Document:

EXHIBIT
10.1

 

CERTAIN CONFIDENTIAL
INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

 

 

COLLABORATION
AND LICENSE AGREEMENT

 

 

BY
AND BETWEEN

 

 

ABGENIX,
INC.

 

 

AND

 

 

ASTRAZENECA
UK LTD

 

 

DATED
AS OF OCTOBER 15, 2003

 

 

TABLE
OF CONTENTS

 

	
  1.

  	
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  RESEARCH PROGRAM

  	
   

  
	
   

  	
  2.1

  	
  General

  	
   

  
	
   

  	
  2.2

  	
  Collaboration Antigen
  Designation

  	
   

  
	
   

  	
  2.3

  	
  Conduct of Research Program

  	
   

  
	
   

  	
  2.4

  	
  Records

  	
   

  
	
   

  	
  2.5

  	
  Reports and Notices

  	
   

  
	
   

  	
  2.6

  	
  Identification of
  Candidate Drugs

  	
   

  
	
   

  	
  2.7

  	
  Research Program Term

  	
   

  
	
   

  	
  2.8

  	
  Project Leaders

  	
   

  
	
   

  	
  2.9

  	
  Key Positions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  RESEARCH MANAGEMENT
  COMMITTEE

  	
   

  
	
   

  	
  3.1

  	
  Composition of the
  Committee

  	
   

  
	
   

  	
  3.2

  	
  Meetings

  	
   

  
	
   

  	
  3.3

  	
  Purpose of Committee

  	
   

  
	
   

  	
  3.4

  	
  Areas of Responsibility

  	
   

  
	
   

  	
  3.5

  	
  Minutes

  	
   

  
	
   

  	
  3.6

  	
  Disputes

  	
   

  
	
   

  	
  3.7

  	
  Target Review Committee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  LICENSES/GRANTS OF RIGHTS

  	
   

  
	
   

  	
  4.1

  	
  Collaboration Antigens

  	
   

  
	
   

  	
  4.2

  	
  Research and
  Development Program Licenses

  	
   

  
	
   

  	
  4.3

  	
  Licensed Products

  	
   

  
	
   

  	
  4.4

  	
  Non-Licensed Products

  	
   

  
	
   

  	
  4.5

  	
  Discontinued Antigens

  	
   

  
	
   

  	
  4.6

  	
  Antigen-Specific Technology

  	
   

  
	
   

  	
  4.7

  	
  Other Technology

  	
   

  
	
   

  	
  4.8

  	
  Oncology Technology

  	
   

  
	
   

  	
  4.9

  	
  Development Program
  Technology

  	
   

  
	
   

  	
  4.10

  	
  Failed Antigens

  	
   

  
	
   

  	
  4.11

  	
  Cross Licenses

  	
   

  
	
   

  	
  4.12

  	
  Diligence

  	
   

  
	
   

  	
  4.13

  	
  Distributors

  	
   

  
	
   

  	
  4.14

  	
  Covenant
  Not to Sue

  	
   

  
	
   

  	
  4.15

  	
  Covenant by ABX

  	
   

  
	
   

  	
  4.16

  	
  Covenant by AZ

  	
   

  
	
   

  	
  4.17

  	
  Third Party Rights

  	
   

  
	
   

  	
  4.18

  	
  Further Covenants and
  Agreements

  	
   

  
	
   

  	
  4.19

  	
  Trademarks

  	
   

  
	
   

  	
  4.20

  	
  Certain
  Restrictions and Rights Regarding Failed and Discontinued Antigens

  	
   

  

 

i

 

	
  5.

  	
  DEVELOPMENT PROGRAM

  	
   

  
	
   

  	
  5.1

  	
  General

  	
   

  
	
   

  	
  5.2

  	
  Conduct
  of Development

  	
   

  
	
   

  	
  5.3

  	
  Development
  Program Work Plan and Budget

  	
   

  
	
   

  	
  5.4

  	
  Process Development Program

  	
   

  
	
   

  	
  5.5

  	
  Records

  	
   

  
	
   

  	
  5.6

  	
  Reports and Notices

  	
   

  
	
   

  	
  5.7

  	
  ABX Registrations

  	
   

  
	
   

  	
  5.8

  	
  AZ Registrations

  	
   

  
	
   

  	
  5.9

  	
  Election Notice

  	
   

  
	
   

  	
  5.10

  	
  Non-Licensed Products

  	
   

  
	
   

  	
  5.11

  	
  Right to Abandon

  	
   

  
	
   

  	
  5.12

  	
  Development Program
  Leaders

  	
   

  
	
   

  	
  5.13

  	
  Performance of
  Development Program by AZ

  	
   

  
	
   

  	
  5.14

  	
  Term of Development Program

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  DEVELOPMENT MANAGEMENT
  COMMITTEE

  	
   

  
	
   

  	
  6.1

  	
  Composition of the Committee

  	
   

  
	
   

  	
  6.2

  	
  Meetings

  	
   

  
	
   

  	
  6.3

  	
  Purpose of Committee

  	
   

  
	
   

  	
  6.4

  	
  Areas of Responsibility

  	
   

  
	
   

  	
  6.5

  	
  Minutes

  	
   

  
	
   

  	
  6.6

  	
  Disputes

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  PROCESS SCIENCE AND
  MANUFACTURING

  	
   

  
	
   

  	
  7.1

  	
  Negotiation and Execution
  of Agreements

  	
   

  
	
   

  	
  7.2

  	
  Prior to First
  Commercial Sale

  	
   

  
	
   

  	
  7.3

  	
  Manufacture
  of Licensed Product for Commercial Sale

  	
   

  
	
   

  	
  7.4

  	
  Manufacturing
  Commitment and Capacity

  	
   

  
	
   

  	
  7.5

  	
  Failure or Inability to
  Perform

  	
   

  
	
   

  	
  7.6

  	
  Additional Capacity
  or Technologies

  	
   

  
	
   

  	
  7.7

  	
  Manufacturing and
  Supply Committee

  	
   

  
	
   

  	
  7.8

  	
  Information Disclosure

  	
   

  
	
   

  	
  7.9

  	
  Process
  Technology

  	
   

  
	
   

  	
  7.10

  	
  Technology Transfer

  	
   

  
	
   

  	
  7.11

  	
  Disengagement

  	
   

  
	
   

  	
  7.12

  	
  DMF

  	
   

  
	
   

  	
  7.13

  	
  Process
  Development Funding and Supply Price

  	
   

  
	
   

  	
  7.14

  	
  Termination

  	
   

  
	
   

  	
  7.15

  	
  Use of Technologies

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  CO-DEVELOPMENT AND
  COMMERCIALIZATION

  	
   

  
	
   

  	
  8.1

  	
  Co-Development Agreement

  	
   

  
	
   

  	
  8.2

  	
  Offer

  	
   

  

 

ii

 

	
  9.

  	
  FUNDING, MILESTONE PAYMENTS AND ROYALTIES

  	
   

  
	
   

  	
  9.1

  	
  Research Program Funding

  	
   

  
	
   

  	
  9.2

  	
  Development Program Funding

  	
   

  
	
   

  	
  9.3

  	
  AZ Milestone
  Payments and Royalties

  	
   

  
	
   

  	
  9.4

  	
  ABX Milestone Payments and
  Royalties

  	
   

  
	
   

  	
  9.5

  	
  Diagnostic or
  Veterinary Products

  	
   

  
	
   

  	
  9.6

  	
  Net Sales by Sublicensees

  	
   

  
	
   

  	
  9.7

  	
  Reduction
  of Royalty

  	
   

  
	
   

  	
  9.8

  	
  Sales Subject to Royalties

  	
   

  
	
   

  	
  9.9

  	
  Royalty Reports and
  Payments

  	
   

  
	
   

  	
  9.10

  	
  Royalty Term

  	
   

  
	
   

  	
  9.11

  	
  Records;
  Inspection

  	
   

  
	
   

  	
  9.12

  	
  Payment Method

  	
   

  
	
   

  	
  9.13

  	
  Currency
  Conversion

  	
   

  
	
   

  	
  9.14

  	
  Late Payments

  	
   

  
	
   

  	
  9.15

  	
  Taxes

  	
   

  
	
   

  	
  9.16

  	
  Imports

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  FINANCING TERMS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  TECHNOLOGY

  	
   

  
	
   

  	
  11.1

  	
  Ownership

  	
   

  
	
   

  	
  11.2

  	
  Restrictions
  Regarding the Technology

  	
   

  
	
   

  	
  11.3

  	
  Material and
  Information Transfer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  PATENT RIGHTS

  	
   

  
	
   

  	
  12.1

  	
  Prosecution and Maintenance

  	
   

  
	
   

  	
  12.2

  	
  Enforcement

  	
   

  
	
   

  	
  12.3

  	
  Invalidity
  or Unenforceability Defenses or Actions

  	
   

  
	
   

  	
  12.4

  	
  Third Party Litigation

  	
   

  
	
   

  	
  12.5

  	
  Retained Rights

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  CONFIDENTIALITY

  	
   

  
	
   

  	
  13.1

  	
  Confidentiality

  	
   

  
	
   

  	
  13.2

  	
  AZ Information

  	
   

  
	
   

  	
  13.3

  	
  Permitted Disclosures

  	
   

  
	
   

  	
  13.4

  	
  Terms of Agreement

  	
   

  
	
   

  	
  13.5

  	
  Use of
  Name/Publicity

  	
   

  
	
   

  	
  13.6

  	
  Publications and
  Presentations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
  REPRESENTATIONS AND
  WARRANTIES

  	
   

  
	
   

  	
  14.1

  	
  Representations
  and Warranties of the Parties

  	
   

  
	
   

  	
  14.2

  	
  Additional Representations,
  Warranties and Covenants of ABX

  	
   

  
	
   

  	
  14.3

  	
  Additional Representation,
  Warranty and Covenant of AZ

  	
   

  
	
   

  	
  14.4

  	
  DISCLAIMER OF WARRANTIES

  	
   

  

 

iii

 

	
   

  	
  14.5

  	
  Additional
  Agreement of the Parties

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
  INDEMNIFICATION AND
  INSURANCE

  	
   

  
	
   

  	
  15.1

  	
  AZ

  	
   

  
	
   

  	
  15.2

  	
  ABX

  	
   

  
	
   

  	
  15.3

  	
  Procedure

  	
   

  
	
   

  	
  15.4

  	
  Insurance

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  TERM; TERMINATION

  	
   

  
	
   

  	
  16.1

  	
  Term

  	
   

  
	
   

  	
  16.2

  	
  Change in Control
  or Acquisition of ABX

  	
   

  
	
   

  	
  16.3

  	
  Termination by AZ for
  Breach

  	
   

  
	
   

  	
  16.4

  	
  Termination by ABX for
  Breach

  	
   

  
	
   

  	
  16.5

  	
  Tolling of Termination

  	
   

  
	
   

  	
  16.6

  	
  Termination for Safety
  Reasons

  	
   

  
	
   

  	
  16.7

  	
  Termination Upon Bankruptcy

  	
   

  
	
   

  	
  16.8

  	
  Effect of
  Expiration and Termination

  	
   

  
	
   

  	
  16.9

  	
  Termination for Safety Reasons

  	
   

  
	
   

  	
  16.10

  	
  Process Development Program

  	
   

  
	
   

  	
  16.11

  	
  Remedies

  	
   

  
	
   

  	
  16.12

  	
  Survival

  	
   

  
	
   

  	
  16.13

  	
  Rights in Bankruptcy

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
  EXCLUSIVITY

  	
   

  
	
   

  	
  17.1

  	
  During the Antigen
  Designation Term

  	
   

  
	
   

  	
  17.2

  	
  Following the
  Antigen Designation Term

  	
   

  
	
   

  	
  17.3

  	
  No Breach

  	
   

  
	
   

  	
  17.4

  	
  Certain
  Provisions Applicable Upon a Change in Control Involving ABX

  	
   

  
	
   

  	
  17.5

  	
  Certain
  Provisions Applicable Upon an Acquisition by or with ABX

  	
   

  
	
   

  	
  17.6

  	
  Certain
  Provisions Applicable Upon a Change in Control Involving AZ

  	
   

  
	
   

  	
  17.7

  	
  Certain Provisions
  Applicable Upon an Acquisition by or with AZ

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
  ADVERSE EVENT REPORTING

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
  PRODUCT RECALL

  	
   

  
	
   

  	
  19.1

  	
  Notification and Recall

  	
   

  
	
   

  	
  19.2

  	
  Recall Expenses

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  20.

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
  20.1

  	
  Governing Law,
  Jurisdiction, Venue and Service

  	
   

  
	
   

  	
  20.2

  	
  Waiver

  	
   

  
	
   

  	
  20.3

  	
  Assignment

  	
   

  
	
   

  	
  20.4

  	
  Independent Contractors

  	
   

  

 

iv

 

	
   

  	
  20.5

  	
  Further Actions

  	
   

  
	
   

  	
  20.6

  	
  Notices

  	
   

  
	
   

  	
  20.7

  	
  No Implied Licenses

  	
   

  
	
   

  	
  20.8

  	
  Force Majeure

  	
   

  
	
   

  	
  20.9

  	
  No Consequential Damages

  	
   

  
	
   

  	
  20.10

  	
  Complete Agreement

  	
   

  
	
   

  	
  20.11

  	
  Counterparts

  	
   

  
	
   

  	
  20.12

  	
  Construction

  	
   

  
	
   

  	
  20.13

  	
  Severability

  	
   

  
	
   

  	
  20.14

  	
  Non-Solicitation

  	
   

  
	
   

  	
  20.15

  	
  Conditions Precedent to
  Grants of Exclusive Licenses

  	
   

  

 

v

 

COLLABORATION
AND LICENSE AGREEMENT

 

This COLLABORATION AND
LICENSE AGREEMENT (this “Agreement”) dated as of October 15, 2003,
is entered into by and between, on the one hand, ABGENIX, INC., a Delaware
corporation (“ABX”), having a place of business at 6701 Kaiser Drive, Fremont,
California 94555, U.S.A., and, on the other hand, ASTRAZENECA UK LTD., a
company incorporated in England under no. 3674842 whose registered office is at
15 Stanhope Gate, London, WIK 1LN, England (“AZ”).

 

RECITALS

 

A.                                   ABX has rights in the XenoMouse®
Animals (as defined below), and other proprietary technology regarding the
research, development, manufacture and commercialization of fully human
monoclonal antibodies generated thereby.

 

B.                                     ABX
has expertise in the research and preclinical and clinical development of such
antibodies and in the development of manufacturing processes for and the
clinical supply and manufacture of such antibodies.

 

C.                                     AZ
has expertise in the research, development and commercialization of
non-antibody products in the field of oncology.

 

D.                                    ABX
desires to research and develop certain fully human monoclonal antibodies
through the first Phase II clinical trials, to develop for AZ manufacturing
processes for the clinical and commercial manufacture of such antibodies and to
manufacture and supply AZ’s clinical and commercial requirements of each such
antibody through the fifth anniversary of its first commercial sale on the
terms and conditions set forth below.

