Document:

exv10w3

 

      Confidential
Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.

Exhibit 10.3

LICENSE AGREEMENT

     THIS AMENDED AND RESTATED LICENSE AGREEMENT (the “AGREEMENT”) is made and entered into on July
27, 1998, between THE GENERAL HOSPITAL CORPORATION, a not-for-profit corporation doing business as
Massachusetts General Hospital, having a place of business at Fruit Street, Boston, Massachusetts
02114 (“GENERAL”) and Phylos, Inc., a corporation having offices at 300 Putnam Avenue, Cambridge,
MA 02139 (“COMPANY”) and amends and restates that certain License Agreement between GENERAL and the
COMPANY effective April 18, 1997 (the “EFFECTIVE DATE”).

     WHEREAS, under research programs funded by the GENERAL and the U.S.
Government, the GENERAL through research conducted by Drs. Jack Szostak and Richard Roberts has
developed an invention pertaining to the directed evolution of proteins;

     WHEREAS, GENERAL has prepared a U.S. Patent Application covering said invention and all Drs.
Szostak’s and Roberts’ rights, title and interest in said application have been assigned to
GENERAL;

     WHEREAS, GENERAL represents to the best of its knowledge and belief that it is the owner of
all rights, title and interest in said patent application and has the right and ability to grant
the license hereinafter described;

     WHEREAS, as a center for research and education, GENERAL is interested in licensing PATENT
RIGHTS and thus benefiting the public and the GENERAL by facilitating the dissemination of the
results of its research in the form of useful PRODUCTS, but is without capacity to commercially
develop, manufacture, and distribute any such PRODUCT; and

     WHEREAS, COMPANY having such capacity, desires to commercially develop, use, manufacture and
distribute such PRODUCTS throughout the world;

     NOW THEREFORE, in consideration of the premises and of the faithful performance of the
covenants herein contained, the parties hereto agree as follows:

1. DEFINITIONS

     1.1 The term “ACCOUNTING PERIOD” shall mean each six month period ending June 30 and December 31.

     1.2 The term “AFFILIATE” shall mean any corporation or other legal entity other than COMPANY
in whatever country organized, controlling, controlled by or under common control with COMPANY. The
term “control” means possession, direct or indirect, of the powers to direct or cause the direction
of the management and policies of an entity, whether through the ownership of voting securities, by
contract or otherwise.

 

 

The term “AFFILIATE” with respect to GENERAL shall mean any company controlling, controlled
by, or under common control, directly or indirectly, with GENERAL.

     1.3 The term “PATENT RIGHT” shall mean the U.S. Provisional Patent Application filed by Drs.
Szostak and Roberts entitled “In vitro selection of proteins using RNA-protein fusions” filed
January 21, 1997, serial number to be assigned, or the equivalent of such application, including
any division, continuation or any foreign patent application or Letters Patent or the equivalent
thereof issuing thereon or reissue, reexamination or extension thereof. PATENT RIGHTS shall also
include those claims in any continuation-in-part of the aforementioned patent application which
claim an invention described or claimed in said patent application.

     1.4 The term “PRODUCT” shall mean any article, device, composition, method or service, the
manufacture, use, importation or sale of which

     (a) absent the licenses granted herein, would infringe a VALID CLAIM of any PATENT RIGHT, or

     (b) does not infringe a VALID CLAIM of any PATENT RIGHT licensed to
COMPANY hereunder but the discovery, development, manufacture or use of which employs TECHNOLOGICAL
INFORMATION.

     1.5 The term “SUBLICENSEE” shall mean any non-AFFILIATE third party licensed by COMPANY or by
an AFFILIATE to make, have made, use or sell any PRODUCT.

     1.6 The term “TECHNOLOGICAL INFORMATION” shall mean any research data, designs, formulas,
process information, clinical data and other information pertaining to any invention claimed in
PATENT RIGHT which is known to Drs. Szostak and Roberts on the EFFECTIVE DATE.

     1.7 The term “VALID CLAIM” shall mean any claim of any PATENT RIGHT that has not been (i)
finally rejected or (ii) declared invalid by a patent office or court of competent jurisdiction in
any unappealed and unappealable decision.

2. LICENSE

     2.1 GENERAL hereby grants COMPANY, to the extent not prohibited by the United States
Government:

     (a) an exclusive, worldwide license under GENERAL’s rights in PATENT RIGHTS to make, have
made, use, import and sell PRODUCTS;

     (b) to the extent an exclusive license is not available to COMPANY in a country, due to legal
or regulatory requirements in such country, a non-exclusive license under PATENT RIGHTS to make,
have made, use and sell PRODUCTS;

 

 

     (c) the right to sublicense PATENT RIGHTS exclusively licensed to COMPANY.

     The above licenses to sell PRODUCTS include the right to grant to the purchaser of PRODUCTS
from COMPANY, its AFFILIATES, and SUBLICENSEES the right to use such purchased PRODUCTS in a method
coming within the scope of PATENT RIGHT.

     2.2 It is understood that the granting of any license hereunder is subject to
GENERAL’s and GENERAL’s AFFILIATES’ right to make and to use the subject matter described and
claimed in PATENT RIGHT for research, clinical and educational purposes but for no other purpose,
and that if federal funding supported the PATENT RIGHT, COMPANY’s license will be subject to the
royalty-free non-exclusive license granted to the u.s. government by statute (35 U.S.C. §
202(c)(4)). For the five (5) years following the EFFECTIVE DATE hereof, if GENERAL’s Office of
Technology Affairs (“OTA”) becomes aware that any GENERAL investigator intends to seek funding for
research at GENERAL using the subject matter described and claimed in any PATENT RIGHT licensed to
COMPANY hereunder, from a commercial sponsor other than COMPANY, OTA will use reasonable efforts to
inform such investigator that he or she may seek such funding first from COMPANY, it being
understood that the final decision will be made by the investigator.

     2.3 Within three (3) months of EFFECTIVE DATE, upon request by COMPANY, GENERAL shall disclose
to COMPANY, TECHNOLOGICAL INFORMATION which COMPANY will be entitled to use to the extent such use
does not infringe any patent not licensed to COMPANY hereunder.

     2.4 It is understood that nothing herein shall be construed to grant COMPANY a license express
or implied under any patent owned solely or jointly by GENERAL other than the PATENT RIGHTS
expressly licensed hereunder.

3. DUE DILIGENCE OBLIGATIONS

     3.1 COMPANY shall itself, or through its AFFILIATES or SUBLICENSEES, use its best efforts to
develop and make commercially available PRODUCTS for commercial sales and distribution throughout
the world. Such efforts shall consist of achieving the following objectives within the time period
designated below following the EFFECTIVE DATE:

     (a) within [**] months, be in possession of either (i) a signed letter of intent or (ii) an
executed agreement for the development of the technology in cooperation with a corporate partner,
such cooperation conveying a minimum annual funding of [**] dollars ($[**]) for a period of not
less than two years; and if this milestone is met by option (i), to then be in possession of an
executed agreement as recited in option (ii) within [**] months of the EFFECTIVE DATE.

 

 

     (b) within [**] months, have entered into additional agreements with corporate partners for
sponsored research conveying a minimum funding of [**] dollars ($[**]);

     (c) subsequent to meeting milestone (b), continue to conduct internal research and development
aimed at developing PRODUCTS using methods covered by PATENT RIGHTS, and to spend $[**] per year on
such research and development efforts;

     (d) subsequent to meeting milestone (b), continue to diligently seek [**], and/or use diligent
efforts to develop PRODUCTS itself.
provided, however, that GENERAL shall not unreasonably withhold its consent to any revision in such
time periods whenever requested in writing by COMPANY and supported by evidence of technical
difficulties or delays that the parties could not have reasonably avoided. Failure to achieve one
or more of the above objectives within the above stated time periods or within any extension
granted by GENERAL shall result in GENERAL having the right to cancel upon thirty (30) days notice
any exclusive license granted hereunder or convert any exclusive license to a non-exclusive
license. Notwithstanding the foregoing, if COMPANY has successfully met milestones (a) and (b)
above, and has paid a minimum of $[**] in payments to GENERAL hereunder, and is in compliance with
milestone (c) above, but is not in compliance with milestone (d) above, GENERAL shall only have the
right to convert COMPANY’s exclusive license to a non-exclusive license.

     3.2 At intervals no longer than every six (6) months, COMPANY shall report in writing to
GENERAL on progress made toward the foregoing objectives.

4. FILING, PROSECUTION AND MAINTENANCE OF PATENT RIGHT

     4.1 GENERAL shall be responsible for the preparation, filing, prosecution and maintenance of
all patent applications and patents included in PATENT RIGHTS, and shall, subject to the provisions
of this Article 4, file and maintain such patent applications and patents at a minimum in the
United States, Canada, the European Patent Office, and Japan (or under the Patent Cooperation
Treaty designating such countries or region). COMPANY shall reimburse GENERAL for all reasonable
costs (“Costs”) incurred by GENERAL for the preparation, filing, prosecution and maintenance of all
PATENT RIGHTS as follows:

     (a) Subject to paragraph 4.2, for all Costs incurred by GENERAL from and after the EFFECTIVE
DATE, COMPANY shall reimburse GENERAL upon receipt of invoices from GENERAL;

     (b) For all Costs incurred by GENERAL prior to the EFFECTIVE DATE,
COMPANY shall reimburse GENERAL upon execution of this Agreement.

 

 

     4.2 With respect to any PATENT RIGHT, each document or a draft thereof pertaining to the
filing, prosecution, or maintenance of such PATENT RIGHT, including but not limited to each patent
application, office action, response to office action, request for terminal disclaimer, and request
for reissue or reexamination of any patent issuing from such application shall be provided to
COMPANY as follows. Documents received from any patent office or counsel’s analysis thereof shall
be provided promptly after receipt. For a document to be filed in any patent office, a draft of
such document shall be provided sufficiently prior to its filing, to allow for review and comment
by COMPANY. GENERAL shall consider in good faith any of COMPANY’S comments or recommendations that
are timely received by GENERAL, and shall instruct its patent counsel to act upon such comments or
recommendations, except to the extent
GENERAL may reasonably conclude that such actions would not be in GENERAL’s interests. If as a
result of the review of any such document, COMPANY shall elect not to pay or continue to pay the
Costs for such PATENT RIGHT, COMPANY shall so notify GENERAL within thirty (30) days of COMPANY’s
receipt of such document and COMPANY shall thereafter be relieved of the obligation to pay any
additional Costs regarding such PATENT RIGHT incurred after the receipt of such notice by GENERAL.
Such U.S. or foreign patent application or patent shall thereupon cease to be a PATENT RIGHT
hereunder and GENERAL shall be free to license its rights to that particular U.S. patent
application or patent to any other party on any terms.

     4.3 In the event that GENERAL does not wish to file, prosecute or maintain any PATENT RIGHT
with respect to specific countries, it shall first notify COMPANY, and COMPANY shall be free, where
not contrary to United States law, to file, prosecute or maintain, at its expense, patent
applications in the name of GENERAL. If necessary, GENERAL shall render COMPANY, at COMPANY’s
expense, all necessary assistance in order to facilitate such filing. Any such application shall be
considered a PATENT RIGHT for all purposes of this Agreement.

5. COMPENSATION

     5.1 Upon the closing of an initial financing by COMPANY raising at least one million dollars
in net proceeds, COMPANY shall issue to GENERAL common stock equal to [**]% of all common shares
then issued and outstanding. If COMPANY shall close a second financing within three months of the
initial financing, GENERAL shall be issued common stock equal to [**]% of the shares issued for the
second financing at the then effective conversion rate to common. GENERAL shall be bound by
obligations incumbent on common stock shareholders with respect to sale and disposition of common
stock, including underwriters’ requested commitments for market standoff.

     5.2 In each year for the seven years following the closing of an initial financing by COMPANY
raising at least one million dollars in net proceeds, COMPANY shall pay GENERAL [**] percent ([**]
%) of any and all research contract fees, upfront and milestone payments received in consideration
for the conduct of research which absent the license granted herein would infringe a VALID CLAIM of
any PATENT RIGHT

 

 

     5.3 In the event that COMPANY wishes to itself sell, or grant sublicenses to sell, to the
[**], any PRODUCT that infringes a VALID CLAIM of any PATENT RIGHT, COMPANY and GENERAL will [**],
on terms that are [**].

     5.4 The payments due under this Agreement shall, if overdue, bear interest until payment at a
per annum rate equal to one percent (1%) above the prime rate in effect at the Bank of Boston on
the due date, not to exceed the maximum permitted by law. The payment of such interest shall
not-preclude GENERAL from exercising any other rights it may have as a consequence of the lateness
of any payment.

6. REPORTS AND PAYMENTS

     6.1 COMPANY shall keep, and shall cause each of its AFFILIATES and
SUBLICENSEES, if any, to keep full and accurate books of accounts containing all particulars that
may be necessary for the purpose of calculating all amounts payable to GENERAL. Such books of
account shall be kept at their principal place of business and, with all necessary supporting data
shall, during all reasonable times for the three (3) years next following the end of the calendar
year to which each shall pertain be open no more than twice a year for inspection by GENERAL or its
designee at GENERAL’s expense for the purpose of verifying financial statements or compliance with
this Agreement. GENERAL agrees to execute a confidentiality agreement with COMPANY with respect to
the information disclosed therein.

     6.2 In each year for the seven years following the closing of an initial financing by COMPANY
raising at least one million dollars in net proceeds, the payment due shall be calculated
semiannually as of the end of each ACCOUNTING PERIOD and shall be paid semiannually within the
sixty (60) days next following such date, every such payment to be supported by the accounting
prescribed in paragraph 6.3 and to be made in United States currency. Whenever conversion from any
foreign currency shall be required, such conversion shall be at the rate of exchange thereafter
published in the Wall Street Journal for the business day closest to the end of the applicable
ACCOUNTING PERIOD.

     6.3 With each semiannual payment, COMPANY shall deliver to GENERAL a full and accurate
accounting to include at least the following information:

     (a) All research contract payments for the six month period, separately reported by corporate
sponsor;

     (b) Milestone payments awarded during the six month period, separately reported by corporate
sponsor; and

     (c) Total payments due GENERAL.

 

 

7. INFRINGEMENT

     7.1 GENERAL will protect its PATENT RIGHTS from infringement and prosecute infringers when, in
its sole judgement, such action may be reasonably necessary, proper and justified.

     7.2 If COMPANY shall have supplied GENERAL with written evidence demonstrating to GENERAL’s
reasonable satisfaction prima facie infringement of a claim of a PATENT RIGHT by a third party,
COMPANY may by notice request GENERAL to allow COMPANY to initiate legal proceedings against the
infringer at COMPANY’s expense. GENERAL shall notify COMPANY within two (2) months of the receipt
of such notice whether GENERAL will allow COMPANY to initiate legal proceedings, and if GENERAL so
decides, COMPANY may, upon notice to GENERAL, initiate legal proceedings against the infringer at
COMPANY’s expense and in GENERAL’s name if so required by law. No settlement, consent judgment or
other voluntary final disposition of the suit which invalidates or restricts the claims of such
PATENT RIGHTS may be entered into without the consent of GENERAL, which consent shall not be
unreasonable withheld. COMPANY shall indemnify GENERAL against any order for payment that may be
made against GENERAL in such proceedings. If however, GENERAL notifies COMPANY within said two (2)
month period that it intends to prosecute such alleged infringer at its expense, GENERAL shall,
within three (3) months of its notice to COMPANY either (i) cause infringement to terminate or (ii)
initiate legal proceedings against the infringer.

     7.3 In the event one party shall initiate or carry on legal proceedings to enforce any PATENT
RIGHT against any alleged infringer, the other party shall fully cooperate with and supply all
assistance reasonably requested by the party initiating or carrying on such proceedings. The party
which institutes any suit to protect or enforce a PATENT RIGHT shall have sole control of that suit
and shall bear the reasonable expenses (excluding legal fees) incurred by said other party in
providing such assistance and cooperation as is requested pursuant to this paragraph. The party
initiating or carrying on such legal proceedings shall keep the other party informed of the
progress of such proceedings and said other party shall be entitled to counsel in such proceedings
but at its own expense. Any award paid by third parties as the result of such proceedings (whether
by way of settlement or otherwise) shall first be applied to reimbursement of the unreimbursed
legal fees and expenses incurred by either party and then the remainder shall be divided between
the parties as follows:

) [**]%) percent to the party initiating such proceedings and [**]%) percent to the other party.

     7.4 For the purpose of the proceedings referred to in this Article 7, the GENERAL and COMPANY
shall permit the use of their names and shall execute such documents and carry out such other acts
as may be necessary. The party initiating or carrying on such legal proceedings shall keep the
other party informed of the progress of such proceedings and said other party shall be entitled to
counsel in such proceedings but
at its own expense, said expenses to be off-set against any damages received by the party
bringing suit in accordance with the foregoing paragraph 7.3.

 

 

8. INDEMNIFICATION

     8.1 (a) COMPANY shall indemnify, defend and hold harmless GENERAL and its trustees, officers,
medical and professional staff: employees, and agents and their respective successors, heirs and
assigns (the “INDEMNITEES”), against any liability, damage, loss or expense (including reasonable
attorney’s fees and expenses of litigation) incurred by or imposed upon the Indemnitees or anyone
of them in connection with any claims, suits, actions, demands or judgments arising out of any
theory of product liability (including, but not limited to, actions in the form of tort, warranty,
or strict liability) concerning any product, process or service made, used or sold pursuant to any
right or license granted under this Agreement.

     (b) COMPANY’s indemnification under (a) above shall not apply to any liability, damage, loss
or expense to the extent that it is directly attributable to the negligent activities, reckless
misconduct or intentional misconduct of the INDEMNITEES.

     (c) COMPANY agrees, at its own expense to provide attorneys reasonably acceptable to the
GENERAL to defend against any actions brought or filed against any party indemnified hereunder with
respect to the subject of indemnity contained herein, whether or not such actions are rightfully
brought.

     (d) This paragraph 8.1 shall survive expiration or termination of this Agreement.

     8.2 (a) Beginning at such time as any such product, process or service is being commercially
distributed or sold (other than for the purpose of obtaining regulatory approvals and other than
COMPANY’s internal use of the PATENT RIGHTS and TECHNOLOGICAL INFORMATION) by COMPANY or by a
licensee, affiliate or agent of COMPANY, COMPANY shall, at its sole cost and expense, procure and
maintain commercial general liability insurance in amounts not less than $2,000,000 per incident
and $2,000,000 annual aggregate and naming the INDEMNITEES as additional insureds. Such commercial
general liability insurance shall provide (i) product liability coverage and (ii) broad form
contractual liability coverage for COMPANY’s indemnification under paragraph 8.1 of this Agreement.
If COMPANY elects to self-insure all or part of the limits described above (including deductibles
or retentions which are in excess of $250,000 annual aggregate) such self-insurance program must be
acceptable to the GENERAL and the Risk Management Foundation. The minimum amounts of insurance
coverage required under this paragraph 8.2 shall not be construed to create a limit of COMPANY’s
liability with respect to its indemnification under paragraph 8.1 of this Agreement.

 

 

     (b) COMPANY shall provide GENERAL with written evidence of such insurance upon request of
GENERAL. COMPANY shall provide GENERAL with written notice at least fifteen (15) days prior to the
cancellation, non-renewal or material change in such insurance; if COMPANY does not obtain
replacement insurance providing comparable coverage prior to the expiration of such fifteen (15)
day period, GENERAL shall have the right to terminate this Agreement effective at the end of such
fifteen (15) day period without notice or any additional waiting periods.

     (c) COMPANY shall maintain such commercial general liability insurance beyond the expiration
or termination of this Agreement during (i) the period that any such product, process, or service
is being commercially distributed or sold (other than for the purpose of obtaining regulatory
approvals) by COMPANY or by a licensee, affiliate or agent of COMPANY and (ii) a reasonable period
after the period referred to in (c) (i) above which in no event shall be less than fifteen (15)
years.

     (d) This paragraph 8.2 shall survive expiration or termination of this Agreement.

     8.3 OTHER THAN WARRANTIES SET FORTH HEREIN, GENERAL MAKES NO WARRANTY, EXPRESS OR IMPLIED,
INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR ANY IMPLIED WARRANTY OF
FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO ANY PATENT, TRADEMARK, SOFTWARE, TRADE SECRET,
TANGIBLE RESEARCH PROPERTY, INFORMATION OR DATA LICENSED OR OTHERWISE PROVIDED TO COMPANY HEREUNDER
AND HEREBY DISCLAIMS THE SAME.

9. TERMINATION

     9.1 Unless otherwise terminated as provided for in this Agreement, the license to PATENT RIGHT
granted hereunder will continue

     (i) for two (2) years after the last attempt by COMPANY, its AFFILIATES, or SUBLICENSEES to
develop PRODUCTS for worldwide distribution, provided such attempt is not prevented by force
majeure, government regulation or intervention, or institution of a law suit by any third party, or

     (ii) until the expiration of each PATENT RIGHT on a country by country basis, the claims of
which but for this Agreement would be infringed by the manufacture, use or sale of any PRODUCT in
the applicable country,

whichever shall first occur. For the purposes of this paragraph 9.1, the term “attempt” shall mean
the conduct, by any of COMPANY, its AFFILIATES or SUBLICENSEES, of (a) research which, absent the
license granted herein would infringe a VALID CLAIM of any PATENT RIGHT (“Licensed Research”), and
which is directed towards discovering, identifying or creating a PRODUCT or PRODUCT candidate, or
(b) commercial

 

 

development efforts directed towards distribution or sale of a PRODUCT, including but not limited
to scale-up and biochemical engineering activities, clinical or preclinical studies, and other
marketing preparations, with respect to a PRODUCT or PRODUCT candidate that has been identified in
the course of Licensed Research.

     9.2 If either party shall fail to faithfully perform any of its obligations under this
Agreement except the due diligence milestones specified in Article 3 herein, the nondefaulting
party may give written notice of the default to the defaulting party. Unless such default is
corrected within sixty (60) days after such notice, the notifying party may terminate this
Agreement and the license hereunder upon thirty (30) days prior written notice, provided that only
one such sixty (60) day grace period shall be available in any twelve (12) month period with
respect to a default of any particular provision hereunder. Thereafter notice of default of said
provision shall constitute termination.

     9.3 In the event that any license granted to COMPANY under this Agreement is terminated, any
sublicense under such license granted prior to termination of said license shall remain in full
force and effect, provided that:

     (i) the SUBLICENSEE is not then in breach of its sublicense agreement;

     (ii) the SUBLICENSEE agrees to be bound to GENERAL as the licensor under the terms and
conditions of this sublicense agreement, as modified by the provisions of this paragraph
9.3;

     (iii) the SUBLICENSEE, at GENERAL’s written request, assumes in a signed writing the same
obligations to GENERAL as those assumed by COMPANY under Articles 8 and 10 hereof;

     (iv) GENERAL shall have the right to receive the greater of (a) any payments payable to
COMPANY under such sublicense agreement to the extent they are reasonably and equitably
attributable to such SUBLICENSEE’s right under such sublicense to use and exploit PATENT RIGHTS
and/or TECHNOLOGICAL INFORMATION or (b) the lowest royalty which is within the “Competitive” range
as hereinafter defined, at the time GENERAL’s license to COMPANY is terminated. A royalty rate
shall be regarded as “Competitive” if it is within the range of royalty rates that GENERAL would
charge in an arms length transaction with a licensee which was not and had not been a sponsor of
research at GENERAL, taking into account the value of the licensed technology at the time GENERAL’s
license to COMPANY is terminated;

     (v) the SUBLICENSEE agrees to use its best commercial-efforts to develop and use the
technology, and/or to use diligent efforts to develop PRODUCTS itself;

     (vi) GENERAL has the right to terminate such sublicense upon sixty (60) days prior written
notice to COMPANY and such SUBLICENSEE in the event of any material breach of the obligation to
make the payments described in clause (iv) of this paragraph

 

 

9.3, unless such breach is cured prior to the expiration of such sixty (60) day period, and
shall further have the right to terminate such sublicense in the event of SUBLICENSEE’s failure to
meet its due diligence obligations pursuant to clause (v) hereof;

     (vii) GENERAL shall not assume, and shall not be responsible to such SUBLICENSEE for, any
representations, warranties or obligations of COMPANY to such SlJBLICENSEE, other than to permit
such SUBLICENSEE to exercise any rights to PATENT RIGHTS and TECHNOLOGICAL INFORMATION that are
granted under such sublicense agreement consistent with the terms of this AGREEMENT.

