Document:

ex10_41a.htm

EXHIBIT 10.41A

 

[*] indicates that a confidential portion of the text of this agreement has been omitted.

 

AMENDED AND RESTATED

COLLABORATION AND LICENSE AGREEMENT

 

This Amended and Restated Collaboration and License Agreement (the “Agreement”) is made and entered into as of February 14, 2012 (the “Amendment Effective Date”) by and between XOMA Ireland Limited, a company with limited liability organized under the laws of the Republic of Ireland, having a place of business at 26 Upper Pembroke Street, Dublin 2, Ireland (“XOMA”) on the first part, and Les Laboratoires Servier, a corporation organized and existing under the laws of France, having offices at 50 rue Carnot, 92284 Suresnes, France and Institut de Recherches Servier, a corporation organized and existing under the laws of France, having offices at 3 rue de la République, 92150 Suresnes, France (these two entities jointly referred to as “Servier”) on the second part.  XOMA and Servier are sometimes referred to herein individually as a “Party” and collectively as the “Parties”.

 

Recitals

 

A.           Servier is a pharmaceutical company committed to researching, developing, manufacturing and marketing novel products of high therapeutic value for human medicine.

 

B.           XOMA owns and controls certain intellectual property related to and has conducted clinical trials with respect to its proprietary IL-1β antibody designated as XOMA 052.

 

C.           Servier and XOMA have established a collaboration for the continued development,  regulatory approval and commercialization of products containing XOMA 052, with XOMA retaining certain exclusive development and commercialization rights in the U.S. and in Japan and Servier having exclusive development and commercialization rights in the rest of the world, in accordance with the terms and conditions set forth in a Collaboration and License Agreement (the “Original Agreement”) dated as of December 30, 2010 (the “Effective Date”).

 

D.           The Parties desire to amend and restate the Original Agreement as set forth herein.

 

Now, Therefore, in consideration of the foregoing premises and the mutual promises, covenants and conditions contained in this Agreement, the Parties agree as follows:

 

	
1.

	
Definitions

 

Capitalized terms used in this Agreement (other than the headings of the Sections or Articles) have the following meanings set forth in this Article 1, or, if not listed in this Article 1, the meanings as designated in the text of this Agreement.

 

1.1           “Acquiror” has the meaning set forth in Section 15.5.

 

  

  

  

 

1.2           “Affiliate” means, with respect to a particular Party, a person, corporation, partnership, or other entity that controls, is controlled by or is under common control with such Party.  For the purposes of the definition in this Section 1.2, the word “control” (including, with correlative meaning, the terms “controlled by” or “under the common control with”) means the actual power, either directly or indirectly through one (1) or more intermediaries, to direct or cause the direction of the management and policies of such entity by the ownership of at least fifty percent (50%) of the voting stock of such entity.

 

1.3           “Alliance Manager” has the meaning set forth in Section 2.7.

 

1.4           “Amendment Effective Date” has the meaning set forth in the first paragraph of this Agreement.

 

1.5           “Behçet’s and Non Infectious Uveitis Pivotal Trials” means the Behçet’s Pivotal Trial(s) and the Non Infectious Uveitis Pivotal Trial(s).

 

1.6           “Behçet’s Disease” means a rare inflammatory disorder, also referred to as Behçet’s Syndrome, involving the small blood vessels.

 

1.7           “Behçet’s Pivotal Trial” means an adequate and well-controlled study (as defined in 21 CFR § 314.126) or foreign equivalent thereof to be conducted with the Product for use in the treatment of Behçet’s Uveitis, as further detailed in the Behçet’s Uveitis and Non Infectious Uveitis Development Plan.

 

1.8           “Behçet’s Uveitis” means Non Infectious Uveitis resulting from Behçet’s Disease.

 

1.9           “Behçet’s Uveitis and Non Infectious Uveitis Development Plan” has the meaning set forth in Section 3.3(a).

 

1.10         “Biosimilar Product” means, with respect to the Product in a given country of the Licensed Territory or Retained Territory, any pharmaceutical biologic product that (a) is similar to the Product; (b) has the same route of administration as the Product; (c) obtained regulatory approval under a biosimilar application submitted in accordance with the then-current rules and regulations in such country that referred to or relied on data submitted by Servier, or one of its Affiliates or sublicensees, in an application for Regulatory Approval for the Product in such country; and (d) is sold in the same country as the Product by a Third Party that is not a sublicensee of Servier or its Affiliates and did not purchase such product in a chain of distribution that included any of Servier or its Affiliates or sublicensees.

 

1.11         “BLA” means a Biologic License Application, as defined in the United States Public Health Service Act, as amended, and applicable regulations promulgated thereunder by the FDA, or any equivalent application that replaces such application in the U.S.

 

1.12         “Bulk Drug Substance” means Licensed Antibody in bulk form.

 

1.13         “Cardiometabolic Field” means the prevention or treatment of Cardiometabolic Indications.

 

  

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1.14         “Cardiometabolic Indications” means: (i) [*]; (ii) Type 2 diabetes (diabetes mellitus type 2); and (iii) [*] cardiovascular indications [*].

 

1.15          “Cardiometabolic Indications Option” has the meaning set forth in Section 3.5.

 

1.16          “Claims” has the meaning set forth in Section 13.1.

 

1.17         “CMC Activities” means the Manufacturing and other activities necessary or useful for generating the CMC Information required for Regulatory Approval of the Licensed Product, including Manufacture of validation and/or clinical trial materials, that are necessary or useful to obtain or maintain Regulatory Approval of a Product.

 

1.18          “CMC Costs” means all costs incurred by or on behalf of either Party that are [*].  CMC Costs shall include [*].  For clarity, [*].

 

1.19         “CMC Information” means Information related to the chemistry, manufacturing and controls of the Bulk Drug Substance or Licensed Product, as specified by FDA or other applicable Regulatory Authority.

 

1.20          “Commercialization Plan” has the meaning set forth in Section 5.4.

 

1.21         “Commercialize” means to promote, market, distribute, sell (and offer for sale or contract to sell) or provide product support for a Product. For clarity, “Commercializing” and “Commercialization” have a correlative meaning.

 

1.22         “Committee” means the JEC, JSC, JDC and/or JMC, or any other committee established by the Parties pursuant to Section 2.1, as the case may be

 

1.23         “Competing Product” means any pharmaceutical product other than the Product, which binds to, and inhibits or modulates, IL-1 as its primary mode of action.

 

1.24         “Confidential Information” of a Party means any and all Information of such Party that is disclosed to the other Party under this Agreement, whether in oral, written, graphic, or electronic form. All Information disclosed by either Party or its Affiliates pursuant to the Mutual Confidentiality Agreement between Servier and [*] dated 01/11/2010 (the “Confidentiality Agreement”) shall be deemed to be such Party’s Confidential Information disclosed hereunder.

 

1.25         “Controlled” means, with respect to any compound, material, Information or intellectual property right, that the applicable Party owns or has a license to such compound, material, Information or intellectual property right and has the ability to grant to the other Party access, a license or a sublicense (as applicable) to such compound, material, Information or intellectual property right as provided for herein without violating the terms of any agreement or other arrangements with any Third Party existing at the time such Party would be first required hereunder to grant the other Party such access, license or sublicense.

 

1.26         “Current Good Manufacturing Practice” or “cGMP” means the then-current standards for the manufacture of pharmaceutical products, pursuant to (a) the FD&C Act (21 U.S.C. 321 et seq.); (b) relevant United States regulations in Title 21 of the United States Code of Federal Regulations (including Parts 11, 210, and 211); (c) EC Directive 2003/94 EC of October 8, 2003; (d) the EC Guide to Good Manufacturing Practice for Medicinal Intermediate Products; (e) the International Conference on Harmonization (ICH) ICH Q7A Good Manufacturing Practice Guidance for Active Pharmaceutical Ingredients; (f) any Japanese laws, rules, guidelines, or regulations corresponding to the subject matter of the foregoing; and (g) all additional Regulatory Authority documents or regulations that replace, amend, modify, supplant or complement any of the foregoing.

 

  

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1.27         “CV Indication” means the first cardiovascular indication to be determined by the JSC and approved by the JEC.

 

1.28         “CV Indication Development Plan” has the meaning set forth in Section 3.4(a).

 

1.29         “Develop” or “Development” means, with respect to a Product, all activities relating to preparing and conducting non-clinical studies and other analyses, clinical studies, and regulatory activities (e.g., preparation of regulatory applications).

 

1.30         “Development Budget” has the meaning set forth in Section 3.2(a).

 

1.31         “Development Costs” means all costs incurred by or on behalf of either Party [*]. Development Costs shall specifically exclude any costs [*].  Development Costs shall include [*].

 

1.32         “Diligent Efforts” means, with respect to a Party’s obligations under this Agreement, the carrying out of such obligations or tasks with a level of efforts and resources consistent with the level of efforts and resources each Party usually dedicates to, and consistent with the commercially reasonable practices of a similarly situated company in the pharmaceutical industry (in the case of Servier) or biotechnology industry (in the case of XOMA) for, the research, development or commercialization of a similarly situated pharmaceutical product as the Product and at a similar stage of development or commercialization, taking into account efficacy, safety, patent and regulatory exclusivity, anticipated or approved labeling, present and future market potential, competitive market conditions, the profitability of the Product in light of pricing and reimbursement issues, and all other relevant factors.  Diligent Efforts shall be determined on a market-by-market or country by country basis, and indication-by-indication basis, and it is anticipated that the level of efforts required shall be different for different markets and indications and shall change over time, reflecting changes in the status of the Product and markets involved.  It is also anticipated that the application of Diligent Efforts may result, in the case of Servier, in its determination not to seek Regulatory Approval for and/or Commercialize the Product in one or more countries of the Licensed Territory that are other than the Significant Markets.

 

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

 

1.34         “Early Option Exercise” has the meaning set forth in Section 3.5(a).

 

1.35         “Early Option Exercise Date” has the meaning set forth in Section 3.5(a).

 

1.36         “Effective Date” has the meaning set forth in Recital C of this Agreement.

 

1.37         “EMA” means the European Medicines Agency or any successor entity.

 

  

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1.38         “EU” means the European Union, as its membership may be altered from time to time, and any successor thereto.  The member countries of the European Union as of the Effective Date are Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and United Kingdom as well as Norway and Iceland.

 

1.39         “Executive Officers” means the Chief Executive Officer of XOMA and the Chief Executive Officer of Servier (or their respective designees).

 

1.40         “FDA” means the United States Food and Drug Administration, and any successor thereto.

 

1.41         “First Commercial Sale” means, with respect to a Product in a particular country, the first commercial sale of such Product in such country after all needed Regulatory Approvals have been obtained in such country.  Sale of a Product by Servier to an Affiliate or a sublicensee shall not constitute a First Commercial Sale; in addition, in no event shall any sales for pre-marketing, testing, or sampling be deemed a First Commercial Sale.

 

1.42         “Flash 2b Report” means the flash report of the results of the Phase 2b Study containing information with respect to whether the primary and secondary endpoints were met, expected to be produced within seven (7) days of the database lock for such study.

 

1.43         “Full Data Set” means the full data set from the Phase 2b Study, including safety information (but which is not the final report of such study), expected to be produced within [*] days of the database lock for such study.

 

1.44         “Global Research and Development Plan” has the meaning set forth in Section 3.2(a).

 

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

 

1.46         “IFRS” means International Financial Reporting Standards, as they exist from time to time, consistently applied.

 

1.47         “IL-1β” means a cytokine protein with a human proprotein form represented by the sequence of amino acids 1-269 of GenBank Accession Number NP_000567.1 and a human mature protein form represented by the sequence of amino acids 117-269 of GenBank Accession Number NP_000567.1.

 

1.48         “IND” means an Investigational New Drug Application submitted to the FDA for approval to commence human clinical trials, or the foreign equivalent of such application in a country other than the U.S.

 

1.49         “Indemnified Party” has the meaning set forth in Section 13.3.

 

  

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1.50         “Indemnifying Party” has the meaning set forth in Section 13.3.

 

1.51         “Information” means all information, techniques, technology, practices, trade secrets, inventions (whether patentable or not), methods, knowledge, know-how, skill, experience, data, results (including pharmacological, toxicological and clinical test data and results), analytical and quality control data, results or descriptions, software and algorithms.

 

1.52         “Initial Behçet’s Development Plan” has the meaning set forth in Section 3.3(a).

 

1.53         “Initial T2D Development Plan” has the meaning set forth in Section 3.4(a).

 

1.54         “Initial Non Infectious Uveitis Development Plan” has the meaning set forth in Section 3.3(a).

 

1.55         “Initiation” of a clinical trial means the first dosing of the first subject in such clinical trial.

 

1.56         “Joint Executive Committee” or “JEC” has the meaning set forth in Section 2.2(a).

 

1.57         “Joint Inventions” has the meaning set forth in Section 9.1.

 

1.58         “Joint Invention Patents” has the meaning set forth in Section 9.1.

 

1.59         “Joint Manufacturing Committee” or “JMC” has the meaning set forth in Section 2.5(a).

 

1.60         “Joint Research and Development Committee” or “JDC” has the meaning set forth in Section 2.4(a).

 

1.61         “Joint Steering Committee” or “JSC” has the meaning set forth in Section 2.3(a).

 

1.62         “Late Option Exercise” has the meaning set forth in Section 3.5(b).

 

1.63         “Late Option Exercise Date” has the meaning set forth in Section 3.5(b).

 

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

 

1.65         “Lead Cardiometabolic Indications” means Type 2 diabetes and the CV Indication.

 

1.66         “Licensed Antibody” means: XOMA 052 (gevokizumab), an IgG2 humanized monoclonal antibody that binds to IL-1b, as well as any fragment, derivative, modification or subunit of such antibody.

 

1.67         “Licensed Product” means any therapeutic or prophylactic product that comprises or incorporates the Licensed Antibody as an active pharmaceutical ingredient alone or in combination with one or more other active agents.

 

  

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1.68         “Licensed Territory” means all countries in the world other than the Retained Territory.

 

1.69         “Major Cardiometabolic Indications” means any of the following: (a)  Type 2 diabetes (diabetes mellitus type 2); or (b) any of the following indications that Servier determines, in good faith and in consultation with XOMA, have projected annual peak sales in the Licensed Territory of the applicable Product of at least [*].

 

1.70         “Major European Countries” means France, Germany, Italy, Spain and the United Kingdom.

 

1.71         “Major Markets” means the U.S., each of the Major European Countries, and Japan.

 

1.72         “Manufacturing” means all activities related to the production, manufacture, processing, filling, finishing, packaging, labeling, inspection, receiving, holding and shipping of Bulk Drug Substance, Licensed Antibody, Products, or any raw materials or packaging materials with respect thereto, or any intermediate of any of the foregoing, including process and cost optimization, process development, qualification and validation, equipment and facility qualification and validation, commercial manufacture, stability and release testing, quality assurance and quality control.  For clarity, “Manufacture” and “Manufactured” have correlative meanings.

 

1.73         “Manufacturing Plan” has the meaning set forth in Section 6.2.

 

1.74         “Marketing Authorization Application” or “MAA” means: (a) in the United States, a BLA, and (b) in any other country or regulatory jurisdiction, an equivalent application for regulatory approval required before commercial sale or use of a Product (or with respect to a subsequent indication) in such country or regulatory jurisdiction.

 

1.75         “Material Impact” means, with respect to a Party, a material adverse impact on the regulatory status or the commercial sales of the Product in such Party’s applicable territory.

 

1.76         “Materials” means all compositions of matter, cells, cell lines, assays, samples, animal models and physical, biological or chemical material, but excluding Bulk Drug Substance or Product transferred in accordance with Article 6.

 

1.77         “MHLW” means the Japanese Ministry of Health, Labour and Welfare or any successor entity.

 

1.78         “Net Sales” Except as provided below with respect to clinical trial samples, in the case of sales by or for the benefit of Servier, its Affiliates, and its sublicensees (the “Seller”) to independent, unrelated persons (“Buyers”) in bona fide arm’s length transactions, “Net Sales” means the gross amount billed or invoiced by Seller with respect to the Product, less the following deductions, in each case to the extent actually allowed and taken by such Buyers and not otherwise recovered by or reimbursed to Seller in connection with such  Product (“Permitted Deductions”): [*].  “Net Sales” shall not include any consideration received with respect to a sale, use or other disposition of any Product in a country as part of a clinical trial necessary to obtain Regulatory Approval in such country. All of the foregoing elements of Net Sales calculations shall be determined in accordance with IFRS or successor standards and guidelines thereto. In the case of transfers of Product between any of Servier, its sublicensees, and affiliates of any of the foregoing, for subsequent sale, rental, lease or other transfer of such Products to third parties, Net Sales shall be the gross invoice or contract price charged to the third party customer for that Product, less the deductions set forth in clauses (i) through (viii) above.

 

  

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In the event that a Product consists of a combination of the Licensed Antibody with one or more other active agents, Net Sales, for the purpose of determining royalty payments, shall be discussed and agreed to by the Parties taking into account the relative value of the Licensed Antibody and of the other active agents.

 

1.79         “New Servier Patents” means any Patent Controlled by Servier or its Affiliates at any time during the Term that (a) is useful for the Development, Manufacture or Commercialization of the Licensed Antibody or Product in the Territory, (b) is not a Servier Collaboration Patent, and (c) provided that, to the extent Servier has paid or is required to pay any royalties or other amounts to any Third Party for use or assignment to it of any such Patent, XOMA has agreed prior to its acceptance of a license to such Patent to pay its portion of such fees or royalties.  For clarity, the use of “Affiliate” in this definition shall exclude any Third Party that becomes an Affiliate of Servier.

 

1.80         “Non Infectious Uveitis” means non infectious inflammation of the uvea, including without limitation Behçet’s Uveitis.

 

1.81         “Non Infectious Uveitis Pivotal Trial” means an adequate and well-controlled study (as defined in 21 CFR § 314.126) or foreign equivalent thereof to be conducted with the Product for use in the treatment of Non Infectious Uveitis, as further detailed in the Behçet’s Uveitis and Non Infectious Uveitis Development Plan.

 

1.82         “Original Agreement” has the meaning set forth in Recital C of this Agreement.

 

1.83         “Patent” means all: (a) unexpired letters patent (including inventor’s certificates) which have not been held invalid or unenforceable by a court of competent jurisdiction from which no appeal can be taken or has been taken within the required time period (and which have not been admitted to be invalid or unenforceable through reissue, disclaimer or otherwise, or been abandoned in accordance with or as permitted by the terms of this Agreement or by mutual written agreement), including any substitution, extension, registration, confirmation, reissue, re-examination, supplementary protection certificates, confirmation patents, patent of additions, renewal or any like filing thereof; (b) pending applications for letters patent which have not been canceled, withdrawn from consideration, finally determined to be unallowable by the applicable governmental authority or court for whatever reason (and from which no appeal is or can be taken), and/or abandoned in accordance with or as permitted by the terms of this Agreement or by mutual written consent, including any continuation, division or continuation-in-part thereof and any provisional applications; and (c) any international counterparts to (a) and (b) above.

 

1.84         “Permitted Deductions” has the meaning set forth in Section 1.78.

 

1.85         “Phase 2 Clinical Trial” means a study of the Product in human patients to determine initial efficacy, pharmacological effect, or dose range and/or regimen finding before embarking on any Phase 3 Clinical Trial, as further defined in 21 C.F.R. 312.21(b), as amended from time to time, or the corresponding foreign regulations.

 

  

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1.86         “Phase 2a Study” means that certain Phase 2a clinical trial being conducted by XOMA or its Affiliates as of the Effective Date and referred to as X052118, with respect to the Product in Type 2 diabetes.

 

1.87         “Phase 2 Results Package” means all of the following: (a) the interim top line data summary from the Phase 2a Study, (b) the Flash 2b Report, and (c) all then-existing safety data related to the Product.

 

1.88         “Phase 2b Study” means that certain Phase 2b clinical trial being conducted by XOMA or its Affiliates as of the Effective Date and referred to as X052078, with respect to the Product in Type 2 diabetes.

 

1.89           “Phase 3 Clinical Trial” means a pivotal study (whether or not denominated a “Phase 3” clinical study under applicable regulations) in human patients with a defined dose or a set of defined doses of a Product designed to ascertain efficacy and safety of such Product for the purpose of enabling the preparation and submission of Marketing Authorization Applications to the competent Regulatory Authorities in a country of the Licensed Territory or Retained Territory, as further defined in 21 C.F.R. 312.21(c), as amended from time to time, or the corresponding foreign regulations.

 

1.90         “Pre-Exercise Period” means the period running from the Effective Date until the later of (i) Early Option Exercise, (ii) Late Option Exercise or (iii) expiration of the Cardiometabolic Indications Option unexercised.

 

1.91         “Product” means any Licensed Product in final form.

 

1.92         “Product Infringement” has the meaning set forth in Section 9.4(a).

 

1.93         “Product Marks” has the meaning set forth in Section 5.5.

 

1.94         “Product Specifications” means the specifications for Bulk Drug Substance, attached hereto as Exhibit 1.94, which shall be updated (a) as required in connection with obtaining Regulatory Approval or continuing compliance with regulatory requirements and (b) as agreed upon in writing from time to time by Servier and XOMA.

 

1.95         “Quality Agreement” has the meaning set forth in Section 6.10.

 

1.96         “Regulatory Approval” means any and all approvals (including supplements, amendments, pre- and post-approvals, but excluding pricing and reimbursement approvals), licenses, registrations or authorizations of any national, supra-national (e.g., the European Commission or the Council of the EU), regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity, that are necessary for the manufacture, distribution, use or sale of a Product in a regulatory jurisdiction.

 

1.97         “Regulatory Authority” means the applicable national (e.g., the FDA), supra-national (e.g., the EMA), regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity that, in each case, governs the Regulatory Approval of a Product in such applicable regulatory jurisdiction.

 

  

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1.98         “Regulatory Materials” means regulatory applications, submissions, notifications, registrations, Regulatory Approvals and/or other filings made to or with, or other approvals granted by, a Regulatory Authority that are necessary or reasonably desirable in order to Develop, Manufacture, market, sell or otherwise Commercialize a Product in a particular country or regulatory jurisdiction.

 

1.99         “Remaining Field” means the prevention or treatment of all human diseases or conditions (including uveitis and Behçet’s Uveitis), other than those human diseases and conditions comprising the Cardiometabolic Field.

 

1.100       “Retained Territory” means (a) the U.S. and (b) Japan, including its territories and possessions.

 

1.101       “Retained Territory License Agreement” has the meaning set forth in Section 3.1(b).

 

1.102       “Servier Collaboration Patent(s)” means any Sole Invention Patent(s) owned by Servier or its Affiliates pursuant to Section 9.1.

 

1.103       “Servier Indemnitees” has the meaning set forth in Section 13.2.

 

1.104       “Servier Know-How” means all Information and Materials that are Controlled by Servier or its Affiliates as of the Effective Date or during the Term and are necessary or useful for the Development, Manufacture or Commercialization of the Bulk Drug Substance or Product and provided that, to the extent Servier has paid or is required to pay any royalties or other amounts to any Third Party for use or assignment to it of any such Information and/or Materials, XOMA has agreed prior to its acceptance of a license to such Information and/or Materials, to pay its portion of such fees or royalties. For clarity, the use of “Affiliate” in this definition shall exclude any Third Party that becomes an Affiliate of Servier.

 

1.105       “Servier Patents” means any (a) New Servier Patents and (b) Servier Collaboration Patents.

 

1.106       “Servier Technology” means the Servier Patents and Servier Know-How and Servier’s interest in the Joint Invention Patents.

 

1.107       “Servier Withholding Tax Action” has the meaning set forth in Section 8.14(c).

 

1.108       “Significant Markets” means [*].

 

1.109       “Sole Inventions” has the meaning set forth in Section 9.1.

 

1.110       “Sole Invention Patents” has the meaning set forth in Section 9.1.

 

1.111       “Specific Diligent Efforts” means, [*].

 

1.112       “Successful EOP2 Meeting” means an FDA End of Phase 2 meeting at which, [*].

 

  

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1.113       “Supply Agreement” has the meaning set forth in Section 6.5(b).

 

1.114       “T2D Development Plan” has the meaning set forth in Section 3.4(a).

 

1.115       “T2D Phase 2 Studies” means collectively the Phase 2a Study and the Phase 2b Study.

 

1.116       “Term” has the meaning set forth in Section 11.1.

 

1.117      “Territory-Specific Work” means any clinical or non-clinical study performed by a Party that is required only by Regulatory Authorities in that Party’s territory (i.e., the Licensed Territory with respect to Servier, or the Retained Territory with respect to XOMA), and not by the Regulatory Authorities in the other Party’s territory.

 

1.118       “Third Party” means any person or entity other than: (a) XOMA; (b) Servier; or (c) an Affiliate of either Party.

 

1.119       “Third Party Partner” has the definition set forth in Section 3.1(b).

 

1.120       “Unsponsored Work” has the meaning set forth in Section 3.8(b).

 

1.121       “U.S.” means the United States of America, including all possessions and territories thereof.

 

1.122       “XOMA Background Patents” means those Patents listed on Exhibit 1.122 as of the Effective Date.

 

1.123       “XOMA Collaboration Patent(s)” means any Sole Invention Patent(s) owned by XOMA or its Affiliates pursuant to Section 9.1.

 

1.124       “XOMA Indemnitees” has the meaning set forth in Section 13.1.

 

1.125       “XOMA Know-How” means all Information and Materials that are Controlled by XOMA or its Affiliates as of the Effective Date or during the Term and are necessary or useful for the Development, Manufacture or Commercialization of a Licensed Product or Manufacture of Bulk Drug Substance, including the Know-How listed on Exhibit 1.125 attached hereto.  For clarity, the use of “Affiliate” in this definition shall exclude any Third Party that becomes an Affiliate of XOMA.

 

1.126       “XOMA Manufacturing Costs” means [*].  XOMA Manufacturing Costs shall not include [*].  For purposes of this definition, [*].

 

1.127       “XOMA Patents” means the XOMA Background Patents and the XOMA Collaboration Patents.

 

1.128       “XOMA Technology” means the XOMA Patents and XOMA Know-How and XOMA’s interest in the Joint Invention Patents.

 

	
2.

	
Collaboration; Committees

 

2.1           Collaboration Overview.  The Parties desire and intend to collaborate with respect to the Development, Manufacture and Commercialization of Products as and to the extent set forth in this Agreement, focusing initially on the Development of the Product for Behçet’s Uveitis, Non Infectious Uveitis and the Lead Cardiometabolic Indications, with XOMA retaining rights to the Product with respect to the Remaining Field in the Retained Territory, Servier being granted exclusive rights to the Product with respect to all indications (i.e., the Remaining Field and the Cardiometabolic Field) in the Licensed Territory and the Cardiometabolic Indications in the Retained Territory, and XOMA having an option to re-acquire such rights in the Retained Territory as set forth in this Agreement (the “Collaboration”).  The Parties intend that their respective organizations will work together to facilitate the success, effectiveness and quality of the Collaboration to maximize the commercial opportunity for the Product to the benefit of both Parties, all in accordance with the terms and conditions of this Agreement.  The Parties shall establish the committees as described in this Article 2 and may from time-to-time establish other committees or sub-committees to report to the Joint Steering Committee in order to effectively implement the Collaboration as jointly agreed by the Parties.

 

  

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2.2           Joint Executive Committee.

 

(a)           Establishment.  As of the Amendment Effective Date, the Parties have established a joint executive committee (the “Joint Executive Committee” or “JEC”), all in accordance with this Section 2.2.  Each Party shall initially appoint at least three (3) representatives to the JEC.  The JEC membership and procedures are further described in Section 2.8.

 

(b)           Specific Responsibilities of the JEC.  The JEC shall in particular, in accordance with the decision-making principles set forth in Section 2.9, manage the overall Collaboration (including but not limited to the intellectual property strategy, resources allocation and major changes to the Collaboration requiring amendments to the Agreement) and resolve any disputed matter of the JSC.

 

2.3           Joint Steering Committee.

 

(a)           Establishment.  As of the Amendment Effective Date, the Parties have established a joint steering committee (the “Joint Steering Committee” or “JSC”) to monitor and oversee their activities under this Agreement, all in accordance with this Section 2.3.  Each Party shall initially appoint at least three (3) representatives to the JSC.  The JSC membership and procedures are further described in Section 2.8.

 

(b)           Specific Responsibilities of the JSC.  The JSC shall in particular, in accordance with the decision-making principles set forth in Section 2.9:

 

(i)           coordinate the activities of the Parties under this Agreement, including facilitating communications between the Parties with respect to the Development, Manufacture and Commercialization of Licensed Antibody, Bulk Drug Substance, and Product;

 

(ii)          provide a forum for discussion of the Development, Manufacture, and Commercialization of the Product;

 

  

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(iii)         review and approve the T2D Development Plan and the Behçet’s Uveitis and Non Infectious Uveitis Development Plan and any other Global Research and Development Plans and associated Development Budgets and any annual or interim updates and proposed amendments thereto;

 

(iv)          review and approve the Manufacturing Plan and associated budget and any annual or interim updates and proposed amendments thereto;

 

(v)           review and discuss Servier’s Commercialization Plan and related activities with respect to the Product throughout the Licensed Territory and (if applicable) the Retained Territory, including pre-launch and go-to-market strategies;

 

(vi)         direct and oversee the JDC, JMC and any other operating committee established by the JSC, on all significant issues that fall within the purview of such committees;

 

(vii)        attempt to resolve issues presented to it by, and disputes within, the other Committees, including the JDC and JMC, in accordance with Section 2.9; and

 

(viii)       perform such other duties as are expressly assigned to the JSC in this Agreement, and perform such other functions as appropriate to further the purposes of this Agreement as may be allocated to it by written agreement of the Parties.

 

2.4           Joint Research and Development Committee.

 

(a)           Establishment.  As of the Amendment Effective Date, the Parties have established a joint research and development committee (the “Joint Research and Development Committee” or “JDC”) to monitor and coordinate the Development of Products under this Agreement.  Each Party shall initially appoint at least three (3) representatives to the JDC.  The JDC membership and procedures are further described in Section 2.8.

 

(b)           Specific Responsibilities of the JDC.  The JDC shall in particular, in accordance with the decision-making principles set forth in Section 2.9:

 

(i)           coordinate the activities of the Parties under and oversee the implementation of the T2D Development Plan, the Behçet’s Uveitis and Non Infectious Uveitis Development Plan, the CV Indication Development Plan, and any other Global Research and Development Plans agreed to by the Parties;

 

(ii)          prepare annual and interim updates to the Global Research and Development Plans;

 

(iii)         provide a forum for and facilitate communications between the Parties with respect to the Development of the Product, including any additional indications proposed by either Party to be jointly pursued;

 

(iv)          monitor and coordinate all regulatory actions, communications and submissions for Products under each Global Research and Development Plan;

 

  

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(v)           perform such other functions as may be appropriate to further the purposes of this Agreement with respect to the Development of Products, as directed by the JSC or the JEC;

 

(vi)          review proposed Unsponsored Work and Territory-Specific Work; and

 

(vii)         discuss and coordinate review of investigator-led clinical studies and provide notice thereof as appropriate to the JMC.

 

2.5           Joint Manufacturing Committee.

 

(a)           Establishment.  As of the Amendment Effective Date, the Parties have established a joint manufacturing committee (the “Joint Manufacturing Committee” or “JMC”) to monitor and oversee the CMC Activities and other activities related to the Manufacture of Bulk Drug Substance and the Product, for Development and Commercial use under this Agreement.  Each Party shall initially appoint at least three (3) representatives to the JMC.  The JMC membership and procedures are further described in Section 2.8.

 

(b)           Specific Responsibilities of the JMC.  The JMC shall in particular, in accordance with the decision-making principles set forth in Section 2.9:

 

(i)           discuss, approve and oversee implementation of and progress against the Global Research and Development Plans as they relate to CMC Activities;

 

(ii)          review the Manufacturing Plan and associated budget and propose updates and amendments thereto to the JSC, for approval;

 

(iii)        coordinate and facilitate cooperation and flow of Information between the Parties with respect to the Manufacture and supply of Bulk Drug Substance and the Product for clinical and commercial use in accordance with Article 6;

 

(iv)         coordinate and facilitate the transfer from XOMA to Servier of the XOMA Know-How as and to the extent provided in Article 6; and

 

(v)           perform such other functions as may be appropriate to further the purposes of this Agreement with respect to the Manufacture of Bulk Drug Substance or the Product, as directed by the JSC or the JEC.

 

2.6           Program Director.  As of the Amendment Effective Date, each Party has appointed and notified the other Party of the identity of a representative having the appropriate qualifications, including a general understanding of pharmaceutical development, to act as its program director under this Agreement (the “Program Director”).  The Program Directors shall serve as the primary contact points between the Parties for the purpose of providing each Party with information on the progress of each Party’s development activities under this Agreement on a day to day basis.  The Program Directors shall also be primarily responsible for facilitating the flow of information and otherwise promoting communication, coordination and collaboration between the Parties.  The Program Directors shall attend all JSC and JDC meetings, and shall have the right to attend all other Committee meetings except the JEC meetings, and shall support the co-chairpersons of each Committee in the discharge of their responsibilities.  A Program Director may also bring any matter in relation to the Development to the attention of any Committee if such Program Director reasonably believes that such matter warrants such attention.  Each Party may replace its Program Director at any time upon written notice to the other Party.

 

  

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2.7           Alliance Manager.  As of the Amendment Effective Date, each Party has appointed and notified the other Party of the identity of a representative having the appropriate qualifications, including a general understanding of pharmaceutical development and commercialization issues, to act as its alliance manager under this Agreement (the “Alliance Manager”).  The Alliance Managers shall serve as the primary business contact points between the Parties for the purpose of providing each Party with information on the progress of each Party’s business related activities under this Agreement and for any activities not falling within the scope of responsibility of the Program Director.  The Alliance Managers shall also be primarily responsible for facilitating the flow of information and otherwise promoting communication, coordination and collaboration between the Parties.  The Alliance Managers shall attend all JSC and JDC meetings, and shall have the right to attend all other Committee meetings other than JEC meetings.  An Alliance Manager may also bring any matter to the attention of any Committee if such Alliance Manager reasonably believes that such matter warrants such attention.  Each Party may replace its Alliance Manager at any time upon written notice to the other Party.

 

2.8           General Committee Membership and Procedures.

 

(a)           Membership.  Each of Servier and XOMA shall designate representatives with appropriate expertise to serve as members of each Committee, and each representative may serve on more than one Committee as appropriate in view of the individual’s expertise.  Each Party may replace its Committee representatives at any time upon written notice to the other Party.  Each Committee shall have co-chairpersons.  Servier and XOMA shall each select from their representatives a co-chairperson for each of the Committees, and each Party may change its designated co-chairpersons from time to time upon written notice to the other Party.  The co-chairpersons of each Committee shall be responsible for calling meetings and preparing and circulating meeting agendas and minutes, but the co-chairpersons shall have no additional powers or rights beyond those held by other Committee members.

 

(b)           Meetings.  Each Committee shall hold meetings at such times as it elects to do so, provided that unless the Parties otherwise agree in writing to a different frequency for such meetings, each Committee shall meet at least twice each calendar year, and provided further that the Parties shall, to the extent practicable, schedule meetings of different Committees on the same day and in the same location.  Either Party may also call a special meeting of a Committee (by videoconference or teleconference) by at least ten (10) business days prior written notice to the other Party in the event such Party reasonably believes that a significant matter must be addressed prior to the next regularly scheduled meeting, and such Party shall provide the applicable Committee no later than ten (10) business days prior to the special meeting with materials reasonably adequate to enable an informed decision.  No later than ten (10) business days prior to any Committee meeting, the co-chairpersons of such Committee shall prepare and circulate an agenda for such meeting; provided, however, that either Party may propose additional topics to be included on such agenda, either prior to or in the course of such meeting.  Each Committee may invite non-members (including consultants and advisors of a Party who are under an obligation of confidentiality consistent with this Agreement) to participate in its meetings, provided that such non-member participants shall have no voting authority at such meetings.  Each Committee may meet in person, by videoconference or by teleconference, provided however, at least one (1) meeting of each Committee per calendar year shall be in person unless the Parties mutually agree in writing to waive such requirement in lieu of a videoconference or teleconference.  In-person Committee meetings shall be held alternately in Berkeley, California, U.S. and Paris, France.  Each Party shall bear the expense of its respective Committee members’ participation in Committee meetings.  Committee meetings shall be effective only if at least one (1) representative of each Party is present or participating in such meeting.  The co-chairpersons of a Committee shall be responsible for preparing reasonably detailed written minutes of all meetings of such Committee that reflect, without limitation, all material decisions made at such meetings.  The co-chairpersons shall send draft meeting minutes to each member of such Committee for review and approval promptly after each Committee meeting.  Such minutes shall be deemed approved unless one or more members of such Committee objects to the accuracy of such minutes within thirty (30) days of receipt.

 

  

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2.9           Decision Making.

 

(a)           Within JSC and Operating Committees.  All decisions within the JSC, JDC, JMC or any other operating Committee other than the JEC shall be made by consensus, with the co-chairperson from each Party having each one (1) vote.  If a dispute arises which cannot be resolved within any Committee other than the JSC and the JEC, the representatives of either Party may cause such dispute to be referred to the JSC for resolution. If after reasonable discussion and good faith consideration of the other Party’s views on a particular matter before the JSC, including any disputes referred to the JSC by another Committee, the JSC is still unable to reach a unanimous decision on such matter for a period of [*] days, then either Party may cause such dispute to be referred to the JEC for resolution as provided in Section 2.9(b) below.

 

(b)           Within the JEC.  Upon being referred a disputed matter from the JSC under Section 2.9(a), or arising within the JSC, the JEC shall consider such matter and discuss it in good faith, and shall strive to seek consensus in its actions and decision making process.  If after reasonable discussion and good faith consideration of the other Party’s views on a particular matter before the JEC, including any disputes referred to the JEC by another Committee, the JEC is still unable after a period of [*] days to reach a unanimous decision on such matter, then either Party may upon notice to the other Party, refer such matter to the Executive Officers of the Parties for attempted resolution by good faith negotiations within [*] days after such notice is received, including at least one (1) in person meeting of the Executive Officers within [*] days after such notice is received.  If the Executive Officers are not able to resolve such disputed matter within [*] days and either Party wishes to pursue the matter, then:

 

(i)           [*]; and

 

(ii)          [*].

 

(c)           Exceptions.  Notwithstanding the preceding Sections 2.9(b)(i) and (ii):

 

  

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(i)           Neither Party shall have the unilateral right to decide any dispute with respect to the Development of the Product, whether pursuant to a Global Research and Development Plan, or any Unsponsored Work, where the other Party believes in good faith that such a decision would have a substantial likelihood of having a Material Impact; provided, however, that where such a decision involves the safety of the Product in the deciding Party’s territory (including, by way of example, the content of the safety section of the Product label, whether a recall should be conducted in such deciding Party’s territory, or whether a particular clinical study should be terminated in its territory for safety reasons), the deciding Party shall nonetheless have the final say with respect to such safety matter, notwithstanding that the other Party has asserted that the effect thereof has a substantial likelihood of having a Material Impact.

 

(ii)           Neither Party shall be permitted to use its final say to (A) increase the total aggregate Development Budget for a given year with respect to the Development activities included in a Global Research and Development Plan, or the total aggregate budget for the Manufacturing Plan for a given year with respect to CMC Activities, in each case by more than [*] percent ([*]%) of the initial total aggregate budgeted amount for such year included in such plan, or (B) change the trial design of any global clinical trial included in any Global Research and Development Plan (including endpoints, sample size, inclusion and exclusion criteria).

 

(d)           Limitations of Committee Authority.  Each Committee shall have solely the powers expressly assigned to it in this Article 2 and elsewhere in this Agreement or as otherwise agreed to by the Parties in writing.  A Committee shall not have any power to amend, modify, or waive compliance with the terms of this Agreement.  It is expressly understood and agreed that the control of decision-making authority by XOMA or Servier, as applicable, pursuant to this Section 2.9, so as to resolve a disagreement or deadlock on a Committee or between the Executive Officers for any matter will not authorize either Party to unilaterally modify or amend, or waive its own compliance with, the terms of this Agreement.

 

(e)           Good Faith.  In conducting themselves on Committees, and in exercising their rights under this Section 2.9, all representatives of both Parties shall consider, reasonably and in good faith, all input received from the other Party, and shall use reasonable efforts to reach consensus on all matters before them.  Each Party’s Committee members shall perform its responsibilities and exercise any decision making authority based on the principles of commercially reasonable Development of Products, consistent with good pharmaceutical practices and commercially reasonable consideration of the optimal balance of maximizing long-term profits derived from the sale of Products in the context of the estimated costs for Development of such Products and other relevant considerations.  Notwithstanding anything to the contrary in this Agreement, neither Party nor any of its Affiliates shall be required to take, or shall be penalized for not taking, any action that is not in compliance with such Party’s ethical business practices and policies or that such Party reasonably believes is not in compliance with applicable Laws.

 

2.10           Discontinuation of Participation on a Committee.

 

(a)           Each Committee, including the JSC and the JEC, shall continue to exist until the first to occur of (i) the Parties mutually agreeing to disband the Committee, or (ii) either Party providing to the other written notice of its intention to disband and no longer participate in such Committee.

 

  

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(b)           Once the JSC and the JEC are disbanded in accordance with Section 2.10(a), such Committee shall have no further obligations under this Agreement and, thereafter, the Program Directors will be the contact persons for the exchange of information under this Agreement, and decisions of such Committee shall be decisions as between the Parties, subject to the final decision making authority under Section 2.9 and the other terms of this Agreement.

 

	
3.

	
Development of Products

 

3.1           General.

 

(a)           Overview.  The Parties desire and intend to collaborate in planning and conducting Development of the Product for each of Behçet’s Uveitis, Non Infectious Uveitis and the Lead Cardiometabolic Indications, and potentially other indications, as and to the extent provided in this Agreement, and pursuant to a separate Global Research and Development Plan for each indication, it being understood that each Party may act either itself or through one or more licensees, sublicensees or subcontractors in its respective territory as permitted under this Agreement.  The Parties intend to coordinate and harmonize their collaborative Development activities where practical, including nonclinical and clinical studies, and manufacturing scale-up, to minimize Development Costs and maximize Development efficiencies in both the Licensed Territory and the Retained Territory.  Unless otherwise specified in a Global Research and Development Plan, each Party shall be responsible and have the final decision-making authority for all Development activities (as and to the extent not prohibited under and subject to Section 2.9) conducted in its own territory (i.e., the Licensed Territory for Servier and the Retained Territory for XOMA), including those portions of global or U.S. or EU clinical trials conducted in such territory and set forth in a Global Research and Development Plan.  With respect to indications other than the Lead Cardiometabolic Indications, Behçet’s Uveitis and Non Infectious Uveitis, the Parties may agree to pursue such indications singly or jointly, as provided in Section 3.8.

 

(b)           Third Party Partner.  Servier acknowledges and understands that XOMA intends to enter into, in its sole discretion, one or more license or partnership agreements with one or more Third Parties under which XOMA grants any such Third Party exclusive license rights to Develop and or Commercialize the Products in one or more Cardiometabolic Indications (subject to XOMA having exercised its Cardiometabolic Indications Option) and/or one or more indications in the Remaining Field, in some or all of the Retained Territory (each such Third Party, a “Third Party Partner” and each such agreement, a “Retained Territory License Agreement”).  Servier agrees that, if XOMA enters into such a Retained Territory License Agreement with a Third Party Partner, then such Third Party Partner shall have all rights to participate in the Development of Products in the Retained Territory that XOMA at such time enjoys (as and to the extent limited by such Retained Territory License Agreement), and that, subject to Servier’s consent not to be unreasonably withheld, but which will be considered only after having received a copy of the Retained Territory License Agreement (redacted with respect to those portions of such agreement that are not relevant to the deliberation and work of such Committees or do not otherwise impact governance of the overall relationship), XOMA has the right to offer to such Third Party Partner the right to participate in the Committees established under this Agreement, and in the Development and regulatory collaboration of the Parties under this Agreement, in order to facilitate the effective and efficient communications regarding and Development of Products throughout both the Retained Territory and the Licensed Territory.  Servier thus agrees that, on written notice by XOMA to Servier after XOMA’s entry into a Retained Territory License Agreement with a Third Party Partner, subject to the terms of any such Retained Territory License Agreement:

 

  

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(i)           Subject to the aforementioned Servier consent, such Third Party Partner shall have the right to have a reasonable number of its representatives attend and participate at all Committee meetings, and the vote of any such representatives shall be included within the vote of XOMA;

 

(ii)          Subject to the aforementioned Servier consent, XOMA shall have the right to designate one or more representatives of such Third Party Partner to act as XOMA’s representatives (in replacement thereof) on any particular Committee (including the JSC but not the JEC);

 

(iii)         Subject to the aforementioned Servier consent, Servier shall cooperate fully with such Third Party Partner with respect to the Development of Products, to the extent that Servier has the obligation under this Agreement to cooperate with XOMA as to such activities;

 

(iv)          To the extent XOMA and/or such Third Party Partner(s) desire to conduct additional human clinical studies with respect to the Product for use in seeking Regulatory Approval for, or Commercializing the Product in the Retained Territory, any such studies or trials would be subject to Section 3.8, and, to the extent Servier on the one hand, and XOMA and its Third Party Partner, on the other hand, do not agree to pursue jointly any such study as provided in Section 3.8, such study shall be “Unsponsored Work” as provided thereunder and any data with respect to the Product generated thereunder (the “Third Party Data”), shall be available for use by Servier in the Licensed Territory to the extent provided in Section 3.8; and

 

(v)           XOMA shall have the right to disclose to such Third Party Partner all Information regarding Products and all Regulatory Materials disclosed by Servier to XOMA under this Agreement, for use by the Third Party Partner in its Development and Commercialization of Products in the Retained Territory, consistent with Section 4.4(a) and Article 10.

 

3.2           Global Research and Development Plans.

 

(a)           The Development of the Product under this Agreement for each of the Lead Cardiometabolic Indications, Behçet’s Uveitis and Non Infectious Uveitis, and any other indication the Parties agree to pursue jointly, shall be conducted pursuant to a reasonably comprehensive written research and development plan (each, a “Global Research and Development Plan”), which shall include a detailed budget for all Development activities set forth in such plan (each, a “Development Budget”), and which shall include the resource allocations for the Parties based upon the general principle that the allocation shall endeavor to take advantage of the respective resources, capabilities and expertise of XOMA and Servier, respectively.  The Global Research and Development Plan also shall set forth the specific activities to be conducted by each Party and the estimated timeline for Development of the Product in order to obtain the data that the Parties intend will be useful, by both Parties, to obtain Regulatory Approvals of the Product in the U.S. and the EU. The Global Research and Development Plan shall also specify the plans and estimated timeline for preparing the necessary Regulatory Materials for obtaining Regulatory Approval in such countries.  Servier shall be the sponsor of all clinical studies conducted in the Licensed Territory and shall be solely responsible for Development activities and for obtaining Regulatory Approval for the Product in the Licensed Territory, and XOMA shall be the sponsor of all clinical studies conducted in the Retained Territory and shall be solely responsible for Development activities and for obtaining Regulatory Approval for the Product in the Retained Territory.