 

E.                                      In light of the foregoing, ABX and AZ
desire to conduct a collaborative program pursuant to which ABX and AZ will
work exclusively together to generate and develop fully human monoclonal
antibodies directed against antigens in the field of oncology on the terms and
conditions set forth below.

 

F.                                      In light of the foregoing, ABX desires
to license to AZ, and AZ desires to obtain a worldwide license, to research,
develop and commercialize products comprising such antibodies derived from such
collaborative program on the terms and conditions set forth below.

 

G.                                     In light of the foregoing, AZ has agreed to purchase certain securities
of ABX in accordance with that certain Securities Purchase Agreement dated as
of even date herewith (the “Purchase Agreement”), and the related
Certificates of Designation (as such term is defined in the Purchase
Agreement), subject to the terms and conditions contained in such agreement and
certificates.

 

NOW THEREFORE, in consideration of the foregoing
premises and the mutual covenants set forth below, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Parties, intending to be legally bound, agree as follows:

 

 

1.                                       DEFINITIONS

 

For purposes of this
Agreement, the terms set forth in this Article 1 shall have the respective
meanings set forth below:

 

1.1                                 “ABX Antigen In-License” shall
mean an ABX In-License pursuant to which ABX or its Affiliates acquires
intellectual property rights to a particular Antigen, or antibodies that bind
to and are directed against such Antigen.

 

1.2                                 “ABX Antigen-Specific Know-How
Rights” shall mean the ABX Prior Antigen-Specific Know-How Rights and the
ABX Subsequent Antigen-Specific Know-How Rights.

 

1.3                                 “ABX Antigen-Specific Patent Rights”
shall mean the ABX Prior Antigen-Specific Patent Rights and the ABX Subsequent
Antigen-Specific Patent Rights.

 

1.4                                 “ABX Antibody Know-How Rights”
shall mean Know-How Rights Controlled by ABX or its Affiliates in
Antibody Technology.

 

1.5                                 “ABX Antibody Patent Rights”
shall mean Patent Rights Controlled by ABX or its Affiliates that
contain a claim that covers, and only to the extent they contain a claim that
covers, Antibody Technology.

 

1.6                                 “ABX Diagnostic Antigen” shall
have the meaning set forth in Section 2.2.1(m).

 

1.7                                 “ABX
Indemnitees” shall have the meaning set forth in Section 15.1.

 

1.8                                 “ABX In-License” shall mean a
license or other agreement under which ABX or its Affiliates (a) Control
Licensed ABX IP Rights, or (b) owe obligations (including obligations to
pay royalties or other amounts) to a Third Party relating to Licensed ABX IP
Rights.

 

1.9                                 “ABX In-License Information”
shall have the meaning set forth in Section 4.17.2.

 

1.10                           “ABX Oncology Know-How Rights”
shall mean Know-How Rights Controlled by ABX or its Affiliates in Oncology Technology.

 

1.11                           “ABX Oncology Patent Rights”
shall mean Patent Rights Controlled by ABX or its Affiliates that contain a
claim that covers, and only to the extent that they contain a claim that
covers, Oncology Technology.

 

1.12                           “ABX Other Know-How Rights”
shall mean Know-How Rights Controlled by ABX or its Affiliates in Other Technology.

 

2

 

1.13                           “ABX Other Patent Rights” shall
mean Patent Rights Controlled by ABX or its Affiliates that contain a claim
that covers, and only to the extent that they contain a claim that covers,
Other Technology.

 

1.14                           “ABX Prior Antigen-Specific Know-How
Rights” shall mean, with respect to a Proposed Antigen or Collaboration
Antigen (irrespective of whether such Collaboration Antigen becomes a
Discontinued Antigen or a Failed Antigen), Know-How Rights Controlled by
ABX or its Affiliates in Antigen-Specific Technology, that (a) are
Controlled by ABX or its Affiliates prior to the date of the applicable Antigen
Notice under
Section 2.2.1(a), 2.2.1(j) or 2.2.1(k), as applicable, (b) are
first Controlled by ABX or its Affiliates after such date pursuant to the
merger, acquisition (whether of all of the outstanding stock or all or
substantially all of the assets of a Person) or similar transaction by or with
another Person, (c) are first Controlled by ABX or its Affiliates after
such date pursuant to an ABX In-License listed on Exhibit K-2,
(d) are first conceived or generated by or on behalf of ABX or its
Affiliates under or in connection with any program conducted outside this
Agreement without violating the terms of this Agreement, (e) are first
conceived or generated by or on behalf of ABX in connection with any validation
activities conducted by ABX with respect to such Proposed Antigen pursuant to
Section 2.2.2(a), or (f) are first conceived or generated by or on
behalf of ABX in connection with any
work performed by ABX under an internal program with respect to the
Advanced ABX Antigen or an Accelerated ABX Antigen prior to each such Antigen
being designated as a Collaboration Antigen; provided, however,
that ABX Prior Antigen-Specific Know-How Rights shall not include any
Antigen-Specific Technology that is first Controlled by ABX or its Affiliates
or first conceived or generated by or on behalf of ABX, as applicable, after
such Antigen becomes a Non-Selected Antigen, a Discontinued Antigen or a Failed
Antigen.

 

1.15                           “ABX Prior Antigen-Specific Patent
Rights” shall mean, with respect to a Proposed Antigen or Collaboration
Antigen (irrespective of whether such Collaboration Antigen becomes a
Discontinued Antigen or a Failed Antigen), Patent Rights Controlled by
ABX or its Affiliates that (a) contain a claim that covers, and only to
the extent they contain a claim that covers, Antigen-Specific Technology, and
(b) (i) are Controlled by ABX or its Affiliates prior to the date of the applicable Antigen Notice under Section 2.2.1(a),
2.2.1(j) or 2.2.1(k), as applicable, (ii) are first Controlled by
ABX or its Affiliates after such date pursuant to the merger, acquisition
(whether of all of the outstanding stock or all or substantially all of the
assets of a Person) or similar transaction by or with another Person,
(iii) are first Controlled by ABX or its Affiliates after such date
pursuant to an ABX In-License listed on Exhibit K-2, (iv) are first
conceived or generated by or on behalf of ABX or its Affiliates under or in
connection with any program conducted outside this Agreement without violating
the terms of this Agreement, (v) are first conceived or generated by or on
behalf of ABX in connection with any validation activities conducted by ABX
with respect to such Proposed Antigen pursuant to Section 2.2.2(a), or
(vi) are first conceived or generated by or on behalf of ABX in connection
with any work performed by ABX under
an internal program with respect to the Advanced ABX Antigen or an
Accelerated ABX Antigen prior to each such Antigen being designated as a
Collaboration Antigen; provided, however, that ABX Prior
Antigen-Specific Patent Rights shall not include any Antigen-Specific
Technology that is first Controlled by ABX or its Affiliates or first conceived
or generated by or on behalf of ABX, as applicable, after such Antigen becomes
a Non-Selected Antigen, a Discontinued Antigen or a Failed Antigen.

 

3

 

1.16                           “ABX Process Know-How Rights”
shall mean Know-How Rights Controlled by ABX or its Affiliates in ABX Process
Technology.

 

1.17                           “ABX Process Patent Rights”
shall mean Patent Rights Controlled by ABX or its Affiliates that contain a
claim that covers, and only to the extent they contain a claim that covers, ABX
Process Technology.

 

1.18                           “ABX Process Technology” shall
mean any and all Information and inventions relating to the preclinical,
clinical and commercial manufacture, testing and release of Antibodies,
Candidate Drugs, Licensed Products or Antibody Equivalents that (a) are
conceived or generated under the Process Science/Clinical Manufacture
Agreement, or (b) otherwise are Controlled by ABX or its Affiliates and
are utilized by ABX or its Affiliates under the Process Science/Clinical
Manufacture Agreement.

 

1.19                           “ABX Product” shall mean a
product containing an Antibody or Antibody Equivalent that binds to and is
directed against a Discontinued Antigen or Failed Antigen.

 

1.20                           “ABX Subsequent Antigen-Specific
Know-How Rights” shall mean, with respect to a Proposed Antigen or
Collaboration Antigen (irrespective of whether such Collaboration Antigen
becomes a Discontinued Antigen or a Failed Antigen), Know-How Rights
Controlled by ABX or its Affiliates in Antigen-Specific Technology, that are
first Controlled by ABX or its Affiliates after the date of the applicable
Antigen Notice under Section 2.2.1(a), 2.2.1(j) or 2.2.1(k), as applicable, and prior to the date of the designation of such
Antigen as a Non-Selected Antigen, Failed Antigen or Discontinued Antigen,
other than ABX Prior Antigen-Specific Know-How Rights and ABX Prior
Antigen-Specific Patent Rights.

 

1.21                           “ABX Subsequent Antigen-Specific
Patent Rights” shall mean, with respect to a Proposed Antigen or
Collaboration Antigen (irrespective of whether such Collaboration Antigen
becomes a Discontinued Antigen or a Failed Antigen), Patent Rights
Controlled by ABX or its Affiliates that (a) contain a claim that covers,
and only to the extent they contain a claim that covers, Antigen-Specific
Technology, and (b) are first Controlled by ABX or its Affiliates after
the date of the applicable Antigen Notice under Section 2.2.1(a), 2.2.1(j) or 2.2.1(k), as applicable,
and prior to the date of the
designation of such Antigen as a Non-Selected Antigen, Failed Antigen or
Discontinued Antigen, other than ABX Prior Antigen-Specific Patent Rights.

 

1.22                           “Accelerated
ABX Antigen” shall have the meaning set forth in Section 2.2.1(j).

 

1.23                           “Acquisition”
shall mean a merger, acquisition (whether of all of the stock or all or
substantially all of the assets of a Person) or similar transaction by or with
ABX or AZ, other than a Change in Control of ABX or AZ.

 

1.24                           “Additional Development Program
Know-How Rights” shall mean Know-How Rights in Additional Development
Program Technology.

 

4

 

1.25                           “Additional Development Program
Patent Rights” shall mean Patent Rights that contain a claim that covers,
any only to the extent they contain a claim that covers, Additional Development
Program Technology.

 

1.26                           “Additional Development Program
Technology” shall mean, with respect to a Collaboration Antigen,
collectively, any and all Information and inventions, whether or not
patented or patentable, which are first conceived or generated by or on behalf
of AZ (other than by ABX under or in connection with the Research Programs) in
the research or development of any Antibody or Candidate Drug that binds to and
is directed against such Collaboration Antigen outside of the Research Programs
and the Development Programs prior to the date that AZ delivers an Election
Notice for such Collaboration Antigen or the date of the first designation of
such Collaboration Antigen as a Failed Antigen or Discontinued Antigen,
whichever is earliest; provided, however, that Additional
Development Program Technology shall exclude Development Program Technology,
Process Technology and XenoMouse Technology.

 

1.27                           “Additional
Technology” shall mean those Information and inventions that are Controlled
by a Party that are necessary or reasonably useful to research and develop
Antibodies and Antibody Equivalents that bind to and are directed against an
Antigen and are in addition to the XenoMouse Technology and the Antibody
Technology; provided, however, that Additional Technology shall
exclude Antibody Technology, Antigen-Specific Technology, Collaboration
Technology, Oncology Technology, Other Technology, Development Program Technology,
Additional Development Program Technology, Process Technology and XenoMouse
Technology.

 

1.28                           “Additional
Technology Know-How Rights” shall mean Know-How Rights in Additional Technology, to the extent the Parties
agree to include such Additional Technology in the applicable Research Program
Work Plan or Development Program Work Plan pursuant to Sections 2.2.2(b),
2.2.3(b) and 5.3.1, respectively.  For
the avoidance of doubt, Additional Technology Know-How Rights shall not include
[Confidential treatment requested].

 

1.29                           “Additional Technology Patent Rights”
shall mean Patent Rights that contain a claim that covers, and only to the
extent they contain a claim that covers, Additional Technology, to the extent
the Parties agree to include such Additional Technology in the applicable
Research Program Work Plan or Development Program Work Plan pursuant to
Sections 2.2.2(b), 2.2.3(b) and 5.3.1, respectively.  For the avoidance of doubt, Additional Technology Patent Rights
shall not include [Confidential treatment requested].

 

1.30                           “Advanced
ABX Antigen” shall mean an Antigen listed on Exhibit C-1.

 

1.31                           “Affiliate”
shall mean, with respect to any Person, any other Person, that controls, is
controlled by or is under common control with such first Person.  For purposes of this definition, a Person
shall be in “control” of another Person if it owns or controls at least fifty
percent (50%) of the equity securities of such Person entitled to vote in
the election of directors (or, in the case of a Person that is not a
corporation, for the election of the corresponding managing authority), or
otherwise has the power to control the management and policies of such Person.

 

5

 

1.32                           “ANDA ACT” shall mean the meaning set forth in
Section 12.2.2.

 

1.33                           “Antibody” shall mean the
composition of matter of a whole antibody, or any fragment thereof, that
(a) (i) is generated under this Agreement from the XenoMouse Animals,
(ii) binds to and is directed against an Antigen that is designated as a
Collaboration Antigen, and either (A) is generated by ABX from the
XenoMouse Animals under an internal program that is not for the benefit
(whether by license, option or similar right) of a Third Party, without
violating the terms of this Agreement, or (B) is generated from the
XenoMouse Animals and is otherwise Controlled by ABX as of the date of the
designation of such Antigen as a Collaboration Antigen, or (iii) binds to
and is directed against a Collaboration Antigen and is generated in connection
with (A) any work performed by or on behalf of ABX with respect to
the Advanced ABX Antigen or an Accelerated ABX Antigen, Expedited ABX Antigen,
Potential Co-Development Antigen or ABX Diagnostic Antigen prior to each such
Antigen being designated as a Collaboration Antigen or (B) any work
performed by or on behalf of ABX
pursuant to Section 4.15 with respect to a Failed Antigen prior to
such Antigen being re-designated as a Collaboration Antigen, or (b) is Derived from (i) any
antibody or fragment described in clause (a), (ii) the amino acid or
nucleic acid sequence or sequence information of any antibody or fragment
described in clause (a), or (iii) the structure or structural
information of any antibody or fragment described in clause (a).

 

1.34                           “Antibody Cells” shall mean all
cells that contain, express or secrete antibodies, or any fragment thereof, or
Genetic Materials that encode antibodies, or any fragment thereof.

 

1.35                           “Antibody
Equivalent” shall mean (a) a whole antibody (including murine,
chimeric, human, humanized, human sequence, recombinant, transgenic, grafted,
phage display derived and single chain antibodies and the like), any fragment
thereof, or any soluble receptor, fusion protein and the like; (b) Genetic Material that encodes
any of the foregoing; or (c) Antibody Cells that contain, express or
secrete any of the foregoing; provided, however, that
Antibody Equivalents shall exclude Antibodies. 
[Confidential treatment requested]

 

1.36                           “Antibody Technology” shall
mean, with respect to a Collaboration Antigen, all Information and inventions,
whether or not patented or patentable, which (a) relate to the
Exploitation of antibodies, and either (i) (A) are Reasonably
Necessary to be utilized by or on behalf of ABX under the Research Program for
such Collaboration Antigen, or (B) are utilized by or on behalf of ABX
under the Research Program or Development Program for such Collaboration
Antigen, or (b) relate to the Exploitation of antibodies generally and are
first conceived or generated under the Research Program for such Collaboration
Antigen; provided, however, that Antibody Technology shall
exclude Antigen-Specific Technology, Collaboration Technology,
Additional Development Program Technology, Development Program Technology, Oncology
Technology, Process Technology and XenoMouse Technology.

