  Suchpayments shall be calculated by multiplying the following percentages by thefollowing incremental annual  RocheGroup Net Sales of the First Generation Products in the United States andCanada (all Net Sales amounts in $ US million):

 
| **Incremental Annual  Net Sales** |   | **Percent  (%) of Net Sales** |
|----------------------------------------|--------|-------------------------------|
| [***]                                  |   | [***]                         |
| [***]                                  |   | [***]                         |
| [***]                                  |   | [***]                         |

 

**7.5****                               Duration of Sales Based Payments. **A sales-based payment toStressgen under **Section 7.4**shall be due on the Net Sales of a given country for so long as Roche or itsAffiliates or Sublicensees continue to sell the First Generation Product insuch country under a Trademark, subject to the adjustments set forth in **Article 8**.

 

**7.6****                               Sales-Based Payments to Roche.**  If Roche exercises the Option, and duringthe Stressgen Sales Period, Stressgen shall owe to Roche sales-based paymentsequal to [***] of annual Stressgen Net Sales; *provided*,*however*, that where Roche did notexercise the Option following BLA Approval but elected to extend its

 

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Option one year pursuant to **Section 4.2**, Stressgenshall owe to Roche sales-based payments equal to [***] of annualStressgen Net Sales.

 

**ARTICLE 8****ADJUSTMENTS TO SALES-BASED PAYMENTS**

 

**8.1****                               Adjustments Related to No Valid Claims.**  Subject to **Section 8.4**,for each country of the Territory in which no Valid Claim exists for therelevant Target Product, the sales-based payment owed with respect to such NetSales shall be one-half the amount otherwise due and owing to Stressgen asprovided in **Section 6.10** and **Section 7.4** respectively.

 

**8.2****                               Adjustments Related to Third PartyCompetition**.

 

**(a)****                                 **If(i) a Third Party is selling a Competitive Product, and (ii) Rochehas an obligation to make sales-based payments under this Agreement withrespect to Net Sales of such Target Product in such country, and (iii) insuch country, sales of units of Competitive Products in aggregate total atleast [***] of the aggregate sales of units of Competitive Products and theTarget Product at issue as measured at the end of a full calendar year, thenRoche shall have the right to reduce by [***] any sales-based paymentsotherwise owed on Roche Group Net Sales of such Target Product in such countryprior to such occurrence if no Competitive Product existed in such country,subject to **Section 8.4**.  As used in this Section **“CompetitiveProduct”**shall mean, with respect to a given Target Product sold ina given country of the Territory by the Roche Group, a product sold by a ThirdParty in such country the regulatory approval for which in such countryspecifically refers to and relies upon the Regulatory Approval dossier for suchTarget Product in such country.

 

**(b)****                                 **Notwithstanding**Section 8.2(a)**, following(i) the [***] of the last to expire of the Stressgen Patent Rights [***]or (ii) the later of (A) expiration of the last to expire of theStressgen Patent Rights containing a Valid Claim [***] or (B) ten (10)years from the First Commercial Sale of the First Generation Product in the[***]; if Roche determines that the marketing and selling of the FirstGeneration Product is no longer

 

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economically viable for Roche, in each of [***], onthe one hand, or [***] on the other hand, then Roche shall have the right, uponwritten notice to Stressgen, to obligate Stressgen to either (1) [***] asthe case may be, at “fair market value” (as defined below) or (2) agreethat the sales-based payments owed to Stressgen pursuant to **Section 7.4** be terminated.  If Roche continues to market and sell theFirst Generation Product under the Trademark in a country, then, in lieu of thesales-based payments under **Section 7.4**, Roche shall pay Stressgen[***] of Net Sales in such country, unless Stressgen owes a royalty payment toMIT in such country pursuant to the MIT Agreement, in which case suchsales-based payments would be [***] of Net Sales for so long as such royaltyobligation to MIT applies.  As usedherein “fair market value” shall be determined by the Parties in good faithnegotiations, based upon a multiple of Net Sales of the First GenerationProduct [***] as the case may be.  Ifthe Parties cannot agree on such multiple, then they shall retain a mutuallyagreed upon neutral Third Party valuation expert to determine such multiple,and the fees of such valuation expert shall be shared by the Parties equally.

 

**8.3****                               Adjustments Related to Third PartyPayments. **Roche shall payand be responsible for the entire consideration owed to any Third Partypursuant to the terms of any licensing arrangement entered into by Roche afterexercising its Option or with respect to the Second Generation Product relatedto a Third Party Right, but shall keep Stressgen informed as reasonablyrequested by Stressgen regarding progress of negotiations with such Third Partyregarding such licensing arrangement. Stressgen shall be solely responsible for paying the entireconsideration owed to any Third Party pursuant to the terms of any licensing arrangemententered into by Stressgen before Roche exercising its Option.  Roche shall have the right to deduct amaximum of [***] of the consideration actually paid to a Third Party withrespect to such Third Party Right (“**DeductibleConsideration**”) from payments otherwise due and payable by Roche toStressgen under **Section 6.10**or**Section 7.4**, solely to theextent such Deductible Consideration is allocable, in good faith, toHspE7.  In no event shall thesales-based payment owed to Stressgen be reduced pursuant to this **Section 8.3** in any given year below[***] of that otherwise due and owing, subject further to **Section 8.4**.  As used herein, **“Third Party Right”**shall mean a patentowned or controlled by a Third Party

 

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under which Roche or its Affiliate obtains a licenseto use, offer for sale, sell or import Target Product in the country followingan opinion of competent legal counsel or an agreement of the Parties that riskexists that a court could find that the use, offer for sale, sale or import ofHspE7 in such country infringes such patent in the absence of such license.