     9.4
Upon termination of any license granted hereunder COMPANY shall pay GENERAL all payments due or accrued on (i) the sale of PRODUCT up to and including the date of
termination and (ii) for twelve (12) months following the date of termination, the sale of PRODUCT
manufactured prior to the termination date.

10. MISCELLANEOUS

     10.1 This Agreement constitutes the entire understanding between the parties with respect to
the subject matter hereof.

     10.2 In order to facilitate implementation of this Agreement, GENERAL and
COMPANY are designating the following individuals to act on their behalf with respect to this
Agreement for the matter indicated below:

     (a) with respect to all payments, any correspondence pertaining to any PATENT RIGHT, or any
notice of the use of GENERAL’s name, for GENERAL, the Director, Office of Technology Affairs, and
for COMPANY, the Chief Executive Officer; provided that correspondence relating to the billing of
patent costs shall be copied to, for GENERAL, the Business Manager, Office of Technology Affairs;
and for COMPANY, the Vice President for Finance and Administration.

     (b) any amendment of or waiver under this Agreement, any written notice including progress
reports or other communication pertaining to the Agreement: for GENERAL, the Director, Office of
Technology Affairs; and for COMPANY, the Chief Executive Officer.

     (c) the above designations may be superseded from time to time by alternative designations
made by: for GENERAL, the President or the Senior Vice President for Research and Technology
Affairs; and for COMPANY, the Chief Executive Officer.

     10.3 This Agreement may be amended and any of its terms or conditions may be waived only by a
written instrument executed by the parties or, in the case of a waiver, by the party waiving
compliance. The failure of either party at any time or times to require performance of any
provision hereof shall in no manner affect its rights at a later time to enforce the same. No
waiver by either party of any condition shall be deemed as a further or continuing waiver of such
condition or term or of any other condition or term.

 

 

     10.4 This Agreement shall be binding upon and inure to the benefit of and be enforceable by
the parties hereto and their respective successors and permitted assigns.

     10.5 Any delays in or failures of performance by either party under this Agreement shall not
be considered a breach of this Agreement if and to the extent caused by occurrences beyond the
reasonable control of the party affected, including but not limited to: Acts of God; acts,
regulations or laws of any government; strikes or their concerted acts of worker; fires; floods;
explosions; riots; wars; rebellion; and sabotage. Any time for performance hereunder shall be
extended by the actual time of delay caused by such occurrence.

     10.6 Neither party shall use the name of the other party or of any staff member, officer,
employee or student of the other party or any adaptation thereof in any advertising, promotional or
sales literature, publicity or in any document employed to obtain funds or financing without the
prior written approval of the party or individual whose name is to be used. For GENERAL, such
approval shall be obtained from the Director of Public Affairs.

     10.7 This Agreement shall be governed by and construed and interpreted in accordance with the
laws of the Commonwealth of Massachusetts.

     10.8 This Agreement shall not be assignable by GENERAL without COMPANY’s written consent
except for the right to receive compensation or other payments payable herein. COMPANY may at its
own discretion and without approval by GENERAL transfer its interest or any part thereof under this
Agreement to a wholly-owned subsidiary or any assignee or purchaser of the portion of its business
associated with the manufacture and sale of PRODUCT. In the event of any such transfer, the
transferee shall assume and be bound by the provisions of this Agreement. Otherwise this Agreement
shall be assignable by COMPANY only with the consent in writing of GENERAL.

     10.9 For any and all claims, disputes, or controversies arising under, out of, or in
connection with this Agreement, except issues relating to the validity, construction or effect of
any PATENT RIGHT, which the parties shall be unable to resolve within sixty (60) days, the party
raising such dispute shall promptly advise the other party of such claim, dispute, or controversy
in a writing which describes in reasonable detail the nature of such dispute. By not later than
five (5) business days after the recipient has received such notice of dispute, each party shall
have selected for itself a representative who shall have the authority to bind such party and shall
additionally have advised the other party in writing of the name and title of such representative.
By not later than ten (10) business days after the date of such notice of dispute, such
representatives shall agree upon a third party which is in the business of providing Alternative
Dispute Resolution (ADR) services (hereinafter, “ADR Provider”) and shall schedule a date with such
ADR Provider to engage in ADR. Thereafter, the representatives of the parties shall engage in good
faith in an ADR process under the auspices of the selected ADR Provider. If within the

 

 

aforesaid thirty (30) business days after the date of the notice of dispute the
representatives of the parties have not been able to agree upon an ADR Provider and schedule a date
to engage in ADR, or if they have not been able to resolve the dispute within thirty (30) business
days after the termination of ADR, the parties shall have the right to pursue any other remedies
legally available to resolve such dispute in either the Courts of the Commonwealth of Massachusetts
or in the United States District Court for the District of Massachusetts, to whose jurisdiction for
such purposes GENERAL and COMPANY hereby irrevocably consents and submits. Notwithstanding the
foregoing, nothing in this Paragraph 10.9 shall be construed to waive any rights or timely
performance of any obligations existing under this Agreement.

     10.10 If any provision(s) of this Agreement are or become invalid, are ruled illegal by any
court of competent jurisdiction or are deemed unenforceable under then current applicable law from
time to time in effect during the term hereof it is the intention of the parties that the remainder
of this agreement shall not be effected thereby. It is further the intention of the parties that in
lieu of each such provision which is invalid, illegal or unenforceable, there be substituted or
added as part of this Agreement a provision which shall be as similar as possible in economic and
business objectives as intended by the parties to such invalid, illegal or enforceable provision,
but shall be valid, legal and enforceable.

     THE PARTIES have duly executed this Agreement as of the date first shown above written.

 

 

	 	 	 	 	 
	COMPANY

	 	 	THE GENERAL HOSPITAL CORPORATION

	 	 	 	 	 	 	 
	BY:

	 	/s/ illegible
	 	BY:
	 	/s/ David Glass
	 

	 	 
	 	 	 	 
	TITLE:

	 	 President and CEO
	 	TITLE:
	 	Associate Director of Patents, Office of Technology Affairs
	 
	DATE:

	 	7/27/1998
	 	DATE:exv10w4

 

      Confidential
Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.

Exhibit 10.4

License, Manufacturing And Supply Agreement

This Agreement (“AGREEMENT”) is made and entered into August 5, 2005 (the “EFFECTIVE DATE”) by
and between Nektar Therapeutics AL, Corporation, having its principal place of business at 490
Discovery Drive, Huntsville, AL 35806 (“NEKTAR AL”); and Compound Therapeutics, Inc. having its
principal place of business at 100 Beaver Street, Waltham, MA 02453 (“COMPANY”). NEKTAR AL and
COMPANY may be referred to herein individually as a “PARTY” and collectively as the “PARTIES.”

RECITALS

WHEREAS, COMPANY is in the business of developing pharmaceutical products, including in particular
the THERAPEUTIC AGENT;

WHEREAS, NEKTAR AL has proprietary technology useful for attaching poly(ethylene) glycol-based
molecules to pharmaceutical compounds, including in particular the NEKTAR AL LICENSED TECHNOLOGY;

WHEREAS, COMPANY desires to obtain an exclusive license to the NEKTAR AL LICENSED TECHNOLOGY,
excluding NEKTAR AL MANUFACTURING TECHNOLOGY, to develop, make, have made, use, sell, offer for
sale, import and export the SELECTED PRODUCT throughout the world, and NEKTAR AL desires to grant
such license to COMPANY, under the terms and conditions specified herein;

WHEREAS, NEKTAR AL is also engaged in the business of manufacturing bulk quantities of PEGYLATED
reagents used in the manufacture of pharmaceutical products, and possesses the requisite plant,
equipment and personnel to produce the SELECTED REAGENT in accordance with the SPECIFICATIONS and
all applicable governmental regulations and consistent with COMPANY’S requirements;

WHEREAS, COMPANY desires NEKTAR AL to manufacture and supply bulk quantities of SELECTED REAGENT to
COMPANY for the sole purpose of enabling COMPANY to develop, make, have made, use, sell, offer for
sale, import and export SELECTED PRODUCT, and NEKTAR AL agrees to undertake the manufacture and
supply of SELECTED REAGENT in accordance with the terms and conditions specified below; and

			
	 	 	 
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NOW, THEREFORE, in consideration of the foregoing and the covenants and promises contained in this
AGREEMENT, the PARTIES agree as follows:

AGREEMENT

	1.	 	Definitions

	 	1.1	 	“AFFILIATE” means, with respect to any person or entity, any other person or
entity that controls, is controlled by, or is under common control with, such person or
entity. For purposes of this definition only, “control,” “controlled by” and “under
common control with” shall mean the possession of the power to direct or cause the
direction of the management and policies of an entity, whether through the ownership of
voting stock or partnership interest, by contract or otherwise. In the case of an
entity, the direct or indirect ownership of fifty percent (50%) or more of its
outstanding voting shares or the ability otherwise to elect a majority of the board of
directors or other managing authority of the entity shall in any event be deemed to
confer control, it being understood that the direct or indirect ownership of a lesser
percentage of such shares shall not necessarily preclude the existence of control. For
clarity, at such time as a person or entity ceases to meet this definition of
AFFILIATE, all rights granted under or pursuant to this AGREEMENT shall terminate,
subject to the application of Section 14.5.1.
	 
	 	1.2	 	“APPROVAL” has the meaning set forth in Schedule VIII.
	 
	 	1.3	 	“BATCH” has the meaning set forth in Schedule VIII.
	 
	 	1.4	 	“BLA” means a Biologics License Application filed with the FDA pursuant to 21
C.F.R. § 601.2 et seq., or any corresponding supranational, foreign or domestic
MARKETING AUTHORIZATION application, registration or certification necessary or
reasonably useful to market SELECTED PRODUCT in such country or territory.
	 
	 	1.5	 	“CHANGE CONTROL” has the meaning set forth in Schedule VIII.
	 
	 	1.6	 	“CHANGE CONTROL FORM” has the meaning set forth in Schedule VIII.
	 
	 	1.7	 	“CLAIMS” has the meaning set forth in Section 11.1.1.

			
	 	 	 
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	 	1.8	 	“COMPANY CORE TECHNOLOGY” means: (i) [**].
	 
	 	1.9	 	“COMPANY CORE TECHNOLOGY INVENTIONS” has the meaning set forth in Section 12.5.
	 
	 	1.10	 	“COMPANY INDEMNITEE” has the meaning set forth in Section 11.1.1
	 
	 	1.11	 	“COMPANY KNOW-HOW” means all KNOW-HOW CONTROLLED by COMPANY that is necessary
or reasonably useful for NEKTAR AL in connection with NEKTAR AL’S performance of its
obligations under this AGREEMENT. COMPANY PATENT RIGHTS are excluded from the
definition of COMPANY KNOW-HOW.
	 
	 	1.12	 	“COMPANY PATENT RIGHTS” means all PATENTS and PATENT APPLICATIONS CONTROLLED by
COMPANY that are necessary or reasonably useful for NEKTAR AL in connection with NEKTAR
AL’S performance of its obligations under this AGREEMENT.
	 
	 	1.13	 	“CONFIDENTIAL INFORMATION” has the meaning set forth in Section 8.1.
	 
	 	1.14	 	“CONTRACT MANUFACTURER” has the meaning set forth in Section 3.5.
	 
	 	1.15	 	“CONTROL(LED)” means the ability to grant a license or sublicense as provided
for herein without violating the terms of any agreement or other arrangement with any
THIRD PARTY.
	 
	 	1.16	 	“CRITICAL CHANGES” has the meaning set forth in SCHEDULE VIII.

1.17 “CRITICAL PROCESS STEP” has the meaning set forth in SCHEDULE VIII.
	 
	 	1.18	 	“CRITICAL RAW MATERIAL” has the meaning set forth in SCHEDULE VIII.
	 
	 	1.19	 	“DATE OF MANUFACTURE” has the meaning set forth in SCHEDULE VIII.
	 
	 	1.20	 	“DEBARRED ENTITY” means a corporation, partnership or association that has been
debarred by the FDA pursuant to 21 U.S.C. §335a (a) or (b) from submitting or assisting
in the submission of any abbreviated drug application, or an AFFILIATE of a DEBARRED
ENTITY.

			
	 	 	 
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	 	1.21	 	“DEBARRED INDIVIDUAL” means an individual who has been debarred by the FDA
pursuant to 21 U.S.C. §335a (a) or (b) from providing services in any capacity to a
person that has an approved or pending drug product application.
	 
	 	1.22	 	“DEFAULT” has the meaning set forth in Section 10.2.2.
	 
	 	1.23	 	“DELIVERY SYSTEM” has the meaning set forth in Section 1.52.
	 
	 	1.24	 	“DISCLOSING PARTY” means the PARTY disclosing CONFIDENTIAL INFORMATION to the
other PARTY hereunder.
	 
	 	1.25	 	“DMF” has the meaning set forth in SCHEDULE VIII.
	 
	 	1.26	 	“DOLLAR(S)” means United States dollars.
	 
	 	1.27	 	“EMEA” means the European Medicines Agency, and any successor agency thereto,
having the administrative authority to regulate the marketing of human pharmaceutical
products, biological therapeutic products and delivery systems in the European Union.
	 
	 	1.28	 	“ESTIMATED COST” has the meaning set forth in Schedule II.
	 
	 	1.29	 	“FAILURE” has the meaning set forth in Section 3.5.
	 
	 	1.30	 	“FDA” means the United States Food and Drug Administration, or any successor
entity that may be established hereafter having the administrative authority to
regulate the marketing of human pharmaceutical products, biological therapeutic
products and delivery systems in the United States.
	 
	 	1.31	 	“FIELD” means the treatment, prevention or diagnosis of human or animal
diseases or conditions.
	 
	 	1.32	 	“FIRST COMMERCIAL SALE” means, with respect to SELECTED PRODUCT, the first sale
by COMPANY or its SUBLICENSEE to a THIRD PARTY following receipt of MARKETING
AUTHORIZATION in the country of sale; provided, however, that SELECTED PRODUCT shipped
by COMPANY or its SUBLICENSEE to a THIRD PARTY prior to receipt of MARKETING
AUTHORIZATION therefor in a particular country where such SELECTED

			
	 	 	 
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	 	 	 	PRODUCT is intended for sale, shall be deemed for the purposes hereof a FIRST
COMMERCIAL SALE to the extent such SELECTED PRODUCT is sold to a THIRD PARTY for
sale in that country after such MARKETING AUTHORIZATION is obtained. A transfer of
SELECTED PRODUCT by COMPANY, its AFFILIATES or its SUBLICENSEES solely for research
and development purposes and for the purpose of directly enabling COMPANY, its
AFFILIATES and its SUBLICENSEES to research and develop SELECTED PRODUCT under this
AGREEMENT shall not be considered a FIRST COMMERCIAL SALE.
	 
	 	1.33	 	“GAAP” has the meaning set forth in SCHEDULE II.
	 
	 	1.34	 	“INVENTIONS” means any and all ideas, concepts, methods, procedures, processes,
improvements, inventions and discoveries, whether or not patentable, that are conceived
or made in the performance of activities conducted in connection with this AGREEMENT
including the process development and manufacture of the SELECTED PRODUCT.
	 
	 	1.35	 	“JOINT INVENTION” has the meaning set forth in Section 12.3.
	 
	 	1.36	 	“JOINT PATENT APPLICATIONS” has the meaning set forth in Section 12.7.
	 
	 	1.37	 	“KNOW-HOW” means all technical, scientific and other know-how, data, materials,
information, trade secrets, ideas, formulae, inventions, discoveries, processes,
machines, manufactures, compositions of matter, improvements, protocols, techniques,
works of authorship, and results of experimentation and testing (whether or not
patentable) in written, electronic, oral or any other form.
	 
	 	1.38	 	“LAW(S)” means any local, state or federal rule, regulation, statute or law in
any jurisdiction relevant to the activities undertaken pursuant to this AGREEMENT or
applicable to either of the PARTIES with respect to any matters set forth herein.
	 
	 	1.39	 	“MANAGING COMMITTEE” means the committee described in Section 3.6.
	 
	 	1.40	 	“MANUFACTURING COST” has the meaning set forth in SCHEDULE II.

			
	 	 	 
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	 	1.41	 	“MARGIN” means [**] percent ([**]%) of NEKTAR AL’S then-current MANUFACTURING
COST with regard to quantities of SELECTED REAGENT intended for research, pre-clinical
development, clinical development and other activities prior to the FIRST COMMERCIAL
SALE of SELECTED PRODUCT, and [**] percent ([**]%) of NEKTAR AL’S then-current
MANUFACTURING COST with regard to quantities of SELECTED REAGENT intended for use on
and after the FIRST COMMERCIAL SALE of SELECTED PRODUCT.
	 
	 	1.42	 	“MARKETING AUTHORIZATION” means the requisite governmental approval for the
marketing and sale of SELECTED PRODUCT in a given country.
	 
	 	1.43	 	“MTEA” has the meaning set forth in Section 8.1.
	 
	 	1.44	 	“NEKTAR AL CORE TECHNOLOGY” means: [**].
	 
	 	1.45	 	“NEKTAR AL CORE TECHNOLOGY INVENTIONS” has the meaning set forth in Section
12.4.
	 
	 	1.46	 	“NEKTAR AL INDEMNITEE” has the meaning set forth in Section 11.1.2.
	 
	 	1.47	 	“NEKTAR AL KNOW-HOW” means all KNOW-HOW CONTROLLED by NEKTAR AL that is
necessary or reasonably useful to develop, make, have made, use, sell, have sold,
import, export or seek MARKETING AUTHORIZATION for the SELECTED PRODUCT or the SELECTED
REAGENT, but with respect to the SELECTED REAGENT, which KNOW-HOW would otherwise be
infringed by COMPANY, its AFFILIATES or SUBLICENSEES but for the grant of licenses
under this AGREEMENT, or otherwise necessary or reasonably useful to practice the
licenses granted under this AGREEMENT. NEKTAR AL PATENT RIGHTS are excluded from the
definition of NEKTAR AL KNOW-HOW.
	 
	 	1.48	 	“NEKTAR AL LICENSED TECHNOLOGY” means, collectively, the NEKTAR AL PATENT
RIGHTS and NEKTAR AL KNOW-HOW.
	 
	 	1.49	 	“NEKTAR AL’S MANUFACTURING FACILITY” has the meaning set forth in SCHEDULE
VIII.

			
	 	 	 
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	 	1.50	 	“NEKTAR AL MANUFACTURING TECHNOLOGY” means, collectively, the NEKTAR AL PATENT
RIGHTS and NEKTAR AL KNOW-HOW to the extent covering the manufacture of the SELECTED
REAGENT.
	 
	 	1.51	 	“NEKTAR AL PATENT RIGHTS” means all of the PATENTS and PATENT APPLICATIONS
CONTROLLED by NEKTAR AL that are necessary or reasonably useful to develop, make, have
made, use, sell, have sold, import and export the SELECTED PRODUCT or the SELECTED
REAGENT, but with respect to the SELECTED REAGENT, which PATENTS or PATENT APPLICATIONS
would otherwise be infringed by COMPANY, its AFFILIATES or SUBLICENSEES but for the
grant of licenses under this AGREEMENT. SCHEDULE V sets forth the PATENTS and PATENT
APPLICATIONS included in the NEKTAR AL PATENT RIGHTS as of the time this AGREEMENT is
executed, and shall be updated by the PARTIES from time to time as needed to list any
other PATENTS and PATENT APPLICATIONS which become included in the NEKTAR AL PATENT
RIGHTS.
	 
	 	1.52	 	“NET SALES” means the amount invoiced (or in the absence of an invoice,
received) by COMPANY, its AFFILIATES or SUBLICENSEES for the sale to THIRD PARTIES in
bona fide arms length transactions of SELECTED PRODUCT less the following, to the
extent included in the amount invoiced: (i) discounts, credits, rebates, allowances,
charge backs, uncollectable accounts, adjustments, rejections, recalls, returns,
billing errors; (ii) price reductions, rebates and similar payments imposed by
government authorities; (iii) transportation, importation, freight, postage, shipping,
insurance and other handling costs, if separately identified on the invoice; (iv)
administrative and other fees and reimbursements and similar payments directly related
to the sale or delivery of SELECTED PRODUCT paid to wholesalers and other distributors,
buying groups, pharmacy benefit management organizations, health care insurance
carriers and other institutions; (v) the cost of the DELIVERY SYSTEM, but only if such
DELIVERY SYSTEM is invoiced separately, where for purposes of this NET SALES
definition, a “DELIVERY SYSTEM” shall mean any delivery system comprising equipment,
instrumentation, one or more devices or other components designed to assist in the
administration of SELECTED PRODUCT;

			
	 	 	 
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	 	 	 	and (vi) any taxes, other governmental charges or import and excise duties levied on
the production, sale, transportation, delivery or use of SELECTED PRODUCT which is
paid by or on behalf of COMPANY (including without limitation sales, use, excise,
turnover, inventory, and value-added taxes). For purposes of determining NET SALES,
SELECTED PRODUCT shall be deemed to be sold when SELECTED PRODUCT is shipped and
invoiced, and a “sale” shall not include transfers or dispositions for charitable,
promotional, pre-clinical, clinical, regulatory or governmental purposes (excluding
however the sales of SELECTED PRODUCT that are intended for administration to
patients and paid for in whole or in part by governmental agencies or authorities
including, by way of example but not limitation, pursuant to governmental programs
such as Medicare or Medicaid). In addition, NET SALES by COMPANY hereunder are
subject to the following:

	 	(a)	 	In the case of pharmacy incentive programs,
hospital performance incentive program charge backs, disease management
programs, similar programs or discounts on “bundles” of products, all
discounts and the like shall be allocated among products on the basis
on which such discounts and the like were accrued, or if such basis
cannot be determined, proportionately to the list prices of such
products;
	 
	 	(b)	 	Sales or other disposals of SELECTED PRODUCT
between and among COMPANY, its AFFILIATES and its SUBLICENSEES shall be
excluded from the computation of NET SALES;
	 
	 	(c)	 	In the event of a sublicense as to the SELECTED
PRODUCT, NET SALES will be calculated with respect to sales of the
SELECTED PRODUCT by the SUBLICENSEE to a THIRD PARTY; and
	 
	 	(d)	 	In the event that SELECTED PRODUCT is sold in
any country in the form of a combination product containing one or more
therapeutically active ingredients in addition to SELECTED PRODUCT,
with respect thereto, the PARTIES shall negotiate in

			
	 	 	 
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	 	 	 	good faith to determine what portion of the net sales of such
combination product in such country shall be treated as NET SALES
under this AGREEMENT, which determination shall be based on the value
added by SELECTED PRODUCT, compared to the value added by such other
therapeutically active ingredients, to the invoice price of such
combination product. If the PARTIES are unable to agree upon such
aggregate economic value, then the PARTIES shall refer the matter to
the senior management representatives of each PARTY and, if the
senior management representatives of the PARTIES cannot resolve such
disagreement within fifteen (15) days after the matter is referred to
them, the PARTIES shall refer the matter to final and binding
arbitration as provided for in Section 17.9.