 

1.37                           “Antigen” shall mean a unique
molecular species [Confidential treatment requested] (c)(i) that is known or reasonably
believed to be selectively or differentially expressed in human cancer cells,
or (ii) as to which the administration or other medical use of an
antibody that binds to and is directed against such protein, carbohydrate, compound or other composition

 

6

 

is known or reasonably
believed to be useful for the diagnosis, prevention or treatment of cancer in
humans.  [Confidential treatment requested]

 

1.38                           “Antigen Designation Term” shall
mean the period commencing on the Effective Date and, unless earlier terminated
pursuant to Section 2.2.4, 16.2, 16.3.1, 16.4.1 or 16.7, expiring on the
third (3rd) anniversary thereof, as may be extended by mutual agreement of the
Parties.

 

1.39                           “Antigen Notice” shall have the
meaning set forth in Section 2.2.1(a).

 

1.40                           “Antigen-Specific Technology”
shall mean, with respect to a Proposed Antigen or Collaboration Antigen
(irrespective of whether such Collaboration Antigen becomes a Discontinued
Antigen or a Failed Antigen), collectively, (a) such Antigen;
(b) Antibody Equivalents that bind to and are directed against such
Antigen; (c) amino acid sequences of such Antigen or Antibody Equivalents;
(d) Genetic Material that encodes such Antigen or Antibody Equivalents;
(e) Antibody Cells that contain, express or secrete such Antibody Equivalents
or Genetic Materials that encode such Antibody Equivalents; (f) uses of
the foregoing; and (g) Information specifically regarding the foregoing;
in each case (of clauses (a) through (g)) that are not first conceived or
generated under or in connection with the Research Program or Development
Program for such Antigen; provided, however, that
Antigen-Specific Technology shall exclude Collaboration Technology, Additional
Development Program Technology, Development Program Technology, Process
Technology, XenoMouse Technology and any Information from any freedom to operate
analyses conducted by AZ pursuant to Section 2.2.2(a).

 

1.41                           “Applicable Law” shall mean the applicable laws,
rules and regulations, including any rules, regulations, guidelines or other
requirements of the applicable supra-national, federal, national, regional,
state, provincial or local regulatory agencies, departments, bureaus,
commissions, councils or other government entities regulating or otherwise
exercising authority, that may be in effect from time to time.

 

1.42                           “Authorized Development Expenses”
shall have the meaning set forth in Section 9.2.

 

1.43                           “Authorized Research Expenses”
shall have the meaning set forth in Section 9.1.

 

1.44                           “AZ Antigen-Specific Know-How Rights”
shall mean the AZ Prior Antigen-Specific Know-How Rights and the AZ Subsequent
Antigen-Specific Know-How Rights.

 

1.45                           “AZ Antigen-Specific Patent Rights”
shall mean the AZ Prior Antigen-Specific Patent Rights and the AZ Subsequent
Antigen-Specific Patent Rights.

 

1.46                           “AZ
Indemnitees” shall have the meaning set forth in Section 15.2.

 

1.47                           “AZ In-License” shall mean a
license or other agreement under which AZ or its Affiliates (a) Controls
Licensed AZ IP Rights, or (b) owes obligations (including obligations to
pay royalties or other amounts) to a Third Party relating to Licensed AZ IP
Rights.

 

7

 

1.48                           “AZ In-License Information”
shall have the meaning set forth in Section 4.17.3.

 

1.49                           “AZ Information” shall have the
meaning set forth in Section 13.2.

 

1.50                           “AZ Oncology Know-How Rights”
shall mean Know-How Rights Controlled by AZ or its Affiliates in Oncology
Technology.

 

1.51                           “AZ Oncology Patent Rights”
shall mean Patent Rights Controlled by AZ or its Affiliates that contain a claim
that covers, and only to the extent that they contain a claim that covers,
Oncology Technology.

 

1.52                           “AZ Other Know-How Rights” shall
mean Know-How Rights Controlled by AZ or its Affiliates in Other Technology.

 

1.53                           “AZ Other Patent Rights” shall
mean Patent Rights Controlled by AZ or its Affiliates that contain a claim that
covers, and only to the extent that they contain a claim that covers, Other
Technology.

 

1.54                           “AZ Prior Antigen-Specific Know-How
Rights” shall mean, with respect to a Proposed Antigen or Collaboration
Antigen (irrespective of whether such Collaboration Antigen becomes a
Discontinued Antigen or a Failed Antigen), Know-How Rights Controlled by
AZ or its Affiliates in Antigen-Specific Technology, that (a) are
Controlled by AZ or its Affiliates prior to the date of the applicable Antigen
Notice under
Section 2.2.1(a), 2.2.1(j)
or 2.2.1(k), as applicable, (b) are first Controlled by AZ or its
Affiliates after such date pursuant to the merger, acquisition (whether of all
of the outstanding stock or all or substantially all of the assets of a Person)
or similar transaction by or with another Person, (c) are first conceived
or generated by or on behalf of AZ or its Affiliates under or in connection
with any program conducted outside this Agreement without violating the terms
of this Agreement, or (d) are first conceived or generated by or on behalf
of AZ in connection with any validation activities conducted by AZ with respect
to such Proposed Antigen pursuant to Section 2.2.2(a); provided, however,
that AZ Prior Antigen-Specific Know-How Rights shall not include any
Antigen-Specific Technology that is first Controlled by AZ or its Affiliates or
first conceived or generated by or on behalf of AZ, as applicable, after such
Antigen becomes a Non-Selected Antigen, a Discontinued Antigen or a Failed
Antigen.

 

1.55                           “AZ Prior Antigen-Specific Patent
Rights” shall mean, with respect to a Proposed Antigen or Collaboration
Antigen (irrespective of whether such Collaboration Antigen becomes a Discontinued
Antigen or a Failed Antigen), Patent Rights Controlled by AZ or its
Affiliates that (a) claim or cover, and only to the extent they claim or
cover, Antigen-Specific Technology, and (b)(i) are Controlled by AZ or its
Affiliates prior to the date of the applicable Antigen Notice under Section 2.2.1(a), 2.2.1(j) or 2.2.1(k), as applicable,
(ii) are first Controlled by AZ or its Affiliates after such date pursuant
to the merger, acquisition (whether of all of the outstanding stock or all or
substantially all of the assets of a Person) or similar transaction by or with
another Person, (iii) are first conceived or generated by or on behalf of
AZ or its Affiliates under or in connection with any program conducted outside
this Agreement without violating the terms of this Agreement, or (iv) are
first conceived or generated by or on behalf of AZ in 

 

8

 

connection with any
validation activities conducted by AZ with respect to such Proposed Antigen
pursuant to Section 2.2.2(a); provided, however, that AZ
Prior Antigen-Specific Patent Rights shall not include any Antigen-Specific
Technology that is first Controlled by AZ or its Affiliates or first conceived
or generated by or on behalf of AZ, as applicable, after such Antigen becomes a
Non-Selected Antigen, a Discontinued Antigen or a Failed Antigen.

 

1.56                           “AZ Process Know-How Rights”
shall mean Know-How Rights Controlled by AZ or its Affiliates in AZ Process
Technology.

 

1.57                           “AZ Process Patent Rights” shall
mean Patent Rights Controlled by AZ or its Affiliates that contain a claim that
covers, and only to the extent they contain a claim that covers, AZ Process
Technology.

 

1.58                           “AZ Process Technology” shall
mean any and all Information and inventions relating to the preclinical,
clinical and commercial manufacture, testing and release of Antibodies,
Candidate Drugs, Licensed Products or Antibody Equivalents that are conceived
or generated by or on behalf of AZ or its Affiliates (other than by ABX) or are
otherwise owned or controlled by, AZ or its Affiliates as of the Effective Date
or at any time during the term of this Agreement, other than the ABX Process
Technology.

 

1.59                           “AZ Products” shall mean
Licensed Products and Non-Licensed Products.

 

1.60                           “AZ Subsequent Antigen-Specific
Know-How Rights” shall mean, with respect to a Proposed Antigen or
Collaboration Antigen (irrespective of whether such Collaboration Antigen
becomes a Discontinued Antigen or a Failed Antigen), Know-How Rights
Controlled by AZ or its Affiliates in Antigen-Specific Technology, that are
first Controlled by AZ or its Affiliates after the date of the applicable
Antigen Notice under Section 2.2.1(a), 2.2.1(j) or 2.2.1(k), as applicable, and prior to the date of the designation of such
Antigen as a Non-Selected Antigen, Failed Antigen or Discontinued Antigen,
other than AZ Prior Antigen-Specific Know-How Rights and AZ Prior
Antigen-Specific Patent Rights.

 

1.61                           “AZ Subsequent Antigen-Specific
Patent Rights” shall mean, with respect to a Proposed Antigen or
Collaboration Antigen (irrespective of whether such Collaboration Antigen
becomes a Discontinued Antigen or a Failed Antigen), Patent Rights
Controlled by AZ or its Affiliates that (a) contain a claim that covers,
and only to the extent they contain a claim that covers, Antigen-Specific
Technology, and (b) are first Controlled by AZ or its Affiliates after the
date of the applicable Antigen Notice under Section 2.2.1(a), 2.2.1(j) or 2.2.1(k), as applicable,
and prior to the date of
the designation of such Antigen as a Non-Selected Antigen, Failed Antigen or
Discontinued Antigen, other than AZ Prior Antigen-Specific Patent Rights.

 

1.62                           “BLA” shall mean a Biologics
License Application or New Drug Application, as defined in the U.S. Federal
Food, Drug, and Cosmetic Act, as amended, and the regulations promulgated
thereunder, and any corresponding supranational, foreign or domestic marketing
authorization application, registration or certification, necessary or useful
to market a Product in a country, but not including pricing and reimbursement
approvals.

 

1.63                           “cGMP” shall mean, with respect
to a Candidate Drug or a Licensed Product, current good manufacturing practices
applicable from time to time to the process 

 

9

 

development, manufacturing, formulating, packaging, labeling, holding
and quality control testing of such Candidate Drug or Licensed Product, including Good Manufacturing Practices and
General Biologics Products Standards as promulgated under the United States
Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 301 et seq, as amended, at 21 C.F.R. Parts
210, 211, 600 and 610, the Guide to GMP for Medicinal Products as promulgated
under European Directive 91/356/EEC, and applicable International Conference on
Harmonisation guidelines.

 

1.64                           “[Confidential treatment
requested]  Patent Rights”
shall mean, collectively, all Patent Rights, including United States
Patent No. [Confidential treatment requested], heretofore or hereafter issuing
in any country from United States Patent Application Serial [Confidential
treatment requested], or from any foreign counterpart patent application
thereto; provided, however, that the foregoing shall not include
any Patent Rights to the extent they contain claims that solely cover
[Confidential treatment requested], including United States Patent No.
[Confidential treatment requested].

 

1.65                           “Candidate Drug” shall mean
(a) an Antibody that binds to and is directed against a Collaboration
Antigen that is designated as a “Candidate Drug” pursuant to Section 2.6
or any other Antibody that binds to and is directed against such Collaboration
Antigen, or (b) any Antibody Equivalent that binds to and is directed
against a Collaboration Antigen, and is Derived from (i) an Antibody
described in clause (a) of Section 1.33, (ii) the amino acid or
nucleic acid sequence or sequence information of any Antibody described in
clause (a) of Section 1.33, or (iii) the structure or structural
information of any Antibody described in clause (a) of
Section 1.33.  For purposes
of clarity, [Confidential treatment requested].

 

1.66                           “Candidate Drug Target Profile”
or “CDTP” shall mean, with respect to each Collaboration Antigen, the
criteria and information requirements approved by the Research Management
Committee pursuant to Section 2.2.2(b) and incorporated into the
applicable Research Program Work Plan for evaluating whether or not to
designate an Antibody that binds to and is directed against such Collaboration
Antigen as a Candidate Drug.

 

1.67                           “Cell: Cell Fusion” shall mean a
method for producing antibody cell lines described in the Cell: Cell Fusion
Patent Rights, and any inventions relating to the foregoing.

 

1.68                           “Cell: Cell Fusion Patent Rights”
shall mean, collectively, all Patent Rights, including United States
Patent Nos. [Confidential treatment requested], heretofore or hereafter issuing
in any country from United States Patent Application Serial Nos. [Confidential
treatment requested], filed [Confidential treatment requested], or from any
foreign counterpart patent application thereto.

 

1.69                           “Chair”
shall have the meaning set forth in Section 3.7.

 

1.70                           “Change
in Control”, with respect to a Party, shall be deemed to have occurred if
any of the following occurs after the date hereof:

 

(a)                                  any
“person” or “group” (as such terms are defined below) is or becomes the
“beneficial owner” (as defined below), directly or indirectly, of shares of
capital stock or other interests (including partnership interests) of such
Party then outstanding and normally entitled (without regard to the occurrence
of any contingency) to vote in the election of

 

10

 

the directors, managers
or similarly supervisory positions (“Voting Stock”) of such Party
representing fifty percent (50%) or more of the total voting power of all
outstanding classes of Voting Stock of such Party or has the power, directly or
indirectly, to elect a majority of the members of the Board of Directors; or

 

(b)                                 such
Party enters into a merger, consolidation or similar transaction with another
Person (whether or not such Party is the surviving entity) and as a result of
such merger, consolidation or similar transaction (i) the members of the
Board of Directors of such Party or the surviving Person immediately prior to
such transaction constitute less than a majority of the members of the Board of
Directors of such Party immediately following such transaction, or
(ii) the Persons that “beneficially owned” (as defined below), directly or
indirectly, the shares of Voting Stock of such Party immediately prior to such
transaction cease to “beneficially own” (as defined below), directly or
indirectly, shares of Voting Stock of such Party representing at least a
majority of the total voting power of all outstanding classes of Voting Stock
of the surviving Person in substantially the same proportions as their
ownership of Voting Stock of such Party immediately prior to such transaction;
or

 

(c)                                  such
Party sells or transfers to any Third Party(ies), in one or more related
transactions, properties or assets representing all or substantially all of
such Party’s consolidated total assets; or

 

(d)                                 the
holders of capital stock of such Party approve any plan or proposal for the
liquidation or dissolution of such Party (whether or not otherwise in
compliance with the terms hereof).