 

  

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(b)           Amendments.  Beginning with the first full calendar year following the Effective Date, on an annual basis (no later than [*]), or more often as the JDC deems appropriate, the JDC shall review, consult with the JMC as appropriate, and, as required, prepare an update and amendment to each then-current Global Research and Development Plan, for approval by the JSC.  Each such updated and amended Global Research and Development Plan shall reflect any changes, additions, re-prioritization of studies and/or indications within, and/or reallocation of resources with respect to, the Development of the Product for the Lead Cardiometabolic Indications, Behçet’s Uveitis and Non Infectious Uveitis, and any additional indications agreed to pursuant to Section 3.8(a), as applicable.  Once approved by the JSC, an amended Global Research and Development Plan shall become effective and supersede the previous Global Research and Development Plan as of the date of such approval.

 

3.3           Development of Product for Behçet’s Uveitis and Non Infectious Uveitis.

 

(a)           Initial Plans for Behçet’s Uveitis and Non Infectious Uveitis.  An initial Global Research and Development Plan for Behçet’s Uveitis, which contains the initial design of a Behçet’s Pivotal Trial and the preliminary Development Budget for continued Development of the Product for Behçet’s Uveitis [*], is attached to this Agreement as Exhibit 3.3(a) (the “Initial Behçet’s Development Plan”).  An initial Global Research and Development Plan for Non Infectious Uveitis, which contains the initial design of a Non Infectious Uveitis Pivotal Trial and the preliminary Development Budget for continued Development of the Product for Non Infectious Uveitis will be attached to this Agreement as Exhibit 3.3(b) (the “Initial Non Infectious Uveitis Development Plan”).  The Parties shall update such plans as needed in accordance with Section 3.2(b) (such updated plans, the “Behçet’s Uveitis and Non Infectious Uveitis Development Plan”).  In the event that [*], then each Party shall have the option, on [*] days prior written notice to the other Party, of pursuing or not pursuing the Development of the Product in Behçet’s Uveitis and/or Non Infectious Uveitis in that Party’s territory.  If either Party elects to pursue the Development of the Product in Behçet’s Uveitis and/or Non Infectious Uveitis, as of the date of the other party’s notice, then such Party shall do so according to its own plan, as Territory-Specific Work and Unsponsored Work.

 

  

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(b)           Responsibilities.  Following the Effective Date, the Parties shall commence and conduct the Behçet’s and Non Infectious Uveitis Pivotal Trials and other required studies in accordance with the timeframes and allocation of responsibilities set forth in the Behçet’s Uveitis and Non Infectious Uveitis Development Plan.  The Behçet’s Pivotal Trial will be conducted by Servier acting as the sponsor in the Licensed Territory and Japan, and a separate Non Infectious Uveitis Pivotal Trial will be conducted by XOMA acting as the sponsor in the Retained Territory and some countries of the Licensed Territory indicated by Servier in writing in its sole discretion.  XOMA shall be responsible for conducting CMC Activities and providing certain clinical trial materials as set forth in Sections 6.4 and 6.5 with respect to the Behçet’s and Non Infectious Uveitis Pivotal Trials and any other related trial.

 

(c)           Development Costs and CMC Costs.

 

Servier shall be responsible for (i) all Development Costs under the Development Budget for the Behçet’s Uveitis and Non Infectious Uveitis Development Plan, up to [*] Dollars ($[*]), [*], and (ii) all CMC Costs for all CMC Activities associated with studies contemplated under such plan or under any plan for the Development of the Product referred to in the last sentence of Section 3.3(a), up to [*] Dollars ($[*]).  Any amounts incurred in accordance with the Development Budget and Behçet’s Uveitis and Non Infectious Uveitis Development Plan in excess of the above maxima shall be shared equally by the Parties; provided such amounts are not greater than [*]% of the budgeted amounts set forth in the Development Budget for such plan, unless the Parties agree in writing to share amounts in excess of [*]% of the budgeted amounts, which agreement shall not be unreasonably withheld.  XOMA shall be reimbursed amounts expended under this Section 3.3(c) and the Parties shall reconcile their expenses incurred under this Section 3.3(c), all as provided in Section 3.6.

 

(d)           For clarity, XOMA’s exercise or failure to exercise the Cardiometabolic Indications Option shall have no effect on this Section 3.3 and the Parties’ obligations and responsibilities hereunder with respect to Development of the Product for Behçet’s Uveitis and/or Non Infectious Uveitis.

 

3.4           Development of Product for Lead Cardiometabolic Indications.

 

(a)           Initial Plan for Lead Cardiometabolic Indications.  An initial Global Research and Development Plan for Type 2 diabetes, which contains the initial plan, including study outlines and estimated timelines, and the preliminary Development Budget for the Development of the Product for Type 2 diabetes [*], will be established by the Parties within [*] days following the Effective Date or at such later time as the Parties shall agree is appropriate and will be attached to this Agreement by reference as Exhibit 3.4(a) (the “Initial T2D Development Plan”).  The Parties shall update such plan as needed in accordance with Section 3.2(b) (such updated plan, the “T2D Development Plan”).  The initial Global Research and Development Plan for the Development of the Product for the CV Indication through Regulatory Approval in the U.S. and EU (the “CV Indication Development Plan”) will be prepared within [*] days of the determination by the JSC/JEC of the CV Indication.

 

  

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(b)           Review of Phase 2 Results in Type 2 Diabetes.

 

(i)           XOMA will discuss with Servier the data analysis plan prior to database lock for the Phase 2b Study.  Promptly after, but no later than [*] days from XOMA’s receipt of the Flash 2b Report from the Phase 2b Study, XOMA shall supply the Phase 2 Results Package to Servier.  XOMA shall thereafter provide the Full Data Set to Servier, for its review, as soon thereafter as it becomes available, but in no event later than [*] days from such data becoming available. After receipt by Servier of the Phase 2 Results Package and the Full Data Set from XOMA, the Parties shall evaluate such results, [*].

 

(ii)          If Servier does not desire to pursue Development, or does not agree on the path for such Development [*], and XOMA does or has a different plan for pursuing such Development or Regulatory Approval in the Retained Territory, XOMA shall, notwithstanding its not having exercised the Cardiometabolic Indications Option at such time, have all rights [*] and, subject to prior approval by Servier (such approval not to be unreasonably withheld), [*].  However, in such case, XOMA would not have the right [*] unless and until it exercised the Cardiometabolic Indications Option pursuant to Section 3.5, and would do so at its or its Third Party Partner’s cost and expense, as Unsponsored Work, in accordance with Section 3.8(b), unless the Parties otherwise agree.  If instead Servier does desire to pursue Development, or a different path for such Development, and XOMA does not, Servier shall nonetheless have all rights to proceed with such continued Development, and XOMA’s rights under the Cardiometabolic Indications Option shall remain in place as such Development progresses.

 

(c)           Responsibilities and Costs During Pre-Exercise Period.  XOMA shall be responsible for completing the conduct of the T2D Phase 2 Studies in accordance with the T2D Development Plan, and Servier shall be responsible for conducting or requesting that XOMA conduct, and for all Development Costs associated with, all other Development activities for the Products, including as required additional Phase 2 Clinical Trials, during the Pre-Exercise Period, subject to repayment of a portion of such costs under Section 8.5 following XOMA’s exercise of the Cardiometabolic Indications Option.  Following completion and evaluation of pre-clinical pharmacological studies and the determination of the CV Indication, should the data warrant, Servier shall commence a Phase 2 Clinical Trial of the Product in the CV Indication.  XOMA would be responsible for conducting CMC Activities and providing certain clinical trial materials as set forth in Sections 6.4 and 6.5 with respect to the Lead Cardiometabolic Indications, and Servier shall be responsible for all CMC Costs associated therewith, subject to repayment of a portion of such costs under Section 8.5 following XOMA’s exercise of the Cardiometabolic Indications Option.  Reimbursement of XOMA’s Development Costs and CMC Costs under this Section 3.4(c) shall be in accordance with Section 3.6.

 

(d)           Responsibilities and Costs Post Early Option Exercise. If XOMA exercises the Early Option Exercise, and except in the case where XOMA pursued Development of the Product in Type 2 diabetes independently as provided in Section 3.4(b)(ii), then:

 

(i)           [*] Servier has determined to move into Phase 3 Clinical Trials in the CV Indication in the Licensed Territory, then XOMA (or its licensee) shall be responsible for conducting in the Retained Territory Phase 3 Clinical Trials of the Product in the CV Indication that are designed to meet the requirements of both the FDA and EMA for Regulatory Approval in the U.S. and EU, respectively, and Servier shall be responsible for conducting in the Licensed Territory such Phase 3 Clinical Trials of the Product, all in accordance with the then-current CV Indication Development Plan (the “Joint Phase 3 Program”); and

 

  

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(ii)          Servier would also be responsible for any then-ongoing clinical trials of the Product in Type 2 diabetes, in accordance with the then-current T2D Development Plan.

 

Servier shall be solely responsible for all Development Costs, in the first instance, incurred after the date of Early Option Exercise to conduct any Joint Phase 3 Program, as set forth in the Development Budget for the T2D or CV Development Plan, as the case may be, provided that Servier shall have the right to [*]. Notwithstanding the foregoing, following Early Option Exercise of the Cardiometabolic Indications Option, if XOMA enters into a Retained Territory License Agreement for one or more Cardiometabolic Indications, [*], and XOMA thereafter shall be responsible for its [*] percent ([*]%) share on an ongoing basis, and shall [*] commencing with the effective date of the Retained Territory License Agreement.  In addition, following such exercise, the Parties will share the CMC Costs incurred following the date of such exercise, for such Development in the Lead Cardiometabolic Indications, in accordance with the Manufacturing Plan, with XOMA responsible for [*] percent ([*]%) of such costs and Servier responsible for [*] percent ([*]%) of such costs.

 

(e)           Responsibilities if No Early Option Exercise. If XOMA does not effect an Early Option Exercise, until any Late Option Exercise, Servier shall be responsible itself for conducting all Phase 3 Clinical Trials of the Product in the Lead Cardiometabolic Indications and shall not be required to include in such trials any patients residing in the Retained Territory, but shall nonetheless ensure that the study design, endpoints and protocols for such Phase 3 Clinical Trials meet EMA and FDA (except for any studies or requirements that are required only by FDA and not also by EMA) requirements for Regulatory Approval of the Product in the Lead Cardiometabolic Indications.  Servier shall be solely responsible for all Development Costs  incurred to conduct all such Phase 3 Clinical Trials of the Product in the Lead Cardiometabolic Indications as set forth in the T2D and CV Development Plans, subject to repayment of a portion of such costs under Section 8.5 in the event XOMA exercises its Late Option Exercise of the Cardiometabolic Indications Option.

 

(f)           Responsibilities If No Option Exercise.  Where XOMA does not exercise even its Late Option Exercise, Servier (or its sublicensees) shall remain solely responsible for all Development Costs and CMC Costs incurred in connection with the further Development of the Product in the Lead Cardiometabolic Indications and any other Cardiometabolic Indications, and shall continue to provide for review and approval by the JSC of updated T2D and CV Development Plans to so reflect such Development, for both the Licensed Territory and the Retained Territory.

 

3.5           Cardiometabolic Indications Option.  Subject to the terms and conditions of this Agreement, Servier hereby grants to XOMA an option to re-acquire all rights (including the right to Develop and Commercialize) to the Product for use in the Cardiometabolic Field, in the Retained Territory (the “Cardiometabolic Indications Option”) as set forth in this Section 3.5.  XOMA may exercise such option by written notice to Servier and payment of the Option Exercise amount set forth in Section 8.5, within the applicable time periods set forth below:

 

  

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(a)           Early Option Exercise. XOMA shall have the right to first exercise the Cardiometabolic Indications Option (the “Early Option Exercise”) at any time following the Effective Date until the date which is no later than [*] days following the first [*] (“Early Option Exercise Date”); or

 

(b)           Late Option Exercise. To the extent XOMA does not affect an Early Option Exercise, it shall nonetheless have the right to exercise the Cardiometabolic Indications Option (the “Late Option Exercise”) after the Early Option Exercise Date, but no later than [*] days after the earlier of (i) [*] required for the submission of the MAA for Type 2 diabetes or (ii) [*] required for the submission of the MAA  for the CV indication, but in any event prior to submission of any MAA for the Product for Type 2 diabetes or for the CV Indication (“Late Option Exercise Date”).

 

(c)           Effect of Exercise.  Any exercise by XOMA of the Cardiometabolic Indications Option would result in (i) termination of the license granted to Servier under Section 7.1(a)(ii)(B) effective as of such time as the payment of the Option Exercise Fee is received, (ii) reversion to XOMA of the right to use the XOMA Technology to Develop and Commercialize the Product, and Manufacture Product for use in the Cardiometabolic Indications in the Retained Territory, and (iii) an obligation to reimburse Servier the relevant percentages of its Development Costs and CMC Costs as are set forth in Section 8.5.

 

3.6           Reconciliation and Reimbursement.

 

(a)           With respect to Development Costs or CMC Costs incurred by XOMA during the prior calendar quarter and which are to be reimbursed as provided under Section 3.3(c) or 3.4(c), (d) or (e), such reimbursement shall be done on the basis of documented employee hours worked, multiplied by fully burdened FTE rates (on the basis of rates indicated in Exhibit 3.6(a), such rates not to be increased beyond the inflation rate in California as measured by the Consumer Price Index) and documented incurred out of pocket material and Third Party services costs comprising such Development Costs or CMC Costs, as the case may be.  XOMA shall invoice Servier for such amounts on a calendar quarterly basis, and Servier shall pay each such invoice within [*] days after receipt thereof.

 

(b)           With respect to Development Costs or CMC Costs incurred by the Parties at such time as they are sharing such costs, as provided in Section 3.3(c) and Section 3.4(d), within [*] days after the end of each calendar [*], each Party shall provide the other Party with a detailed, activity-based statement of such Development Costs or CMC Costs (the “Cost Report”) (or in each case an estimate of any portions thereof where actuals are not known as of such time) as well as details of any adjustments to be made to the amounts submitted in the previous calendar quarter, in a format to be agreed-upon by the Parties; provided that neither Party’s Development Costs or CMC Costs incurred in connection with the Development of the Product or CMC Activities undertaken in connection therewith which are greater than [*]% of the amount budgeted therefor shall be subject to cost sharing as provided herein unless the other Party has agreed to such overage, such agreement not to be unreasonably withheld.  Within [*] days after the end of the calendar quarter, Servier shall provide XOMA with a written report (the “Reconciliation Report”) setting forth in a format to be agreed-upon by the Parties, the calculations of each Party’s share of such Development Costs or CMC Costs.  Such Reconciliation Report shall include for such calendar quarter the (i) total Development Costs and total CMC Costs incurred by each Party, and each Party’s respective share thereof, and (ii) the net payment due from one Party to the other Party in accordance with this Section 3.6(b).  Any net payment owed from one Party to the other Party shall be paid within [*] days following such reconciliation (i.e. within [*] days after the end of the calendar quarter) provided that if a Party disputes an amount provided in such Reconciliation Report then such disputed amount shall be reviewed by the JDC (with respect to Joint Development Cost), or JMC (with respect to a CMC Cost), as applicable, and any net payment owed with respect to the undisputed amounts shall be paid within a [*] day period.  If requested by a Party, any invoices or other supporting documentation for any payments to a Third Party shall be promptly provided.

 

  

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3.7           Unsponsored Work and Territory-Specific Work. The costs for all Unsponsored Work (defined below), and Territory-Specific Work,  shall be borne solely by the Party undertaking such activities except as provided in Section 3.3(c)(ii).

 

3.8           Additional Studies or Indications.

 

(a)           Either Party shall have the right, through the JDC, to propose that one or more additional human clinical studies (beyond what is then included in the applicable Global Research and Development Plan) be conducted for a Lead Cardiometabolic Indication or that one or more additional indications in the Cardiometabolic Field (other than a Lead Cardiometabolic Indication) or the Remaining Field (other than Behçet’s Uveitis or Non Infectious Uveitis) be pursued for Development of the Product, and shall provide the JDC with any supporting data or publications supporting any such proposal.  In such event, the JDC shall consider such proposal and evaluate the supporting data and Information in good faith.  If both Parties’ JDC representatives agree to conduct such proposed Development, the JDC shall prepare an amendment to the applicable Global Research and Development Plan to include the proposed studies, for approval by the JSC, and the Parties shall have the diligence obligations with respect to such additional studies or indications as provided in Sections 3.9 and 5.6.  The Parties shall share all costs and expenses incurred to conduct such activities in accordance with the applicable budget and in the proportions set forth in Sections 3.3(c), 3.4(d), and Section 8.5, as the case may be.

 

(b)           If the non-proposing Party (i) does not believe that such additional human clinical studies are necessary for Regulatory Approval of the Product in the applicable Lead Cardiometabolic Indication, or is not interested in pursuing a proposed new indication, (ii) does not wish to fund such proposed activities, and (iii) does not reasonably believe that such proposed activities are substantially likely to create a Material Impact, then the proposing Party shall have the right to perform the proposed activities (the “Unsponsored Work”) at its own expense.  The proposing Party shall deliver to the JDC all proposed plans for such Unsponsored Work in advance of commencing such activities and deliver an update on such Unsponsored Work at each meeting of the JDC.  Promptly following completion of the Unsponsored Work, the proposing Party shall deliver to the JDC the top-line data summary and shall disclose all other Information resulting from such Unsponsored Work to the other Party pursuant to Section 4.4.  Notwithstanding anything to the contrary in this Agreement, the non-proposing Party shall have access to and the right to use all Information resulting from the Unsponsored Work solely as necessary to comply with the regulatory requirements in its territory in particular with respect to safety reporting and a Party’s license rights to such Information shall  be limited solely to such purpose.  If, following completion of any Unsponsored Work, the non-proposing Party wishes to have the right to use the resulting Information (beyond the rights pursuant to the immediately preceding sentence of this Section 3.8(b)), it may do so upon reimbursing the proposing Party for [*] percent ([*]%) of its reasonable documented costs and expenses of the Unsponsored Work.  Once the non-proposing Party has reimbursed such amounts, the Information from such Unsponsored Work shall be included in the proposing Party’s licensed know-how, the activities shall no longer be considered Unsponsored Work, and the applicable indication shall be subject to milestone payments as and to the extent specified under Article 8.  If however, the non-proposing Party does in good faith believe the proposed activities are substantially likely to create a Material Impact, the Parties shall submit the matter for resolution in accordance with Sections 2.9(b) or 2.9(c); provided that if, pursuant to Section 2.9(b), the Executive Officers are not able to resolve the matter within the applicable [*]-day period, then either Party may submit the matter for non-binding mediation under Section 14.2 followed by binding arbitration under Section 14.3, if applicable.

 

  

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3.9           Development Diligence; Standards of Conduct.  Each Party shall use Diligent Efforts to carry out the activities assigned to it under the Global Research and Development Plans.  Each Party shall conduct its activities under the Global Research and Development Plans in a good scientific manner and in compliance in all material respects with all applicable Laws.  Servier will use Diligent Efforts to Develop and obtain Regulatory Approval for the Product in the Lead Cardiometabolic Indications, Behçet’s Uveitis, Non Infectious Uveitis and any additional indications agreed pursuant to Section 3.8(a) in the Licensed Territory and, following the Pre-Exercise Period, if XOMA has not exercised the Cardiometabolic Indications Option, for the Lead Cardiometabolic Indications and any additional Cardiometabolic Indications agreed pursuant to Section 3.8(a) in the Retained Territory, itself or through one or more sublicensees. The Parties agree that as and to the extent Development of the Product is terminated for any indication, they will discuss in good faith another indication to pursue, either jointly or independently as Unsponsored Work.

 

3.10         Opt-Out Rights of Either Party in Cardiometabolic Field.  If XOMA exercises the Cardiometabolic Indications Option under Section 3.5, and thereafter the Parties are conducting a Joint Phase 3 Program or otherwise jointly conducting and funding one or more studies with respect to the Product in a given Cardiometabolic Indication, then on an indication-by-indication basis, upon [*] days written notice, either Party shall have the right to “opt-out” of its obligations to jointly conduct such program for such indication; provided, however, that regardless of such election to so opt-out, the opting-out Party would nonetheless be responsible for its allocated percentage of all Development Costs and CMC Costs allocable to any then-ongoing studies or trials with respect to such Indication, and would have all rights under Section 4.4 to reference and use the data and other results of any such trials or studies, it being understood that any studies or trials initiated and conducted thereafter by the non-opting-out Party would be Unsponsored Work as to which the opting-out Party has only those rights as specified in Section 3.8(b).

 

3.11         Development Records and Reports.  Each Party shall maintain complete and accurate records (in the form of technical notebooks and/or electronic files where appropriate) of all work conducted by it or on its behalf under the Global Research and Development Plans and all Information resulting from such work.  Such records, including any electronic files where such Information may also be contained, shall fully and properly reflect all work done and results achieved in the performance of the Global Research and Development Plans in sufficient detail and in good scientific manner appropriate for patent and regulatory purposes.  Each Party shall have the right to review and copy such records maintained by the other Party at reasonable times, but no less than [*] in any one calendar year, and to obtain access to originals (including the databases) to the extent needed for patent or regulatory purposes or for other legal proceedings.  Each Party shall provide the other party and the JDC with regular reports detailing its Development activities under the Development Plan and the results of such activities at each regularly scheduled JDC meeting, at a level of detail reasonably sufficient to enable the other Party to determine the reporting Party’s compliance with its Diligent Efforts obligations under Section 3.9. The Parties may agree to set up an electronic data room in order to manage the exchange of information in a secure manner.

 

  

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3.12           Subcontracts.  Each Party may perform any of its Development obligations under this Agreement through one or more subcontractors and consultants upon written notice to the JDC, provided that (a) such Party remains responsible for the work allocated to, and payment to, such subcontractors and consultants as it selects to the same extent it would if it had done such work itself; (b) the subcontractors and consultants undertake in writing obligations of confidentiality and non-use regarding Confidential Information that are substantially the same as those undertaken by the Parties pursuant to Article 10 hereof; and (c) the subcontractors and consultants agree in writing to assign all intellectual property developed in the course of performing any such work under the Global Research and Development Plans to the Party retaining such subcontractors or consultants.

 

3.13           Personnel.  All employees, agents and subcontractors of each Party and its Affiliates conducting activities under this Agreement shall, prior to commencing any such activities, be under written obligation to assign any inventions and related intellectual property rights to the Party by whom they are employed or for whom they are providing services (or its designated Affiliate).  The Parties acknowledge and agree that this Agreement shall be deemed to be a joint research agreement under 35 U.S.C. §103(c).

 

	
4.

	
Regulatory Matters

 

4.1           Lead Regulatory Party.  In general, XOMA shall be the lead Party for, and have the final say with respect to, subject to Section 2.9, regulatory activities regarding the Product in the Retained Territory for the Remaining Field and, if XOMA exercises the Cardiometabolic Indications Option, for the Cardiometabolic Indications.  Servier (or its designee for the Retained Territory) shall be the lead Party for, and have the final say with respect to, subject to Section 2.9, all regulatory activities regarding the Product in the Licensed Territory for all indications and in the Retained Territory for the Cardiometabolic Indications if XOMA does not exercise the Cardiometabolic Indications Option before expiration thereof.  Except for those clinical studies commenced prior to the Effective Date and unless otherwise agreed by the Parties, Servier shall be the sponsor of all clinical studies of the Product performed in the Licensed Territory, and XOMA (or its licensee) shall be the sponsor of all clinical studies performed in the Retained Territory; provided that if XOMA does not exercise the Cardiometabolic Indications Option before expiration thereof, Servier’s designee shall be the sponsor of all clinical studies performed in the Retained Territory for the Product in any Cardiometabolic Indication.  To the extent a Party for a given clinical trial requires that the other Party conduct some part of such trial or interact with Regulatory Authorities in such other Party’s territory, such other Party will reasonably consider such request and should the latter accept it, it shall be the sponsor of such component of such trial in its territory.

 

  

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4.2           Ownership of Regulatory Dossier.  Servier will own all Regulatory Materials for the Product in the Licensed Territory, and XOMA will own all Regulatory Materials for the Product in the Retained Territory, for all indications.  Following the Pre-Exercise Period, where XOMA has not exercised the Cardiometabolic Indications Option, and upon the sublicense by Servier, if any, of the rights to the Product in such indications in the Retained Territory to a Third Party, XOMA shall be obligated at such time to assign over to such Third Party, upon request, any such Regulatory Materials for the Product for the Cardiometabolic Indications.  XOMA will also manage and control the drug master file for the Licensed Antibody, to which Servier shall have full access and the right to reference for the exercise of its licenses to the Product.

 

4.3           Regulatory Rights, Diligence and Responsibilities.  Servier shall use Diligent Efforts to prepare and file all necessary Regulatory Materials for the Product with Regulatory Authorities and to seek Regulatory Approval for the Product in the Lead Cardiometabolic Indications, in Behçet’s Uveitis and in Non Infectious Uveitis in the Major European Countries, and shall be responsible for preparing and filing all necessary Regulatory Materials for the Product with Regulatory Authorities and seeking Regulatory Approval for the Product in all other indications in the Licensed Territory, in each case as relevant, in accordance with the Global Research and Development Plans.  XOMA shall use Diligent Efforts to prepare and file all necessary Regulatory Materials for the Product with Regulatory Authorities and seeking Regulatory Approval for the Product in the Retained Territory in all indications other than the Cardiometabolic Indications and, upon exercise of the Cardiometabolic Indications Option, in the Cardiometabolic Indications in the Retained Territory, in accordance with the Global Research and Development Plans.  Each Party shall keep the other Party informed of regulatory developments relating to the Product in its respective territory through regular reports at the JDC meetings.  Each Party shall send Regulatory Materials (in the case of Servier for the EMA) in draft form to the other Party and give the latter a reasonable period of time (not exceeding [*] days) to comment on such drafts of Regulatory Materials.  Each Party shall notify the other Party of any Regulatory Materials (other than routine correspondence) submitted to or received from any Regulatory Authorities respectively in the Retained Territory for XOMA and in the Major European Countries for Servier and shall provide the other Party with copies thereof.  Each Party shall provide the other Party with reasonable advance notice of all meetings, conferences, and discussions scheduled with any Regulatory Authority (in the case of Servier for the EMA) concerning the Product, and shall consider in good faith any input from the other Party in preparing for such meetings, conferences or discussion.  Unless prohibited by applicable Laws, XOMA shall have the right to attend any such meetings, conferences or discussions of Servier with EMA.  If XOMA elects not to or cannot attend such meetings, conferences or discussions, Servier shall provide written summaries of such meetings, conferences or discussions in English as soon as practicable after the conclusion thereof.  Following the last Phase 2 Clinical Trial for Type 2 diabetes, as determined by the JDC, XOMA agrees to schedule and attend an End of Phase 2 Meeting with the FDA with respect to the anticipated Phase 3 clinical program for Type 2 diabetes, should the data warrant.  Servier will have the option, but not the obligation, to have representatives of Servier present at such meeting.

 

4.4           Rights of Reference; Use of Data.

 

(a)           Promptly after the Effective Date, XOMA shall work with Servier to facilitate the timely transfer of the XOMA Know-How related to the Product (other than the XOMA Know-How related to Manufacturing, which is covered by Section 6.8).  Such transfer shall occur in a manner and following a reasonable schedule to be established by the JSC.  XOMA shall provide access to Servier to copies of relevant material, Information, reports and data, including pre-clinical data, clinical data, and any data that have been provided to Regulatory Authorities for the purpose of obtaining Regulatory Approval. Except with respect to Unsponsored Work, each Party shall make available to the other Party all data and results generated under any Global Research and Development Plan and, for use in complying with safety reporting obligations in its territory, all data generated under any Unsponsored Work or Territory-Specific Work; and each Party shall have the right to cross reference, file or incorporate by reference any Regulatory Materials filed by the other Party (or for which the other Party has a right of reference and a right to transfer such right of reference to such first Party) for the Product in order to support regulatory filings that such Party is permitted to make under this Agreement for the Product and to enable such Party to fulfill its obligations and exploit it rights under this Agreement to Develop, Manufacture (subject to Article 6), or Commercialize the Product. Each Party shall, on written request by the other Party (or its Affiliate or licensee), provide to the requesting Party and to any specified Regulatory Authority a letter, in the form reasonably required by the requesting Party, acknowledging that the requesting Party has the right of reference to any such Regulatory Materials for all purposes consistent with the Development and Commercialization of Product in the applicable country.  Further, each Party shall ensure that any other party to which such Party assigns any such Regulatory Materials agrees in writing that the other Party has the above rights of reference, and to provide to such other Party (or its Affiliate or licensee) and to any specified Regulatory Authority a letter, in the form reasonably required by the requesting Party, acknowledging that the requesting Party has the right of reference to any such Regulatory Materials for all such purposes.

 

  

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(b)           During the Term, on a regular basis, each Party shall present reports at JDC meetings on its activities under the Global Research and Development Plans and all regulatory activities with respect to Products in its territory, at a level of detail to be agreed by the JDC; provided, however, that any such presentation shall include at least a summary of the resulting data from all studies conducted by a Party with respect to the Product.

 

(c)           All preclinical, non-clinical, analytical, manufacturing, and clinical data and associated reports disclosed by one Party to the other under this Agreement, other than Unsponsored Work or Territory-Specific Work, may be used by the receiving Party subject to the terms of this Agreement solely for the purpose of Developing, seeking and obtaining Regulatory Approval and Commercializing the Product in its respective territory and field.  Each Party shall have the right to share any and all such data and other Regulatory Materials received from the other Party with its Affiliates and any Third Party sublicensees or licensees in its respective territory solely for the purpose of Developing, seeking and obtaining Regulatory Approval and Commercializing the Product in its respective territory and field.  Access to and use of such pre-clinical and clinical data are given by each Party to the other Party without cost (except as otherwise provided herein) on an “as is” basis without any warranty of any kind.  Each receiving Party accepts all risk and liability in relation to the use of the data received from the other Party and shall indemnify and hold harmless the Party providing such data from any Third Party’s claim(s) based upon such data as provided in Article 13.

 

4.5           Recalls.  Any decision to initiate a recall or withdrawal of a Product shall be made by Servier in the Licensed Territory and by XOMA in the Retained Territory; provided that Parties shall discuss in good faith and coordinate their efforts with respect to any such recalls.  After the Pre-Exercise Period, if XOMA does not exercise the Cardiometabolic Indications Option, Servier (or its sublicensee) shall have the right to initiate a recall or withdrawal of a Product for the Cardiometabolic Field in the Retained Territory.  In the event of any recall or withdrawal, such Party shall take any and all necessary action to implement such recall or withdrawal in accordance with applicable Laws, with assistance from the other Party as reasonably requested by the deciding Party.  The costs of any such recall or withdrawal shall be borne solely by the deciding Party in the applicable territory and field.

 

  

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5.

	
Commercialization

 

5.1           Overview.  Servier shall have sole control and responsibility for the Commercialization of Products in the Licensed Territory and shall bear all costs and expenses associated with the Commercialization of Products in the Licensed Territory; and XOMA shall have sole control and responsibility for the Commercialization of Products in the Retained Territory and shall bear all costs and expenses associated with the Commercialization of Products in the Retained Territory; provided, however that following the Pre-Exercise Period, if XOMA does not exercise the Cardiometabolic Indications Option, then Servier shall have sole control and responsibility, itself or through a Third Party sublicensee, for the Commercialization of Products in the Retained Territory in the Cardiometabolic Field, subject to compliance with this Agreement, and shall bear all costs and expenses associated therewith.  The Party with responsibility for Commercialization in a territory and field shall be referred to as the “Commercializing Party” for such territory and field.

 

5.2           Sales and Distribution.  It is understood that as between the Parties, the Commercializing Party shall be solely responsible for handling all returns, order processing, invoicing and collection, distribution, and receivables for Products in the applicable territory and indication.

 

5.3           Ex-Territory Sales.  Neither Party shall engage in any advertising or promotional activities relating to the Product directed primarily to customers or other buyers or users of the Product located outside its territory or accept orders for Products from or sell Products into such other Party’s territory for its own account or for the Commercializing Party’s account, and if such other Party receives any order for Products in the Commercializing Party’s territory, it shall refer such orders to the Commercializing Party for acceptance or rejection.

 

5.4           Commercialization Plan for Licensed Territory.  Servier shall pursue Commercialization of the Product in the Licensed Territory, in accordance with its normal business practices for its internal products at a similar stage.  Servier shall deliver an initial Commercialization plan to XOMA no later than [*] months prior to the anticipated date of the first filing of the first MAA for the Product in the Licensed Territory (the “Commercialization Plan”).  After the establishment of the initial Commercialization Plan, Servier shall prepare updates and amendments to such Commercialization Plan at least annually and deliver such updated Commercialization Plan to XOMA no later than October 31st of each calendar year.

 

5.5           Trademarks.  Servier shall have the right to brand the Products in the Licensed Territory using trademarks and trade names it determines appropriate for the Products, which may vary by country or within a country (“Product Marks”).  Each Party shall not, and shall ensure that its Affiliates and sublicensees will not, make any use of the trademarks or house marks of the other Party or its Affiliates or licensees (including their corporate names) or any trademark confusingly similar thereto. Servier shall own all rights in the Product Marks and shall register and maintain the Product Marks in the Retained Territory (if XOMA does not exercise the Cardiometabolic Indications Option) and other countries it determines reasonably necessary at its own cost and expense.  XOMA shall have the right to brand the Products in the Retained Territory in the Remaining Field, and, in the event that XOMA exercises the Cardiometabolic Indications Option, in the Cardiometabolic Indications, using trademarks and trade names it determines appropriate for the Products at XOMA’s cost and expense. Following the Pre-Exercise Period, if XOMA does not exercise the Cardiometabolic Indications Option, Servier shall have the right to convey to any sublicensee in the Retained Territory the right to brand the Products for the Cardiometabolic Indications, subject to coordination with and the approval of XOMA, not to be unreasonably withheld, to ensure that no confusion arise in the Retained Territory with respect to Products for use in the Remaining Field and those for use in the Cardiometabolic Indications.

 

  

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5.6           Commercial Diligence.  During the Term, Servier shall use Diligent Efforts to Commercialize the Products throughout the Licensed Territory [*], including in [*] of the Major European Countries, in the Cardiometabolic Field and in the Remaining Field. Without limiting the generality of the foregoing, Servier [*], including in [*] of the Major European Countries, in Behçet’s Uveitis, in Non Infectious Uveitis and in each Lead Cardiometabolic Indication pursuant to Section 3.8(a).  After the Pre-Exercise Period, if XOMA does not exercise the Cardiometabolic Indications Option, Servier shall include in any sublicense agreement with respect to the Retained Territory, that such sublicensee [*] to Commercialize the Product in the U.S. and Japan in each Lead Cardiometabolic Indication and each additional Cardiometabolic Indication agreed pursuant to Section 3.8(a), in each case provided that it receives Regulatory Approval in such countries.  To the extent Servier determines not to apply for Regulatory Approval, for and/or launch the Product [*], it shall promptly notify XOMA and terminate this Agreement with respect to such Significant Markets in accordance with Section 11.2.

 

5.7           Standards of Conduct.  Each Party shall in all respects comply with all applicable Laws and applicable guidelines concerning the advertising, sales and marketing of prescription drug products in Commercializing Products under this Agreement, including without limitation the Foreign Corrupt Practices Act of 1977, as amended (“FCPA”) and any applicable local anti-bribery laws.

 

5.8           Limitations and Protections in Retained Territory in Event of No Option Exercise.  Following the Pre-Exercise Period and where XOMA does not exercise or allows to lapse the Cardiometabolic Indications Option, the following shall apply thereafter:

 

(a)           Limitations on Development.

 

(i)           Except as expressly approved in advance in writing by the Parties, neither Servier, nor any of its Affiliates or sublicensees shall, directly or through any Third Party, sponsor, conduct or cause to be conducted, otherwise assist in, supply any Licensed Antibody or Product for use in connection with, fund or otherwise support any human clinical trial (including without limitation any investigator sponsored studies) using such Licensed Antibody or Product for any indication or use in the Remaining Field, in the Retained Territory.

 

  

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(ii)          Except as expressly approved in advance in writing by the Parties, neither XOMA, nor any of its Affiliates, licensees or sublicensees shall, directly or through any Third Party, sponsor, conduct or cause to be conducted, otherwise assist in, supply any Licensed Antibody or Product for use in connection with, fund or otherwise support any human clinical trial (including without limitation any investigator sponsored studies) using such Licensed Antibody or Product for any indication or use in the Cardiometabolic Field, in the Retained Territory.

 

(b)           Limitations on Commercialization Activities

 

(i)           Subject to any applicable law, Servier and its sublicensees (and their respective Affiliates) shall not knowingly promote or sell (or encourage or facilitate the sale of) (a) any Product for use in the Remaining Field in the Retained Territory.  Servier and its sublicensees (and their respective Affiliates) shall not provide funding to or otherwise support continuing education programs for sales representatives and/or medical professionals in which information is provided about the use of any Product for use in the Remaining Field in the Retained Territory.

 

(ii)          Subject to any applicable law, XOMA and its licensees (and their respective Affiliates) shall not knowingly promote or sell (or encourage or facilitate the sale of) any Product for use in the Cardiometabolic Field in the Retained Territory.  XOMA and its licensees (and their respective Affiliates) shall not provide funding to or otherwise support continuing education programs for sales representatives and/or medical professionals in which information is provided about the use of any Product for use in the Cardiometabolic Field in the Retained Territory.

 

(c)           Tracking of Sales of Product.  Should XOMA not exercise the Cardiometabolic Indications Option, the Parties agree to discuss, through the JSC and/or JEC, potential mechanisms to be put in place with respect to the tracking of sales of the Product as between the Cardiometabolic Indications and the Remaining Field in the Retained Territory.

 

(d)           Each of Servier and XOMA shall ensure that any license or sublicense agreement it enters into with respect to the Retained Territory include the foregoing obligations.

 

	
6.

	
Manufacturing

 

6.1           Overview.  The Manufacture of Product shall be overseen and coordinated by the Joint Manufacturing Committee and conducted pursuant to the Manufacturing Plan.  In general and subject to the terms of this Agreement, (a) XOMA shall be primarily responsible for conducting the CMC Activities, (b) XOMA shall be responsible for Manufacturing Bulk Drug Substance for clinical and commercial use for the Licensed Territory and the Retained Territory, (c) Servier shall be responsible for Manufacturing finished Product from such Bulk Drug Substance for sale of Products in the Licensed Territory, and (d) where XOMA does not exercise its Cardiometabolic Indications Option, Servier, or at Servier’s choice XOMA (for a period not to exceed [*] years from First Commercial Sale in the Retained Territory) or a Third Party designated by Servier, shall be responsible for Manufacturing finished Product from such Bulk Drug Substance for sale of Products in the Cardiometabolic Field in the Retained Territory.

 

  

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6.2           Manufacturing Plan.  XOMA shall prepare and propose to the JMC for discussion purposes a detailed plan for CMC Activities, including process development and scale-up, Manufacture of Bulk Drug Substance, Manufacture of finished Product from Bulk Drug Substance, and any other matters related to the Manufacture of the Product, as well as a quarter-by-quarter budget for such activities (including direct costs, external costs, costs of raw materials, capital improvements required in connection therewith, and the like), such a detailed plan will be submitted for approval to the JSC (the “Manufacturing Plan”).  The Manufacturing Plan will include only those capital expenditures by XOMA that are fully dedicated to the production of Bulk Drug Substance, and will provide allocations of costs for those costs that are shared between Bulk Drug Substance and other products of XOMA.  An initial Manufacturing Plan for Development of the Product for Behçet’s Uveitis for calendar year 2011 is attached to this Agreement as Exhibit 6.2.  The Parties, through the JMC, shall make good faith efforts to review such initial Manufacturing Plan and agree upon any revisions, amendments or additions thereto, for the Product for Behçet’s Uveitis, Non Infectious Uveitis and the Lead Cardiometabolic Indications for the subsequent [*] years, and have it approved by the JSC within [*] days after the Amendment Effective Date.  On an annual basis, the JMC shall have prepared by XOMA and shall propose any amended or revised Manufacturing Plan for approval by the JSC by no later than [*] of each year, the budget for which shall govern the activities to be conducted during the following calendar year to enable appropriate scale up activity and financial planning.

 

6.3           Future Planning.  The Parties through the JMC shall continue discussing a mutually beneficial arrangement for the harmonized Manufacture of Bulk Drug Substance for Commercialization and Development use by Servier, consistent with the following principles, and amend the Manufacturing Plan to reflect such arrangement:

 

(a)           Maintain quality control standards and uniform specifications for the Bulk Drug Substance and finished Product;

 

(b)           Enable speed to market for initial launch and subsequent indications;

 

(c)           Mitigate risks to ensure the uninterrupted supply of Bulk Drug Substance and finished Product.

 

(d)           Minimize XOMA Manufacturing Costs.

 

6.4           CMC Activities.  XOMA shall be responsible for the performance of CMC Activities for Bulk Drug Substance, including associated regulatory activities, in accordance with the Manufacturing Plan.  Prior to XOMA’s exercise of the Cardiometabolic Indications Option and thereafter if XOMA does not exercise such option, Servier shall reimburse XOMA for all documented costs incurred by XOMA in performing such activities in accordance with the Manufacturing Plan and the budget contained therein, as provided in Article 3.  If XOMA exercises the Cardiometabolic Indications Option, XOMA shall reimburse certain of these costs as provided in Section 8.5, and the Parties shall thereafter share such costs for the Cardiometabolic Field as provided in Section 3.4(d).

 

6.5           Supply of Bulk Drug Substance.  Until such time as Servier may establish a second source of Bulk Drug Substance as contemplated in Section 6.7, Servier, its Affiliates and sublicensees shall purchase exclusively from XOMA, and XOMA shall Manufacture and supply exclusively to Servier or its Affiliates or sublicensees, subject to the terms of this Article 6, and to the terms of the Supply Agreement (as defined below), all Bulk Drug Substance required by Servier, its Affiliates and sublicensees for Development use and for Commercial use.

 

  

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(a)           Clinical Use.  Bulk Drug Substance for clinical use by Servier will be supplied either as finished Product in vials or as Bulk Drug Substance, at Servier’s option.  Manufacture and supply of Bulk Drug Substance will be included within CMC Activities under the Manufacturing Plan, and all related costs will be included in CMC Costs under Section 6.4.  XOMA’s manufacture and supply of Bulk Drug Substance to Servier for clinical use will be governed by a supply agreement, containing commercially reasonable terms mutually agreed by the Parties, including terms for sales forecasting, inventory builds and safety stock requirements, an initial version of which will be entered into on or before  the Amendment Effective Date (the “Initial Supply Agreement”).

 

(b)           Commercial Use.

 

(i)           At a time to be determined by the JMC, and reasonably sufficiently in advance of the anticipated First Commercial Sale of a Product, the Parties will amend the Initial Supply Agreement to include commercial use and reflect then-available relevant Information (as amended, the “Supply Agreement”).  XOMA will supply Bulk Drug Substance to Servier for commercial use at a price equal to [*]% of the XOMA Manufacturing Costs for such Bulk Drug Substance.

 

(ii)          For the avoidance of doubt, no cost or expense shall be counted more than once in calculating XOMA’s actual Manufacturing costs or the XOMA Manufacturing Costs even if such cost or expense falls into more than one of the cost categories that comprise such cost.  The Parties agree that each shall use its good faith efforts to reduce the XOMA Manufacturing Costs, including, where appropriate, the procurement of raw materials by using Servier’s internal procurement infrastructure.

 

(c)           Existing Inventory. Servier shall only purchase from XOMA, and XOMA shall sell to Servier, XOMA’s existing inventory of phase 2 clinical materials and XOMA’s existing inventory of phase 3 clinical materials that are necessary and suitable for the performance of clinical studies by Servier. Servier shall purchase such inventory reasonably in advance of the time Servier intends to use such inventory pursuant to a forecast to be agreed by the Parties.

 

6.6           Manufacture of Finished Product.  For all Product sold by or on behalf of Servier, except for the Products sold in the Retained Territory (which is discussed under Section 6.1), Servier shall be responsible for final Manufacture of the finished Product from Bulk Drug Substance, including fill and finish and packaging, at Servier’s expense; provided that upon Servier’s request, XOMA shall arrange for a Third Party selected and approved by Servier to conduct final Manufacture of the Product for Servier from Bulk Drug Substance supplied by XOMA, including fill and finish and packaging, at Servier’s expense.  Where Servier requests that XOMA be responsible for final Manufacture of finished Product from Bulk Drug Substance for sale in the Retained Territory, the Parties shall discuss the terms and conditions of such final Manufacture at such time.

 

  

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6.7           Manufacturing Facilities.  XOMA shall ensure that (a) prior to the first filing of an MAA for the Product with the EMA, there is at least one facility qualified to manufacture Bulk Drug Substance for MAA submission to the EMA and (b) prior to the filing of an MAA for the first Major Cardiometabolic Indication for the Product with the EMA, there is a second facility qualified to manufacture Bulk Drug Substance for MAA submission to the EMA; provided that, where upon timely request by Servier, such second Bulk Drug Substance manufacturing facility is to be located in the EU and owned by Servier or by a Third Party contract manufacturer selected by Servier (the “Servier Facility”), the costs and expenses of qualifying and constructing such Servier Facility shall be borne by Servier; and provided further, that where Servier does not so request, XOMA shall establish such second facility outside the EU, at its own expense.  In connection with such request by Servier regarding the Servier Facility, the Parties shall discuss in good faith and cooperate with respect to the transfer of XOMA Know-How related to the Manufacture of Bulk Drug Substance and Product to the Servier Facility pursuant to Section 6.8.

 

6.8           Transfer of XOMA Know-How and Manufacturing Technology.

 

(a)           At Servier’s request and expense, and on a schedule determined by the JMC, XOMA shall disclose (and provide copies, as applicable) to either Servier or the Third Party manufacturer selected by Servier under Section 6.7, all XOMA Know-How necessary or useful to enable Servier or such Third Party manufacturer (as appropriate) to Manufacture Bulk Drug Substance.  For clarity, nothing in this Section 6.8 with respect to XOMA’s obligation to transfer XOMA Know-How to Servier shall limit XOMA’s right to use any such XOMA Know-How to fulfill XOMA’s obligations to Manufacture and supply Bulk Drug Substance to Servier under this Agreement or the Supply Agreement.  In addition, XOMA shall make available to Servier, on a reasonable consultation basis, advice of its technical personnel as may reasonably be requested by Servier in connection with such transfer of XOMA Know-How.  [*].

 

(b)           Servier and/or its Third Party manufacturer shall use the XOMA Know-How transferred under Section 6.8(a) solely for the purpose of Manufacturing Bulk Drug Substance and finished Products in accordance with the terms and conditions of this Agreement, and for no other purpose.

 

(c)           Servier acknowledges and agrees that XOMA may condition its agreement to transfer any XOMA Know-How to a Third Party manufacturer on the execution of a confidentiality agreement between such Third Party manufacturer and XOMA that contains terms substantially equivalent to those of Article 10.

 

6.9           Audits.

 

(a)           XOMA shall maintain, for at least [*] years from the date of creation, accurate records and accounts of costs of Manufacturing the Bulk Drug Substance in order to allow Servier to determine the accuracy of the calculation of XOMA Manufacturing Costs.  Upon the written request of Servier and not more than once in any calendar year, XOMA shall permit an independent certified public accounting firm of internationally recognized standing, selected by Servier and reasonably acceptable to XOMA and under binder of confidentiality, to have access during normal business hours to such of the records of XOMA as may be reasonably necessary to verify the accuracy of such calculations hereunder for any year ending not more than [*] months prior to the date of such request.  The accounting firm shall disclose to Servier only whether the records are correct or not and the specific details concerning any discrepancies.  The findings of such inspection shall be XOMA’s Confidential Information for the purposes of Article 10; provided that Servier shall have the right to disclose such findings to any sublicensee or Affiliate in accordance with Article 10.