 

**8.4****                               Maximum Adjustments. **For so long as SBC owes to MIT aroyalty pursuant to the MIT Agreement, in no event shall Roche, for any TargetProduct in any country in the Territory, reduce the amount payable to Stressgenhereunder to less than [***] of Net Sales of such Target Product, on account ofadjustments under this **Article 8.**

 

**8.5****                               Payments Under the MIT Agreement. **Notwithstanding anything to thecontrary herein, the Parties acknowledge that SBC and MIT have entered into theMIT Agreement, as it is and may be further amended.  Stressgen or SBC, as the case may be, shall directly pay MIT anyamounts due to MIT under such agreement, and such amounts shall not affect orbe offset against the sales-based payments owing from Roche to Stressgen underthis Agreement.

 

**8.6****                               Combination Products. **If Roche or its Affiliates sell aTarget Product that is comprised of the Target Product as well as otherpharmaceutically active agent(s) (a “**CombinationProduct**”), then the Parties shall meet approximately one (1) yearprior to the anticipated commercial launch of such Combination Product tonegotiate in good faith and agree to an appropriate adjustment to Net Sales toreflect the relative significance and value of the Target Product and the otherpharmaceutically active agent(s) contained in the Combination Product.  If, after good faith negotiations (not toexceed ninety (90) days), the Parties cannot agree to an appropriateadjustment, Net Sales shall equal Net Sales of the Combination Productmultiplied by a fraction, the numerator of which is the reasonable fair marketvalue of the Target Product and the denominator of which is the reasonable fairmarket value in the aggregate, of all pharmaceutically active agents containedin the Combination Product.

 

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**ARTICLE 9PAYMENT, REPORTING, AUDITING**

 

**9.1****                               Currencyand Conversion**.

 

**(a)****                                 **Allpayments made and amounts owed under this Agreement shall be in U.S. Dollars.

 

**(b)****                                 **Whenevercalculation of Net Sales requires conversion from any foreign currency, Rocheshall convert the amount of Net Sales in foreign currencies as computed inRoche’s central Swiss Francs Sales Statistics for the countries concerned.  Roche shall first convert the amount of NetSales into Swiss Francs and then into U.S. Dollars, using the averageyear-to-date rate of exchange for such currencies as retrieved from theReuters’ system for the applicable period, in accordance with Roche’s thencurrent standard practices.  Whenevercalculation of Net Sales requires conversion from any foreign currency ,Stressgen shall convert the amount of Net Sales directly into U.S. Dollars,using the average rate of exchange for such currencies published in the WallStreet Journal for the applicable period, in accordance with Stressgen’s thencurrent standard practices

 

**(c)****                                 **Forsublicensees in a country, when calculating the Net Sales, the sublicenseeshall report to Roche the amount of such sales within thirty (30) days from theend of the reporting period, after having converted each applicable monthlysales in foreign currency into Swiss Francs using the average rate of exchangepublished in the Wall Street Journal (or some other source agreed upon by theParties for any particular country) for each respective month of the reportingperiod.

 

**9.2****                               Sales-BasedPayments**.  Each Party shallcalculate sales-based payments owed to the other Party pursuant to thisAgreement quarterly as of March 31, June 30, September 30 andDecember 31 (each being the last day of a reporting

 

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period).  EachParty shall pay such payments quarterly within sixty (60) days after the end ofeach reporting period in which Net Sales occur during the Term.

 

With each suchpayment, the paying Party shall deliver to the other Party the followinginformation:

 

**(a)****                                 **AdjustedGross Sales for Target Product;

 

**(b)****                                 **NetSales for Target Product; and

 

**(c)****                                 **Sales-basedpayments due to such Party for the reporting period.

 

If a Party doesnot pay to the other Party any amounts due under this Agreement within theapplicable time period set forth herein, then such payment shall bear interest,to the extent permitted by applicable law, at the average one-month LondonInterbank Offered Rate (LIBOR) as reported by Datastream (or a successor orsimilar organization) from time to time, calculated on the number of days sucha payment is overdue.

 

**9.3****                               Taxes**.

 

**(a)****                                 **Stressgenor SBC, as the case may be, shall pay all applicable taxes levied on account ofpayments accruing or made to Stressgen under this Agreement.  Roche shall pay all applicable taxes leviedon account of payments accruing or made to Roche under this Agreement.

 

**(b)****                                 **Ifprovision is made in law or by regulation of any country for withholding oftaxes of any type, levies or other charges with respect to any amounts payableunder this Agreement to a Party, the other Party (the “Responsible Party”)shall promptly pay such tax, levy or charge for and on behalf of the otherParty to the proper governmental authority, and shall promptly furnish theother Party with receipt of such payment. The Responsible Party shall have the right to deduct any such tax, levyor charge actually paid from payment due the other Party or be promptlyreimbursed by the other Party if no further payments are due to suchParty.  Each Party agrees to assist theother Party in claiming exemption from such deductions or withholdings under

 

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double taxation or similar agreement or treaty fromtime to time in force and in minimizing the amount required to be so withheldor deducted.

 

**9.4****                               BlockedCountries**.  If by reason of lawRoche is unable to convert to U.S. Dollars a portion of the amount due by Rocheunder this Agreement, then Roche shall notify Stressgen in writing andStressgen shall have the right to receive such portion and, upon writtenrequest from Stressgen, Roche shall pay to Stressgen such portion, in the currencyof any other country designated by Stressgen and legally available to Roche.

 

**9.5****                               Accounting**.

 

**(a)****                                 **EachParty shall maintain and cause its Affiliates and sublicensees to maintainbooks of account containing all particulars that may be necessary for the purposeof calculating all payments under this Agreement.  Such books of account shall be kept at their principal place ofbusiness. Each Party shall have the right to engage the other Party’sindependent, certified public accountant to perform, on behalf of the firstParty, an audit, conducted in accordance with International AccountingStandards of such books and records of the other Party’s and its Affiliates andsublicensees as is necessary to confirm any amounts payable to the auditingParty under this Agreement for the period or periods requested by the auditingParty and the correctness of any report or payments made under this Agreement.

