exv10w42






Exhibit 10.42




May 3, 2001




Merck KGaA

Frankfurter Strasse 250

D64293 Darmstadt, Germany




Attention: Legal Department




Dear Sirs:




	 	 	 

	Re:
	 	Supply agreement (the “Supply Agreement”) dated the 3rd day
of May, 2001 between Biomira International Inc. (“Biomira”)
and Merck KGaA (“Merck”) and Collaboration agreement (the
“Collaboration Agreement”) dated the 3rd day of May, 2001
between Biomira and Merck (collectively, the “Agreements”)






We note that pursuant to the Agreements, each of Biomira and Merck has agreed that if applicable
laws or regulations require that taxes be withheld on any payments received by either party from
the other party under the Agreements, that the party withholding the taxes (the “Withholding
Party”) will deduct those taxes (the “Withheld Amount”) from the amount of such payment due to the
receiving party. We also note that pursuant to the Agreements, both parties have agreed to
cooperate to reduce the amount of any such Withheld Amount and obtain the benefit of any tax treaty
with appropriate withholding exemption waivers with respect to the Withheld Amount. For good and
valuable consideration the receipt and sufficiency of which is hereby acknowledged, Biomira agrees
to indemnify Merck and Merck agrees to indemnify Biomira with respect to certain reassessments of
the Withheld Amount as further described below. With respect only to the Agreements:


1. Both parties agree to discuss, share information and disclose pertinent data with each other
with respect to international taxation matters relating to non-resident withholding taxes and/or
effectively connected income of fiscal jurisdictions and to use commercially reasonable efforts to
ensure that intercompany transactions of one party do not create adverse tax consequences for the
other party. The tax representatives from both parties agree to meet either directly or by way of
teleconference at least annually, or more frequently upon a party’s reasonable request, to address
and reconcile any outstanding or pending taxation matters with respect to such intercompany
transactions. Any information disclosed by one party to the other pursuant to this letter is
confidential, proprietary information of the disclosing party and shall be governed by the
provisions of Article 12 of the Collaboration Agreement.


2. Notwithstanding the provisions of paragraph 1 above, if after such consultation, the parties are
unable to agree on an intercompany transaction proposed by a party, such party shall (subject to
the provisions of the Agreements) be free to proceed with the intercompany transaction.


3. If, as a result of an assessment or review (the “Original Assessment”), a final determination is
made, from which no appeal lies (the “Reassessment”) by the relevant responsible taxing authority
(the “Authority”) and:



 









 









	 	(i)	 	the Authority determines that the Withheld Amount is less than the amount that
should have been withheld pursuant to domestic law and/or the relevant tax treaty (the
“Reassessed Amount”); and
	 
	 	(ii)	 	the reason for the Reassessment is not attributable to any action or failure to
act within the control of the Withholding Party; provided however, that any action
under paragraphs 1 and 2 shall not be deemed an action or failure to act within the
control of the Withholding Party under this subparagraph (ii),






	 	 	then:






	 	(a)	 	if Biomira (or any of its affiliates) is the Withholding Party, Merck agrees to
indemnify and hold Biomira (or any such affiliate) free and harmless for the difference
between the Withheld Amount and the Reassessed Amount including any interest, penalties
and reasonable outside attorney and accounting fees incurred with respect to such
difference; or
	 
	 	(b)	 	if Merck (or any of its affiliates) is the Withholding Party, Biomira agrees to
indemnify and hold Merck (or any such affiliate) free and harmless for the difference
between the Withheld Amount and the Reassessed Amount including any interest, penalties
and reasonable outside attorney and accounting fees incurred with respect to such
difference.






	 	 	The parties shall give each other prompt written notice of any requests or inquiries from
any taxing authority with respect to the Withheld Amount and will cooperate with each other
and their counsel in the course of the review by the taxing authority. Further, the
provisions of section 17.3 of the Collaboration Agreement shall apply to any claim for
indemnity under paragraph 3 above.




4. The indemnity set forth in paragraph 3 above shall not apply to any intercompany transaction the
details of which had not been disclosed to the other party under paragraph 1.


5. Biomira acknowledges that Merck shall sublicense its rights and obligations (however, Merck’s
payment obligations vis-a-vis Biomira shall not be affected) with respect to the United States
under the Collaboration Agreement to EMD Pharmaceuticals, Inc. Biomira hereby consents to such
sublicense as required under section 2.1 of the Collaboration Agreement, subject to Merck’s
compliance with the provisions of paragraph 1 above.


6. An example of a calculation under section 6.3 of the Collaboration Agreement is attached hereto
as Schedule “A”. Both parties agree to the methodology as proposed in Schedule “A”.


7. This letter agreement shall be governed by the laws of England (without regard to the choice of
laws provisions thereof).


Kindly confirm your agreement with the foregoing by signing the duplicate copy of this letter where
indicated and then returning the same to the writer.



 









 








	 	 	 	 	 

	Yours truly,
	 	 	 	 
	 
	 	 	 	 
	BIOMIRA INTERNATIONAL INC.
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	Per: W. Vickery Stoughton

	 	/s/ W. Vickery Stoughton
 

	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	Accepted and agreed this 3rd day of May, 2001.	 	 
	 
	 	 	 	 
	Merck KGaA
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	Per: Bernhard Scheuble

	 	/s/ Bernhard Scheuble
 

Chairman and CEO
	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	Per: Jens Eckhardt

	 	/s/ Jens Eckhardt
 

Legal Counsel