 

  

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(b)           If such accounting firm concludes that Servier has overpaid for the Bulk Drug Substance supplied during such period, XOMA shall refund Servier the amount overpaid within [*] days after the receipt of such accounting firm’s written report so concluding.  If such accounting firm concludes that additional amounts were owed by Servier for the for the Bulk Drug Substance supplied during such period, Servier shall pay the additional amounts to XOMA within [*] days after the receipt of such accounting firm’s written report so concluding.  Any such audit of records shall be at Servier’s expense; provided that in the event such audit discloses an overpayment of more than [*] percent ([*]%) between the amounts paid and the amounts due to XOMA, XOMA shall pay the expense of such audit.

 

6.10           Quality Agreement.  In connection with the negotiation of the Supply Agreement, the Parties have entered into a separate quality agreement setting forth the responsibilities of the quality organizations of each Party with respect to the cGMP manufacture of the Product, which is to be amended on or before the Amendment Effective Date (the “Quality Agreement”).  In the event of any conflict or inconsistency between the Quality Agreement and this Agreement, the Quality Agreements shall govern with respect to matters related to quality, and this Agreement shall govern with respect to all other matters.

 

6.11           Safety Data Exchange Agreement.  As soon as reasonably practicable after the Amendment Effective Date, but in no event later than 90 days thereafter, the pharmacovigilance departments of both Parties shall meet and agree on a safety data exchange agreement (“Safety Data Exchange Agreement”) which when executed shall be incorporated herein as Exhibit 6.11.

 

	
7.

	
Licenses and Related Rights

 

7.1           Licenses to Servier.

 

(a)           License Grant.  Subject to the terms and conditions of this Agreement and the agreements set forth on Exhibit 7.1(a), XOMA hereby grants Servier:

 

(i)           a co-exclusive (with XOMA) royalty free license, with the right to sublicense as provided in Section 7.1(c), under the XOMA Technology to (A) Develop Products in the Cardiometabolic Field and in the Remaining Field in the Licensed Territory (subject to the last sentence of Section 4.1 and to Section 3.3(b) above), and (B) in the Cardiometabolic Field in the Retained Territory, subject to earlier termination in the event of XOMA’s exercise of the Cardiometabolic Indications Option, solely in accordance with the Global Research and Development Plans and/or this Agreement;

 

(ii)          an exclusive, royalty-bearing license, with the right to sublicense as provided in Section 7.1(c), under the XOMA Technology to use, sell, offer for sale, distribute, import, export and otherwise Commercialize Products in (A) the Remaining Field and the Cardiometabolic Field in the Licensed Territory during the Term and (B) the Cardiometabolic Field in the Retained Territory, during the Term, but subject to earlier termination in the event of XOMA’s exercise of the Cardiometabolic Indications Option; and

 

  

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(iii)         an exclusive, worldwide, royalty-free license under the XOMA Technology, with the right to sublicense as provided in Section 7.1(c), to make and have made finished Product from Bulk Drug Substance supplied by XOMA, (A) for use in the Development or Commercialization of Products in the Remaining Field and the Cardiometabolic Field in the Licensed Territory and (B) for use in the Development or Commercialization of Products in the Cardiometabolic Field in the Retained Territory, until such time as and subject to XOMA’s exercise of the Cardiometabolic Indications Option.  In addition, XOMA hereby grants to Servier a license to manufacture or have manufactured Bulk Drug Substance (X) solely for use in the Development or Commercialization of Products in and for the Licensed Territory, and (Y) for use in the Development or Commercialization of Products solely in the Cardiometabolic Field in the Retained Territory, until such time as and subject to XOMA’s exercise of the Cardiometabolic Indications Option, all as and to the extent provided in Sections 6.7 and 6.8.

 

(b)           XOMA Retained Rights.  It is understood that at all times XOMA and its Affiliates retain (i) the exclusive right to Develop and Commercialize the Product in the Remaining Field in the Retained Territory, (ii) the right to practice the XOMA Technology as and to the extent needed in connection with its activities under this Agreement in fulfillment of its obligations hereunder, (iii) the right to Manufacture Bulk Drug Substance in the Licensed Territory and the Retained Territory and (iv) the right to use and practice the XOMA Technology outside the scope of the licenses granted to Servier in Section 7.1(a).

 

(c)           Sublicense Rights.

 

(i)           Servier shall have the right to grant sublicenses of the licenses granted to it under Section 7.1(a)(i)(A), Section 7.1(a)(ii)(A), and Section 7.1(a)(iii)(A) and 7.1(a)(iii)(X) to any of its Affiliates. Servier shall have the right to grant sublicenses of the licenses granted to it under Section 7.1(a)(i)(A), Section 7.1(a)(ii)(A), and Section 7.1(a)(iii)(A) to any Third Parties with the prior written consent of XOMA, not to be unreasonably withheld;

 

(ii)          Servier shall have the right to grant sublicenses of the licenses granted to it under Section 7.1(a)(i)(B), Section 7.1(a)(ii)(B) and Section 7.1(a)(iii)(B) to any of its Affiliates. Servier shall have the right to grant sublicenses of the licenses granted to it under Section 7.1(a)(i)(B), Section 7.1(a)(ii)(B), Section 7.1(a)(iii)(B), and Section 7.1(a)(iii)(Y) to any Third Parties with the prior written consent of XOMA, not to be unreasonably withheld, but only in the event XOMA does not exercise its Cardiometabolic Indications Option; for clarity, where XOMA does not exercise such option at the Early Option Exercise Date, Servier shall have no right to sublicense such rights until after the Late Option Exercise Date;

 

provided that in the case of Third Parties: (w) Servier shall provide XOMA with prior written notice with respect to any such sublicense, and a redacted copy thereof, (x) Servier shall remain responsible for the compliance with this Agreement by such sublicensee(s), (y) each such sublicense agreement shall be consistent with the terms and conditions of this Agreement, and (z) Servier shall require, in substance, any sublicensee of XOMA Technology in the Cardiometabolic Field in the Retained Territory to defend, indemnify and hold harmless the XOMA Indemnitees from any and all damages or other amounts payable to a Third Party claimant, to the extent resulting from Claims against them that arise from or are based on: (A) the use of XOMA Technology in connection with the Development, Manufacture or Commercialization of the Product by or on behalf of such sublicensee or its affiliates in the Retained Territory; or (B) the use by such sublicensee in the Retained Territory of pre-clinical and clinical data and information supplied by XOMA to Servier under Section 4.4(c) (and sublicensed or transferred to such sublicensee), except in the case of XOMA’s fraud, gross negligence or willful misconduct.

 

  

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7.2           Licenses to XOMA.

 

(a)           License Grant.  Subject to the terms and conditions of this Agreement, Servier hereby grants XOMA:

 

(i)           a non-exclusive, royalty-free license, with the right to sublicense as provided in Section 7.2(b), under the Servier Technology to Develop Products in the Cardiometabolic Field (subject to XOMA’s exercise of the Cardiometabolic Indications Option) and in the Remaining Field solely in accordance with the Global Research and Development Plans and/or this Agreement;

 

(ii)          a non-exclusive, royalty-free license, with the right to sublicense as provided in Section 7.2(b), under the Servier Technology to use, sell, offer for sale, distribute, import, export and otherwise Commercialize Products in (A) the Remaining Field in the Retained Territory during the Term and (B) upon XOMA’s exercise of the Cardiometabolic Indications Option, the Cardiometabolic Field in the Retained Territory;  and

 

(iii)         a non-exclusive, worldwide license under the Servier Technology to Manufacture Bulk Drug Substance and Product.

 

(b)           Sublicense Rights.  XOMA shall have the right to grant sublicenses of the license granted to it under Section 7.2(a) to any of its Affiliates. XOMA shall have the right to grant sublicenses of the license granted to it under Section 7.2(a) to any Third Parties, with the prior written consent of Servier, which shall not be unreasonably withheld: (i) XOMA shall provide Servier with prior written notice with respect to any such sublicense, (ii) XOMA shall remain responsible for the compliance with this Agreement by such sublicensee(s), and (iii) each such sublicense agreement shall be consistent with the terms and conditions of this Agreement.

 

(c)           Exclusive Rights Option.  Should XOMA desire to convert any of the licenses granted under Section 7.2(a) from non-exclusive to exclusive, upon reasonable written notice to Servier, the Parties shall negotiate in good faith the terms upon which Servier will grant such exclusive rights.

 

7.3           Negative Covenants.

 

(a)           Servier covenants that it will not, and will not permit any of its Affiliates or sublicensees to, use or practice any XOMA Technology outside the scope of the license granted to it under Section 7.1 above.  XOMA covenants that it will not, and will not permit any of its Affiliates or sublicensees to, use or practice any Servier Technology outside the scope of the license granted to it under Section 7.2 above.

 

  

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(b)           XOMA agrees that during a period of [*] years following the First Commercial Sale of the Product in the Licensed Territory, it shall not, itself or through one or more Affiliates or Third Parties, sell, offer for sale, distribute, promote or market any Competing Product (x) for use in any indication in the Licensed Territory, and (y) in the event of expiration of the Cardiometabolic Indications Option without exercise by XOMA, in the Retained Territory for use in any Cardiometabolic Indication.

 

(c)           Servier agrees that during a period of [*] years following the First Commercial Sale of the Product by or on behalf of XOMA in the Retained Territory, it shall not, itself or through one or more Affiliates or Third Parties, sell, offer for sale, distribute, promote or market any Competing Product (x) for use in any indication in the Licensed Territory, (y) for use in any indication in the Retained Territory if XOMA exercises the Cardiometabolic Indications Option, or (z) for use in any indication, other than Cardiometabolic Indications, in the Retained Territory, in the event of expiration of the Cardiometabolic Indications Option without exercise by XOMA.

 

(d)           Sections 7.3(b) and 7.3(c) shall survive termination of this Agreement as follows:

 

(i)           Upon early termination of this Agreement by Servier under Section 11.2 (whether in its entirety or in a given country or region) or by XOMA under Section 11.4 , Section 7.3(c) shall survive (in the terminated country/region(s) or, if the Agreement is terminated in its entirety, in the Licensed Territory and Retained Territory ) until the earlier of (A) [*] years following the First Commercial Sale of the Product in the Retained Territory by or on behalf of XOMA, or (B) [*] years following the effective date of such termination.  However, in the event of such termination, XOMA’s obligations under Section 7.3(b) shall terminate in the terminated country/region(s) or in the Licensed Territory in its entirety, as applicable.

 

(ii)          Upon termination of this Agreement by Servier under Section 11.3, Servier’s obligations under Sections 7.3(c) and XOMA’s obligations under Section 7.3(b) shall terminate in the terminated region(s) or in the Licensed Territory and Retained Territory in their entirety, as applicable.

 

(iii)         Upon termination of this Agreement by Servier under Section 11.4, XOMA’s obligations under Section 7.3(b) shall survive until the earlier of (A) [*] years following the First Commercial Sale of the Product in the Licensed Territory, or (B) [*] years following the effective date of termination; and Servier’s obligations under Section 7.3(c) shall terminate.

 

(iv)          Upon termination of this Agreement by XOMA under Section 11.5, Servier’s obligations under Section 7.3(c) shall survive in the terminated jurisdiction(s) until the earlier of (A) [*] years following the First Commercial Sale of the Product by or on behalf of XOMA in the Retained Territory, or (B) [*] years following the effective date of termination; and Section 7.3(b) shall terminate in the terminated jurisdiction(s).

 

  

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7.4           No Implied Licenses.  Except as explicitly set forth in this Agreement, neither Party shall be deemed by estoppel or implication to have granted the other Party any license or other right to any intellectual property of such Party.

 

	
8.

	
PAYMENTS

 

8.1           Notification, Payment and Invoicing.  Any and all amounts payable by a Party to the other Party under this Agreement shall be invoiced as follows:

 

	
  

	
●

	
by XOMA to LES LABORATOIRES SERVIER, 22 rue Garnier, 92200 Neuilly sur Seine, France, VAT FR08085480796, to the attention of [*].

 

	
  

	
●

	
by Servier to XOMA Ireland Limited, 26 Upper Pembroke Street, Dublin 2, Ireland, VAT IE 6327875R, to the attention of [*].

 

Unless otherwise indicated below, payment shall be made within [*] days of receipt of the corresponding invoice. Each Party shall inform the other Party promptly and no later than within [*] days of the occurrence of an event triggering a payment obligation on the informing Party.

 

8.2           Upfront Payment.  Servier has paid to XOMA a one-time, non-refundable and non-creditable upfront cash payment of Fifteen Million Dollars ($15,000,000).

 

8.3           Cash Advance to XOMA.  Servier has provided to XOMA an advance of funds in the total amount of fifteen million euro (€15,000,000), in accordance with a separate loan agreement entered into by and between the Parties contemporaneous with the Original Agreement (the “Loan Agreement”).

 

8.4           Phase 3 Initiation Milestone. Regardless of whether XOMA has at such time exercised the Cardiometabolic Indications Option, Servier shall make a one-time, non-refundable and non-creditable milestone payment to XOMA of Twenty Million Dollars ($20,000,000) within [*] days after the Initiation of the first Phase 3 Clinical Trial for the Product by or on behalf of Servier in and for the Licensed Territory in Type 2 diabetes and receipt of the corresponding invoice.

 

8.5           XOMA Payments on Option Exercise.  XOMA shall be obligated to make the applicable following payments to Servier upon exercise of the Cardiometabolic Indications Option:

 

	  	
Early Option Exercise

	
Late Option Exercise

	
Option Exercise amount for patent and know-how access

	
$[*]

	
$[*]

	
Reimbursement of CMC Costs Incurred Prior to Exercise for CMC Activities for  Cardiometabolic Indications – Percent of Total Costs Incurred

	
[*]%

	
[*]%

	
Reimbursement of Development Costs Incurred Prior to Exercise for Clinical Studies for Cardiometabolic Indications – Percent of Total Costs Incurred

	
[*]%

	
[*]%

  

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XOMA shall pay the Option Exercise amount for patent and know-how access within [*] days of exercise of the option and receipt of the corresponding invoice.  Subject to Article 3, as of the date of exercise of the option, XOMA shall be obligated to reimburse Servier for XOMA’s share (as determined above) of the CMC Costs and Development Costs incurred by Servier prior to the option exercise date (the “Reimbursable Costs”) in accordance with the following schedule: (A) for the Early Option Exercise, during the period from the date of option exercise until the [*] anniversary of such date, no payments would be owed, but commencing with the first calendar [*] after the [*] anniversary, and for the [*] calendar [*] thereafter, XOMA would be obligated to pay [*] of the total Reimbursable Costs within [*] days following the end of such calendar [*] and receipt of the corresponding invoice; and (B) for the Late Option Exercise, during the period from the date of option exercise until the [*] month  anniversary of such date, no payments would be owed, but commencing with the first calendar [*] after such [*] month anniversary, and for the [*] calendar [*] thereafter, XOMA would be obligated to pay [*] of the total Reimbursable Costs within [*] days following the end of such calendar [*] and receipt of the corresponding invoice.  Following exercise of the option, the ongoing CMC Costs and Development Costs for the Cardiometabolic Indications shall be handled as provided in Article 3.

 

8.6           Milestone Payments if XOMA Exercises the Cardiometabolic Indications Option.

 

(a)           General.  If XOMA exercises the Cardiometabolic Indications Option, Servier shall make one-time, non-refundable and non-creditable milestone payments to XOMA within [*] days after the achievement of each applicable milestone event by Servier or its Affiliates or sublicensees as provided below and receipt of the corresponding invoice.

 

(b)           Development and Regulatory Milestones for Major Cardiometabolic Indications.  The following milestone payments shall be payable to XOMA for one or more Products to achieve the following milestone events:

 

	
Milestone Event

	
Milestone Payment

	
Initiation of the first Phase 3 Clinical Trial for each of the first [*] Major Cardiometabolic Indications other than Type 2 diabetes

	
€[*]

	
Acceptance for filing of MAA by EMA for each of the first [*] Major Cardiometabolic Indications

	
€[*]

	
Regulatory Approval by EMA (centralized) for each of the first [*] Major Cardiometabolic Indications

	
€[*]

  

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For clarity, the maximum total amount payable under this Section 8.6(b) if all milestones are achieved would be €[*].  Whether a Cardiometabolic Indication is a Major Cardiometabolic Indication shall be determined by Servier in good faith, in consultation with XOMA. To the extent XOMA disagrees, in good faith, with any determination by Servier that an indication is not a Major Cardiometabolic Indication, the Parties shall attempt to resolve such dispute by good-faith negotiations between the Executive Officers and if not resolved within [*] days after notice of XOMA’s disagreement, Servier shall have the final say and shall not be required to pay the foregoing milestones with respect to such Cardiometabolic Indication. Rather, in such a case, Servier shall be required to pay milestones as provided under Section 8.6(c) below, up to the limits provided in such section; it being understood that the maximum number of Cardiometabolic Indications for which Servier would owe milestones under this Section 8.6(b) and Section 8.6(c), in the aggregate, is [*].  Further, if Net Sales of the Product for such Cardiometabolic Indication in the Licensed Territory achieve at least [*] euros (€[*]) during any annual period starting on October 1st, then Servier shall so notify XOMA and the amounts set forth above (i.e., an aggregate of [*] euros (€[*])) minus such amounts as were previously paid to XOMA pursuant to Section 8.6(c), if any, shall thereafter be due and owing within [*] days of receipt of invoice from XOMA.

 

(c)           Development and Regulatory Milestones for Non-Major Cardiometabolic Indications. Servier shall pay the following milestone payments to XOMA for one or more Products, for each of the first [*] Indications in the Cardiometabolic Field which are not determined to be Major Cardiometabolic Indications, to achieve the designated milestone event within [*] days of the achievement of each such milestone event and receipt of the corresponding invoice:

 

	
Milestone Event

	
Milestone Payment

	
Acceptance for filing of MAA by EMA

	
€[*]

	
Regulatory Approval by EMA

	
€[*]

 

(d)           Sales Milestones.  Servier shall make the following one-time, non-refundable and non-creditable sales milestone payments to XOMA when the aggregate Net Sales of all Products in the Licensed Territory first reach the thresholds specified below in any [*]-month period.  Such payments shall be made no later than [*] days after the end of the period in which each such sales milestone event is achieved and receipt of the corresponding invoice.

 

  

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Threshold for Aggregate

Net Sales in the Licensed Territory

	
Milestone Payment

	
€[*]

	
€[*]

	
€[*]

	
€[*]

	
€[*]

	
€[*]

	
€[*]

	
€[*]

	
€[*]

	
€[*]

To the extent more than one sales threshold is reached in any given [*]-month period, then the applicable milestone payment for each such achievement shall be due and owing with respect to such period.  If during the Pre-Exercise Period any sales milestone becomes due in accordance with this Section 8.6(d), such amount shall be due and owing.  If following the Pre-Exercise Period, however, the Cardiometabolic Indications Option is not exercised, the Net Sales milestones then due and owing thereafter are only those set forth below under Section 8.8(d) and not those listed above; provided that any amounts paid as of such time under the above schedule shall be credited against the first Net Sales milestone owed under Section 8.8(d).  For example, should the payment of €[*] have been paid, and XOMA does not exercise the Cardiometabolic Indications Option, and subsequently Servier achieves worldwide Net Sales of $[*], the payment owed would be $[*] minus €[*].

 

8.7           Regulatory Milestones for Remaining Field Indications.  Irrespective of whether XOMA exercises the Cardiometabolic Indications Option, Servier shall pay the following milestone payments to XOMA, within [*] days of the achievement of the applicable milestone event and receipt of the corresponding invoice, for one or more Products to achieve the following milestones for each of the first [*] Indications in the Remaining Field, other than Behçet’s Uveitis and Non Infectious Uveitis, to achieve the designated milestone event:

 

	
Milestone Event

	
Milestone Payment

	
Acceptance for filing of MAA by EMA

	
€[*]

	
Regulatory Approval by EMA

	
€[*]

 

No development or regulatory milestone payments will be due for Behçet’s Uveitis or Non Infectious Uveitis.  For clarity, the maximum total amount payable under this Section 8.7 is €[*]. As used in this Article 8, “Indication” means an indication for the Product that is the subject of a separate MAA or supplemental MAA or any new indication requiring an amendment to the MAA.

 

  

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8.8           Development and Regulatory Milestone Payments if XOMA Does Not Exercise the Cardiometabolic Indications Option.

 

(a)           General.  If XOMA does not exercise the Cardiometabolic Indications Option, Servier shall make one-time, non-refundable and non-creditable development and regulatory milestone payments to XOMA within [*] days after the achievement of each applicable milestone event by Servier or its Affiliates or sublicensees as set forth below and receipt of the corresponding invoice.

 

(b)           Major Cardiometabolic Indications Field.  The following milestone payments shall be payable to XOMA for achievement of the following milestones by one or more Products:

 

	
Milestone Event

	
Milestone Payment

	
Initiation of the first Phase 3 Clinical Trial for each of the first [*] Major Cardiometabolic Indications other than Type 2 diabetes

	
€[*]

 

	
Acceptance for filing of MAA by FDA for each of the first [*] Major Cardiometabolic Indications

	
€[*]

	
Acceptance for filing of MAA by EMA for each of the first [*] Major Cardiometabolic Indications

	
€[*]

	
Filing of MAA with MHLW for each of the first [*] Major Cardiometabolic Indications

	
€[*]

	
Regulatory Approval by FDA for each of the first [*] Major Cardiometabolic Indications

	
€[*]

	
Regulatory Approval  by EMA for each of the first [*] Major Cardiometabolic Indications

	
€[*]

	
Regulatory Approval by MHLW for each of the first [*] Major Cardiometabolic Indications

	
€[*]

For clarity, the maximum total amount payable under this Section 8.8(b) shall be €[*].  Whether a Cardiometabolic Indication is a Major Cardiometabolic Indication shall be determined by Servier in good faith, in consultation with XOMA.  To the extent XOMA disagrees, in good faith, with any determination by Servier that an indication is not a Major Cardiometabolic Indication, the Parties shall attempt to resolve such dispute by good-faith negotiations between the Executive Officers and if not resolved within [*] days after notice of XOMA’s disagreement, Servier shall have the final say and shall not be required to pay the foregoing milestones with respect to such Cardiometabolic Indication.  Rather, in such a case, Servier shall be required to pay milestones as provided under Section 8.8(c) below, up to the limits provided in such section; it being understood that the maximum number of Cardiometabolic Indications for which Servier would owe milestones under this Section 8.8(b) and Section 8.8(c), in the aggregate, is [*].  Further, if Net Sales of the Product for such Cardiometabolic Indication in the Licensed Territory achieve at least [*] euros (€[*]) during any annual period starting on October 1st, then Servier shall so notify XOMA and the amounts set forth above (i.e., up to an aggregate of [*] euros (€[*]), depending on where such Product has been approved) minus such amounts as were previously paid to XOMA pursuant to Section 8.8(c), if any, shall thereafter be due and owing within [*] days of receipt of invoice from XOMA.

 

  

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(c)           Non-Major Cardiometabolic Indications. Servier shall pay the following milestone payments to XOMA for one or more Products, for each of the first [*] Indications in the Cardiometabolic Field which are not determined to be Major Cardiometabolic Indications, to achieve the designated milestone event within [*] days of the achievement of each such milestone event and receipt of the corresponding invoice:

 

	
Milestone Event

	
Milestone Payment

	
Acceptance for filing of MAA by EMA, FDA or MHLW, whichever occurs first

	
€[*]

	
Regulatory Approval by EMA, FDA or MHLW, whichever occurs first

	
€[*]

(d)           Sales Milestones.  Servier shall make the following one-time, non-refundable and non-creditable sales milestone payments to XOMA when the aggregate worldwide Net Sales of all Products first reach the thresholds specified below in any [*]-month period.  Such payments shall be made no later than [*] days after the end of the period in which each such sales milestone event is achieved and receipt of the corresponding invoice.

 

	
Threshold for Aggregate Annual

Worldwide Net Sales

	
Milestone Payment

	
$[*]

	
$[*]

	
$[*]

	
$[*]

	
$[*]

	
$[*]

	
$[*]

	
$[*]

 

To the extent more than one sales threshold is reached in any given year, then the applicable milestone payment for each such achievement shall be due and owing with respect to such year.

 

8.9           Royalty Payments.

 

(a)           Royalties in Licensed Territory.  Subject to the other applicable terms of this Section 8.9, and regardless of whether XOMA exercises the Cardiometabolic Indications Option, Servier shall pay to XOMA quarterly non-refundable, non-creditable royalties on Net Sales of Products in the Licensed Territory during such quarter, on a Product-by-Product and a country-by-country basis, as calculated by multiplying the total Net Sales of such Product in such country during such quarter by the applicable royalty rate as determined in the following royalty rate table.  As used herein, “Daily Cost of Treatment” for a particular Product in a country means the average Net Sales per unit of the Product for such country in a specific calendar quarter (converted to Euros), divided by the number of days between each use of such Product as specified in the label for such Product in the country (e.g., per unit Net Sales divided by 30 for a Product labeled to be administered once per month).

 

  

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Daily Cost of Treatment

	
Royalty Rate

	
Less than or equal to [*]

	
[*]%

	
Greater than [*] and less than or equal to [*]

	
[*]%

	
Greater than [*] and less than or equal to [*]

	
[*]%

	
Greater than [*] and less than or equal to [*]

	
[*]%

	
Greater than [*]

	
[*]%

 

In addition, Servier shall pay to XOMA (to the extent applicable) the following additional quarterly non-refundable, non-creditable royalties on Net Sales of Products in the Licensed Territory during such quarter, depending upon the Purchase Cost Ratio (as defined below) of such Product for the quarter, on a Product-by-Product and country-by-country basis, such royalties to be calculated by multiplying the applicable royalty rate set forth in the royalty rate table below by the total Net Sales of the Product in such country during such quarter.  As used herein, “Purchase Cost” means, with respect to a particular Product for commercial sale in a particular country during a calendar quarter, the actual total amount paid by Servier to XOMA for its purchase of the amount of Bulk Drug Substance actually contained in such Product sold in such quarter (i.e., the XOMA Manufacturing Cost for such amount of Bulk Drug Substance purchased, plus [*]% of such cost).  As used herein, “Purchase Cost Ratio” means, with respect to a particular Product for commercial sale in a particular country during a calendar quarter, the Purchase Cost for such Product divided by the average Net Sales per unit of such Product sold in the country during such quarter, expressed as a percentage.

 

	
Purchase Cost Ratio for a Product

	
Additional Royalty Rate

	
Less than [*]% but greater than or equal to [*]% of Net Sales per unit

	
[*]%

	
Less than [*]% but greater than or equal to [*]% of Net Sales per unit

	
[*]%

	
Less than [*]% of Net Sales per unit

	
[*]%

  

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The Parties agree that if any factors affecting the profitability of the Product in the Licensed Territory change materially during the Term, the Parties will meet and discuss in good faith possible modifications to the royalty scheme for the Product in the Licensed Territory set forth in this Section 8.9(a) in light of such changing factors.

 

(b)           Royalties in Retained Territory.  Subject to Sections 8.9(c) and 8.9(d), if XOMA does not exercise the Cardiometabolic Indications Option, in addition to royalties under Section 8.9(a), Servier shall pay to XOMA non-refundable, non-creditable royalties on Net Sales of Products by Servier, its Affiliates and sublicensees for use in the Cardiometabolic Indications in the Retained Territory, as calculated by multiplying the applicable royalty rates set forth in the royalty rate table below by the corresponding amount of incremental Net Sales in the Retained Territory of all Products in a calendar year (the “Total Annual Net Sales”).

 

	
Net Sales of all Products in Retained Territory

	
Royalty Rate

	
For that portion of Total Annual Net Sales less than $[*]

	
[*]%

	
For that portion of Total Annual Net Sales greater than or equal to $[*] but less than $[*]

	
[*]%

	
For that portion of Total Annual Net Sales greater than or equal to $[*] but less than $[*]

	
[*]%

	
For that portion of Total Annual Net Sales greater than or equal to $[*] but less than $[*]

	
[*]%

	
For that portion of Total Annual Net Sales equal to or greater than $[*]

	
[*]%

 

(c)           Royalty Term.  Royalties under this Section 8.9 with respect to a particular Product and country will be payable for so long as such Product is sold in such country.

 

(d)           Royalty Adjustments.

 

(i)           Third Party Royalty Offset.  If, after the Effective Date, Servier or its sublicensee or designee:  (A) is required, as agreed by the Parties in good faith, or absent such agreement, in the reasonable opinion of an independent expert selected by the Parties, to obtain a license from any Third Party under patent rights controlled by such Third Party in order to make, have made, use, sell, offer for sale or import a Licensed Antibody and/or a Product in any country, and pursuant to such license is required to pay a royalty or a lump sum payment to the Third Party based on sales of the Product containing such Licensed Antibody in such country, or (B) is required by any court of competent jurisdiction, due to infringement of patent rights controlled by such Third Party in any country(ies), to pay such a royalty to such a Third Party based on sales of such Product in such country(ies), then Servier may deduct from the milestones payments or royalties that would otherwise be due to XOMA on Net Sales resulting from the sales of such Product in such country in a calendar quarter the amount paid by Servier to such Third Party with respect to the sale of such Product for such country during such calendar quarter; provided that in no event shall the operation of this Section 8.9(d)(i) reduce the royalties or milestones payment due to XOMA for any Product below [*] percent ([*]%) of the amount that otherwise would have become due under this Agreement for such country.

 

  

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(ii)          Biosimilar Competition.  On a country by country basis, following expiration of all XOMA Patents and Servier Collaboration Patents claiming a particular Product and the first commercial sale of a Biosimilar Product to such Product in such country, if, during any calendar quarter, the unit volume of sales of all such Biosimilar Product(s) in such country during such quarter are more than [*] percent ([*]%) of the total unit volume of sales of (i) all such Biosimilar Products plus (ii) such Product’s unit volume of sales in such country, then the royalty rates under Section 8.9(a) or (b), as applicable, shall be reduced by [*] percent ([*]%) in any given calendar quarter with respect to the sales such Product in such country.

 

(e)           Royalty Reports and Payments.  Within [*] days following the end of each calendar [*] following the First Commercial Sale of a Product by Servier or its Affiliate or sublicensee anywhere in the Licensed Territory or Retained Territory, Servier shall provide XOMA with a report containing the following information for the applicable calendar quarter, on a Product-by-Product basis: (i) gross sales and Net Sales of Product consolidated in Euros, (ii) a calculation of the royalty payment due on such sales, including a calculation of the Purchase Cost used in the determination of such royalty, (iii) an accounting of the number of units and prices for the Product sold, grouped by the Daily Cost of Treatment in the countries in the Licensed Territory, (iv) the adjustment, if any, made in accordance with the terms of Section 8.9(d), as well as any other details reasonably requested by XOMA.

 

8.10         Payment Method.  All payments due under this Agreement to XOMA shall be made by bank wire transfer in immediately available funds to an account designated by XOMA.  All royalty payments arising from Net Sales in the Licensed Territory shall be made in Euros. All other payments, including any royalties arising from sales in the Retained Territory in the Cardiometabolic Indications, shall be made either in Dollars or in Euros as indicated in the corresponding section of this Agreement or as agreed by the Parties.

 

8.11         Late Payment.  If either Party fails to make any payment due to the other Party under this Agreement, then interest shall accrue on a daily basis at the rate equal to one month LIBOR (for payment in Dollars) or EURIBOR (for payments in Euros) plus [*] basis points per annum, or at the maximum rate permitted by applicable Law, whichever is the lower.

 

8.12         Foreign Exchange.  Conversion of sales recorded in local currencies to Euros shall be performed in a manner consistent with Servier’s normal practices used to prepare its audited financial statements for internal and external reporting purposes, which uses a widely accepted source of published exchange rates.

 

  

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8.13         Records; Inspection.  Servier shall, and shall ensure that its Affiliates and sublicensee(s) will, keep complete, true and accurate books of account and records for the purpose of determining the payments to be made under this Agreement.  Such books and records shall be kept for at least [*] years following the end of the calendar year to which they pertain.  Such records shall be open for inspection during such period by independent accountants, solely for the purpose of verifying payment statements hereunder.  Such inspections shall be made no more than [*] each calendar year, on reasonable notice during normal business hours.  Any unpaid amounts (plus interest as set forth in Section 8.11) that are discovered shall be paid promptly by Servier.  Inspections conducted under this Section 8.13) shall be at the expense of XOMA, unless the inspection discloses an underpayment by Servier of [*] percent ([*]%) or more of the amount due for any period covered by the inspection, whereupon all costs relating to the inspection for such period shall be paid promptly by Servier.

 

8.14         Taxes.

 

(a)           Taxes on Income.  Each Party shall be solely responsible for the payment of all taxes imposed on its share of income arising directly or indirectly from the efforts of the Parties under this Agreement.

 

(b)           Tax Cooperation.  The Parties agree to cooperate with one another and use reasonable efforts to reduce or eliminate tax withholding or similar obligations in respect of royalties, milestone payments, and other payments made by Servier to XOMA under this Agreement.  Servier agrees that under current bilateral income tax Treaty between France and Ireland, payments made by Servier to XOMA under this Agreement are not subject to withholding tax in France.  To the extent Servier is required to deduct and withhold taxes on any payment to XOMA, Servier shall pay the amounts of such taxes to the proper Governmental Authority in a timely manner and promptly transmit to XOMA an official tax certificate or other evidence of such withholding sufficient to enable XOMA to claim such payment of taxes.  XOMA shall provide Servier, who shall complete any required portions of, any tax forms that may be reasonably necessary in order for Servier not to withhold tax or to withhold tax at a reduced rate under an applicable bilateral income tax treaty, including Forms 5000-EN and 5003-EN.  Each Party shall provide the other with reasonable assistance to enable the recovery, as permitted by applicable Laws, of withholding taxes, value added taxes, or similar obligations resulting from payments made under this Agreement, such recovery to be for the benefit of the Party bearing such withholding tax or value added tax.  Servier shall require its sublicensees to cooperate with XOMA in a manner consistent with this Section 8.14(b).

 

(c)           Taxes Resulting From Servier Action.  If Servier is required to make a payment to XOMA that is subject to a deduction or withholding of tax, then (i) if such withholding or deduction obligation arises as a result of any action by Servier, including any assignment or sublicense, or any failure on the part of Servier or its Affiliate to comply with applicable Laws or filing or record retention requirements, that has the effect of modifying the tax treatment of the Parties hereto (a “Servier Withholding Tax Action”), then the sum payable by Servier (in respect of which such deduction or withholding is required to be made) shall be increased to the extent necessary to ensure that XOMA receives a sum equal to the sum that it would have received had no such Servier Withholding Tax Action occurred, and (ii) otherwise, the sum payable by Servier (in respect of which such deduction or withholding is required to be made) shall be made to XOMA after deduction of the amount required to be so deducted or withheld, which deducted or withheld amount shall be remitted to the proper Governmental Authority in accordance with applicable Laws.

 

  

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(d)           Other Taxes.  Each Party shall be solely responsible for the payment of Value Added Tax, custom duties, registration duties, transfer taxes, stamp duties and any other taxes or duties imposed to it in relation with the payments made under this Agreement.

 

(e)           XOMA Obligations.  The provisions of subsections (b) and (c) above shall apply mutatis mutandis to XOMA where XOMA is the paying Party.

 

	
9.

	
INTELLECTUAL PROPERTY

 

9.1           Ownership of Inventions.  Each Party shall own all inventions, whether or not patentable, made solely by its or its Affiliates’ own employees, agents, or independent contractors in the course of conducting its or its Affiliates’ activities under this Agreement, together with all intellectual property rights therein (“Sole Inventions”).  The Parties shall jointly and equally own any inventions, whether or not patentable, that are made jointly by employees, agents, or independent contractors of each Party or its Affiliates in the course of conducting its or its Affiliates’ activities under this Agreement, together with all intellectual property rights therein (“Joint Inventions”).  Inventorship shall be determined in accordance with U.S. patent laws.  All Patents claiming patentable Sole Inventions (but not Joint Inventions) shall be referred to herein as “Sole Invention Patents”.  All Patents claiming patentable, jointly owned Joint Inventions shall be referred to herein as “Joint Invention Patents”.  Except to the extent either Party is restricted by the licenses granted to the other Party or its Affiliates under this Agreement, each Party and its Affiliates shall be entitled to practice and exploit the Joint Inventions and the Joint Invention Patents without the duty of accounting or seeking consent from the other Party.

 

9.2           Disclosure.  Each Party shall promptly disclose to the other Party all Sole Inventions and Joint Inventions, including any invention disclosures or other similar documents, submitted to it by its or its Affiliates’ employees, agents or independent contractors describing inventions that are either Sole Inventions or Joint Inventions, and all Information relating to such inventions to the extent necessary for the preparation, filing and prosecution of any Patent with respect to such invention.  Upon the disclosure of a Joint Invention or Sole Invention pursuant to this Section 9.2, the Parties shall promptly discuss such Joint Invention or Sole Invention and (a) confirm its status as either a Joint Invention or a Sole Invention in light of the ownership principles set forth in Section 9.1 and (b) determine whether to file a patent application claiming such Joint Invention or Sole Invention; provided that the Party owning such Sole Invention shall nonetheless have the right to file for such patent application.

 

9.3           Patent Prosecution.

 

(a)           Budget.  With respect to the second and third calendar quarters of the Term, each Party has provided to the other Party, and within [*] days after the beginning of each calendar quarter thereafter, each Party shall provide to the other Party, a reasonably detailed budget setting forth its estimated costs and expenses for the subsequent six (6)-month period for the preparation, filing, prosecution and maintenance of all Patents whose costs and expenses such other Party is (or may be) responsible for under this Section 9.3.  At either Party’s request, the Parties shall promptly discuss such budget(s), and the providing Party shall provide any additional Information as the other Party may reasonably request.

 

  

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(b)           XOMA Patents and Joint Invention Patents.

 

(i)           Licensed Territory.  Except as otherwise provided in this Section 9.3(b)(i), XOMA shall be solely responsible for the preparation, filing, prosecution and maintenance of the XOMA Patents in its own name, and Joint Invention Patents in the name of Servier and XOMA, in the Licensed Territory, using patent counsel reasonably acceptable to Servier.  The Parties shall discuss and confer with respect to the overall patent strategy with respect to the XOMA Patents and any Joint Invention Patents in the Licensed Territory.  XOMA shall keep Servier advised of the status of all communications and actual and prospective filings and submissions regarding the XOMA Patents and Joint Invention Patents in the Licensed Territory, and shall give Servier a reasonable opportunity (but in no event less than ten (10) business days) to review and comment on any such communications, filings, filing date and submissions proposed to be sent to any patent office.  XOMA shall incorporate all reasonable comments of Servier before making any substantive filing or submission related to the XOMA Patents or Joint Invention Patents in the Licensed Territory, provided that such comments are obtained at least [*] business days prior to the deadline for filing.  If XOMA no longer wishes to maintain or prosecute any XOMA Patent or Joint Invention Patent in the Licensed Territory, then XOMA shall give reasonable notice to Servier, and thereafter, Servier may, upon written notice to XOMA, prosecute and maintain such XOMA Patent or Joint Invention Patent in its own name, and XOMA shall execute all required documents in order to assign to Servier such XOMA Patent or XOMA’s interest in such Joint Invention Patent, at XOMA’s expense.  Servier shall be solely responsible for all costs and expenses incurred by XOMA or its Affiliates after the Effective Date and associated with the filing, prosecution (including any interferences, reissue proceedings and reexaminations) and maintenance of the XOMA Patents and Joint Invention Patents in the Licensed Territory.  Notwithstanding the foregoing, if Servier no longer desires to retain its license under any XOMA Patent or Joint Invention Patent in the Licensed Territory, and desires to cease payment of the costs of prosecution and maintenance thereof, it shall have the right to terminate such license to such Patent, and terminate reimbursement to XOMA of such costs, upon [*] days written notice; provided that with respect to any such Joint Invention Patent, Servier shall execute all required documents in order to assign to XOMA Servier’s interest in such Joint Invention Patent, at Servier’s expense.

 

(ii)          Retained Territory.

 

(1)           XOMA shall have the sole authority and control over the preparation, filing, prosecution and maintenance of the XOMA Patents in its own name, and Joint Invention Patents in the name of XOMA and Servier, in the Retained Territory, at XOMA’s sole cost and expense, provided that XOMA shall update Servier from time to time on the status of such Patent prosecution and maintenance efforts; provided, however, that if the Cardiometabolic Indications Option expires without exercise thereof by XOMA, Section 9.3(b)(ii)(2) below shall apply to the XOMA Patents and Joint Invention Patents in the Retained Territory, and not this Section 9.3(b)(ii)(1).

 

  

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(2)           After expiration of the Cardiometabolic Indications Option without exercise thereof by XOMA, except as otherwise provided in this Section 9.3(b)(ii)(2), XOMA shall be solely responsible for the preparation, filing, prosecution and maintenance of the XOMA Patents and Joint Invention Patents in the Retained Territory, using patent counsel reasonably acceptable to Servier.  The Parties (including any sublicensee of Servier) shall discuss and confer with respect to the overall patent strategy with respect to the XOMA Patents and any Joint Invention Patents in the Retained Territory.  XOMA shall keep Servier advised of the status of all communications and actual and prospective filings and submissions regarding such XOMA Patents and Joint Invention Patents in the Retained Territory, and shall give Servier a reasonable opportunity (but in no event less than [*] business days) to review and comment on any such communications, filings and submissions proposed to be sent to any patent office.  With respect to those XOMA Patents and Joint Invention Patents in the Retained Territory that are relevant to the Cardiometabolic Field (e.g., that claim the use of the Licensed Antibody to treat a Cardiometabolic Indication) (the “XOMA Retained Territory Cardiometabolic Patents”), XOMA shall incorporate all reasonable comments of Servier before making any substantive filing or submission related to such Patents, provided that such comments are obtained at least [*] business days prior to the deadline for filing.  For all other XOMA Patents and Joint Invention Patents in the Retained Territory, XOMA shall consider Servier’s comments in good faith.  If XOMA no longer wishes to maintain or prosecute any XOMA Patent or Joint Invention Patent in the Retained Territory, then XOMA shall give reasonable notice to Servier, and thereafter, Servier may, upon written notice to XOMA, prosecute and maintain such XOMA Patent or Joint Invention Patent in its own name and at its sole expense, and XOMA shall execute all required documents in order to assign to Servier such XOMA Patent or XOMA’s interest in such Joint Invention Patent, at XOMA’s expense.  Servier shall be responsible for [*]% of all costs and expenses incurred by XOMA or its Affiliates after the expiration of the Cardiometabolic Indications Option, associated with the filing, prosecution (including any interferences, reissue proceedings and reexaminations) and maintenance of the XOMA Retained Territory Cardiometabolic Patents, and XOMA shall be responsible for [*]% of such costs and expenses.  XOMA shall be solely responsible for all costs and expenses incurred by XOMA or its Affiliates associated with the filing, prosecution (including any interferences, reissue proceedings and reexaminations) and maintenance of all XOMA Patents and Joint Invention Patents in the Retained Territory that are not XOMA Retained Territory Cardiometabolic Patents.

 

(c)           Servier Patents.

 

(i)           Licensed Territory. Servier shall have sole authority and control over the preparation, filing, prosecution and maintenance of the Servier Patents in the Licensed Territory, at Servier’s sole cost and expense, provided that Servier shall update XOMA from time to time on the status of such Patent prosecution and maintenance efforts in the Licensed Territory.

 

(ii)          Retained Territory.  Except as otherwise provided in this Section 9.3(c)(ii), Servier shall be solely responsible for the preparation, filing, prosecution and maintenance of the Servier Patents in the Retained Territory, using patent counsel reasonably acceptable to XOMA.  The Parties (including any sublicensee of Servier) shall discuss and confer with respect to the overall patent strategy with respect to the Servier Patents in the Retained Territory. Servier shall keep XOMA advised of the status of all communications and actual and prospective filings and submissions regarding the Servier Patents, and shall give XOMA a reasonable opportunity (but in no event less than ten (10) business days) to review and comment on any such communications, filings and submissions proposed to be sent to any patent office.  Servier shall incorporate all reasonable comments of XOMA before making any substantive filing or submission related to the Servier Patents in the Retained Territory, provided that such comments are obtained at least [*] business days prior to the deadline for filing.  If Servier no longer wishes to maintain or prosecute any Servier Patent in the Retained Territory, then Servier shall give reasonable notice to XOMA, and thereafter, XOMA may, upon written notice to Servier, prosecute and maintain such Patent in its own name, and Servier shall execute all required documents in order to assign to XOMA such Patent, at Servier’s expense.  XOMA shall be solely responsible for all costs and expenses incurred by Servier or its Affiliates associated with the filing, prosecution (including any interferences, reissue proceedings and reexaminations) and maintenance of the Servier Patents in the Retained Territory.  Notwithstanding the foregoing, if the Cardiometabolic Indications Option expires without exercise thereof by XOMA, then (A) for those Servier Patents in the Retained Territory that are relevant to the Remaining Field (e.g., that claim the use of the Licensed Antibody to treat a Remaining Field Indication) (the “Servier Retained Territory Remaining Field Patents”), XOMA shall be responsible for [*]% of all costs and expenses incurred by Servier or its Affiliates after the expiration of the Cardiometabolic Indications Option, associated with the filing, prosecution (including any interferences, reissue proceedings and reexaminations) and maintenance of the Servier Retained Territory Remaining Field Patents, and Servier shall be responsible for [*]% of such costs and expenses, and (B) for all other Servier Patents in the Retained Territory, Servier shall be solely responsible for all costs and expenses incurred by Servier or its Affiliates after the expiration of the Cardiometabolic Indications Option, associated with the filing, prosecution (including any interferences, reissue proceedings and reexaminations) and maintenance of such Patents, and Servier shall not be obligated to incorporate all reasonable comments of XOMA with respect thereto, but shall consider XOMA’s comments in good faith.

 

  

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(d)           Patent Term Extension.  XOMA and Servier shall cooperate with each other and shall use Diligent Efforts in obtaining patent term extension (including any pediatric exclusivity extensions as may be available) or supplemental protection certificates or their equivalents in any country.

 

(e)           Data Exclusivity.  With respect to data exclusivity periods (such as those periods listed in the Biologics Price Competition and Innovation Act of 2009 and the Patient Protection and Affordable Care Act, as amended, or foreign equivalents of such laws), Servier shall use Diligent Efforts consistent with its obligations under applicable Laws (including any applicable consent order) to seek, maintain and enforce all such data exclusivity periods available for the Products in the Licensed Territory and, if XOMA does not exercise the Cardiometabolic Indications Option, in the Retained Territory.

 

  

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(f)           Cooperation.  Each Party shall provide the other Party all reasonable assistance and cooperation in the patent prosecution efforts provide above in this Section 9.3, including providing any necessary powers of attorney and executing any other required documents or instruments for such prosecution.

 

9.4           Enforcement of Patents.

 

(a)           Notification and Dispute Resolution.  If either Party becomes aware of any existing or threatened infringement of any XOMA Patents, Joint Invention Patents or Servier Patents, which infringing activity involves the manufacture, use, import, offer for sale or sale of any Product in the Licensed Territory or the Retained Territory (a “Product Infringement”), it shall promptly notify the other Party in writing to that effect, and the Parties will consult with each other regarding any actions to be taken with respect to such Product Infringement.  The Parties (including any sublicensee of Servier) shall discuss and confer with respect to the overall strategy with respect to any Patent litigation strategy under this section 9.4 with respect to a XOMA Patent or Joint Invention Patent in the Licensed Territory (and Retained Territory, with respect to the Cardiometabolic Field in the event of failure by XOMA to exercise the Cardiometabolic Indications Option), or Servier Patents, except with respect to those Servier Patents listed under section 9.3(c)(ii)(B) in the event of failure by XOMA to exercise the Cardiometabolic Indications Option, or Joint Invention Patent in the Retained Territory; any disputes arising with respect to such strategy or litigation tactics shall be submitted for resolution to an independent patent counsel approved by both Parties for resolution, pursuant to an expedited procedure, so as not to prejudice the proposing Party’s response or action.