 

For the purpose of the
definition of “Change in Control”, (i) ”person” and “group” have the
meanings given such terms under Section 13(d) and 14(d) of the Exchange
Act or any successor provision to either of the foregoing, and the term “group”
includes any group acting for the purpose of acquiring, holding or disposing of
securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act (or
any successor provision thereto), (ii) a “beneficial owner” shall be
determined in accordance with Rule 13d-3 under the Exchange Act, as in effect
on the Effective Date, except that the number of shares of Voting Stock of such
Party shall be deemed to include, in addition to all outstanding shares of
Voting Stock of such Party, all shares of Voting Stock not outstanding that are
subject to options, warrants, rights to purchase or conversion privileges
exercisable within sixty (60) days of the date of determination of a Change in
Control (“Unissued Shares”) deemed to be held by the “person” or “group”
(as such terms are defined above) or other Person with respect to which the
Change in Control determination is being made and all Unissued Shares deemed to
be held by all other Persons, and (iii) the terms “beneficially owned” and
“beneficially own” shall have meanings correlative to that of “beneficial
owner.”

 

1.71                           “Claims” shall have the meaning
set forth in Section 15.1.

 

1.72                           “Co-Development Agreement” shall
have the meaning set forth in Section 8.1.

 

11

 

1.73                           “Co-Development Antigen” shall
mean a Potential Co-Development Antigen which is designated as a Co-Development
Antigen pursuant to Section 2.2.1(l).

 

1.74                           “Collaboration
Antigen” shall mean any Antigen listed as a “Collaboration Antigen” on
Exhibit B, as such Exhibit may be amended pursuant to Sections 2.2.1(j),
2.2.1(l), 2.2.2(c), 2.2.2(d), 2.3.1, 2.3.3, 2.6.4, 2.6.5, 4.15, 5.9, 5.11 and
16.8.3(a).

 

1.75                           “Collaboration Know-How Rights”
shall mean Know-How Rights in Collaboration Technology.

 

1.76                           “Collaboration Patent Rights”
shall mean Patent Rights that contain a claim that covers, and only to
the extent they contain a claim that covers, Collaboration Technology.

 

1.77                           “Collaboration Technology” shall
mean, collectively, (a) Antibodies that bind to and are directed against a
Collaboration Antigen (irrespective of whether such Collaboration Antigen
becomes a Discontinued Antigen or a Failed Antigen); (b) Genetic Materials
that encode such Antibodies; (c) amino acid sequences of such Antibodies;
(d) Antibody Cells that contain, express or secrete such Antibodies or
such Genetic Materials or such amino acid sequences; (e) uses of the
foregoing or such Collaboration Antigen; (f) inventions that
uniquely relate to such Collaboration Antigen or one or more Antibodies or
Antibody Equivalents that bind to and are directed against such Collaboration
Antigen (including inventions specific to the function of such Collaboration
Antigen in a particular disease, state or condition, or the use of Antibodies
or Antibody Equivalents to diagnose, prevent or treat such disease, state or
condition, or the interaction of antibodies with such Collaboration Antigen, or
assays or other research or drug delivery tools specific to such Collaboration
Antigen); and
(g) Information specifically regarding the foregoing or such Collaboration
Antigen or Antibody Equivalents that bind to and are directed against such
Collaboration Antigen; in each case (of clauses (a) through (g)) which are
(x) Controlled by a Party as of the date that such Collaboration
Antigen is first designated as such (other than any Information from any validation activities conducted by either
Party or freedom to operate analyses conducted by AZ, in each case pursuant
to Section 2.2.2(a)) or (y) first
conceived or generated under or in connection with the Research Programs.

 

1.78                           “Commercial Field” shall mean
the diagnosis, prevention or treatment of any disease, state or condition in
humans or animals.

 

1.79                           “Commercially Reasonable Efforts”
shall mean:

 

(a)                                  with
respect to the research of an Antigen or Antibody, efforts and resources
commonly used in the research-based pharmaceutical industry or, solely with
respect to the performance of the Research Programs by ABX (but not its
activities with respect to the development, manufacture and commercialization
of Licensed Products) efforts and resources commonly used in the established
biotechnology industry;

 

12

 

(b)                                 with
respect to the development of an Antigen, Antibody or resulting Product,
efforts and resources commonly used in the research-based pharmaceutical
industry;

 

(c)                                  with
respect to the commercialization of a Licensed Product or any product with
respect to a Co-Development Antigen, efforts and resources commonly used in the
research-based pharmaceutical industry and, solely with respect to the
commercialization of ABX Products that bind to and are directed against a
Discontinued Antigen, efforts and resources commonly used in the established
biotechnology industry;

 

(d)                                 with
respect to the manufacture of an Antibody or a Licensed Product, efforts and
resources commonly used in the research-based pharmaceutical industry or,
solely with respect to ABX’s process development and manufacturing of Products,
efforts and resources commonly used in the contract manufacturing industry by
those contract manufacturing organizations that provide process development and
clinical and commercial scale cGMP manufacture of antibody therapeutics on a
commercial basis;

 

in each case for an antigen, antibody or product of similar commercial
potential at a similar stage in its lifecycle, taking into consideration its
safety and efficacy, its cost to develop, the competitiveness of alternative
products, the intellectual property landscape, the likelihood of regulatory
approval, its profitability and other relevant factors.  Commercially Reasonable Efforts shall be
determined on a market-by-market basis for each Antigen, Antibody and Licensed
Product.  For the avoidance of doubt,
the Parties acknowledge and agree that it is standard practice in the
research-based pharmaceutical industry and established biotechnology industry
for a company to prioritize the product opportunities available to it and to
allocate resources accordingly, provided that the foregoing shall not relieve a
Party of its obligations under the first sentence of this definition to
progress development and commercialization. 
For the further avoidance of doubt, the Parties acknowledge and agree
that the obligation to use “Commercially Reasonable Efforts” to commercialize a
Product applies to each of the Major Markets even if a Party does not have a
commercial presence in a Major Market, which obligation may be satisfied
through a sublicensee.

 

1.80                           “Committed
Antigen” shall mean an Antigen with respect to which, at the time
such Antigen is first identified by ABX as provided in Section 2.2.1(a) or
first proposed by AZ for consideration as a Proposed Antigen pursuant to Section 2.2.1(a),
whichever is earlier, (a) ABX has granted to a Third Party under an
Existing Collaboration, without breach of the exclusivity provisions of
Article 17, a license or other right to antibodies thereto that would
preclude ABX from granting AZ an exclusive license to Exploit Antibodies that
bind to and are directed against such Antigen under this Agreement;
(b) the terms and conditions of any ABX In-License as in effect as of
[Confidential treatment requested], prohibit ABX from granting a license or
other rights under Licensed ABX IP Rights; or (c) [Confidential treatment
requested].

 

1.81                           “Competitive
Product” shall mean, with respect to an Antigen, if ABX or AZ undergoes a
Change in Control or an Acquisition, any Antibody Equivalent with respect to
such Antigen that is actively being researched, developed or commercialized by
the other party or parties to such Change in Control or Acquisition (together
with any follow on or replacement Antibody Equivalent), in either case as of
the applicable Trigger Date, provided that, with 

 

13

 

respect to ABX, with
respect to a Proposed Antigen, Prioritized Antigen or Collaboration Antigen,
the existence of such Competitive Product was disclosed by ABX to AZ pursuant
to Section 16.2.

 

1.82                           “Competitor” shall, from time to
time, mean any of the top [Confidential treatment requested] pharmaceutical companies based on IMS
all class consolidation as set forth in the latest available data, plus [Confidential
treatment requested] and [Confidential
treatment requested] and their
successors.

 

1.83                           “Confidential Information” shall
mean, with respect to a Party, all Information (and all tangible and intangible
embodiments thereof), that is Controlled by such Party, and is disclosed by or
on behalf of such Party to the other Party either pursuant to the
Confidentiality Agreement, or in the course of performing this Agreement or a
Related Agreement.  For purposes of this Agreement,
notwithstanding the Party that disclosed such Information, (x) all ABX
Process Technology, Antibody Technology and XenoMouse Technology shall be
Confidential Information of ABX; (y) all AZ Process Technology, Additional
Development Program Technology and Development Program Technology shall be Confidential
Information of AZ, and (z) all Collaboration Technology, Oncology
Technology and Other Technology shall be Confidential Information of AZ with
respect to ABX and, subject to Section 13.2, Confidential Information of
ABX with respect to AZ.  Notwithstanding the foregoing,
Confidential Information of a Party shall not include information that, and
only to the extent, the Receiving Party can establish by written documentation
(a) has been generally known prior to disclosure of such information by
the Disclosing Party to the Receiving Party; (b) has become generally
known, without the fault of the Receiving Party, subsequent to disclosure of
such information by the Disclosing Party to the Receiving Party; (c) has
been duly received by the Receiving Party at any time from a source, other than
the Disclosing Party, rightfully having possession of and the right to disclose
such information free of confidentiality obligations; (d) has been
otherwise known by the Receiving Party free of confidentiality obligations
prior to disclosure of such information by the Disclosing Party to the
Receiving Party; or (e) has been independently developed by employees or
others on behalf of the Receiving Party without access to or use of such
information disclosed by the Disclosing Party to the Receiving Party (each, a “Confidentiality
Exception”).

 

1.84                           “Confidentiality Agreement”
shall mean the Confidential Disclosure Agreement effective as of March 14,
2001, as amended, between the Parties.

 

1.85                           “Contract Services Agreement”
shall have the meaning set
forth in Section 5.2.1.

 

1.86                           “Control” shall mean, with
respect to any invention, item of Information, Patent Right or other
intellectual property right, possession of the right (and only to the extent of
the right), whether directly or indirectly, and whether by ownership, license
or otherwise (but excluding any rights granted under Article 4 and
Sections 5.7.2, 7.9 and 7.12), to assign or grant a license, sublicense or
other right to or under, such invention, item of Information, Patent Right or
other intellectual property right as provided for herein without violating the
terms of any agreement or other arrangement with any Third Party.  For the avoidance of doubt, a Party shall 

 

14

 

not be deemed to Control the intellectual property of the other Party by
virtue of the grants set forth in Article 4 and Sections 5.7.2, 7.9 and
7.12 for purposes of this definition.

 

1.87                           “Core
Antibody Technology” shall mean such Antibody Technology Controlled by ABX
or its Affiliates that is Reasonably Necessary to complete the following
portions of a Research Program generally in accordance with the template
Research Program Work Plan attached hereto, that has as its goal the delivery
of Antibodies that meet the applicable CDTP criteria in accordance with
industry standards:  (a) the
immunization of XenoMouse Animals, (b) the generation of Antibodies from
such XenoMouse Animals, and (c) the initial characterization of such
Antibodies (consisting of binding such Antibodies to an antigen (by ELISA and
FACS), [Confidential treatment requested]; in each case as customarily
practiced by ABX, utilizing ABX standard techniques and materials (other than
transfer vectors proprietary from Third Parties) for hybridoma or XenoMax
Technology approaches.

 

1.88                           “Core
Patent Rights” shall mean Patent
Rights, Controlled by ABX or its Affiliates, to the extent they contain a claim
that covers Core Technology.

 

1.89                           “Core
Technology” shall mean XenoMouse
Technology (other than XenoMouse Methods), Core XenoMouse Technology and Core
Antibody Technology.

 

1.90                           “Core
XenoMouse Technology” shall mean XenoMouse Technology (other than XenoMouse
Animals) that is Reasonably Necessary to complete a Research Program generally without
regard to the specific antigen.

 

1.91                           “Derived”
shall mean directly (but not necessarily by means of a single step) and
substantially obtained, created, synthesized, derived, generated or
selected.  For the avoidance of doubt, an Antibody Equivalent will not be Derived
from an Antibody if (x) the composition of such Antibody, or any fragment
thereof, (y) the amino acid or nucleic acid sequence or sequence
information of such Antibody, or any fragment thereof, or (z) the
structure or structural information of such Antibody, or any fragment thereof,
is not directly (but not necessarily by means of a single step) and
substantially used to obtain create, synthesize, derive, generate or select
such Antibody Equivalent.

 

1.92                           “Development Management Committee”
shall mean the joint development committee, comprising representatives of ABX
and AZ, described in Article 6.

 

1.93                           “Development Program” shall
mean, with respect to any one or more lead Research Antibody and each Candidate
Drug that binds to and is directed against a Collaboration Antigen, the
regulatory and clinical development activities that are to be performed by ABX
in advance of Phase II Completion for such Research Antibodies and Candidate
Drug, which may include, at AZ’s election, (a) the identification,
validation and development of one or more biomarkers associated with the
(i) target indication(s) against which such Research Antibodies or
Candidate Drug are directed or (ii) use of such Candidate Drug in the
Commercial Field, (b) the preliminary evaluation of various Research
Antibodies or Candidate Drugs, including their productivity and viability, to
determine which Research Antibodies or Candidate Drugs to introduce into
production process development, (c) the optimization of one or more such
Antibodies or such Candidate Drug, (d) toxicology, pre-clinical and
other IND enabling studies

 

15

 

for such Candidate Drug, and (e) Phase I Clinical Trials and
applicable Phase II Clinical Trials for such Candidate Drug, all as
described in Article 5 and as more fully set forth in the applicable
Development Program Work Plan.

 

1.94                           “Development
Program Know-How Rights” shall mean Know-How Rights in Development Program
Technology.

 

1.95                           “Development
Program Leader” shall have the meaning set forth in Section 5.12.

 

1.96                           “Development
Program Patent Rights” shall mean Patent Rights that contain a claim that
covers, and only to the extent they contain a claim that covers, Development
Program Technology.

 

1.97                           “Development Program Technology”
shall mean, collectively, any and all Information and inventions,
whether or not patented or patentable, which are first conceived or generated
under or in connection with the Development Programs; provided, however,
that Development Program Technology shall exclude XenoMouse Technology and
Process Technology.  For the avoidance
of doubt, Information and inventions first conceived or generated under a
Research Program Work Plan shall not be deemed to have been first conceived or
generated in connection with a Development Program.

 

1.98                           “Development Program Term” shall
mean, with respect to each Candidate Drug, the period described in
Section 5.14.

 

1.99                           “Development Program Work Plan”
shall mean, with respect to each Candidate Drug, the written development
plan(s) prepared by the Parties pursuant to Section 5.3, as amended and
approved by the Development Management Committee pursuant to Section 6.3
and written budget(s) for the activities set forth in such plan(s).  The Development Program Work Plan for each
Candidate Drug shall be attached sequentially (as Exhibit E-1, etc.) to
Exhibit E.

 

1.100                     “Disclosing
Party” shall have the meaning set forth in Section 13.1.

 

1.101                     “Discontinued
Antigen” shall mean a Collaboration Antigen that is designated as a
“Discontinued Antigen” pursuant to Section 2.6.5, 4.15, 5.9, 5.11 or
16.8.3(a).

 

1.102                     “Distributor” shall mean, as to
AZ or ABX (as applicable), any Third Party in any country, appointed by such Party to
distribute, market and sell an AZ Product or ABX Product (as applicable),
whether or not such Party also grants to such Third Party a sublicense with
respect to such Product in connection therewith (with or without packaging
rights), provided that such Third Party purchases its requirements of such
Products from such Party or its Affiliates, but does not otherwise make any
royalty or other payment, or give any other consideration, to such Party or its
Affiliates with respect to intellectual property rights controlled by such
Party or its Affiliates with respect to such Product.