 

**(b)****                                 **Suchaudits shall be conducted during normal business hours upon reasonable priorwritten notice from the auditing Party (minimum of thirty (30) days) in such amanner as to not unnecessarily interfere with the other Party’s normal businessactivities, and shall include results of no more than three (3) precedingcalendar years prior to audit notification. The auditing Party shall have a right to request from the independentcertified public accountant full access to review all work papers andsupporting documents pertinent to such audit.

 

**(c)****                                 **Suchaudit shall not occur more frequently than once per calendar year nor morefrequently than once with respect to records covering any specific period oftime.  Notwithstanding the preceding, ifthe auditing Party reasonably believes, after 

 

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reviewing information received from the other Party’sindependent public accountant, that an additional audit is appropriate toaddress an apparent discrepancy between such Party’s returns and otherinformation as is necessary for reporting hereunder, the auditing Party shallhave the right, by an audit specialty firm acceptable to the other Party,employed by the auditing Party and at its own expense, to perform suchnecessary audit procedures.

 

**(d)****                                 **Theuse of all information, data, documents and abstracts referred above shall befor the sole purpose of verifying statements or compliance with this Agreement,shall be treated as the audited Party’s Confidential Information subject to theobligations of this Agreement and, except in the event of a dispute between theParties regarding amounts payable hereunder or the results of any audit, neednot be retained more than three (3) years from the end of the calendar year towhich each shall pertain.  Audit resultsshall be shared by Roche and Stressgen.

 

**(e)****                                 **Ifany audit hereunder reveals an underpayment, the audited Party shall promptlymake up such underpayment, and if such underpayment is more than five percent(5%), together with accrued interest calculated in accordance with **Section 9.2**.  The auditing Party shall bear the full cost of any audit underthis **Section 9.5**, unless suchaudit discloses an underpayment by the other Party of more than five percent(5%) of the amount owed hereunder, in which case it shall bear the full cost ofsuch audit as performed by its independent, certified public accountant, and/orsuch independent audit firm as may be used pursuant to Subsection (c)above.

 

**(f)****                                   **Thefailure of the Party to which a payment is made hereunder to requestverification of any payment calculation during which corresponding records arerequired to be retained under this **Section 9.5**shall be considered acceptance of such reporting by that Party.

 

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**ARTICLE 10COORDINATION OF THE PARTIES; EXCHANGE OF INFORMATION**

 

**10.1****                        General**.  The Parties acknowledge and agree that it is in their commoninterests to keep one another generally apprised, from time to time, of theirrespective activities with respect to the First Generation Product and SecondGeneration Product development and commercialization, given the Parties’respective obligations to various regulatory authorities, and in light ofRoche’s Option, and in the event Roche elects not to exercise the Option, butto proceed with only the Second Generation Product; but not to the extent suchinformation exchange would impact the confidentiality obligations of eitherParty with respect to any Third Parties. To that end, the Parties agree on the information exchange andcoordination provisions set forth in this Article 10.

 

**10.2****                        Appointment of Liaisons**.  Promptly after the Effective Date, eachParty shall appoint an individual to act as the Liaison from that Party withrespect to the other Party, and shall inform the other Party of the identity ofsuch Liaison.

 

**10.3****                        Responsibilities of Liaisons. **The Liaisons shall undertake andbe responsible for coordinating any periodic communications as may be requiredor reasonably requested between the Parties relating to their activities underthis Agreement.  In addition, prior toRoche’s exercise of the Option (provided it has not been terminated) and duringany period of time during which Roche maintains the Second GenerationDevelopment License, the Liaisons shall meet at least quarterly (or at suchfrequency as the Parties may later agree) to discuss (A) technical andscientific progress with respect to Stressgen’s First Generation Productdevelopment efforts and Roche’s Second Generation Product development efforts;and (B) the status of Stressgen’s efforts to commercialize the First GenerationProduct in the Territory, including general information related to whether andto what extent Stressgen is in negotiations with respect to a Third PartyCollaboration Agreement.

 

**10.4****                        Pharmacovigilance Agreement**.  The Parties further agree that, prior to thefirst to occur of (i) Roche’s filing of an IND with respect to the SecondGeneration Product, or (ii) the first dosing in man of the Second GenerationProduct,  they will enter

 

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into a Pharmacovigilance Agreement to coordinateinformation with respect to safety, adverse events and the right with respectto the First Generation Product and the Second Generation Product to ensurethat each Party is able to comply with its obligations to any and all regulatoryauthorities with respect to the respective products.

 

**10.5****                        Effect of No Option Exercise**.  The Parties also agree and acknowledge thatit may be the case that Roche elects not to exercise the Option, butnonetheless proceeds with development and commercialization of the SecondGeneration Product.  In light of theforegoing sentence, Roche agrees that it shall endeavor in good faith todevelop and commercialize the Second Generation Product so as to bedistinguishable in the market from the First Generation Product and thereby tominimize market confusion with respect to the prescription and use of theSecond Generation Product and the First Generation Product.

 

**ARTICLE 11INTELLECTUAL PROPERTY**

 

**11.1****                        Ownershipof Intellectual Property**.  Asbetween the Parties, Stressgen or SBC, as the case may be, shall own allStressgen Inventions, Roche shall own all Roche Inventions, and Stressgen andRoche shall jointly own all Joint Inventions, if any. Except to the extent anyJoint Invention is exclusively licensed by one Party to the other Partyhereunder, each Party shall have the right to practice Joint Inventions, and togrant licenses to Affiliates and Third Parties under Patents claiming JointInventions, without the other party’s consent and without any duty to accountto the other Party with respect thereto. Each Party shall require all of its employees to assign all inventionsrelated to Target Products made by them to such Party.