 

(b)           XOMA Patents and Joint Invention Patents.

 

(i)           Licensed Territory.  XOMA shall have the first right, but shall not be obligated, to bring an infringement action against any person or entity engaged in a Product Infringement of the XOMA Patents and Joint Invention Patents in the Licensed Territory, at XOMA’s cost and expense.  If XOMA does not desire to bring such an action or to continue to pursue such action with respect to any such Patent (or to settle or otherwise secure the abatement of such Product Infringement), it shall so notify Servier prior to the earlier of: (A) [*] days following XOMA’s receipt or delivery of the notice under Section 9.4(a), or (B) [*] days before the deadline, if any, set forth in the applicable Laws for the filing of such actions, in which event Servier shall have the right to bring and control any such action, at its own expense and by counsel of its own choice.  In addition, to the extent XOMA does not so notify Servier within a reasonable time to allow Servier to bring such action, XOMA shall bring such action on behalf of, under the direction of, and at the expense of, Servier.

 

(ii)          Retained Territory.  XOMA shall have the first right, but shall not be obligated, to bring an infringement action against any person or entity engaged in a Product Infringement of the XOMA Patents and Joint Invention Patents in the Retained Territory, at XOMA’s cost and expense.  If the Cardiometabolic Indications Option expires without XOMA’s exercise thereof, and if XOMA does not desire to bring such an action or to continue to pursue such action with respect to any such Patent (or to settle or otherwise secure the abatement of such Product Infringement), it shall so notify Servier prior to the earlier of: (A) [*] days following XOMA’s receipt or delivery of the notice under Section 9.4(a), or (B) [*] days before the deadline, if any, set forth in the applicable Laws for the filing of such actions, in which event, Servier shall have the right to bring and control any such action, at its own expense and by counsel of its own choice.  In addition, to the extent XOMA does not so notify Servier within a reasonable time to allow Servier to bring such action, XOMA shall bring such action on behalf of, under the direction of, and at the expense of, Servier.

 

  

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(c)           Servier Patents.  Servier shall have the first right, but shall not be obligated, to bring an infringement action against any person or entity engaged in any infringement of the Servier Patents in the Licensed Territory or the Retained Territory, at Servier’s cost and expense.  If Servier does not desire to bring such an action or to continue to pursue such action with respect to any such Patent in the Retained Territory (or to settle or otherwise secure the abatement of such Product Infringement) it shall so notify XOMA prior to the earlier of: (i) [*] days following Servier’s receipt or delivery of the notice under Section 9.4(a), or (ii) [*] days before the deadline, if any, set forth in the applicable Laws for the filing of such actions, in which event XOMA shall have the right to bring and control any such action, at its own expense and by counsel of its own choice.  In addition, to the extent Servier does not so notify XOMA within a reasonable time to allow XOMA to bring such action, Servier shall bring such action on behalf of, under the direction of, and at the expense of, XOMA.

 

(d)           Cooperation.  Each Party shall provide to the enforcing Party under this Section 9.4 reasonable assistance in such enforcement, at such enforcing Party’s request and expense, including joining such action as a party plaintiff if required by applicable Laws to pursue such action.  The enforcing Party shall keep the other Party regularly informed of the status and progress of such enforcement efforts and shall reasonably consider the other Party’s comments on any such efforts, subject to Section 9.4(a).  To the extent that the non-enforcing Party owns or controls the Patent being enforced, it shall be entitled to separate representation in such matter by counsel of its own choice and at its own expense, but such Party shall at all times cooperate fully with the enforcing Party.  Neither Party shall have the right to settle any patent infringement litigation under this Section 9.4 without the prior written consent of such other Party, such consent not to be unreasonably withheld or delayed.

 

(e)           Expenses and Recoveries.  The enforcing Party bringing a claim, suit or action under Section 9.4(b) or 9.4(c) shall be solely responsible for any expenses incurred by such Party as a result of such claim, suit or action.  If such Party recovers monetary damages in such claim, suit or action, such recovery shall be allocated first to the reimbursement of any expenses incurred by the Parties in such litigation (including, for this purpose, a reasonable allocation of expenses of internal counsel), and any remaining amounts shall be allocated as follows: (i) in the case of any recovery for a Product Infringement of a XOMA Patent or Joint Invention Patent in the Licensed Territory, [*] percent ([*]%) to Servier and [*] percent ([*]%) to XOMA, (ii) in the case of any recovery for a Product Infringement of a XOMA Patent or Joint Invention Patent in the Retained Territory, one hundred percent (100%) retained by XOMA, but, where XOMA does not exercise the Cardiometabolic Indications Option, and such recovery relates to a Product Infringement in the Cardiometabolic Field, [*] percent ([*]%) to Servier and [*] percent ([*]%) to XOMA, (iii) in the case of any recovery for a Product Infringement of a Servier Patent in the Licensed Territory, one hundred percent (100%) retained by Servier, and (iv) in the case of any recovery for a Product Infringement of a Servier Patent in the Retained Territory, [*] percent ([*]%) to XOMA and [*] percent ([*]%) to Servier or, where XOMA does not exercise the Cardiometabolic Indications Option, and such recovery relates to a Product Infringement in the Cardiometabolic Field, one hundred percent (100%) to Servier.

 

  

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9.5           Patent Oppositions and Other Proceedings.

 

(a)           If a XOMA Patent or Joint Invention Patent in the Licensed Territory becomes the subject of any proceeding commenced by a Third Party in connection with an opposition, action for declaratory judgment, nullity action, interference or other attack upon the validity, title or enforceability thereof, then XOMA shall have the first right, but not the obligation, to control such defense at its own expense using counsel of its own choice.  If XOMA decides that it does not wish to defend against such action, it shall notify Servier reasonably in advance of all applicable deadlines, and Servier shall thereafter have the right, but not the obligation, to assume defense of such action at its own expense.

 

(b)           If a XOMA Patent or Joint Invention Patent in the Retained Territory becomes the subject of any proceeding commenced by a Third Party in connection with an opposition, action for declaratory judgment, nullity action, interference or other attack upon the validity, title or enforceability thereof, then XOMA shall have the first right, but not the obligation, to control such defense at its own expense using counsel of its own choice.  If XOMA decides that it does not wish to defend against such action with respect to a Joint Invention Patent, it shall notify Servier reasonably in advance of all applicable deadlines, and Servier shall thereafter have the right, but not the obligation, to assume defense of such action with respect to such Patent at its own expense.  If the Cardiometabolic Indication Option expires without exercise by XOMA, and if XOMA decides that it does not wish to defend against such action with respect to a XOMA Patent that is a XOMA Retained Territory Cardiometabolic Patent, it shall notify Servier reasonably in advance of all applicable deadlines, and Servier shall thereafter have the right, but not the obligation, to assume defense of such action with respect to such Patent at its own expense.

 

(c)           If a Servier Patent becomes the subject of any proceeding commenced by a Third Party in connection with an opposition, action for declaratory judgment, nullity action, interference or other attack upon the validity, title or enforceability thereof, then Servier shall have the first right, but not the obligation, to control such defense at its own expense using counsel of its own choice.  If Servier decides that it does not wish to defend against such action with respect to a Servier Patent in the Retained Territory, it shall notify XOMA reasonably in advance of all applicable deadlines, and XOMA shall thereafter have the right, but not the obligation, to assume defense of such action at its own expense.

 

(d)           The Party controlling any defense under this Section 9.5 (other than XOMA under Section 9.5(b) in the Retained Territory, or Servier under Section 9.5(c) in the Licensed Territory) shall permit the non-controlling Party to participate in the proceedings to the extent permissible under applicable Laws and to be represented by its own counsel at the non-controlling Party’s expense.  Notwithstanding any of the foregoing, the Party controlling any infringement action pursuant to Section 9.4 shall also have the sole right to control the response to any attack on the validity, title, or enforceability of a Patent that is asserted by the alleged infringer(s) as a counterclaim or affirmative defense in such action, subject to Section 9.6.  Neither Party shall have the right to settle any proceeding under this Section 9.5 with respect to any XOMA Patent or Joint Invention Patent without the prior written consent of such other Party, such consent not to be unreasonably withheld or delayed.

 

  

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(e)           The Parties (including any sublicensee of Servier) shall discuss and confer with respect to the overall strategy with respect to any Patent litigation strategy under this Section 9. 5 with respect to a XOMA Patent or Joint Invention Patent in the Licensed Territory (and Retained Territory, with respect to the Cardiometabolic Field in the event of failure by XOMA to exercise the Cardiometabolic Indications Option), or Servier Patents or Joint Invention Patent in the Retained Territory; any disputes arising with respect to such strategy or litigation tactics shall be submitted for resolution to an independent patent counsel approved by both Parties for resolution, pursuant to an expedited procedure, so as not to prejudice the proposing Party’s response or action.

 

9.6           Patents Licensed From Third Parties.  Each Party’s rights under this Article 9 with respect to the prosecution, maintenance and enforcement of any XOMA Background Patent that is licensed by XOMA or its Affiliates from a Third Party or any New Servier Patent that is licensed by Servier or its Affiliates from a Third Party, shall be subject to the rights of such Third Party to prosecute, maintain and enforce such Patent.

 

9.7           Patent Marking.  Servier and its Affiliates and sublicensees shall mark Products marketed and sold by Servier or its Affiliates or sublicensee hereunder with appropriate patent numbers or indices, where required by applicable Laws; provided, however, that Servier shall only be required to so mark such Product to the extent such markings or such notices would affect recoveries of damages or equitable remedies available under applicable Laws with respect to infringements of patents in the applicable jurisdiction.

 

9.8           Infringement of Third Party Rights.  If any Product used or sold by Servier or its Affiliates or sublicensees becomes the subject of a Third Party’s claim or assertion of infringement of such Third Party’s intellectual property rights in any jurisdiction, Servier shall promptly notify XOMA, and the Parties shall agree on and enter into a “common interest agreement” wherein the Parties agree to their shared, mutual interest in the outcome of such potential dispute, and thereafter, the Parties shall promptly meet to consider the claim or assertion and the appropriate course of action.  Unless agreed otherwise by the Parties, Servier shall be solely responsible for defending itself and, except as provided in the next sentence, XOMA, against any such claim or assertion in the Licensed Territory, at its sole expense.  To the extent XOMA engages separate counsel in such defense, it would be at its own cost and expense.  Servier shall keep XOMA fully informed of such claim and its defense, and shall reasonably consider and seek to accommodate any timely comments of XOMA with respect thereto.

 

	
10.

	
CONFIDENTIALITY

 

10.1         Confidentiality Obligations.  The Parties agree that during the Term and for a period of [*] years thereafter, a Party receiving Confidential Information of the other Party shall: (a) use Diligent Efforts to maintain in confidence such Confidential Information (but not less than those efforts as such Party uses to maintain in confidence its own proprietary industrial information of similar kind and value); (b) not disclose such Confidential Information to any Third Party without prior written consent of the other Party, except to the extent expressly authorized by this Agreement or otherwise agreed in writing by the Parties; and (c) not use such other Party’s Confidential Information for any purpose except those permitted by this Agreement or in connection with exercising such Party’s or its Affiliates’ rights and/or fulfilling their obligations under this Agreement or any other agreement between the Parties or their Affiliates.

 

  

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10.2         Exceptions.  The obligations in Section 10.1 shall not apply with respect to any portion of the other Party’s Confidential Information that the receiving Party can show by competent written proof:

 

(a)           was known to the receiving Party, other than under an obligation of confidentiality, at the time of disclosure by the disclosing Party;

 

(b)           was generally available to the public or otherwise part of the public domain, at the time of disclosure by the other Party;

 

(c)           becomes generally available to the public or otherwise part of the public domain after the disclosure by the other Party, other than through any act or omission of the receiving Party in breach of this Agreement;

 

(d)           is subsequently disclosed to the receiving Party by a Third Party who has a legal right to make such disclosure and who did not obtain such information directly or indirectly from the other Party; or

 

(e)           is subsequently independently developed by employees or contractors of the receiving Party who had no access to or knowledge of the other Party’s Confidential Information.

 

10.3         Authorized Disclosure.  A Party may disclose to a Third Party the Confidential Information belonging to the other Party to the extent such disclosure is reasonably necessary in the following instances; provided that notice of any such disclosure shall be provided as soon as practicable to the other Party:

 

(a)           filing or prosecuting Patents in accordance with Section 9.3;

 

(b)           complying with the requirement of Regulatory Authorities with respect to obtaining and maintaining Regulatory Approval of Products;

 

(c)           prosecuting or defending litigation as contemplated by this Agreement;

 

(d)           disclosure to its or its Affiliates’ employees, agents, consultants, contractors, licensees or sublicensees on a need-to-know basis for the sole purpose of performing its or its Affiliates’ obligations or exercising its or its Affiliates’ rights under this Agreement or any other agreement between the Parties or their Affiliates; provided that in each case, the disclosees are bound by written obligations of confidentiality and non-use consistent with those contained in this Agreement;

 

(e)           disclosure to any bona fide potential or actual investor, Acquiror or merger partner or other potential or actual financial partner for the sole purpose of evaluating an actual or potential investment, acquisition or other business relationship; provided that in connection with such disclosure, the disclosing Party shall use all reasonable efforts to inform each disclosee of the confidential nature of such Confidential Information and cause each disclosee to treat such Confidential Information as confidential; provided, however, that where such potential Acquiror or merger partner is at such time a competitor of Servier in the Licensed Territory, i.e., a company clinically developing or commercializing in the Licensed Territory a product in one or several indications where the Product is being developed or is planned to be developed by Servier (and, where XOMA has not exercised the Cardiometabolic Indications Option, the same applies in the Retained Territory), XOMA shall prior to such disclosure obtain Servier’s approval with respect to such disclosure; or

 

  

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(f)            complying with applicable Laws, including regulations promulgated by applicable security exchanges, court orders or administrative subpoenas or orders.

 

Notwithstanding the foregoing, in the event a Party is required to make a disclosure of the other Party’s Confidential Information pursuant to Sections 10.3(c) or (f), such Party shall promptly notify the other Party of such required disclosure and shall use reasonable efforts to assist the other Party, at such other Party’s expense, in obtaining a protective order preventing or limiting the required disclosure.

 

10.4         Publicity; Terms of Agreement.

 

(a)           Each Party shall have the right to make its own public announcement of the execution of this Agreement in accordance with its internal policies and legal requirements, provided the other Party agrees with the content of such public announcement, except to the extent any such content of such announcement is required by applicable Law or the exchange on which such Party’s securities are traded, as determined by such Party’s counsel.

 

(b)           After release of such press release, if either Party desires to make a public announcement concerning the material terms of this Agreement, such Party shall give reasonable prior advance notice of the proposed text of such announcement to the other Party for its prior review and approval (except as otherwise provided herein), such approval not to be unreasonably withheld, except that in the case of a press release or governmental filing required by law, regulation or stock exchange rules, the disclosing Party shall provide the other Party with such advance notice as it reasonably can and shall not be required to obtain approval therefor.  A Party commenting on such a proposed press release or governmental filing shall provide its comments, if any, within [*] business days after receiving the press release for review.  Further, Servier agrees that XOMA has the right to issue a press release with respect to the occurrence of the following events under this Agreement, provided that Servier is afforded a reasonable opportunity (but not more than [*] business days) to review the content of such press release prior to its release:  (i) filing and/or approvals of any regulatory applications; (ii) initiation and summary results of a clinical trial; (iii) the receipt, and, where deemed material, the amount, of each milestone payment received under this Agreement; and (iv) commercial launch of a Product in a country or region in the Retained Territory or in the Licensed Territory (to the extent agreed by Servier that such launch has occurred). Neither Party shall be required to seek the permission of the other Party to repeat any information regarding the terms of this Agreement or any amendment thereto that has already been publicly disclosed by such Party, or by the other Party, in accordance with this Section 10.4, provided such information remains accurate as of such time.

 

  

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(c)           The Parties acknowledge that either or both Parties may be obligated to file under applicable Laws a copy of this Agreement with the U.S. Securities and Exchange Commission (“SEC”) or other Governmental Authorities.  Each Party shall be entitled to make such a required filing, provided that it requests confidential treatment of the commercial terms and sensitive technical terms hereof and thereof to the extent such confidential treatment is reasonably available to such Party and permitted by such Governmental Authority.  In the event of any such filing, each Party will provide the other Party with a copy of the Agreement marked to show provisions for which such Party intends to seek confidential treatment and shall reasonably consider and incorporate the other Party’s comments thereon to the extent consistent with the legal requirements, with respect to the filing Party, governing disclosure of material agreements and material information that must be publicly filed.

 

10.5         Technical Publications.  Neither Party may publish peer reviewed manuscripts, or give other forms of public disclosure such as abstracts and presentations, of results of studies carried out under this Agreement, without the opportunity for prior review and coordination by the other Party, except to the extent required by applicable Laws.  A Party seeking publication shall provide the other Party the opportunity to review and comment on any proposed publication which relates to the Product at least [*] days prior to its intended submission for publication.  The other Party shall provide the Party seeking publication with its comments in writing, if any, within [*] days after receipt of such proposed publication.  The Party seeking publication shall consider in good faith any comments thereto provided by the other Party and shall comply with the other Party’s request to remove any and all of such other Party’s Confidential Information from the proposed publication.  In addition, the Party seeking publication shall delay the submission for a period up to [*] days in the event that the other Party can demonstrate reasonable need for such delay, including the preparation and filing of a patent application.  If the other Party fails to provide its comments to the Party seeking publication within such [*]-day period, such other Party shall be deemed not to have any comments, and the Party seeking publication shall be free to publish in accordance with this Section 10.5 after the [*]-day period has elapsed.  The Party seeking publication shall provide the other Party with a copy of the manuscript at the time of the submission.  Each Party agrees to acknowledge the contributions of the other Party and its employees in all publications as scientifically appropriate.

 

10.6         Equitable Relief.  Each Party acknowledges that its breach of this Article 10 could cause irreparable harm to the other Party, which might not be reasonably or adequately compensated in damages in an action at law.  By reasons thereof, each Party agrees that the other Party may be entitled, in addition to any other remedies it may have under this Agreement or otherwise, to preliminary and permanent injunctive and other equitable relief to prevent or curtail any actual or threatened breach of the obligations relating to Confidential Information set forth in this Article 10 by the other Party.

 

	
11.

	
TERM AND TERMINATION

 

11.1         Term.  This Agreement became effective on the Effective Date and, unless earlier terminated pursuant to this Article 11, shall remain in effect on a Product-by-Product basis, for so long as Servier is developing or selling such Product in any country in the Licensed Territory and, where XOMA does not exercise the Cardiometabolic Indications Option, the Retained Territory (the “Term”).

 

  

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11.2         Unilateral Termination by Servier.  Notwithstanding the above, Servier shall be permitted to terminate the Agreement with respect to the EU or in its entirety or, with respect to countries outside the EU only, on a country-by-country basis, without cause and without damages due by Servier to XOMA, its Affiliates, licensees or sub-licensees on account of such termination, upon [*] days prior written notice to XOMA (it being understood that Servier shall at all times remain liable for all costs incurred by it under this Agreement during such notice period).

 

11.3         Termination for Safety or Public Health Reasons.  Notwithstanding Section 11.2, if Servier determines that a safety or public health issue has arisen which is demonstrated by clinically relevant events which are documented and which relate to the Licensed Antibody or the Product, it shall immediately notify XOMA, and it shall be permitted to terminate the Agreement with respect to the EU or in its entirety or, with respect to countries outside the EU only, on a country-by-country basis, promptly, but in any event within [*] days of Servier’s determination of such issue.

 

11.4         Termination for Material Breach.  Each Party shall have the right to terminate this Agreement in its entirety immediately upon written notice to the other Party if the other Party materially breaches its obligations under this Agreement and, after receiving written notice identifying such material breach in reasonable detail, fails to cure such material breach within [*] days from the date of such notice (or within [*] business days from the date of such notice in the event such material breach is solely based on the breaching Party’s failure to pay any amounts due hereunder).  Where such breach is not curable, the termination shall become effective upon receipt of the termination notice by the breaching Party.

 

11.5         Termination for Patent Challenge.  XOMA shall have the right to terminate this Agreement immediately upon written notice to Servier if Servier or its Affiliates or sublicensees (directly or indirectly, individually or in association with any other person or entity) challenge the validity, enforceability or scope of any XOMA Patent anywhere in the Licensed Territory or Retained Territory; provided that such termination right shall be for the country of the challenged Patent only or, for a challenged Patent in a member state of the European Patent Organisation, for all such member states.

 

11.6         Effects of Termination of the Agreement.  Upon any early termination of this Agreement, in its entirety or on a country-by-country or EU basis:

 

(a)           Termination of License to Servier.  All licenses granted to Servier under Section 7.1 shall terminate, but in the case of termination on a country-by-country or EU basis, solely to the extent such licenses relate to those countries so terminated.

 

(b)           Servier License.  Other than termination on the basis of a public health and safety reason under Section 11.3, or termination by Servier on the basis of a material breach of the Agreement by XOMA under Section 11.4, or except where Servier can reasonably demonstrate that Commercializing the Product in the terminated country(ies) is detrimental to Servier’s sales in the non-terminated countries, Servier hereby grants to XOMA, effective only in the event of such termination and upon the request of XOMA, an exclusive, irrevocable license (with the right to grant sublicenses through multiple tiers) under the Servier Technology to research, Develop, make, have made, use, sell, offer for sale, import and otherwise Commercialize the Products in such terminated country(ies), which shall bear royalties at a rate equal to the lower of (x) [*]% of Net Sales (defined mutatis mutandis with the definition in Section 1.78) in any country in which a Product has received Regulatory Approval prior to the effective date of termination, or [*]% of Net Sales (defined mutatis mutandis with the definition in Section 1.78) in any country in which a Product has not received Regulatory Approval prior to the effective date of termination, or (y) such royalty rate as was then being paid by Servier as of the time of such termination.

 

  

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(c)           Regulatory Materials; Data.  Other than termination on the basis of a public health and safety reason under Section 11.3, or termination by Servier on the basis of a material breach of the Agreement by XOMA under Section 11.4 (provided that in such case Servier, upon XOMA’s request, would agree to discuss in good faith such a transfer of such materials and approvals), or except where Servier can reasonably demonstrate that Commercializing the Product in the terminated country(ies) is detrimental to Servier’s sales in the non-terminated countries, effective only in the event of such termination Servier hereby transfers to XOMA, at XOMA’s costs, the Regulatory Materials, and Regulatory Approvals, and the related data relating to the Product in such terminated country.

 

(d)           Transition Assistance.  Promptly upon request by XOMA, but in no event commencing later than [*] days after the effective date of termination, Servier shall provide such assistance, at no cost to XOMA, as may be reasonably necessary or useful for XOMA to commence or continue Developing, Manufacturing or Commercializing the Product in the terminated country(ies), to the extent Servier is then performing or having performed such activities, including transferring or amending as appropriate, upon request of XOMA, any agreements or arrangements with Third Party vendors to Develop, Manufacture, distribute, sell or otherwise Commercialize the Product in such terminated country(ies).  To the extent that any such contract between Servier and a Third Party is not assignable to XOMA, Servier shall reasonably cooperate with XOMA to arrange to continue to provide such services for a reasonable time after termination.

 

(e)           Remaining Inventories.  If this Agreement is terminated in a given country, XOMA shall have the right, upon its request, to obtain from Servier, at cost, any or all of the inventory of Products (or components thereof) held by Servier as of the date of such termination (that are not committed to be supplied to any Third Party or sublicensee, in the ordinary course of business, as of the date of termination).  XOMA shall notify Servier within [*] days after the date of termination whether XOMA elects to exercise such right.

 

(f)           Assignment of Patents by Servier.  With respect to any or all of those XOMA Patents and Joint Invention Patents in the terminated countries, or in all countries if this Agreement is terminated in its entirety, that were assigned by XOMA to Servier under Section 9.3(b), upon XOMA’s request, Servier shall assign to XOMA (i) all of its right, title and interest in such XOMA Patents and (ii) a one-half interest in such Joint Invention Patents, in each case on commercially reasonable terms to be negotiated by the Parties in good faith upon such termination.

 

  

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(g)           Assignment of Patents by XOMA.  With respect to any or all of those Servier Patents and Joint Invention Patents in the terminated countries, or in all countries if this Agreement is terminated in its entirety, that were assigned by Servier to XOMA under Section 9.3(c), upon Servier’s request, XOMA shall assign to Servier (i) all of its right, title and interest in such Servier Patents and (ii) a one-half interest in such Joint Invention Patents, in each case on commercially reasonable terms to be negotiated by the Parties in good faith upon such termination.

 

11.7           Survival.  Termination or expiration of this Agreement shall not affect any rights or obligations of the Parties under this Agreement that have accrued prior to the date of termination or expiration.  Notwithstanding anything to the contrary, the following provisions shall survive any expiration or termination of this Agreement: Sections 6.9, 6.11, 7.3 (as and to the extent provided therein), 8.11, 8.13, 9.1, 10.1, 10.2, 10.3, 10.4, 10.6, 11.6, 11.7, 12.5, 15.4, 15.5, 15.7, 15.8, 15.9, 15.10, 15.11 and 15.12 and Articles 1, 13 and 14.

 

	
12.

	
REPRESENTATIONS AND WARRANTIES AND COVENANTS

 

12.1         Mutual Representations and Warranties.  Each Party hereby represents and warrants to the other Party as follows:

 

(a)           Corporate Existence.  As of the Effective Date, it is a company or corporation duly organized, validly existing, and in good standing, if applicable, under the Laws of the jurisdiction in which it is incorporated.

 

(b)           Corporate Power, Authority and Binding Agreement.  As of the Effective Date, (i) it has the corporate power and authority and the legal right to enter into this Agreement and perform its obligations hereunder; (ii) it has taken all necessary corporate action on its part required to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder; and (iii) this Agreement has been duly executed and delivered on behalf of such Party, and constitutes a legal, valid, and binding obligation of such Party that is enforceable against it in accordance with its terms.

 

12.2         Additional Representations and Warranties of XOMA.  XOMA represents and warrants to Servier that, as of the Effective Date:

 

(a)           Title; Encumbrances. It has sufficient legal and/or beneficial title, ownership or license, free and clear from any mortgages, pledges, liens, security interests, conditional and installment sale agreements, encumbrances, charges or claims of any kind, of the XOMA Technology to grant the licenses to Servier as purported to be granted pursuant to this Agreement.

 

(b)           Sufficiency.  The XOMA Background Patents are all of the Patents owned or Controlled by XOMA or its Affiliates as of the Effective Date that claim the composition, manufacture or use of a Licensed Antibody and/or Product.  To XOMA’s and its Affiliates’ knowledge,  none of the Development, Manufacture, or Commercialization of the Product as it exists as of the Effective Date, interferes with, infringes, misappropriates or otherwise violates any intellectual property rights of any Third Party in a manner that would reasonably result in a material adverse effect on the marketability of the Product.

 

  

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(c)           Pending or Threatened Proceedings.  To XOMA’s and its Affiliates’ knowledge, [*], there is no claim, investigation, suit, action or proceeding pending against XOMA or its Affiliates before or by any governmental entity or arbitrator that (i) relates to the Licensed Antibody and the XOMA Background Patents or (ii) prevents the execution of this Agreement.

 

(d)           Intellectual Property Proceedings.  To XOMA’s and its Affiliates’ knowledge, the XOMA Background Patents are valid and enforceable. Neither XOMA nor any of its Affiliates have received any written communication alleging that any of the XOMA Background Patents are unpatentable, invalid or unenforceable or are subject to interference, reexamination, reissue, revocation, opposition, appeal or other administrative proceeding.

 

(e)           Regulatory Data.  XOMA has disclosed or made available to Servier in writing (i) any and all study reports, data and information provided to any Regulatory Authority, and (ii) all filings and correspondence between XOMA and its Affiliates and any Regulatory Authority, in the case of both (i) and (ii) relating to the Licensed Antibody.

 

(f)           Due Diligence Data.  To XOMA’s and its Affiliates’ knowledge, [*], the documents containing the technical information and Know-How disclosed or made available to Servier prior to the Effective Date are true and accurate copies of what they purport to be in all material respects.  XOMA has made available to Servier all information in its (or its Affiliates’) possession or control relating to the Licensed Antibody and the Development, Manufacture and Commercialization of the Licensed Antibody or the Product, that XOMA believes, [*], is material to the marketability of the Product in the Licensed Territory.

 

(g)           Notice of Infringement or Misappropriation.  Neither XOMA nor its Affiliates have received any written notice from any Third Party asserting or alleging that any research or development of the Licensed Antibody or Licensed Product by XOMA or its Affiliates prior to the Effective Date infringed or misappropriated the intellectual property rights of such Third Party.

 

12.3         Additional Representations and Warranties of Servier.  Servier represents and warrants to XOMA that, as of the Effective Date, to Servier’s knowledge, it does not own or Control any Patents covering or claiming the manufacture, use, sale, offer for sale, or import of any Licensed Antibody.

 

12.4         Mutual Covenants.

 

(a)           No Debarment.  In the course of the Development of Products, neither Party nor its Affiliates shall use any employee or consultant who has been debarred by any Regulatory Authority, or, to such Party’s or its Affiliates’ knowledge, is the subject of debarment proceedings by a Regulatory Authority.  Each Party shall notify the other Party promptly upon becoming aware that any of its or its Affiliates’ employees or consultants has been debarred or is the subject of debarment proceedings by any Regulatory Authority.

 

(b)           Compliance.  Each Party and its Affiliates shall comply in all material respects with all applicable Laws in the Development, Manufacture and Commercialization of the Product and performance of its obligations under this Agreement.

 

  

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12.5         Disclaimer.  EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, NO REPRESENTATIONS OR WARRANTIES WHATSOEVER, WHETHER EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT, OR NON-MISAPPROPRIATION OF THIRD PARTY INTELLECTUAL PROPERTY RIGHTS, ARE MADE OR GIVEN BY OR ON BEHALF OF A PARTY, AND ALL REPRESENTATIONS AND WARRANTIES, WHETHER ARISING BY OPERATION OF LAW OR OTHERWISE, ARE HEREBY EXPRESSLY EXCLUDED.  Servier understands and acknowledges that the Products are the subject of ongoing clinical research and development and that XOMA cannot assure the safety or usefulness of any Product.

 

	
13.

	
INDEMNIFICATION AND LIMITATION OF LIABILITY

 

13.1         Indemnification by Servier.  Servier shall defend, indemnify, and hold XOMA and its Affiliates and their respective officers, directors, employees, and agents (the “XOMA Indemnitees”) harmless from any and all damages or other amounts payable to a Third Party claimant, as well as any reasonable attorneys’ fees and costs of litigation incurred by such XOMA Indemnitees, all to the extent resulting from claims, suits, proceedings or causes of action brought by such Third Party (“Claims”) against such XOMA Indemnitees that arise from or are based on: (a) the Development, Manufacture or Commercialization of the Product by or on behalf of Servier or its Affiliates or its or their sublicensees (excluding in all cases XOMA or its Affiliates) in the Licensed Territory; (b) the breach of any of Servier’s obligations under this Agreement, including Servier’s representations and warranties set forth herein; (c) the willful misconduct or gross negligence  of any Servier Indemnitee; or (d) the use by Servier in the Licensed Territory of pre-clinical and clinical data and information supplied by XOMA to Servier under Section 4.4(c), except in the case of XOMA’s fraud or willful misconduct (it being understood that Servier’s defense obligations shall remain in effect).  The foregoing indemnity obligation shall not apply to any Claim to the extent such Claim arises from or is based on any activity set forth in Section 13.2(b) or (c).

 

13.2         Indemnification by XOMA.  XOMA shall defend, indemnify, and hold Servier and its Affiliates and their respective officers, directors, employees, and agents (the “Servier Indemnitees”) harmless from and against any and all damages or other amounts payable to a Third Party claimant, as well as any reasonable attorneys’ fees and costs of litigation incurred by such Servier Indemnitees, all to the extent resulting from Claims against such Servier Indemnitees that arise from or are based on (a) the Development, Manufacture or Commercialization of the Product by or on behalf of XOMA or its Affiliates or its or their sublicensees (excluding in all cases Servier, its Affiliates or its sublicensees) in the Retained Territory ; (b) the breach of any of XOMA’s obligations under this Agreement, including XOMA’s representations and warranties set forth herein; (c) the willful misconduct or gross negligence  of any XOMA Indemnitee; or (d) the use by XOMA in the Retained Territory of pre-clinical and clinical data and information supplied by Servier to XOMA under Section 4.4(c), except in the case of Servier’s fraud or willful misconduct (it being understood that XOMA’s defense obligations shall remain in effect).  The foregoing indemnity obligation shall not apply to any Claim to the extent that such Claim arises from or is based on any activity set forth in Section 13.1(b) or (c).

 

13.3         Conditions to Indemnification.  The Party claiming indemnity under this Article 13 (the “Indemnified Party”) shall give written notice to the Party from whom indemnity is being sought (the “Indemnifying Party”) promptly after learning of such Claim, provided that the failure to promptly provide such notice shall not relieve the Indemnifying Party of any of its indemnification obligations hereunder except to the extent that the Indemnifying Party’s defense of the relevant Claim is prejudiced by such failure.  The Indemnified Party shall provide the Indemnifying Party with reasonable assistance, at the Indemnifying Party’s expense, in connection with the defense of the Claim for which indemnity is being sought.  The Indemnified Party may participate in and monitor such defense with counsel of its own choosing at its sole expense; provided, however, the Indemnifying Party shall have the right to assume and conduct the defense of the Claim with counsel of its choice.  The Indemnifying Party shall not settle any Claim without the prior written consent of the Indemnified Party, not to be unreasonably withheld, unless the settlement involves only the payment of money.  So long as the Indemnifying Party is actively defending the Claim in good faith, the Indemnified Party shall not settle or compromise any such Claim without the prior written consent of the Indemnifying Party.  If the Indemnifying Party does not assume and conduct the defense of the Claim as provided above, (a) the Indemnified Party may defend against, consent to the entry of any judgment, or enter into any settlement with respect to such Claim in any manner the Indemnified Party may deem reasonably appropriate (and the Indemnified Party need not consult with, or obtain any consent from, the Indemnifying Party in connection therewith), and (b) the Indemnifying Party shall remain responsible to indemnify the Indemnified Party as provided in this Article 13.

 

  

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13.4         Limitation of Liability.  NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, PUNITIVE, OR INDIRECT DAMAGES ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF THE POSSIBILITY OF SUCH DAMAGES.

 

13.5         Insurance.  Each Party shall procure and maintain insurance, including product liability insurance, with respect to its activities hereunder and which is consistent with normal business practices of prudent companies similarly situated at all times during which any Product is being clinically tested in human subjects or commercially distributed or sold.  Each Party shall provide the other Party with evidence of such insurance upon request and shall provide the other Party with written notice at least [*] days prior to the cancellation, non-renewal or material changes in such insurance.  It is understood that such insurance shall not be construed to create a limit of either Party’s liability with respect to its indemnification obligations under this Article 13.

 

	
14.

	
Dispute Resolution.

 

14.1         Disputes.  The Parties recognize that disputes as to certain matters may from time to time arise that relate to either Party’s rights and/or obligations hereunder.  It is the objective of the Parties to establish procedures to facilitate the resolution of disputes arising under this Agreement in an expedient manner by mutual cooperation and without resort to litigation.  To accomplish this objective, the Parties agree to follow the procedures set forth in this Article 14 to resolve any controversy or claim arising out of, relating to or in connection with any provision of this Agreement, if and when a dispute arises under this Agreement.

 

14.2         Internal Resolution; Mediation.  With respect to all disputes arising between the Parties under this Agreement, including, without limitation, any alleged breach under this Agreement or any issue relating to the interpretation or application of this Agreement, if the Parties are unable to resolve such dispute within [*] days after such dispute is first identified by either Party in writing to the other, the Parties shall refer such dispute to the Executive Officers (or their designees) for attempted resolution by good faith negotiations within [*] days after such notice is received, including at least one (1) in person meeting of the Executive Officers within [*] days after such notice is received.  If the Executive Officers of the Parties are not able to resolve such disputed matter within [*] days and either Party wishes to pursue the matter, the Parties agree to submit the disputed matter for non-binding mediation (with the understanding that the role of the mediator shall not be to render a decision but to assist the Parties in reaching a mutually acceptable resolution), using a mutually agreed upon mediator selected from [*], in [*], for a period of not more than [*] days.

 

  

66

  

 

14.3         Binding Arbitration.  If the Parties are unable to resolve a dispute relating to any alleged breach under this Agreement or any issue relating to the interpretation or application of this Agreement and such disputed matter is not resolved by non-binding mediation under Section 14.2 within [*] days and either Party wishes to pursue the matter, each such dispute, controversy or claim, subject to Section 14.4, shall be finally resolved by binding arbitration administered by the International Chamber of Commerce (“ICC”) pursuant to its Dispute Resolution Rules then in effect, and judgment on the arbitration award may be entered in any court having jurisdiction thereof.  The Parties agree that:

 

(a)           The arbitration shall be conducted by a panel of three persons experienced in the pharmaceutical business.  Within [*] days after initiation of arbitration, each Party shall select one person to act as arbitrator and the two Party-selected arbitrators shall select a third arbitrator within [*] days of their appointment.  If the arbitrators selected by the Parties are unable or fail to agree upon the third arbitrator, the third arbitrator shall be appointed by the ICC.  The place of arbitration shall be [*], and all proceedings and communications shall be in English.

 

(b)           Either Party may apply to the arbitrators for interim injunctive relief until the arbitration award is rendered or the controversy is otherwise resolved.  Either Party also may, without waiving any remedy under this Agreement, seek from any court having jurisdiction any injunctive or provisional relief necessary to protect the rights or property of that Party pending the arbitration award.  The arbitrators shall have no authority to award punitive or any other type of damages not measured by a Party’s compensatory damage.  Each Party shall bear its own costs and expenses and attorneys’ fees and an equal share of the arbitrators’ fees and any administrative fees of arbitration, unless the arbitrators determine that a Party has incurred unreasonable expense due to vexatious or bad faith position taken by the other Party, in which event, the arbitrators may make an award of all or any portion of such expenses so incurred.

 

(c)           Reasons for the arbitrators’ decisions should be complete and explicit, including reasonable determinations of law and fact.  The written reasons should also include the basis for any damages awarded and a statement of how the damages were calculated.  Such a written decision shall be rendered by the arbitrators following a full comprehensive hearing, no later than [*] months following the selection of the arbitrators under Section 14.3(a).

 

(d)           Except to the extent necessary to confirm an award or as may be required by applicable Laws, neither Party nor any arbitrator may disclose the existence, content, or results of an arbitration without the prior written consent of both Parties.  In no event shall an arbitration be initiated after the date when commencement of a legal or equitable proceeding based on the dispute, controversy or claim would be barred by the applicable statute of limitations.

 

  

67

  

 

14.4         Patent Disputes.  Notwithstanding Section 14.3, any dispute, controversy or claim relating to the scope, validity, enforceability or infringement of any Patent covering the manufacturing, use, importation, offer for sale or sale of a Product shall be submitted to a court of competent jurisdiction in the country in which such Patent was granted.

 

	
15.

	
MISCELLANEOUS

 

15.1         Entire Agreement; Amendments.  This Agreement, including the Exhibits hereto and the Supply Agreement, Quality Agreement, and Safety Data Exchange Agreement contemplated hereunder, and the Loan Agreement, sets forth the complete, final and exclusive agreement and all the covenants, promises, agreements, warranties, representations, conditions and understandings between the Parties hereto with respect to the subject matter hereof, and supersedes all prior agreements and understandings between the Parties with respect to the subject matter hereof.  There are no covenants, promises, agreements, warranties, representations, conditions or understandings, either oral or written, between the Parties other than as are set forth in this Agreement.  No subsequent alteration, amendment, change or addition to this Agreement shall be binding upon the Parties unless reduced to writing and signed by an authorized officer of each Party.

 

15.2         Rights in Bankruptcy.  All licenses granted under this Agreement by Servier or XOMA are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of rights to “intellectual property” as defined under Section 101(34A) of the U.S. Bankruptcy Code.  The Parties agree that the Parties, as licensees of such rights under this Agreement, shall retain and may fully exercise all of their rights and elections under the U.S. Bankruptcy Code.  The Parties further agree that, in the event of the commencement of a bankruptcy proceeding by or against either Party under the U.S. Bankruptcy Code, the Party hereto that is not a party to such proceeding shall be entitled to a complete duplicate of (or complete access to, as appropriate) any such intellectual property and all embodiments of such intellectual property (including all Information related to such intellectual property and rights of reference with respect to Regulatory Approvals), and same, if not already in their possession, shall be promptly delivered to them (a) upon any such commencement of a bankruptcy proceeding upon their written request therefore, unless the Party subject to such proceeding continues to perform all of its obligations under this Agreement, or (b) if not delivered or granted under (a) above, following the rejection of this Agreement by or on behalf of the Party subject to such proceeding upon written request therefore by the non-subject Party.

 

15.3         Force Majeure.  Each Party shall be excused from the performance of its obligations under this Agreement to the extent that such performance is prevented by force majeure (as defined below) and the nonperforming Party promptly provides notice of the prevention to the other Party.  Such excuse shall be continued so long as the condition constituting force majeure continues and the nonperforming Party takes reasonable efforts to remove the condition.  For purposes of this Agreement, “force majeure” shall include conditions beyond the control of the Parties, including an act of God, war, civil commotion, labor strike or lock-out, epidemic, failure or default of public utilities or common carriers, destruction of production facilities or materials by fire, earthquake, storm or like catastrophe.

 

  

68

  

 

15.4         Notices.  Any notices given under this Agreement shall be in writing, addressed to the Parties at the following addresses, and delivered by person, by facsimile (with receipt confirmation), or by FedEx or other reputable courier service.  Any such notice shall be deemed to have been given: (a) as of the day of personal delivery; (b) one (1) day after the date sent by facsimile service; or (c) on the day of successful delivery to the other Party confirmed by the courier service.  Unless otherwise specified in writing, the mailing addresses of the Parties shall be as described below.

 

 

	 	If to XOMA: 	XOMA Ireland Limited
	 	 	26 Upper Pembroke Street
	 	 	Dublin 2
	 	 	Ireland
	 	 	Attention: Company Secretary
	 	 	FAX: 353 1 637 3989
	 	 	 
	 	With copies (which shall not constitute notice) to:
	 	 	A & L Goodbody
	 	 	North Wall Quay
	 	 	IFSC
	 	 	Dublin 1
	 	 	Attention:  Seamus O’Croinin
	 	 	FAX:           353 1 649 2649
	 	 	 
	 	If to Servier:	LES LABORATOIRES SERVIER
	 	 	22 rue Garnier
	 	 	92200 Neuilly Sur Seine
	 	 	France
	 	 	Attention: Direction de la Coopération Scientifique
	 	 	FAX : +33.1.55.72.39.00

 

15.5         Assignment.  Neither Party may assign or transfer this Agreement or any rights or obligations hereunder without the prior written consent of the other, except that a Party may make such an assignment without the other Party’s consent to its Affiliates, including in connection with any re-domiciling of such Party or its Affiliates, or to a Third Party successor to substantially all of the business of such Party to which this Agreement relates (such Third Party, an “Acquiror”), whether in a merger, sale of stock, sale of assets or other transaction.  Any successor or assignee of rights and/or obligations permitted hereunder shall, in writing to the other Party, expressly assume performance of such rights and/or obligations.  Any permitted assignment shall be binding on the successors of the assigning Party.  Any assignment or attempted assignment by either Party in violation of the terms of this Section 15.5 shall be null, void and of no legal effect.

 

15.6         Performance by Affiliates.  Each Party may discharge any obligations and exercise any right hereunder through any of its Affiliates.  Each Party hereby guarantees the performance by its Affiliates of such Party’s obligations under this Agreement, and shall cause its Affiliates to comply with the provisions of this Agreement in connection with such performance.  Any breach by a Party’s Affiliate of any of such Party’s obligations under this Agreement shall be deemed a breach by such Party, and the other Party may proceed directly against such Party without any obligation to first proceed against such Party’s Affiliate.

 

  

69

  

 

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

 

15.8         Severability.  If any of the provisions of this Agreement are held to be invalid or unenforceable by any court of competent jurisdiction from which no appeal can be or is taken, the provision shall be considered severed from this Agreement and shall not serve to invalidate any remaining provisions hereof.  The Parties shall make a good faith effort to replace any invalid or unenforceable provision with a valid and enforceable one such that the objectives contemplated by the Parties when entering this Agreement may be realized.

 

15.9         No Waiver.  Any delay in enforcing a Party’s rights under this Agreement or any waiver as to a particular default or other matter shall not constitute a waiver of such Party’s rights to the future enforcement of its rights under this Agreement, excepting only as to an express written and signed waiver as to a particular matter for a particular period of time.

 

15.10       Independent Contractors.  Each Party shall act solely as an independent contractor, and nothing in this Agreement shall be construed to give either Party the power or authority to act for, bind, or commit the other Party in any way.  Nothing herein shall be construed to create the relationship of partners, principal and agent, or joint-venture partners between the Parties.

 

15.11       Governing Law.  Resolution of all disputes, controversies or claims arising out of, relating to or in connection with this Agreement or the performance, enforcement, breach or termination of this Agreement and any remedies relating thereto, shall be governed by and construed under the substantive laws of [*], without regard to conflicts of law rules.

 

15.12       Construction of this Agreement.  Except where the context otherwise requires, wherever used, the use of any gender shall be applicable to all genders, and the word “or” is used in the inclusive sense.  When used in this Agreement, “including” means “including without limitation”.  References to either Party include the successors and permitted assigns of that Party.  The headings of this Agreement are for convenience of reference only and in no way define, describe, extend or limit the scope or intent of this Agreement or the intent of any provision contained in this Agreement.  The Parties have each consulted counsel of their choice regarding this Agreement and have jointly prepared this Agreement, and, accordingly, no provisions of this Agreement shall be construed against either Party on the basis that the Party drafted this Agreement or any provision thereof.  If the terms of this Agreement conflict with the terms of any Exhibit, then the terms of this Agreement shall govern.  The official text of this Agreement and any Exhibits hereto, any notice given or accounts or statements required by this Agreement, and any dispute proceeding related to or arising hereunder, shall be in English.  In the event of any dispute concerning the construction or meaning of this Agreement, reference shall be made only to this Agreement as written in English and not to any other translation into any other language.

 

  

70

  

 

15.13       Privileges.  If a Party is entitled to attorney-client or attorney work product privileges from disclosure established under public policy provisions, such privileges shall apply and may be invoked by the other Party.

 

15.14      Counterparts.  This Agreement may be executed in two (2) or more counterparts, each of which shall be an original and all of which shall constitute together the same document.  Counterparts may be signed and delivered by facsimile, or electronically in PDF format, each of which shall be binding when sent.

 

[Signature page follows.]

 

  

71

  

 

In Witness Whereof, the Parties have executed this Agreement in duplicate originals by their proper officers as of the Amendment Effective Date.