 

1.103                     “DMF” shall mean any drug
master file filed with the FDA with respect to any Candidate Drug, and any
equivalent filing in other countries or regulatory jurisdictions.

 

16

 

1.104                     “Drug DMF” shall have the
meaning set forth in Section 7.12.

 

1.105                     “Effective Date” shall mean the
date on which the conditions precedent set forth in Section 20.15 have
been satisfied.

 

1.106                     “Election
Notice” shall have the meaning set forth in Section 5.9.

 

1.107                     “Excluded
Antigens” shall mean, collectively, the Committed Antigens, [Confidential
treatment requested].

 

1.108                     [Confidential
treatment requested]

 

1.109                     “Exercise
Notice” shall have the meaning set forth in Section 2.6.5.

 

1.110                     “Existing
Collaboration” shall mean a written agreement between ABX and a Third Party
in effect as of [Confidential treatment requested] (as the same may be amended
or restated from time to time, subject to this Agreement),  pursuant to which ABX or its Affiliate
has granted as of the Effective Date, or has an obligation to grant during the
Antigen Designation Term, a license under ABX intellectual property rights to research, develop, manufacture or
commercialize Antibody Equivalents that bind to and are directed against an
Antigen selected by such Third Party, which license would preclude ABX from
granting a license to such Antigen to AZ under this Agreement.

 

1.111                     “Expedited
ABX Antigen” shall have the meaning set forth in Section 2.2.1(k).

 

1.112                     “Expert”
shall have the meaning set forth in Section 3.6.1.

 

1.113                     “Exploit”
or “Exploitation” shall mean to make, have made, import, use, sell,
offer for sale, or otherwise dispose of, including all discovery, research,
development, registration, modification, enhancement, improvement, manufacture,
storage, formulation, exportation, transportation, distribution, promotion and
marketing activities related thereto.

 

1.114                     “Failed
Antigen” shall mean a Collaboration Antigen that is designated as a “Failed
Antigen” pursuant to Section 2.3.1, 2.3.3 or 2.6.4.

 

1.115                     “FDA” shall mean the Food and
Drug Administration of the United States, or the successor thereto.

 

1.116                     “Financing
Documents” shall have the meaning set forth in Article 10.

 

1.117                     “First
Commercial Sale” shall mean, with respect to a Product, the first sale of
such Product by a Party, its (sub)licensees or its or their respective
Affiliates to customers who are not Affiliates or (sub)licensees (other than
Distributors) in a country after all applicable marketing and pricing approvals
(if applicable) have been granted by the applicable governing health authority
of such country.

 

1.118                     “Force Majeure” shall have the
meaning set forth in Section 20.8.1.

 

17

 

1.119                     “FTE”
shall mean a full time equivalent individual. 
FTE effort shall be charged by calculating the individual’s total hours
dedicated to the applicable activities under this Agreement as a percentage of
total hours worked multiplied by the relevant FTE Rate.  By way of example, and not in limitation of
the foregoing, (a) if a full-time, salaried employee spends 100% of his or
her effort hours on the applicable activities under this Agreement, the FTE
charge-out rate shall be calculated as the FTE Rate multiplied by 100%,
(b) if a full-time, salaried employee spends 50% of his or her effort
hours on the applicable activities under this Agreement, the FTE charge-out
rate shall be calculated as the FTE Rate multiplied by 50%, and (c) if a
seventy-five percent (75%)-time, salaried employee spends fifty percent (50%)
of his or her efforts on the applicable activities under this Agreement, the
FTE charge-out rate shall be calculated as the FTE Rate multiplied by
thirty-seven and one-half percent (37.5%) (50% x 75% = 37.5%).  No FTE credit shall be given for overtime
hours for salaried employees.

 

1.120                     “FTE Rate”
shall mean that rate agreed to by the Parties, from time to time, to reflect
the fully-burdened internal cost of an FTE, which rate, in any period, shall be
the same for employees of AZ and ABX, and in no event shall such rate exceed
[Confidential treatment requested] per FTE per year (increased as of each
anniversary of the Effective Date by an inflation factor equal to the
percentage increase during the immediately preceding calendar year in the San
Francisco – Oakland – San Jose Consumer Price Index – All Urban Consumer
(CPI-U), as published by the US Department of Labor, Bureau of Labor
Statistics), unless otherwise agreed by the Parties.  It is the intent of both Parties that the FTE Rate shall account
for: all employee-related compensation, including salaries, wages, bonuses,
benefits, profit sharing, stock option grants, and FICA costs, as well as
travel, meals and entertainment, training, recruiting, relocation, operating
supplies, postage, communications expense, professional dues, depreciation,
repairs and maintenance, rent and lease, utilities, taxes, facilities and space
costs, and computer service charges.

 

1.121                     “Genetic Material” shall mean a
nucleotide or nucleic acid sequence (whether coding or non-coding and whether
intact or a fragment).

 

1.122                     “Gene
Therapy” shall mean the treatment or prevention of a disease by means of Ex
Vivo Delivery or In Vivo Delivery (via viral or nonviral gene transfer systems)
of compositions comprising either (a) Genetic Material that encodes an
antibody, wherein such antibody serves a material function in the treatment or
prevention of such disease; (b) Genetic Material that encodes a moiety
other than an antibody, wherein the moiety serves a material function in the
treatment or prevention of such disease and wherein such composition
incorporates an antibody (or Genetic Material that encodes such antibody),
which antibody is used as a targeting vehicle for the composition; or
(c) Genetic Material that encodes an antibody that serves a material
function in the treatment or prevention of such disease, wherein such
composition also incorporates an antibody (or Genetic Material that encodes
such antibody), which antibody is used as a targeting vehicle for the
composition.  For purposes of this
definition, (x) “Ex Vivo Delivery” shall mean the introduction, outside of
the body of a human, of the compositions set forth in clauses (a), (b) or
(c) above into a cell, tissue, organoid, or organ which contains such
introduced compositions into the body of the same (autologous) or different
(allogenic) human, without limitation as to the formulation, anatomic site, or
route of administration or the use of encapsulation or other devices for such
administration, and (y) “In Vivo Delivery” shall mean the introduction of
the compositions set forth in clauses (a), (b) or (c) 

 

18

 

above into an individual,
without limitation as to the formulation, anatomic site, or route of
administration or the use of encapsulation or other devices for such
administration.

 

1.123                     “GenPharm Cross License Agreement”
shall mean that certain Cross License Agreement entered into by ABX, Japan Tobacco,
Inc., Xenotech, L.P., Cell Genesys, Inc., and GenPharm International, Inc.,
effective as of March 26, 1997, as the same may be amended from time to
time.

 

1.124                     “In-Licenses” shall mean,
collectively, the ABX In-Licenses and the AZ In-Licenses.

 

1.125                     “IND” shall mean an
Investigational New Drug application filed with the FDA, or any corresponding
filing or submission with any foreign regulatory authority, that is required to
commence human clinical testing of any Product.

 

1.126                     “Indemnitee” shall have the meaning set forth in
Section 15.3.1.

 

1.127                     “Indemnitor” shall have the
meaning set forth in Section 15.3.1.

 

1.128                     “Information” shall mean all technical,
scientific, financial, business and other information and data of any type or
nature whatsoever (and all tangible (but not a composition of matter) and
intangible embodiments thereof), including (a) information and data
regarding inventions, technology, methods, processes, practices, formulae,
instructions, skills, techniques, procedures, designs, assembly procedures,
computer programs, apparatuses, specifications, results, and materials;
(b) information and data resulting from high-throughput screening, gene
expression, genomic, proteomic, other drug discovery, biological, chemical,
pharmacological, toxicological, pharmaceutical, physical, analytical,
pre-clinical, clinical and safety testing; and (c) data and information
regarding study designs and protocols; assays and biological methodology;
manufacturing and quality control procedures, test procedures, synthesis,
purification and isolation techniques, in each case (i) whether or not
confidential, proprietary, patented or patentable, and (ii) whether in
written, electronic or any other form now known or hereafter developed, but
excluding the Registrations.

 

1.129                     “Infringement
Suit” shall have the
meaning set forth in Section 12.4.

 

1.130                     “Initial
Closing Date” shall have the meaning set forth in the Purchase Agreement.

 

1.131                     “Integrated Collaboration Antigen”
shall have the meaning set forth in Section 2.2.1(f).

 

1.132                     “Integrated Proposed Antigen”
shall have the meaning set forth in Section 2.2.1(f).

 

1.133                     “Intrabody” shall mean any
antibody (or any binding fragment thereof) or Genetic Material encoding such
antibody or fragment, which antibody or fragment (a) is capable of
intracellular binding to a target that is present within a cell,
(b) contains an intracellular

 

19

 

retention sequence or an intracellular localization sequence, or
(c) the therapeutic or diagnostic utility of which is effected by binding
to a target within a cell.

 

1.134                     “Key Positions” shall have the
meaning set forth in Section 2.9.

 

1.135                     “Know-How Rights” shall mean
trade secret or other know-how rights to the extent not generally known or
available.

 

1.136                     “Liabilities” shall have the
meaning set forth in Section 15.1.

 

1.137                     “Licensed ABX IP Rights” shall
mean, with respect to an Antigen, collectively, (a) ABX Antibody Know-How
Rights, ABX Antibody Patent Rights, ABX Oncology Know-How Rights, ABX Oncology
Patent Rights, ABX Other Know-How Rights, ABX Other Patent Rights, XenoMouse
Know-How Rights and XenoMouse Patent Rights; (b) the applicable ABX Prior
Antigen-Specific Know-How Rights, ABX Prior Antigen-Specific Patent Rights, ABX
Subsequent Antigen-Specific Know-How Rights and ABX Subsequent Antigen-Specific
Patent Rights; (c) ABX’s rights in the applicable Collaboration Know-How
Rights and Collaboration Patent Rights; and (d) ABX’s rights in the
Additional Technology Know-How Rights and Additional Technology Patent Rights; provided,
however, that Licensed ABX IP Rights shall not include the Excluded
Catalytic Antibody and Intrabody IP Rights. 
For the avoidance of doubt, Licensed ABX IP Rights with respect to a
Collaboration Antigen shall not include any Information or inventions first
conceived or generated by or on behalf of ABX or its Affiliates, or that come
into the possession or control of ABX or its Affiliates with respect to,
subject to Section 4.5.1, a Discontinued Antigen or, subject to
Section 4.15, a Failed Antigen after such Antigen ceases to be a
Collaboration Antigen.

 

1.138                     “Licensed AZ IP Rights” shall
mean, with respect to an Antigen, collectively, (a) AZ Oncology Know-How
Rights, AZ Oncology Patent Rights, AZ Other Know-How Rights and AZ Other Patent
Rights; (b) the applicable AZ Prior Antigen-Specific Know-How Rights, AZ
Prior Antigen-Specific Patent Rights, AZ Subsequent Antigen-Specific Know-How
Rights, AZ Subsequent Antigen-Specific Patent Rights, Additional Development
Program Know-How Rights, Additional Development Program Patent Rights,
Development Program Know-How Rights and Development Program Patent Rights;
(c) AZ’s rights in the applicable Collaboration Know-How Rights and
Collaboration Patent Rights; and (d) AZ’s rights in the Additional Technology
Know-How Rights and Additional Technology Patent Rights.  For the avoidance of doubt, Licensed AZ IP
Rights with respect to a Collaboration Antigen shall not include any
Information or inventions first conceived or generated by or on behalf of AZ or
its Affiliates, or that come into the possession or control of AZ or its
Affiliates with respect to a Discontinued Antigen or Failed Antigen after such
Antigen ceases to be a Collaboration Antigen.

 

1.139                     “Licensed IP Rights” shall mean,
collectively, the Licensed ABX IP Rights and the Licensed AZ IP Rights.

 

1.140                     “Licensed Product” shall mean,
with respect to a Collaboration Antigen (other than a Discontinued Antigen
(unless ABX has failed to deliver an Exercise Notice therefor) or a Failed
Antigen) for which AZ has provided an Election Notice, any form or dosage of
pharmaceutical composition, preparation, therapy or diagnostic tool in finished
form labeled 

 

20

 

and packaged for sale by prescription, over-the-counter or any other
method for use in the Commercial Field that contains a Candidate Drug that
binds to and is directed against such Collaboration Antigen.  For the avoidance of doubt, a
Licensed Product may also contain, in addition to a Candidate Drug, any
radioisotope, toxin or other composition of matter.

 

1.141                     “Major Market” shall mean
Canada, France, Germany, Italy, Japan, the United Kingdom and the United
States.

 

1.142                     “Manufacturing and Supply Agreement”
shall mean that certain Manufacturing and Supply Agreement entered into between
the Parties in accordance with Section 7.1.

 

1.143                     “Manufacturing and Supply Committee”
shall mean the joint manufacturing and supply committee, comprising representatives
of ABX and AZ, described in Section 7.7.

 

1.144                     “Manufacturing Data” shall have the meaning set forth in
Section 7.8.

 

1.145                     “Material Transfer Agreement”
shall mean that certain material transfer agreement attached hereto as
Exhibit P.

 

1.146                     “Multi-Antigen Collaboration
Antigen” shall have the meaning set forth in Section 2.2.1(f).

 

1.147                     “Multi-Antigen Proposed Antigen”
shall have the meaning set forth in Section 2.2.1(f).

 

1.148                     “Net Sales”
shall mean, [Confidential
treatment requested].

 

1.149                     “Non-Antibody
Product” shall mean any Non-Licensed Product with respect to a
Collaboration Antigen, a Discontinued Antigen or a Failed Antigen that does not
contain an Antibody or Antibody Equivalent that binds to and is directed
against such Antigen.

 

1.150                     “Non-Licensed Product” shall
mean any product with respect to a Collaboration Antigen (other than a Failed
Antigen or Discontinued Antigen) that does not contain a Candidate Drug or any
product with respect to a Failed Antigen or, subject to Section 4.5.1(e),
a Discontinued Antigen.

 

1.151                     “Non-Performing
Party” shall have the meaning set forth in Section 2.3.7.

 

1.152                     “Non-Selected
Antigen” shall mean (a) a Proposed Antigen that is rejected by the
Target Review Committee during the Antigen Designation Term or by the Research
Management Committee or AZ pursuant to Section 2.2.2(c) or
Section 2.2.2(d) or, with respect to a Proposed Antigen that is the
Advanced ABX Antigen or an Accelerated ABX Antigen, Section 2.2.1(j),
(b) subject to Section 2.2.4, a Proposed Antigen that has not been
designated a Prioritized Antigen or Collaboration Antigen as of the expiration
or earlier termination of the Antigen Designation Term, (c) a Potential
Co-Development Antigen that is rejected by AZ or is not designated as a Collaboration
Antigen or a Co-Development Antigen within the applicable

 

21

 

time periods pursuant to
Section 2.2.1(l), (d) a Proposed Antigen that is replaced by AZ in
order to substitute another Antigen as a Proposed Antigen in its place pursuant
to Section 2.2.1(o),  (e) a
Proposed Antigen that is withdrawn by AZ pursuant to Section 2.2.1(e) or
4.17.2, or (f) subject to Section 2.2.1(e), an Antigen that AZ fails to
timely designate as a Proposed Antigen within the applicable time period
pursuant to Section 2.2.1(e).