 

**11.2****                        PatentProsecution and Maintenance**.  TheParties, through the Liaisons, shall discuss in good faith the preparation,filing and maintenance of any patent applications and patents issuing therefromwith respect to any Joint Inventions, including which Party should take thelead with respect to such activities, and the sharing of costs associatedtherewith.

 

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**11.3****                        Covenant Not to Sue**.  Roche hereby covenants that no Patentcovering or claiming any invention made or created by or on behalf of Roche orits Affiliates in the conduct of development of the Second Generation Productshall be asserted against Stressgen, its Affiliates or sublicensees, or any oftheir successors, with regard to the making, using, selling, offering for sale,or importing of the First Generation Product in the Territory.

 

**ARTICLE 12CONFIDENTIAL INFORMATION**

 

**12.1****                        Non-Disclosureand Non-Use**.** **In carrying out rights andobligations under this Agreement, the Parties may share proprietary information(“**ConfidentialInformation**”) with each other. A Party receiving Confidential Information under this Agreement (“**Recipient**”)from the other disclosing Party (“**Discloser**”) shall maintain suchConfidential Information as follows:

 

During the Term,the Recipient agrees, with respect to Confidential Information it receives:

 

**(a)****                                 **notto use such Confidential Information for any purpose other than in connectionwith the purpose of carrying out its rights and obligation under thisAgreement;

 

**(b)****                                 **totreat such Confidential Information as it would its own information of the samenature and importance, and in any event, to use no less than a reasonabledegree to care to protect the proprietary nature of such ConfidentialInformation; and

 

**(c)****                                 **totake all reasonable precautions to prevent the disclosure of such ConfidentialInformation to any non-Affiliate Third Party without the prior written consentof the Discloser.

 

**12.2****                        Exceptions**.** **ARecipient shall be relieved of any and all obligations under **Section 12.1** regarding ConfidentialInformation which:

 

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**(a)****                                 **wasknown to the Recipient or its Affiliate prior to receipt hereunder; or

 

**(b)****                                 **asdemonstrated by the Recipient by competent written proof, is independentlygenerated by the Recipient or its Affiliate by persons who have not had accessto or knowledge of the Confidential Information disclosed hereunder; or

 

**(c)****                                 **atthe time of disclosure by the Discloser to the Recipient, was generallyavailable to the public, or which after disclosure hereunder becomes generallyavailable to the public through no fault attributable to the Recipient; or

 

**(d)****                                 **ishereafter made available to the Recipient or its Affiliate for use andunrestricted disclosure by the Recipient from any Third Party having a right todo so.

 

**12.3****                        AuthorizedDisclosure**.** **Nothing in this Agreement shallprohibit disclosure by a Party of Confidential Information received from theother Party to its consultants, sublicensees, investment bankers, potentialstrategic partners, advisors, clinical investigators and contract manufacturers,if any, but only on a need to know basis for purposes provided for in thisAgreement, provided such disclosure occurs pursuant to a writtenconfidentiality agreement containing provisions substantially as protective asthose of this Article.

 

The restrictionsset forth in this Article shall not prevent disclosure to the extentrequired pursuant to a judicial or governmental order, provided that theRecipient gives the Discloser sufficient notice to permit the Discloser to seeka protective order or other similar order with respect to such ConfidentialInformation.

 

This Agreementsupercedes the Confidentiality provisions of the Prior Agreement.  All information exchanged thereunder shallbe deemed Confidential Information under this Agreement and shall be subject tothis **Article 12**.

 

**12.4****                        Survival**.** **This **Article 12** shall survive any termination or expiration ofthis Agreement for a period of ten (10) years.

 

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**ARTICLE 13PUBLICATION AND PRESS RELEASE**

 

**13.1****                        Publications**.  Unless and until Roche exercises the Option,Roche shall not publish (publish shall include all disclosures, including oral,written or otherwise) the results of any non-clinical studies or clinicaltrials related to the First Generation Product without the opportunity forreasonable prior review by Stressgen. Roche agrees, upon written request fromStressgen, not to so publish such results either (i) until Stressgen isgiven up to thirty (30) days from the date of such written request to seekappropriate patent protection for any material in such publication orpresentation which it reasonably believes is patentable; or (ii) whereStressgen believes in good faith that the publication of such data would havean adverse effect on the development, Regulatory Approval for, orcommercialization of, the First Generation Product.  Stressgen also shall have the right to require deletion of itsConfidential Information that may be in any such proposed publication, prior tosuch publication.  If Roche exercisesits Option, then all proposed publications shall be handled through the JointCommercialization Committee described in Appendix A.  If Roche wishes to publish the results of non-clinical studies orclinical trials related to the Second Generation Product, then the Liaisonsfrom both Parties shall establish a committee to handle such proposedpublications, it being understood that where Stressgen believes in good faiththat the publication of such data would have an adverse effect on thedevelopment, Regulatory Approval for, or commercialization of, the FirstGeneration Product, Roche shall not have the unilateral right to publish suchresults.

 

**13.2****                        PressRelease; Public Disclosure of Agreement**. The Parties shall issue a mutually agreed upon joint press releasepromptly following the Effective Date with respect to this Agreement.  Stressgen and Roche will jointly discuss andagree in writing on any statement to the public regarding this Agreement,subject in each case to disclosure otherwise required by law or regulation asdetermined in good faith by each Party. When a Party elects to make any such statement it will give the otherParty at least *five (5) day’s notice*, unless disclosure is required by law,or any listing or trading agreement concerning its publicly traded securities,in a shorter period of time, to the

 

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other Party to review and comment on suchstatement.  Notwithstanding theforegoing, either Party shall have the right to publicly disclose informationregarding this Agreement or the Parties’ activities hereunder, to the extentsuch information has already been made publicly available in a mannerconsistent with this **Section 13.2**.

 

**ARTICLE 14REPRESENTATIONS, WARRANTIES AND COVENANTS**

 

**14.1****                        MutualRepresentations and Warranties**. Each Party hereby represents and warrants, that, as of the EffectiveDate, it has the full right and authority to enter into this Agreement, andthat it is not aware of any impediment that would inhibit its ability toperform its obligations under this Agreement.