	Les Laboratoires Servier  	XOMA Ireland Limited
	 	 
	 	 
	
By:

	
By:

	 	 
	
Name: [*]

	
Name: [*]

	 	 
	
Title: [*]

	
Title: [*]

	 	 
	 	 
	
By:

	  
	 	 
	
Name: [*]

	  
	 	 
	
Title: [*]

	  
	  	  
	 	 
	
Institut de Recherches Servier

	  
	 	 
	
By:

	  
	 	 
	
Name: [*]

	  
	 	 
	
Title:[*]

	  

  

 

  

 

	Exhibits	 
	 	 
	
Exhibit 1.94

	
Product Specifications

	
Exhibit 1.122

	
XOMA Background Patents as of Effective Date

	
Exhibit 1.125

	
XOMA Know-How as of Effective Date

	
Exhibit 3.3(a)

	
Initial Behçet’s Development Plan

	
Exhibit 3.3(b)

	
Initial Non Infectious Uveitis Development Plan

	
Exhibit 3.4(a)

	
Initial T2D Development Plan

	
Exhibit 3.6(a)

	
FTE Rates

	
Exhibit 6.2

	
Initial Manufacturing Plan

	
Exhibit 6.11

	
Safety Data Exchange Agreement

	
Exhibit 7.1(a)

	
Third Party Agreements

  

  

  

Exhibit 1.94

Product Specifications

[*]

  

  

  

Exhibit 1.122

XOMA Background Patents as of Amendment Effective Date

FAMILY 1

Title:                      IL1-BETA BINDING ANTIBODIES AND FRAGMENTS THEREOF

Inventors:                      Linda Masat; Mary Haak-Frendscho; Gang Chen; Arnold Horwitz; Marina Roell

	
COUNTRY

	
APP. NO.

	
FILE DATE

	
PATENT/PUBLICATION

	
US Provisional

	
60/692,830

	
06/21/05

	  
	
PCT

	
PCT/US06/024261

	
06/21/06

	
WO07/002261

	
US

	
11/472,813

	
06/21/2006

	
7,531,166

	
US

	
12/218,914

	
07/18/2008

	
7,582,742

	
US

	
12/463,741

	
05/11/2009

	
7,744,865

	
US

	
12/463,844

	
05/11/2009

	
7,744,866

	
US

	
12/464,006

	
05/11/2009

	
7,829,093

	
US

	
12/464,323

	
05/12/2009

	
7,988,968

	
US

	
12/464,381

	
05/12/2009

	
7,943,121

	
Australia

	
2006 262179

	
06/21/2006

	
AU2006262179 B2

	
Brazil

	
PI0612273-6

	
06/21/2006

	
BRPI0612273 A2

	
Canada

	
2,612,760

	
06/21/2006

	
CA2612760 A1

	
China

	
2006 80026551.9

	
06/21/2006

	
CN101228188 A

	
Europe:

	
06773749.4

	
06/21/2006

	
1899378

	
Austria

	
06773749.4

	
06/21/2006

	
1899378

	
Belgium

	
06773749.4

	
06/21/2006

	
1899378

	
Bulgaria

	
06773749.4

	
06/21/2006

	
1899378

	
Cyprus

	
06773749.4

	
06/21/2006

	
1899378

	
Czech Republic

	
06773749.4

	
06/21/2006

	
1899378

	
Denmark

	
06773749.4

	
06/21/2006

	
1899378

	
Estonia

	
06773749.4

	
06/21/2006

	
E004059

	
Finland

	
06773749.4

	
06/21/2006

	
1899378

	
France

	
06773749.4

	
06/21/2006

	
1899378

	
Germany

	
06773749.4

	
06/21/2006

	
60 2006 010 072.8-08

	
Greece

	
06773749.4

	
06/21/2006

	
1899378

	
Hungary

	
06773749.4

	
06/21/2006

	
E 007716

	
Iceland

	
06773749.4

	
06/21/2006

	
1899378

	
Ireland

	
06773749.4

	
06/21/2006

	
1899378

	
Italy

	
06773749.4

	
06/21/2006

	
73749BE/2009

	
Latvia

	
06773749.4

	
06/21/2006

	
1899378

	
Lithuania

	
06773749.4

	
06/21/2006

	
1899378

	
Luxembourg

	
06773749.4

	
06/21/2006

	
1899378

	
Monaco

	
06773749.4

	
06/21/2006

	
1899378

	
Netherlands

	
06773749.4

	
06/21/2006

	
1899378

	
Poland

	
06773749.4

	
06/21/2006

	
1899378

	
Portugal

	
06773749.4

	
06/21/2006

	
1899378

	
Romania

	
06773749.4

	
06/21/2006

	
1899378

	
Slovak Republic

	
06773749.4

	
06/21/2006

	
1899378

	
Slovenia

	
06773749.4

	
06/21/2006

	
1899378

	
Spain

	
06773749.4

	
06/21/2006

	
1899378

  

  

  

	
Sweden

	
06773749.4

	
06/21/2006

	
1899378

	
Switzerland

	
06773749.4

	
06/21/2006

	
1899378

	
Turkey

	
06773749.4

	
06/21/2006

	
TR 2009 09878 T4

	
United Kingdom

	
06773749.4

	
06/21/2006

	
1899378

	
Europe

	
09 174 190.0

	
10/27/2009

	
2163562 A2

	
Europe

	
10 179 088.9

	
09/23/2010

	
2314623 A1

	
Europe

	
10 179 089.7

	
09/23/2010

	
2322552 A2

	
Hong Kong

	
09100795.8

	
06/21/2006

	
1123560A

	
Hong Kong

	
10107181.2

	
07/27/2010

	
1140781A

	
Hong Kong

	
11111525.8

	
10/26/2011

	  
	
Hong Kong

	
11112428.4

	
11/27/2011

	  
	
Israel

	
188094

	
06/21/2006

	
188094

	
Israel

	
202630

	
12/09/2009

	
202630

	
India

	
320/CHENP/2008

	
06/21/2006

	  
	
Japan

	
2008-518374

	
06/21/2006

	
2008-543340

	
Korea

	
10-2008-7001520

	
06/21/2006

	
KR20080039875 A

	
Mexico

	
MX/a/2007/016032

	
06/21/2006

	
282003

	
Mexico

	
MX/a/2010/002638

	
03/08/2010

	  
	
New Zealand

	
565138

	
06/21/2006

	  
	
Philippines

	
1-2007-502895

	
06/21/2006

	  
	
Russian Federation

	
2008102135

	
06/21/2006

	
RU2008102135 A

	
Singapore

	
200718904-6

	
06/21/2006

	
140638

	
South Africa

	
2008/00555

	
06/21/2006

	
2008/00555

FAMILY 2

Title:                      METHODS FOR TREATMENT OF IL-1BETA RELATED DISEASES

Inventors:                      Alan M. Solinger; Patrick J. Scannon; Robert J. Bauer; David Alleva

	
COUNTRY

	
APP. NO.

	
FILE DATE

	
PATENT/PUBLICATION

	
US Provisional

	
60/871,046

	
12/20/06

	  
	
US Provisional

	
60/908,389

	
03/27/07

	  
	
US Provisional

	
60/911,033

	
04/10/07

	  
	
PCT

	
PCT/US07/088411

	
12/20/07

	
WO 08/077145

	
US

	
11/961,764

	
12/20/2007

	
7,695,718

	
US

	
12/710,842

	
02/23/2010

	
8,101,166

	
US

	
12/757,885

	
04/09/2010

	
2011-0038859-A1

	
Europe

	
07 869 675.4

	
12/20/2007

	
EP2094306 A2

	
Australia

	
2007333635

	
12/20/2007

	
AU2007333635 A1

	
Brazil

	
PI 0720928-2

	
12/20/2007

	  
	
Canada

	
2,673,592

	
12/20/2007

	  
	
China

	
200780051536.4

	
12/20/2007

	
CN 101616690A

	
Hong Kong

	
10102012.8

	
02/25/2010

	
1135323A

	
India

	
4626/DELNP/2009

	
12/20/2007

	  
	
Indonesia

	
W00 2009 01721

	
12/20/2007

	
050.2064A

	
Japan

	
2009-543229

	
12/20/2007

	
2010-514694

	
Mexico

	
MX/a/2009/006709

	
12/20/2007

	  
	
Russia

	
2009127066

	
12/20/2007

	  
	
South Africa

	
2009/04660

	
12/20/2007

	
2009/04660

  

  

  

FAMILY 3

	
Title:

	
METHODS FOR TREATMENT OF GOUT

	
Inventors:

	
Alan M. Solinger

	
COUNTRY

	
APP. NO.

	
FILE DATE

	
PATENT/PUBLICATION

	
US Provisional

	
61/015,633

	
12/20/2007

	  
	
US Provisional

	
61/059,378

	
06/06/2008

	  
	
US Provisional

	
61/095,191

	
09/08/2008

	  
	
PCT

	
PCT/US08/087519

	
12/18/2008

	
WO 2009/086003

	
Australia

	
2008343085

	
07/12/2010

	  
	
Canada

	
2,710,252

	
06/18/2010

	  
	
China

	
200880126879.7

	
08/13/2010

	  
	
Europe

	
08866346.3

	
12/18/2008

	
2 391 650 A1

	
Mexico

	
MX/a2010/006823

	
06/18/2019

	
293693

	
Russia

	
2010129783

	
07/20/2010

	  

FAMILY 4

Title:                      METHODS FOR THE TREATMENT OF RHEUMATOID ARTHRITIS Inventors: Alan M. Solinger, Alexander Owyang

	
COUNTRY

	
APP. NO.

	
FILE DATE

	
PATENT/PUBLICATION

	
US Provisional

	
61/059,711

	
06/05/08

	  
	
US Provisional

	
61/095,232

	
09/08/08

	  
	
PCT

	
PCT/US09/46441

	
12/06/2010

	
WO 2009/149370

	
Canada

	
2,727,171

	
12/06/2010

	  
	
Australia

	
2009256072

	
12/14/2010

	  
	
Europe

	
09759528.4

	
12/22/2010

	
2 293 816 A1

FAMILY 5

Title:                      METHODS FOR TREATING OR PREVENTING IL-1BETA RELATED DISEASES

Inventors:                      Patrick J. Scannon, Alan M. Solinger, Robert J. Bauer

	
COUNTRY

	
APP. NO.

	
FILE DATE

	
PATENT/PUBLICATION

	
US Provisional

	
61/094,842

	
09/05/08

	  
	
US Provisional

	
61/121,451

	
12/10/08

	  
	
PCT

	
PCT/US09/56086

	
09/04/2009

	
WO 2010/028275

	
US

	
13/062,457

	
03/04/2011

	  
	
Australia

	
2009289547

	
03/02/2011

	  
	
Canada

	
2,735,940

	
03/02/2011

	  
	
Europe

	
09 812 306.0

	
04/04/2011

	
2 341 936 A1

	
Japan

	
2011-526241

	
03/04/2011

	  

  

  

  

FAMILY 6

	
Title: 

	
METHODS FOR IMPROVEMENT OF BETA CELL FUNCTION

	
Inventors: 

	
Patrick J. Scannon, Alan M. Solinger, Robert J. Bauer

	
COUNTRY

	
APP. NO.

	
FILE DATE

	
PATENT/PUBLICATION

	
US Provisional

	
61/094,857

	
09/05/08

	  
	
US Provisional

	
61/121,486

	
12/10/08

	  
	
PCT

	
PCT/US09/56084

	
09/04/2009

	
WO 2010/028273

	
US

	
13/062,461

	
03/04/2011

	  
	
Australia

	
2009289545

	
03/03/2011

	  
	
Canada

	
2,735,939

	
03/02/2011

	  
	
Europe

	
09 812 304.5

	
04/04/2011

	
2 341 935 A1

	
Japan

	
2011-526240

	
03/04/2011

	  

FAMILY 7

	
Title:

	
CARDIOVASCULAR RELATED USES OF IL-1ΒETA ANTIBODIES AND BINDING FRAGMENTS THEREOF

	
Inventors: 

	
Patrick J. Scannon, Alan M. Solinger, Jeffrey D. Feldstein

	
COUNTRY

	
APP. NO.

	
FILE DATE

	
PATENT/PUBLICATION

	
US Provisional

	
61/182,679

	
05/29/09

	  
	
US Provisional

	
61/252,571

	
10/16/09

	  
	
US Provisional

	
61/313,001

	
03/11/10

	  
	
US

	
12/790,738

	
05/28/2010

	
2010-0316651-A1

	
PCT

	
PCT/US10/36761

	
05/28/2010

	
WO 2010/138939

	
Australia

	
2010253924

	
12/12/2011

	  
	
Brazil

	
PCT/US10/36761

	
11/29/2011

	  
	
Canada

	
2,763,161

	
11/22/2011

	  
	
China

	
PCT/US10/36761

	
01/20/2012

	  
	
Eurasia

	
201101643

	
12/15/2011

	  
	
Europe

	
10 781 360.2

	
12/20/2011

	  
	
Indonesia

	
W00 2011 04690

	
12/21/2011

	  
	
Israel

	
216660

	
11/28/2011

	  
	
India

	
9944/DELNP/2011

	
12/16/2011

	  
	
Japan

	
PCT/US10/36761

	
11/28/2011

	  
	
Korea

	
10-2011-7031198

	
12/27/2011

	  
	
Mexico

	
MX/a/2011/012666

	
12/28/2011

	  
	
New Zealand

	
597024

	
12/12/2011

	  
	
Philippines

	
1-2011-502479

	
11/28/2011

	  
	
Singapore

	
201108772-3

	
11/28/2011

	  
	
South Africa

	
2011/09050

	
12/08/2011

	  

  

  

  

FAMILY 8

RESERVED

FAMILY 9

	
Title:

	
METHODS FOR THE TREATMENT OF IL-1BETA RELATED CONDITIONS

	
Inventors: 

	
Alan M. Solinger, Ahmet Gül

 

	
COUNTRY

	
APP. NO.

	
FILE DATE

	
PATENT/PUBLICATION

	
US

	
61/332,658

	
05/07/2010

	  
	
US

	
61/334,125

	
05/12/2010

	  
	
PCT

	
PCT/US11/35646

	
05/06/2011

	
WO 2011/140522

XOMA Collaboration Patents as of Amendment Effective Date

[*]

  

  

  

Exhibit 1.125

XOMA Know-How as of Effective Date

[*]

  

  

  

Exhibit 3.3(a)

Initial Behçet’s Development Plan

[*]

  

  

  

Exhibit 3.3(b)

Non-Infectious Uveitis Development Plan

  

  

  

Exhibit 3.4(a)

Initial T2D Development Plan

  

  

  

Exhibit 3.6(a)

FTE Rates

	
2010 Budgeted Rates

	
Quality

	  	
$ [*]

	
Pilot Plant

	  	
$ [*]

	
Analytical Development

	  	
$ [*]

	
PAM

	  	
$ [*]

	
Manufacturing

	  	
$ [*]

	
Formulation Development

	  	
$ [*]

	
Materials Mgmt

	  	
$ [*]

	
Clinical Development

	  	
$ [*]

	
Regulatory Affairs

	  	
$ [*]

	
Bioanalytical Development

	  	
$ [*]

	
NonClinical Safety Evaluation

	  	
$ [*]

	
Pharmacokinetics

	  	
$ [*]

  

  

  

Exhibit 6.2

Initial Manufacturing Plan

[*]

  

  

  

Exhibit 6.11

Safety Data Exchange Agreement

  

  

  

Exhibit 7.1(a)

Third Party Agreements

	 	
· 

	
Non-Exclusive XOMA License Agreement by and between XOMA Corporation (the predecessor in interest of XOMA Ltd.) and Genentech, Inc., effective as of December 30, 1998.1

	 	
· 

	
[*]2

	 	
· 

	
License Agreement by and between the University of Zurich and XOMA (US) LLC, effective as of April 11, 2007.3

 

 

 

1 Assigned to XOMA Technology Ltd., pursuant to an Assignment and Assumption Agreement between XOMA Ltd. and XOMA Technology Ltd., effective as of May 31, 1999.

 

2 [*]

 

3 Assigned to XOMA Technology Ltd. Pursuant to an Assignment and Assumption Agreement between XOMA (US) LLC and XOMA Technology Ltd., effective as of December 30, 2010.ex10_43.htm

EXHIBIT 10.43

 

[*] indicates that a confidential portion of the text of this agreement has been omitted.

 

 

	  

LOAN AGREEMENT

 

 

Dated as of December 30, 2011

among

XOMA (US) LLC,

as Borrower,

 

XOMA LTD.,

as Parent,

 

and

 

Each Other Loan Party

From Time to Time Party Hereto

 

and

 

GENERAL ELECTRIC CAPITAL CORPORATION,

as Agent

 

and

 

Each Other Lender

From Time to Time Party Hereto

 

 

  

  

  

 

TABLE OF CONTENTS

 

	
1.

	 	DEFINITIONS	
1

	
2.

	 	LOANS AND TERMS OF PAYMENT	
1

	 	2.1	 	
Term Loan

	
1

	 	2.2	 	
Interest and Repayment

	
2

	 	2.3	 	
Prepayments

	
5

	 	2.4	 	
Late Fees

	
8

	 	2.5	 	
Default Rate

	
8

	 	2.6	 	
Lender Fees

	
8

	
 

	2.7	 	
Maximum Lawful Rate

	
9

	
 

	2.8	 	
Authorization and Issuance of the Warrants

	
9

	
3.

	 	[RESERVED]	
9

	
4.

	 	CONDITIONS OF CREDIT EXTENSIONS	
9

	 	4.1	 	
Conditions Precedent to Term Loan

	
9

	
5.

	 	REPRESENTATIONS AND WARRANTIES OF LOAN PARTIES	
12

	 	5.1	 	
Due Organization and Authorization

	
12

	 	5.2	 	
Required Consents

	
12

	 	5.3	 	
No Conflicts

	
13

	 	5.4	 	
Litigation

	
13

	 	5.5	 	
Financial Statements

	
14

	 	5.6	 	
Use of Proceeds; Margin Stock

	
14

	 	5.7	 	
Collateral

	
14

	 	5.8	 	
Compliance with Laws

	
15

	 	5.9	 	
Intellectual Property

	
15

	 	5.10	 	
Solvency

	
16

	 	5.11	 	
Taxes; Pension

	
16

	 	5.12	 	
Full Disclosure

	
16

	 	5.13	 	
Regulatory Compliance

	
17

	 	5.14	 	
Environmental Matters

	
19

	
6.

	 	AFFIRMATIVE COVENANTS 	
20

	 	6.1	 	Good Standing	20

 

  

  

  

 

	 	6.2	 	
Notice to Agent and the Lenders

	
21

	 	6.3	 	
Financial Statements

	
22

	 	6.4	 	
Insurance

	
22

	 	6.5	 	
Taxes

	
23

	 	6.6	 	
Agreement with Landlord/Bailee

	
23

	 	6.7	 	
Real Property

	
23

	 	6.8	 	
Protection of Intellectual Property

	
23

	 	6.9	 	
Special Collateral Covenants

	
24

	 	6.10	 	
Further Assurances

	
26

	 	6.11	 	
Compliance with Law

	
26

	 	6.12	 	
Environmental Matters

	
26

	
7.

	 	NEGATIVE COVENANTS	
27

	 	7.1	 	
Liens

	
27

	 	7.2	 	
Indebtedness

	
28

	 	7.3	 	
Dispositions

	
31

	 	7.4	 	
Change in Name, Location or Executive Office; Change in Business; Change in Fiscal Year

	
32

	 	7.5	 	
Mergers or Acquisitions

	
32

	 	7.6	 	
Restricted Payments

	
32

	 	7.7	 	
Investments

	
33

	 	7.8	 	
Transactions with Affiliates

	
34

	 	7.9	 	
Compliance

	
35

	 	7.10	 	
Deposit Accounts and Securities Accounts

	
35

	 	7.11	 	
Amendments to Other Agreements

	
36

	
8.

	 	DEFAULT AND REMEDIES	
36

	 	8.1	 	
Events of Default

	
36

	 	8.2	 	
Lender Remedies

	
38

	 	8.3	 	
Application of Proceeds

	
38

	
9.

	 	THE AGENT	
39

	 	9.1	 	
Appointment of Agent

	
39

	 	9.2	 	
Agent’s Reliance, Etc

	
40

	 	9.3	 	
GECC and Affiliates

	
41

	 	9.4	 	
Lender Credit Decision

	
41

	 	9.5	 	
Indemnification

	
41

 

  

  

  

 

	 	9.6	 	
Successor Agent

	
41

	 	9.7	 	
Setoff and Sharing of Payments

	
42

	 	9.8	 	
Advances; Payments; Non-Funding Lenders; Information; Actions in Concert

	
42

	
10.

	 	MISCELLANEOUS	
44

	 	10.1	 	
Assignment

	
44

	 	10.2	 	
Notices

	
45

	 	10.3	 	
Process Agent

	
45

	 	10.4	 	
Correction of Transaction Documents

	
46

	 	10.5	 	
Performance

	
46

	 	10.6	 	
Payment of Fees and Expenses

	
46

	 	10.7	 	
Indemnity Provisions

	
46

	 	10.8	 	
Rights Cumulative

	
47

	 	10.9	 	
Entire Agreement; Amendments, Waivers

	
48

	 	10.10	 	
Binding Effect

	
49

	 	10.11	 	
Use of Logo

	
49

	 	10.12	 	
Waiver of Jury Trial

	
49

	 	10.13	 	
Governing Law and Jurisdiction.

	
50

	 	10.14	 	
Confidentiality

	
50

	 	10.15	 	
USA Patriot Act

	
51

	 	10.16	 	
Counterparts

	
51

  

  

  

 

LOAN AGREEMENT

 

THIS LOAN AGREEMENT, dated as of December 30, 2011 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, this “Agreement”) is among GENERAL ELECTRIC CAPITAL CORPORATION (“GECC”), in its capacity as agent for Lenders (as defined below) (together with its successors and assigns in such capacity, “Agent”), the financial institutions who are or hereafter become parties to this Agreement as lenders (together with GECC, collectively the “Lenders”, and each individually, a “Lender”), XOMA (US) LLC, a Delaware limited liability company (“Borrower”), XOMA Ltd., a Bermuda exempted company and as such entity may be discontinued from Bermuda pursuant to Sections 132G and 132H of the Companies Act of 1981 of Bermuda and converted to a Delaware corporation pursuant to Section 388 of the Delaware General Corporation Law (“Parent”) and the other entities or persons, if any, who are or hereafter become parties to this Agreement as guarantors (together with Parent, each a “Guarantor” and collectively, the “Guarantors”, and together with Borrower, each a “Loan Party” and collectively, the “Loan Parties”).

 

RECITALS

 

Borrower wishes to borrow funds from Lenders, and Lenders desire to make a term loan, severally, but not jointly, to Borrower pursuant to the terms and conditions of this Agreement.

 

AGREEMENT

 

Each of the parties hereto agree as follows:

1.             DEFINITIONS.

 

As used in this Agreement, all capitalized terms shall have the definitions as provided herein.  Any accounting term used but not defined herein shall be construed in accordance with generally accepted accounting principles in the United States of America, as in effect from time to time (“GAAP”) and all calculations shall be made in accordance with GAAP.  The term “financial statements” shall include the accompanying notes and schedules.  All other terms used but not defined herein shall have the meaning given to such terms in the Uniform Commercial Code as adopted in the State of New York, as amended and supplemented from time to time (the “UCC”).

 

2.             LOANS AND TERMS OF PAYMENT.

 

2.1           Term Loan.

 

(a)           Commitment.  Subject to the terms and conditions hereof, each Lender, severally, but not jointly, agrees to make a term loan (the “Term Loan”) to Borrower on the Closing Date (as defined below) in an aggregate principal amount equal to such Lender’s commitment as identified on Schedule A hereto (such commitment of each Lender as it may be amended to reflect assignments made in accordance with this Agreement or terminated or reduced in accordance with this Agreement, its  “Commitment”, and the aggregate of all such commitments, the “Commitments”).  Notwithstanding the foregoing, the aggregate principal amount of the Term Loan made hereunder shall not exceed $10,000,000 (the “Total Commitment”).  Each Lender’s obligation to fund the Term Loan shall be limited to such Lender’s Pro Rata Share (as defined below) of the Term Loan.  As of the Closing Date, GECC shall be the only Lender, shall hold 100% of the Commitments and, subject to the terms and conditions hereof, will fund 100% of the Term Loan on the Closing Date.  After funding of the Term Loan all references in this Agreement to the Commitments shall mean the outstanding principal amount of the Term Loans.

 

  

  

  

 

(b)           [Reserved]

 

(c)           Funding of Term Loan.  Upon the terms and subject to the conditions set forth herein, each Lender, severally and not jointly, shall make available to Agent its Pro Rata Share of the requested Term Loan, in lawful money of the United States of America in immediately available funds, to the Collection Account (as defined below) prior to 11:00 a.m. (New York time) on the Closing Date.  Agent shall, unless it shall have determined that one of the conditions set forth in Section 4.1 has not been satisfied, by 4:00 p.m. (New York time) on such day, credit the amounts received by it in like funds (net of any amounts due and payable to Agent) to Borrower by wire transfer to, unless otherwise specified in a Disbursement Letter (as defined below), the following deposit account of Borrower (or such other deposit account as specified in writing by an authorized officer of Borrower and acceptable to Agent):

 

Bank Name: Wells Fargo Bank

Bank Address: One Kaiser Plaza, Suite 850

Oakland, CA 94612

ABA#: 121000248

Account #: 4375-679073

Beneficiary Name: XOMA (US) LLC

Ref: XOMA (US) LLC

(d)           Notes.  The Term Loan made by each Lender shall be evidenced by this Agreement, and if requested by a Lender, a promissory note substantially in the form of Exhibit A hereto (each a “Note” and, collectively, the “Notes”).

 

(e)           Agent May Assume Funding.  Unless Agent shall have received notice from a Lender prior to the date of any particular Term Loan that such Lender will not make available to Agent such Lender’s Pro Rata Share of the Term Loan, Agent may assume that such Lender has made such amount available to it on the date of the Term Loan in accordance with subsection (c) of this Section 2.1, and may (but shall not be obligated to), in reliance upon such assumption, make available a corresponding amount for the account of Borrower on such date.  If and to the extent that such Lender shall not have so made such amount available to Agent, such Lender and Borrower severally agree to repay to Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the day such amount is made available to Borrower until the day such amount is repaid to Agent, at (i) in the case of Borrower, a rate per annum equal to the interest rate applicable thereto pursuant to Section 2.2(a), and (ii) in the case of such Lender, a floating rate per annum equal to, for each day from the day such amount is made available to Borrower until such amount is reimbursed to Agent, the weighted average of the rates on overnight federal funds transactions among members of the Federal Reserve System, as determined by Agent in its sole discretion (the “Federal Funds Rate”) for the first Business Day and thereafter, at the interest rate applicable to the Term Loan.  If such Lender shall repay such corresponding amount to Agent, the amount so repaid shall constitute such Lender’s loan included in the Term Loan for purposes of this Agreement.

 

2.2           Interest and Repayment.

 

(a)           Interest.  The Term Loan shall accrue interest in arrears from the date made until the Term Loan is fully repaid at a fixed per annum rate of interest equal to 11.71%.  All computations of interest and fees calculated on a per annum basis shall be made by Agent on the basis of a 360-day year, in each case for the actual number of days occurring in the period for which such interest and fees are payable.  Each determination of an interest rate or the amount of a fee hereunder shall be made by Agent and shall be conclusive, binding and final for all purposes, absent manifest error.

 

  

2

  

 

(b)           Payments of Principal and Interest.

 

(i)             Interest Payments.  Borrower shall pay accrued interest to Agent, for the ratable benefit of the Lenders, in arrears on January 4, 2011 and on the first day of each calendar month occurring thereafter (including January 4, 2011, each, a “Scheduled Payment Date”).

 

(ii)            Principal Payments.  Borrower shall pay principal to Agent, for the ratable benefit of the Lenders, in forty-one (41) equal consecutive payments of $238,095.24 on each Scheduled Payment Date and one final payment, in an amount equal to the entire remaining principal balance of the Term Loan, on June 30, 2015.

 

(iii)           Payments Generally.  Notwithstanding the foregoing provisions of this Section 2.2(b), all unpaid principal and accrued interest and other outstanding Obligations with respect to the Term Loan is due and payable in full to Agent, for the ratable benefit of Lenders, on the earliest of (A) June 30, 2015 (the “Scheduled Maturity Date”), and (B) the date that the Term Loan otherwise becomes due and payable hereunder, whether by acceleration of the Obligations pursuant to Section 8.2 or otherwise (the earlier of (A) and (B), the “Term Loan Maturity Date”).  Each scheduled payment of interest or principal hereunder is referred to herein as a “Scheduled Payment.”  Without limiting the foregoing, all Obligations shall be due and payable on the Term Loan Maturity Date.  “Obligations” means the Term Loan and all other debt, monetary liabilities, obligations and liabilities of any kind whatsoever of Borrower or any other Loan Party to any one or more of the Agent, any Lender, or any other holder of Obligations arising under or in connection with the Transaction Documents irrespective of whether the debts, liabilities or obligations (1) are for principal, interest, fees, charges, losses, costs or expenses, prepayment of premiums, indemnities, reimbursements or other sums; (2) accrue after the filing of any petition in bankruptcy or after the commencement of any insolvency, reorganization or similar proceedings, and whether or not allowed in such case or proceeding; (3) are actual, prospective, contingent or otherwise; (4) are now existing or arising in the future; (5) are at any time ascertained or unascertained; (6) are owed or incurred by or on the account of any Loan Party alone, or severally or jointly with any other person; (7) are owed to or incurred for the account of Agent or any Lender alone, or severally or jointly with any other person; or (8) comprise any combination of the above.

 

(c)           No Reborrowing.  Once the Term Loan is repaid or prepaid, it cannot be reborrowed.

 

(d)           Payments.  All payments (including prepayments) to be made by any Loan Party under any Transaction Document shall be made by wire transfer or ACH transfer in immediately available funds (which shall be the exclusive means of payment hereunder) in U.S. dollars, without setoff or counterclaim to the Collection Account (as defined below) before 3:00 p.m. (New York time) on the date when due.  All payments received by Agent after 3:00 p.m. (New York time) on any Business Day or at any time on a day that is not a Business Day may, in Agent’s sole discretion, be deemed to be received on the next Business Day.  Whenever any payment required under this Agreement would otherwise be due on a date that is not a Business Day, such payment shall instead be due on the next Business Day, and additional fees or interest, as the case may be, shall accrue and be payable for the period of such extension.  As used herein, the term “Collection Account” means the following account of Agent (or such other account as Agent shall identify to Borrower in writing):

 

  

3

  

 

Bank Name: Deutsche Bank

Bank Address: New York, NY

ABA Number: 021 001 033

Account Number: 50271079

Account Name: GECC HH Cash Flow Collections

Ref: XOMA (US) LLC/CFN HFS2968

(e)           Withholdings and Increased Costs.  All payments shall be made free and clear of any taxes, withholdings, duties, impositions or other similar charges imposed by any governmental authority (collectively, “Taxes”) (other than (1) any Taxes imposed on or measured by net income or overall gross income or receipts, franchise Taxes, and branch profits or similar Taxes, in each case imposed as a result of any present or former connection between the Agent and/or the applicable Lender and the taxing jurisdiction (other than a connection arising solely from the Transaction Documents, including as a result of the Agent or such Lender having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, or engaged in any other transaction pursuant to, the Transaction Documents); (2) any U.S. federal withholding Tax imposed on amounts payable to or for the account of any Lender pursuant to any Requirement of Law in effect on the date on which such Lender acquires its applicable interest in the Term Loan (or changes its lending office), except to the extent that such Lender (or Lender’s assignor, if any) was entitled, immediately prior to such change in lending office (or assignment), to additional amounts in respect of such withholding tax and (3) any U.S. federal withholding tax imposed pursuant to Section 1471 through 1474 of the Internal Revenue Code of 1986, as amended, and any amended or successor version that is substantially comparable (collectively, “Excluded Taxes”), such that Agent and Lenders will receive the entire amount of any Obligations (net only of Excluded Taxes), regardless of source of payment.  If Agent or any Lender shall have reasonably determined that the introduction of or any change in, after the date hereof, any law, treaty, governmental (or quasi-governmental) rule, regulation, guideline or order (other than with respect to (1) any Taxes imposed on or with respect to any payment under any Transaction Documents or (2) any Excluded Taxes) reduces the rate of return on Agent or such Lender’s capital as a consequence of its obligations hereunder or increases the cost to Agent or such Lender of agreeing to make or making, funding or maintaining the Term Loan, then Borrower shall from time to time upon demand by Agent or such Lender (with a copy of such demand to Agent) promptly pay to Agent for its own account or for the account of such Lender, as the case may be, additional amounts sufficient to compensate Agent or such Lender for such reduction or for such increased cost.  A certificate as to the amount of such reduction or such increased cost submitted by Agent or such Lender (with a copy to Agent) to Borrower shall be conclusive and binding on Borrower, absent manifest error, provided that, neither Agent nor any Lender shall be entitled to payment of any amounts under this Section 2.2(e) unless it has delivered such certificate to Borrower within 180 days after the occurrence of the changes or events giving rise to the increased costs to, or reduction in the amounts received by, Agent or such Lender; provided further that notwithstanding anything herein to the contrary, (a) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (b) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case of this clause (b) pursuant to Basel III, shall in each case be deemed to be introduced or changed after the date hereof, regardless of the date enacted, adopted or issued.  This provision shall survive the termination of this Agreement.  Any Lender claiming any additional amounts payable pursuant to this Section 2.2(e) shall use its reasonable efforts (consistent with its internal policies and Requirements of Law (as defined below)) to designate a different lending office for funding or booking the Commitments and Term Loans if, in the sole judgment of such Lender, such designation would reduce any such additional amounts (or any similar amount that may thereafter accrue) in the future, would not subject such Lender to any unreimbursed cost or expense and would not be otherwise disadvantageous to such Lender.  Borrower hereby agrees to pay all costs and expenses incurred by any Lender in connection with such designation.

 

  

4

  

 

(f)            Loan Records.  Each Lender shall maintain in accordance with its usual practice accounts evidencing the Obligations of Borrower to such Lender resulting from such Lender’s Pro Rata Share of the Term Loan, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement.  Agent shall maintain in accordance with its usual practice a register on its books to record the Term Loan and any other extensions of credit made by Lenders hereunder, and all payments thereon made by Borrower.  The entries made in such register shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the Obligations recorded therein; provided, however, that no error in such register and no failure of any Lender or Agent to maintain any such register shall affect the obligations of Borrower to repay the Obligations in accordance with their terms.  The parties shall treat the registered Lender as the Lender for all purposes of this Agreement, notwithstanding any notice to the contrary.

 

2.3           Prepayments.

 

(a)            Voluntary Prepayments.  Borrower may voluntarily prepay, upon five (5) Business Days’ prior written notice to Agent (which notice may be conditioned upon the closing of a related acquisition or refinancing transaction), the Term Loan in full, but not in part.

 

(b)           Mandatory Prepayments.

 

(i)            If any Loan Party shall at any time or from time to time make or agree to make a Transfer pursuant to Section 7.3(b), and the aggregate amount of net proceeds received by the Loan Parties and their Subsidiaries in connection with such Transfer and all other Transfers occurring during such fiscal year exceeds $100,000, then (i) Borrower shall promptly notify Agent of such proposed Transfer (including the amount of estimated net proceeds to be received by a Loan Party and/or such Subsidiary in respect thereof) and (ii) promptly upon receipt by a Loan Party and/or such Subsidiary of such net proceeds of such Transfer, the Borrower shall deliver, or cause to be delivered, such net proceeds to Agent as a prepayment of the Term Loan (unless otherwise waived in writing by the Requisite Lenders), which prepayment shall be applied to the remaining installments of the Term Loan in inverse order of maturity.  Notwithstanding the foregoing and provided no Default or Event of Default has occurred and is continuing, such prepayment shall not be required to the extent a Loan Party or such Subsidiary reinvests such net proceeds of such Transfer in productive assets (other than inventory) of a kind then used or usable in the business of the Loan Parties or such Subsidiary, within ninety (90) days after the date of such Transfer; provided that the Borrower notifies Agent of such Loan Party’s or such Subsidiary’s intent to reinvest and of the completion of such reinvestment at the time such proceeds are received and when such reinvestment occurs, respectively.

 

  

5

  

 

(ii)           If any Loan Party or any of its Subsidiaries shall at any time or from time to time (x) make or agree to make an exclusive license for the use of any Loan Party’s or its Subsidiaries’ Intellectual Property (other than (1) the XMET Intellectual Property (as defined below), (2) pursuant to the [*] Disposition or (3) licenses that could not result in a legal transfer of title of the licensed property but that are exclusive in respects other than territory or that are exclusive as to territory only as to discreet geographical areas outside of the United States), or (y) grant any negative pledges on any Intellectual Property or any of its other assets permitted under clause (e) of the second sentence of Section 7.1, then simultaneously with such license becoming effective or such negative pledge being granted, as the case may be, unless otherwise waived in writing by the Lenders, the Borrower shall either (A) prepay the Term Loan and all other Obligations in full or (B) have deposited cash collateral for the Obligations in an amount equal to the then outstanding principal balance of the Term Loan in a deposit account under the full dominion and control of the Agent pursuant to a cash collateral agreement in form and substance satisfactory to the Agent.  If any Loan Party or any of its Subsidiaries shall at any time or from time to time create, incur, assume or permit to exist any Lien on any Intellectual Property or any of its other assets permitted under clause (g) of the first sentence of Section 7.1, then simultaneously with such Lien being created, incurred, assumed or permitted to exist, the Borrower shall prepay the Term Loan and all other Obligations in full unless the Lenders shall have waived such prepayment in writing.

 

(iii)           If any Loan Party or any of its Subsidiaries shall at any time or from time to time (x) make or agree to make an exclusive license for the use of any XMET Intellectual Property (other than licenses that could not result in a legal transfer of title of the licensed property but that are exclusive in respects other than territory or that are exclusive as to territory only as to discreet geographical areas outside of the United States), or (y) grant any Liens on any XMET Assets permitted under clause (i) of the first sentence of Section 7.1 or any negative pledges on any XMET Assets permitted under clause (g) of the second sentence of Section 7.1, then simultaneously with such license becoming effective or such Lien or negative pledge being granted, as the case may be, unless otherwise waived in writing by the Lenders, the Borrower shall prepay the Term Loan in an amount equal to the amount set forth in the table below opposite the month in which such license becomes effective or such Lien or negative pledge is granted.  “XMET Assets” means (A) the XMET Intellectual Property, (B) all statistical data and regulatory filings solely related to the insulin receptor antibodies which form the Loan Parties’ “XMet” program and (C) all raw materials and inventory created, developed, acquired or manufactured solely with respect to the insulin receptor antibodies which form the Loan Parties’ “XMet” program (1) on or prior to entering into an XMET License Agreement, or (2) thereafter with funding from third parties pursuant to the XMET License Agreement.  “XMET Intellectual Property” means any Intellectual Property related to the insulin receptor antibodies which form the Loan Parties’ “XMet” program.  “XMET License Agreement” means an agreement between one or more Loan Parties and a third party collaboration partner containing a license permitted under Section 7.3(c) with respect to the XMET Intellectual Property.

 

  

6

  

	
Month

	
Prepayment Amount

	
December 2011

	
$2,500,000.00

	
January 2012

	
$2,440,476.19

	
February 2012

	
$2,380,952.38

	
March 2012

	
$2,321,428.57

	
April 2012

	
$2,261,904.76

	
May 2012

	
$2,202,380.95

	
June 2012

	
$2,142,857.14

	
July 2012

	
$2,083,333.33

	
August 2012

	
$2,023,809.52

	
September 2012

	
$1,964,285.71

	
October 2012

	
$1,904,761.90

	
November 2012

	
$1,845,238.10

	
December 2012

	
$1,785,714.29

	
January 2013

	
$1,726,190.48

	
February 2013

	
$1,666,666.67

	
March 2013

	
$1,607,142.86

	
April 2013

	
$1,547,619.05

	
May 2013

	
$1,488,095.24

	
June 2013

	
$1,428,571.43

	
July 2013

	
$1,369,047.62

	
August 2013

	
$1,309,523.81

	
September 2013

	
$1,250,000.00

	
October 2013

	
$1,190,476.19

	
November 2013

	
$1,130,952.38

	
December 2013

	
$1,071,428.57

	
January 2014

	
$1,011,904.76

	
February 2014

	
$952,380.95

	
March 2014

	
$892,857.14

	
April 2014

	
$833,333.33

	
May 2014

	
$773,809.52

	
June 2014

	
$714,285.71

	
July 2014

	
$654,761.90

	
August 2014

	
$595,238.10

	
September 2014

	
$535,714.29

	
October 2014

	
$476,190.48

	
November 2014

	
$416,666.67

	
December 2014

	
$357,142.86

	
January 2015

	
$297,619.05

	
February 2015

	
$238,095.24

	
March 2015

	
$178,571.43

	
April 2015

	
$119,047.62

	
May 2015

	
$59,523.81

	
June 2015

	
$0.00

(c)           Prepayment Obligation.  Upon the date of any prepayment of the Term Loan permitted or required under this Agreement, Borrower shall pay to Agent, for the ratable benefit of the Lenders, a sum equal to (i) the outstanding principal amount of the Term Loan being prepaid and all accrued interest thereon, plus (ii) to the extent that the Term Loan is prepaid in full, the Final Payment Fee, plus (iii) subject to the final sentence of this clause (c), the Prepayment Premium as yield maintenance for the loss of a bargain and not as a penalty.   The “Prepayment Premium” shall mean, with respect to any Term Loan being prepaid, an amount equal to (A) 3% of the principal amount of such Term Loan being prepaid, if such prepayment is made on or before the one year anniversary of the Term Loan, (B) 2% of the principal amount of such Term Loan being prepaid, if such prepayment is made after the one year anniversary of the Term Loan but on or before the two year anniversary of the Term Loan, and (C) 1% of the principal amount of such Term Loan being prepaid, if such prepayment is made after the two year anniversary of the Term Loan but before the Scheduled Maturity Date.

 

  

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Notwithstanding the foregoing, the Borrower shall not be required to pay the Prepayment Premium in connection with any prepayment of the Term Loan under the following circumstances:

 

(x)            the prepayment of the Term Loan is required under clause (b) above; or

 

(y)           (i) any Loan Party desires to incur Indebtedness in connection with a bona fide corporate collaboration in the ordinary course of business and consistent with past practice, (ii) no Default or Event of Default has occurred and is continuing, and (iii) the incurrence of such Indebtedness is approved by the board of directors of the applicable Loan Party, but such Indebtedness does not otherwise satisfy the requirements of Section 7.2(i) and the Requisite Lenders do not approve the incurrence of such Indebtedness within fifteen (15) Business Days (or such shorter period of time as Agent shall agree) after receipt by Agent of a written request for such consent, together with a reasonably detailed description of such Indebtedness and copies of such documents related thereto as Agent shall request, then within thirty (30) days after the Requisite Lenders reject such incurrence of Indebtedness and upon three (3) Business Days’ prior written notice to Agent.

 

2.4           Late Fees.  If Agent does not receive any Scheduled Payment or other payment under any Transaction Document from any Loan Party within five (5) days after its due date, then, at Agent’s election, such Loan Party agrees to pay to Agent for the ratable benefit of all Lenders, a late fee equal to (a) 5.0% of the amount of such unpaid payment or (b) such lesser amount that, if paid, would not cause the interest and fees paid by such Loan Party under this Agreement to exceed the Maximum Lawful Rate (as defined below) (the “Late Fee”).

 

2.5           Default Rate.  The Term Loan and other Obligations shall bear interest, at the election of Agent or the Requisite Lenders (as defined below) (or automatically while any Event of Default (as defined below) under Section 8.1(g) exists), from and after the occurrence and during the continuation of an Event of Default, at a rate equal to the lesser of (a) 5.0% above the rate of interest applicable to such Obligations as set forth in Section 2.2(a) immediately prior to the occurrence of the Event of Default and (b) the Maximum Lawful Rate (the “Default Rate”).  The application of the Default Rate shall not be interpreted or deemed to extend any cure period or waive any Default or Event of Default or otherwise limit Agent’s or any Lender’s right or remedies hereunder.  All interest payable at the Default Rate shall be payable on demand.

 

2.6           Lender Fees.

 

(a)           Closing Fee.  On the Closing Date, Borrower shall pay to Agent, for the benefit of Lenders in accordance with their Pro Rata Shares, a non-refundable closing fee in an amount equal to $100,000, which fee shall be fully earned when paid.

 

(b)           Final Payment Fee. On the date upon which the outstanding principal amount of the Term Loan is repaid in full, or if earlier, is required to be repaid in full (whether by scheduled payment, voluntary prepayment, acceleration of the Obligations pursuant to Section 8.2 or otherwise), Borrower shall pay to Agent, for the ratable accounts of Lenders, a fee equal to 5% of the original principal amount of the Term Loan (the “Final Payment Fee”), which Final Payment Fee shall be deemed to be fully-earned on the date the Term Loan is made.

 

  

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2.7           Maximum Lawful Rate.  Anything herein, any Note or any other Transaction Document (as defined below) to the contrary notwithstanding, the obligations of Loan Parties hereunder and thereunder shall be subject to the limitation that payments of interest shall not be required, for any period for which interest is computed hereunder, to the extent (but only to the extent) that contracting for or receiving such payment by Agent and Lenders would be contrary to the provisions of any law applicable to Agent and Lenders limiting the highest rate of interest which may be lawfully contracted for, charged or received by Agent and Lenders, and in such event Loan Parties shall pay Agent and Lenders interest at the highest rate permitted by applicable law (“Maximum Lawful Rate”); provided, however, that if at any time thereafter the rate of interest payable hereunder or thereunder is less than the Maximum Lawful Rate, Loan Parties shall continue to pay interest hereunder at the Maximum Lawful Rate until such time as the total interest received by Agent and Lenders is equal to the total interest that would have been received had the interest payable hereunder been (but for the operation of this paragraph) the interest rate payable since the making of the Term Loan as otherwise provided in this Agreement, any Note or any other Transaction Document.

 

2.8           Authorization and Issuance of the Warrants.  Parent has duly authorized the issuance to Lenders (or their respective affiliates or designees) of stock purchase warrants substantially in the form of the warrant attached hereto as Exhibit E (collectively, the “Warrants”) evidencing Lenders’ (or their respective affiliates or designees) right to acquire their respective Pro Rata Share of up to 263,158 common shares of Parent at an exercise price of $1.14 per share.  The exercise period shall expire five (5) years from the date such Warrants are issued.

 

3.            [RESERVED].