	 	1.53	 	“NON-DISCLOSURE AGREEMENTS” means those agreements entered into between the
PARTIES on September 7, 2004 between the PARTIES, and July 13, 2005 between the
PARTIES, Bioprocess Technology Consultants, Inc. and Avecia Ltd., providing for
confidential treatment of the PARTIES’ information.
	 
	 	1.54	 	“PATENT” means: (i) any letters patent and utility models including any
extension, substitution, registration, confirmation, reissue, supplemental protection
certificate, re-examination or renewal thereof; and (ii) to the extent valid and
enforceable rights are granted by a governmental authority thereunder, a PATENT
APPLICATION (and in each case any foreign counterpart thereto).
	 
	 	1.55	 	“PATENT APPLICATION” means an application for letters patent, including a
provisional application, converted provisional application, continuation application, a
continued prosecution application, a continuation-in-part application, a divisional
application, a re-examination application, and a reissue application (and in each case
any foreign counterpart thereto).
	 
	 	1.56	 	“PATENT CLAIM CHALLENGE” means the initiation of any judicial action by
COMPANY, any of its AFFILIATES or any of its SUBLICENSEES that challenges the validity
or enforceability of any claim within the NEKTAR AL PATENT RIGHTS.

			
	 	 	 
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	 	1.57	 	“PEG” means poly(ethylene) glycol.
	 
	 	1.58	 	“PEGYLATION,” with correlative meanings “PEGYLATED” or to “PEGYLATE”, means
covalent chemical bonding of any REAGENT (including the SELECTED REAGENT and including
covalent chemical bonding through linking groups) with or to another material or
materials. Such materials include, without limitation, proteins, peptides,
oligonucleotides, other biomolecules, small molecules, therapeutic agents (including
the THERAPEUTIC AGENT), diagnostic agents, imaging agents and detectable labels.
Additional materials that may be PEGYLATED include without limitation, polymers,
liposomes, films, chemical separation and purification surfaces, solid supports,
metal/metal oxide surfaces and other surfaces such as, by way of example but not
limitation, those on implanted devices, and equipment, where a REAGENT is covalently
chemically bonded to one or more reactive molecules on the surface of such device or
equipment. “PEGYLATION” shall include the synthesis, derivatization, characterization,
and modification of PEG for such purposes, together with the synthesis, derivatization,
characterization, and modification of the raw materials and intermediates for the
manufacture of REAGENTS (including the SELECTED REAGENT) or products (including the
SELECTED PRODUCT) incorporating such REAGENT by means of covalent chemical bonding, and
all methods of making and using each and all of the foregoing.
	 
	 	1.59	 	“PHASE 1 CLINICAL TRIAL” means the first lawful study in humans, conducted in
accordance with 21 C.F.R. § 312.21(a) (or the equivalent LAWS and regulations in
jurisdictions outside the United States), of the safety, metabolism and pharmacologic
actions of a pharmaceutical or biologic product, which is prospectively designed to
generate sufficient data (if successful) to design and commence a PHASE 2 CLINICAL
TRIAL of such product.
	 
	 	1.60	 	“PHASE 2 CLINICAL TRIAL” means a controlled or uncontrolled clinical trial,
conducted in accordance with 21 C.F.R. § 312.21(b) (or the equivalent LAWS and
regulations in jurisdictions outside the United States), of appropriate size and
designed to evaluate the effectiveness of the product for a particular indication and
to determine the common short-term side effects and risks associated with the product.

			
	 	 	 
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	 	1.61	 	“PIVOTAL TRIAL,” also know as a Phase 3 clinical trial, means a controlled or
uncontrolled clinical trial, conducted in accordance with § 21 C.F.R. 312.21(c) (or the
equivalent LAWS and regulations in jurisdictions outside the United States), that is
conducted after preliminary evidence suggesting effectiveness has been obtained, that
is of an expanded size and designed to establish that a product is safe and effective
for its intended use, to define warnings, precautions and adverse reactions that are
associated with the product in the dosage range to be prescribed, and to support
MARKETING AUTHORIZATION of such product, including physician labeling, of such product.
	 
	 	1.62	 	“PURCHASE PRICE” has the meaning set forth in Section 5.4.1.
	 
	 	1.63	 	“QUALITY AGREEMENT” means the Agreement attached as SCHEDULE VIII.
	 
	 	1.64	 	“REAGENT” means a PEG derivative used in the manufacture of a pharmaceutical or
diagnostic product or medical device, including the SELECTED REAGENT.
	 
	 	1.65	 	“RECIPIENT” has the meaning set forth in Section 8.1.
	 
	 	1.66	 	“REWORK” has the meaning set forth in SCHEDULE VIII.
	 
	 	1.67	 	“ROYALTY RATE” means:

	 	(a)	 	[**] percent ([**]%) of the portion of
aggregate NET SALES of SELECTED PRODUCT that is less than or equal to
[**] DOLLARS ($[**]) in any calendar year;
	 
	 	(b)	 	[**] percent ([**]%) of the portion of
aggregate NET SALES of SELECTED PRODUCT that exceeds [**] DOLLARS
($[**]) but that is less than or equal to [**] DOLLARS ($[**]) in any
calendar year; and
	 
	 	(c)	 	[**] percent ([**]%) of the portion of
aggregate NET SALES of SELECTED PRODUCT that exceeds [**] DOLLARS
($[**]) in any calendar year.

			
	 	 	 
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	 	1.68	 	“ROYALTY TERM” means, with respect to the SELECTED PRODUCT in each country in
the world, the period of time commencing on the date of the FIRST COMMERCIAL SALE of
the SELECTED PRODUCT in such country and expiring upon the later of: (a) ten (10)
years thereafter; and (b) the expiration date of the last VALID PATENT CLAIM.
	 
	 	1.69	 	“SAFETY STATEMENT” has the meaning set forth in SCHEDULE VIII.
	 
	 	1.70	 	“SELECTED PRODUCT” means the chemical entity resulting from attachment of the
THERAPEUTIC AGENT to the SELECTED REAGENT by means of PEGYLATION.
	 
	 	1.71	 	“SELECTED REAGENT” means [**].
	 
	 	1.72	 	“SIGNIFICANT DEVIATION” has the meaning set forth in SCHEDULE VIII.
	 
	 	1.73	 	“SOLE INVENTION” has the meaning set forth in Section 12.3.
	 
	 	1.74	 	“SPECIFICATIONS” means the specifications for the SELECTED REAGENT as set forth
in Schedule I.
	 
	 	1.75	 	“SUBLICENSEE” means any person or entity, including AFFILIATES, to which
COMPANY grants a sublicense (i) to research and/or develop SELECTED PRODUCT pursuant to
the license set forth in Section 2.1, or (ii) to make, have made, use, sell, have sold,
import and/or export the SELECTED PRODUCT pursuant to the license set forth in Section
2.1 (which for the purposes hereof will include the right to distribute, market or
promote). SUBLICENSEE shall not include distributors or other parties to which COMPANY
or its AFFILIATES sells SELECTED PRODUCT in the ordinary course of business, or
manufacturers or contract synthesis facilities which produce the active molecule in
THERAPEUTIC AGENT for COMPANY or its AFFILIATES.
	 
	 	1.76	 	“TERM” has the meaning set forth in Section 14.1.
	 
	 	1.77	 	“THERAPEUTIC AGENT” means the protein based on a domain of fibronectin that is
an inhibitor of the VEGFR-2 receptor and whose amino acid sequence

			
	 	 	 
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	 	 	 	shall be provided by COMPANY to NEKTAR within two (2) business days after the
EFFECTIVE DATE and attached to this AGREEMENT as SCHEDULE IV.
	 
	 	1.78	 	“THIRD PARTY” means any entity other than NEKTAR AL, COMPANY, a SUBLICENSEE of
COMPANY and their respective AFFILIATES.
	 
	 	1.79	 	“UAH” has the meaning set forth in SCHEDULE VII.
	 
	 	1.80	 	“VALID PATENT CLAIM” means either: (a) a claim of an issued and unexpired
PATENT that is included within the NEKTAR AL PATENT RIGHTS, and that has not (i) been
declared invalid by an unreversed and unappealable decision of a court or other
appropriate body of competent jurisdiction, (ii) been admitted to be invalid or
unenforceable through reexamination, reissue, disclaimer, or otherwise, (iii) expired
or been cancelled, or (iv) been abandoned; or (b) a claim of a PATENT APPLICATION that
is included within the NEKTAR AL PATENT RIGHTS and has (i) been filed in good faith and
consistent with customary and commercially reasonable practices, (ii) been kept
pending, in good faith and consistent with customary and commercially reasonable
practices, but for not more than ten (10) years based on the filing date of the PATENT
APPLICATION, (iii) not been abandoned, and (iv) not been finally disallowed without the
possibility of appeal or refiling of such PATENT APPLICATION.

	2.	 	Licenses to NEKTAR AL LICENSED TECHNOLOGY and COMPANY Technology

	 	2.1	 	License to COMPANY. Subject to the terms and conditions of this
AGREEMENT, NEKTAR AL hereby grants to COMPANY, for the TERM of this AGREEMENT, an
exclusive, worldwide, royalty-bearing license, with the right to grant sublicenses as
provided in Section 2.2, under the NEKTAR AL LICENSED TECHNOLOGY, but excluding NEKTAR
AL MANUFACTURING TECHNOLOGY, to develop, make, have made, use, sell, offer for sale,
import and export the SELECTED PRODUCT in the FIELD. For clarity, this license does
not include a license under any NEKTAR AL LICENSED TECHNOLOGY to make or have made the
SELECTED REAGENT.

			
	 	 	 
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	 	2.2	 	Sublicenses. COMPANY shall have the right to grant sublicenses under
the licenses granted in Section 2.1 above to any THIRD PARTY or AFFILIATE, provided
that:

	 	(a)	 	the terms of each sublicense shall be
consistent with the terms and conditions of this AGREEMENT as
applicable;
	 
	 	(b)	 	COMPANY’S grant of any sublicense shall not
relieve COMPANY from any of its obligations under this AGREEMENT;
	 
	 	(c)	 	COMPANY shall remain jointly and severally
liable for any breach of a sublicense by a SUBLICENSEE; and
	 
	 	(d)	 	COMPANY shall not grant a sublicense to a THIRD
PARTY (whether such THIRD PARTY is a company, corporation, limited
liability company, partnership or other such legal entity, or a
division or operating or business unit of such legal entity) that, at
the time of the proposed grant of a sublicense, is primarily engaged in
the business of: (i) manufacturing REAGENTS; or (ii) attaching REAGENTS
to pharmaceutical or biotechnology products, including licensing
intellectual property rights or technology pertaining to attachment of
REAGENTS to pharmaceutical or biotechnology products, or providing
services pertaining to attachment of REAGENTS to pharmaceutical or
biotechnology products, without NEKTAR AL’S prior written consent,
which shall not be withheld unreasonably.

	 	2.3	 	NEKTAR AL Research Rights and Limitations. Notwithstanding anything to
the contrary in this AGREEMENT and without limiting any other retained rights, the
license granted under Section 2.1 shall be subject to the retained right of NEKTAR AL
and its AFFILIATES: (i) to practice the NEKTAR AL LICENSED TECHNOLOGY for the conduct
of research and development of products that it is developing either itself or with
others (other than SELECTED PRODUCT), and in connection with the sale of REAGENTS
through NEKTAR AL’S catalog for research purposes; (ii) to develop, make, have made,
use, sell, offer for sale,

			
	 	 	 
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	 	 	 	import, export and license products other than SELECTED PRODUCT, including products
containing the SELECTED REAGENT (but not the THERAPEUTIC AGENT); and (iii) to
perform their respective obligations to THIRD PARTIES set forth in agreements
existing as of the EFFECTIVE DATE.
	 
	 	2.4	 	License to NEKTAR AL. COMPANY hereby grants to NEKTAR AL a
non-exclusive, worldwide, royalty-free license, during the TERM, under (a) COMPANY
KNOW-HOW and COMPANY PATENT RIGHTS, and (b) the NEKTAR AL LICENSED TECHNOLOGY that is
licensed exclusively to COMPANY hereunder, only to the extent necessary or reasonably
useful for NEKTAR AL to fulfill its obligations under this AGREEMENT. With COMPANY’S
prior written approval, NEKTAR AL shall have the right to grant sublicenses under the
licenses granted in this Section 2.4 to any THIRD PARTY or AFFILIATE, but only to the
extent necessary or reasonably useful for such THIRD PARTY or AFFILIATE to perform
services under a work plan agreed in advance by COMPANY, provided that:

	 	(a)	 	the terms of each sublicense shall be
consistent with the terms and conditions of this AGREEMENT as
applicable;
	 
	 	(b)	 	NEKTAR AL’S grant of any sublicense shall not
relieve NEKTAR AL from any of its obligations under this AGREEMENT; and
	 
	 	(c)	 	NEKTAR AL shall remain jointly and severally
liable for any breach of a sublicense by a sublicensee under this
Section 2.4.

	 	2.5	 	No Implied Rights or Licenses. Neither PARTY grants to the other any
rights or licenses, whether by implication, estoppel or otherwise, except to the extent
expressly provided for under this AGREEMENT.
	 
	 	2.6	 	NEKTAR AL Covenant. NEKTAR AL covenants and agrees that, during the
TERM of this AGREEMENT, it and its AFFILIATES shall not develop, make, have made, use,
sell, offer for sale, import or export SELECTED PRODUCT anywhere in the world in the
FIELD, and further that it and its AFFILIATES shall not grant any THIRD PARTY a license
under the NEKTAR AL LICENSED

			
	 	 	 
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	 	 	 	TECHNOLOGY to develop, make, have made, use, sell, offer for sale, import or export
SELECTED PRODUCT anywhere in the world in the FIELD.
	 
	 	2.7	 	NEKTAR AL KNOW-HOW. NEKTAR AL covenants and agrees that, during the
TERM of this AGREEMENT, NEKTAR AL will make good faith efforts to make available to
COMPANY NEKTAR AL KNOW-HOW in NEKTAR AL’S sole discretion. The foregoing covenant
shall not require NEKTAR AL to make available all NEKTAR AL KNOW-HOW, and shall not
require NEKTAR AL to make available NEKTAR AL KNOW-HOW that is not necessary or
reasonably useful to practice the license granted under Section 2.1, nor shall it
require NEKTAR AL to make available any NEKTAR AL KNOW-HOW within the NEKTAR AL
MANUFACTURING TECHNOLOGY.

	3.	 	Manufacture and Supply of SELECTED REAGENT

	 	3.1	 	Exclusivity. During the TERM, on a country-by-country basis, NEKTAR AL
shall manufacture and supply and COMPANY shall purchase from NEKTAR AL, one hundred
percent (100%) of COMPANY’S and COMPANY’S SUBLICENSEES’ purchase requirements of
SELECTED REAGENT for the manufacturing of SELECTED PRODUCT, subject only to Section
3.5.
	 
	 	3.2	 	Minimum Purchases and Rolling Forecast for Supply. Prior to the
EFFECTIVE DATE, COMPANY has provided NEKTAR AL with a forecast of its requirements of
SELECTED REAGENT through the second calendar quarter of 2007 (a copy of which will be
attached as SCHEDULE VI within five (5) business days of the EFFECTIVE DATE), with the
required quantities of such forecast constituting a binding order for supply of
SELECTED REAGENT for those amounts in the forecast from the EFFECTIVE DATE through the
end of the first quarter of 2006. At least sixty (60) days prior to the beginning of
the first calendar quarter of 2006, COMPANY shall provide NEKTAR AL with a rolling
forecast of its requirements of SELECTED REAGENT during the eight (8) calendar quarters
beginning the first calendar quarter 2006, with the required quantities for the first
[**] calendar quarters of such forecast constituting a binding order for supply of
SELECTED REAGENT, and the forecast for the remaining [**] calendar quarters to be an
estimate only, which in all cases shall equal at least one

			
	 	 	 
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	 	 	 	hundred percent (100%) of COMPANY’S and COMPANY’S SUBLICENSEES’ requirements of
SELECTED REAGENT. COMPANY shall update such forecast at least sixty (60) days prior
to the commencement of each successive calendar quarter. Notwithstanding the
foregoing, NEKTAR AL shall only be bound to supply up to one hundred and twenty
percent (120%) of the initial forecast covering any calendar quarter (or most
current forecast covering such calendar quarter to the extent agreed by the MANAGING
COMMITTEE). In the event that the binding order portion of COMPANY’S forecast for a
given calendar quarter exceeds one hundred and twenty percent (120%) of the initial
forecast for such calendar quarter, then the PARTIES shall meet in good faith to
discuss how and whether NEKTAR AL can meet the revised forecast. Any and all
forecasts provided by COMPANY to NEKTAR AL under this AGREEMENT shall be sent to
NEKTAR AL Contract Management.
	 
	 	3.3	 	Purchase Orders. COMPANY shall, from time to time, provide NEKTAR AL
with COMPANY’S standard form of written purchase order for amounts of SELECTED REAGENT
to be provided by NEKTAR AL hereunder, provided however that all terms and conditions
respecting any orders of SELECTED REAGENT other than the quantity and delivery dates
shall be governed exclusively by the terms of this AGREEMENT, and provided further
that, at all times, COMPANY will be required to order full, and not fractional, BATCHES
of SELECTED REAGENT. Each such purchase order shall be sent to the attention of NEKTAR
AL Contract Management and shall specify the quantity and requested delivery date of
SELECTED REAGENT, requested packaging, as well as the site to which SELECTED REAGENT is
to be shipped; provided, however, that COMPANY shall not designate in any purchase
order a delivery date that is less than five (5) months after the date of such purchase
order. NEKTAR AL shall have each shipment of SELECTED REAGENT shipped pursuant to its
standard shipping procedures and documentation. The terms and conditions of this
AGREEMENT shall govern all purchase orders, notwithstanding the fact that a purchase
order or the standard shipping document may provide for additional or different
obligations of either PARTY than the terms and conditions of this AGREEMENT. Any such
additional or different terms in any such purchase order or shipping documents are
hereby expressly rejected.

			
	 	 	 
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	 	3.4	 	Fulfillment. To the extent that any orders for SELECTED REAGENT do not
exceed one hundred and twenty percent (120%) of COMPANY’S initial forecast for a given
calendar quarter, and to the extent forecasts and purchase orders are submitted as
provided hereunder, NEKTAR AL shall fulfill these purchase orders by the later of: (a)
five (5) months after the date of such purchase order; or (b) any other mutually agreed
upon in writing delivery date. If, for any reason including force majeure, NEKTAR AL
cannot fulfill an order by the later of five (5) months of the date of such purchase
order or any other agreed upon in writing delivery date, or there is a significant risk
that NEKTAR AL will not be able to so fulfill an order, then NEKTAR AL shall notify
COMPANY in writing within forty-eight (48) hours of such determination. To the extent
that such order for SELECTED REAGENT does not exceed one hundred twenty percent (120%)
of COMPANY’S initial forecast for a given calendar quarter (or most current forecast
covering such calendar quarter to the extent agreed by the MANAGING COMMITTEE), and to
the extent that such purchase order is submitted as provided hereunder, the provisions
of Section 3.5 shall apply.
	 
	 	3.5	 	Failure to Supply. If, for any given delivery specified on a purchase
order, NEKTAR AL cannot supply at least eighty percent (80%) of the amount of SELECTED
REAGENT ordered by COMPANY pursuant to Section 3.3 that is within the limits set forth
in Section 3.2 by the time for delivery of such shipment provided in Section 3.4, for
any reason including force majeure, then, with regard to such deficiency, within thirty
(30) days after such delivery date (or, in the case of a quantity of SELECTED REAGENT
that was delivered but breached the warranty in Section 4.2, within sixty (60) days
after the date of delivery of such quantity of SELECTED REAGENT, COMPANY so notifies
NEKTAR AL in writing of such breach in accordance with Section 5.2), NEKTAR AL shall
provide COMPANY a reasonable plan for curing such deficiency, and shall use
commercially reasonable efforts to pursue such plan to cure the deficiency within
ninety (90) days after the originally planned delivery date (or, if applicable, the
notice from COMPANY). If there is a disagreement as to whether NEKTAR AL is using
commercially reasonable efforts to pursue such plan to cure the deficiency within such
ninety (90) day period, such disagreement shall be referred to the senior management
representatives of each PARTY and, if the senior

			
	 	 	 
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	 	 	 	management representatives of the PARTIES cannot resolve such disagreement within
fifteen (15) days after the matter is referred to them, the PARTIES shall refer the
matter to final and binding arbitration as provided for in Section 17.9. Subject to
Section 17.1, if, in any two (2) calendar quarters within a period of four (4)
consecutive calendar quarters, NEKTAR AL cannot supply at least eighty percent (80%)
of the amount of SELECTED REAGENT ordered by COMPANY pursuant to Section 3.3 that
complies with the warranty in Section 4.2 and is within the limits set forth in
Section 3.2 by the time for delivery of such shipment provided in Section 3.4, for
any reason including force majeure, then NEKTAR AL shall be considered as having
failed to manufacture and to sell to COMPANY such quantity of SELECTED REAGENT (a
“FAILURE”). At its expense, NEKTAR AL shall: (i) work with COMPANY in good faith
and select a THIRD PARTY contract manufacturer (the “CONTRACT MANUFACTURER”)
reasonably acceptable to COMPANY with whom COMPANY may contract to make such
quantity of SELECTED REAGENT and COMPANY’S and COMPANY’S SUBLICENSEES’ subsequent
purchase requirements of SELECTED REAGENT for the manufacturing of SELECTED PRODUCT;
(ii) grant a personal, non-assignable, non-exclusive, paid-up and royalty-free right
and license under the NEKTAR AL LICENSED TECHNOLOGY to CONTRACT MANUFACTURER solely
to make such SELECTED REAGENT for the manufacturing of SELECTED PRODUCT for so long
as the CONTRACT MANUFACTURER manufactures SELECTED REAGENT hereunder; and (iii) use
all commercially reasonable efforts to enable such CONTRACT MANUFACTURER to make
such SELECTED REAGENT (including providing such CONTRACT MANUFACTURER with personnel
and records that are necessary or reasonably useful for such manufacture, but
specifically excluding all start-up and other costs incurred by the CONTRACT
MANUFACTURER including, without limitation, costs of scale up and process
qualification and process validation, and capital expenditures). COMPANY shall
ensure that such CONTRACT MANUFACTURER treats CONFIDENTIAL INFORMATION (including,
without limitation, the terms and existence of the contract under which it is
engaged by COMPANY) in accordance with the provisions of Article 8 hereunder and
agrees to assignment of INVENTIONS relating to the manufacture of the SELECTED
REAGENT in accordance with the provisions of

			
	 	 	 
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	 	 	 	Article 12 hereunder. If a FAILURE is due to an event of force majeure, subject to
COMPANY’S approval (not to be unreasonably withheld or delayed), COMPANY and its
SUBLICENSEES shall purchase their entire requirements of SELECTED REAGENT from
NEKTAR AL once NEKTAR AL is able to resume the manufacture and supply of COMPANY’S
and its SUBLICENSEES’ entire requirements thereof. Notwithstanding the foregoing,
within ten (10) business days after such FAILURE due to an event of force majeure,
NEKTAR AL at its option may elect to directly contract with a CONTRACT MANUFACTURER
to manufacture the SELECTED REAGENT at the requisite quality and scale, and agrees
to bear all costs associated with that contract including, without limitation,
start-up costs and capital expenditures associated with enabling the CONTRACT
MANUFACTURER as well as that portion of the purchase price of the SELECTED REAGENT
from such CONTRACT MANUFACTURER that exceeds the then-current PURCHASE PRICE of the
SELECTED REAGENT manufactured and supplied by NEKTAR AL, and COMPANY’S approval as
provided for in the immediately preceding sentence shall not apply. Except with
respect to the immediately preceding sentence, in the event of a FAILURE for any
reason, NEKTAR AL shall not be liable for that portion of the purchase price of the
SELECTED REAGENT from such CONTRACT MANUFACTURER that exceeds the then-current
PURCHASE PRICE of the SELECTED REAGENT manufactured and supplied by NEKTAR AL. Upon
notice from NEKTAR AL pursuant to Section 3.4 that there is a risk that NEKTAR AL
will not be able to fulfill an order, the PARTIES shall discuss in good faith
whether and to what extent the provisions of this Section 3.5 shall be applied at
that time. Notwithstanding anything to the contrary herein, the remedies provided
for in this Section 3.5 shall constitute COMPANY’S sole and exclusive remedy against
NEKTAR AL, and the entire liability of NEKTAR AL, in connection with a FAILURE that
is the subject of a notice from the COMPANY to NEKTAR AL under this Section 3.5 and,
if such FAILURE has been caused by an event of force majeure, such FAILURE shall not
be deemed a breach of this AGREEMENT by NEKTAR AL.
	 