 

**14.2****                        NoOther Representations or Warranties**. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, THE FOREGOINGREPRESENTATION AND WARRANTY IS IN LIEU OF, AND EACH PARTY EXPRESSLY DISCLAIMS,ANY AND ALL REPRESENTATIONS AND WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED,INCLUDING, WITHOUT LIMITATION, WARRANTIES OF DESIGN, MERCHANTABILITY, FITNESSFOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTSOF THIRD PARTIES, OR ARISING FROM A COURSE OF DEALING, USAGE OR TRADEPRACTICES.  IN NO EVENT SHALL EITHERPARTY BE LIABLE TO THE OTHER PARTY FOR SPECIAL, INDIRECT, INCIDENTAL, PUNITIVEOR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT; *provided, however*, that theforegoing shall not be construed to limit either Party’s indemnificationobligations under **Article 16**.

 

**ARTICLE 15TERM AND TERMINATION**

 

**15.1****                        Term. **The Term of this Agreement shall commence upon the EffectiveDate.  Unless this Agreement isterminated sooner as provided in this Article, this Agreement shall continue infull force and effect until the date on which both the Option and the SecondGeneration Development License have expired without exercise or have terminatedearly; *provided, however,*thatwhere the Second Generation

 

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Commercial License has been granted pursuant to **Section 6.5**, this Agreement shallcontinue, on a country-by-country basis, in full force and effect until nopayment obligations under this Agreement are or will become due with respect toNet Sales of the Second Generation Product in such country, at which time allthe rights and licenses granted to Roche by Stressgen under **Article 6** of this Agreement for theSecond Generation Product shall automatically become non-exclusive, irrevocableand fully-paid.

 

**15.2****                        Breach**.  A Party (“non-breaching party”) shall havethe right, in addition to any other rights and remedies, to terminate thisAgreement in the event the other Party (“breaching party”) is in breach of anyof its material obligations under this Agreement.  The non-breaching party shall provide written notice to thebreaching party, which notice shall identify the breach and the countries inwhich the non-breaching party intends to have this Agreement terminate.  The breaching party shall have a period ofsixty (60) days after such written notice is provided to cure such breach.  If such breach is not cured within therelevant period, this Agreement, and the rights set forth herein, shallterminate.

 

The waiver byeither Party of any breach of any term or condition of this Agreement shall notbe deemed a waiver as to any subsequent or similar breach.

 

**15.3****                        Terminationby Roche of Second Generation Product License**.  At any time during the Term, Roche shall have the right toterminate the license granted to Roche pursuant to **Section 6.1** or **6.5**inits entirety, or on a country-by-country basis at any time by providing onehundred and eighty (180) days’ prior written notice to Stressgen identifying,as applicable, the countries in which Roche intends to terminate suchlicense.  Upon any termination of theSecond Generation Development License by Roche in its entirety or in a countrypursuant to this **Section 15.3**,all rights and licenses granted by Stressgen to Roche under this Agreement (or,as applicable, in the country) with respect to the Second Generation Productshall terminate on the effective date of such termination.  Notwithstanding the foregoing, in the eventRoche terminates the Second Generation Development License or Second GenerationCommercial License

 

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under this **Section 15.3**,and if Roche at such time continues to market and sell the Second GenerationProduct, it shall nonetheless owe to Stressgen the sales based payments as setforth in **Section 6.10** forsuch time as provided in that Section.

 

**15.4****                        AccruedRights; Surviving Rights and Obligations**. Expiration or termination of this Agreement by a Party, for any reason,will not relieve either Party of any obligation accruing prior to suchexpiration or termination.  Except asset forth below or as expressly set forth elsewhere in this Agreement, theobligations and rights of the Parties under the following provisions of thisAgreement shall survive expiration or termination of this Agreement to theextent that the survival of such rights or obligations are necessary to permittheir complete fulfillment or discharge: **Section 9.5**,**13.1, 18.4**, and **Articles 11, 12, 15, 16** and **17**.

 

**ARTICLE 16INDEMNIFICATION**

 

**16.1****                        Indemnificationby Stressgen**.  Unless otherwiseprovided herein, Stressgen and SBC agree to indemnify, hold harmless and defendRoche and its directors, officers, employees and agents from and against anyand all suits, claims, actions, demands, liabilities, expenses and/or loss,cost of defense (including without limitation attorneys’ fees, court costs,witness fees, damages, judgments, fines and amounts paid in settlement) (“**Losses**”) and any other amounts Rochebecomes legally obligated to pay to a Third Party, including MIT because of anyclaim or claims against it to the extent that such claim or claims arise out ofthe use, development, handling or commercialization of the any First GenerationProduct by or on behalf of Stressgen, its Affiliates or agents, but only to theextent such Losses do not result from the negligence or misconduct or failureto act of Roche, its agents or sublicensees.

 

**16.2****                        Indemnificationby Roche**.  Unless otherwise providedherein, Roche shall indemnify, hold harmless and defend Stressgen and SBC andtheir directors, officers, employees and agents from and against any and allLosses, and any amounts Stressgen or SBC becomes legally obligated to pay to aThird Party, including MIT, because of any claim or claims against it to theextent that such claim or claims arise

 

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out of the use, development, handling, storage,manufacture, sale or other disposition of the Second Generation Productconducted by or on behalf of the Roche Group, other than Stressgen or SBC, butonly to the extent such Losses do not result from to the negligence ormisconduct or failure to act of Stressgen or SBC.