 

4.            CONDITIONS OF CREDIT EXTENSIONS

 

4.1           Conditions Precedent to Term Loan.  No Lender shall be obligated to make its Pro Rata Share of the Term Loan, or to take, fulfill, or perform any other action hereunder, until (i) the following have been delivered to Agent (the date on which the Lenders make the Term Loan after all such conditions shall have been satisfied in a manner satisfactory to Agent and the Lenders or waived in accordance with this Agreement, the “Closing Date”):

 

(a)           a counterpart of this Agreement duly executed by each Loan Party, each Lender and Agent;

 

(b)           a certificate executed by the Secretary of Borrower, the form of which is attached hereto as Exhibit B-1 (the “US Secretary’s Certificate”), providing verification of incumbency and attaching (i) such Loan Party’s board resolutions approving the transactions contemplated by this Agreement and the other Transaction Documents and (ii) such Loan Party’s governing or constituent documents;

 

(c)           a certificate executed by a Director of XOMA Ireland Limited, an Irish private limited company (“XOMA Ireland”), the form of which is attached hereto as Exhibit B-2 (each and collectively, the “Irish Director’s Certificate”), providing certain verifications and certificates and attaching (i) such Loan Party’s board resolutions approving the transactions contemplated by this Agreement and the other Transaction Documents and (if applicable) powers of attorney under which such documents are signed and (ii) such Loan Party’s governing or constituent documents;

 

(d)           a certificate executed by the Secretary or a Director of each of Parent and XOMA Technology Ltd., a Bermuda exempted company (“XOMA Technology”, together with Parent, the “Bermuda Entities”), the form of which is attached hereto as Exhibit B-3 (each and collectively, the “Bermuda Secretary’s Certificate”, and together with the US Secretary’s Certificate and the Irish Director’s Certificate, the “Secretary Certificates”), providing certain verifications and certificates and attaching (i) such Loan Party’s board resolutions approving the transactions contemplated by this Agreement and the other Transaction Documents and (if applicable) powers of attorney under which such documents are signed and (ii) such Loan Party’s governing or constituent documents;

 

  

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(e)           copies of UCC financing statements, other public notice filings, collateral assignments, and termination statements, with respect to the Collateral as Agent shall request (for the purposes of this Agreement, “Collateral” means any and all assets of any Loan Party now owned or hereafter acquired, upon which a Lien is purported to be created by any Transaction Document; provided, however that in no event shall a mortgage be required on the leasehold interests of Borrower under its leases with respect to the Space Lease Locations (as defined below in Section 6.13));

 

(f)            certificates of insurance evidencing the insurance coverage, and satisfactory additional insured and lender loss payable endorsements, in each case as required pursuant to Section 6.4 herein;

 

(g)           current lien, judgment, bankruptcy and tax lien search results (including equivalent Irish searches with respect to XOMA Ireland and Bermuda searches with respect to the Bermuda Entities) demonstrating that there are no other Liens (as defined below) on the Collateral, other than Permitted Liens (as defined below) and Liens being terminated on or prior to the Closing Date;

 

(h)           a Warrant in favor of each Lender (or its affiliate or designee);

 

(i)            a certificate of status/good standing/compliance of each Loan Party from the jurisdiction of such Loan Party’s organization (with respect to any jurisdiction outside of the United States, to the extent applicable) and a certificate of foreign qualification from each jurisdiction where such Loan Party’s failure to be so qualified could reasonably be expected to have a Material Adverse Effect (as defined below), in each case as of a recent date acceptable to Agent;

 

(j)            an Access Agreement (as defined below in Section 6.6) for any third party location other than the Space Lease Locations where any of the following are located: (i) any Loan Party’s principal place of business, (ii) any Loan Party’s books or records or (iii) Collateral with an aggregate value in excess of $400,000;

 

(k)           a mortgage, deed of trust or other document granting a Lien in favor of the Agent for the benefit of the Lenders as security for the Obligations (a “Mortgage”) over the real property owned by Parent located at 901 Heinz Ave., Berkeley, CA 94710, together with each document (including title policies or marked-up unconditional insurance binders (in each case, together with copies of all documents referred to therein), maps, ALTA (or TLTA, if applicable) as-built surveys (in form and as to date that is sufficiently acceptable to the title insurer issuing title insurance to the Agent for such title insurer to deliver endorsements to such title insurance as reasonably requested by the Agent), flood zone searches and/or certificates, zoning reports, environmental assessments and reports, environmental indemnity agreements, appraisals required to comply with the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended (“FIRREA”), and evidence regarding recording and payment of fees, insurance premiums and taxes) that the Agent may reasonably request, to create, register, perfect, maintain, evidence the existence, substance, form or validity of or enforce a valid lien on such real property in favor of the Agent as security for the Obligations, subject only to such Liens as the Agent may approve (all such documents referred to herein as “Mortgage Supporting Documents”);

 

  

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(l)            opinions of legal counsel, in form and substance satisfactory to Agent;

 

(m)          one or more completed perfection certificates from each Loan Party, duly executed by such Loan Party (each and collectively, the “Perfection Certificate”), a form of which Agent previously delivered to Borrower;

 

(n)           one or more Account Control Agreements (as defined below), in form and substance reasonably acceptable to Agent, duly executed by the applicable Loan Parties and the applicable depository or financial institution, for each deposit and securities account to the extent required pursuant to Section 7.10;

 

(o)           a guaranty, pledge and security agreement governed by New York law (the “US Security Agreement”), in form and substance satisfactory to Agent, executed by Parent and each of its Subsidiaries except XOMA Development Corporation, a Delaware corporation (“XOMA Development”), XOMA (Bermuda) Ltd., a Bermuda exempted company (“XOMA Bermuda”), XOMA CDRA LLC, XOMA LS Limited and XOMA Limited (UK);

 

(p)           a Debenture granted by each of the Bermuda Entities (the “Bermuda Debentures”) and a charge over the shares in XOMA Technology granted by the Parent (the “Bermuda Share Charge”) each governed by Bermuda law (the “Bermuda Security Agreements”), in form and substance satisfactory to Agent, executed by the Bermuda Entities;

 

(q)           (i) a Debenture granted by XOMA Ireland in favor of the Agent for the benefit of the Lenders (“Irish Debenture”), (ii) an Irish Share Charge granted by Parent dated on or about the Closing Date in favor of the Agent for the benefit of the Lenders (“Irish Charge”), (iii) an Irish Companies Registration Office Form C1 with respect to the Irish Debenture, (iv) an Irish Companies Registration Office Form C1 with respect to the US Security Agreement, (v) an Irish Companies Registration Office Form 8E with respect to the US Security Agreement (vi) an Irish Companies Registration Office Form 8E with respect to the Irish Charge, (vi) any document of title for any Collateral that is pledged, mortgaged or subject to a fixed charge under the Transaction Documents (including any stock or share certificate) and blank share transfers for any Irish Shares forming part of the Collateral, (vii) executed but undated letters of resignation from each of the directors, alternate directors and Secretary of XOMA Ireland, (viii) the share certificate which validly and correctly evidences Parent’s 100% shareholding in XOMA Ireland, executed under seal, in each case in form and substance satisfactory to Agent, executed by Parent and XOMA Ireland and (ix) all notices of assignment required to be served by the Company under the Irish Debenture together with all signed and dated acknowledgements to such notices of assignment;

 

(r)            all certificates representing all securities being pledged pursuant to the US Security Agreement and Bermuda Security Agreements together with related undated powers or endorsements duly executed in blank;

 

(s)           an amendment to the limited liability company agreement of Borrower, in form and substance acceptable to Agent;

 

(t)            a disbursement instruction letter, in form and substance satisfactory to Agent and the Lenders, executed by each Loan Party, Agent and each Lender (the “Disbursement Letter”);

 

  

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(u)           a Master Intercompany Promissory Note, in form and substance satisfactory to Agent and Lenders, executed by each Loan Party (the “Master Intercompany Note”) and endorsed to Agent; and

 

(v)           all other documents and instruments as Agent or any Lender may reasonably deem necessary or appropriate to effectuate the intent and purpose of this Agreement (together with the Agreement, the Notes, the Warrants, the Account Control Agreements, the Access Agreements, the Perfection Certificate, the Mortgage, the US Security Agreement, Irish Debenture, Irish Charge, Bermuda Security Agreements, the Secretary Certificates, the Disbursement Letter, and all other agreements, instruments, documents and certificates executed and/or delivered to or in favor of the Agent or any Lender from time to time in connection with this Agreement or the transactions contemplated hereby, the “Transaction Documents”);

 

(ii)           Agent and Lenders shall have received the fees required to be paid by Borrower, and Borrower shall have reimbursed Agent and Lenders for all of their fees, costs and expenses for which an invoice has been presented at least one Business Day prior to the Closing Date; and

 

(iii)           (a) all representations and warranties in Section 5 below shall be true as of the date of the Term Loan; (b) no Event of Default or any other event, which with the giving of notice or the passage of time, or both, would constitute an Event of Default (such event, a “Default”), has occurred and is continuing or would result from the making of the Term Loan; and (c) Agent shall have received a certificate from an authorized officer of each Loan Party confirming each of the foregoing.

 

5.            REPRESENTATIONS AND WARRANTIES OF LOAN PARTIES.

 

Each Loan Party, jointly and severally, represents, warrants and covenants to the Agent and each Lender that:

 

5.1           Due Organization and Authorization.  Each Loan Party’s exact legal name is as set forth in the Perfection Certificate and each Loan Party is, and will remain, duly organized, existing and in good standing under the laws of the jurisdiction of its organization (with respect to any jurisdiction outside of the United States, to the extent applicable) as specified in the Perfection Certificate (or, with respect to any Loan Party organized in a jurisdiction outside of the United States on the Closing Date which discontinues and relocates after the Closing Date to a jurisdiction within the United States pursuant to the Parent Redomestication or a Subsidiary Redomestication (as such terms are defined below in Section 7.4), under the laws of such new jurisdiction of organization, has its chief executive office at the location specified in the Perfection Certificate, and is, and will remain, duly qualified and licensed in every jurisdiction wherever necessary to carry on its business and operations, except where the failure to be so qualified and licensed could not reasonably be expected to have a Material Adverse Effect (defined below in Section 5.4).  This Agreement and the other Transaction Documents have been duly authorized, executed and delivered by each Loan Party and constitute legal, valid and binding agreements enforceable in accordance with their terms.  The execution, delivery and performance by each Loan Party of each Transaction Document executed or to be executed by it is in each case within such Loan Party’s powers.  As of the Closing Date, neither the [*] Subsidiary nor the [*] Subsidiary (each as defined below in Section 7.7) has been formed.

 

5.2           Required Consents.  No filing, registration, qualification with, or approval, consent or withholding of objections from, any governmental authority or instrumentality or any other entity or person is required with respect to the entry into, or performance by any Loan Party of, any of the Transaction Documents, except any obtained on or before the Closing Date (including but not limited to the Form C1 in the Irish Companies Registration Office in respect of the Irish Debenture and the Form 8E in the Irish Companies Registration Office in respect of the Irish Charge).

 

  

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5.3           No Conflicts.  The entry into, and performance by each Loan Party of, the Transaction Documents will not (a) violate any of the organizational documents of such Loan Party, (b) violate any material law, rule, regulation, order, award or judgment applicable to such Loan Party, or (c) result in any breach of or constitute a default under, or result in the creation of any lien, security interest, mortgage, charge, assignment, pledge, claim or encumbrance of any kind (any of the foregoing, a “Lien”) on any of such Loan Party’s property (except for Liens in favor of Agent, on behalf of itself and Lenders) pursuant to, any indenture, mortgage, deed of trust, bank loan, credit agreement, any agreement between any Loan Parties or Subsidiaries of Loan Parties on the one hand and (A) Novartis Vaccines and Diagnostics, Inc. (f/k/a Chiron Corporation) (“Novartis”) or any of its affiliates or (B) Les Laboratoires Servier (“Servier”) or Institut de Recherches Servier or any of their respective affiliates on the other hand, or any other Material Agreement (as defined below) to which such Loan Party is a party.  As used herein, “Material Agreement” means (i) the agreements between certain Loan Parties or Subsidiaries of Loan Parties and (A) Novartis or any of its affiliates and (B) Servier or Institut de Recherches Servier or any of their respective affiliates, in each case listed on Schedule B hereto, (ii) the Medpace Agreement, (iii) any agreement or contract to which such Loan Party is a party and which either resulted in the receipt or payment of amounts in the aggregate exceeding $250,000 (or $500,000 with respect to any employment agreement) in the prior calendar year or could reasonably be expected to result in the receipt or payment of amounts in the aggregate exceeding $250,000 (or $500,000 with respect to any employment agreement) in the current calendar year or any year thereafter through and including the 2015 calendar year (but excluding calendar years ending thereafter), and (iv) any agreement or contract to which such Loan Party is a party the termination of which could reasonably be expected to have a Material Adverse Effect.  A list of all Material Agreements as of the Closing Date is set forth on Schedule B.  All material agreements of the Loan Parties or Subsidiaries of the Loan Parties on the Closing Date with Novartis, Servier or Institut de Recherches Servier or any of their respective affiliates are set forth on Schedule B.   As of the Closing Date, the Borrower has provided to the Agent, or made available to the Agent through an electronic dataroom, a true and correct copy of all Material Agreements and all amendments and modifications thereto.

 

5.4           Litigation.  There are no actions, suits, proceedings or investigations pending against or, to the knowledge of any Loan Party, affecting any Loan Party before any court, federal, state, provincial, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, or, to the knowledge of any Loan Party, any basis thereof, which could reasonably be expected to have a Material Adverse Effect, or which questions the validity of the Transaction Documents, or the other documents required thereby or any action to be taken pursuant to any of the foregoing, nor does any Loan Party have reason to believe that any such actions, suits, proceedings or investigations are threatened.  As used in this Agreement, the term “Material Adverse Effect” means a material adverse effect on (a) the operations, business, assets, properties, or condition (financial or otherwise) of Borrower, individually, or the Loan Parties taken as a whole, (b) the ability of the Borrower individually to perform any of its obligations under any Transaction Document to which it is a party or the ability of the other Loan Parties taken as a whole to perform any of their obligations under any Transaction Document to which any of them are party, (c) the legality, validity or enforceability of any Transaction Document, (d) the rights and remedies of Agent or any Lender under any Transaction Document or (e) the validity, perfection or priority of any Lien in favor of Agent, on behalf of itself and the Lenders, on any of the Collateral.

 

5.5           Financial Statements. All annual and quarterly financial statements delivered to Agent and Lenders pursuant to Section 6.3 have been prepared in accordance with GAAP (subject, in the case of unaudited financial statements, to the absence of footnotes and normal year end audit adjustments), and all monthly financial statements delivered to the Agent and Lenders pursuant to Section 6.3 have been prepared in accordance with historical practices and are consistent in form to those financial statements previously provided to Agent. Since the date of the most recent audited financial statements, no event has occurred which has had or could reasonably be expected to have a Material Adverse Effect.

 

  

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5.6           Use of Proceeds; Margin Stock.  The proceeds of the Term Loan shall be used for working capital and general corporate purposes.  No Loan Party and no Subsidiary of any Loan Party is engaged in the business of purchasing or selling margin stock (within the meaning of Regulations T, U and X of the Board of Governors of the Federal Reserve System) (“Margin Stock”) or extending credit for the purpose of purchasing Margin Stock.  As of the Closing Date, no Loan Party and no Subsidiary of any Loan Party owns any Margin Stock.

 

5.7           Collateral.  Each Loan Party is, and will remain, the sole and lawful owner, and in possession of, the Collateral, and has the sole right and lawful authority to grant the security interest described in this Agreement.  The assets of each Loan Party and of each Subsidiary of each Loan Party are, and will remain, free and clear of all Liens, except for (a) Liens in favor of Agent, on behalf of itself and the Lenders, to secure the Obligations, (b) Liens (i) with respect to the payment of taxes, assessments or other governmental charges or (ii) of suppliers, carriers, materialmen, warehousemen, workmen or mechanics and other similar Liens, in each case imposed by law and arising in the ordinary course of business, and securing amounts that are not yet due or that are being contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves or other appropriate provisions are maintained on the books of the applicable Loan Party in accordance with GAAP and which do not involve, in the reasonable judgment of Agent, any risk of the sale, forfeiture or loss of any of the Collateral (a “Permitted Contest”), (c) Liens existing on the date hereof and set forth on Schedule B hereto, (d) Liens securing Indebtedness (as defined in Section 7.2 below) permitted under Section 7.2(c) below, provided that (i) such Liens exist prior to the acquisition of, or attach substantially simultaneous with, or within 20 days after, the acquisition, repair, improvement or construction of such property financed by such Indebtedness, and (ii) such Liens do not extend to any property of a Loan Party other than the property (and proceeds thereof) acquired or built, or the improvements or repairs, financed by such Indebtedness, (e) licenses described in Section 7.3(c) below, (f) pledges or cash deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance or other types of social security benefits (but not including any lien imposed by ERISA) that secure amounts that are not yet due or payable, (g) statutory bankers’ liens or rights of set off in deposit or securities accounts in favor of the financial institution at which such deposit or securities account is located, provided that to the extent an Account Control Agreement is required for such deposit or securities account, such liens or rights of set off have been waived or subordinated in a manner satisfactory to Agent therein, (h) zoning restrictions, easements, rights of way, encroachments or other restrictions on the use of, and other minor defects or irregularities in title with respect to, any real property of any Loan Party or its Subsidiaries so long as the same do not materially impair the value or use of such real property by such Loan Party or such Subsidiary, (i) purported Liens evidenced by the filing of precautionary UCC financing statements relating solely to operating leases of personal property entered into in the ordinary course of business to the extent such lease is not otherwise prohibited hereunder, (j) Liens arising from judgments, decrees or attachments that do not constitute an Event of Default hereunder, (k) Liens of landlords (i) arising by statute or (ii) under any lease entered into in the ordinary course of business, in each case on fixtures and movable tangible property located on the real property leased or subleased from such landlord, securing amounts that are not yet due or that are being contested pursuant to a Permitted Contest and which are subordinated to the security interests of the Agent and Lenders granted under the Transaction Documents pursuant to an Access Agreement (or, with respect to clause (i) only, under any lease for which no Access Agreement is required hereunder), (l) Liens incurred in the extension, renewal or refinancing of Indebtedness secured by Liens described in clause (d) above, provided that any such extension, renewal or replacement Liens shall be limited to the property encumbered by the existing Lien and the principal amount of the Indebtedness being extended, renewed or refinanced may not be increased, and (m) Liens expressly permitted under the first sentence of Section 7.1 below (all of such Liens described in the foregoing clauses (a) through (m) are referred to herein as “Permitted Liens”).

 

  

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5.8           Compliance with Laws.

 

(a)           Each Loan Party is and will remain in compliance in all material respects with all laws, statutes, ordinances, rules and regulations applicable to it.

 

(b)           Without limiting the generality of the immediately preceding clause (a), each Loan Party further agrees that it and each of its Subsidiaries is and will remain in compliance in all material respects with all U.S. economic sanctions laws, Executive Orders and implementing regulations as promulgated by the U.S. Treasury Department's Office of Foreign Assets Control, and all applicable anti-money laundering and counter-terrorism financing provisions of the Bank Secrecy Act and all regulations issued pursuant to it.  No Loan Party nor any of its Subsidiaries, Affiliates or joint ventures (i) is a person or entity designated by the U.S. Government on the list of the Specially Designated Nationals and Blocked Persons (the “SDN List”) with which a U.S. person or entity cannot deal with or otherwise engage in business transactions, (ii) is a person or entity who is otherwise the target of U.S. economic sanctions laws such that a U.S. person or entity cannot deal or otherwise engage in business transactions with such person or entity, or (iii) is controlled by (including without limitation by virtue of such person being a director or owning voting shares or interests), or acts, directly or indirectly, for or on behalf of, any person or entity on the SDN List or a foreign government that is the target of U.S. economic sanctions prohibitions such that the entry into, or performance under, this Agreement or any other Transaction Document would be prohibited under U.S. law.

 

(c)           Each Loan Party and each of its Subsidiaries is in compliance with (i) the Trading with the Enemy Act of 1917, Ch. 106, 40 Stat. 411, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B Chapter V, as amended) and any other enabling legislation or executive order relating thereto, (ii) the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, P.L. 107-56, as amended (the “Patriot Act”), and (iii) other federal or state laws relating to “know your customer” and anti-money laundering rules and regulations.  No part of the proceeds of the Term Loan will be used directly or indirectly for any payments to any government official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977.

 

(d)           Each Loan Party has met the minimum funding requirements of the United States Employee Retirement Income Security Act of 1974 (as amended, “ERISA”) with respect to any employee benefit plans subject to ERISA.  No Loan Party is an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940.

 

5.9           Intellectual Property.  The Intellectual Property (defined below) is and will remain free and clear of all Liens, except for Liens described in clauses (a), (b)(i), (c) and (e) of Section 5.7 and clauses (b), (c), (e), (g) and (h) of the first sentence of Section 7.1.  No Loan Party has nor will it enter into any agreement or financing arrangement in which a negative pledge in such Loan Party’s Intellectual Property (other than the Excluded Negative Pledge Assets as defined below) is granted to any party.  As of the Closing Date no Loan Party has any interest in, or title to any Intellectual Property except as disclosed in the Perfection Certificate.  Each Loan Party owns or has rights to use all Material Intellectual Property, without any actual infringement or claimed infringement that has been asserted against and received in writing by such Loan Party upon the rights of third parties.  “Intellectual Property” means any and all copyrights, trademarks, servicemarks, patents, design rights, software, trade secrets and intangible rights of a Loan Party and any applications, registrations, products, awards, judgments, amendments, renewals, extensions and improvements related thereto.  “Material Intellectual Property” means all Intellectual Property that is material to the conduct of the business of the Loan Parties taken as a whole.

 

  

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5.10          Solvency.  Both before and after giving effect to the Term Loan, the transactions contemplated herein, and the payment and accrual of all transaction costs in connection with the foregoing, each Loan Party is and will be Solvent.  As used herein, “Solvent” means, with respect to a Loan Party on a particular date, that on such date (a) the fair value of the property (including intangibles and goodwill) of such Loan Party is greater than the total amount of liabilities, including contingent liabilities, of such Loan Party; (b) the present fair salable value of the assets of such Loan Party is not less than the amount that will be required to pay the probable liability of such Loan Party on its debts as they become absolute and matured; (c) such Loan Party does not intend to, and does not believe that it will, incur debts or liabilities beyond such Loan Party’s ability to pay as such debts and liabilities mature; (d) such Loan Party is not engaged in a business or transaction, and is not about to engage in a business or transaction, for which such Loan Party’s property would constitute an unreasonably small capital; (e) such Loan Party is not “insolvent” within the meaning of Section 101(32) of the United States Bankruptcy Code (11 U.S.C. § 101, et seq.), as amended from time to time; (f) such Loan Party is not deemed unable to pay its debts in accordance with section 162 of the Companies Act of 1981 of Bermuda; and (g) such Loan Party is able to pay its debts as they fall due.  The amount of contingent liabilities (such as litigation, guaranties and pension plan liabilities) at any time shall be computed as the amount that, in light of all the facts and circumstances existing at the time, represents the amount that can be reasonably be expected to become an actual or matured liability.

 

5.11          Taxes; Pension.  All foreign, United States federal, California and other material state and local tax returns, reports and statements, including information returns, required by any governmental authority to be filed by each Loan Party and its Subsidiaries have been filed on a timely basis with the appropriate governmental authority and all foreign, United States federal, California and other material state and local taxes, levies, assessments and similar charges have been paid prior to the date on which any fine, penalty, interest or late charge may be added thereto for nonpayment thereof (or any such fine, penalty, interest, late charge or loss has been paid), excluding taxes, levies, assessments and similar charges or other amounts which are the subject of a Permitted Contest.  Proper and accurate amounts have been withheld by each Loan Party from its respective employees for all periods in compliance with applicable laws and such withholdings have been timely paid to the respective governmental authorities.  Each Loan Party has made all contributions required to be made to all present pension, profit sharing and deferred compensation plans in accordance with their terms, and no Loan Party has withdrawn from participation in, or has permitted partial or complete termination of, or permitted the occurrence of any other event with respect to, any such plan which could reasonably be expected to result in any liability of a Loan Party, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental authority.

 

5.12          Full Disclosure.  Loan Parties hereby confirm that all of the information disclosed on the Perfection Certificate is true, correct and complete as of the date of this Agreement.  No representation, warranty or other statement made by or on behalf of a Loan Party to Agent or Lenders (including in any certificate, instrument, agreement or document delivered pursuant to this Agreement or any other Transaction Document) contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained therein in light of the circumstances under which they were made not misleading, it being recognized by Agent and Lenders that the projections and forecasts provided by Loan Parties in good faith and based upon reasonable and stated assumptions are not to be viewed as facts and that actual results during the period or periods covered by any such projections and forecasts may differ from the projected or forecasted results.

 

  

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5.13          Regulatory Compliance.

 

(a)           Each Loan Party has, and it and its products are in conformance with, all registrations, authorizations, approvals, licenses, permits, clearances, certificates, and exemptions issued or allowed by the U.S. Food and Drug Administration or any successor thereto (“FDA”) or any comparable governmental authority (including but not limited to new drug applications, abbreviated new drug applications, biologics license applications, investigational new drug applications, over-the-counter drug monograph, product recertifications, manufacturing approvals and authorizations, pricing and reimbursement approvals, labeling approvals or their foreign equivalent, controlled substance registrations, and wholesale distributor permits) (hereinafter “Registrations”) that are material to the conduct of the business of the Loan Parties taken as a whole.  To the knowledge of each Loan Party, neither the FDA nor any comparable governmental authority is considering limiting, suspending, or revoking such Registrations or changing the marketing classification or labeling or other significant parameter affecting the products of the Loan Parties in any material respect.  To the knowledge of each Loan Party, there is no false or materially misleading information or significant omission in any product application or other submission to the FDA or any comparable governmental authority.  The Loan Parties have fulfilled and performed their obligations under each Registration in all material respects, and no event has occurred or condition or state of facts exists which would constitute a material breach or default under, or would cause revocation or termination of, any such Registration.  To the knowledge of each Loan Party, no event has occurred or condition or state of facts exists which would present potential product liability that could reasonably be expected to result in a Material Adverse Effect related, in whole or in part, to any Loan Party’s activities or products that are subject to Public Health Laws.  To the knowledge of each Loan Party, any third party that is a manufacturer or contractor for the Loan Parties is in compliance in all material respects with all Registrations required by the FDA or comparable governmental authority and all Public Health Laws insofar as they reasonably pertain to the manufacture of product components or products regulated as medical devices and marketed or distributed by the Loan Parties.  “Public Health Laws” means all applicable Requirements of Law relating to the procurement, development, manufacture, production, analysis, distribution, dispensing, importation, exportation, use, handling, quality, sale, or promotion of any drug, medical device, food, dietary supplement, or other product (including, without limitation, any ingredient or component of the foregoing products) subject to regulation under the Federal Food, Drug, and Cosmetic Act (21 U.S.C. et seq.) and similar state laws, controlled substances laws, pharmacy laws, or consumer product safety laws.

 

(b)           All products designed, developed, investigated, manufactured, prepared, assembled, packaged, tested, labeled, distributed, sold or marketed by or on behalf of the Loan Parties that are subject to the jurisdiction of the FDA or a comparable governmental authority, have been and are being designed, developed, investigated, manufactured, prepared, assembled, packaged, tested, labeled, distributed, sold and marketed in compliance in all material respects with the Public Health Laws and all other Requirements of Law, including, without limitation, clinical and non-clinical evaluation, product approval or clearance, premarketing notification, good manufacturing practices, labeling, advertising and promotion, record-keeping, establishment registration and listing, reporting of recalls, and adverse event reporting.

 

  

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(c)           No Loan Party is subject to any obligation arising under an administrative or regulatory action, proceeding, investigation or inspection by or on behalf of a governmental authority (including, without limitation, the FDA), warning letter, notice of violation letter,  consent decree, or request for information or other notice, response or commitment, the compliance with which may reasonably be expected to have a Material Adverse Effect, that is made to or with the FDA or any comparable governmental authority, and no such obligation has been threatened.  Except as otherwise disclosed on Schedule B, there is no, and there is no act, omission, event, or circumstance of which any Loan Party has knowledge that would reasonably be expected to give rise to or lead to any civil, criminal or administrative action, suit, demand, claim, complaint, hearing, investigation, demand letter, warning letter, proceeding or request for information pending against any Loan Party.  To each Loan Party’s knowledge, there has not been any violation of any Public Health Laws by any Loan Party in its product development efforts, submissions, record keeping and reports to the FDA or any other comparable governmental authority that could reasonably be expected to require or lead to investigation, corrective action or enforcement, regulatory or administrative action that could reasonably be expected to have a Material Adverse Effect.  To the knowledge of each Loan Party, there are no civil or criminal proceedings relating to any Loan Party or any officer, director or employee of any Loan Party that involve a matter within or related to the FDA’s any other comparable governmental authority’s jurisdiction except as otherwise disclosed on Schedule B.

 

(d)           As of the Closing Date, no Loan Party is undergoing any inspection related to any activities or products of the Loan Parties that are subject to Public Health Laws, or any other governmental authority investigation except as set forth on Schedule B.

 

(e)           During the period of six calendar years immediately preceding the Closing Date, no Loan Party has introduced into commercial distribution any products manufactured by or on behalf of any Loan Party or distributed any products on behalf of another manufacturer that were upon their shipment by any Loan Party adulterated or misbranded in violation of 21 U.S.C. § 331. The Loan Parties have not received any notice or communication from the FDA or comparable governmental authority alleging material noncompliance with any Requirement of Law. Except as otherwise disclosed on Schedule B, no product has been seized, withdrawn, recalled, detained, or subject to a suspension (other than in the ordinary course of business) of research, manufacturing, distribution or commercialization activity, and there are no facts or circumstances reasonably likely to cause (i) the seizure, denial, withdrawal, recall, detention, public health notification, safety alert or suspension of manufacturing or other activity relating to any product; (ii) a change in the labeling of any product suggesting a compliance issue or risk; or (iii) a termination, seizure or suspension of manufacturing, researching, distributing or marketing of any product.  No proceedings in the United States or any other jurisdiction seeking the withdrawal, recall, revocation, suspension, import detention, or seizure of any product are pending or threatened against any Loan Party.

 

(f)            No Loan Party nor any of its respective officers, directors, employees, agents or contractors (i) have been excluded or debarred from any federal healthcare program (including without limitation Medicare or Medicaid) or any other federal program or (ii) have received notice from the FDA or any other comparable governmental authority with respect to debarment or disqualification of any person that could reasonably be expected to have a Material Adverse Effect. No Loan Party nor any of its respective officers, directors, employees, agents or contractors have been convicted of any crime or engaged in any conduct for which (x) debarment is mandated or permitted by 21 U.S.C. § 335a or (y) such person or entity could be excluded from participating in the federal health care programs under Section 1128 of the Social Security Act or any similar law.  To the knowledge of each Loan Party, no officer, employee or agent of any Loan Party, has (aa) made any untrue statement of material fact or fraudulent statement to the FDA or any other comparable governmental authority; (bb) failed to disclose a material fact required to be disclosed to the FDA or any other comparable governmental authority; or (cc) committed an act, made a statement, or failed to make a statement that would reasonably be expected to provide the basis for the FDA or any other comparable governmental authority to invoke its policy respecting “Fraud, Untrue Statements of Material Facts, Bribery, and Illegal Gratuities,” as set forth in 56 Fed. Reg. 46191 (September 10, 1991).

 

  

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“Requirements of Law” means, with respect to any Person, the common law and any federal, state, local, foreign, multinational or international laws, statutes, codes, treaties, standards, rules and regulations, ordinances, orders, judgments, writs, injunctions, decrees (including administrative or judicial precedents or authorities) and other legally binding requirements of any governmental authority that are applicable to such Person or any of its property.

“Person” means any individual, partnership, corporation (including a business trust and a public benefit corporation), joint stock company, estate, association, firm, enterprise, trust, limited liability company, unincorporated association, joint venture and any other entity or governmental authority.

5.14          Environmental Matters.  In each case as of the Closing Date and except where any failures to comply would not reasonably be expected to result in, either individually or in the aggregate, Environmental Liabilities (as defined below) in excess of $250,000 to the Loan Parties and their Subsidiaries, (a) the operations of each Loan Party and each Subsidiary of each Loan Party are and have been in compliance with all applicable Environmental Laws (as defined below), including obtaining, maintaining and complying with all Permits (as defined below) required by any applicable Environmental Law, (b) no Loan Party and no Subsidiary of any Loan Party is party to, and no Loan Party and no Subsidiary of any Loan Party and no real property currently (or to the knowledge of any Loan Party previously) owned, leased, subleased, operated or otherwise used by or for any such Person is subject to or the subject of, any contractual obligation or any pending (or, to the knowledge of any Loan Party, threatened) order, action, investigation, suit, proceeding, audit, claim, demand, dispute or notice of violation or of potential liability or similar notice relating in any manner to any Environmental Law, (c) no Lien in favor of any governmental authority securing, in whole or in part, Environmental Liabilities has attached to any property of any Loan Party or any Subsidiary of any Loan Party and, to the knowledge of any Loan Party, no facts, circumstances or conditions exist that could reasonably be expected to result in any such Lien attaching to any such property, (d) no Loan Party and no Subsidiary of any Loan Party has caused or suffered to occur any Release (as defined below) of Hazardous Materials (as defined below), (e) to the knowledge of any Loan Party there has been no  Release of Hazardous Materials at any real property currently (or to the knowledge of any Loan Party previously) owned, leased, subleased, operated or otherwise used by or for any such Loan Party and each Subsidiary of each Loan Party and (f) no Loan Party and no Subsidiary of any Loan Party (i) has permitted any current or former tenant to engage in operations in violation of any Environmental Law or (ii) knows of any facts, circumstances or conditions reasonably constituting notice of a violation of any Environmental Law by any of them, including receipt of any information request or notice of potential responsibility under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, or similar Environmental Laws.

 

“Environmental Laws” means all Requirements of Law and Permits imposing liability or standards of conduct for or relating to the regulation and protection of human health, safety, or the workplace (in each case to the extent related to Hazardous Materials), the environment, Hazardous Materials, and natural resources, including public notification requirements and environmental transfer of ownership, notification or approval statutes.

 

  

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“Environmental Liabilities” means all claims, actions, suits, judgments, damages, losses, liability, obligations, responsibilities, fines, penalties, sanctions, costs, fees, taxes, commissions, charges, disbursements and expenses (including without limitation, those incurred upon any appeal or in connection with the preparation for and/or response to any subpoena or request for document production relating thereto), in each case of any kind or nature (including interest accrued thereon or as a result thereto and reasonable fees, charges and disbursements of financial, legal and other advisors and consultants), whether joint or several, whether or not indirect, contingent, consequential, actual, punitive, treble or otherwise (including (i) costs of all actions required by applicable Environmental Laws to (x) clean up, remove, treat or in any other way address any Hazardous Material in the indoor or outdoor environment, (y) prevent or minimize any Release or threat of a Release so that a Hazardous Material does not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment or (z) perform pre-remedial studies and investigations and post-remedial monitoring and care with respect to any Hazardous Material (collectively “Remedial Actions”) and (ii) natural resource damages and costs and expenses of investigation and feasibility studies, including the cost of environmental consultants and attorneys’ costs) that may be imposed on, incurred by or asserted against any Loan Party or any Subsidiary of any Loan Party as a result of, or related to, any claim, suit, action, investigation, proceeding or demand by any Person, whether based in contract, tort, strict liability, criminal or civil statute or common law or otherwise, arising under any Environmental Law, including without limitation arising in connection with any Release or threat of a Release and resulting from the ownership, lease, sublease or other operation or use of property by any Loan Party or any Subsidiary of any Loan Party, whether on, prior or after the date hereof.

“Hazardous Material” means any substance, material or waste that is classified, regulated or could otherwise give rise to liability under any Environmental Law as hazardous, toxic, a contaminant or a pollutant or by other words of similar meaning or regulatory effect, including without limitation, petroleum or any fraction thereof, asbestos, polychlorinated biphenyls and radioactive substances.

“Permits” means, with respect to any Person, any permit, approval, authorization, license, registration, certificate, concession, grant, franchise, variance or permission from, and any other contractual obligations with, any governmental authority, in each case applicable to such Person or any of its property or to which such Person or any of its property is subject.

“Release” means any release, spill, emission, leaking, pumping, pouring, emitting, emptying, escape, injection, deposit, disposal, discharge, dispersal, dumping, leaching or migration of Hazardous Material into or through the environment.

5.15          XOMA Bermuda and XOMA Development.   As of the Closing Date and for long as such entity continues to exist, neither XOMA Bermuda nor XOMA Development (i) has any assets, (ii) has any Indebtedness or other liabilities, or (iii) conducts any business beyond the maintenance of its legal existence.

 

6.            AFFIRMATIVE COVENANTS.

 

6.1           Good Standing.  Each Loan Party shall maintain its and each of its Subsidiaries’ existence and good standing (with respect to any jurisdiction outside of the United States, to the extent applicable) in its jurisdiction of organization (other than as a result of the Parent Redomestication, any Subsidiary Redomestication or the Permitted Dissolutions (as defined in Section 6.13 below) and maintain qualification in each jurisdiction in which the failure to so qualify could reasonably be expected to have a Material Adverse Effect.  Each Loan Party shall maintain, and shall cause each of its Subsidiaries to maintain, in full force all licenses, approvals and agreements, the loss of which could reasonably be expected to have a Material Adverse Effect.  “Subsidiary” means, with respect to a Loan Party, any entity the management of which is, directly or indirectly controlled by, or of which an aggregate of more than 50% of the outstanding voting capital stock (or other voting equity interest) is, at the time, owned or controlled, directly or indirectly by, such Loan Party or one or more Subsidiaries of such Loan Party, and, unless the context otherwise requires each reference to a Subsidiary herein shall be a reference to a Subsidiary of Borrower.

 

  

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6.2           Notice to Agent and the Lenders.  Loan Parties shall provide Agent with (a) notice of any change in any material respect (except that in each case such materiality qualifier shall not be applicable to any representation or warranty that is already expressly qualified or modified by materiality in the text thereof) in the accuracy of the Perfection Certificate promptly (but in any event within six (6) Business Days) after the date on which any Responsible Officer (as defined below) of a Loan Party obtains knowledge of the occurrence of any such change, (b) notice of the occurrence of any Default or Event of Default, promptly (but in any event within three (3) Business Days) after the date on which any Responsible Officer of a Loan Party obtains knowledge of the occurrence of any such event, (c) copies of all statements, reports and notices made available generally by any Loan Party to its securityholders and all documents filed with the Securities and Exchange Commission (“SEC”) or any securities exchange or governmental authority exercising a similar function, promptly (but in any event within five (5) Business Days) after delivering such information to such persons; provided that notification to Agent by facsimile transmission or electronic transmission of the filing of any such statement, report or notice on the SEC’s Next-Generation EDGAR System shall satisfy the notice and delivery requirements of this clause (c), (d) a report of any legal actions pending or threatened against any Loan Party or any Subsidiary that could reasonably be expected to result in damages or costs to any Loan Party or any Subsidiary of $150,000 or more in excess of applicable insurance coverage, promptly (but in any event within five (5) Business Days) after receipt of notice thereof by a Responsible Officer of a Loan Party, including without limitation any such legal actions alleging potential or actual violations of any Public Health Law, (e) a list of new applications or registrations that any Loan Party has made or filed in respect of any Intellectual Property or any material change in status of any outstanding application or registration (other than any change in status on an application or registration prosecuted by a third party of which a Responsible Officer of the Loan Parties or the Borrower’s Director of Intellectual Property has no knowledge) concurrently with the delivery of each quarterly compliance certificate delivered pursuant to Section 6.3, (f) notice of any breach or other event constituting a default or event of default under any Material Agreement, promptly (but in any event within three (3) Business Days) after the date on which any Responsible Officer of a Loan Party obtains knowledge of the occurrence of any such event, (g) notice of any amendments to, and copies of all statements, reports and notices (other than non-material amendments, statements, reports and notices delivered in the ordinary course of business) delivered to or by a Loan Party in connection with any Material Agreement, promptly (but in any event within five (5) Business Days) after the execution of any such amendment or the receipt of any statement, report or notice by a Responsible Officer of any Loan Party, (h) copies of any notice that the FDA or comparable governmental authority is limiting, suspending or revoking any Registration, changing the market classification, distribution pathway or parameters or labeling of the products of the Loan Parties, or considering any of the foregoing, promptly (but in any event within three (3) Business Days) after receipt thereof by a Responsible Officer of any Loan Party, (i) notice that any Loan Party has become subject to any administrative or regulatory action, FDA or comparable governmental authority inspection, Form FDA 483 observation, warning letter, notice of violation letter, or other enforcement action, or notice, response or commitment, the compliance with which may be reasonably expected to have a Material Adverse Effect, made to or with the FDA or any comparable governmental authority, or notice that any product of any Loan Party has been seized, withdrawn, recalled, detained, or subject to a suspension of manufacturing, or the commencement of any proceedings in the United States or any other jurisdiction seeking the withdrawal, recall, suspension, import detention, or seizure of any product are pending or threatened against any Loan Party, promptly (but in any event within three (3) Business Days) after receipt thereof by a Responsible Officer of any Loan Party and (j) notice of any material adverse deviation from the most recent annual operating plan of Borrower delivered to Agent and Lenders in accordance with Section 6.3 promptly (but in any event within three (3) Business Days) after the date on which any Responsible Officer of a Loan Party obtains knowledge thereof.  “Responsible Officer” shall mean the chief executive officer, president, chief financial officer, chief medical officer, vice president of finance, general counsel, executive vice president, chief scientific officer, vice president of regulatory affairs and compliance, and any other officer with substantially the same responsibility as any of the above.

 

  

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6.3           Financial Statements.  Borrower shall deliver to Agent and Lenders (a) unaudited consolidated and, if available, consolidating balance sheets, statements of operations and cash flow statements of Parent and its Subsidiaries in the form attached hereto as Exhibit D-1 within 30 days of the end of each calendar month, certified by Parent’s president, chief executive officer, chief financial officer or general counsel, and (b) quarterly unaudited consolidated and, if available, consolidating balance sheets, statements of operations and cash flow statements of Parent and its Subsidiaries for each of the first three fiscal quarters of each fiscal year of Parent and annual audited consolidated and, if available, consolidating balance sheets, statements of operations and cash flow statements of Parent and its Subsidiaries, certified by a recognized firm of certified public accountants, in each case within five (5) Business Days after such statements are required to be provided to the SEC.  All audited financial statements delivered pursuant to this Section 6.3 shall be accompanied by the report of an independent certified public accounting firm acceptable to Agent (it being agreed that Ernst & Young LLP is acceptable to Agent) which report shall (i) contain an unqualified opinion, stating that such consolidated financial statements present fairly in all material respects the financial position for the periods indicated in conformity with GAAP applied on a basis consistent with prior years and (ii) not include any explanatory paragraph expressing substantial doubt as to going concern status.  All such annual and quarterly statements are to be prepared using GAAP (subject, in the case of unaudited financial statements, to the absence of footnotes and normal year end audit adjustments) and are to be in compliance with applicable SEC requirements.  All financial statements delivered pursuant to this Section 6.3 shall be accompanied by a compliance certificate, signed by the chief financial officer or general counsel of Parent, in the form attached hereto as Exhibit D-2, and the management discussion and analysis that is filed by the Parent with the SEC for the respective fiscal period.  Borrower shall deliver to Agent and Lenders (i) as soon as available and in any event not later than 75 days after the end of each fiscal year of Parent, the annual operating plan for Parent, on a consolidated basis, approved by the Board of Directors of Parent, for the current fiscal year, and (ii) such budgets, sales projections, or other business, financial, corporate affairs and other information as Agent or any Lender may reasonably request from time to time.

 

6.4           Insurance.  Each Loan Party, at its expense, shall maintain, and shall cause each Subsidiary to maintain, insurance (including, without limitation, (a) comprehensive general liability, hazard, and business interruption insurance and (b) with respect to any real property subject to a Mortgage which is located in a Special Flood Hazard Area (as defined below), Federal Flood Insurance (as defined below), or to the extent not available, private flood insurance, in each case with respect to all of its properties and businesses (including, the Collateral), in such amounts and covering such risks as is carried generally in accordance with sound business practice by companies in similar businesses similarly situated and in any event with deductible amounts, insurers and policies that shall be reasonably acceptable to Agent.  Borrower shall deliver to Agent certificates of insurance evidencing such coverage, together with endorsements to such policies naming Agent as a lender loss payee or additional insured, as appropriate, in form and substance reasonably satisfactory to Agent.  Each policy shall provide that coverage may not be canceled by the insurer except upon 30 days prior written notice to Agent and shall not be subject to co-insurance.  Each Loan Party appoints Agent as its attorney-in-fact to make, settle and adjust all claims under and decisions with respect to such Loan Party’s policies of insurance, and to receive payment of and execute or endorse all documents, checks or drafts in connection with insurance payments. Agent shall not act as such Loan Party’s attorney-in-fact unless an Event of Default has occurred and is continuing.  The appointment of Agent as any Loan Party’s attorney in fact is a power coupled with an interest and is irrevocable until all of the Obligations are paid in full in cash. Proceeds of insurance shall be applied, at the option of Agent, to repair or replace the Collateral or to reduce any of the Obligations.  “Federal Flood Insurance” means Federally backed Flood Insurance available under the program created by the U.S. Congress pursuant to the National Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973, as revised by the National Flood Insurance Reform Act of 1994, that mandates the purchase of flood insurance to cover real property improvements located in Special Flood Hazard Areas in participating communities and provides protection to property owners through a Federal insurance program.  “Special Flood Hazard Area” means an area that the Federal Emergency Management Agency’s current flood maps indicate has at least a one percent (1%) chance of a flood equal to or exceeding the base flood elevation (a 100-year flood) in any given year.

 

  

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6.5           Taxes.  Each Loan Party shall, and shall cause each Subsidiary to, timely file all foreign, United States federal, California and other material state and local tax reports and pay and discharge all foreign, United States federal, California and other material state and local taxes, assessments and governmental charges or levies imposed upon it, or its income or profits or upon its properties or any part thereof, before the same shall be in default and before the date on which penalties attach thereto, except to the extent such taxes, assessments and governmental charges or levies are the subject of a Permitted Contest.

 

6.6           Agreement with Landlord/Bailee.  Unless otherwise agreed to by Agent in writing, each Loan Party shall obtain and maintain a landlord consent and/or bailee letter in favor of Agent executed by the applicable landlord or bailee (in the form attached hereto as Exhibit C-1 or Exhibit C-2, as applicable, or in such other form as is reasonably acceptable to Agent, each an “Access Agreement”)) with respect to any real property (other than real property owned in fee simple by a Loan Party) on which (a) a Loan Party’s principal place of business is located, (b) a Loan Party’s books or records are located or (c) Collateral is located (other than Collateral with an aggregate value of less than of $400,000) as Agent may require.  If Agent agrees in writing that a Loan Party shall not be required to obtain and maintain an Access Agreement with respect to any real property described in the immediately preceding sentence, then concurrently with the delivery of each compliance certificate pursuant to Section 6.3, the Borrower shall certify to Agent (1) that all payments under such lease have been paid when due and (2) that no default or event of default exists under such lease.

 

6.7           Real Property.  Upon request of the Agent, each Loan Party shall deliver to it (a) an appraisal complying with and to the extent required by FIRREA, (b) within forty-five days of receipt of notice from Agent that real property of the Loan Parties is located in a Special Flood Hazard Area, Federal Flood Insurance, and (c) a Mortgage on any real property owned by any Loan Party, together with all Mortgage Supporting Documents relating thereto (or, if such real property is located in a jurisdiction outside the United States, similar documents deemed appropriate by the Agent to obtain the equivalent in such jurisdiction of a first-priority mortgage on such owned real property).