	 	3.6	 	MANAGING COMMITTEE. To facilitate communication between the PARTIES
during the performance of this AGREEMENT, the PARTIES shall appoint a

			
	 	 	 
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	 	 	 	MANAGING COMMITTEE consisting of two (2) representatives from each of NEKTAR AL and
COMPANY. The initial representatives are set forth on Schedule IX hereto. Each
PARTY may replace its representatives on the MANAGING COMMITTEE by prior written
notice to the other PARTY. The MANAGING COMMITTEE shall have the responsibilities
set forth in Section 3.7 and such other responsibilities as the PARTIES may agree
from time to time, provided that the MANAGING COMMITTEE shall have no right or power
to amend the terms of this AGREEMENT or waive rights or obligations of the PARTIES
hereunder. The MANAGING COMMITTEE shall meet at such times and places, in person or
by telephone conferencing or other electronic communication, as it shall determine
to carry out its responsibilities; provided, that a meeting of the MANAGING
COMMITTEE shall take place no later than thirty (30) days after the EFFECTIVE DATE.
The MANAGING COMMITTEE shall operate by consensus with representatives of NEKTAR AL
having one (1) collective vote and representatives of COMPANY having one (1)
collective vote. If a dispute arises regarding matters within the scope of
responsibilities of the MANAGING COMMITTEE, and the MANAGING COMMITTEE fails to
reach a consensus on its resolution within thirty (30) days of when the dispute was
presented to the MANAGING COMMITTEE, then the dispute shall be referred to the
senior management representatives of each PARTY.
	 
	 	3.7	 	Production Management. The MANAGING COMMITTEE will plan and manage the
manufacturing and supply activities to be performed under this AGREEMENT and facilitate
communication between the PARTIES during such time as NEKTAR AL supplies COMPANY with
SELECTED REAGENT hereunder. The MANAGING COMMITTEE shall be responsible for discussing
in good faith and agreeing on issues relating to forecasting, and contingency planning.
Notwithstanding the foregoing, the MANAGING COMMITTEE shall have no right or power to
amend the terms of this AGREEMENT or waive rights or obligations of the PARTIES
hereunder.

	4.	 	SPECIFICATIONS and Manufacturing Warranty for SELECTED REAGENT

	 	4.1	 	Specifications. The SPECIFICATIONS for SELECTED REAGENT to be supplied
pursuant to Article 3 are set forth in Schedule I. Each PARTY may propose a

			
	 	 	 
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	 	 	 	change to the SPECIFICATIONS to the other PARTY for evaluation considering the
relative costs, benefits and technical ability to make such change. Any
modifications of the SPECIFICATIONS (including without limitation the test methods)
shall be handled in accordance with SCHEDULE VIII, Article 2. COMPANY shall
reimburse NEKTAR AL for its reasonable costs associated with implementing any
modifications to the SPECIFICATIONS if and only if such modifications and such costs
are approved in advance in writing by the COMPANY.
	 
	 	4.2	 	Warranty. NEKTAR AL warrants that: (a) SELECTED REAGENT shall be
manufactured in compliance with applicable LAW and regulations applicable to COMPANY’S
intended use of SELECTED REAGENT in manufacturing SELECTED PRODUCT for administration
to humans and obtaining MARKETING AUTHORIZATIONS, and with the quality standards and
testing methods of NEKTAR AL for SELECTED REAGENT, which standards and methods shall be
governed by NEKTAR AL’S quality system that NEKTAR AL employs for other REAGENTS
manufactured by NEKTAR AL for THIRD PARTIES for their intended use in manufacturing
pharmaceutical products for administration to humans and obtaining MARKETING
AUTHORIZATIONS; and (b) each shipment of SELECTED REAGENT shall, upon delivery pursuant
to Section 7.3, be in conformity with the applicable SPECIFICATIONS. NEKTAR AL’S
liability and COMPANY’S remedy for breach of the foregoing warranty shall be limited to
the actions and procedures required in Section 3.5 above, Article 5 below and Section
11.1.1, provided however, NEKTAR AL’S liability and COMPANY’S remedy under Section
11.1.1 shall be limited to CLAIMS arising out of non-conformity of the SELECTED REAGENT
with the warranty provided for in Section 4.2(a), but only to the extent such
non-conformity could not be ascertained by COMPANY pursuant to agreed upon incoming
inspection and testing of the SELECTED REAGENT as set forth in SCHEDULE I within the
sixty (60) day period under Section 5.2.
	 
	 	4.3	 	Disclaimer of Warranty. Except as set forth in this AGREEMENT, NEKTAR
AL PROVIDES NO WARRANTIES, EXPRESS OR IMPLIED, REGARDING SELECTED REAGENT, SELECTED
PRODUCT, OR NEKTAR AL LICENSED

			
	 	 	 
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	 	 	 	TECHNOLOGY, AND HEREBY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS AND IMPLIED,
INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT.

	5.	 	Quality and Complaints

	 	5.1	 	Analysis. Promptly after arrival of a shipment of SELECTED REAGENT at
COMPANY or COMPANY’S designated site, COMPANY shall analyze such SELECTED REAGENT using
methods approved in writing by both PARTIES according to the test procedures set forth
in SCHEDULE I.
	 
	 	5.2	 	Complaints. COMPANY shall notify NEKTAR AL in writing if a shipment of
SELECTED REAGENT does not comply with the warranty in Section 4.2(b) within sixty (60)
days after COMPANY’S receipt of the relevant shipment of SELECTED REAGENT, or with the
warranty in Section 4.2(a) within one (1) year, or thirty (30) days following COMPANY’S
next annual audit under Section 5.5, whichever is longer, after COMPANY’S receipt of
the relevant shipment of SELECTED REAGENT, and shall include full details of the basis
for such noncompliance (including supporting data). If no such written notice of
noncompliance is received by NEKTAR AL within the above applicable period, COMPANY
shall be deemed to have accepted the applicable shipment of SELECTED REAGENT, which
shall thereafter conclusively be presumed to meet the applicable warranty under Section
4.2 of this AGREEMENT.
	 
	 	5.3	 	Complaints Procedure. If NEKTAR AL receives a notice of noncompliance
under Section 5.2, the following procedures shall apply:

	 	5.3.1	 	Subject to the applicable acceptance period in Section 5.2,
NEKTAR AL shall supply COMPANY the replacement quantity of SELECTED REAGENT
that was allegedly missing or defective from the original shipment. If a
shipment of SELECTED REAGENT does not comply with the warranty in Section
4.2(a), NEKTAR AL shall supply such replacement quantity within a time period,
from the date on which such notice is received by NEKTAR AL, equal to the
length of the period of

			
	 	 	 
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	 	 	 	time for which such original quantity was supplied. For example, if the
amount of SELECTED REAGENT which does not comply with the warranty in
Section 4.2(a) equates to two (2) calendar quarters of supply under Article
3 of this AGREEMENT, then NEKTAR AL shall replace such defective quantity
within two (2) calendar quarters from the date on which such notice is
received by NEKTAR AL. If a shipment of SELECTED REAGENT does not comply
with the warranty in Section 4.2(b), NEKTAR AL shall supply such replacement
quantity within thirty (30) days from the date on which such notice is
received by NEKTAR AL, or if such quantity is not then available, as soon as
NEKTAR AL has the necessary quantities available, provided it is not later
than sixty (60) days after NEKTAR AL’S receipt of such notice.
	 
	 	5.3.2	 	If the non-compliance concerns the quality of SELECTED REAGENT
delivered and NEKTAR AL, acting reasonably and in good faith, accepts the
details submitted by COMPANY as to the non-compliance of a shipment of SELECTED
REAGENT, the replacement material described in Section 5.3.1 will be provided
to COMPANY at no additional cost to COMPANY.
	 
	 	5.3.3	 	If the non-compliance concerns the quality of SELECTED REAGENT
delivered and NEKTAR AL, acting reasonably and in good faith, does not accept
the details submitted by COMPANY as to the non-compliance of a shipment of
SELECTED REAGENT, then within thirty (30) days from the date on which the
details of COMPANY’S complaint are received by NEKTAR AL, NEKTAR AL shall
appoint (i) an independent scientific and technical expert reasonably
acceptable to COMPANY to review the details supporting COMPANY’S assertion of
non-compliance with Section 4.2(a) or (ii) an independent laboratory reasonably
acceptable to COMPANY to review any assertion of non-compliance with Section
4.2(b). COMPANY shall not unreasonably withhold or delay acceptance of the
independent scientific and technical expert or independent laboratory appointed
by NEKTAR AL. The findings of such expert or laboratory, as the case may be,
shall be final and conclusively binding on

			
	 	 	 
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	 	 	 	the PARTIES as to whether such SELECTED REAGENT complies with the warranty
in Section 4.2. If the expert or laboratory determines that such SELECTED
REAGENT is noncompliant, then all the fees of the expert or the laboratory
shall be paid by NEKTAR AL, and COMPANY shall have no obligation to pay for
the quantities of noncompliant SELECTED REAGENT, but shall be responsible
for payment of replacement quantities that conform to the applicable
warranty set forth in Section 4.2 within thirty (30) days after COMPANY’S
receipt of such replacement shipment. On the other hand, if the expert or
laboratory confirms that such SELECTED REAGENT did comply with the
applicable requirements of Section 4.2, then all of the fees of the
laboratory or the expert shall be paid by COMPANY. COMPANY shall promptly
pay for any replacement quantities shipped by NEKTAR AL in addition to the
original quantities shipped, and COMPANY shall be considered to have finally
and completely accepted such allegedly noncompliant shipment of SELECTED
REAGENT.

	 	5.4	 	Fees for Manufacturing and Supply of SELECTED REAGENT.

	 	5.4.1	 	During the TERM hereof, COMPANY shall pay to NEKTAR AL for the
supply of the quantities of SELECTED REAGENT the DOLLAR per unit price of
SELECTED REAGENT utilizing the procedure as set forth in SCHEDULE II (the
“PURCHASE PRICE”).
	 
	 	5.4.2	 	COMPANY shall also pay to NEKTAR AL fees equal to NEKTAR AL’S
then-current fees for providing services reasonably approved in writing by
COMPANY in advance from time to time during the TERM, provided that such fees
shall: (i) be provided by NEKTAR AL to COMPANY prior to NEKTAR AL commencing
any such services, and (ii) not exceed the lowest rates then charged by NEKTAR
AL to other customers for whom NEKTAR AL manufactures and supplies REAGENTS.
In general, such services are those that are reasonably necessary for, and
solely relating to, the development, scale-up and validation of SELECTED
REAGENT to be manufactured under this AGREEMENT, including without limitation:

			
	 	 	 
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	 	(a)	 	improvements to and expansion of facilities,
analytical method development, analytical method validation, cleaning
method validation, process validation, reprocessing, supporting
documentation including, but not limited to, the preparation, filing
and maintenance of Drug Master Files and other regulatory filings;
	 
	 	(b)	 	NEKTAR AL’S generating and providing
information or performing work pursuant to any governmental or
regulatory agency requests for information or work (including any
testing) regarding SELECTED REAGENT or its manufacturing process; and
	 
	 	(c)	 	installation, qualification and validation
needed for SELECTED REAGENT including scale-up.

	 	 	 	For further clarity, COMPANY shall not be required to reimburse NEKTAR AL
for the cost of providing any services to the extent such services are
reimbursed to NEKTAR AL by other customers to whom NEKTAR AL manufactures
and supplies SELECTED REAGENT.

	 	5.5	 	Compliance. NEKTAR AL warrants that it will perform regular
self-inspections in order to assure compliance with the warranty standards in Section
4.2(a) of this AGREEMENT, and submit to inspections by COMPANY. Upon thirty (30) days
prior written notice, COMPANY shall have the right once in each twelve (12) months
period and at reasonable hours to audit the quality systems of NEKTAR AL, and also at
any time, from time to time, if COMPANY has a reasonable basis for believing there has
been or is a material breach of NEKTAR AL’S obligations under Section 4.2 of this
AGREEMENT. Notice provided under the immediately preceding sentence shall include the
basis for the audit. Such audits shall be performed to verify, among other things:
(1) the quality of the facilities providing SELECTED REAGENT; (2) the general controls
and security practices and procedures at any facility or part of a facility used by
NEKTAR AL to provide SELECTED REAGENT; and (3) NEKTAR AL’S compliance with all
applicable LAWS. In addition, COMPANY will have the option to designate an independent
THIRD PARTY, reasonably acceptable to NEKTAR AL and subject to confidentiality
obligations to NEKTAR AL, to verify that all proprietary

			
	 	 	 
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	 	 	 	manufacturing operations relating to the manufacture of SELECTED REAGENT are in
compliance with the warranty standards in Section 4.2(a) of this AGREEMENT. If
NEKTAR AL becomes aware that any shipment of SELECTED REAGENT to COMPANY does not
meet all of the requirements of Section 4.2, NEKTAR shall promptly notify COMPANY.

	6.	 	Milestones; Royalty Payments; Royalty Reports

	 	6.1	 	Milestone Payments. The PARTIES agree that in partial consideration
for the rights acquired by COMPANY under this AGREEMENT, COMPANY shall pay to NEKTAR AL
milestone payments in accordance with and on the dates provided in SCHEDULE III hereto
for SELECTED PRODUCT. Such milestone payments shall be non-refundable and
non-creditable, and in addition to any royalty or other payments due under this
AGREEMENT. If for whatever reason, a particular milestone event for which a milestone
payment is due is not achieved then in such case, the milestone payment that NEKTAR AL
would have received upon the occurrence of such milestone event for the SELECTED
PRODUCT, had the particular milestone event been achieved, shall be paid on the
occurrence of the next milestone event for which a milestone payment is due, which
payment shall be paid in addition to and not instead of the milestone payment that is
to be paid to NEKTAR AL upon the occurrence of the next milestone event. For example,
if COMPANY decides not to conduct a PHASE 2 CLINICAL TRIAL of the SELECTED PRODUCT but
instead proceeds from conducting a PHASE 1 CLINICAL TRIAL to a PIVOTAL TRIAL of the
SELECTED PRODUCT, then in such case, the milestone payment that NEKTAR AL would have
received on commencement of such PHASE 2 CLINICAL TRIAL shall be paid to NEKTAR AL on
commencement of the PIVOTAL TRIAL, in addition to the milestone payment that NEKTAR AL
is to receive on commencement of the PIVOTAL TRIAL.

	 	6.2	 	Royalties.

	 	6.2.1	 	The PARTIES agree that in partial consideration for the rights
acquired by COMPANY under this AGREEMENT, COMPANY shall pay NEKTAR AL during
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	 	 	 	in an amount equal to the product of the ROYALTY RATE times the aggregate
NET SALES of SELECTED PRODUCT in all countries where the manufacture,
import, export, use, offer for sale or sale of SELECTED PRODUCT or SELECTED
REAGENT is covered by a VALID PATENT CLAIM. In the event there is no VALID
PATENT CLAIM covering the manufacture, use, import, export, offer for sale
or sale of SELECTED PRODUCT or SELECTED REAGENT in a particular country, the
ROYALTY RATE otherwise applicable [**] for such particular country.
	 
	 	6.2.2	 	No royalties shall be payable on SELECTED PRODUCT distributed
to THIRD PARTIES solely for marketing and advertising purposes or as a sample
for testing or evaluation purposes. No royalties shall be payable on sales
among COMPANY, its AFFILIATES and its SUBLICENSEES, but royalties shall be
payable on subsequent sales by COMPANY, its AFFILIATES or its SUBLICENSEES to a
THIRD PARTY. No multiple royalty shall be payable on SELECTED PRODUCT because
the manufacture, import, export, use, offer for sale or sale of SELECTED
PRODUCT is covered by more than one NEKTAR AL PATENT RIGHT or is subject to
both NEKTAR AL KNOW-HOW and a VALID PATENT CLAIM.
	 
	 	6.2.3	 	If COMPANY, its AFFILIATES or its SUBLICENSEES are required to
pay royalties to any THIRD PARTY because the manufacture, import, export, use,
offer for sale or sale of SELECTED PRODUCT infringes any PATENT of such THIRD
PARTY in any country in the world (but only if the composition of matter or
method of manufacture of the SELECTED REAGENT infringes such PATENT), COMPANY,
its AFFILIATES or its SUBLICENSEES may deduct from royalties thereafter due to
NEKTAR AL with respect to the NET SALES of SELECTED PRODUCT in such country, an
amount equal to [**] the royalties and such other payments to such THIRD PARTY
for a license under such PATENT. In no event shall the royalties due to NEKTAR
AL on the NET SALES of SELECTED PRODUCT in a country on account of any
reduction pursuant to this Section 6.2.3 be reduced by means of such
deductions, by an amount

			
	 	 	 
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	 	 	 	that is more than [**] percent ([**]%) of the royalties otherwise payable.
The foregoing shall be NEKTAR AL’S sole liability and COMPANY’S sole remedy
in the event of any actual or alleged infringement of a THIRD PARTY PATENT
as a result of the manufacture, use, importation, exportation or sale of
SELECTED REAGENT or SELECTED PRODUCT.
	 
	 	6.2.4	 	Within ten (10) business following either BLA filing or
notification of MARKETING AUTHORIZATION for the SELECTED PRODUCT in the United
States or European Union, COMPANY, at its option, in its sole discretion, and
upon written notice to NEKTAR AL, may elect to reduce all royalties otherwise
payable on account of NET SALES of SELECTED PRODUCT after application of all
other provisions of this AGREEMENT by an amount equal to either [**] percent
([**]%) or [**] percent ([**]%) of the NET SALES of SELECTED PRODUCT giving
rise to each such royalty payment obligation, to be specified by COMPANY in
such notice. A fee shall be due and payable by COMPANY to NEKTAR AL within
thirty (30) days after making such election according to the following table:

	 	 	 	 	 
	 	 	Royalty Buy Down (U.S.$ [**])
	Event at which Buy Down Occurs	 	[**]%
	 	[**]%
	BLA Filing

	 	[**]
	 	[**]
	MARKETING AUTHORIZATION

	 	[**]
	 	[**]

	 	6.3	 	Reports, Exchange Rates. COMPANY shall notify NEKTAR AL in writing
promptly upon the FIRST COMMERCIAL SALE of SELECTED PRODUCT in each country. Commencing
upon the FIRST COMMERCIAL SALE of SELECTED PRODUCT and continuing during the ROYALTY
TERM, COMPANY shall furnish to NEKTAR AL a quarterly written report showing, on a
country-by-country basis, according to the volume of units of SELECTED PRODUCT sold in
each such country (by SKU) during the reporting period: (a) the gross invoiced sales of
SELECTED PRODUCT sold in each country during the reporting period, and the amounts
deducted therefrom to determine NET SALES from such gross invoiced sales detailed in
accordance with those deductions provided for in the definition of NET SALES; (b) the
royalties payable in DOLLARS, if any, which

			
	 	 	 
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	 	 	 	shall have accrued hereunder based upon the NET SALES of SELECTED PRODUCT; (c) the
withholding taxes, if any, required by LAW to be deducted in respect of such sales;
and (d) the date of the FIRST COMMERCIAL SALE of SELECTED PRODUCT in each country
during the reporting period. With respect to sales of SELECTED PRODUCT invoiced in
DOLLARS, the gross invoiced sales, NET SALES, and royalties payable shall be
expressed in the report in DOLLARS. With respect to sales of SELECTED PRODUCT
invoiced in a currency other than DOLLARS, the gross invoiced sales, NET SALES and
royalties payable shall be expressed in the report provided hereunder in the
domestic currency of the party making the sale as well as in the DOLLAR equivalent
of the royalty payable and the exchange rate used in determining the amount of
DOLLARS. The DOLLAR equivalent shall be calculated using the average exchange rate
(local currency per DOLLAR) published in The Wall Street Journal, Western Edition,
under the heading “Currency Trading,” on the last business day of each month during
the applicable calendar quarter. Reports shall be due hereunder on the sixtieth
(60th) day following the close of each quarter.

	7.	 	Records; Audits; Shipment Terms; Payment Terms

	 	7.1	 	Records. COMPANY and its SUBLICENSEES shall keep complete and accurate
records in sufficient detail to make the reports required hereunder, to confirm their
respective compliance with the provisions of Section 3.1, to properly reflect all gross
sales and NET SALES of SELECTED PRODUCT and to verify the determination of all amounts
payable hereunder. Without limiting the foregoing, COMPANY shall include in each
sublicense granted by it pursuant to this AGREEMENT a provision requiring the
SUBLICENSEE to make reports to COMPANY consistent with those COMPANY is required to
provide hereunder, to keep and maintain records of sales made and deductions taken in
calculating royalties due to NEKTAR AL with respect to such sublicense, and to grant
access to such records by NEKTAR AL’S independent accountant pursuant to Section 7.2
below to the same extent required of COMPANY under this AGREEMENT.
	 
	 	7.2	 	Audits.

			
	 	 	 
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	 	7.2.1	 	By NEKTAR AL. Upon thirty (30) days prior written
notice, NEKTAR AL shall have the right once in each twelve (12) months period
to have an independent certified public accounting firm of recognized national
standing in the United States, selected by NEKTAR AL and reasonably acceptable
to COMPANY, at NEKTAR AL’S expense, to have access during normal business hours
to such of the records of COMPANY, under conditions of confidentiality
reasonably acceptable to COMPANY, as may be reasonably necessary to verify (i)
COMPANY’S compliance with the purchase requirements of Section 3.1, and (ii)
the accuracy of any amounts reported, actually paid or payable under this
AGREEMENT for any year ending not more than twenty-four (24) months prior to
the date of such request. The accounting firm shall disclose to each PARTY
whether the NET SALES are correct or incorrect and the specific details
concerning any discrepancies. No other information shall be provided to NEKTAR
AL. If such accounting firm concludes that additional royalty amounts were
owed to NEKTAR AL during such period, COMPANY shall pay such additional
royalties (including interest on such additional royalties, from the date such
royalty amounts were payable, at the prime lending rate published on the first
business day of each month from such date in The Wall Street Journal, Western
Edition, plus two percent (2%) per annum, compounded monthly, or the maximum
rate allowed under LAW, whichever is less) within thirty (30) days of the date
the PARTIES receive such accounting firm’s written report so concluding. The
fees charged by such accounting firm shall be paid by NEKTAR AL; provided
however, that if the audit discloses that the royalties payable by COMPANY for
the audited period are more than one hundred five percent (105%) of the
royalties actually paid for such period, then COMPANY shall pay the reasonable
fees and expenses charged by such accounting firm. Such auditors shall not be
paid on a contingency basis. Any information received by NEKTAR AL pursuant to
this Section 7.2.1 shall be deemed to be CONFIDENTIAL INFORMATION of COMPANY.
Upon the expiration of twenty-four (24) months following the end of any
calendar year, the calculation of royalties payable with respect to such

			
	 	 	 
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	 	 	 	calendar year shall be binding and conclusive upon NEKTAR AL and COMPANY and
its SUBLICENSEES.
	 