 

**16.3****                        Procedure**.  In the event of a claim by a Third Partyagainst a Party entitled to indemnification under this Agreement (“**IndemnifiedParty**”), the Indemnified Party shall promptly notify the other Party(“**IndemnifyingParty**”) in writing of the claim and the Indemnifying Party shallundertake and solely manage and control, at its sole expense, the defense ofthe claim and its settlement.  TheIndemnified Party shall cooperate with the Indemnifying Party, including, asrequested by the Indemnifying Party entering into a joint defenseagreement.   The Indemnified Party may,at its option and expense, be represented in any such action or proceeding bycounsel of its choice.  The IndemnifyingParty shall not be liable for any litigation costs or expenses incurred by theIndemnified Party without the Indemnifying Party’s written consent.  The Indemnifying Party shall not settle anysuch claim unless such settlement fully and unconditionally releases theIndemnified Party from all liability relating thereto, unless the IndemnifiedParty otherwise agrees in writing.

 

**16.4****                        Insurance**.  Each Party, at its own expense, shallmaintain product liability insurance, or self-insure, in an amount consistentwith industry standards during the Term. Each Party shall provide fifteen (15) days prior written notice to anymaterial change in its insurance program.

 

**ARTICLE 17DISPUTE RESOLUTIONS AND GOVERNING LAW**

 

**17.1****                        Disputes**.  Unless otherwise set forth in thisAgreement, if a dispute arises under this Agreement among the Parties, then theParties shall refer such dispute to the respective Executive Officers, and suchExecutive Officers shall attempt in good faith to resolve such dispute.  If the Parties are unable resolve a givendispute pursuant to **Section 17.1**within sixty (60) days of referring such dispute to the Executives, then eitherParty shall have all rights at law or in equity to pursue such dispute.

 

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**17.2****                        GoverningLaw**.  The Parties have made thisAgreement in accordance with the laws of New York, which laws shall govern thisAgreement and under which laws construction of this Agreement shall occur,without regard to its choice of law principles.

 

**ARTICLE 18**

 

**MISCELLANEOUS**

 

**18.1****                        Agency**.  Neither of the Parties is an employee, agentor representative of the other Party for any purpose.  Each of the Parties is an independent contractor, not an employeeor partner of the other Party.  Neitherof the Parties shall have the authority to speak for, represent or obligate theother Parties in any way without prior written authority from the otherParties.

 

**18.2****                        EntireAgreement**.  This Agreement embodiesthe entire understanding of the Parties with respect to the subject matterhereof and supercedes all previous communications, representations orunderstandings, and agreements, whether oral or written, between the Partiesrelating to the subject matter hereof.

 

**18.3****                        Amendment**.  No amendment or modification hereof shall bevalid or binding upon the Parties unless made in writing and signed byauthorized signing officers of both Parties expressly stating that it isintended to amend or modify this Agreement.

 

**18.4****                        Assignment**.** **ThisAgreement shall not be assigned or transferred in part or in whole by any Partywithout the prior written consent of the other; *provided, however*, thateither Party, without notice and at any time for any reason, may assign ortransfer this Agreement in whole or in part to (a) any of its Affiliateswho agree to be bound by the terms and conditions of this Agreement or(b) any successor of such Party as part of consolidation or merger,corporate reorganization or sale of all or substantially all of its businessassets to which this Agreement relates (provided that intellectual propertyrights of the acquiring party to such transaction, if other than one of theParties to this Agreement, shall not be included in the technology licensedhereunder).  In the

 

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event of assignment or transfer to an Affiliate, theParty making the assignment will remain liable and responsible for theperformance and observance of all its duties and obligations hereunder.  The rights and obligations of the Partiesunder this Agreement shall be binding upon and inure to the benefit of thesuccessors and permitted assigns of the Parties.  Any assignment not in accordance with this Agreement shall bevoid.

 

**18.5****                        Notices**.  Any notice or other communication under thisAgreement, unless otherwise specified, shall be in writing and provided whendelivered to the addressee at the address listed below (a) on the date ofdelivery if delivered in person or (b) three (3) days after mailing to theother Party by express mail or overnight delivery service, which obtains asigned receipt:

 

In the case of Stressgen or SBC:

 

Stressgen Biotechnologies, Inc.

10241 Wateridge Circle Drive

Suite C200

San Diego, California  92121

USA

Attn:  GeneralCounsel

 

With a copy to:

 

Cooley Godward LLP

Five Palo Alto Square

3000 El Camino Real

Palo Alto, CA  94306

Attn:  Barbara A. Kosacz, Esq.

 

In the case of Roche:

 

F.Hoffmann-La Roche Ltd

Grenzacherstrasse 124

CH-4070

Basel, Switzerland

Attn:  Corporate Law

 

and

 

Hoffmann-La Roche Inc.

340 Kingsland Street

Nutley, New Jersey 07110

Attn: Corporate Secretary

 

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Either Party may changeits address for communications by a notice in writing to the other Party inaccordance with this Section.

 

**18.6****                        ForceMajeure**.  Any prevention, delay orinterruption of performance (collectively “**Delay**”) by any Party under this Agreementshall not be a breach of this Agreement if and to the extent caused byoccurrences beyond the reasonable control of the Party affected by the forcemajeure, including but not limited to acts of God, embargoes, governmentalrestrictions, terrorism, strikes or other concerted acts of workers, fire,flood, earthquake, explosion, riots, wars, civil disorder, rebellion orsabotage.  The affected Party shallimmediately notify the other Party upon the commencement and end of the Delay.  During the Delay, any time for performancehereunder by either Party shall extend by the actual time of Delay. If theDelay resulting from the force majeure exceeds six (6) months, the other Party,upon written notice to the affected Party, may elect to (a) treat suchDelay as a material breach, or (b) extend the term of this Agreement foran amount of time equal to the Delay.

 

**18.7****                        Severability**.  If a court of competent jurisdiction holdsany term or condition of this Agreement unenforceable for any reason,interpretation of such term or condition shall, if possible, achieve the intentof the Parties to this Agreement.  Ifnot capable of such interpretation, the Parties shall in good faith seek toagree on an alternative provision reflecting the intent of the Parties which isenforceable.  In such event, all otherterms, conditions and provision of this Agreement shall be valid andenforceable to the full extent.