 

6.8           Protection of Intellectual Property.  Each Loan Party shall take all necessary actions to: (a) protect, defend and maintain the validity and enforceability of its Material Intellectual Property, (b) promptly advise Agent in writing of material infringements of its Material Intellectual Property and take all appropriate actions to enforce its rights in its Material Intellectual Property against infringement, misappropriation or dilution and to recover any and all damages for such infringement, misappropriation or dilution, (c) not allow any Material Intellectual Property to be abandoned, forfeited or dedicated to the public without Agent’s written consent, and (d) notify Agent promptly, but in any event within ten (10) Business Days, if it knows or has reason to know (i) that any application or registration relating to any Material Intellectual Property may become abandoned or dedicated, or (ii) if any adverse determination or development (including the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, the United States Copyright Office or any court) has occurred regarding such Loan Party’s ownership of any Material Intellectual Property, its right to register the same, or to keep and maintain the same.  Each Loan Party shall remain liable under each of its Intellectual Property licenses pursuant to which it is a licensee (“Licenses”) to observe and perform all of the material conditions and material obligations to be observed and performed by it thereunder.  None of Agent or any Lender shall have any obligation or liability under any such License by reason of or arising out of this Agreement, the granting of a Lien, if any, in such License or the receipt by Agent (on behalf of itself and Lenders) of any payment relating to any such License.  None of Agent or any Lender shall be required or obligated in any manner to perform or fulfill any of the obligations of any Loan Party under or pursuant to any License, or to make any payment, or to make any inquiry as to the nature or the sufficiency of any payment received by it or the sufficiency of any performance by any party under any License, or to present or file any claims, or to take any action to collect or enforce any performance or the payment of any amounts which may have been assigned to it or which it may be entitled at any time or times.

 

  

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6.9           Special Collateral Covenants.

 

(a)           Each Loan Party shall remain in possession of its respective Collateral solely at (i) the location(s) specified on the Perfection Certificate, except (A) as expressly permitted under Sections 7.3 or 7.5, (B) to the extent such Collateral is in transit or undergoing maintenance or repair, or (C) to the extent such Collateral constitutes “work in process” in the ordinary course of business temporarily in the possession of a third party, and (ii) other locations where portable goods of a de minimis value (such as laptops, phones and other similar equipment) may be located in the ordinary course of business; except that Agent, on behalf of itself and the Lenders, shall have the right to possess (x) any chattel paper or instrument that constitutes a part of the Collateral, (y) any other Collateral in which Agent’s security interest (on behalf of itself and the Lenders) may be perfected only by possession and (z) any Collateral after the occurrence of an Event of Default in accordance with this Agreement and the other Transaction Documents.

 

(b)           Each Loan Party shall (i) use the Collateral only in its trade or business, (ii) maintain all of the Collateral in good operating order and repair, normal wear and tear excepted, and (iii) use and maintain the Collateral only in compliance with manufacturers’ recommendations or prudent industry practices and all applicable laws, in each case except to the extent the failure to do so could not reasonably be expected to have a Material Adverse Effect.

 

(c)           The Agent and Lenders do not authorize and each Loan Party agrees it shall not (i) remove any of its cash, Cash Equivalents or tangible assets from, or maintain any of its cash, Cash Equivalents or tangible assets outside of, the continental United States or (ii) remove any of its intangible assets from, or maintain any of its intangible assets outside of, the United States, Bermuda or Ireland, except in each case, (A) registrations of Intellectual Property in each applicable jurisdiction of registration, (B) as expressly permitted under clauses (a)(i)(B), (a)(i)(C) and (a)(ii) of this Section 6.9, (C) office furniture and other related office equipment with an aggregate value not to exceed $25,000, and (D) cash and Cash Equivalents in deposit accounts or securities accounts maintained in Ireland so long as for purposes of this clause (D), (1) the Agent has a first priority perfected Lien in such deposit accounts or security accounts pursuant to fully executed Account Control Agreements, and (2) no cash or Cash Equivalents are transferred from deposit accounts or securities accounts in the United States to deposit accounts or securities accounts in Ireland other than an amount equal to the actual out-of-pocket costs, fees and expenses incurred or to be incurred by XOMA Ireland in the ordinary course of business and used by XOMA Ireland to pay such costs, fees and expenses within five (5) Business Days of such transfer, so long as (x) before and after giving effect to such transfer, no Default or Event of Default shall have occurred and be continuing or would result therefrom and (y) after giving effect to such transfer and the payment of the related out-of-pocket costs, fees and expenses, the aggregate amount of cash and Cash Equivalents maintained by the Loan Parties in deposit accounts and securities accounts outside the United States does not exceed $3,000,000 (or the Euro equivalent thereof).

 

  

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(d)           Each Loan Party shall pay promptly when due all documentary, stamp, recording, excise and other similar taxes, charges, license fees, and assessments levied or assessed on any of the Collateral, on its use, or on this Agreement or any of the other Transaction Documents.  At its option, Agent may, upon written notice to the applicable Loan Party and only after the occurrence of an Event of Default,  discharge taxes, Liens, security interests or other encumbrances at any time levied or placed on the Collateral and may pay for the maintenance, insurance and preservation of the Collateral and effect compliance with the terms of this Agreement or any of the other Transaction Documents.  Each Loan Party agrees to reimburse Agent, on demand, all costs and expenses incurred by Agent in connection with such payment or performance and agrees that such reimbursement obligation shall constitute Obligations.

 

(e)           Each Loan Party shall, at all times, keep reasonably accurate and complete records of the Collateral.

 

(f)            Each Loan Party agrees and acknowledges that any third person who may at any time possess all or any portion of the Collateral shall be deemed to hold, and shall hold, the Collateral as the agent of, and as pledge holder for, Agent (on behalf of itself and Lenders). Agent may at any time give notice to any third person described in the preceding sentence that such third person is holding the Collateral as the agent of, and as pledge holder for, Agent (on behalf of itself and Lenders).

 

(g)           Each Loan Party shall, during normal business hours, and in the absence of a Default or an Event of Default, upon three (3) Business Days’ prior notice, as frequently as Agent reasonably determines to be appropriate: (i) provide Agent (who may be accompanied by representatives of any Lender at such Lender’s sole expense except as otherwise agreed in Section 10.6) and any of its officers, employees and agents access to the properties, facilities, principal advisors and employees (including officers) of each Loan Party and to the Collateral, (ii) permit Agent (who may be accompanied by representatives of any Lender at such Lender’s sole expense except as otherwise agreed in Section 10.6), and any of its officers, employees and agents, to inspect, audit and make extracts from any Loan Party’s books and records (or at the request of Agent, deliver true and correct copies of such books and records to Agent), and (iii) permit Agent (who may be accompanied by representatives of any Lender at such Lender’s sole expense), and its officers, employees and agents, to inspect, audit, appraise, review, evaluate and make test verifications and counts of the Collateral of any Loan Party; provided, that, so long as no Default or Event of Default has occurred and is continuing, the Loan Parties shall only be required to reimburse Agent and any applicable Lender for costs and expenses under Section 10.6 with respect to two (2) such inspections and audits under this Section 6.9(g) during any calendar year.  Upon Agent’s request, each Loan Party will promptly notify Agent in writing of the location of any Collateral.  If a Default or Event of Default has occurred and is continuing or if access is necessary to preserve or protect the Collateral as determined by Agent, each such Loan Party shall provide such access to Agent and to each Lender at all times and without advance notice, and shall reimburse Agent and any applicable Lender for all reasonable costs and expenses incurred in connection therewith.  Each Loan Party shall make available to Agent and its auditors or counsel, as quickly as is possible under the circumstances, originals or copies of all books and records that Agent may reasonably request.  Notwithstanding any other provision of this Agreement or any other Transaction Document, so long as no Default or Event of Default then exists, each Loan Party shall have the right in its good faith business judgment to deny or restrict the Agent, the Lenders and their respective representatives, access to highly confidential and proprietary scientific data and specifications.

 

  

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6.10           Further Assurances.  Each Loan Party shall, upon request of Agent, furnish to Agent such further information, execute and deliver to Agent such documents and instruments (including, without limitation, UCC financing statements, Mortgages and Mortgage Supporting Documents) and shall do such other acts and things as Agent may at any time reasonably request relating to the perfection or protection of the security interest created by this Agreement or any other Transaction Document or for the purpose of carrying out the intent of this Agreement and the other Transaction Documents.

 

6.11           Compliance with Law.  Each Loan Party shall comply with all applicable statutes, rules, regulations, standards, policies and orders administered or issued by any governmental authority having jurisdiction over it, its business or its products, except where the failure to comply would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.  Without limiting the generality of the foregoing, each Loan Party shall comply with all Public Health Laws and their implementation by any applicable governmental authority and all lawful requests of any governmental authority applicable to its products, except where the failure to comply would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.  All products developed, manufactured, tested, distributed or marketed by or on behalf of any Loan Party that are subject to the jurisdiction of the FDA or comparable governmental authority shall be developed, tested, manufactured, distributed and marketed in compliance with the Public Health Laws and any other Requirements of Law, including, without limitation, product approval or premarket notification, good manufacturing practices, labeling, advertising, record-keeping, and adverse event reporting, and have been and are being tested, investigated, distributed, marketed, and sold in compliance with Public Health Laws and all other Requirements of Law, except where the failure to comply would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.

 

6.12           Environmental Matters.  Each Loan Party shall, and shall cause each of its Subsidiaries to, comply with, and maintain its real property, whether owned, leased, subleased or otherwise operated or used, in compliance with, all applicable Environmental Laws (including by implementing any Remedial Actions necessary to achieve such compliance) or that is required by orders or legally binding directives of any governmental authority under any applicable Environmental Law except where the failure to comply would not reasonably be expected to, individually or in the aggregate, result in Environmental Liabilities (excluding legal fees and expenses) in excess of $250,000.  Without limiting the foregoing, if an Event of Default is continuing or if Agent at any time has a reasonable basis to believe that there exist violations of Environmental Laws by any Loan Party or any Subsidiary of any Loan Party or that there exist any Environmental Liabilities, in each case that could reasonably be expected to result in Environmental Liabilities in excess of $250,000, then each Loan Party shall, promptly upon receipt of request from Agent, cause the performance of, or allow Agent and its Related Persons access to such real property for the purpose of conducting, such environmental audits and assessments, including subsurface sampling of soil and groundwater, and cause the preparation of such reports, in each case as Agent may from time to time reasonably request.  Such audits, assessments and reports, to the extent not conducted by Agent or its designee, shall be conducted and prepared by reputable environmental consulting firms reasonably acceptable to Agent and shall be in form and substance reasonably acceptable to Agent.

 

  

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6.13          Post Closing Covenants.

 

  

(a)            Letters of Resignation. No later than 30 days after the Closing Date (or such later date as the Agent shall approve in writing), Borrower shall deliver executed but undated letters of resignation from each of the directors, alternate directors and Secretary of XOMA Technology to the extent the same are not delivered to Agent on or before the Closing Date.

  

(b)           Access Agreement.  No later than 45 days after the Closing Date (or such later date as the Agent shall approve in writing), the Loan Parties shall have used commercially reasonable efforts to deliver Access Agreements for the leased locations of the Loan Parties located at (i) 2910 7th St., Berkeley, CA 94710, (ii) 830/890 Heinz Ave., Berkeley, CA 94710, (iii) 804 Heinz Ave., Berkeley, CA 94710, (iv) 5854/5860 Hollis St., Emeryville, CA 94608, and (v) 820 Heinz Ave., Berkeley, CA 94710 (collectively, the “Space Lease Locations”).

 

(c)           Subsidiary Dissolutions.  On or prior to March 31, 2012 (or such later date as the Agent shall approve in writing), each of XOMA Bermuda and XOMA Development shall either (x) be dissolved and/or its existence terminated and all assets of XOMA Bermuda or XOMA Development, as the case may be, shall be transferred to another Loan Party organized in the U.S. (or in the case of XOMA Bermuda another Loan Party organized in Bermuda) prior to such dissolution and/or termination (the “Permitted Dissolutions”) or (y) have become a Loan Party (with all of its capital stock pledged to secure the Obligations) pursuant to such joinder agreements, guaranties and security documents as the Agent shall require, accompanied by legal opinions, filings, board resolutions, organizational documents of the type that would have been delivered if XOMA Bermuda or XOMA Development, as the case may be, had been a Loan Party on the Closing Date.

 

7.             NEGATIVE COVENANTS

 

7.1           Liens.  No Loan Party shall, and no Loan Party shall permit any of its Subsidiaries to, create, incur, assume or permit to exist any Lien on any Intellectual Property or any of its other assets, other than (a) Liens of the type described in clauses (a) through (l) of Section 5.7 above, (b) Liens granted by the [*] Subsidiary on the [*] (as defined below) and proceeds thereof securing Indebtedness permitted under Section 7.2(d) below, (c) Liens granted by the [*] Subsidiary on the [*] (as defined below) and proceeds thereof securing Indebtedness permitted under Section 7.2(e) below, (d) Liens on Excluded Negative Pledge Assets in favor of the applicable third party that is the counterparty to the applicable permitted collaboration or development arrangement with a Loan Party or other permitted transaction relating to the Excluded Negative Pledge Assets securing obligations of such Loan Party arising under such arrangement or transaction, (e) Liens in favor of the United States government on inventions and other Intellectual Property created or produced pursuant to contractual obligations between any Loan Party and the United States government pursuant to 48 C.F.R. 52.227-11 (or by incorporation of such statute into any contractual obligations), (f) solely to the extent the transactions described in that certain Royalty Purchase Agreement (the “CIMZIA Royalty Purchase Agreement”), dated as of August 12, 2010, by and among XOMA CDRA LLC, a Delaware limited liability company (“XOMA CDRA”), Borrower, Parent and the purchaser named therein are recharacterised as a secured financing, Liens granted by XOMA CDRA on the Purchased Interest and Additional Collateral (in each case as defined in the CIMZIA Royalty Purchase Agreement as in effect on the date hereof), (g) Liens securing Indebtedness permitted to be incurred under Section 7.2(i) so long as such Liens do not extend to any property of any Loan Party other than the Intellectual Property and/or related contract rights that are the subject of the collaboration to which such Indebtedness relates, (h) to the extent it constitutes a Lien, the obligation of the Borrower to [*] (as defined in Section 7.2(l) below) and (i) Liens on any XMET Assets securing obligations other than Indebtedness pursuant to an XMET License Agreement so long as such Liens do not extend to any property of any Loan Party other than the XMET Assets that are the subject of such XMET License Agreement.  No Loan Party shall, and no Loan Party shall permit any of its Subsidiaries to, grant any negative pledges on any Intellectual Property or any of its other assets, other than (a) this Section 7.1, (b) negative pledges on the [*] and proceeds thereof in favor of the holders of the Indebtedness permitted under Section 7.2(d) below, (c) negative pledges on the [*] and proceeds thereof in favor of the holders of the Indebtedness permitted under Section 7.2(e) below, (d) other restrictions applying only to Excluded Negative Pledge Assets imposed by the applicable third party that is the counterparty to the applicable permitted collaboration arrangement or other permitted transaction relating to such Excluded Negative Pledge Asset, (e) negative pledges on the Intellectual Property and/or contract rights that are the subject of a collaboration of the type referred to in Section 7.2(i), (f) negative pledges or other restrictions in any document or instrument governing Liens permitted pursuant to Section 5.7(d) provided that any such negative pledge or restriction contained therein relates solely to the asset or assets subject to such permitted Liens, and (g) negative pledges or other restrictions with respect to the XMET Assets set forth in an XMET License Agreement so long as such negative pledges and other restrictions do not extend to any property of any Loan Party other than the XMET Assets that are the subject of such XMET License Agreement.

 

  

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“Excluded Negative Pledge Asset” shall mean Excluded Collateral (as defined in the US Security Agreement) consisting of (a) Intellectual Property constituting XOMA-052 (including without limitation all Collateral (as defined in that certain Loan Agreement, dated as of December 30, 2010, by and between XOMA Ireland and Servier, as in effect on the date hereof, the “Servier Loan Agreement”)), or Anti-Botulism Antibody Products (as defined below), (b) the Borrower’s contract rights in the collaboration and related agreements (the “Novartis Contract Rights”) currently in place with Novartis (including without limitation all Collateral (as defined in that certain Secured Note Agreement, dated as of May 26, 2005, by and between Novartis and Borrower, as amended and as in effect as of the date hereof, the “Novartis Loan Agreement”)), (c) the [*], the [*] and proceeds thereof and (d) solely to the extent the transactions described in the CIMZIA Royalty Purchase Agreement are recharacterised as a secured financing, the assets of XOMA CDRA pledged under the CIMZIA Royalty Purchase Agreement (including the Purchased Interest and Additional Collateral as such terms are defined in the CIMZIA Royalty Purchase Agreement as in effect on the date hereof).  As used herein, “Anti-Botulism Antibody Products” means the antibody products known as XOMA 3AB (antibodies to serotype A), XOMA 3BB (antibodies to serotype B), XOMA 3EB (antibodies to serotype E) and XOMA 4CD (antibodies to serotype C and D), as well as the planned antibody products to the F and G serotypes.

 

7.2           Indebtedness.  No Loan Party shall, and no Loan Party shall permit any of its Subsidiaries to, directly or indirectly create, incur, assume, permit to exist, guarantee or otherwise become or remain directly or indirectly liable with respect to, any Indebtedness (as hereinafter defined), except for

 

(a)           the Obligations;

 

(b)           Indebtedness existing on the date hereof and set forth on Schedule B to this Agreement;

 

(c)           Indebtedness consisting of capitalized lease obligations and purchase money Indebtedness, in each case incurred by Borrower or any of its Subsidiaries to finance the acquisition, repair, improvement or construction of fixed or capital assets of such person, provided that (i) the aggregate outstanding principal amount of all such Indebtedness, together with any Indebtedness incurred pursuant to clause (m) below to refinance such Indebtedness (or other refinancings thereof), does not exceed $500,000 at any time and (ii) the principal amount of such Indebtedness does not exceed the lower of the cost or fair market value of the property so acquired or built or of such repairs or improvements financed with such Indebtedness (each measured at the time of such acquisition, repair, improvement or construction is made); provided, however, that any change in GAAP occurring after the Closing Date shall not cause any lease existing on the date such change becomes effective that was not a capitalized lease prior to such change to be deemed a capitalized lease, and the obligations with respect thereto shall not constitute capitalized lease obligations;

 

  

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(d)           Indebtedness of the [*] Subsidiary so long as no Loan Party or any other Subsidiary or Affiliate of any Loan Party is directly, contingently or otherwise indirectly obligated with respect to such Indebtedness or otherwise provides any form of credit support to secure such Indebtedness;

 

(e)           Indebtedness of the [*] Subsidiary so long as no Loan Party or any other Subsidiary or Affiliate of any Loan Party is directly, contingently or otherwise indirectly obligated with respect to such Indebtedness or otherwise provides any form of credit support to secure such Indebtedness;

 

(f)            Indebtedness of XOMA Ireland owed to Servier pursuant to the Servier Loan Agreement in an aggregate principal amount not to exceed €17,500,000;

 

(g)           Indebtedness of Borrower owed to Novartis pursuant to the Novartis Loan Agreement in an aggregate principal amount not to exceed $17,000,000;

 

(h)           Indebtedness owing by any Loan Party to another Loan Party, provided that (i) each Loan Party shall have executed and delivered to each other Loan Party a demand note (each, an “Intercompany Note”) to evidence such intercompany loans or advances owing at any time by each Loan Party to the other Loan Parties, which Intercompany Note shall be in form and substance reasonably satisfactory to Agent (it being agreed that the form signed and delivered on the Closing Date pursuant to Section 4.1(u) is satisfactory to Agent and satisfies the requirements of this Section 7.2(h)) and shall be pledged and delivered to Agent pursuant to the Pledge Agreement as additional Collateral for the Obligations, (ii) any and all Indebtedness of any Loan Party to another Loan Party shall be subordinated to the Obligations pursuant to the subordination terms set forth in each Intercompany Note, and (iii) no Default or Event of Default would occur either before or after giving effect to any such Indebtedness;

 

(i)            Indebtedness incurred in connection with a bona fide corporate collaboration in the ordinary course of business and consistent with past practice; provided, that (i) such Indebtedness shall be unsecured except to the extent permitted to be secured pursuant to Section 7.1(g), (ii) no Default or Event of Default shall have occurred and be continuing both before and after incurring such Indebtedness, (iii) the incurrence of such Indebtedness shall have been approved by the board of directors of the applicable Loan Party, (iv) the aggregate outstanding principal amount of all such Indebtedness, together with any Indebtedness incurred pursuant to clause (m) below to refinance such Indebtedness (or other refinancings thereof), does not exceed $10,000,000 at any time, (v) such Indebtedness shall not require any Loan Party to make any payments prior to the date that is at least 180 days after the Termination Date (as defined below in Section 10.10) other than regularly scheduled interest payments at a rate not to exceed 14.05% per annum, and (vi) such Indebtedness is otherwise on, and subject to, such terms and conditions as are reasonably acceptable to Agent;

 

(j)            Indebtedness of any Loan Party arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business in an aggregate amount not to exceed $10,000 at any time outstanding, provided that any such Indebtedness is extinguished within ten (10) Business Days of its incurrence;

 

  

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(k)           obligations of any Loan Party under any foreign exchange contract, currency swap agreement, interest rate swap, cap or collar agreement or other similar agreement or arrangement designed to alter the risks to any Loan Party arising from fluctuations in currency values or interest rates entered into in the ordinary course of business and not for speculative purposes, so long as the aggregate exposure of the Loan Parties does not exceed $4,000,000 at any time;

 

(l)            obligations owed by the Borrower to Medpace, Inc. pursuant to that certain Amendment No. 1 thereto, dated as of October 4, 2011, by and among the Borrower and Medpace, Inc. (the “Medpace First Amendment”), which amends that certain Master Services Agreement, dated as of November 9, 2009, by and among the Borrower and Medpace, Inc. (as so amended, the “Medpace Agreement”), in an aggregate principal amount not to exceed $[*], less any payments of such obligations by the Loan Parties under the Medpace First Amendment from time to time;

 

(m)           extensions, refinancings, modifications, amendments and restatements of any items of Indebtedness described in clauses (c), (f), (g) and (i) above, provided that the principal amount thereof is not increased (other than an increase in the amount of accrued and unpaid interest, prepayment premiums and other fees and expenses associated with such extension, refinancing, modification, amendment or restatement), and the terms thereof are not modified to impose more burdensome terms upon any Loan Party or its Subsidiary, as the case may be; and

 

(n)           other Indebtedness not otherwise permitted under this Section 7.2 in aggregate principal amount not to exceed $100,000 at any time.

 

The term “Indebtedness” means, with respect to any person, at any date, without duplication, (i) all obligations of such person for borrowed money, (ii) all obligations of such person evidenced by bonds, debentures, notes or other similar instruments, or upon which interest payments are customarily made, (iii) all obligations of such person to pay the deferred purchase price of property or services, but excluding obligations to trade creditors incurred in the ordinary course of business and not past due by more than 90 days, (iv) all capital lease obligations of such person, (v) the principal balance outstanding under any synthetic lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing product, (vi) all obligations of such person to purchase securities (or other property) which arise out of or in connection with the issuance or sale of the same or substantially similar securities (or property), (vii) all contingent or non-contingent obligations of such person to reimburse any bank or other person in respect of amounts paid under a letter of credit or similar instrument, (viii) all equity securities of such person subject to repurchase or redemption otherwise than at the sole option of such person, (ix) all “earnouts” and similar payment obligations of such person (it being understood, for the purposes of this clause (ix), that milestone and royalty payments to be made in the ordinary course of business pursuant to licensing agreements permitted hereunder, which do not constitute seller financing, shall not be deemed to be “earnouts”), (x) all indebtedness secured by a Lien on any asset of such person, whether or not such indebtedness is otherwise an obligation of such person, (xi) all obligations of such person under any foreign exchange contract, currency swap agreement, interest rate swap, cap or collar agreement or other similar agreement or arrangement designed to alter the risks of that person arising from fluctuations in currency values or interest rates, in each case whether contingent or matured, and (xii) all obligations or liabilities of others guaranteed by such person.

 

  

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7.3           Dispositions.  No Loan Party shall, and no Loan Party shall permit any of its Subsidiaries to, convey, sell, rent, lease, sublease, mortgage, license, transfer or otherwise dispose of (collectively, “Transfer”) any of the Collateral or any Intellectual Property, except for the following (collectively, “Permitted Dispositions”):  (a) sales of inventory in the ordinary course of business, (b) dispositions by a Loan Party or any of its Subsidiaries of tangible assets that are no longer used or useful in the business of such Loan Party or Subsidiary for cash and fair value so long as (i) no Default or Event of Default exists at the time of such disposition or would be caused after giving effect thereto and (ii) the fair market value of all such assets disposed of does not exceed $1,000,000 in any calendar year, (c) non-exclusive licenses and exclusive licenses for the use of any Loan Party’s Intellectual Property in the ordinary course of business, so long as (i) no Default or Event of Default has occurred and is continuing at the time of such Transfer or would result therefrom, (ii) such license constitutes an arms-length transaction in the ordinary course of business (and in the case of an exclusive license, made in connection with a bona fide corporate collaboration in the ordinary course of business and approved by the board of directors of the applicable Loan Party) and the terms of which, on their face, (A) do not provide for a sale or assignment (other than to the extent such assignment constitutes a Lien permitted under clause (g) or (i) of the first sentence of Section 7.1) of any Intellectual Property and (B) do not restrict (other than as permitted under clause (e) or (g) of the second sentence of Section 7.1) such Loan Party’s ability to pledge, grant a security interest in or Lien on, or assign or otherwise Transfer any Intellectual Property, (iii) the applicable Loan Party delivers seven (7) Business Days prior written notice and a brief summary of the terms of such license to Agent, (iv) the applicable Loan Party delivers to Agent copies of the final executed licensing documents in connection with such license within five (5) Business Days upon consummation of such license (provided that the applicable Loan Party shall use commercially reasonable efforts to ensure that the confidentiality provisions of such licensing documentation permit the applicable Loan Party to deliver such documents to Agent, and if the applicable Loan Party fails to obtain such permission, the applicable Loan Party shall deliver to Agent and Lenders such licensing documentation redacted to the extent necessary to comply with such confidentiality restrictions) and (v) all royalties, milestone payments or other proceeds arising from the licensing agreement are paid to a deposit account or securities account that is governed by an Account Control Agreement, (d) Transfers of Antibody Libraries and Related Assets (as defined below) in the ordinary course of business, on arms-length terms, to unaffiliated third parties so long as (i) no Default or Event of Default has occurred and is continuing at the time of such Transfer, (ii) the applicable Loan Party delivers seven (7) Business Days prior written notice and a brief summary of the terms of such sale to Agent, (iii) the applicable Loan Party delivers to Agent copies of the final executed transaction documents within five (5) Business Days upon consummation of such transaction and (iv) all proceeds arising from such transaction are paid to a deposit account or securities account that is governed by an Account Control Agreement, (e) the Transfer of the [*] to the [*] Subsidiary upon formation thereof, provided that at the time of such Transfer no Default or Event of Default shall be continuing or would result therefrom, (f) the Transfer of the [*] to the [*] Subsidiary upon formation thereof, provided that at the time of such Transfer no Default or Event of Default shall be continuing or would result therefrom, (g) Transfers of assets from any Loan Party or any Subsidiary thereof to Borrower, (h) Transfers of Intellectual Property from any Loan Party or any Subsidiary thereof to XOMA Technology in the ordinary course of business consistent with past practice, (i) Transfers of assets between XOMA Ireland and XOMA Technology, (j) Transfers of cash and Cash Equivalents expressly permitted pursuant to clause (D) of the exception to Section 6.9(c) and (k) the [*] Disposition so long as (i) no Default or Event of Default has occurred and is continuing or would result therefrom, (ii) the Borrower delivers seven (7) Business Days prior written notice and a brief summary of the terms of the [*] Disposition to Agent, (iii) the Borrower delivers to Agent copies of the final executed documents in connection with the [*] Disposition within five (5) Business Days of consummation of the [*] Disposition and (iv) all royalties, milestone payments or other proceeds arising from the [*] Disposition are paid to a deposit account or securities account that is governed by an Account Control Agreement.  As used herein “Antibody Libraries and Related Assets” shall mean (a) specific collections of polynucleotides encoding antibodies and their associated biological materials, (b) intellectual property and know-how related thereto or to the use thereof, (c) materials, intellectual property and know-how embodying the Targeted Affinity EnhancementTM technology or other technology made available by XOMA for improving or enhancing the affinity of antibodies and (d) the informatics and other materials-handling systems, associated software applications and related data systems and know-how related thereto made available by XOMA for use in connection therewith.  As used herein, the “[*] Disposition” shall mean the Transfer of all or a portion of the Intellectual Property identified on Schedule C to [*], a Delaware corporation, or one or more of its affiliates.

 

  

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7.4           Change in Name, Location or Executive Office; Change in Business; Change in Fiscal Year.  No Loan Party shall, and no Loan Party shall permit any of its Subsidiaries to: (a) change its name or its jurisdiction of organization; (b) relocate its chief executive office prior to providing a duly executed Access Agreement with respect to such new location; (c) engage in any business other than or reasonably related or incidental to the businesses currently engaged in by such Loan Party or Subsidiary; (d) cease to conduct business substantially in the manner conducted by such Loan Party or Subsidiary as of the date of this Agreement; or (e) change its fiscal year end; except, in each case with respect to clauses (a), (b), (c) and (d), pursuant to (A) the Parent Redomestication or any Subsidiary Redomestication and only upon 30 days prior written notification to Agent and delivery of all reaffirmations, perfection certificates, legal opinions or other documents or information reasonably requested by Agent in connection therewith, or (B) the Permitted Dissolutions.  The term “Parent Redomestication” means the (i) conversion of Parent to a Delaware corporation pursuant to the provisions of Section 388 of the Delaware General Corporation Law, (ii) discontinuance of Parent’s registration in Bermuda pursuant to the provisions of Sections 132G and 132H of the Companies Act 1981 of Bermuda and (iii) any exchange of shares in the capital of Parent registered as a Bermuda exempted company for capital stock in Parent organized as a Delaware corporation on a one-for-one basis to the extent necessary to give effect to such conversion.  The term “Subsidiary Redomestication” means (i) the conversion of any wholly owned Subsidiary of Parent which is organized in a jurisdiction outside of the United States to an entity organized in a jurisdiction within the United States and (ii) the exchange of capital stock of such Subsidiary organized in a jurisdiction outside of the United States for the capital stock of such Subsidiary as organized in a jurisdiction inside of the United States to the extent necessary to give effect to such conversion.

 

7.5           Mergers or Acquisitions.  No Loan Party shall merge or consolidate, and no Loan Party shall permit any of its Subsidiaries to merge or consolidate, with or into any other person or entity (other than (a) mergers of a Subsidiary into Borrower in which Borrower is the surviving entity, (b) mergers of a Subsidiary of Parent (other than Borrower) into a Loan Party (other than Parent) in which such Loan Party is the surviving entity, and (c) mergers of a Subsidiary of Parent which is not a Loan Party into another Subsidiary of Parent which is not a Loan Party) or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another person or entity or all or substantially all of the assets constituting any line of business, division, branch, operating division or other unit operation of another person or entity.

 

7.6           Restricted Payments.  No Loan Party shall, and no Loan Party shall permit any of its Subsidiaries (other than the [*] Subsidiary and the [*] Subsidiary) to, (a) declare or pay any dividends or make any other distribution or payment on account of or redeem, retire, defease or purchase any capital stock (other than the payment of dividends to Borrower and any exchange of capital stock required to complete the Parent Redomestication or any Subsidiary Redomestication), (b) purchase, redeem, defease or prepay any principal of, premium, if any, interest or other amount payable in respect of any Indebtedness other than regularly scheduled or mandatory repayments of Indebtedness permitted to be incurred under Section 7.2 (provided that no such regularly scheduled or mandatory repayments of Indebtedness of Subsidiaries that are not Loan Parties shall be directly or indirectly funded by any Loan Party), (c) make any payment in respect of management fees or consulting fees (or similar fees) to any equityholder or other Affiliate of a Loan Party other than as set forth on Schedule B, (d) be a party to or bound by an agreement that restricts a Subsidiary from paying dividends or otherwise distributing property to Borrower or (e) make any payments on account of intercompany Indebtedness permitted under Section 7.2 (except in accordance with the terms of the applicable Intercompany Note then in effect with respect to such intercompany Indebtedness); provided, that for any taxable period for which Borrower is either a disregarded entity or a partnership for U.S. federal or applicable state or local income tax purposes or is a member of a consolidated, combined or similar income tax group of which Parent or any other direct or indirect parent of Borrower is the common parent, Borrower may make distributions to fund the income tax liability of Parent (or such other common parent) to the extent such liability is attributable to Borrower and/or its Subsidiaries.

 

  

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7.7           Investments.  No Loan Party shall, and no Loan Party shall permit any of its Subsidiaries to, directly or indirectly (a) acquire or own, or make any loan, advance or capital contribution (an “Investment”) in or to any person or entity (other than to another Loan Party to the extent permitted under the terms and conditions set forth in Section 7.2(h)), (b) acquire or create any Subsidiary, or (c) engage in any joint venture or partnership with any other person or entity, other than: (i) Investments existing on the date hereof and set forth on Schedule B to this Agreement, (ii) Investments in cash and Cash Equivalents (as defined below), (iii) loans or advances to employees of Borrower or any of its Subsidiaries to finance travel, entertainment and relocation expenses and other ordinary business purposes in the ordinary course of business as presently conducted, provided that the aggregate outstanding principal amount of all loans and advances permitted pursuant to this clause (iii) shall not exceed $50,000 at any time, (iv) Investments consisting of accounts receivable, endorsements for collection, deposits or similar Investments arising in the ordinary course of business, (v) any Investment consisting of intercompany Indebtedness extended by a Loan Party to another Loan Party to the extent permitted under Section 7.2(h), (vi) the contribution of the [*] to the [*] Subsidiary upon formation thereof, provided that at the time of such contribution no Default or Event of Default shall be continuing or would result therefrom, (vii) the contribution of the [*] to the [*] Subsidiary so long as at the time of such contribution no Default or Event of Default shall be continuing or would result therefrom, (viii) Investments made in connection with purchases of inventory, supplies, material or equipment in the ordinary course of business, (ix) Investments received as consideration in connection with the [*] Disposition and (x) capital contributions by Parent to any Loan Party (clauses (i) through (x) collectively, the “Permitted Investments”).

 

The term “Cash Equivalents” means (v) any readily-marketable securities (i) issued by, or directly, unconditionally and fully guaranteed or insured by the United States federal government or (ii) issued by any agency of the United States federal government the obligations of which are fully backed by the full faith and credit of the United States federal government, (w) any readily-marketable direct obligations issued by any other agency of the United States federal government, any state of the United States or any political subdivision of any such state or any public instrumentality thereof, in each case having a rating of at least “A-1” from S&P or at least “P-1” from Moody’s, (x) any commercial paper rated at least “A-1” by S&P or “P-1” by Moody’s and issued by any entity organized under the laws of any state of the United States, (y) any U.S. dollar-denominated time deposit, insured certificate of deposit, overnight bank deposit or bankers’ acceptance issued or accepted by (i) Agent or (ii) any commercial bank that is (A) organized under the laws of the United States, any state thereof or the District of Columbia, (B) “adequately capitalized” (as defined in the regulations of its primary federal banking regulators) and (C) has Tier 1 capital (as defined in such regulations) in excess of $250,000,000 or (z) shares of any United States money market fund that (i) has substantially all of its assets invested continuously in the types of investments referred to in clause (v), (w), (x) or (y) above with maturities which shall not exceed 396 days, (ii) has net assets in excess of $500,000,000 and (iii) has obtained from either S&P or Moody’s the highest rating obtainable for money market funds in the United States; provided, however, that the maturities of all obligations specified in any of clauses (v), (w), (x) and (y) above shall not exceed 365 days.  For the avoidance of doubt, “Cash Equivalents” does not include (and each Loan Party is prohibited from purchasing or purchasing participations in) any auction rate securities or other corporate or municipal bonds with a long-term nominal maturity for which the interest rate is reset through a Dutch auction.

 

  

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Notwithstanding the foregoing the Borrower may form (1) a special purpose entity after the Closing Date (the “[*] Subsidiary”) for the purpose of [*] (the “[*] Activities”) and/or (2) a special purpose entity after the Closing Date (the “[*] Subsidiary”) for the purpose of [*] (as defined below) (the “[*] Activities”); provided, that at the option of the Borrower, the [*] Subsidiary and the [*] Subsidiary may be the same entity and have the combined purposes set forth above.  Neither the [*] Subsidiary nor the [*] Subsidiary shall be required to be a Loan Party.  At any time when it is a Subsidiary of a Loan Party, the [*] Subsidiary shall not engage in any activities other than the [*] Activities and activities reasonably related thereto and shall not have any assets other than immaterial assets and the [*].  At any time when it is a Subsidiary of a Loan Party, the [*] Subsidiary shall not engage in any activities other than the [*] Activities and activities reasonably related thereto and shall not have any assets other than immaterial assets and the [*].  No Loan Party or any other Subsidiary thereof shall be obligated directly, contingently or otherwise indirectly for any obligation or liability of the [*] Subsidiary or [*] Subsidiary.  No funds or assets of any Loan Party shall be expended after the Closing Date on or in connection with the [*] or the [*] (whether for development costs, legal fees, debt or equity financing transaction costs or otherwise) in excess of $600,000 in the aggregate (excluding (A) funds provided by a third party for such  purpose and (B) up to an additional $600,000 for which a written commitment has been received from a third party for reimbursement of such expended funds).  No Liens may be granted or Indebtedness incurred in connection with the [*] or the [*] until such [*] has been Transferred to the [*] Subsidiary or the [*] have been transferred to the [*] Subsidiary, respectively, other than Liens permitted under clause (h) of the first sentence of Section 7.1 and Indebtedness permitted under Section 7.2(l).

“[*]” means [*].

7.8           Transactions with Affiliates.  No Loan Party shall, and no Loan Party shall permit any of its Subsidiaries to, directly or indirectly enter into or permit to exist any transaction with any Affiliate (as defined below) of a Loan Party or any Subsidiary of a Loan Party except for (i) transactions that are in the ordinary course of such Loan Party’s or such Subsidiary’s business, upon fair and reasonable terms that are no more favorable to such Affiliate than would be obtained in an arm’s length transaction, (ii) transactions solely among Loan Parties that are expressly permitted hereunder, (iii) tax distributions by Borrower expressly permitted under the proviso to Section 7.6, and (iv) any exchange of capital stock required to give effect to the Parent Redomestication or any Subsidiary Redomestication.  As used herein, “Affiliate” means, with respect to a Loan Party or any Subsidiary of a Loan Party, (a) each person that, directly or indirectly, owns or controls 5.0% or more of the stock or membership interests having ordinary voting power in the election of directors or managers of such Loan Party or such Subsidiary, and (b) each person that controls, is controlled by or is under common control with such Loan Party or such Subsidiary.

 

Without limitation of the foregoing, in no event shall any Loan Party engage, or permit any of its Subsidiaries to engage, in any transaction with the [*] Subsidiary or [*] Subsidiary except for (i) administrative (including legal and human resources) support services provided to the [*] Subsidiary and/or [*] Subsidiary on reasonable and customary terms that do not interfere with the business of any Loan Party or any of its Subsidiaries, (ii) any Transfer to the [*] Subsidiary of the [*] upon fair and reasonable terms no less favorable to any Loan Party or any of its Subsidiaries than would be obtained in a comparable arm’s length transaction with a person or entity other than the [*] Subsidiary, provided that at the time of such Transfer no Default or Event of Default shall be continuing or would result therefrom, (iii) any Transfer to the [*] Subsidiary of the [*] upon fair and reasonable terms no less favorable to any Loan Party or any of its Subsidiaries than would be obtained in a comparable arm’s length transaction with a person or entity other than the [*] Subsidiary, provided that at the time of such Transfer no Default or Event of Default shall be continuing or would result therefrom, (iv) transactions between the [*] Subsidiary and [*] Subsidiary which do not directly or indirectly involve or otherwise adversely affect any Loan Party or any other Subsidiary of any Loan Party, (v) other transactions in the ordinary course of business and undertaken in good faith and not for purposes of evading any covenant or restriction in any Transaction Document and upon fair and reasonable terms no less favorable to any Loan Party or any of its Subsidiaries than would be obtained in a comparable arm’s length transaction with a person or entity other than the [*] Subsidiary or [*] Subsidiary and which is disclosed in writing to Agent, and (vi) the expenditure by the Loan Parties of up to $600,000 in the aggregate (excluding (A) funds provided by a third party for such  purpose and (B) up to an additional $600,000 for which a written commitment has been received from a third party for reimbursement of such expended funds) after the Closing Date on or in connection with the [*] or the [*] (whether for development costs, legal fees, debt or equity financing transaction costs or otherwise) expressly permitted under Section 7.7.

 

  

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7.9           Compliance.  No Loan Party shall, and no Loan Party shall permit any of its Subsidiaries to, (a) fail to comply with the laws and regulations described in clauses (b) or (c) of Section 5.8 herein, or (b) use any portion of the Term Loan to purchase, become engaged in the business of purchasing or selling, or extend credit for the purpose of purchasing or carrying Margin Stock.

 

7.10         Deposit Accounts and Securities Accounts.  No Loan Party shall directly or indirectly maintain or establish any deposit account or securities account, unless Agent, the applicable Loan Party or Loan Parties and the depository institution or securities intermediary at which the account is or will be maintained enter into a deposit account control agreement or securities account control agreement (or, in respect of XOMA Ireland, a Notice of Assignment and Acknowledgment of Assignment in the form set forth on Schedule 2 to the Irish Debenture), as the case may be, in form and substance satisfactory to Agent (an “Account Control Agreement”) (which agreement shall provide, among other things, that (i) such depository institution or securities intermediary has no rights of setoff or recoupment or any other claim against such deposit or securities account (except as agreed to by Agent), other than for payment of its service fees and other charges directly related to the administration of such account and for returned checks or other items of payment, and (ii) such depository institution or securities intermediary shall comply with all instructions of Agent without further consent of such Loan Party or Loan Parties, as applicable, including, without limitation, an instruction by Agent to comply exclusively with instructions of Agent with respect to such account (such notice, a “Notice of Exclusive Control”), in each case with such modifications as may be acceptable to the Agent), prior to or concurrently with the establishment of such deposit account or securities account (or in the case of any such deposit account or securities account maintained as of the date hereof, on or before the Closing Date).  Except as provided in the last sentence of this Section 7.10, each Loan Party shall deposit all of its cash and Cash Equivalents into deposit accounts or securities accounts, as applicable, which are subject to Account Control Agreements.  Agent may only give a Notice of Exclusive Control with respect to any deposit account or securities account at any time at which an Event of Default has occurred and is continuing.  At the request of Agent, Borrower shall create or designate a dedicated deposit account or accounts to be used exclusively for payroll or withholding tax purposes.  Notwithstanding anything herein to the contrary, this Section 7.10 shall not apply to (a) any deposit account exclusively used for payroll, payroll taxes, or other employee wage and benefit payments to or for the benefit of the Loan Parties’ employees, provided that the aggregate balance in such accounts does not exceed the amount necessary to make the immediately succeeding payroll, payroll tax or benefit payment (or such minimum amount as may be required by any Requirement of Law with respect to such accounts), as applicable, (b) any zero-balance disbursement account, and (c) any deposit account or securities account the average daily balance of which in the aggregate, together with the average daily balance of all such other deposit accounts and securities accounts excluded pursuant to this clause (c), shall not exceed $100,000  (all accounts described in clause (a) through (c) of this sentence are referred to as “Excluded Accounts”).

 

  

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7.11          Amendments to Other Agreements.  No Loan Party shall amend, modify or waive any provision of (a) any Material Agreement or (b) any of such Loan Party’s organizational or constitutional documents, in each case without the prior written consent of Agent and the Requisite Lenders (unless the net effect of such amendment, modification or waiver is not adverse in any material respect to any Loan Party, Agent or the Lenders).

 

8.            DEFAULT AND REMEDIES.

 

8.1           Events of Default.  Loan Parties shall be in default under this Agreement and each of the other Transaction Documents if (each of the following, an “Event of Default”):

 

(a)           Borrower shall fail to pay (i) any principal when due, or (ii) any interest, fees or other Obligations (other than as specified in clause (i)) within a period of three (3) Business Days after the due date thereof (other than on the Term Loan Maturity Date) under any of the Transaction Documents;

 

(b)           any Loan Party breaches any of its obligations under Section 6.1 (solely as it relates to maintaining its existence), Section 6.2, Section 6.3, Section 6.4 (solely by reason of  non-payment of premiums by a Loan Party or any such default that relates to property or casualty insurance policies), or Article 7;

 

(c)           any Loan Party breaches any of its other obligations under any of the Transaction Documents and fails to cure such breach within 30 days after the earlier of (i) the date on which a Responsible Officer of such Loan Party becomes aware, or through the exercise of reasonable diligence should have become aware, of such failure and (ii) the date on which notice shall have been given to Borrower from Agent;

 

(d)           any warranty, representation or statement made or deemed made by or on behalf of any Loan Party in any of the Transaction Documents or otherwise in connection with any of the Obligations shall be false or misleading in any material respect at the time such warranty, representation or statement was made or deemed made;

 

(e)           Collateral with an aggregate value in excess of $100,000 is subjected to attachment, execution, levy, seizure or confiscation in any legal proceeding or otherwise, and no bond is posted or protective order obtained to negate such risk, and such legal proceeding shall not have been vacated or discharged for a period of 20 consecutive days, and there shall not be in effect (by reason of a pending appeal or otherwise) any stay of enforcement thereof;

 

(f)           one or more judgments, orders or decrees shall be rendered against any Loan Party or any Subsidiary of a Loan Party that exceeds by more than $250,000 any insurance coverage applicable thereto (to the extent the relevant insurer has been notified of such claim and has not denied coverage therefor), or one or more non-monetary judgments, orders or decrees shall be rendered against any Loan Party or any Subsidiary of a Loan Party that could reasonably be expected to result in a Material Adverse Effect, and in either case (i) enforcement proceedings shall have been commenced by any creditor upon any such judgment, order or decree or (ii) such judgment, order or decree shall not have been vacated or discharged for a period of 30 consecutive days and there shall not be in effect (by reason of a pending appeal or otherwise) any stay of enforcement thereof;

 

  

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(g)           (i)           any Loan Party or any Subsidiary of a Loan Party shall generally not pay its debts as such debts become due, shall admit in writing its inability to pay its debts generally, shall make a general assignment for the benefit of creditors, or shall cease doing business as a going concern, (ii) any proceeding shall be instituted by or against any Loan Party or any Subsidiary of a Loan Party seeking to adjudicate it a bankrupt or insolvent or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, composition of it or its debts or any similar order, in each case under any law relating to bankruptcy, examination, insolvency or reorganization or relief of debtors or seeking the entry of an order for relief or the appointment of a custodian, receiver, trustee, Irish law examiner, conservator, liquidating agent, liquidator, other similar official or other official with similar powers, in each case for it or for any substantial part of its property and, in the case of any such proceedings instituted against (but not by or with the consent of) such Loan Party or such Subsidiary, either such proceedings shall remain undismissed or unstayed for a period of 45 days or more or any action sought in such proceedings shall occur or (iii) any Loan Party or any Subsidiary of a Loan Party shall take any corporate or similar action or any other action to authorize any action described in clause (i) or (ii) above;

 

(h)           a Material Adverse Effect has occurred;

 

(i)            (i) any provision of any Transaction Document shall fail to be valid and binding on, or enforceable against, a Loan Party party thereto, or (ii) any Transaction Document purporting to grant a security interest to secure any Obligation shall fail to create a valid and enforceable security interest on any Collateral with a value in excess of $100,000 purported to be covered thereby or such security interest shall fail or cease to be a perfected Lien with the priority required in the relevant Transaction Document except to the extent that any such loss of perfection or priority results from the failure of the Agent to file UCC financing statements or continuation statements or other equivalent filings, or any Loan Party shall state in writing that any of the events described in clause (i) or (ii) above shall have occurred;

 

(j)            (i) any Loan Party or any Subsidiary of a Loan Party defaults under any Material Agreement (after any applicable grace period contained therein), (ii) (A) any Loan Party or any Subsidiary of a Loan Party fails to make (after any applicable grace period) any payment when due (whether due because of scheduled maturity, required prepayment provisions, acceleration, demand or otherwise) on any Indebtedness (other than the Obligations) of such Loan Party or such Subsidiary having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than $300,000 (“Material Indebtedness”), (B) any other event shall occur or condition shall exist under any contractual obligation relating to any such Material Indebtedness, if the effect of such event or condition is to accelerate, or to permit the acceleration of (without regard to any subordination terms with respect thereto), the maturity of such Material Indebtedness or (C) any such Material Indebtedness shall become or be declared to be due and payable, or be required to be prepaid, redeemed, defeased or repurchased (other than by a regularly scheduled required prepayment), prior to the stated maturity thereof, or (iii) Borrower or any Subsidiary defaults (beyond any applicable grace period) under any obligation for payments due or otherwise under any lease agreement that meets the criteria for the requirement of an Access Agreement under Section 6.6 and, as a result thereof, the landlord thereunder has the right to terminate such lease agreement;

 

  

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(k)           (i) any of the chief executive officer or the chief financial officer of Borrower as of the date hereof shall cease to be involved in the day to day operations (including research development) or management of the business of Borrower, unless a permanent or interim successor of such officer is appointed by the board of directors of the Borrower within 90 days of such cessation of involvement, and such successor is in compliance with the Office of Foreign Assets Control, money-laundering, anti-terrorism, SEC, drug/device laws and regulations, and other similar regulations (in each case, to the extent applicable to a natural Person), (ii) Parent shall cease to own and control all of the economic and voting rights associated with ownership of all of the outstanding capital stock of all classes of the Borrower and each other Loan Party on a fully-diluted basis, (iii) the acquisition, directly or indirectly, by any person or group (as such term is used in Section 13(d)(3) of the Securities Exchange Act of 1934) of more than thirty-five percent (35%) of the voting power of the voting stock of Parent by way of merger or consolidation or otherwise, (iv) during any period of twelve consecutive calendar months, individuals who at the beginning of such period constituted the board of directors of Parent (together with any new directors whose election by the board of directors of Parent or whose nomination for election by the stockholders of Parent was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason other than death or disability to constitute a majority of the directors then in office, or (v) Borrower ceases to own and control, directly or indirectly, all of the economic and voting rights associated with the outstanding voting capital stock (or other voting equity interest) of each of its Subsidiaries; provided, however, that (x) the consummation of the Parent Redomestication, any Subsidiary Redomestication or the Permitted Dissolutions in each case as expressly permitted hereunder shall not constitute an Event of Default under this clause (k) and (y) the [*] Subsidiary and the [*] Subsidiary may issue voting and/or economic equity interests to an unrelated third party for fair value as determined by the board of directors of such entities;

 

(l)           (i) The FDA or any other governmental authority initiates enforcement action against any Loan Party or any supplier of a Loan Party that causes any Loan Party to recall, withdraw, remove or discontinue marketing any of its products which could reasonably be expected to have a Material Adverse Effect of the type described in clauses (b), (c), (d) and (e) of the definition thereof; (ii) [*]; (iii) any Loan Party conducts a mandated or voluntary recall which could reasonably be expected to result in liability and expense to the Loan Parties of $[*] or more; or (iv) any Loan Party enters into a settlement agreement with the FDA or any other governmental authority that results in aggregate liability as to any single or related series of transactions, incidents or conditions, of $[*] or more, or that could reasonably be expected to have a Material Adverse Effect of the type described in clauses (b), (c), (d) and (e) of the definition thereof.