	 	7.2.2	 	Manufacturing Cost Audit. COMPANY shall have the
right to audit, on an annual basis and at its expense (except as provided
below), the records maintained by NEKTAR AL solely to verify MANUFACTURING COST
for any year ending not more than twenty-four (24) months prior to the date of
such request. Any such audit will be conducted during regular business hours
and upon reasonable advance notice (not to be less than thirty (30) days). If
COMPANY desires to audit such records, it shall engage an independent,
certified public accountant reasonably acceptable to NEKTAR AL, to examine such
records under conditions of confidentiality reasonably acceptable to NEKTAR AL.
Such accountant shall be instructed to provide to COMPANY a report verifying
MANUFACTURING COST for the annual period to which such audit pertains, but
shall not disclose to COMPANY any CONFIDENTIAL INFORMATION of NEKTAR AL not
necessary therefor. If as a result of such an audit, it is determined that
COMPANY overpaid NEKTAR AL by more than five percent (5%) during such annual
period, then NEKTAR AL shall re-pay to COMPANY such overpayment (including
interest on such overpayment, from the date such amount was paid to NEKTAR AL,
at the prime lending rate published on the first business day of each month
from such date in The Wall Street Journal, Western Edition, plus two percent
(2%) per annum, compounded monthly, or the maximum rate allowed under LAW,
whichever is less) within thirty (30) days of the date the PARTIES receive such
audit results, and the reasonable expenses of such audit shall be paid by
NEKTAR AL. Such auditors shall not be paid on a contingency basis. Any
information received by COMPANY pursuant to this Section 7.2.2 shall be deemed
to be CONFIDENTIAL INFORMATION of NEKTAR AL. Upon the expiration of
twenty-four (24) months following the end of any calendar year, the
determination of MANUFACTURING COST payable with respect to such calendar year
shall be binding and conclusive upon NEKTAR AL and COMPANY.

			
	 	 	 
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	 	7.3	 	Delivery and Shipment; Title and Risk of Loss. NEKTAR AL shall deliver
all SELECTED REAGENT to COMPANY, and title to and risk of loss of each quantity of
SELECTED REAGENT so delivered shall pass to COMPANY Ex Works (Incoterms 2000) NEKTAR
AL’S manufacturing or storage facilities. Such delivery shall constitute a shipment
hereunder. COMPANY shall pay all packaging, storage, shipping, customs, duties, taxes,
freight and insurance charges associated with shipments of SELECTED REAGENT. All
shipments shall be addressed to the destination selected by COMPANY and set forth in
the relevant purchase order.
	 
	 	7.4	 	Invoicing; Payment Terms. NEKTAR AL shall send invoices to COMPANY for
any SELECTED REAGENT shipped to COMPANY no earlier than the date on which SELECTED
REAGENT is placed aboard the carrier at the point of shipment from the place of
manufacture or storage owned or controlled by NEKTAR AL. All invoices shall be in
DOLLARS. All payments due under this AGREEMENT shall be due and payable thirty (30)
days from receipt of invoice except for milestone payments under Section 6.1, which
shall be due and payable thirty (30) days after the occurrence of the milestone event
triggering the payment. Royalties shown to have accrued to NEKTAR AL as set forth in
each royalty report to be provided under Section 6.3 shall be due and payable on the
date such royalty report is due. Payment of royalties in whole or in part may be made
in advance of such due date. Any and all amounts past due under this AGREEMENT shall
bear interest at the prime lending rate published on the first business day of each
month during such period of delinquency in The Wall Street Journal, Western Edition,
plus two percent (2%) per annum, compounded monthly, or the maximum rate allowed under
LAW, whichever is less.
	 
	 	7.5	 	Payment Method. All payments by COMPANY under this AGREEMENT shall be
paid in DOLLARS, and all such payments shall be made by bank wire transfer in
immediately available funds to such account as NEKTAR AL shall designate at least ten
(10) business days before such payment is due. If at any time legal restrictions
prevent the prompt remittance of part or all royalties due with respect to sales of
SELECTED PRODUCT in any country where SELECTED PRODUCT

			
	 	 	 
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	 	 	 	is sold, payment shall be made through such lawful means or methods as NEKTAR AL and
COMPANY shall reasonably determine.
	 
	 	7.6	 	Taxes. When any amount due hereunder is subject to withholding for any
taxes or similar governmental charges, the PARTIES shall use their commercially
reasonable efforts to do all such acts and things and to sign all such documents as
will enable them to take advantage of any applicable double taxation agreement or
treaty. In the event there is no applicable double taxation agreement or treaty, or if
an applicable double taxation agreement or treaty reduces but does not eliminate such
withholding or similar tax, COMPANY shall, after notifying NEKTAR AL promptly and in
advance of its intention to pay such withholding taxes, pay such withholding or similar
tax to the appropriate government authority, deduct the amount paid from the amount due
NEKTAR AL and secure and send to NEKTAR AL the best available evidence of its payment
of any such withholdings.

	8.	 	Confidentiality; Exchange of Information

	 	8.1	 	In General. For the TERM and for a period of ten (10) years
thereafter, each PARTY shall maintain in confidence all information and materials of
the other PARTY (including, but not limited to, KNOW-HOW and samples of the THERAPEUTIC
AGENT, SELECTED REAGENT and SELECTED PRODUCT) disclosed or provided to it by the other
PARTY (either pursuant to this AGREEMENT or the NON-DISCLOSURE AGREEMENTS or the
Material Transfer and Evaluation Agreement referred to in Section 17.8, the “MTEA”) and
identified as, or acknowledged to be, confidential in writing or, if disclosed verbally
or by observation, summarized in writing and submitted to RECIPIENT within thirty (30)
days of the oral or visual disclosure thereof (together with all embodiments thereof,
the “CONFIDENTIAL INFORMATION”). CONFIDENTIAL INFORMATION may also include information
regarding intellectual property and confidential or proprietary information of THIRD
PARTIES. In addition, and notwithstanding the foregoing, INVENTIONS that, under
Article 12 are to be owned by one PARTY, shall be deemed CONFIDENTIAL INFORMATION of
such PARTY and not the other PARTY, even if such INVENTIONS initially are generated and
disclosed by the other PARTY. The terms and conditions of this

			
	 	 	 
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	 	 	 	AGREEMENT and the NON-DISCLOSURE AGREEMENTS and the MTEA, also shall be deemed
CONFIDENTIAL INFORMATION of both PARTIES. Any combination of features or
disclosures shall not be deemed to fall within the foregoing exclusions merely
because individual features are published or known to the general public or in the
rightful possession of the RECIPIENT unless the combination itself and principle of
operation thereof are published or known to the general public or are in the
rightful possession of the RECIPIENT. The non-disclosure and non-use obligations
contained in this Article 8 shall not apply to the extent that any receiving PARTY
(the “RECIPIENT”) can demonstrate that (a) the disclosed information was public
knowledge at the time of such disclosure to RECIPIENT, or thereafter became public
knowledge, other than as a result of action or omission of RECIPIENT in violation
hereof; (b) the disclosed information was rightfully known by RECIPIENT without an
obligation of confidentiality (as shown by its written records) prior to the date of
disclosure to RECIPIENT by the other PARTY; (c) the disclosed information was
disclosed to RECIPIENT on an unrestricted basis from a source unrelated to any PARTY
and not under a duty of confidentiality to the other PARTY; or (d) the disclosed
information was independently developed by RECIPIENT (as shown by its written
records) without use of CONFIDENTIAL INFORMATION disclosed by the other PARTY.
	 
	 	8.2	 	Additional Protections. Each PARTY shall take reasonable steps to
maintain the confidentiality of the CONFIDENTIAL INFORMATION of the other PARTY, which
steps shall be no less protective than those that such PARTY takes to protect its own
information and materials of a similar nature, but in no event less than a reasonable
degree of care. Neither PARTY shall use or permit the use of any CONFIDENTIAL
INFORMATION of the other PARTY except for the purposes of carrying out its obligations
or exercising its rights under this AGREEMENT, and neither PARTY shall copy any
CONFIDENTIAL INFORMATION of the other PARTY except as may be necessary or reasonably
useful for such purposes. All CONFIDENTIAL INFORMATION of a PARTY, including all
copies and derivations thereof, is and shall remain the sole and exclusive property of
the DISCLOSING PARTY and subject to the restrictions provided for herein. Neither
PARTY shall disclose any CONFIDENTIAL INFORMATION of the other PARTY

			
	 	 	 
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	 	 	 	other than to those of its directors, officers, AFFILIATES, employees, licensors,
independent contractors, SUBLICENSEES, sublicensees of NEKTAR AL under Section 2.4,
assignees, agents and external advisors directly concerned with the carrying out of
this AGREEMENT, and the CONTRACT MANUFACTURER, on a “need to know” basis, and
provided such disclosure is subject to written confidentiality and non-use
obligations no less protective than those provided for in this Article 8. Other
than as expressly permitted herein, RECIPIENT may not use CONFIDENTIAL INFORMATION
of the other PARTY in applying for PATENTS or securing other intellectual property
rights.
	 
	 	8.3	 	Permitted Disclosures.

	 	8.3.1	 	The obligations of Sections 8.1 shall not apply to the extent
that RECIPIENT is required to disclose information by LAW, judicial order by a
court of competent jurisdiction, or rules of a securities exchange or
requirement of a governmental agency for purposes of obtaining approval to test
or market SELECTED PRODUCT, or to disclose information to a patent office for
the purposes of filing a PATENT as permitted in this AGREEMENT; provided that
to the extent practicable the RECIPIENT shall provide prior written notice
thereof to the DISCLOSING PARTY and sufficient opportunity for the DISCLOSING
PARTY to object to any such disclosure or to request confidential treatment
thereof or a protective order therefor.
	 
	 	8.3.2	 	The PARTIES acknowledge that it may be to their mutual
interest to publish articles relating to data generated or analyzed as part of
this AGREEMENT. Neither PARTY shall submit for written or oral publication or
presentation any manuscript, abstract, writing, printed material or the like
which includes data or any other CONFIDENTIAL INFORMATION of the other PARTY
without first obtaining the prior written consent of the other PARTY, which
consent shall not be unreasonably withheld or delayed; provided however that
valid commercial reasons may exist for withholding such consent.

			
	 	 	 
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	 	8.4	 	Irreparable Injury. The PARTIES acknowledge that either PARTY’S breach
of this Article 8 may cause the other PARTY irreparable injury for which it would not
have an adequate remedy at LAW. In the event of a breach, the nonbreaching PARTY shall
be entitled to seek injunctive relief in addition to any other remedies it may have at
LAW or in equity, without necessity of posting a bond, and the PARTY alleged to have
breached shall not assert as a defense the adequacy of monetary damages.
	 
	 	8.5	 	Return of CONFIDENTIAL INFORMATION. Each PARTY shall return or destroy
all CONFIDENTIAL INFORMATION of the other PARTY in its possession upon termination or
expiration of this AGREEMENT, except any CONFIDENTIAL INFORMATION that is necessary to
allow such PARTY to perform or enjoy any of its rights or obligations that expressly
survive the termination or expiration of this AGREEMENT and except that such PARTY may
retain one copy of CONFIDENTIAL INFORMATION for archival purposes only.
	 
	 	8.6	 	Periodic Report of Activities. From time to time during the TERM as
appropriate, COMPANY shall report generally to NEKTAR AL on the testing of SELECTED
PRODUCT by COMPANY, its AFFILIATES or its SUBLICENSEES, and provide NEKTAR AL will
information and data that COMPANY reasonably believes is relevant to understanding the
safety and performance of SELECTED REAGENT for use in products administered to humans.
Such report and any such information and data shall be CONFIDENTIAL INFORMATION of
COMPANY. This provision shall be in addition to COMPANY’S obligations under the
QUALITY AGREEMENT and Section 17.10.
	 
	 	8.7	 	Other than as expressly provided for herein, neither COMPANY nor its
SUBLICENSEES, agents or independent contractors may develop, make, have made, use,
sell, offer for sale, import or export the SELECTED REAGENT, nor may COMPANY or its
SUBLICENSEES, agents or independent contractors copy, distribute, reverse engineer (by
way of example but not limitation, by performing tests such as HPLC, gas chromatography
or x-ray crystallography), sell, lease, license or otherwise transfer, modify, adapt or
create derivatives of the SELECTED REAGENT.

			
	 	 	 
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	9.	 	Regulatory Matters
	 
	   All regulatory matters will be handled according to the procedures set forth in Schedule
VIII.
	 
	10.	 	Representations, Warranties; Covenants; Limitation of Liability

	 	10.1	 	By Both PARTIES. Each PARTY represents and warrants to the other that
as of the EFFECTIVE DATE: (a) it has the full corporate power to enter into and
perform this AGREEMENT; (b) this AGREEMENT constitutes its legal, valid and binding
obligation; (c) to the best of its and its AFFILIATES’ knowledge, there are no
agreements or arrangements between such PARTY and any THIRD PARTY which could prevent
it from, or conflict with such PARTY’S carrying out all of its obligations hereunder,
including without limitation, in the case of NEKTAR AL, its grant to COMPANY of the
license described in Section 2.1; (d) to the best of its and its AFFILIATES’ knowledge,
it has sufficient legal and/or beneficial title or other rights under its intellectual
property rights necessary for the purposes contemplated under this AGREEMENT and to
grant the licenses contained in this AGREEMENT; (e) each of such PARTY’S employees,
officers, contractors (including CONTRACT MANUFACTURERS), SUBLICENSEES and consultants
has executed or will execute an agreement that requires such employee, officer,
contractor (including CONTRACT MANUFACTURER), SUBLICENSEE or consultant, to the extent
permitted by LAW, to assign to such PARTY all INVENTIONS, PATENTS, and KNOW-HOW made
during the course of and as a result of their association with such PARTY; and (f) each
of such PARTY’S employees, officers, contractors (including CONTRACT MANUFACTURERS),
SUBLICENSEES and consultants is or will be subject to an executed agreement that
requires such employee, officer, contractor (including CONTRACT MANUFACTURER),
SUBLICENSEE or consultant to maintain as confidential any information CONTROLLED by
such PARTY, or provided by the other PARTY, that is CONFIDENTIAL INFORMATION under this
AGREEMENT.
	 
	 	10.2	 	By COMPANY; Diligence.

			
	 	 	 
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	 	10.2.1	 	COMPANY covenants to NEKTAR AL that during the TERM of this AGREEMENT,
COMPANY shall use its commercially reasonable efforts to develop, seek
MARKETING AUTHORIZATION for, manufacture, commercialize and market SELECTED
PRODUCT. As between the PARTIES, COMPANY shall be responsible for all
development activities, except as expressly provided in this AGREEMENT, and for
the preparation, filing and maintenance of applications for MARKETING
AUTHORIZATION for SELECTED PRODUCT.
	 
	 	10.2.2	 	In the event that COMPANY does not use its commercially reasonable efforts as
provided for herein (a “DEFAULT”), at NEKTAR AL’S sole election, NEKTAR AL
shall have the right either to (i) convert the exclusive licenses granted to
COMPANY hereunder (if any) to non-exclusive, or (ii) terminate this AGREEMENT
under Section 14.3.
	 
	 	10.2.3	 	COMPANY represents and warrants to NEKTAR AL that as of the EFFECTIVE DATE,
to the best of its and its AFFILIATES’ knowledge, it is not aware of any
material communications alleging that it has violated or, by conducting its
obligations as currently proposed under this AGREEMENT, it would violate any of
the intellectual property rights of any THIRD PARTY.

	 	10.3	 	By NEKTAR AL.

	 	10.3.1	 	NEKTAR AL represents and warrants to the COMPANY that, as of the EFFECTIVE
DATE, to NEKTAR AL’S and its AFFILIATES’ actual knowledge and without any duty
of inquiry or investigation: (a) Except as provided for in SCHEDULE VII, there
are not any existing claims or litigation brought by a THIRD PARTY under any
THIRD PARTY patent, trade secret or other THIRD PARTY proprietary right in
respect of NEKTAR AL’S exploitation of NEKTAR AL LICENSED TECHNOLOGY, which
claims or litigation could reasonably be expected to affect COMPANY’S practice
of the rights licensed under Section 2.1 of this AGREEMENT; (b) There is not
any basis upon which the COMPANY’S practice of rights licensed under Section
2.1 of this AGREEMENT (i.e.,

			
	 	 	 
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	 	 	 	the use of SELECTED REAGENT by COMPANY to make the SELECTED PRODUCT by
means of covalent chemical attachment) would infringe on the rights of THIRD
PARTIES; (c) There are not any licenses or restrictions other than those
included herein on NEKTAR AL’S or its licensees’ (other than the COMPANY’S)
ability to practice the NEKTAR AL LICENSED TECHNOLOGY; and (d) There are not
any licenses or restrictions other than those included herein on COMPANY’S
ability to practice the NEKTAR AL LICENSED TECHNOLOGY, excluding the NEKTAR
AL MANUFACTURING TECHNOLOGY.
	 
	 	10.3.2	 	NEKTAR AL’S liability for breach of any of the foregoing representations and
warranties shall be limited to the remedies provided for under Section 6.2.3 of
this AGREEMENT.
	 
	 	10.3.3	 	NEKTAR AL represents and warrants to the COMPANY that neither NEKTAR AL, nor
any of its employees or agents, has ever been, is currently, or is the subject
of a proceeding that could lead to that entity or person becoming, as
applicable, a DEBARRED ENTITY or DEBARRED INDIVIDUAL. NEKTAR AL further
covenants, represents and warrants that if, during the TERM, it, or any of its
employees or agents, becomes or is the subject of any FDA investigation or
debarment proceeding that could lead to such entity or person becoming, as
applicable, a DEBARRED ENTITY or DEBARRED INDIVIDUAL, NEKTAR AL shall
immediately notify COMPANY, and if such entity or person becomes, as
applicable, a DEBARRED ENTITY or a DEBARRED INDIVIDUAL, COMPANY shall have the
right to immediately terminate this AGREEMENT.

	 	10.4	 	Limitation of Liability and Exclusion of Damages.

	 	10.4.1	 	EXCEPT IN THE CASE OF A BREACH OF ARTICLE 8 AND WITHOUT LIMITING THE PARTIES’
OBLIGATIONS UNDER ARTICLE 11, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY
FOR SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES
(INCLUDING WITHOUT LIMITATION,

			
	 	 	 
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	 	 	 	DAMAGES RESULTING FROM LOSS OF USE, LOSS OF PROFITS, INTERRUPTION OR LOSS OF
BUSINESS OR OTHER ECONOMIC LOSS) ARISING OUT OF THIS AGREEMENT OR WITH
RESPECT TO A PARTY’S PERFORMANCE OR NON-PERFORMANCE HEREUNDER, EXCEPT WHERE
SUCH DAMAGES WERE CAUSED BY GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF A
PARTY. The limitation on liability and exclusion of damages under this
Section 10.4.1: (i) apply even if a PARTY had or should have had knowledge,
actual or constructive, of the possibility of such damages; and (ii) are a
fundamental element of the basis of the bargain between the PARTIES and this
AGREEMENT would not be entered into without such limitations and exclusions.
Moreover, the remedies under this AGREEMENT are intended to be exclusive,
and the limitation on liability and exclusion of damages under this Section
10.4.1 are intended to apply even if there is a total and fundamental breach
of this AGREEMENT, and the essential purpose of these provisions is to limit
the PARTIES’ respective liabilities hereunder.

	11.	 	Indemnification; Insurance

	 	11.1	 	Indemnity.

	 	11.1.1	 	By NEKTAR AL. NEKTAR AL shall defend, indemnify and hold COMPANY,
its AFFILIATES and its SUBLICENSEES, and their respective shareholders,
directors, officers, employees and agents (each, a “COMPANY INDEMNITEE”)
harmless from and against all losses, liabilities, damages, costs and expenses
(including reasonable attorney’s fees and costs of investigation and
litigation, regardless of outcome) resulting from all claims, demands, actions
and other proceedings by or on behalf of any THIRD PARTY (including any
governmental authority) (collectively, “CLAIMS”) to the extent arising from:
(i) the breach of any representation, warranty, covenant or obligation of
NEKTAR AL under this AGREEMENT; or (ii) the negligence, recklessness or willful
misconduct of NEKTAR AL or its sublicensees or any of their respective

			
	 	 	 
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	 	 	 	THIRD PARTY agents or subcontractors in the performance of its or their
obligations and permitted activities under this AGREEMENT.
	 
	 	11.1.2	 	By COMPANY. COMPANY shall defend, indemnify and hold NEKTAR AL,
NEKTAR AL AFFILIATES, and their respective shareholders, directors, officers,
employees and agents (each, a “NEKTAR AL INDEMNITEE”) harmless from and against
all losses, liabilities, damages, costs and expenses (including reasonable
attorney’s fees and costs of investigation and litigation, regardless of
outcome) resulting from all CLAIMS to the extent arising from: (a) the breach
of any representation, warranty, covenant or obligation of COMPANY under this
AGREEMENT; (b) except to the extent NEKTAR AL is responsible for indemnifying
COMPANY INDEMNITEES under Section 11.1.1, the development (including without
limitation the conduct of clinical trials in humans), manufacturing, testing,
storage, handling, transportation, disposal, commercialization (including any
recalls, field corrections or market withdrawals), marketing, distribution,
promotion, sale or use of SELECTED PRODUCT (including as a result of any
illness, injury or death to persons, including employees, agents or
contractors of COMPANY or its SUBLICENSEES, or damage to property); or (c) the
negligence, recklessness or willful misconduct of COMPANY or its SUBLICENSEES
or any of their respective THIRD PARTY agents or subcontractors in the
performance of its or their obligations and permitted activities under this
AGREEMENT.

	 	11.2	 	Insurance. COMPANY, at its own expense, shall maintain comprehensive
general liability insurance, including product liability insurance, upon and after the
administration of the SELECTED PRODUCT to the first patient in the first PHASE 1
CLINICAL TRIAL, in the minimum amount of one million DOLLARS ($1,000,000) per
occurrence, and three million DOLLARS ($3,000,000) in the aggregate, with NEKTAR AL
named as an additional insured. Such policies shall include a provision that NEKTAR AL
shall be given thirty (30) days written notice prior to cancellation or material change
in such a policy, except in the case of non-payment, which shall require at least ten
(10) days notice. The insurance

			
	 	 	 
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	 	 	 	carriers must be rated A-, VII or better by A.M. Best Company, provided that the
insurance required in this Section 11.2 is available from such carriers on
commercially reasonable terms. COMPANY shall maintain such insurance for so long as
it or its SUBLICENSEE(S) continues to research or develop or manufacture or
commercialize SELECTED PRODUCT, and shall from time to time provide copies of
certificates of such insurance to NEKTAR AL upon its request. If the insurance
policy is written on a claims-made basis then the coverage must be kept in place for
at least seven (7) years after the termination of this AGREEMENT. If COMPANY elects
to have any of its employees visit NEKTAR AL’S facilities, COMPANY shall maintain
employers’ liability insurance for limits of one million DOLLARS ($1,000,000) per
occurrence. If an employee of COMPANY is driving to NEKTAR AL’S facilities, the
COMPANY shall maintain auto liability insurance for owned, non-owned and hired
autos, for a limit of one million DOLLARS ($1,000,000) combined single limit.
	 