 

1.153                     “Notice to Abandon” shall have
the meaning set forth in Section 5.11.

 

1.154                     “Oncology Know-How Rights” shall
mean, collectively, ABX Oncology Know-How Rights and AZ Oncology Know-How
Rights.

 

1.155                     “Oncology Patent Rights” shall
mean, collectively, ABX Oncology Patent Rights and AZ Oncology Patent Rights.

 

1.156                     “Oncology Technology” shall mean
all Information and inventions, whether or not patented or patentable, which
(a) relate to the diagnosis, prevention or treatment of cancer in humans
(including by use of antibodies), and (b) are first conceived or generated
under or in connection with the Research Programs; provided, however,
that Oncology Technology shall exclude Collaboration Technology,
Development Program Technology, Additional Development Program Technology,
Process Technology and XenoMouse Technology.

 

1.157                     “Other Know-How Rights” shall
mean, collectively, ABX Other Know-How Rights and AZ Other Know-How Rights.

 

1.158                     “Other Patent Rights” shall
mean, collectively, ABX Other Patent Rights and AZ Other Patent Rights.

 

1.159                     “Other Technology” shall mean
all Information and inventions, whether or not patented or patentable,
that are conceived or generated under the Research Programs; provided, however,
that Other Technology shall exclude Antibody Technology, Antigen-Specific
Technology, Collaboration Technology, Oncology Technology, Additional
Development Program Technology, Development Program Technology, Process
Technology and XenoMouse Technology.

 

1.160                     “Partially Committed Antigen”
shall mean an Antigen with respect to which, at the time such Antigen is first
identified by ABX as provided in Section 2.2.1(a) or first proposed by AZ
for consideration as a Proposed Antigen pursuant to Section 2.2.1(a),
whichever is earlier, (a) ABX has granted to a Third Party under an
Existing Collaboration, without breach of the exclusivity provisions of
Article 17, a
non-exclusive license or other non-exclusive right to Exploit Antibody Equivalents
that bind to and are directed against such Antigen that would not preclude ABX
from granting to AZ the conditional right to obtain an exclusive license under
this Agreement with respect to such Antigen, and (b) [Confidential
treatment requested].

 

1.161                     “Party” shall mean either AZ or ABX and “Parties”
shall mean both AZ and ABX.

 

22

 

1.162                     “Patent Rights” shall mean (a) all patents and
patent applications, including provisional patent applications, (b) all
national, regional and international patent applications filed either from such
patent applications or provisional applications or from an application claiming
priority from either of these, including divisionals, continuations,
continuations-in-part, provisionals, converted provisionals and continued
prosecution applications, (c) any and all patents that have issued or in
the future issue from the foregoing patent applications, including utility
models, petty patents and design patents and certificates of invention,
(d) any and all extensions or restorations by existing or future extension
or restoration mechanisms, including revalidations, reissues, re-examinations
and extensions (including any supplementary protection certificates and the
like) of the foregoing patents or patent applications (described in
clauses (a), (b) and (c)), and (e) any similar rights, including
so-called patent pipeline protection, or any importation, revalidation,
confirmation or introduction patent or registration patent or patent of
additions to any such foregoing patent applications and patents.

 

1.163                     “Payee”
shall have the meaning set
forth in Section 9.9.

 

1.164                     “Payor”
shall have the meaning set
forth in Section 9.9.

 

1.165                     “Performing
Party” shall have the meaning set forth in Section 2.3.7.

 

1.166                     “Person” shall mean an individual, sole proprietorship,
partnership, limited partnership, limited liability partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or other similar entity or
organization, including a government or political subdivision, department or
agency of a government, or an academic or research institution.

 

1.167                     “Phase I Clinical Trial” shall
mean a human clinical trial in any country that is intended to initially
evaluate the safety or pharmacological effect of a Product in subjects or that
would otherwise satisfy requirements of 21 C.F.R. 312.21(a), or its foreign
equivalent.

 

1.168                     “Phase II Clinical Trial” shall
mean a human clinical trial in any country that is intended to initially
evaluate the effectiveness of a Product for a particular indication or
indications in patients with the disease or indication under study or that
would otherwise satisfy requirements of 21 C.F.R. 312.21(b), or its foreign
equivalent.

 

1.169                     Phase II Completion” shall mean the delivery by ABX
to AZ of a complete data package from a Phase II Clinical Trial for a Candidate
Drug that [Confidential treatment requested].

 

1.170                     “Phase III Clinical Trial” shall mean a pivotal human clinical
trial, the principal purpose of which is to establish safety and efficacy in
patients with the disease target being studied as required in 21 C.F.R. 312, or
similar clinical studies prescribed by the regulatory authorities in a country
other than the United States whether or not such study is a traditional Phase
III study.

 

1.171                     “Potential
Co-Development Antigen” shall have the meaning set forth in
Section 2.2.1(l).

 

23

 

1.172                     “Pre-Existing Non-Antibody Program”
shall mean a program to research, develop or commercialize products with
respect to an Antigen (other than Antibody Equivalents) that was being actively
and materially conducted by a Person that undergoes a Change in Control or
Acquisition by or with ABX or AZ, as applicable, as of the applicable Trigger
Date.

 

1.173                     “Prioritized Antigen” shall mean
a Proposed Antigen designated as such pursuant to Section 2.2.1(j),
2.2.1(k), 2.2.1(n) or 2.2.2(a), and listed on Exhibit Q, as such Exhibit
may be amended from time to time.

 

1.174                     “Process Development and
Manufacturing Plan” shall have the meaning set forth in Section 7.2.5.

 

1.175                     “Process Development Program”
shall mean the program for the development of one or more processes, and
associated technology, for the manufacture (including scale-up) of Research
Antibodies and Candidate Drugs, including processes and technology for the
production, purification, evaluation, characterization, stability assessment,
vialing and release of a Research Antibody or a Candidate Drug, as applicable, and the performance of other related
activities in support of the Registrations for a Candidate Drug or Licensed
Product, which are to be conducted pursuant to the Process Science/Clinical Manufacture
Agreement.

 

1.176                     “Process Science/Clinical
Manufacture Agreement” shall mean, with respect to a Candidate Drug, that
certain Process Science/Clinical Manufacture Agreement entered into between the
Parties in accordance with Section 7.1 for such Candidate Drug.

 

1.177                     “Process Technology” shall mean
the ABX Process Technology and the AZ Process Technology.

 

1.178                     “Product” shall mean an AZ
Product or ABX Product.

 

1.179                     “Program Budget” shall mean the
budget(s) prepared by ABX and accepted by AZ pursuant to Section 5.3 or
7.13.1, as amended by the mutual agreement of the Parties, for the activities
to be performed by or on behalf of ABX or its Affiliates under a Development
Program or Process Development Program, as applicable, which sets forth the
projected costs and expenses of such activities in accordance with
Section 5.3 or 7.13.1, as applicable, and shall include a detailed cost
proposal in a mutually acceptable format.

 

1.180                     “Project Leader” shall have the
meaning as set forth in Section 2.8.

 

1.181                     “Proposed Antigens” shall mean
all Antigens listed on Exhibit A-1 or Exhibit A-2, as such Exhibits
may be amended pursuant to Sections 2.2.1, 2.2.2(c), 2.2.2(d) or 4.17.2.

 

1.182                     “Proprietary
ABX Antigen” [Confidential treatment requested]

 

1.183                     “Purchase Agreement” shall have
the meaning set forth in the Recitals.

 

1.184                     “Pursuing Party” shall have the
meaning set forth in Section 4.12.2(a).

 

24

 

1.185                     “Reasonably Necessary” shall
mean [Confidential treatment requested].

 

1.186                     “Receiving Party” shall have the
meaning set forth in Section 13.1.

 

1.187                     “Registrations” shall mean, with
respect to a Product in a country, all applicable regulatory approvals,
including BLAs (and pricing and reimbursement approvals if applicable), by the
applicable governmental or regulatory authority in such country to import,
make, use or sell such Product in such country for use in the Commercial Field,
together with all applications and submissions therefor.

 

1.188                     “Related Agreements” shall mean
the Financing Documents, the Process Science/Clinical Manufacture Agreement,
the Manufacturing and Supply Agreement, the Contract Services Agreement,
the Co-Development Agreement and the technology transfer agreement, quality
assurance agreement and other related agreements entered into by the Parties
pursuant to and in accordance with this Agreement.

 

1.189                     “Research
Antibody” shall have the meaning set forth in Section 2.3.2.

 

1.190                     “Research Management Committee”
shall mean the joint research committee comprising representatives of ABX and
AZ, as described in Article 3.

 

1.191                     “Research Program” shall mean,
with respect to each Collaboration Antigen, the research and preclinical
program described in the applicable Research Program Work Plan to be performed
by the Parties in accordance with Section 2.3.

 

1.192                     “Research Program Term” shall
mean the period described in Section 2.7.

 

1.193                     “Research Program Work Plan”
shall mean, with respect to each Collaboration Antigen, the written research
plan prepared by ABX, in consultation with AZ, and approved by the Research
Management Committee pursuant to Section 2.2.2(b), as the same may be
amended pursuant to Section 2.2.3 or 2.6.2.  The Research Program Work Plan for each Collaboration Antigen
shall be attached sequentially (as Exhibit D-1, etc.) to Exhibit D.

 

1.194                     “Royalty Term” shall mean, [Confidential
treatment requested].

 

1.195                     “Supplementary XenoMouse Agreement”
shall mean the agreement attached hereto as Exhibit R.

 

1.196                     “Target Review Committee” shall
have the meaning set forth in Section 3.7.

 

1.197                     “Target Sourcing Group” shall
have the meaning set forth in Section 2.1.

 

1.198                     “Third Party” shall mean any
Person other than ABX, AZ or their respective Affiliates.

 

1.199                     “Third Party Royalties” shall
mean, with respect to a Product in a country, the royalty payments under any
In-License pursuant to which [Confidential treatment requested].

 

25

 

1.200                     “Trigger
Date” shall mean, with respect to a Change in Control or Acquisition by or
with a Party, the date that the definitive agreement with respect to such
Change in Control or Acquisition, as applicable, was first signed or the
effective date of such definitive agreement, whichever is earlier.

 

1.201                     “Valid Claim” shall mean, with
respect to a Product in a country, either (a) a claim of an issued and
unexpired Patent Right included within the Licensed ABX IP Rights or
Collaboration Patent Rights (in the case of an AZ Product) or Licensed AZ IP
Rights or Collaboration Patent Rights (in the case of an ABX Product) that
covers such Product as a composition of matter in such country or the use of
such Product for an indication included in the Registrations for such Product
in such country, which has not been held permanently revoked, unenforceable or
invalid by a decision of a court or other governmental agency of competent
jurisdiction, unappealable or unappealed within the time allowed for appeal,
and which has not been admitted to be invalid or unenforceable through reissue
or disclaimer or otherwise; or (b) a claim of a pending patent application
included within the Licensed ABX IP Rights or Collaboration Patent Rights (in
the case of an AZ Product) or Licensed AZ IP Rights or Collaboration Patent
Rights (in the case of an ABX Product) that covers such Product as a
composition of matter in such country or the use of such Product for an
indication included in the Registrations for such Product in such country,
which claim was filed in good faith and has not been abandoned or finally
disallowed without the possibility of appeal or refiling of such application, provided that such claim has not
been pending for more than [Confidential treatment requested] years.

 

1.202                     “XenoMax Technology” shall mean (a) all
technology (including methods, protocols, standard operating procedures and
techniques) utilized by ABX for the identification, generation and isolation of
antibodies from XenoMouse Animals through the use of the technology known as
the Selected Lymphocyte Antibody Method that is described in U.S. Patent
No. 5,627,052 (and all improvements thereto), and (b) all Information
regarding the foregoing (and all tangible and intangible embodiments thereof).

 

1.203                     “XenoMouse Animals” shall mean
those mice that are transgenic for the human heavy chain variable Ig loci that
is described in Mendez, et al., Nature Genetics 15: 146-156 (1997), and
any and all improved strains of such mice, in each case that are used by ABX or
its Affiliates in their business to generate antibodies for use in the
Commercial Field; provided, however, that XenoMouse Animals
exclude [Confidential treatment requested].

 

1.204                     “XenoMouse Lambda Animals” [Confidential
treatment requested]

 

1.205                     “XenoMouse Methods” shall mean,
collectively, all methods and techniques (including protocols and standard
operating procedures) used in connection with immunizing XenoMouse Animals with
an antigen (including Antigens) or Deriving therefrom antibodies (including
Antibodies), Genetic Materials that encode such antibodies, or Antibody Cells
that contain, express or secrete such antibodies or such Genetic Materials, and
all uses of such methods or techniques, that (a) are Controlled by ABX or
its Affiliates, or (b) are first conceived or generated under the Research
Programs.  Without limiting the
generality of the foregoing, XenoMouse Methods includes XenoMax Technology.

 

26

 

1.206                     “XenoMouse Know-How Rights”
shall mean Know-How Rights in the
XenoMouse Technology described in clauses (a) and (b) of
Section 1.209 or clause (d) of Section 1.209 to the extent it
relates to clauses (a) and (b) of Section 1.209.

 

1.207                     “XenoMouse Patent Rights” shall
mean Patent Rights that claim or cover, and only to the extent that they claim
or cover, the XenoMouse Technology described in clauses (a) and (b) of
Section 1.209 or clause (d) of Section 1.209 to the extent it
relates to clauses (a) and (b) of Section 1.209.

 

1.208                     “XenoMouse Supported Patent Rights”
shall mean the claims of any Patent Rights (other than Collaboration Patent
Rights, Oncology Patent Rights or AZ Other Patent Rights) of AZ that
(a) are supported by (but solely to the extent that the supporting
Collaboration Technology is expressly included in support of a claim in the
specifications or the file wrapper of such Patent Rights), or claim inventions
Derived from, that portion of Collaboration Technology that could not have been
conceived or generated without using XenoMouse Animals or another rodent strain
that contains human antibody genes and is able to produce human antibodies, and
(b) cover (i) any rodent strain that contains human antibody genes
and is able to produce fully human antibodies or any part of such rodent
strain, or (ii) the use of any such rodent strain or part thereof
(excluding any specific antibodies generated thereby).

 

1.209                     “XenoMouse Technology” shall
mean, collectively, (a) all XenoMouse Animals (including those immunized
with Antigens) and all uses thereof; (b) all XenoMouse Methods and all
uses thereof; (c) all materials, including fragments, derivatives,
progeny, modifications or improvements to the XenoMouse Animals or XenoMouse
Methods, Derived from the foregoing and all uses thereof; and (d) all
Information specifically regarding the foregoing (and all tangible and
intangible embodiments thereof) that is disclosed by ABX to AZ or Derived from
the use of the XenoMouse Animals or XenoMouse Methods under this Agreement; provided,
however, that XenoMouse Technology shall not include any Collaboration
Technology, Development Program Technology, Additional Development Program
Technology or AZ Process Technology.