 

**18.8****                        NoRight to Use Names**.  Except asotherwise provided herein, this Agreement provides no grant of right to aParty, express or implied, to use in any manner the trademarks, trade names,trade dress or house marks of the other Party or its Affiliates.

 

**18.9****                        Bankruptcy**.  All rights and licenses granted under orpursuant to this Agreement by Roche or Stressgen are, and will otherwise bedeemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code,licenses of right to “intellectual property” as defined under Section 101of the U.S. Bankruptcy Code.  TheParties

 

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agree that the Parties, as licensees of such rightsunder this Agreement, will retain and may fully exercise all of their rightsand elections under the U.S. Bankruptcy Code. The Parties further agree that, in the event of the commencement of abankruptcy proceeding by or against either Party under the U.S. BankruptcyCode, the Party hereto that is not a party to such proceeding will be entitledto a complete duplicate of (or complete access to, as appropriate) any suchintellectual property and all embodiments of such intellectual property, andsame, if not already in their possession, will be promptly delivered to them(a) upon any such commencement of a bankruptcy proceeding upon theirwritten request therefor, unless the Party subject to such proceeding elects tocontinue to perform all of its obligations under this Agreement, or (b) ifnot delivered under (a) above, following the rejection of this Agreement by oron behalf of the Party subject to such proceeding upon written request thereforby the non-subject Party.

 

**18.10****                 Interpretation**.  All headings are for reference purposes onlyand shall not in any way affect the meaning or interpretation of thisAgreement. This Agreement incorporates all exhibits as a part of this Agreementby reference.  The term “including” (orany variation thereof such as “include”) shall be without limitation.  All dollar amounts referred to in thisAgreement are in US dollars.

 

**18.11****                 Counterparts**.  The Parties may execute this Agreement incounterparts, each of which the Parties shall deem an original, but all ofwhich together shall constitute one and the same instrument.

 

**18.12****                 Waiver**.  A waiver of any default, breach ornon-compliance under this Agreement is not effective unless signed by the Partyto be bound by the waiver.  No waiverwill be inferred from or implied by any failure to act or delay in acting by aParty in respect of any default, breach, non-observance or by anything done oromitted to be done by the other Party. The waiver by a Party of any default, breach or non-compliance underthis Agreement will not operate as a waiver of that Party’s rights under thisAgreement in respect of any continuing or subsequent default, breach ornon-compliance (whether of the same or any other nature).

 

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**IN WITNESS WHEREOF,**theParties have executed this Agreement in duplicate originals by their properofficers as of the date and year first above written.

 
| **STRESSGEN  DEVELOPMENT CORPORATION**     | **F.  HOFFMANN-LA ROCHE LTD**                |
|--------------------------------------------|----------------------------------------------|
|                                       |                                         |
|                                       |                                         |
| By:                                        |  /s/ Donna  Stoute                      |   | By: |  /s/ M.  Mulqueen | /s/ B. Bollon |   |
| Name:                                      |  Donna Stoute                           |   | Name: |  M. Mulqueen | B. Bollon |   |
| Title:                                     |  Assistant  Secretary                   |   | Title: |  Head of  Operations | EVP, PL |   |
|                                       |                                         |
|                                       |                                         |
| **STRESSGEN BIOTECHNOLOGIES  CORPORATION** | **HOFFMANN-LA ROCHE INC.**                   |
|                                       |                                         |
|                                       |                                         |
| By:                                        |  /s/ Daniel L.  Korpolinski             |   | By: |  /s/ Dennis  E. Burns |   |
| Name:                                      |  Daniel L.  Korpolinski                 |   | Name: |  Dennis E.  Burns |   |
| Title:                                     |  President  and Chief Executive Officer |   | Title: |  VP, Global  Head of Business Dev. |   |
|                                            |                                              |  |  |  |  |  |  |  |  |  |  |  |

 

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**APPENDIX A**

 

**FIRST GENERATION PRODUCT LICENSEAGREEMENT**

 

**ESSENTIAL TERMS**

 

**A.****                                    AgreedUpon Terms.**

 

1.                                     **Licenses Granted to Roche**.  Effective upon exercise of the Option,Stressgen and SBC grant to Roche the right and license, under the StressgenPatent Rights, Stressgen Know-How and the Trademarks, to:

 

**(a)****                                 **Asof the exercise of such Option, exclusively develop the First GenerationProduct for the GW Indication and any Non-GW Indications for which the FirstGeneration Product has not been approved as of the date of exercise of theOption;

 

**(b)****                                 **Asof the exercise of such Option, exclusively further develop the FirstGeneration Product for any indications for which such product has receivedRegulatory Approval as of the date of exercise of the Option;

 

**(c)****                                 **Followingthe Stressgen Sales Period, exclusively market, promote, sell, offer for sale,import and otherwise commercialize the First Generation Product in the UnitedStates and Canada, subject to **Section 4.5**and **4.6** of theAgreement;

 

**(d)****                                 **Asof the exercise of such Option, exclusively market, promote, sell, offer forsale and otherwise commercialize, and book all sales for, the First GenerationProduct in the Territory outside the United States and Canada; and

 

**(e)****                                 **Asof the exercise of such Option, non-exclusively manufacture, or havemanufactured, the First Generation Product.

 

2.                                       **MIT Agreement**.  Roche hereby acknowledges that Articles II, V, VII, VIII, IX, X,XII, XIII and XV of the MIT Agreement shall be binding upon Roche, itsAffiliates and their respective sublicensees as if each of them were a party tothe MIT Agreement.  In particular, Rocheagrees and understands that SBC’s exclusive rights, privileges and licenseunder the MIT Agreement, and therefore Roche’s sublicense under the MIT

 

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Agreement shall terminate upon expiration or abandonment of all issuedpatents and filed applications within the Patent Rights (as defined in the MITAgreement), unless the MIT Agreement is earlier terminated in accordance withthe provisions of the MIT Agreement.  SBC’s license under the MIT Agreement isexpected to terminate on [***].