	 	11.3	 	Procedures. If any CLAIM covered by Section 11.1 is brought, the
indemnified PARTY shall promptly notify the indemnifying PARTY in writing of such
CLAIM. Provided that the indemnifying PARTY is not contesting the indemnity obligation
in good faith, the indemnifying PARTY shall assume, at its cost and expense, the sole
defense of such CLAIM through counsel selected by the indemnifying PARTY and reasonably
acceptable to the other PARTY, except that those indemnified may at their option and
expense select and be represented by separate counsel. The indemnifying PARTY shall
maintain control of such defense, provided that the indemnifying PARTY shall act
reasonably and in good faith with respect to all matters relating to the settlement or
disposition of any claim as the settlement or disposition related to the parties being
indemnified, and except that the indemnifying PARTY may settle a CLAIM as to one
indemnified involving any remedy other than the payment of money by the indemnifying
PARTY only with the prior consent of such person or entity, which may not be withheld
unreasonably. Those indemnified may, at their option and expense, participate in such
defense, but regardless shall cooperate with the indemnifying PARTY in its defense of
any claim for which indemnification is sought under Section 11.1.

			
	 	 	 
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	12.	 	INVENTIONS, KNOW-HOW and PATENTS

	 	12.1	 	Existing Intellectual Property. Other than as expressly provided in
this AGREEMENT, neither PARTY grants nor shall be deemed to grant any right, title or
interest to the other PARTY in any PATENT, PATENT APPLICATION, KNOW-HOW or other
intellectual property right CONTROLLED by such PARTY as of the EFFECTIVE DATE or during
the TERM of this AGREEMENT.
	 
	 	12.2	 	Disclosure. Each PARTY shall promptly disclose in writing to the other
all INVENTIONS arising from the joint or separate activities (including any INVENTIONS
first made, conceived or first reduced to practice as a result of such activities) of
the PARTIES or their agents, sublicensees (including SUBLICENSEES), contract
manufacturers (including CONTRACT MANUFACTURERS) or independent contractors in
connection with the performance of their obligations or activities under this
AGREEMENT; provided, however, that NEKTAR AL shall not be obligated to disclose under
this Section 12.2 a SOLE INVENTION to the extent such SOLE INVENTION falls within the
scope of NEKTAR AL CORE TECHNOLOGY and that COMPANY shall not be obligated to disclose
under this Section 12.2 a SOLE INVENTION to the extent such SOLE INVENTION falls within
the scope of COMPANY CORE TECHNOLOGY.
	 
	 	12.3	 	Ownership of INVENTIONS. Except as otherwise set forth in Sections
12.4 or 12.5, all INVENTIONS made solely by employees, agents, sublicensees, contract
manufacturers (including CONTRACT MANUFACTURERS) or independent contractors of NEKTAR
AL in the performance of this AGREEMENT and all INVENTIONS made solely by employees,
agents, sublicensees (including SUBLICENSEES), contract manufacturers (including
CONTRACT MANUFACTURERS) or independent contractors of COMPANY in practicing the rights
licensed to COMPANY in Section 2.1 of this AGREEMENT (each, a “SOLE INVENTION”) shall
be the exclusive property of such PARTY. Except as otherwise set forth in Sections
12.4 or 12.5, if employees, agents, sublicensees (including SUBLICENSEES), contract
manufacturers (including CONTRACT MANUFACTURERS) or independent contractors of each of
NEKTAR AL and COMPANY jointly develop any INVENTION in the performance of activities

			
	 	 	 
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	 	 	 	conducted in connection with this AGREEMENT (each, a “JOINT INVENTION”), COMPANY and
NEKTAR AL shall each own an undivided one-half (1/2) interest in and to such JOINT
INVENTION, and shall have the right to freely exploit and grant licenses under any
such JOINT INVENTION and any PATENT claiming such JOINT INVENTION without consent of
or a duty of accounting to the other PARTY. For the avoidance of doubt, the
determination as to whether an INVENTION has been “solely” or “jointly” made shall
be based upon whether employees, agents, sublicensees (including SUBLICENSEES),
contract manufacturers (including CONTRACT MANUFACTURERS) or independent contractors
of a PARTY would be or are properly named as an inventor on a corresponding PATENT
APPLICATION under United States inventorship LAWS.
	 
	 	12.4	 	NEKTAR AL CORE TECHNOLOGY INVENTIONS. Any and all rights, title and
interest in and to all SOLE INVENTIONS and JOINT INVENTIONS which fall within the scope
of NEKTAR AL CORE TECHNOLOGY shall belong solely to NEKTAR AL (“NEKTAR AL CORE
TECHNOLOGY INVENTIONS”). COMPANY hereby agrees to and hereby does, and shall, without
additional consideration transfer and assign to NEKTAR AL all of its right, title and
interest in and to such NEKTAR AL CORE TECHNOLOGY INVENTIONS and all intellectual
property rights therein including enforcement rights, and shall require its employees,
agents, sublicensees (including SUBLICENSEES), contract manufacturers (including
CONTRACT MANUFACTURERS) and independent contractors to so assign their right, title
and interest therein to NEKTAR AL. NEKTAR AL shall be responsible, at its sole expense
and discretion, and with the cooperation of COMPANY, for the filing, prosecution and
maintenance of foreign and domestic PATENT APPLICATIONS and PATENTS covering such
NEKTAR AL CORE TECHNOLOGY INVENTIONS. For clarity, such NEKTAR AL CORE TECHNOLOGY
INVENTIONS shall be included in the NEKTAR AL CORE TECHNOLOGY and subject to the
license granted to COMPANY pursuant to this AGREEMENT.
	 
	 	12.5	 	COMPANY CORE TECHNOLOGY INVENTIONS. Any and all rights, title and
interest in and to all SOLE INVENTIONS and JOINT INVENTIONS which fall within the scope
of COMPANY CORE TECHNOLOGY shall belong solely to

			
	 	 	 
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	 	 	 	COMPANY (“COMPANY CORE TECHNOLOGY INVENTIONS”). NEKTAR AL hereby agrees to and
hereby does, and shall, without additional consideration assign to COMPANY all of
its right, title and interest in and to any COMPANY CORE TECHNOLOGY INVENTIONS and
all intellectual property rights therein including enforcement rights, and shall
require its employees, agents or independent contractors to so assign their right,
title and interest therein to COMPANY. COMPANY shall be responsible, at its sole
expense and discretion, and with the cooperation of NEKTAR AL if requested by
COMPANY, for the filing, prosecution and maintenance of foreign and domestic PATENT
APPLICATIONS and PATENTS covering such COMPANY CORE TECHNOLOGY INVENTIONS.
	 
	 	12.6	 	Individual PATENT Filings. Each PARTY shall have sole discretion and
right to prepare, file, prosecute, maintain and defend PATENT APPLICATIONS or PATENTS
for INVENTIONS it solely owns under this AGREEMENT, and shall be responsible for
related interference proceedings. Each PARTY shall confer with the other PARTY, and
make every reasonable effort to adopt the other PARTY’S suggestions regarding the
prosecution of such PATENT APPLICATIONS, and shall copy the other PARTY on any official
actions and submissions in such PATENT APPLICATIONS. Costs incurred with respect to
PATENT APPLICATIONS shall be borne by the PARTY with the right to prosecute each such
PATENT APPLICATION.
	 
	 	12.7	 	Joint PATENT Filings. With respect to all PATENT APPLICATIONS on JOINT
INVENTIONS that are jointly owned by the PARTIES (i.e., JOINT INVENTIONS that have not
been assigned nor are assignable to the other PARTY pursuant to Sections 12.4 and 12.5)
(the “JOINT PATENT APPLICATIONS”), the PARTIES shall determine which PARTY shall be
responsible for filing, prosecuting and maintaining PATENT APPLICATIONS and PATENTS on
behalf of both PARTIES (the “RESPONSIBLE PARTY”) based on a good faith determination of
the relative contributions of the PARTIES to the INVENTION and the relative interests
of the PARTIES in the INVENTION. At least twenty (20) days prior to the contemplated
filing of such PATENT APPLICATION, the RESPONSIBLE PARTY shall submit a substantially
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	 	 	 	APPLICATION to the other PARTY for its approval, which shall not be unreasonably
withheld or delayed. Except as set forth below, the PARTIES shall share equally the
costs of the preparation, filing, prosecution and maintenance of all JOINT PATENT
APPLICATIONS. If either PARTY elects not to pay its portion of any shared costs for
a JOINT PATENT APPLICATION or PATENT issuing therefrom, the other PARTY may proceed
with such JOINT PATENT APPLICATION in its own name and at its sole expense, in which
case the PARTY electing not to pay its share of costs hereby agrees to transfer and
assign and shall transfer and assign its entire right, title and interest in and to
such JOINT PATENT APPLICATION to the other PARTY and such INVENTION shall be treated
as a SOLE INVENTION of the assignee for the purposes of Sections 12.3 and 12.7.
	 
	 	12.8	 	Further Actions. Each PARTY shall cooperate with the other PARTY to
execute all documents and take all reasonable actions to effect the intent of this
Article 12.

	13.	 	Infringement

	 	13.1	 	Infringement of THIRD PARTY Rights.

	 	13.1.1	 	Notice. If the development, manufacture, use, import, export or sale
of a SELECTED PRODUCT results in a claim for PATENT infringement by a THIRD
PARTY, the PARTY to this AGREEMENT first having notice shall promptly notify
the other PARTY in writing. The notice shall set forth the facts of the claim
in reasonable detail.
	 
	 	13.1.2	 	Litigation Unrelated to SELECTED REAGENT. Except to the limited
extent provided for in Section 13.1.3, COMPANY shall defend, indemnify and hold
harmless each NEKTAR AL INDEMNITEE from and against all losses, liabilities,
damages, costs and expenses (including reasonable attorney’s fees and costs of
investigation and litigation, regardless of outcome) resulting from any claim
that the development, manufacture, use, import, export or sale of SELECTED
PRODUCT infringes a THIRD PARTY patent or misappropriates THIRD PARTY know-how,
and the

			
	 	 	 
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	 	 	 	provisions of Sections 11.1.2 and 11.3 shall apply with respect to any such
claim to the same extent as though it were a CLAIM for which COMPANY has an
obligation to defend, indemnify and defend NEKTAR AL under Section 11.1.2.
In the event of a conflict between the provisions of Article 12 and this
Section 13.1.2, the provisions of this Section 13.1.2 shall apply. NEKTAR
AL shall cooperate with COMPANY at COMPANY’S request and expense in such
defense, and shall have the right to be represented by counsel of its own
choice, at NEKTAR AL’S expense.
	 
	 	13.1.3	 	COMPANY’S obligations under Section 13.1.2 shall not apply to the extent that
any infringement of a THIRD PARTY patent or misappropriation of THIRD PARTY
know-how results solely from the composition of matter or the method of
manufacture of the SELECTED REAGENT.

	 	13.2	 	Infringement By THIRD PARTIES.

	 	13.2.1	 	Notice of Infringement. If any VALID PATENT CLAIM is infringed by a
THIRD PARTY, or any KNOW HOW utilized in the manufacture, use, import, export
or sale of the SELECTED REAGENT or the SELECTED PRODUCT is misappropriated by a
THIRD PARTY, the PARTY first having knowledge of such infringement or
misappropriation shall promptly notify the other PARTY in writing. The notice
shall set forth the facts of such infringement or misappropriation in
reasonable detail.
	 
	 	13.2.2	 	Prosecution of Actions Related to the SELECTED REAGENT.

	 	(a)	 	NEKTAR AL shall have the primary right, but not
the obligation, to institute, prosecute and control any action or
proceeding with respect to (but only to the extent concerning) any
infringement of NEKTAR AL LICENSED TECHNOLOGY by reason of a THIRD
PARTY’S manufacture, use, import, export or sale of SELECTED REAGENT,
using counsel of its own choice, at its own expense. COMPANY shall
cooperate with NEKTAR AL at NEKTAR AL’S

			
	 	 	 
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	 	 	 	request and expense in the prosecution of such action or proceeding.
If NEKTAR AL determines that COMPANY is an indispensable party to the
action, COMPANY hereby consents to be joined. In such event, COMPANY
shall have the right to be represented in that action by its own
counsel and at its own expense.
	 
	 	(b)	 	If NEKTAR AL fails to bring an action or
proceeding within a period of sixty (60) days after receiving written
notice from COMPANY or otherwise having knowledge of such infringement
or misappropriation by reason of a THIRD PARTY’S manufacture, use,
import, export or sale of SELECTED REAGENT, COMPANY shall have the
right to bring and control any such action using counsel of its own
choice, and at its own expense. If COMPANY determines that NEKTAR AL
is an indispensable PARTY to the action, NEKTAR AL hereby consents to
be joined. In such event, NEKTAR AL shall have the right to be
represented in such action by its own counsel at its own expense. No
settlement, consent judgment or other voluntary final disposition of a
suit under this Section 13.2.2 may be entered into without the joint
consent of COMPANY and NEKTAR AL (which consent shall not be withheld
unreasonably).
	 
	 	(c)	 	Awards. If either PARTY brings an
action for infringement or misappropriation by a THIRD PARTY under this
Section 13.2.2, any damages or other monetary awards or payments in
settlement recovered by such PARTY shall be applied first to defray the
costs and expenses incurred by both PARTIES in the action. Any
remainder shall be retained by the PARTY that brought such action;
provided, however if that PARTY is COMPANY, then any remainder shall be
retained by COMPANY, but such amount shall be deemed to be additional
NET SALES of SELECTED PRODUCT on which royalties are payable to NEKTAR
AL pursuant to Section 6.2.

			
	 	 	 
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	 	13.2.3	 	Prosecution of Actions Related to the SELECTED PRODUCT.

	 	(a)	 	Except to the limited extent provided in
Section 13.2.2, COMPANY shall have the primary right, but not the
obligation, to institute, prosecute and control any action or
proceeding against THIRD PARTIES arising from or related to such THIRD
PARTIES’ manufacture, use, export or sale of SELECTED PRODUCT or
infringement of any PATENTS, PATENT APPLICATIONS or KNOW-HOW CONTROLLED
by COMPANY covering COMPANY CORE TECHNOLOGY, using counsel of its own
choice, at its own expense. NEKTAR AL shall cooperate with COMPANY at
COMPANY’S request and expense in the prosecution of such action or
proceeding. If COMPANY determines that NEKTAR AL is an indispensable
party to the action, NEKTAR AL hereby consents to be joined. In such
event, NEKTAR AL shall have the right to be represented in that action
by its own counsel and at its own expense.
	 
	 	(b)	 	If COMPANY fails to bring an action or
proceeding within a period of sixty (60) days after receiving written
notice from NEKTAR AL of the possibility of a claim, or otherwise
having knowledge of a claim described in Section 13.2.3(a), NEKTAR AL
shall have the right, but not the obligation, to bring and control any
such action using counsel of its own choice, at its own expense. If
NEKTAR AL determines that COMPANY is an indispensable PARTY to the
action, COMPANY hereby consents to be joined. In such event, COMPANY
shall have the right to be represented in such action using counsel of
its own choice, at its own expense. No settlement, consent judgment or
other voluntary final disposition of a suit under this Section
13.2.3(b) may be entered into without the joint consent of NEKTAR AL
and COMPANY (which consent shall not be withheld unreasonably).
	 
	 	(c)	 	Awards. If either PARTY brings an action for
infringement or misappropriation by a THIRD PARTY under this Section
13.2.3

			
	 	 	 
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	 	 	 	any damages or other monetary awards or payments in settlement
recovered by such PARTY shall be applied first to defray the costs
and expenses incurred by both PARTIES in the action. Any remainder
shall be retained by COMPANY, but such amount shall be deemed to be
additional NET SALES of SELECTED PRODUCT on which royalties are
payable to NEKTAR AL pursuant to Section 6.2.

	14.	 	Term and Termination

	 	14.1	 	Expiration. The term of this AGREEMENT (the “TERM”) shall commence on
the EFFECTIVE DATE and shall remain in force until the last to expire of any VALID
PATENT CLAIM on a country-by-country basis, unless earlier terminated as provided
herein.
	 
	 	14.2	 	Termination by COMPANY. COMPANY shall have the right to terminate this
AGREEMENT upon ninety (90) days’ written notice to NEKTAR AL in the following
circumstances:

	 	14.2.1	 	If the MARKETING AUTHORIZATION for SELECTED PRODUCT is withdrawn or suspended
by the regulatory authorities (the FDA and the EMEA) in both the major markets
(both the United States and the European Union) of the world;
	 
	 	14.2.2	 	If scientific or medical findings, which clearly indicate serious hazards
associated with SELECTED PRODUCT, prohibit further development or marketing of
SELECTED PRODUCT;
	 
	 	14.2.3	 	If significant changes in competitiveness seriously inhibit the effective
marketing of SELECTED PRODUCT; or
	 
	 	14.2.4	 	On a country-by-country basis, in the event COMPANY is unable to market
SELECTED PRODUCT in the United States of America, the United Kingdom, France,
Germany, Spain, Italy or Japan due to valid patent infringement claims of THIRD
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	 	14.2.5	 	COMPANY has the right to terminate this AGREEMENT at any time upon ninety
(90) days’ written notice to NEKTAR AL.

	 	14.3	 	Termination for Cause. Each PARTY shall have the right to terminate
this AGREEMENT by written notice to the other PARTY for a failure to comply with the
material terms of this AGREEMENT by the other PARTY, provided such failure to comply is
not corrected by the failing PARTY within ten (10) days of written notice of any
failure to make timely payment of royalties or any other amount when due hereunder (but
only if and when such failure is not a result of a PARTY’S good faith dispute of the
amount due), or within sixty (60) days of receipt of written notice of any other
failure from the non-failing PARTY. Further, NEKTAR AL shall have the right to
terminate this AGREEMENT by written notice to COMPANY in the event of any PATENT CLAIM
CHALLENGE, provided such PATENT CLAIM CHALLENGE is not withdrawn or dismissed within
sixty (60) days of receipt of written notice of such PATENT CLAIM CHALLENGE to COMPANY
from NEKTAR AL. The right of either PARTY to terminate this AGREEMENT as provided
herein above shall not be affected in any way by such PARTY’S waiver of or failure to
take actions with respect to any previous default.
	 
	 	14.4	 	Bankruptcy. In case of the filing of a voluntary petition for
bankruptcy, the failure to cause an involuntary petition in bankruptcy to be dismissed
within sixty (60) days after the filing thereof, suspension of payment, assignment for
the benefit of creditors, voluntary liquidation or otherwise of one PARTY, then the
other PARTY shall be entitled to terminate this AGREEMENT by giving thirty (30) days
written notice.
	 
	 	14.5	 	Effect of Termination.

	 	14.5.1	 	The provisions of Sections 3.5 (but only with respect to the last sentence
thereof), 4.2 (but only with respect to the last sentence thereof), 6.2.3 (but
only with respect to the last sentence thereof), 6.3, 7.1, 7.2, 7.4 through 7.6
(as to accrued and unpaid amounts), 8.1 through 8.5, 10.3.2, 10.4, 13.1, 14.5,
17.2, 17.3, 17.4, 17.6 through 17.10 and 17.12 and Articles 9, 11, 12 (as to
INVENTIONS made prior to such termination) and 16 (and in each case together
with any defined terms applicable to such

			
	 	 	 
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	 	 	 	provisions) shall survive termination of this AGREEMENT for any reason
whatsoever.
	 
	 	14.5.2	 	If the AGREEMENT is terminated by COMPANY pursuant to Section 14.2, COMPANY
shall continue to be obligated to purchase and shall purchase SELECTED REAGENT
manufactured pursuant to any issued purchase orders and binding forecasts,
pursuant to Article 3 and the provisions of the following Sections shall apply
(in addition to those specified in Section 14.5.1 above): Articles 3, 4 and 5
and Section 7.3 (and in each case together with any defined terms applicable to
such provisions). Any SELECTED REAGENT so manufactured shall be invoiced to
COMPANY in full and paid by COMPANY in accordance with the terms of this
AGREEMENT. Termination shall not affect shipments of SELECTED REAGENT which
have been made by NEKTAR AL to COMPANY, and all provisions of this AGREEMENT
shall continue to apply to such shipments notwithstanding notice of any such
termination. Any SELECTED REAGENT so manufactured shall be invoiced to COMPANY
in full and paid by COMPANY in accordance with the terms of this AGREEMENT.
NEKTAR AL shall complete or cause the completion of the manufacturing of any
work-in-progress on the date on which the termination is effective, provided
such work-in-progress was reasonably undertaken to perform NEKTAR AL’S
obligations under this AGREEMENT. Any SELECTED REAGENT so manufactured shall
be invoiced to COMPANY in full and paid by COMPANY in accordance with the terms
of this AGREEMENT.
	 
	 	14.5.3	 	If the AGREEMENT is terminated by COMPANY pursuant to Section 14.3 or Section
10.3.3, then for so long as COMPANY continues to develop, make, have made, use,
sell, offer for sale, import, export SELECTED PRODUCT in the FIELD, all of the
following shall apply:

	 	(a)	 	The licenses granted in Section 2.1 and 2.2
shall survive such termination and COMPANY’S payment obligations under
Article 6 shall survive such termination.

			
	 	 	 
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	 	(b)	 	At COMPANY’S option, NEKTAR AL shall: (i)
complete or cause the completion of the manufacturing of any
work-in-progress on the date on which the termination is effective; and
(ii) shall manufacture and supply SELECTED REAGENT requested by COMPANY
pursuant to the terms of this AGREEMENT for up to two (2) years from
the date on which the termination is effective. Any SELECTED REAGENT
so manufactured shall be invoiced to COMPANY in full and paid by
COMPANY in accordance with the terms of this AGREEMENT. If COMPANY
elects to require NEKTAR AL to manufacture and supply SELECTED REAGENT
pursuant to Clause (ii) above, COMPANY shall use commercially
reasonable efforts to mitigate NEKTAR AL’S obligations under Clause
(ii) above.
	 
	 	(c)	 	COMPANY may contract with a THIRD PARTY
CONTRACT MANUFACTURER to make COMPANY’S and COMPANY’S SUBLICENSEES’
subsequent purchase requirements of SELECTED REAGENT for the
manufacturing of SELECTED PRODUCT; provided that such CONTRACT
MANUFACTURER shall be selected solely by COMPANY and is not a THIRD
PARTY to whom a sublicense may not be granted under Section 2.2(d).
Upon execution of such contract, NEKTAR AL shall grant a perpetual,
non-exclusive, paid-up and royalty-free right and license under the
NEKTAR AL LICENSED TECHNOLOGY to the CONTRACT MANUFACTURER solely to
make such SELECTED REAGENT for the manufacturing of SELECTED PRODUCT
under such contract, and, subject to the CONTRACT MANUFACTURER agreeing
to protect NEKTAR AL’S CONFIDENTIAL INFORMATION on terms consistent
with the provisions of Article 8 of this AGREEMENT and agreeing to
grant to NEKTAR AL a non-exclusive, royalty-free, worldwide, perpetual
license to practice INVENTIONS relating to the manufacture of the
SELECTED REAGENT, which may be sublicensed by NEKTAR AL for bona fide
business purposes, shall use all commercially reasonable

			
	 	 	 
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	 	 	 	efforts to enable the CONTRACT MANUFACTURER to make such SELECTED
REAGENT (including providing the CONTRACT MANUFACTURER with personnel
and records that are necessary or reasonably useful for such
manufacture, but specifically excluding all start-up and other costs
incurred by the CONTRACT MANUFACTURER including, without limitation,
costs of scale up and process qualification and process validation,
and capital expenditures). In the event the contract between COMPANY
and the CONTRACT MANUFACTURER expires or is terminated, this Section
14.5.3(c) shall apply to COMPANY’S contracting with a subsequent
CONTRACT MANUFACTURER at COMPANY’S expense.
	 
	 	(d)	 	In addition to the Sections and Articles set
forth in Section 14.5.1, the provisions of Sections 4.3, 7.4 (excluding
the first sentence thereof), 7.5, 7.6, 8.1–8.5 (for a period of ten
(10) years after expiration of the ROYALTY TERM) 13.2, 17.11 and 17.13
(as to COMPANY only) and Articles 2, 6 and 12 (as to INVENTIONS made
after such termination) and, in each case together with any defined
terms applicable to such provisions, shall survive termination of this
AGREEMENT.