 

2.                                       RESEARCH
PROGRAM

 

2.1                                 General.
  As more fully described in this
Article 2, during the Antigen Designation Term, (a) the
Parties shall work together, through a target sourcing group established by AZ
(the “Target Sourcing Group”), to review and propose Antigens as
Proposed Antigens; (b) from the Proposed Antigens, the Target Review
Committee shall select certain Proposed Antigens as Prioritized Antigens, for
which the CDTP and Research Program Work Plan will be prepared pursuant to
Section 2.2.2(b); (c) the Research Management Committee thereafter
shall designate Collaboration Antigens from the Prioritized Antigens; and
(d) AZ shall have the limited right to designate the Advanced ABX Antigen,
Accelerated ABX Antigens, Expedited ABX Antigens and Potential Co-Development
Antigens as Collaboration Antigens.  As
more fully described in this Article 2, the Parties shall use Commercially Reasonable Efforts to
conduct a Research Program to generate, research and conduct preclinical
development of Antibodies that bind to and are directed against each
Collaboration Antigen.  Any disputes in
the 

 

27

 

Target Sourcing Group
shall be resolved by AZ (subject to the right of ABX to unilaterally designate
Proposed Antigens rejected by the Target Sourcing Group under
Section 2.2.1(c)).

 

2.2                                 Collaboration Antigen Designation.

 

2.2.1                        Proposed Antigens. 
The initial Proposed Antigens designated by ABX, as of the Effective
Date, for selection by the Research Management Committee as Collaboration
Antigens are set forth in Exhibit A-1. 
The initial Proposed Antigens designated by AZ, as of the Effective
Date, for selection by the Research Management Committee as Collaboration
Antigens are set forth in Exhibit A-2. 
Such Exhibits may be amended as follows:

 

(a)                                  At
any time during the Antigen Designation Term, AZ and ABX shall have the right
to propose, and shall use Commercially Reasonable Efforts to identify and
propose to the Target Sourcing Group pursuant to this Section 2.2.1(a),
Antigens for use in the Research Programs; [Confidential treatment requested].  Subject to the previous two sentences,
promptly following the identification of an Antigen by a Party, such Party
shall submit to the other Party, subject to the confidentiality provisions of
this Agreement, express written notice of the proposal of such Antigen (the “Antigen
Notice”), which shall be in such form as the Parties mutually agree, and
shall include, to the extent such information is known to the proposing Party
or reasonably available to the proposing Party in the scientific or patent
literature [Confidential treatment requested]. 
ABX and AZ shall each use
Commercially Reasonable Efforts to propose a sufficient number of Proposed
Antigens so that the Research Management Committee is able to designate
thirty-six (36) Collaboration Antigens during the Antigen Designation
Term, with the goal of designating [Confidential treatment requested] to [Confidential treatment
requested]  Collaboration Antigens per year, provided
that no more than [Confidential treatment requested] Collaboration Antigens shall be
designated per year without the mutual written agreement of the Parties.

 

(b)                                 With
respect to each Antigen proposed by AZ pursuant to Section 2.2.1(a),
within thirty (30) days after ABX’s receipt of an Antigen Notice from AZ,
ABX shall notify AZ in writing whether or not such Antigen is [Confidential
treatment requested]

 

(c)                                  The Parties shall work together to
discuss and exchange Information with respect to Antigens for which an Antigen
Notice is submitted pursuant to Section 2.2.1(a) for possible nomination
as Proposed Antigens through the Target Sourcing Group.  For each Antigen proposed by a Party
pursuant to Section 2.2.1(a) [Confidential treatment requested], ABX shall promptly submit to AZ
(i) the ABX In-License Information (as defined in Section 4.17.2)
applicable to such Antigen, [Confidential treatment requested] (iii) all other Information with
respect to such Antigen (together with all Information reasonably available
from public sources), including any Information with respect to Antibody
Equivalents that bind to and are directed against such Antigen, that are
Controlled by ABX or its Affiliates, provided that (except as provided in the
above parenthetical) ABX shall not be required to perform any additional work
to generate such Information and (iv) such reasonable research quantities
of any Antibodies or Antibody Equivalents Controlled by ABX that bind to and
are directed against such Antigen as AZ may reasonably require in order for AZ
to internally assess such Antibodies or Antibody Equivalents, provided that if
ABX does not have sufficient quantities available, ABX shall have the right, in
lieu of such Antibodies or Antibody

 

28

 

Equivalents, to provide
AZ with the applicable cell lines Controlled by ABX for such Antibodies or
Antibody Equivalents to enable AZ to generate such materials.  Any transfers of Antibodies, Antibody
Equivalents or cell lines to AZ pursuant to clause (iv) above shall be
made pursuant to the Material Transfer Agreement.  After receipt of an Antigen Notice and such Information and
materials, as applicable, for an Antigen, the Target Sourcing Group shall have
the right to designate such Antigen as a Proposed Antigen whereupon Exhibit A-2 shall be amended
accordingly.  [Confidential
treatment requested] ABX shall have the right to unilaterally designate such Antigen as a Proposed Antigen (up to a
maximum of [Confidential treatment requested] Proposed Antigens or such other number as the Parties mutually agree
in writing) whereupon Exhibit A-1 shall be amended accordingly.

 

(d)                                 Prior
to each Antigen becoming a
Proposed Antigen, a Prioritized Antigen or a Collaboration Antigen,
[Confidential treatment requested] 
ABX’s rights to Exploit any such product shall be subject to
Article 17.  [Confidential
treatment requested].

 

(e)                                  [Confidential
treatment requested]

 

(f)                                    [Confidential treatment
requested]

 

(g)                                 [Confidential
treatment requested]

 

(h)                                 Upon
the designation of an Antigen as a Proposed Antigen pursuant to Section 2.2.1(c), each Party shall
promptly furnish to the Research Management Committee any other Information
Controlled by such Party (together with all Information reasonably available
from public sources), not previously provided to the other Party, with respect
to such Antigen that supports such Party’s belief that it qualifies as an
Antigen as to which the administration or other medical use of an antibody that
binds to and is directed against such Antigen could be useful for the
prevention, treatment or diagnosis of cancer in humans.  Prior to a Proposed Antigen becoming a
Collaboration Antigen or a Non-Selected Antigen, each Party shall promptly
deliver to such other Party any additional Information of the type set forth in
Section 2.2.1(c) and
this Section 2.2.1(h) that becomes known to such Party or its Affiliates
with respect to such Proposed Antigen.

 

(i)                                     [Confidential
treatment requested]

 

(j)                                     At any time during the Antigen
Designation Term following the [Confidential treatment requested] after the Effective Date, for the
Advanced ABX Antigen and promptly following the Effective Date for each
Antigen (other than the Advanced ABX Antigen, an Excluded Antigen or a
Partially Committed Antigen) Controlled by ABX or its Affiliates that was being
researched, or against which Antibody Equivalents were being researched,
developed or otherwise Exploited (“Accelerated ABX Antigens”), as of the
Effective Date, each of which is set forth on Exhibit C-2, ABX shall deliver to AZ (i) an
Antigen Notice, (ii) the ABX In-License Information, (iii) all
other Information Controlled by ABX (together with all Information reasonably
available from public sources) with respect to such Antigen, including any
Information with respect to Antibody Equivalents that bind to and are directed
against, and any other products with respect to, such Antigen, provided that
(except as provided in the above parenthetical) ABX shall not be required to do
any additional work to generate such Information

 

29

 

and (iv) such reasonable
research quantities of any Antibodies or Antibody Equivalents Controlled by ABX
that bind to and are directed against such Antigen as AZ may reasonably require
in order for AZ to internally assess such Antibodies or Antibody Equivalents,
provided that if ABX does not have sufficient quantities available, ABX shall
have the right, in lieu of such Antibodies or Antibody Equivalents, to provide
AZ with the applicable cell lines Controlled by ABX for such Antibodies or
Antibody Equivalents to enable AZ to generate such materials.  Any transfers of Antibodies, Antibody
Equivalents or cell lines to AZ pursuant to clause (iv) above shall be
made pursuant to the Material Transfer Agreement.  If AZ notifies ABX in writing, within [Confidential treatment
requested] days after receipt of the applicable Antigen Notice, that AZ desires
to include the Advanced ABX Antigen as a Collaboration Antigen, then the Parties shall negotiate in good
faith to determine the financial terms on which such Advanced ABX Antigen would
be included as a Collaboration Antigen, provided that such Collaboration
Antigen shall not count towards the Collaboration Antigen totals set forth in
Section 2.2.2(f) and the Parties shall not be required to perform a
Research Program for such Antigen.  If
the Parties reach mutual agreement on such financial terms within [Confidential
treatment requested] after the
receipt of such Antigen Notice, then such Advanced ABX Antigen shall be
designated a Collaboration Antigen and Exhibit B shall be amended accordingly.  If the Advanced ABX Antigen is designated as
a Collaboration Antigen, then all Information and inventions conceived or
generated in connection with any work performed by or on behalf of ABX with
respect to such Antigen prior to such designation that would have been
Collaboration Technology if such work had been performed under a Research
Program shall be Collaboration Technology and the provisions of
Section 11.1.3 shall apply thereto. 
If AZ fails to timely notify ABX in writing that AZ desires to
include the Advanced ABX Antigen as a Collaboration Antigen, or if the Parties
fail to timely reach mutual agreement on the financial terms on which such Advanced ABX Antigen would be included as
a Collaboration Antigen, then such Advanced ABX Antigen shall be designated a
Non-Selected Antigen, shall not count as a Proposed Antigen and neither Party shall have any further rights or obligations to the
other Party with respect to such Advanced ABX Antigen under this Agreement. 
The following Accelerated ABX Antigens shall be deemed to be Prioritized
Antigens as of the Effective Date:  [Confidential
treatment requested].  Within [Confidential treatment
requested] after the later of
the Effective Date and the date of the Antigen Notice for [Confidential
treatment requested], and
within [Confidential treatment requested] after the later of the Effective Date and the
date of the Antigen Notice for [Confidential treatment requested] and [Confidential treatment
requested], AZ shall decide
whether to designate such Accelerated ABX Antigens as Prioritized
Antigens.  If AZ fails to timely notify
ABX in writing that AZ desires to include an Accelerated ABX Antigen as a
Prioritized Antigen, then such
Accelerated ABX Antigen shall be designated a Non-Selected Antigen and neither Party shall have any further
rights or obligations to the other Party with respect to such Accelerated ABX
Antigen under this Agreement.  With respect to each
Accelerated ABX Antigen that is designated as a Prioritized Antigen either as
of the Effective Date or pursuant to Section 2.2.2(a), Exhibit Q shall be
amended accordingly and the Parties shall use good faith efforts to agree upon
the CDTP criteria and Research Program Work Plan for such Prioritized Antigen
within [Confidential treatment requested] of such designation, and once such CDTP
criteria and Research Program Work Plan have been finalized in accordance with
Section 2.2.2(b), the Research Management Committee or AZ shall decide
whether to select such Prioritized Antigen as a Collaboration Antigen pursuant
to Section 2.2.2(c), whether or not AZ has completed its review of the
proprietary status of such Antigen.  If
an Accelerated ABX 

 

30

 

Antigen is designated as a Collaboration Antigen, then all Information
and inventions conceived or generated in connection with any work performed by
or on behalf of ABX with respect to such Antigen prior to such designation that
would have been Collaboration Technology if such work had been performed under
a Research Program shall be Collaboration Technology and the provisions of
Section 11.1.3 shall apply thereto.

 

(k)                                  At any time following the Effective
Date and during the Antigen Designation Term, [Confidential treatment
requested]  Any transfers of Antibodies,
Antibody Equivalents or cell lines to AZ pursuant to clause (iv) above
shall be made pursuant to the Material Transfer Agreement.  AZ shall have [Confidential treatment
requested] after receipt of the applicable Antigen Notice to notify ABX in writing
of the designation of an Expedited ABX Antigen as a Prioritized Antigen. 
If AZ fails to timely notify ABX in writing that AZ desires to
designate an Expedited ABX Antigen as a Prioritized Antigen, then such Expedited ABX Antigen shall be
designated a Non-Selected Antigen, shall be deleted from
Exhibit A-1 or A-2, as applicable, and neither Party
shall have any further rights or obligations to the other Party with respect to
such Expedited ABX Antigen under this Agreement.  With
respect to each Expedited ABX Antigen that is designated as a Prioritized
Antigen, Exhibit Q and Exhibit A-2 shall be amended to include such Antigen and
the Parties shall use good faith efforts to agree upon the CDTP criteria and
Research Program Work Plan for such Antigen within [Confidential
treatment requested] pursuant
to Section 2.2.2(b) and once such CDTP criteria and Research Program Work
Plan have been finalized in accordance with Section 2.2.2(b), the Research
Management Committee or AZ shall decide whether to select such Prioritized
Antigen as a Collaboration Antigen pursuant to Section 2.2.2(c), whether
or not AZ has completed its review of the proprietary status of such
Antigen.  If an Expedited ABX Antigen is designated as a Collaboration Antigen,
then any work performed by or on behalf of ABX with respect to such
Antigen prior to such designation shall be deemed to have been performed under
the Research Program for such Collaboration Antigen and the provisions of
Sections 11.1.1, 11.1.3, 11.1.4, 11.1.5 and 11.1.7 shall apply.