 

3.                                       **Right to Sublicense. **The rights and licenses granted to Roche hereunder shallinclude the right to grant sublicenses to its Affiliates and Third Partiesunder such rights and licenses, in whole or in part.  If Roche grants such a sublicense, Roche shall ensure that all ofthe applicable terms and conditions of this Agreement shall apply to theAffiliate or Third Party sublicensee to the same extent as they apply to Rochefor all purposes.  Roche assumes fullresponsibility for the performance of all obligations so imposed on suchAffiliate or Third Party sublicensee and will itself account to Stressgen forall payments due under this Agreement by reason of such sublicense.  Any sublicenses granted under thisSection by Roche shall terminate upon the early termination of thisAgreement, to the extent this Agreement becomes terminated.  Notwithstanding the foregoing, Roche shallnot have the right to sublicense the rights granted pursuant to Section 2above to any Third Party in the United States or Canada, except upon the priorwritten approval of Stressgen, which approval Stressgen shall not unreasonablywithhold.

 

4.                                       **Joint Commercialization Committee. **Creation of a JointCommercialization Committee, with equal number or representatives from eachParty, to coordinate the Parties’ efforts with respect to the development,marketing and promotion of the First Generation Product and if Roche hasretained such rights, the Second Generation Product.  Roche shall have ultimate decision-making authority with respectto matters before such Joint Commercialization Committee, but shall act in goodfaith as to the commercialization matters described in Sections 4.6 and 4.8 ofthe Agreement.

 

5.                                     Followingthe Stressgen Sales Period, Roche shall have responsibility for commercialsupply of First Generation Product, whether by assignment to Roche of any ThirdParty manufacturing agreement Stressgen then has in place with respect to such

 

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supply, or through the renegotiation of any such manufacturingagreement, or through manufacture by Roche itself of such commercial supplies,at its own cost, it being understood that Roche shall not be required to itselfcommercially manufacture the First Generation Product.

 

6.                                     Rocheshall use Diligent Efforts to further develop and commercialize the FirstGeneration Product, subject to final say of Roche as to what development/commercializationcontinues and/or commences.  Rochefurther agrees that it shall continue to market and sell the First GenerationProduct under the Trademark, unless the Parties agree otherwise.  In the event Roche determines that it andits Affiliates are no longer able, or ceases to desire, to develop or  commercialize the Second Generation Product,for any reason, then Roche shall so notify Stressgen in writing, and theexclusive license to the First Generation Product set forth herein shallterminate.  Roche shall fund allprospective costs for developing and commercializing and obtaining additionalRegulatory Approval for the First Generation Product in the Territory.

 

7.                                     Rochegrants to Stressgen a right of first negotiation if Roche**chooses to sublicense suchits rights to a Third Party, in the United States and/or Canada.

 

8.                                     Rocheshall pay milestones and sales-based payments as set forth in **Sections 7.2**,**7.3** and **7.4**,and payment, reporting and auditing rights and obligations shall be consistentwith **Article 9** of theAgreement.

 

9.                                     Rocheshall be responsible for handling all interactions with Regulatory Authorities,the maintenance of safety databases, and other regulatory matters.

 

10.                               Termand termination rights, including the right of each Party to terminate formaterial breach of the other Party shall be consistent with those set forth in **Section 15.1 and 15.2**.

 

In addition, upon anytermination of the First Generation Product License Agreement, all rights andlicenses granted by Stressgen and SBC to Roche terminate

 

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on the effective date of such termination.  In the event of any such termination, the following shall apply:

 

(a)                                  Rocheshall, upon Stressgen’s written request, assign and transfer to Stressgen, atno expense to Stressgen, all of Roche’s right, title and interest in and to allregulatory filings (such as INDs and drug master files), Regulatory Approvals,clinical trial agreements (to the extent assignable and not cancelled), and alldata, including clinical data, materials and information, in Roche’s possessionand Control related to the First Generation Product in the Territory.  Stressgen shall, upon such transfer, havethe right to disclose and submit such filings, approvals and data to(i) governmental agencies of the country to the extent required ordesirable to secure government approval for the development, manufacturing orsale of the First Generation Product in the Territory; (ii) Third Partiesacting on behalf of Stressgen, its Affiliates or sublicensees, to the extentreasonably necessary for the development, manufacture, or sale of the FirstGeneration Product in the country; and (iii) Third Parties to the extentreasonably necessary to market First Generation Product in the Territory.

 

(b)          In addition, Roche shall grant toStressgen an exclusive, non-royalty bearing license, under Roche intellectualproperty (including Roche Inventions or other patents and know-how andincluding any trademarks used or intended for use in connection with the saleof the First Generation Product), to make, have made, use, offer for sale, selland import such First Generation Product in such country or the Territory, asapplicable

 

(c)           IfRoche or its contractor has assumed the manufacturing of the First GenerationProduct, Roche will work with Stressgen in good faith (i) to transition themanufacturing back to Stressgen and (ii) to ensure that an uninterrupted supplyof the First Generation Product is made available for on-going clinical trials andfor patients.

 

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(d)                                 Rocheshall agree to take such actions and execute such instruments, agreements anddocuments as are necessary to affect the foregoing.

 

**B.****                                    Termsto Be Negotiated. **The Parties shallalso have as an objective to agree upon additional terms related to:

 

1.                                     Prosecution,maintenance and enforcement of the Stressgen Patent Rights and any Rochepatents related to or covering the First Generation Product in the Territory.

 

2.                                     Confidentiality

 

3.                                     Productliability and indemnification.

 

4.                                       Development of Second Generation Product,if any, for Non-GW Indications.

 

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