	 	14.5.4	 	If this AGREEMENT is terminated by NEKTAR AL pursuant to Section 14.3:

	 	(a)	 	COMPANY shall continue to be obligated to
purchase and shall purchase SELECTED REAGENT manufactured pursuant to
any issued purchase orders and binding forecasts, pursuant to Article 3
and the provisions of the following Sections shall apply (in addition
to those specified in Section 14.5.1 above): Articles 3, 4 and Article
5 and Section 7.3 (and in each case together with any defined terms
applicable to such provisions). Any SELECTED REAGENT so manufactured
shall be invoiced to COMPANY in full and paid by COMPANY in accordance
with the terms of this AGREEMENT. Termination shall not affect
shipments of

			
	 	 	 
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	 	 	 	SELECTED REAGENT which have been made by NEKTAR AL to COMPANY, and
all provisions of this AGREEMENT shall continue to apply to such
shipments notwithstanding notice of any such termination. Any
SELECTED REAGENT so manufactured shall be invoiced to COMPANY in full
and paid by COMPANY in accordance with the terms of this AGREEMENT;
	 
	 	(b)	 	NEKTAR AL shall complete or cause the
completion of the manufacturing of any work-in-progress on the date on
which the termination is effective, provided such work-in-progress was
reasonably undertaken to perform NEKTAR AL’S obligations under this
AGREEMENT. Any SELECTED REAGENT so manufactured shall be invoiced to
COMPANY in full and paid by COMPANY in accordance with the terms of
this AGREEMENT; and
	 
	 	(c)	 	COMPANY shall be entitled to sell out all
remaining stocks of SELECTED PRODUCT under the terms and conditions set
forth in this AGREEMENT for a period not to exceed six (6) months after
the effective date of termination, after which time all rights and
licenses granted hereunder shall immediately terminate and all licensed
rights shall revert in their entirety to the respective licensor.
Subject to the foregoing, if this AGREEMENT is terminated for any
reason whatsoever (including pursuant to Section 14.2), any licenses
and sublicenses granted under this AGREEMENT shall automatically
terminate and all licensed rights shall revert in their entirety to the
respective licensor.

	 	14.5.5	 	Upon termination of this AGREEMENT by any PARTY for any reason, COMPANY shall
remain obligated to pay NEKTAR AL all accrued milestone payments and accrued
royalties in accordance with the terms of this AGREEMENT. Termination of this
AGREEMENT by a PARTY shall not be an exclusive remedy and all other remedies
will be available to the terminating PARTY, in equity and at LAW.

			
	 	 	 
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	15.	 	Assignment
	 
	 	 	Unless otherwise expressly permitted hereunder, neither PARTY may assign any of its rights
or delegate any of its duties under this AGREEMENT without the prior written consent of the
other PARTY, except that either PARTY may assign its rights and responsibilities hereunder
without the other PARTY’S consent as part of: (i) either (a) in the case of NEKTAR AL, the
sale of all or substantially all of the assets or the entire business to which this
AGREEMENT relates, or, in the case of the COMPANY, the sale of all or substantially all of
its assets or business related to the THERAPEUTIC AGENT, or (b) a merger, consolidation,
reorganization or other combination with or into another person or entity; or (ii) the
transfer or assignment to an AFFILIATE, in each case, pursuant to which the surviving entity
or assignee assumes the assigning or merging PARTY’S obligations hereunder. Any assignment
made in violation of this Article 15 shall be null and void.
	 
	16.	 	Notices
	 
	 	 	Any notice or other communication required or permitted to be given under this AGREEMENT
shall be given in writing and shall be deemed sufficient if personally delivered, delivered
by facsimile transmission, delivered by nationally recognized express mail or courier
service, or mailed by United States registered or certified mail, postage prepaid, properly
addressed to the respective addresses of the PARTIES as written below, or such alternate
address as shall be specified by notice given in the manner provided in this Section 16.
Notices so given shall be effective upon the earlier to occur of (i) receipt by the PARTY to
which notice is given, or (ii) the fourth (4th) business day following the date such notice
was posted.

If to COMPANY, addressed to:

Compound Therapeutics

100 Beaver Street

Waltham, MA 02453

Fax: +1 781 209 2302

Attention: Chief Executive Officer

With a copy to:

Compound Therapeutics

100 Beaver Street

			
	 	 	 
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Waltham, MA 02453

Fax: +1 781 209 2302

Attention: Chief Operating Officer

and

Faber Daeufer & Rosenberg PC

1050 Winter Street, Suite 1000

Waltham, MA 02451

Fax: +1 781 795 4747

Attention: Joseph L. Faber

If to NEKTAR AL, addressed to:

NEKTAR Therapeutics AL, Corporation

1112 Church Street

Huntsville, AL 35801

Fax: 256-704-7648

Attention: Contract Management

With a copy to:

Nektar Therapeutics

150 Industrial Road

San Carlos, CA 94070-6256

Fax: 650-620-5360

Attention: Vice President, Corporate Legal

	17.	 	Miscellaneous

	 	17.1	 	Force Majeure. Neither PARTY shall be held liable or responsible to
the other PARTY nor be deemed to have defaulted under or breached this AGREEMENT for
failure or delay in fulfilling or performing any term of this AGREEMENT to the extent,
and for so long as, such failure or delay is caused by or results from causes beyond
the reasonable control of the affected PARTY; provided, however, that the foregoing
shall not be applied to excuse or delay any payment obligation or notice obligation of
either PARTY under this AGREEMENT. When such circumstances arise, the PARTIES shall
discuss what, if any, modification of the terms of this AGREEMENT may be required to
arrive at an equitable solution.
	 
	 	17.2	 	Severability. All the terms and provisions of this AGREEMENT are
distinct and severable, and if any term or provision is held unenforceable, illegal or
void in

			
	 	 	 
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	 	 	 	whole or in part by any court, regulatory authority or other competent authority it
shall to that extent be deemed not to form part of this AGREEMENT, and the
enforceability, legality and validity of the remainder of this AGREEMENT shall not
be affected thereby.
	 
	 	17.3	 	Variation. This AGREEMENT may not be released, discharged,
supplemented, amended, varied or modified in any manner except by an instrument in
writing signed by a duly authorized officer or representative of each PARTY hereto.
	 
	 	17.4	 	Forbearance and Waiver. No waiver by a PARTY in respect of any breach
shall operate as a waiver in respect of any subsequent breach. No forbearance, failure
or delay by a PARTY in exercising any right or remedy shall operate as a waiver
thereof, nor shall any single or partial forbearance, exercise or waiver of any right
or remedy prejudice its further exercise of any right or remedy under this AGREEMENT or
at LAW.
	 
	 	17.5	 	Counterparts. This AGREEMENT may be executed in more than one
counterpart, each of which constitutes an original and all of which together shall
constitute one enforceable agreement.
	 
	 	17.6	 	No Partnership. The relationship of the PARTIES is that of independent
contractors and this AGREEMENT shall not operate so as to create a partnership or joint
venture of any kind between the PARTIES.
	 
	 	17.7	 	Construction. The PARTIES have participated jointly in the negotiation
and drafting of this AGREEMENT. In the event that an ambiguity or question of intent
or interpretation arises, this AGREEMENT shall be construed as if drafted jointly by
the PARTIES and no presumption or burden of proof shall arise favoring or disfavoring
any PARTY by virtue of the authorship of any of the provisions of this AGREEMENT. The
captions 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 term “including” as used herein means
including the generality of any description preceding such term.

			
	 	 	 
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	 	17.8	 	Entire Agreement. This AGREEMENT and the Schedules attached hereto
constitute the entire understanding between the PARTIES and supersedes any prior
written or oral understanding, negotiations or agreements between and among them
respecting the subject matter hereof, except for the Material Transfer and Evaluation
Agreement among the PARTIES and Avecia Limited dated June 10, 2005, which shall
continue in full force and effect in accordance with its terms. There are no
representations, agreements, arrangements or understandings, oral or written, between
the PARTIES relating to the subject matter of this AGREEMENT that are not fully
expressed in this AGREEMENT. This AGREEMENT shall be binding upon, and inure to the
benefit of, the PARTIES and their respective successors and assigns.
	 
	 	17.9	 	Governing LAW; Dispute Resolution. This AGREEMENT shall be governed by
and construed in accordance with the LAWS of the State of California without regard to
its or any other jurisdiction’s choice of law rules. Any dispute, controversy or claim
arising out of or relating to this AGREEMENT, or the breach, termination or invalidity
thereof, shall be finally settled by binding arbitration conducted in the English
language, in the principal place of business of the PARTY that does not file the demand
for arbitration, and under the then-current commercial arbitration rules of the
American Arbitration Association (“AAA”). The arbitration shall be conducted by three
(3) arbitrators (one appointed by each PARTY, and the third jointly appointed by the
other two arbitrators). Each of the arbitrators shall be independent neutrals, and
shall be a lawyer with substantial experience in negotiating agreements for the
development, manufacture and commercialization of pharmaceutical and biotechnology
products. Any award pursuant to any arbitration hereunder shall be rendered by a
majority of the three (3) arbitrators. The arbitrators shall apply the governing LAW
set forth in this Section 17.9. Disputes about arbitration procedure shall be resolved
by a majority of the three (3) arbitrators. The arbitrators may proceed to an award
notwithstanding the failure of the either PARTY to participate in the proceedings.
Discovery shall be limited to mutual exchange of documents relevant to the dispute,
controversy or claim; depositions shall not be permitted unless agreed to by both
PARTIES. The arbitrators shall be authorized to grant interim relief, including to
prevent the destruction of goods or documents involved in the

			
	 	 	 
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	 	 	 	dispute, protect trade secrets and provide for security for a prospective monetary
award. The limitations on liability and exclusions of damages set out in this
AGREEMENT shall apply to an award of the arbitrators. Specifically, but without
limitation, under no circumstances shall the arbitrators be authorized to award
punitive or multiple damages. Any purported award of punitive or multiple damages
or of other damages not permitted under the limitations on liability and exclusions
of damages set out in this AGREEMENT shall be beyond the arbitrators’ authority,
void, and unenforceable. The prevailing PARTY shall be entitled to an award of
reasonable attorney fees incurred in connection with the arbitration in such amount
as may be determined by the arbitrators. The award of the arbitrators shall be the
sole and exclusive remedy of the PARTIES and shall be enforceable in any court of
competent jurisdiction, subject only to revocation on grounds of fraud or clear bias
on the part of one or more of the arbitrators. Notwithstanding this, application
may be made to any court for a judicial acceptance of the award or order of
enforcement. Notwithstanding anything contained in this Section 17.9 to the
contrary, each PARTY shall have the right to institute judicial proceedings against
the other PARTY or anyone acting by, through or under such other PARTY, in order to
enforce the instituting PARTY’S rights hereunder through reformation of contract,
specific performance, injunction or similar equitable relief.
	 
	 	17.10	 	Publicity. Except as otherwise provided in Article 8 and subject to
either PARTY’S reporting obligations under applicable state and federal (including
securities) LAWS: (a) NEKTAR AL and COMPANY shall not disclose any terms or conditions
of this AGREEMENT to any THIRD PARTY without the prior written consent of the other
PARTY; and (b) NEKTAR AL and COMPANY shall not use the other PARTY’S name in publicity
materials or other public disclosures without the prior written consent of the other
PARTY, such consent not to be unreasonably withheld or delayed. During the TERM,
COMPANY shall inform NEKTAR AL prior to issuing a press release containing non-public
material information concerning the SELECTED PRODUCT, and such information shall be
CONFIDENTIAL INFORMATION of COMPANY, and NEKTAR AL shall inform COMPANY prior to
issuing a press release containing non-public material

			
	 	 	 
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	 	 	 	information concerning SELECTED REAGENT, and such information shall be CONFIDENTIAL
INFORMATION of NEKTAR AL.
	 
	 	17.11	 	Patent Marking and SELECTED PRODUCT Marking. COMPANY shall place
appropriate NEKTAR AL patent and/or patent pending markings on each SELECTED PRODUCT or
the packaging therefore where required by LAW. The content, form, size, location and
language of such markings shall be in accordance with the LAWS and practices of the
country in which the applicable units of each SELECTED PRODUCT are distributed.
COMPANY shall be responsible for all packaging (non-commercial and commercial) and
labeling of SELECTED PRODUCT.
	 
	 	17.12	 	Termination of NON-DISCLOSURE AGREEMENTS. All provisions of, rights
granted and covenants made in the NON-DISCLOSURE AGREEMENTS are hereby terminated and
of no further force and effect and are superseded in their entirety by the provisions
of, rights granted and covenants made in this AGREEMENT. The PARTIES acknowledge and
agree that any disclosure made pursuant to the NON-DISCLOSURE AGREEMENTS shall be
governed by the terms and conditions of Article 8.
	 
	 	17.13	 	Compliance with LAWS. Each PARTY will comply with all LAWS in
performing its obligations and exercising its rights hereunder. Nothing in this
AGREEMENT shall be deemed to permit a PARTY or its sublicensees (including
SUBLICENSEES) to export, re-export or otherwise transfer any information or materials
(including SELECTED REAGENT) transferred hereunder or SELECTED PRODUCT manufactured
therefrom without complying with LAWS.

			
	 	 	 
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	IN WITNESS WHEREOF, the PARTIES hereto have caused their authorized representatives to execute
this AGREEMENT by signing below:

	 	 	 
	Signed:
	 	 
	For and on behalf of:

	 	For and on behalf of:
	Nektar Therapeutics AL, Corporation

	 	Compound Therapeutics, Inc.
	 
	 	 
	Signature  /s/ Stephen A. Charles

	 	Signature /s/ John Edwards
	Name: Stephen A. Charles, Ph.D.

	 	Name: John Edwards
	Title: VP, Business Development & Licensing

	 	Title: Chief Operating Officer

			
	 	 	 
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SCHEDULE I

SELECTED REAGENT SPECIFICATIONS

	 	 	 	 	 
	Test	 	Method	 	Specification
	Appearance
	 	[**]	 	[**]
	Identity
	 	[**]	 	[**]
	MW
	 	[**]	 	[**]
	Polydispersity
	 	[**]	 	[**]
	% Purity (1)
	 	[**]	 	[**]
	PEG Impurities
	 	 	 	 
	[**]
	 	[**]	 	[**]
	[**]
	 	[**]	 	[**]
	Total PEG Impurities (2)
	 	[**]	 	[**]
	Residual [**]
	 	[**]	 	[**]
	Organic Volatiles
	 	 	 	 
	Total [**]
	 	[**]	 	[**]
	[**]
	 	[**]	 	[**]
	[**]
	 	[**]	 	[**]
	[**]
	 	[**]	 	[**]
	[**]
	 	[**]	 	[**]
	Endotoxin
	 	[**]	 	[**]
	[**] content
	 	[**]	 	[**]

 

			
	(1)	 	% Purity = 100% — Total PEG Impurities
	 
	(2)	 	Total PEG Impurities = [**]
	 
	(3)	 	Total [**]

			
	 	 	 
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SCHEDULE II

PURCHASE PRICE

The PURCHASE PRICE for SELECTED REAGENT manufactured by NEKTAR AL under this AGREEMENT will be, to
the extent SELECTED REAGENT is manufactured by NEKTAR AL, NEKTAR AL’S then-current MANUFACTURING
COST plus the MARGIN for such quantity of SELECTED REAGENT.

“MANUFACTURING COST” means:

To the extent SELECTED REAGENT is manufactured by NEKTAR AL, the costs of all direct material,
direct labor and manufacturing overhead to the extent consumed, provided or procured by a
manufacturing facility in the manufacture of SELECTED REAGENT as specified below.

	 	A.	 	Direct material costs include:

	 	1.	 	The cost of raw materials, process consumables (i.e., resins,
membranes, etc.), containers, container components, packaging, labels and other
printed materials used in production.
	 
	 	2.	 	Scrap of raw materials, work in progress and finished goods
(exclusive of losses in excess of a reasonable allowance for normal wastage
limits and losses attributable to the negligence, willful misconduct or breach
of this AGREEMENT by NEKTAR AL).

	 	B.	 	Direct labor costs include salaries and fringe benefits for personnel directly
involved in the manufacturing process.
	 
	 	C.	 	Direct service costs include costs of services provided by THIRD PARTIES for
the manufacture of the SELECTED REAGENT or any component thereof (e.g., sterilization
and specialized testing, manufacturing of raw materials).
	 
	 	D.	 	Manufacturing overhead includes all direct and indirect manufacturing costs
that cannot be identified in a practical manner with specific units of production and,
therefore, cannot be included in specific manufacturing costs as direct material or
direct labor. Such overhead costs include:

			
	 	 	 
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	 	1.	 	Department specific manufacturing overhead allocations,
including, but not limited to, utilities (e.g., oil, electric, steam, water),
indirect manufacturing materials and supplies, consumables (e.g., production
supply materials, tools, spare parts), supervision, production management,
plant management, actual failures or four percent (4%) of MANUFACTURING COST of
the SELECTED REAGENT whichever is lower and subject to the true-up mechanism
hereinbelow, engineering and development support, maintenance and repair of the
production plant and production equipment, taxes (excluding income taxes) and
property, CGL and workers’ compensation insurance coverage for the
manufacturing facility.
	 
	 	2.	 	Overhead allocations from involved service areas, including,
but not limited to, human resources, IT, operations finance, quality assurance
analysis of raw materials in production including, but not limited to, analysis
of semi-finished and finished goods produced, materials management (including,
but not limited to, wages and salaries relating to materials administration,
purchasing and warehousing), regulatory affairs, validation, outside services
(security, laundry, testing, etc.), inventory storage related to raw materials
and semi-finished goods, process documentation, and other services required to
be performed in connection with the manufacturing of the SELECTED REAGENT.
	 
	 	3.	 	Overhead allocations for general services used at the
production facility including, but not limited to, telephones and fax, postal
services (internal and external), copying and office services/equipment,
cleaning, health services, security, and cafeterias.
	 
	 	4.	 	Freight, warehousing costs, taxes and import duties, and
forwarding costs on raw materials payable by NEKTAR AL.
	 
	 	5.	 	Rent and other costs directly allocable to the lease of
facilities, equipment or materials used to manufacture the SELECTED REAGENT.
Depreciation which reflects on a pro rata basis the use of assets used for

			
	 	 	 
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	 	 	 	manufacturing the SELECTED REAGENT, but excluding plant and equipment
purchased by COMPANY according to Section 5.4.2.
	 
	 	6.	 	Actual costs incurred for engineering services, permitting,
equipment or otherwise in connection with compliance with environmental laws
(including, but not limited to, waste disposal) as a result of the manufacture
of the SELECTED REAGENT.

	 	 	 	Manufacturing overhead does not include (i) any costs attributable to corporate
general and administrative activities, including but not limited to, executive
management, investor relations, corporate communications, public relations, business
development, legal affairs, finance, sales, marketing, market research, scientific
research or development, or human resources; (ii) the costs of any improvements to
or expansion of manufacturing facilities, analytical method development, analytical
method validation, cleaning method validation, process validation, reprocessing or
supporting documentation, including, but not limited to, the preparation, filing and
maintenance of the Drug Master Files and other regulatory filings; (iii)
depreciation or other costs associated with excess capacity; or (iv) any royalties
payable to THIRD PARTIES.

MANUFACTURING COST will be calculated in accordance with generally accepted accounting
principles (“GAAP”) applied on a consistent basis in the country of manufacture. The
accounting procedures used to calculate manufacturing overhead shall ensure that
manufacturing overhead is allocated in no greater proportion than is necessarily associated
with the manufacture of those quantities of SELECTED REAGENT actually ordered by COMPANY or
included in the current calendar year of the supply forecast used to calculate the ESTIMATED
COST (as provided by COMPANY under Section 3.2) and will specifically exclude any overhead
associated with excess capacity at NEKTAR AL (except to the extent such costs are incurred
in a given calendar year as a result of COMPANY purchasing less than the forecast amount of
SELECTED REAGENT for that calendar year that was used to calculate the ESTIMATED COST as
described below) and shall be otherwise consistent with the allocation method used for all
products produced or to be produced at the manufacturing facility. The “cost” for purchased
materials, services or SELECTED REAGENT will include the actual amount paid including the
benefit of any price reductions, payment or

			
	 	 	 
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 terms discounts, or other reimbursements, such as volume discounts, that may be applicable
to such purchases.

NEKTAR AL will notify COMPANY in writing of its best estimate of its MANUFACTURING COST
(“ESTIMATED COST”) sixty (60) days before the start of each calendar year and such ESTIMATED
COST shall then apply throughout the following calendar year of supply of SELECTED REAGENT.
NEKTAR AL will provide COMPANY with a non-binding draft of such ESTIMATED COST five (5)
months before the start of each calendar year. Each such notification will include the
costs and assumptions that form the basis for such ESTIMATED COST in a level of detail at
least as granular as that outlined in the definition of MANUFACTURING COST contained in this
Schedule II and will be based on the then-current forecast as supplied by COMPANY under
Article 3. At the end of that calendar year, NEKTAR AL will perform an analysis to compare
the ESTIMATED COST with the actual MANUFACTURING COST for the year just completed and will
provide a copy of such analysis to COMPANY in writing no later than sixty (60) days after
the end of that year just completed. If the actual MANUFACTURING COST is higher than the
ESTIMATED COST, then COMPANY will reimburse to NEKTAR AL, in accordance with the payment
terms set forth herein, the difference between the ESTIMATED COST plus the MARGIN and the
actual MANUFACTURING COST plus the MARGIN for all SELECTED REAGENT supplied in the
applicable calendar year. If the actual MANUFACTURING COST is lower than the ESTIMATED
COST, then NEKTAR AL will reimburse COMPANY, in accordance with the payment terms set forth
herein, the difference between the ESTIMATED COST plus the MARGIN and the actual
MANUFACTURING COST plus the MARGIN for all SELECTED REAGENT supplied in the applicable
calendar year.

			
	 	 	 
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SCHEDULE III

Milestones

Pursuant to Section 6.1, the following milestone payments shall be payable by COMPANY to NEKTAR AL
thirty (30) days after the occurrence of the following milestone events with respect to SELECTED
PRODUCT:

	 	 	 	 	 
	 	 	Milestone Payment	 
	Milestone Event	 	(US DOLLARS)	 
	Within ten (10) days of the EFFECTIVE DATE for
pre-clinical development activities
	 	$	[**]	 
	 
	 	 	 	 
	Within thirty (30) days of administration of the
SELECTED PRODUCT to the first patient in the first PHASE
1 CLINICAL TRIAL
	 	$	[**]	 
	 
	 	 	 	 
	Within thirty (30) days of administration of the
SELECTED PRODUCT to the first patient in the first PHASE
2 CLINICAL TRIAL
	 	$	[**]	 
	 
	 	 	 	 
	Within thirty (30) days of administration of the
SELECTED PRODUCT to the first patient in the first
PIVOTAL TRIAL
	 	$	[**]	 
	 
	 	 	 	 
	Within thirty (30) days of filing a BLA or equivalent
with the FDA or EMEA for the SELECTED PRODUCT
	 	$	[**]	 
	 
	 	 	 	 
	Within thirty (30) days of grant of first MARKETING
AUTHORIZATION for the SELECTED PRODUCT in the United
States or European Union
	 	$	[**]	 

	The above payments shall be made only upon the first time achieved for SELECTED PRODUCT.