 

8.2           Lender Remedies.  Upon the occurrence and during the continuance of any Event of Default, Agent may, and at the written request of the Requisite Lenders shall, terminate the Commitments and declare any or all of the Obligations to be immediately due and payable, without demand or notice to any Loan Party and the accelerated Obligations shall bear interest at the Default Rate pursuant to Section 2.5, provided that, upon the occurrence of any Event of Default specified in Section 8.1(g) above, the Obligations shall be automatically accelerated.  After the occurrence and during the continuance of an Event of Default, Agent shall have (on behalf of itself and Lenders) all of the rights and remedies of a secured party under the UCC, and under any other applicable law.

 

8.3           Application of Proceeds.  Proceeds from any Transfer of the Collateral or from any Transfer of the Intellectual Property (other than Permitted Dispositions) and all payments made to or proceeds of Collateral or Intellectual Property received by Agent during the continuance of an Event of Default shall be applied as follows: (a) first, to pay all fees, costs, indemnities, reimbursements and expenses then due to Agent under the Transaction Documents in its capacity as Agent under the Transaction Documents, until paid in full in cash, (b) second, to pay all fees, costs, indemnities, reimbursements and expenses then due to Lenders under the Transaction Documents in accordance with their respective Pro Rata Shares, until paid in full in cash, (c) third, to pay all interest on the Term Loan then due to Lenders in accordance with their respective Pro Rata Shares (other than interest, fees, expenses and other amounts accrued after the commencement of any proceeding referred to in Section 8.1(g) if a claim for such amounts is not allowable in such proceeding), until paid in full in cash, (d) fourth, to pay all principal on the Term Loan then due to Lenders in accordance with their respective Pro Rata Shares, until paid in full in cash, (e) fifth, to pay all other Obligations then due to Lenders in accordance with their respective Pro Rata Shares (including, without limitation, all interest, fees, expenses and other amounts accrued after the commencement of any proceeding referred to in Section 8.1(g) whether or not a claim for such amounts is allowable in such proceeding), until paid in full in cash, and (f) finally, to Borrower or as otherwise required by law.  Borrower shall remain fully liable for any deficiency.

 

  

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9.            THE AGENT.

 

9.1           Appointment of Agent.

 

(a)           Each Lender hereby appoints GECC (together with any successor Agent pursuant to Section 9.6) as Agent under the Transaction Documents and authorizes Agent to (a) execute and deliver the Transaction Documents and accept delivery thereof on its behalf from Loan Parties, (b) take such action on its behalf and to exercise all rights, powers and remedies and perform the duties as are expressly delegated to Agent under such Transaction Documents and (c) exercise such powers as are reasonably incidental thereto.  The provisions of this Article 9 are solely for the benefit of Agent and the Lenders and none of Loan Parties nor any other person shall have any rights as a third party beneficiary of any of the provisions hereof.  In performing its functions and duties under this Agreement and the other Transaction Documents, Agent shall act solely as an agent of Lenders and does not assume and shall not be deemed to have assumed any obligation toward or relationship of agency or trust with or for any Loan Party or any other person.  Agent shall have no duties or responsibilities except for those expressly set forth in this Agreement and the other Transaction Documents.  The duties of Agent shall be mechanical and administrative in nature and Agent shall not have, or be deemed to have, by reason of this Agreement, any other Transaction Document or otherwise a fiduciary or trustee relationship in respect of any Lender.  Except as expressly set forth in this Agreement and the other Transaction Documents, Agent shall not have any duty to disclose, and shall not be liable for failure to disclose, any information relating to Borrower or any of its Subsidiaries that is communicated to or obtained by GECC or any of its affiliates in any capacity.

 

(b)           Without limiting the generality of clause (a) above, Agent shall have the sole and exclusive right and authority (to the exclusion of the Lenders), and is hereby authorized, to (i) act as the disbursing and collecting agent for the Lenders with respect to all payments and collections arising in connection with the Transaction Documents (including in any other bankruptcy, insolvency or similar proceeding), and each person making any payment in connection with any Transaction Document to any Lender is hereby authorized to make such payment to Agent, (ii) file and prove claims and file other documents necessary or desirable to allow the claims of Agent and the Lenders with respect to any Obligation in any proceeding described in any bankruptcy, insolvency or similar proceeding (but not to vote, consent or otherwise act on behalf of such Lender), (iii) act as collateral agent for Agent and each Lender for purposes of the perfection of all Liens created by the Transaction Documents and all other purposes stated therein, (iv) manage, supervise and otherwise deal with the Collateral, (v) take such other action as is necessary or desirable to maintain the perfection and priority of the Liens created or purported to be created by the Transaction Documents, (vi) except as may be otherwise specified in any Transaction Document, exercise all remedies given to Agent and the other Lenders with respect to the Collateral, whether under the Transaction Documents, applicable law or otherwise and (vii) execute any amendment, consent or waiver under the Transaction Documents on behalf of any Lender that has consented in writing to such amendment, consent or waiver; provided, however, that Agent hereby appoints, authorizes and directs each Lender to act as collateral sub-agent for Agent and the Lenders for purposes of the perfection of all Liens with respect to the Collateral, including any deposit account maintained by a Loan Party with, and cash and cash equivalents held by, such Lender, and may further authorize and direct the Lenders to take further actions as collateral sub-agents for purposes of enforcing such Liens or otherwise to transfer the Collateral subject thereto to Agent, and each Lender hereby agrees to take such further actions to the extent, and only to the extent, so authorized and directed.  Agent may, upon any term or condition it specifies, delegate or exercise any of its rights, powers and remedies under, and delegate or perform any of its duties or any other action with respect to, any Transaction Document by or through any trustee, co-agent, employee, attorney-in-fact and any other person (including any Lender).  Any such person shall benefit from this Article 9 to the extent provided by Agent.

 

  

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(c)           If Agent shall request instructions from Requisite Lenders or all affected Lenders with respect to any act or action (including failure to act) in connection with this Agreement or any other Transaction Document, then Agent shall be entitled to refrain from such act or taking such action unless and until Agent shall have received instructions from Requisite Lenders or all affected Lenders, as the case may be, and Agent shall not incur liability to any person by reason of so refraining.  Agent shall be fully justified in failing or refusing to take any action hereunder or under any other Transaction Document (a) if such action would, in the opinion of Agent, be contrary to law or any Transaction Document, (b) if such action would, in the opinion of Agent, expose Agent to any potential liability under any law, statute or regulation or (c) if Agent shall not first be indemnified to its satisfaction against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action.  Without limiting the foregoing, no Lender shall have any right of action whatsoever against Agent as a result of Agent acting or refraining from acting hereunder or under any other Transaction Document in accordance with the instructions of Requisite Lenders or all affected Lenders, as applicable.

 

9.2           Agent’s Reliance, Etc.  Neither Agent nor any of its affiliates nor any of their respective directors, officers, agents, employees or representatives shall be liable for any action taken or omitted to be taken by it or them hereunder or under any other Transaction Documents, or in connection herewith or therewith, except for damages caused by its or their own gross negligence or willful misconduct as finally determined by a court of competent jurisdiction.  Without limiting the generality of the foregoing, Agent:  (a) may treat the payee of any Note as the holder thereof until such Note has been assigned in accordance with Section 10.1; (b) may consult with legal counsel, independent public accountants and other experts, whether or not selected by it, and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts; (c) shall not be responsible or otherwise incur liability for any action or omission taken in reliance upon the instructions of the Requisite Lenders, (d) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations made in or in connection with this Agreement or the other Transaction Documents; (e) shall not have any duty to inspect the Collateral (including the books and records) or to ascertain or to inquire as to the performance or observance of any provision of any Transaction Document, whether any condition set forth in any Transaction Document is satisfied or waived, as to the financial condition of any Loan Party or as to the existence or continuation or possible occurrence or continuation of any Default or Event of Default and shall not be deemed to have notice or knowledge of such occurrence or continuation unless it has received a notice from Borrower or any Lender describing such Default or Event of Default clearly labeled “notice of default”; (f) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, effectiveness, genuineness, sufficiency or value of, or the attachment, perfection or priority of any Lien created or purported to be created under or in connection with, any Transaction Document or any other instrument or document furnished pursuant hereto or thereto; and (g) shall incur no liability under or in respect of this Agreement or the other Transaction Documents by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopy, telegram, cable or telex) believed by it to be genuine and signed or sent or otherwise authenticated by the proper party or parties.

 

  

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9.3           GECC and Affiliates.  For so long as GECC is a Lender hereunder, it shall have the same rights and powers under this Agreement and the other Transaction Documents as any other Lender and may exercise the same as though it were not Agent; and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated, include GECC in its individual capacity.  GECC and its affiliates may lend money to, invest in, and generally engage in any kind of business with, Borrower, any of Borrower’s Subsidiaries, any of their Affiliates and any person who may do business with or own securities of Borrower, any of Borrower’s Subsidiaries or any such Affiliate, all as if GECC were not Agent and without any duty to account therefor to Lenders.  GECC and its affiliates may accept fees and other consideration from Borrower for services in connection with this Agreement or otherwise without having to account for the same to Lenders.  Each Lender acknowledges the potential conflict of interest between GECC as a Lender holding disproportionate interests in the Term Loan and GECC as Agent, and expressly consents to, and waives, any claim based upon, such conflict of interest.

 

9.4           Lender Credit Decision.  Each Lender acknowledges that it has, independently and without reliance upon Agent or any other Lender and based on the financial statements referred to in Section 6.3 and such other documents and information as it has deemed appropriate, made its own credit and financial analysis of each Loan Party and its own decision to enter into this Agreement.  Each Lender also acknowledges that it will, independently and without reliance upon Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement.  Each Lender acknowledges the potential conflict of interest of each other Lender as a result of Lenders holding disproportionate interests in the Term Loan, and expressly consents to, and waives, any claim based upon, such conflict of interest.

 

9.5           Indemnification.  Lenders shall and do hereby indemnify Agent (to the extent not reimbursed by Loan Parties and without limiting the obligations of Loan Parties hereunder), ratably according to their respective Pro Rata Shares from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against Agent in any way relating to or arising out of this Agreement or any other Transaction Document or any action taken or omitted to be taken by Agent in connection therewith; provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from Agent’s gross negligence or willful misconduct as finally determined by a court of competent jurisdiction. Without limiting the foregoing, each Lender agrees to reimburse Agent promptly upon demand for its Pro Rata Share of any out-of-pocket expenses (including reasonable counsel fees) incurred by Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement and each other Transaction Document, to the extent that Agent is not reimbursed for such expenses by Loan Parties.  The provisions of this Section 9.5 shall survive the termination of this Agreement.

 

9.6           Successor Agent.  Agent may resign at any time by delivering five (5) days prior notice of such resignation to the Lenders and the Borrower, effective on the date set forth in such notice.  Upon any such resignation, the Requisite Lenders shall have the right to appoint a successor Agent.  If no successor Agent shall have been so appointed by the Requisite Lenders and shall have accepted such appointment within 30 days after the resigning Agent’s giving notice of resignation, then the resigning Agent may, on behalf of Lenders, appoint a successor Agent, which shall be a Lender, if a Lender is willing to accept such appointment, or otherwise shall be a commercial bank or financial institution or a subsidiary of a commercial bank or financial institution if such commercial bank or financial institution is organized under the laws of the United States of America or of any State thereof and has a combined capital and surplus of at least $300,000,000.  If no successor Agent has been appointed pursuant to the foregoing, within 30 days after the date such notice of resignation was given by the resigning Agent, the Requisite Lenders shall thereafter perform all the duties of Agent hereunder until such time, if any, as the Requisite Lenders appoint a successor Agent as provided above. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall succeed to and become vested with all the rights, powers, privileges and duties of the resigning Agent. Upon the earlier of the acceptance of any appointment as Agent hereunder by a successor Agent or the effective date of the resigning Agent’s resignation, the resigning Agent shall be discharged from its duties and obligations under this Agreement and the other Transaction Documents, except that any indemnity rights or other rights in favor of such resigning Agent shall continue. After any resigning Agent’s resignation hereunder, the provisions of this Section 9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was acting as Agent under this Agreement and the other Transaction Documents.

 

  

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9.7           Setoff and Sharing of Payments.  In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, upon the occurrence and during the continuance of any Event of Default and subject to Section 9.8(e), each Lender is hereby authorized at any time or from time to time upon the direction of Agent, without notice to Borrower or any other person, any such notice being hereby expressly waived, to offset and to appropriate and to apply any and all balances held by it at any of its offices for the account of Borrower (regardless of whether such balances are then due to Borrower) and any other properties or assets at any time held or owing by that Lender or that holder to or for the credit or for the account of Borrower against and on account of any of the Obligations that are not paid when due.  Any Lender exercising a right of setoff or otherwise receiving any payment on account of the Obligations in excess of its Pro Rata Share thereof shall purchase for cash (and the other Lenders or holders shall sell) such participations in each such other Lender’s or holder’s Pro Rata Share of the Obligations as would be necessary to cause such Lender to share the amount so offset or otherwise received with each other Lender or holder in accordance with their respective Pro Rata Shares of the Obligations.  Borrower agrees, to the fullest extent permitted by law, that (a) any Lender may exercise its right to offset with respect to amounts in excess of its Pro Rata Share of the Obligations and may sell participations in such amounts so offset to other Lenders and holders and (b) any Lender so purchasing a participation in the Term Loan made or other Obligations held by other Lenders or holders may exercise all rights of offset, bankers’ lien, counterclaim or similar rights with respect to such participation as fully as if such Lender or holder were a direct holder of the Term Loan and the other Obligations in the amount of such participation.  Notwithstanding the foregoing, if all or any portion of the offset amount or payment otherwise received is thereafter recovered from the Lender that has exercised the right of offset, the purchase of participations by that Lender shall be rescinded and the purchase price restored without interest.  The term “Pro Rata Share” means, with respect to any Lender at any time, the percentage obtained by dividing (x) the Commitment of such Lender then in effect (or, if such Commitment is terminated, the aggregate outstanding principal amount of the Term Loan owing to such Lender) by (y) the Total Commitment then in effect (or, if the Total Commitment is terminated, the outstanding principal amount of the Term Loan owing to all Lenders).

 

9.8           Advances; Payments; Non-Funding Lenders; Information; Actions in Concert.

 

(a)           Advances; Payments.  If Agent receives any payment for the account of Lenders on or prior to 1:00 p.m. (New York time) on any Business Day, Agent shall pay to each applicable Lender such Lender’s Pro Rata Share of such payment on such Business Day. If Agent receives any payment for the account of Lenders after 1:00 p.m. (New York time) on any Business Day, Agent shall pay to each applicable Lender such Lender’s Pro Rata Share of such payment on the next Business Day. To the extent that any Lender has failed to fund any such payments and Term Loans (a “Non-Funding Lender”), Agent shall be entitled to set off the funding short-fall against that Non-Funding Lender’s Pro Rata Share of all payments received from Borrower.

 

  

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(b)           Return of Payments.

 

(i)           If Agent pays an amount to a Lender under this Agreement in the belief or expectation that a related payment has been or will be received by Agent from a Loan Party and such related payment is not received by Agent, then Agent will be entitled to recover such amount (including interest accruing on such amount at the Federal Funds Rate for the first Business Day and thereafter, at the rate otherwise applicable to such Obligation) from such Lender on demand without setoff, counterclaim or deduction of any kind.

 

(ii)           If Agent determines at any time that any amount received by Agent under this Agreement must be returned to a Loan Party or paid to any other person pursuant to any insolvency law or otherwise, then, notwithstanding any other term or condition of this Agreement or any other Transaction Document, Agent will not be required to distribute any portion thereof to any Lender.  In addition, each Lender will repay to Agent on demand any portion of such amount that Agent has distributed to such Lender, together with interest at such rate, if any, as Agent is required to pay to a Loan Party or such other person, without setoff, counterclaim or deduction of any kind.

 

(c)           Non-Funding Lenders.  The failure of any Non-Funding Lender to make the Term Loan or any payment required by it hereunder shall not relieve any other Lender (each such other Lender, an “Other Lender”) of its obligations to make the Term Loan, but neither any Other Lender nor Agent shall be responsible for the failure of any Non-Funding Lender to make the Term Loan or make any other payment required hereunder.  Notwithstanding anything set forth herein to the contrary, a Non-Funding Lender shall not have any voting or consent rights under or with respect to any Transaction Document or constitute a “Lender” (or be included in the calculation of “Requisite Lender” hereunder) for any voting or consent rights under or with respect to any Transaction Document.  At Borrower’s request, Agent or a person reasonably acceptable to Agent shall have the right with Agent’s consent and in Agent’s sole discretion (but shall have no obligation) to purchase from any Non-Funding Lender, and each Non-Funding Lender agrees that it shall, at Agent’s request, sell and assign to Agent or such person, all of the Commitments and all of the outstanding Term Loans of that Non-Funding Lender for an amount equal to the principal balance of all Term Loans held by such Non-Funding Lender and all accrued interest and fees with respect thereto through the date of sale, such purchase and sale to be consummated pursuant to an executed Assignment Agreement (as defined below).

 

(d)           Dissemination of Information.  Agent shall use reasonable efforts to provide Lenders with any notice of Default or Event of Default received by Agent from, or delivered by Agent to Borrower, with notice of any Event of Default of which Agent has actually become aware and with notice of any action taken by Agent following any Event of Default; provided that Agent shall not be liable to any Lender for any failure to do so, except to the extent that such failure is attributable to Agent’s gross negligence or willful misconduct as finally determined by a court of competent jurisdiction.  Lenders acknowledge that Borrower is required to provide financial statements to Lenders in accordance with Section 6.3 hereto and agree that Agent shall have no duty to provide the same to Lenders.

 

  

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(e)           Actions in Concert.  Anything in this Agreement to the contrary notwithstanding, each Lender hereby agrees with each other Lender that no Lender shall take any action to protect or enforce its rights arising out of this Agreement, the Notes or any other Transaction Documents (including exercising any rights of setoff) without first obtaining the prior written consent of Agent and Requisite Lenders, it being the intent of Lenders that any such action to protect or enforce rights under this Agreement and the Notes shall be taken in concert and at the direction or with the consent of Agent and Requisite Lenders.

 

10.           MISCELLANEOUS.

 

10.1          Assignment.

 

(a)           Subject to the terms of this Section 10.1, each Lender shall have the right to sell, transfer or assign, at any time or times, all or a portion of its rights and obligations hereunder and under the other Transaction Documents, its Commitment, its Term Loans or any portion thereof or interest therein, including any Lender’s rights, title, interests, remedies, powers or duties thereunder; provided, however, that any such sale, transfer or assignment shall: (i) except in the case of a sale, transfer or assignment to a Qualified Assignee (as defined below), require the prior written consent of Agent and the Requisite Lenders (which consent shall not be unreasonably withheld, conditioned or delayed); (ii) require the execution of an assignment agreement in form and substance reasonably satisfactory to, and acknowledged by, Agent (an “Assignment Agreement”); (iii) be conditioned on such assignee Lender representing to the assigning Lender and Agent that it is purchasing the applicable Commitment and/or Term Loans to be assigned to it for its own account, for investment purposes and not with a view to the distribution thereof; (iv) be in an aggregate amount of not less than $1,000,000, unless such assignment is made to an existing Lender or an affiliate of an existing Lender or is of the assignor’s (together with its affiliates’) entire interest of the Term Loans or is made with the prior written consent of Agent; and (v) include a payment to Agent of an assignment fee of $3,500 (unless otherwise agreed by Agent); providedfurther, however, that so long as no Default or Event of Default has occurred and is continuing, assignments of all or any portion of the Term Loan (or any rights or obligations under the Transaction Documents) to any Non-Eligible Lender (as defined below) shall require the prior consent of the Borrower, which consent shall not be unreasonably withheld, delayed or conditioned, and the consent of Borrower shall be deemed to have been given if Borrower has not delivered an objection in writing within five (5) Business Days of a request for such consent.  In the case of an assignment by a Lender under this Section 10.1(a), the assignee shall have, to the extent of such assignment, the same rights, benefits and obligations as all other Lenders hereunder.  The assigning Lender shall be relieved of its obligations hereunder with respect to its Commitment and Term Loans, as applicable, or assigned portion thereof from and after the date of such assignment.  Borrower hereby acknowledges and agrees that any assignment shall give rise to a direct obligation of Borrower to the assignee and that the assignee shall be considered to be a “Lender”.  In the event any Lender assigns or otherwise transfers all or any part of the Commitments and Obligations, Borrower shall, upon the assignee’s or the assignor’s request, execute new Notes in exchange for the Notes, if any, being assigned.  Agent may amend Schedule A to this Agreement to reflect assignments made in accordance with this Section 10.1.

 

As used herein, “Qualified Assignee” means (a) any Lender and any affiliate of any Lender and (b) any commercial bank, savings and loan association or savings bank or any other entity which is an “accredited investor” (as defined in Regulation D under the Securities Act) which extends credit or buys loans as one of its businesses, including insurance companies, mutual funds, lease financing companies and commercial finance companies, in each case, which has a rating of BBB or higher from S&P and a rating of Baa2 or higher from Moody's at the date that it becomes a Lender and in each case of clauses (a) and (b), which, through its applicable lending office, is capable of lending to Borrower without the imposition of any withholding or similar taxes; provided that no person proposed to become a Lender after the Closing Date that holds any subordinated debt or stock issued by any Loan Party or its Affiliates shall be a Qualified Assignee.

 

  

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As used herein, “Non-Eligible Lender” means (a) any hedge fund or private equity fund that is engaged in the business of purchasing distressed debt or (b) any entity that has (i) become subject to a voluntary or involuntary case under the U.S. Bankruptcy Code or any similar bankruptcy laws, (ii) a custodian, conservator, receiver or similar official appointed for it or any substantial part of such entity’s assets, or (iii) made a general assignment for the benefit of creditors, been liquidated, or otherwise been adjudicated as, or determined by any governmental authority having regulatory authority over such entity or its assets to be, insolvent or bankrupt, and in the case of this clause (b), Agent has determined that such entity is reasonably likely to fail to fund any payments required to be made by it (if any) under the Transaction Documents.

 

(b)           In addition to the other rights provided in this Section 10.1, each Lender may, without notice to or consent from Agent or any Loan Party, sell participations to one or more persons or entities in or to all or a portion of its rights and obligations under the Transaction Documents (including all of its rights and obligations with respect to the Term Loans); provided, however, that, whether as a result of any term of any Transaction Document or of such participation, (i) no such participant shall have a commitment, or be deemed to have made an offer to commit, to make the Term Loan hereunder, and, no such participant shall be liable for any obligation of such Lender hereunder, (ii) such Lender’s rights and obligations, and the rights and obligations of the Loan Parties and Agent and other Lenders towards such Lender, under any Transaction Document shall remain unchanged and each other party hereto shall continue to deal solely with such Lender, which shall remain the holder of the Obligations, and in no case shall a participant have the right to enforce any of the terms of any Transaction Document, and (iii) the consent of such participant shall not be required (either directly, as a restraint on such Lender’s ability to consent hereunder or otherwise) for any amendments, waivers or consents with respect to any Transaction Document or to exercise or refrain from exercising any powers or rights such Lender may have under or in respect of the Transaction Documents (including the right to enforce or direct enforcement of the Obligations), except for those described in clauses (ii), (iii) and (viii) of subsection 10.9(c) hereof.

 

10.2          Notices.  All notices, requests or other communications given in connection with this Agreement shall be in writing, shall be addressed to the parties at their respective addresses set forth on the signature pages hereto below such parties’ name or in the most recent Assignment Agreement executed by any Lender, or in the case of any Loan Party to the address of the Parent (or, solely in the case of service of process or other documents in accordance with Section 10.3 below, the address of the Borrower), unless and until a different address may be specified in a written notice to the other party delivered in accordance with this Section, and shall be deemed given (a) on the date of receipt if delivered by hand, (b) on the date of sender’s receipt of confirmation of proper transmission if sent by facsimile transmission, (c) on the next Business Day after being sent by a nationally-recognized overnight courier, and (d) on the fourth Business Day after being sent by registered or certified mail, postage prepaid.  As used herein, the term “Business Day” means and includes any day other than Saturdays, Sundays, or other days on which commercial banks in New York, New York are required or authorized to be closed.

 

10.3          Process Agent.  Each Loan Party irrevocably, (a) nominates as its agent, to receive service of process or other documents, the Borrower; and (b) agrees that service of process or documents on that agent or any other person appointed under clause (a) will be sufficient service on it. The process agent named above irrevocably and unconditionally accepts that appointment. Each Loan Party shall ensure that the process agent remains authorized to accept service on its behalf.  If the process agent ceases to have an office in the place specified, each Loan Party shall ensure that at all times there is another person in that place acceptable to the Agent to receive process on its behalf.  Each Loan Party shall promptly notify the Agent in writing of the appointment of such other person.

 

  

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10.4          Correction of Transaction Documents.  Agent may correct patent errors and fill in all blanks in this Agreement or the Transaction Documents consistent with the agreement of the parties.

 

10.5          Performance.  Time is of the essence of this Agreement.  This Agreement shall be binding, jointly and severally, upon all parties described as the “Borrower” and their respective successors and assigns, and shall inure to the benefit of Agent, Lenders, and their respective successors and assigns; provided, however, that (a) any assignment by any Lender shall be subject to the provisions of Section 10.1 and (b) no Loan Party may assign or transfer any of its rights or obligations under this Agreement without the prior written consent of Agent and Lenders pursuant to Section 10.9.

 

10.6          Payment of Fees and Expenses.  Loan Parties agree, jointly and severally, to pay or reimburse upon demand for all reasonable fees, costs and expenses incurred by Agent (and solely with respect to clause (d), the Lenders) in connection with (a) the investigation, preparation, negotiation, execution, administration of, or any amendment, modification, waiver or termination of, this Agreement or any other Transaction Document, (b) any legal advice relating to Agent’s rights or responsibilities under any Transaction Document, (c) the administration of the Loans and the facilities hereunder and any other transaction contemplated hereby or under the Transaction Documents and (d) the enforcement, assertion, defense or preservation of Agent’s and Lenders’ rights and remedies under this Agreement or any other Transaction Document, in each case of clauses (a) through (d), including, without limitation, reasonable attorneys’ fees and expenses, reasonable fees and expenses of consultants, auditors (including internal auditors) and appraisers and UCC and other corporate search and filing fees and wire transfer fees.  Borrower further agrees that such fees, costs and expenses shall constitute Obligations.  This provision shall survive the termination of this Agreement.  For the avoidance of doubt, this Section 10.6 shall not apply to Taxes, which shall be governed exclusively by Section 2.2(e) and Section 6.9(d).

 

10.7          Indemnity Provisions.

 

(a)           General Indemnity.  Each Loan Party shall and does hereby jointly and severally indemnify and defend Agent, Lenders, and their respective successors and assigns, and their respective directors, officers, employees, consultants, attorneys, agents and affiliates (each an “Indemnitee”) from and against all liabilities, losses, damages, expenses, penalties, claims, actions and suits (including, without limitation, related reasonable attorneys’ fees) of any kind whatsoever arising, directly or indirectly, which may be imposed on, incurred by or asserted against such Indemnitee as a result of or in connection with this Agreement, the other Transaction Documents or any of the transactions contemplated hereby or thereby (the “Indemnified Liabilities”); provided that, no Loan Party shall have any obligation to any Indemnitee with respect to any Indemnified Liabilities to the extent such Indemnified Liabilities arise from the gross negligence or willful misconduct of such Indemnitee as determined by a final non-appealable judgment of a court of competent jurisdiction.  In no event shall any Indemnitee be liable on any theory of liability for any special, indirect, consequential or punitive damages (including, without limitation, any loss of profits, business or anticipated savings).  Each Loan Party, the Agent and each Lender waives, releases and agrees (and each Loan Party shall cause each other Loan Party to waive, release and agree) not to sue upon any such claim for any special, indirect, consequential or punitive damages, whether or not accrued and whether or not known or suspected to exist in its favor.  This provision shall survive the termination of this Agreement.

 

  

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(b)           Environmental Liabilities.  Without limiting the foregoing, “Indemnified Liabilities” includes all Environmental Liabilities imposed on, incurred by or asserted against any Indemnitee, including those arising from, or otherwise involving, any property of any Loan Party or any affiliate of any Loan Party or any actual, alleged or prospective damage to property or natural resources or harm or injury alleged to have resulted from any Release or threatened Release of Hazardous Materials on, upon or into such property or natural resource or any property on or contiguous to any real property owned or leased by any Loan Party or any affiliate of any Loan Party, whether or not, with respect to any such Environmental Liabilities, any Indemnitee is a mortgagee pursuant to any leasehold mortgage, a mortgagee in possession, the successor-in-interest to any Loan Party or any affiliate of any Loan Party or the owner, lessee or operator of any property of any Loan Party or any affiliate of any Loan Party through any foreclosure action, in each case except to the extent such Environmental Liabilities (i) are incurred following foreclosure by Agent or following Agent or any Lender having become the successor-in-interest to any Loan Party or any affiliate of any Loan Party and (ii) are attributable to such Indemnitee.

 

(c)           Foreign Currency Indemnity.  If, at any time (i) the Agent or any Lender, receiver, or an attorney receives or recovers any amount payable by a Loan Party including: (A) under any judgment or order of any government authority, (B) for any breach of this Agreement or any other Transaction Document, (C) on the liquidation or bankruptcy of any Loan Party or any proof or claim in that liquidation or bankruptcy, or (D) any other thing into which the obligations of any Loan Party may have become merged; and (ii) the currency in which the payment is made is not in US Dollars; each Loan Party, jointly and severally, indemnifies the Agent and each Lender, receiver, or attorney against any shortfall between the amount payable in US Dollars and the amount actually or notionally received or recovered by the Agent and each Lender, receiver, or attorney after the currency in which the payment is made is converted or translated into US Dollars under clause (d) below.

 

(d)           Conversion of Currencies.  In making any currency conversion under clause (c) above, the Agent and any Lender, receiver, or attorney may itself or through its bankers (in a manner consistent with their usual practices) purchase one currency with another, whether or not through an intermediate currency, whether spot or forward, in the manner and amounts and at the time it thinks fit.

 

(e)           For the avoidance of doubt, this Section 10.7 shall not apply to Taxes, which shall be governed exclusively by Section 2.2(e) and Section 6.9(d).

 

(f)            Continuing Indemnities and Evidence of Loss.  Each indemnity of a Loan Party in this Agreement or any other Transaction Document is a continuing obligation of the Loan Party, despite any settlement of account or the occurrence of any other thing, and remains in full force and effect until the Obligations are fully and finally repaid. Each indemnity of a Loan Party in this Agreement or any other Transaction Document is an additional, separate and independent obligation of a Loan Party and no one indemnity limits the general nature of any other indemnity. Each indemnity of a Loan Party in this Agreement or any other Transaction Document survives the termination of this Agreement or any other Transaction Document. A certificate given by an officer of the Agent or any Lender detailing the amount of any loss covered by any indemnity in this Agreement or any other Transaction Document is sufficient evidence of such loss.

 

10.8          Rights Cumulative.  Agent’s and Lenders’ rights and remedies under this Agreement or otherwise arising are cumulative and may be exercised singularly or concurrently.  Neither the failure nor any delay on the part of Agent or any Lender to exercise any right, power or privilege under this Agreement shall operate as a waiver, nor shall any single or partial exercise of any right, power or privilege preclude any other or further exercise of that or any other right, power or privilege.  NONE OF AGENT OR ANY LENDER SHALL BE DEEMED TO HAVE WAIVED ANY OF ITS RESPECTIVE RIGHTS UNDER THIS AGREEMENT OR UNDER ANY OTHER AGREEMENT, INSTRUMENT OR PAPER SIGNED BY BORROWER UNLESS SUCH WAIVER IS EXPRESSED IN WRITING AND SIGNED BY AGENT, REQUISITE LENDERS OR ALL LENDERS, AS APPLICABLE.  A waiver on any one occasion shall not be construed as a bar to or waiver of any right or remedy on any future occasion.

 

  

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10.9          Entire Agreement; Amendments, Waivers.

 

(a)           This Agreement and the other Transaction Documents constitute the entire agreement between the parties with respect to the subject matter hereof and thereof and supersede all prior understandings (whether written, verbal or implied) with respect to such subject matter.  Section headings contained in this Agreement have been included for convenience only, and shall not affect the construction or interpretation of this Agreement.

 

(b)           Except for actions expressly permitted to be taken by Agent, no amendment, modification, termination or waiver of any provision of this Agreement or any other Transaction Document, or any consent to any departure by a Loan Party therefrom, shall in any event be effective unless the same shall be in writing and signed by Agent, Borrower, and Lenders having more than (x) 50% of the aggregate Commitments of all Lenders or (y) if such Commitments have expired or been terminated, 50% of the aggregate outstanding principal amount of the Term Loans (the “Requisite Lenders”).  Except as set forth in clause (c) below, all such amendments, modifications, terminations or waivers requiring the consent of any Lenders shall require the written consent of Requisite Lenders.

 

(c)           No amendment, modification, termination or waiver of any provision of this Agreement or any other Transaction Document shall, unless in writing and signed by Borrower, Agent and each Lender directly affected thereby: (i) increase or decrease any Commitment of any Lender or increase or decrease the Total Commitment (which shall be deemed to affect all Lenders), (ii) reduce the principal of or rate of interest on any Obligation or the amount of any fees payable hereunder (other than waiving the imposition of the Default Rate), (iii) postpone the date fixed for or waive any payment of principal of or interest on the Term Loan, or any fees hereunder, (iv) release all or substantially all of the Collateral, or consent to a transfer of all or substantially all of the Intellectual Property, in each case except as otherwise expressly permitted in the Transaction Documents (which shall be deemed to affect all Lenders), (v) subordinate the Lien on all or substantially all of the Collateral granted in favor of Agent securing the Obligations (which shall be deemed to affect all Lenders), (vi) release a Loan Party from, or consent to a Loan Party’s assignment or delegation of, such Loan Party’s obligations hereunder and under the other Transaction Documents or any Guarantor from its guaranty of the Obligations (which shall be deemed to affect all Lenders), (vii) amend, modify, terminate or waive Section 8.3, 9.7 or 10.9(b) or (c), or (viii) amend or modify the definition of “Requisite Lenders”.

 

(d)           Notwithstanding any provision in this Section 10.9 to the contrary, no amendment, modification, termination or waiver affecting or modifying the rights or obligations of Agent hereunder shall be effective unless signed by Borrower, Agent and Requisite Lenders.

 

(e)           Each Lender hereby consents to the release by Agent of any Lien held by Agent for the benefit of itself and the Lenders in any or all of the Collateral to secure the Obligations upon (i) the occurrence of any Permitted Disposition pursuant to Section 7.3 and (ii) the termination of the Commitments and the payment and satisfaction in full of the Obligations.

 

  

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Notwithstanding the foregoing, this Agreement may be amended without the written consent of the Requisite Lenders and solely with the consent of the Agent, Parent and Borrower in order to effect technical amendments to this Agreement in connection with or arising out of the Parent Redomestication or any Subsidiary Redomestication.

 

10.10       Binding Effect.  This Agreement shall continue in full force and effect until the Termination Date; provided, however, that the provisions of this Section 10.10 and Sections 2.2(e), 9.5, 10.6 and 10.7 and the other indemnities contained in the Transaction Documents shall survive the Termination Date.  The surrender, upon payment or otherwise, of any Note or any of the other Transaction Documents evidencing any of the Obligations shall not affect the right of Agent to retain the Collateral for such other Obligations as may then exist or as it may be reasonably contemplated will exist in the future.  This Agreement and the grant of a security interest in the Collateral pursuant to any Transaction Document shall automatically be reinstated if the Agent or any Lender is ever required to return or restore the payment of all or any portion of the Obligations (all as though such payment had never been made).  “Termination Date” means the date on which all of the Obligations are paid in full in cash, all of the Commitments hereunder are terminated, and this Agreement shall have been terminated.

 

10.11        Use of Logo.  Each Loan Party authorizes Agent to use its name, logo and/or trademark without notice to or consent by such Loan Party, in connection with certain promotional materials that Agent may disseminate to the public.  The promotional materials may include, but are not limited to, brochures, video tape, internet website, press releases, tombstones, advertising in newspaper and/or other periodicals, lucites, and any other materials relating the fact that Agent has a financing relationship with Borrower and such materials may be developed, disseminated and used without Loan Parties’ review.  Nothing herein obligates Agent to use a Loan Party’s name, logo and/or trademark, in any promotional materials of Agent.  Loan Parties shall not, and shall not permit any of its respective Affiliates to, issue any press release or other public disclosure (other than any document filed with any governmental authority relating to a public offering of the securities of Borrower or otherwise required to be filed by any Loan Party with the SEC) using the name, logo or otherwise referring to General Electric Capital Corporation, GE Healthcare Financial Services, Inc. or of any of their affiliates, the Transaction Documents or any transaction contemplated herein or therein without at least two (2) Business Days prior written notice to and the prior written consent of Agent unless, and only to the extent that, Loan Parties or such Affiliate is required to do so under applicable law and then, only after consulting with Agent prior thereto.

 

10.12        Waiver of Jury Trial.  EACH OF THE LOAN PARTIES, AGENT AND LENDERS UNCONDITIONALLY WAIVE ANY AND ALL RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE OTHER TRANSACTION DOCUMENTS, ANY OF THE INDEBTEDNESS SECURED HEREBY, ANY DEALINGS AMONG LOAN PARTIES, AGENT AND/OR LENDERS RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED AMONG LOAN PARTIES, AGENT AND/OR LENDERS.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT. THIS WAIVER IS IRREVOCABLE.  THIS WAIVER MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING.  THE WAIVER ALSO SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED TRANSACTION.  THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

  

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10.13        Governing Law and Jurisdiction.

 

(a)           GOVERNING LAW.  THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS (EXCLUDING THOSE TRANSACTION DOCUMENTS THAT BY THEIR OWN TERMS ARE EXPRESSLY GOVERNED BY THE LAWS OF ANOTHER JURISDICTION) AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE COLLATERAL, PROVIDED, HOWEVER, THAT IF THE LAWS OF ANY JURISDICTION OTHER THAN NEW YORK SHALL GOVERN IN REGARD TO THE VALIDITY, PERFECTION OR EFFECT OF PERFECTION OF ANY LIEN OR IN REGARD TO PROCEDURAL MATTERS AFFECTING ENFORCEMENT OF ANY LIENS IN COLLATERAL, SUCH LAWS OF SUCH OTHER JURISDICTIONS SHALL CONTINUE TO APPLY TO THAT EXTENT.

 

(b)           SUBMISSION TO JURISDICTION.  ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT SHALL BE BROUGHT EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK LOCATED IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH LOAN PARTY EXECUTING THIS AGREEMENT HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS.  NOTWITHSTANDING THE FOREGOING, THE AGENT AND OTHER LENDERS SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST ANY LOAN PARTY (OR ANY PROPERTY OF SUCH LOAN PARTY) IN THE COURT OF ANY OTHER JURISDICTION THE AGENT OR THE LENDERS DEEM NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS.  THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, THAT ANY OF THEM MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH JURISDICTIONS.

 

(c)           NON-EXCLUSIVE JURISDICTION.  NOTHING CONTAINED IN THIS SECTION 10.13 SHALL AFFECT THE RIGHT OF AGENT OR THE LENDERS TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE REQUIREMENTS OF LAW OR COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY LOAN PARTY IN ANY OTHER JURISDICTION.

 

10.14        Confidentiality.  Each Lender and Agent agrees to use all reasonable efforts to maintain, in accordance with its customary practices, the confidentiality of information obtained by it pursuant to any Transaction Document and designated in writing by any Loan Party as confidential, except that such information may be disclosed (a) with the Borrower’s consent, (b) to such Lender’s or Agent’s Related Persons (as defined below), as the case may be, that are advised of the confidential nature of such information and are instructed to keep such information confidential in accordance with the terms hereof, (c) to the extent such information presently is or hereafter becomes (i) publicly available other than as a result of a breach of this Section 10.14 or (ii) available to such Lender or Agent or any of their Related Persons, as the case may be, from a source (other than any Loan Party) not known by them to be subject to disclosure restrictions, (d) to the extent disclosure is required by any applicable law, rule, regulation, court decree, subpoena or other legal, administrative, governmental or regulatory request, order or proceeding or otherwise requested or demanded by any governmental authority, (e) to the extent necessary or customary for inclusion in league table measurements, (f) (i) to the National Association of Insurance Commissioners or any similar organization, any examiner or any nationally recognized rating agency or (ii) otherwise to the extent consisting of general portfolio information that does not identify Loan Parties, (g) to current or prospective assignees or participants and to their respective Related Persons, in each case to the extent such assignees, participants or Related Persons agree to be bound by provisions substantially similar to the provisions of this Section 10.14 (and such persons or entities may disclose information to their respective Related Persons in accordance with clause (b) above), (h) to any other party hereto, and (i) in connection with the exercise or enforcement of any right or remedy under any Transaction Document, in connection with any litigation or other proceeding to which such Lender or Agent or any of their Related Persons is a party or bound, or to the extent necessary to respond to public statements or disclosures by Loan Parties or their Related Persons referring to a Lender or Agent or any of their Related Persons. In the event of any conflict between the terms of this Section 10.14 and those of any other contractual obligation entered into with any Loan Party (whether or not a Transaction Document), the terms of this Section 10.14 shall govern. “Related Persons” means, with respect to any person or entity, each affiliate of such person or entity and each director, officer, employee, agent, trustee, representative, attorney, accountant and each insurance, environmental, legal, financial and other advisor and other consultants and agents of or to such person or entity or any of its affiliates.

 

  

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10.15        USA Patriot Act.  Each Lender that is subject to the Patriot Act hereby notifies the Loan Parties that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of each Loan Party and other information that will allow such Lender to identify each Loan Party in accordance with the Patriot Act.

 

10.16        Counterparts.  This Agreement may be executed in any number of counterparts and by different parties in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement.  Delivery of an executed signature page of this Agreement by facsimile transmission or electronic transmission shall be as effective as delivery of a manually executed counterpart hereof.

 

[Signature Page Follows]

 

  

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IN WITNESS WHEREOF, each Loan Party, Agent and Lenders, intending to be legally bound hereby, have duly executed this Agreement in one or more counterparts, each of which shall be deemed to be an original, as of the day and year first aforesaid.

BORROWER:

XOMA (US) LLC, a Delaware limited liability company

 

	
By: 

	 	 
	 	 Name:	 	 
	 	 Title:	 	 

 

PARENT:

XOMA LTD., a Bermuda exempted company

 

	
By: 

	 	 
	 	 Name:	 	 
	 	 Title:	 	 

                                          

EACH GUARANTOR:

XOMA TECHNOLOGY LTD., a Bermuda exempted company

 

	
By: 

	 	 
	 	 Name:	 	 
	 	 Title:	 	 

 

XOMA IRELAND LIMITED, an Irish private limited company

 

	
By: 

	 	 
	 	 Name:	 	 
	 	 Title:	 	 

 

Address For Notices For All Loan Parties:

 

c/o XOMA Ltd.

2910 Seventh Street

Berkeley, CA 94710

Attention: Legal Department

Phone: (510) 201-7200

Facsimile: (510) 649-7571

 

[XOMA CREDIT AGREEMENT]

 

  

  

  

 

AGENT AND LENDER:

GENERAL ELECTRIC CAPITAL CORPORATION

 

	
By: 

	 	 
	 	 Name:	 	 
	 	 Title:	Duly Authorized Signatory	 

 

Address For Notices:

 

General Electric Capital Corporation

c/o GE Healthcare Financial Services, Inc.

Two Bethesda Metro Center, Suite 600

Bethesda, Maryland  20814

Attention: Senior Vice President of Risk – Life Science Finance

Phone: (301) 961-1640

Facsimile: (301) 664-9855

 

With a copy to:

General Electric Capital Corporation

c/o GE Healthcare Financial Services, Inc.

Two Bethesda Metro Center, Suite 600

Bethesda, Maryland  20814

Attention: General Counsel

Phone: (301) 961-1640

Facsimile:  (301) 664-9866

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