			
	 	 	 
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SCHEDULE IV

Structure of THERAPEUTIC AGENT

[**]

Where each letter above
represents an amino acid as follows:

A = alanine

C = cysteine

D = aspartic acid

E = glutamic acid

F = phenylalanine

G = glycine

H = histidine

I = isoleucine

K = lysine

L = leucine

M = methionine

N = asparagine

P = proline

Q = glutamine

R = arginine

S = serine

T = threonine

V = valine

W = tryptophan

Y = tyrosine

[**]

 

SCHEDULE V

NEKTAR AL PATENT RIGHTS

	 	 	 	 	 
	NEKTAR AL Reference	 	Patent/Serial Number	 	Status
	SHE0071.00

	 	[**]	 	Pending
	SHE0071.PCT

	 	[**]	 	Pending

			
	 	 	 
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SHEDULE VI

INITIAL SUPPLY

			
	 	 	 
	 	 	Page  72 of 89
	 	 	 

 

 

SCHEDULE VII

On July 12, 2005, a complaint was filed by The Board of Trustees of the University of Alabama
(“UAH”) against Nektar Therapeutics AL, Corporation and Nektar Therapeutics, Inc., in the United
States District Court for the Northern District of Alabama. Among other things, the complaint
alleges patent infringement, breach of contract license, violation of the Alabama Trade Secrets Act
and unjust enrichment. Generally, the complaint alleges that Defendants’ refusal to pay royalties
based upon UAH patented and licensed technology represents a breach of an exclusive license
agreement between UAH and Nektar Therapeutics AL, Corporation (formerly Shearwater Corporation) and
that Defendants have infringed and are infringing UAH’s patent. The Complaint seeks certain
monetary damages and other relief.

			
	 	 	 
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SCHEDULE VIII

QUALITY AGREEMENT

This Quality Agreement (“QUALITY AGREEMENT”) outlines the roles, responsibilities, deliverables and
time requirements with respect to the quality assurance of the SELECTED REAGENT produced by NEKTAR
AL for COMPANY under the AGREEMENT. NEKTAR AL will produce the SELECTED REAGENT in a manner
compliant with all LAWS and regulations applicable to COMPANY’S intended use of the SELECTED
REAGENT in pharmaceutical manufacturing, and otherwise in accordance with the AGREEMENT. The
effective date of this QUALITY AGREEMENT shall be the EFFECTIVE DATE. If any provision in this
QUALITY AGREEMENT conflicts with any provision in the AGREEMENT, the provision in the AGREEMENT
shall govern.

	1.	 	General

	 	1.1	 	All changes to this QUALITY AGREEMENT must be approved in writing by both
PARTIES. Unless otherwise defined specifically in this QUALITY AGREEMENT (Attachment
C), all terms used herein will have the same meaning as the definitions provided in the
AGREEMENT.
	 
	 	1.2	 	Any disputes regarding nonconforming SELECTED REAGENT will be resolved in
accordance with Section 5.3 of the AGREEMENT if based on a notice of noncompliance
under Section 5.2 of the AGREEMENT, otherwise in accordance with the dispute resolution
procedures in Section 17.9 of the AGREEMENT. The authorized quality representatives
will attempt to resolve any other disputes or conflicts otherwise relating to this
QUALITY AGREEMENT in a timely and equitable manner and in compliance with all
applicable quality and regulatory requirements. Such resolutions shall be in writing
and shall be signed by the authorized Quality Assurance representatives of NEKTAR AL
and COMPANY. If any issue remains unresolved for more than twenty (20) days, the
senior corporate Quality officials from NEKTAR AL and COMPANY should be contacted to
resolve the issue, and, if any issue remains unresolved for more than thirty (30) days,
either PARTY may commence dispute resolution under Section 17.9 of the AGREEMENT. The
responsible COMPANY Quality Assurance and

			
	 	 	 
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	 	 	 	 NEKTAR AL’S Quality Assurance Department
shall provide a Quality Assurance management organizational chart and list of contact information to each other. In
addition, both PARTIES agree to notify each other of changes to Quality Assurance
management or contact information within twenty (20) business days.

	2.	 	Change Control
	 
	 	 	NEKTAR AL will utilize a documented system of procedures for the control of changes to
systems, facilities, NEKTAR AL’S MANUFACTURING FACILITY, processes, procedures, raw
materials, packaging materials, suppliers, equipment, manufacturing methods, BATCH size, and
analytical testing and release requirements (“CHANGE CONTROL”). CRITICAL CHANGES on
SELECTED REAGENT (Attachment A) must be approved in writing by COMPANY prior to
implementation. NEKTAR AL must provide a summary of the CRITICAL CHANGE and the CHANGE
CONTROL FORM for COMPANY’S consideration.
	 
	3.	 	Regulatory

	 	3.1	 	Regulatory Filings

	 	3.1.1	 	NEKTAR AL will prepare a DMF with assistance from COMPANY as
reasonably required by NEKTAR AL. NEKTAR AL will duly and timely file the DMF
with the FDA, the EMEA and other regulatory bodies as reasonably required by
the COMPANY consistent with its regulatory strategy for SELECTED PRODUCT, and
NEKTAR AL will own the DMF and maintain the DMF in compliance with applicable
LAW through the duration of the TERM. NEKTAR AL will grant COMPANY the right
to reference such DMF. For jurisdictions which do not have a DMF procedure and
where COMPANY seeks MARKETING AUTHORIZATION, NEKTAR AL will provide COMPANY
with those relevant sections, appropriately redacted, of the U.S. DMF needed
for regulatory submission of the SELECTED PRODUCT. Such sections will provide
sufficient data to satisfy the regulatory requirements of those jurisdictions
to achieve registration for the SELECTED PRODUCT. COMPANY and NEKTAR AL will
work together to minimize public disclosure of NEKTAR CONFIDENTIAL INFORMATION
related to any regulatory submission.

			
	 	 	 
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	 	3.1.2	 	NEKTAR AL will respond to any questions from regulatory
authorities in a timely manner, consistent with NEKTAR AL standard operating
procedures and the requirements of the AGREEMENT.
	 
	 	3.1.3	 	NEKTAR AL will provide COMPANY with sufficient notice and
detail of all CRITICAL CHANGES prior to implementation of any required updates
to the filed DMF for the SELECTED REAGENT.
	 
	 	3.1.4	 	Prior to establishment of the DMF for the SELECTED REAGENT,
NEKTAR AL will provide COMPANY all necessary information which it may possess,
pertinent to the SELECTED REAGENT, to keep the global regulatory filings
current and up-to-date.

	 	3.2	 	Complaints and Adverse Event Reporting

	 	3.2.1	 	Each PARTY shall promptly notify the other of any information
coming into its possession concerning the safety, quality, efficacy, and actual
or pending regulatory action regarding the SELECTED REAGENT. If NEKTAR AL
believes it has information that potentially requires an NDA Field Alert or
BPDR (Biological Product Deviation Report), NEKTAR AL shall notify COMPANY
within two (2) days. Any determinations on how to address the information
impacting SELECTED PRODUCT quality and safety, including communication with
regulatory authorities, shall be the responsibility of COMPANY.
	 
	 	3.2.2	 	COMPANY shall maintain systems for the management of SELECTED
PRODUCT complaints and will maintain procedures and systems for the
surveillance, receipt, and evaluation of serious adverse drug events, 21 CFR
314.80(a), as well as all other adverse drug events as they pertain to the
SELECTED PRODUCT.

	 	3.3	 	Recalls

			
	 	 	 
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	 	3.3.1	 	In the event that either PARTY determines that the SELECTED
REAGENT violates applicable LAWS, regulations, the agreed upon SPECIFICATIONS
or the warranty in Section 4.2 of the AGREEMENT, whether or not such action is
requested by any governmental agency,
NEKTAR AL and COMPANY have the responsibility to notify each other promptly.
After such notice, the PARTIES’ representatives from business, medical,
regulatory, Quality Assurance, legal, and any other functions deemed
necessary will consult to determine if the SELECTED PRODUCT should be
withdrawn or recalled. The final decision to recall or withdraw the
SELECTED PRODUCT resides with COMPANY. Performance of all activities
associated with recalls and withdrawals are primarily the responsibility of
COMPANY, although NEKTAR AL shall provide reasonable assistance requested by
COMPANY.
	 
	 	3.3.2	 	COMPANY will notify NEKTAR AL of any recall involving the
SELECTED PRODUCT, regardless of whether the recall involves an issue with the
SELECTED REAGENT. If the recall involves an issue with the SELECTED REAGENT,
NEKTAR AL will investigate the issue using its deviation handling procedure.
COMPANY will be responsible for formal notification to the regulatory
authorities as well as determining the impact of such decision on the SELECTED
PRODUCT.

	4.	 	Raw Materials

	 	4.1	 	Procurement, Delivery and Storage of Raw Materials

	 	4.1.1	 	NEKTAR AL is responsible for determining suitable source(s) of
all raw materials for the SELECTED REAGENT and procuring such materials from
such source(s). NEKTAR AL vendor qualification requirements will apply to all
materials sourced by NEKTAR AL for the SELECTED     REAGENT. Qualification of
vendors of raw materials shall be documented by NEKTAR AL, and such
documentation shall be made available to COMPANY during COMPANY’S quality
audits of NEKTAR AL, if requested. NEKTAR AL will maintain a complete list of
process specific materials to be utilized in manufacturing the SELECTED 

			
	 	 	 
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	 	 	 	REAGENT
and will notify COMPANY of any CRITICAL RAW MATERIAL supplier/manufacturer
change prior to implementation.
	 
	 	4.1.2	 	NEKTAR AL will store and handle all raw materials and samples
under appropriate conditions. NEKTAR AL will maintain appropriate
controls to prevent cross-contamination of the raw materials and other materials used in
the manufacture of the SELECTED REAGENT.

	 	4.2	 	Inspection and Testing of Raw Materials

	 	4.2.1	 	NEKTAR AL is responsible for determining specifications for
raw materials. Such specifications will be in accordance with NEKTAR AL’S
standard operating procedures.

	 	4.3	 	Transmissible Spongiform Encephalopathies (TSE) Compliance

	 	4.3.1	 	NEKTAR AL will source relevant raw materials from non-animal
derived sources whenever possible. If animal derived materials are necessary,
then NEKTAR AL will comply with U.S. and European regulations (EP, latest
edition, Chapter 5.2.8 Minimizing the Risk of Transmitting Animal Spongiform
Encephalopathy Agents via Medicinal Products) by obtaining country of origin
certification and verifying that the source country is not a known
BSE-contaminated country (in accordance with 9 CFR 94.18). If required,
COMPANY and NEKTAR AL may make an application for a TSE Certificate of
Suitability in accordance with European Directive(s) and EMEA notes for
guidance.

	5.	 	SPECIFICATIONS and Analytical Methods

	 	5.1	 	SPECIFICATIONS

	 	5.1.1	 	The SELECTED REAGENT must be manufactured, packaged, labeled,
handled and shipped in accordance with the AGREEMENT.

	 	5.2	 	Analytical Methods

			
	 	 	 
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	 	5.2.1	 	NEKTAR AL is responsible for monitoring and complying with
compendial (USP, Ph. Eur., JP) test methods and procedures as they apply to the
SELECTED REAGENT. COMPANY may review any new non-compendial test methods
transfer, qualification, and/or validation for the SELECTED REAGENT during the
quality audit.
	 
	 	5.2.2	 	NEKTAR AL is responsible for any analytical method transfers
to or from other sites for the SELECTED REAGENT. NEKTAR AL may not change any
testing methodology for the SELECTED REAGENT without the prior written approval
of COMPANY.

	6.	 	Manufacture, Storage and Packaging of the SELECTED REAGENT

	 	6.1	 	NEKTAR AL agrees to manufacture, store, package, and label the SELECTED REAGENT
in accordance with the AGREEMENT and NEKTAR AL’S standard operating procedures.

	7.	 	Inspections and Testing of the SELECTED REAGENT

	 	7.1	 	NEKTAR AL will carry out the inspection and testing of the SELECTED REAGENT as
set forth in the AGREEMENT and NEKTAR AL’S standard operating procedures.
Subcontractors must meet NEKTAR AL’S requirements for approved suppliers.
	 
	 	7.2	 	Released SELECTED REAGENT Documentation

	 	7.2.1	 	NEKTAR AL will provide COMPANY with a certificate of analysis
with each BATCH of SELECTED REAGENT. Manufacturing records and Quality Control
test results must be complete, be reviewed by NEKTAR AL Quality Assurance for
conformance to NEKTAR AL requirements, and have all BATCH related deviation
issues closed prior to BATCH release by NEKTAR AL Quality Assurance. NEKTAR AL
will retain all completed manufacturing records, Quality Control test records,
and BATCH related documents for a minimum of seven (7) years from DATE OF
MANUFACTURE. These documents must be accessible for review and inspection at
NEKTAR AL’S MANUFACTURING FACILITY by

			
	 	 	 
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	 	 	 	COMPANY during the quality audits or by
regulatory authorities if requested. At the end of the document retention
period, NEKTAR AL will notify COMPANY in the event that the documents will no
longer be retained by NEKTAR AL.

	 	7.3	 	Analytical Testing

	 	7.3.1	 	NEKTAR AL will have written procedures describing the
identification, quarantine, handling, sampling, testing and approval or
rejection of raw materials. NEKTAR AL will perform testing in accordance with
its established methods and procedures and will review them against defined
specifications. Changes to these methods and procedures will be consistent
with NEKTAR AL’S CHANGE CONTROL procedure. Deviations to the test methods and
procedures and out-of-SPECIFICATIONS test results on the SELECTED REAGENT will
be handled in a manner consistent with Article 2 of this QUALITY AGREEMENT.

	 	7.4	 	Deviations and SIGNIFICANT DEVIATIONS

	 	7.4.1	 	Deviations will be managed according to NEKTAR AL’S standard
operating procedures reviewed by COMPANY during COMPANY’S quality audits of
NEKTAR AL.
	 
	 	7.4.2	 	SIGNIFICANT DEVIATIONS are defined in Attachment B.
SIGNIFICANT DEVIATIONS will be investigated in accordance with NEKTAR AL’S
standard operating procedures for root cause and fully documented by NEKTAR AL.
	 
	 	7.4.3	 	A SIGNIFICANT DEVIATION on the SELECTED REAGENT must be
approved by COMPANY prior to shipment of the SELECTED REAGENT. NEKTAR AL must
provide a copy of a summary report(s) on all SIGNIFICANT DEVIATIONS relating to
the SELECTED REAGENT (Attachment B) for COMPANY’S consideration. COMPANY shall
have the right to refuse at its discretion any BATCH that has experienced a
SIGNIFICANT DEVIATION.

			
	 	 	 
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	 	7.4.4	 	A SIGNIFICANT DEVIATION on a confirmed out-of-SPECIFICATION
result for stability testing for the SELECTED REAGENT will be communicated to
COMPANY according to NEKTAR AL’S standard operating procedures.

	 	7.5	 	Label Master Copy Approval

	 	7.5.1	 	Label master copy approval will be handled through NEKTAR AL’S
CHANGE CONTROL system. The SELECTED REAGENT’S label must contain the DATE OF
MANUFACTURE or re-test date (when available) of the SELECTED REAGENT, the
recommended storage conditions and SAFETY STATEMENT of the SELECTED REAGENT.

	8.	 	Audits

	 	8.1	 	External Regulatory Inspections

	 	8.1.1	 	NEKTAR AL will immediately notify COMPANY of any inspections,
notifications, or actions by a regulatory authority or other enforcement body
that directly involve the SELECTED REAGENT. NEKTAR AL will provide appropriate
support for all regulatory inspections.
	 
	 	8.1.2	 	In the event of any regulatory inspection, whether included
under 8.1.1 or otherwise, NEKTAR AL will provide COMPANY with a summary report
at the completion of such regulatory inspections. Any inspectional
correspondence letters that directly affect the SELECTED REAGENT will be
communicated by NEKTAR AL to COMPANY via telephone, followed by a redacted copy
of any inspectional observations from such inspection.

	 	8.2	 	COMPANY Quality Audits

	 	8.2.1	 	COMPANY reserves the right to audit all NEKTAR AL’S
MANUFACTURING FACILITIES and systems, including manufacturing, testing and
stability laboratories and other areas supporting production of the SELECTED
REAGENT. Such quality audits shall not exceed two (2) business days in
duration unless otherwise mutually agreed by the PARTIES. The quality audit
dates will be mutually agreed by the 

			
	 	 	 
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	 	 	 	PARTIES acting reasonably and in good
faith. After receipt of a formal written quality audit report from COMPANY,
NEKTAR AL will respond to COMPANY within thirty (30) business days on the
status of any quality audit observations.

	9.	 	Training

	 	9.1	 	NEKTAR AL will have a documented training program to assure that all personnel
engaged in activities directly related to manufacturing, testing and release of the
SELECTED REAGENT have the appropriate education, training, and experience required to
perform their assigned functions properly. Training records shall be available for
COMPANY’S review during quality audits, if requested.

	10.	 	Data Reporting Requirements

	 	10.1	 	The analytical data pack used to support NEKTAR AL’S release of the SELECTED
REAGENT must be stored and retained in accordance with NEKTAR AL’S standard operating
procedures as may be reviewed by COMPANY during its quality audits of NEKTAR AL and
will be made available to COMPANY at NEKTAR AL’S site upon request.

	11.	 	Shipment of the SELECTED REAGENT

	 	11.1	 	NEKTAR AL will only ship SELECTED REAGENT which has been released by the
approved NEKTAR AL standard operating procedures reviewed by COMPANY during its quality
audits of NEKTAR AL and which meets the SPECIFICATIONS. COMPANY will identify the
destination to which the SELECTED REAGENT BATCHES are to be shipped. The SELECTED
REAGENT will be shipped in shrink wrapped bottles.

	12.	 	Retained Samples of the SELECTED REAGENT

	 	12.1	 	NEKTAR AL agrees to store retained samples for all the SELECTED REAGENT BATCHES
in accordance with NEKTAR AL’S standard operating procedures as may be reviewed by
COMPANY during its quality audits of NEKTAR AL. The

			
	 	 	 
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	 	 	 	amount of retained samples must be
of sufficient quantity to conduct at least full specification analyses in duplicate.
	 
	 	12.2	 	NEKTAR AL agrees to store the retained samples under controlled storage
conditions defined by NEKTAR AL for the SELECTED REAGENT and for a minimum of seven (7)
years from the DATE OF MANUFACTURE.

	13.	 	Storage of SELECTED REAGENT

	 	13.1	 	NEKTAR AL agrees to store the SELECTED REAGENT under appropriate storage
conditions according to NEKTAR AL’S standard operating procedures as may be reviewed by
COMPANY during its quality audits of NEKTAR AL.

	14.	 	Restricted Compounds

	 	14.1	 	The NEKTAR AL’S MANUFACTURING FACILITY used in the manufacture, storage and
shipment of the SELECTED REAGENT will be free from potential contamination by
dihydroergotamine, penicillins, cephalosporins, beta lactams, tetracyclines,
nitrofurantoin, streptomycin, vancomycin, chloramphenicol, neomycin, polymyxin B,
amphotericin B, hormone products and derivatives, pesticides, fungicides, rodenticides,
antineoplastic agents, and compounds classified as Pregnancy Category X as defined in
21 C.F.R. § 201.57(f)(6)(i)(e), including without limitation, FSH/LHRH oligopeptides.

	15.	 	Annual Reviews

	 	15.1	 	COMPANY’S Quality Assurance and NEKTAR AL’S Quality Assurance agree to meet as
needed to discuss outstanding quality issues. Both PARTIES agree to meet at least
annually to review this QUALITY AGREEMENT and list, categorize, and prioritize
significant anticipated changes to the process. COMPANY and NEKTAR AL will meet as
necessary to review quality issues related to the obligations and responsibilities as
described in this QUALITY AGREEMENT. Both PARTIES will mutually agree to the timing of
the review.

			
	 	 	 
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	16.	 	Returned Goods

	 	16.1	 	NEKTAR AL will follow NEKTAR AL’S standard operating procedures as may be
reviewed by COMPANY during its quality audits of NEKTAR AL for handling returned goods,
quarantined materials, and/or rejected materials.

	17.	 	Stability

	 	17.1	 	NEKTAR AL is responsible for initiating stability testing of the SELECTED
REAGENT upon written request by COMPANY. Changes to test plans, sampling
plans, and test methods will be managed in accordance with the CHANGE CONTROL
section of this QUALITY AGREEMENT and NEKTAR AL’S standard operating procedures as
may be reviewed by COMPANY during its quality audits of NEKTAR AL.

			
	 	 	 
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ATTACHMENT A

Critical Changes

CRITICAL CHANGES means any:

	 	•	 	change to CRITICAL RAW MATERIALS (includes change in vendor and/or change in testing
methodology or change in any SPECIFICATION),
	 
	 	•	 	process change to a CRITICAL PROCESS STEP (includes process changes due to change of
major equipment),
	 
	 	•	 	change in in-process control or release testing which change any SPECIFICATION,
including any change in the methodology of any method indicated in Schedule I of the
AGREEMENT,
	 
	 	•	 	change in packaging,

or other changes that would influence purity of the SELECTED REAGENT, or which would affect its use
in subsequent processing of the SELECTED PRODUCT derived from the SELECTED REAGENT, or which is
outside of the scope of documentation submitted by NEKTAR AL to regulatory authorities or to
COMPANY in connection with MARKETING AUTHORIZATION for the SELECTED PRODUCT.

			
	 	 	 
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ATTACHMENT B

Significant Deviations

SIGNIFICANT DEVIATIONS requiring notification to COMPANY include any deviation that has the
potential to impact the quality of the SELECTED REAGENT or the validation status. SIGNIFICANT
DEVIATIONS are:

	 	•	 	A physical contamination, cross-contamination, or other chemical contamination
	 
	 	•	 	A confirmed out-of-SPECIFICATION result for release or stability testing for the
SELECTED REAGENT
	 
	 	•	 	REWORKING of the SELECTED REAGENT
	 
	 	•	 	A deviation from a CRITICAL PROCESS STEP

			
	 	 	 
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ATTACHMENT C

Definitions

“APPROVAL” means the concurrence between COMPANY and NEKTAR AL, such as agreement on a proposed
CRITICAL CHANGE, as evidenced in writing and signed by both PARTIES’ authorized quality
representatives.

“BATCH” means a specific quantity of a material produced in a process or fraction of a process, as
determined from time to time through APPROVAL.

“CHANGE CONTROL” has the meaning set forth in Section 2 of this QUALITY AGREEMENT.

“CHANGE CONTROL FORM” means NEKTAR AL’S procedural form that documents CRITICAL CHANGES. The form
includes a description of the critical change, justification, and APPROVAL signatures at a minimum.

“CRITICAL CHANGES” has the meaning set forth in Attachment A of this QUALITY AGREEMENT.

“CRITICAL PROCESS STEP” means: [**]

“CRITICAL RAW MATERIALS” are: [**]

“DATE OF MANUFACTURE” means the last date of manufacturing for the SELECTED REAGENT, typically when
the SELECTED REAGENT is removed from drying.

“DMF” means a drug master file covering the analysis and manufacturing of SELECTED REAGENT,
comprising any and all technical information, including without limitation analytical methods,
stability and pharmaceutical data and manufacturing processes with respect to SELECTED REAGENT in
the possession or control of NEKTAR AL and its AFFILIATES.

			
	 	 	 
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“NEKTAR AL’S MANUFACTURING FACILITY” means 1112 Church Street, Huntsville, Alabama 35801 or such
other site as defined by NEKTAR.

“REWORK” means subjecting SELECTED REAGENT that does not conform to standards or SPECIFICATIONS to
one or more processing steps that are different from the established manufacturing process (e.g.
re-crystallization from a different solvent).

“SIGNIFICANT DEVIATION” has the meaning set forth in Attachment B of this QUALITY AGREEMENT.

“SAFETY STATEMENT” means the statement that is included on the labels of the SELECTED REAGENT:
“Caution: For Manufacturing, processing or repacking. Not approved for human use without further
processing”.

			
	 	 	 
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 SCHEDULE IX

INITIAL MEMBERS OF MANAGING COMMITTEE

COMPANY

[**]

NEKTAR AL

[**]

			
	 	 	 
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