 

(l)                                     At any time following [Confidential
treatment requested] after the
Effective Date and continuing for [Confidential treatment requested] thereafter during the Antigen
Designation Term, if ABX desires to commence a research program to generate and
develop antibodies that bind to and are directed against a Proposed Antigen
(other than a Prioritized Antigen), regardless of which Party first proposed
such Antigen (“Potential Co-Development Antigen”), then ABX shall deliver to AZ written
notice thereof, together with (i) all Information Controlled by ABX
(together with all Information reasonably available from public sources) with
respect to such Antigen, including Information with respect to any Antibody
Equivalents that bind to and are directed against, and any other products with
respect to, such Antigen, provided that (except as provided in the above
parenthetical) ABX shall not be required to perform additional work to generate
such Information, and (ii) any Information Controlled by ABX with respect
to the intellectual property status of such Antigen, including antibody
products that bind to and are directed against such Antigen.  Upon AZ’s receipt of such notice and
Information, ABX shall have the right to conduct, at its sole cost and expense,
such research program.  Notwithstanding
the foregoing, ABX shall have no right to designate more than [Confidential
treatment requested] Potential Co-Development Antigens in any [Confidential
treatment requested] month period, not to exceed [Confidential treatment
requested] Potential Co-Development Antigens in the aggregate.  For
purposes of clarity, any such Potential Co-Development

 

31

 

Antigen shall remain a Proposed Antigen.  ABX shall notify AZ in writing promptly
after the first immunization with a Potential Co-Development Antigen.  Within [Confidential treatment requested]
after the first immunization with the applicable Potential Co-Development
Antigen, AZ shall have the right to designate any Potential Co-Development
Antigen as a Prioritized Antigen and, if so designated, to designate such
Prioritized Antigen as a Collaboration Antigen.  If such Potential Co-Development Antigen is designated a
Prioritized Antigen during such period, the Parties shall use good faith
efforts to agree upon the CDTP criteria and the Research Program Work Plan for
such Prioritized Antigen [Confidential treatment requested] days pursuant to
Section 2.2.2(b) and
once such CDTP criteria and Research Program Work Plan have been finalized in
accordance with Section 2.2.2(b), the Research Management Committee or AZ
shall decide whether to select such Prioritized Antigen as a Collaboration
Antigen pursuant to Section 2.2.2(c), whether or not AZ has completed its
review of the proprietary status of such Antigen.  If, during such [Confidential treatment
requested] period, AZ elects to designate such Potential Co-Development Antigen as a
Collaboration Antigen, Exhibit B shall be amended accordingly and ABX
shall have no rights to such Antigen under Section 8.1, provided
that such period shall be tolled in the event of any delays caused by ABX or
its Affiliates in preparing and finalizing the CDTP criteria and Research Program Work Plan
for such Antigen pursuant to Section 2.2.2(b) or in the event of any bona
fide dispute with respect to such CDTP criteria or Research Program Work
Plan for so long as dispute resolution procedures are being pursued in good
faith.  If AZ fails to notify ABX in writing,
within such period, that AZ desires to designate a Potential Co-Development
Antigen as a Collaboration Antigen, then such Potential Co-Development Antigen shall continue to be a
Proposed Antigen (provided that AZ shall have no right to designate such
Antigen as a Collaboration Antigen) and ABX shall have the right to continue,
at its sole cost and expense, the internal program of research with respect to
such Proposed Antigen, provided that, within [Confidential treatment requested] after the first immunization of such
Antigen under such internal program, AZ shall have the right to designate such
Antigen as a Co-Development Antigen and, if AZ timely designates such Antigen
as a Co-Development Antigen, the rights and obligations of the Parties with
respect to such Antigen shall be governed by Section 8.1.  Any
such internal program
shall be conducted substantially in accordance with the Research Program Work
Plan template attached hereto as Exhibit H with the goal of meeting or
exceeding the CDTP form profile attached hereto as Exhibit G.  ABX shall not transfer, license or encumber any of its rights with respect to such
Antigen unless and until such Antigen becomes a Non-Selected Antigen, Failed
Antigen or Discontinued Antigen.  ABX
shall provide AZ with quarterly written progress reports regarding the status
and results of its research regarding such Potential Co-Development Antigen,
including (x) Information with respect to all Antibodies and Antibody
Equivalents that bind to and are directed against such Potential Co-Development
Antigen generated from such program and any other Information Controlled by ABX
with respect to such Antibodies or Antibody Equivalents and such Antigen,
including Information described in clause (ii) above, and (y) such reasonable
research quantities of lead Antibodies or Antibody Equivalents that bind to and are directed against
such Potential Co-Development Antigen generated from such program, as AZ
may reasonably require in order for AZ to internally assess such Antibodies or
Antibody Equivalents, provided that if ABX does not have sufficient quantities
available, ABX shall have the right, in lieu of such Antibodies or Antibody
Equivalents, to provide AZ with the applicable cell lines Controlled by ABX for
such Antibodies or Antibody Equivalents to enable AZ to generate such
materials.  Any transfers of Antibodies

 

32

 

and Antibody Equivalents
or cell lines, as applicable, to AZ pursuant to the foregoing sentence shall be
made pursuant to the Material Transfer Agreement. 
During such period as AZ has the right to designate a Potential
Co-Development Antigen as a Collaboration Antigen, AZ shall have the sole right
to control the preparation, filing and prosecution of all Patent Rights that
are specific to such Potential Co-Development Antigen (except as provided in
the following sentence), Antibodies or Antibody Equivalents that bind to and
are directed against such Potential Co-Development Antigen, or uses of the
foregoing.   During such period as AZ
has the right to designate a Potential Co-Development Antigen as a
Collaboration Antigen or a Co-Development Antigen, ABX shall have the sole
right to control the preparation, filing and prosecution of all Patent Rights
that are specific to a Potential Co-Development Antigen that ABX has
unilaterally designated as a Proposed Antigen over the objection of the Target
Sourcing Group pursuant to Section 2.2.1(c) or that AZ has not designated
as a Collaboration Antigen within the time permitted therefor, Antibodies or
Antibody Equivalents that bind to and are directed against such Potential
Co-Development Antigen, or uses of the foregoing.  During such period, each Party shall provide the other with an
advance copy of each proposed patent filing within such Patent Rights and shall
consider in good faith and incorporate the reasonable comments of such other
Party thereon.  For the avoidance of
doubt, any Co-Development Antigen shall not count against the Collaboration
Antigen totals set forth in Section 2.2.2(f).  If a Potential Co-Development Antigen is designated as a
Collaboration Antigen, then any such work performed by or on behalf of
ABX prior to such designation shall be deemed to have been performed under the
Research Program for such Collaboration Antigen and the provisions of Sections
11.1.1, 11.1.3, 11.1.4, 11.1.5 and 11.1.7 shall apply.  Notwithstanding the foregoing, on and after
the Trigger Date of a Change in Control of ABX, ABX shall have no right to
designate Proposed Antigens as Potential Co-Development Antigens, unless,
subject to this Section 2.2.1(l), such Proposed Antigens were unilaterally
designated by ABX over the objection of the Target Sourcing Group pursuant to
Section 2.2.1(c).

 

(m)                               If, at any time after the [Confidential
treatment requested]
anniversary of the Effective Date during the Antigen Designation Term, ABX
desires to generate Antibodies that bind to and are directed against a Proposed
Antigen (other than a Prioritized Antigen) that was unilaterally designated as
such by ABX over the objection of the Target Sourcing Group pursuant to
Section 2.2.1(c) and has not been designated as a
Prioritized Antigen for potential use in the diagnosis or staging of diseases,
states or conditions, ABX shall notify AZ in writing thereof and, thereafter,
ABX shall have the right to generate and characterize Antibodies that bind to
and are directed against such Proposed Antigen (a “ABX Diagnostic Antigen”)
prior to the conduct of in  vitro testing thereof.  Notwithstanding the foregoing, ABX
shall have no right to designate more than [Confidential treatment requested]
ABX Diagnostic Antigens in any [Confidential treatment requested] period, not
to exceed [Confidential treatment requested] ABX Diagnostic Antigens in the
aggregate.  ABX shall notify AZ in
writing promptly after the first immunization with an ABX Diagnostic
Antigen.  For purposes of clarity, any such ABX Diagnostic Antigen shall remain
a Proposed Antigen.  At any time
during the Antigen Designation Term, AZ shall have the right to designate any
ABX Diagnostic Antigen as a Prioritized Antigen and, if so designated, to
designate such Prioritized Antigen as a Collaboration Antigen.  Any Antibodies that are generated pursuant to this Section 2.2.1(m)
that do not bind to such ABX Diagnostic Antigen shall be destroyed.  ABX shall not transfer, license or encumber any of its rights with respect to such
ABX Diagnostic Antigen or any Antibodies or Antibody Equivalents that bind to
and are directed against such ABX Diagnostic Antigen unless

 

33

 

and until such Antigen becomes a Non-Selected Antigen.  On a quarterly basis, ABX shall promptly
provide AZ with any Information generated from any work performed pursuant to
this Section 2.2.1(m), including (x) Information with
respect to all such Antibodies or Antibody Equivalents generated from such work
and any other Information Controlled by ABX with respect to such Antibodies or
Antibody Equivalents or such Antigen, and (y) such reasonable
research quantities of lead Antibodies or Antibody Equivalents generated from such work, as AZ
may reasonably require in order for AZ to internally assess such Antibodies or
Antibody Equivalents, provided that if ABX does not have sufficient quantities
available, ABX shall have the right, in lieu of such Antibodies or Antibody
Equivalents, to provide AZ with the applicable cell lines Controlled by ABX for
such Antibodies or Antibody Equivalents to enable AZ to generate such
materials.  Any transfers of Antibodies,
Antibody Equivalents or cell lines, as applicable, to AZ pursuant to the
foregoing sentence shall be made pursuant to the Material Transfer Agreement. 
If any such ABX Diagnostic Antigen is designated as a Collaboration
Antigen, then any such work performed by or on behalf of ABX prior to
such designation shall be deemed to have been performed under the Research
Program for such Collaboration Antigen and the provisions of Sections 11.1.1,
11.1.3, 11.1.4, 11.1.5 and 11.1.7 shall apply.  ABX shall provide AZ with an
advance copy of each proposed patent filing that contains a claim that covers
an invention that is conceived in the course of the work conducted pursuant to
this Section 2.2.1(m) and is specific to an ABX Diagnostic Antigen,
Antibodies or Antibody Equivalents that bind to and are directed against such
ABX Diagnostic Antigen, or uses of the foregoing, and shall consider in good
faith and incorporate the reasonable comments of AZ thereon.

 

(n)                                 Unless otherwise agreed by the Parties,
the maximum number of Proposed Antigens that (i) were proposed by AZ
pursuant to Section 2.2.1(a) and are (or are required to be) set forth on
Exhibit A-2, at any time, shall not exceed (A) [Confidential
treatment requested] Proposed
Antigens prior to the date[Confidential treatment requested] after the Effective Date, (B) [Confidential
treatment requested] Proposed
Antigens following the date [Confidential treatment requested] after the Effective Date and prior to
the date [Confidential treatment requested] after the Effective Date, and (C) [Confidential treatment
requested] Proposed Antigens
following the date [Confidential treatment requested] after the Effective Date and prior to
the date [Confidential treatment requested] after the Effective Date, and (ii) are unilaterally designated
by ABX over the objection of the Target Sourcing Group and are (or are required
to be) set forth on Exhibit A-1 during the entire Antigen Designation Term
shall not exceed [Confidential treatment requested] Antigens.  Neither Party shall designate (or attempt or purport to designate)
more Proposed Antigens than the applicable maximum number of Proposed Antigens
set forth above.  Unless otherwise
agreed by the Parties, during the Antigen Designation Term, the maximum number
of Proposed Antigens that are designated as Prioritized Antigens at any one
time shall not exceed [Confidential treatment requested]. 
AZ shall have the right on written notice to ABX to remove the
designation of one or more Proposed Antigens as Prioritized Antigens, while
maintaining such Antigens as Proposed Antigens, and to re-designate such
Proposed Antigens as Prioritized Antigens from time to time during the Antigen
Designation Term.  AZ shall not
designate, at any given time, more Prioritized Antigens than the maximum number
of Prioritized Antigens set forth above.

 

(o)                                 Unless otherwise agreed by the Parties,
AZ shall have the right to substitute one or more Proposed Antigens, from time
to time, by written notice to ABX pursuant to Section 2.2.1(a); provided,
however, that, except as set forth in Section 2.3.1, AZ shall not

 

34

 

have the right to, and shall not, substitute more than [Confidential
treatment requested]
Proposed Antigens in the aggregate in any twelve (12) month period during
the Antigen Designation Term; and provided  further that the
substitution of a Non-Selected Antigen for a Proposed Antigen shall be subject
to Section 2.2.2(e).  Upon ABX’s receipt of notice of such
a substitution of an Antigen, the Antigen that is being replaced in order to substitute another Antigen
as a Proposed Antigen in its place shall be designated a Non-Selected Antigen, shall
be deleted from Exhibit A-2 and neither Party
shall have any further rights or obligations to the other Party with respect to
such Antigen under this Agreement.  AZ
shall not substitute (or attempt or purport to substitute) more Proposed
Antigens than the applicable maximum number of Proposed Antigens in any period
as set forth above.  Unless otherwise
agreed by the Parties, ABX shall not have the right to substitute any Antigen
for a Proposed Antigen.

 

2.2.2                        Collaboration
Antigens.

 

(a)                                  The
Target Review Committee shall, from time to time during the Antigen Designation
Term, review the information provided by the Parties pursuant to
Section 2.2.1 to determine the prioritization of Proposed Antigens and
whether or not to designate a given Proposed Antigen as a Prioritized
Antigen.  For purposes of clarity, a Proposed Antigen does not cease to be a
Proposed Antigen after it becomes a Prioritized Antigen.  If either Party determines that such
information is not sufficient to determine whether a Proposed Antigen should be
designated as a Prioritized Antigen or a Prioritized Antigen designated as a
Collaboration Antigen, such Party shall have the right, but not the obligation,
at its own expense, to conduct further validation activities (without use of
the Licensed IP Rights of the other Party other than the ABX Antigen-Specific
Patent Rights, ABX Antigen-Specific Know-How Rights, AZ Antigen-Specific Patent
Rights or AZ Antigen-Specific Know-How Rights) with respect to such Proposed
Antigen.  Any Information resulting from
such validation activities shall be promptly disclosed to the Target Review
Committee.  In addition to such
validation activities, AZ shall have the right, at its own expense, to review
the proprietary status of the Proposed Antigens and conduct a freedom to
operate analyses to determine whether any Third Party intellectual property
rights might limit or otherwise affect AZ’s ability to fully Exploit any AZ
Products with respect thereto.  ABX shall reasonably cooperate with
reasonable requests of AZ in performing such review, including by providing AZ
with such information in ABX’s possession as AZ may reasonably request to
assist AZ in performing such review.  AZ
shall not be obligated to provide the results of any such review and analyses
to ABX except as provided in Section 4.5.1(c).

 

(b)                                 In
the event that the Target Review Committee or AZ designates a Proposed Antigen
as a Prioritized Antigen, such Proposed Antigen shall be added to Exhibit Q and
the Parties shall promptly develop the
Candidate Drug Target Profile for such Antigen based upon the form profile
attached as Exhibit G.  The CDTP
criteria should be sufficiently powered to predict whether a particular
Antibody has commercial potential as a Licensed Product.  If there is a dispute with respect to the
CDTP criteria for an Antigen, such dispute shall be referred to the Research
Management Committee for resolution, provided that in no event shall the CDTP
criteria for an Antigen be set below the minimum thresholds set forth on
Exhibit G without AZ’s prior consent. 
Once the Target Review Committee has approved the CDTP criteria
for a Prioritized Antigen, or any dispute with respect thereto has been
resolved, ABX shall, in consultation with AZ, promptly prepare a Research
Program Work Plan in accordance
with

 

35

 

Section 2.2.3 for review and approval by the Target Review
Committee, provided that such Research Program Work Plan shall in no
event require fewer activities or resources than what is set forth in the form
Research Program Work Plan attached hereto as Exhibit H without the prior
written consent of AZ, not to be unreasonably withheld; provided, however,
that the obligations of the Parties to conduct the Research Program Work Plan
are subject to the provisions of Sections 2.2.3 and 2.3.  In connection with the preparation and
implementation of the Research Program Work Plan for an Antigen, ABX shall make
available and use Core Technology.  In
connection with the preparation of the CDTP criteria and Research Program Work
Plan for an Antigen, each Party shall promptly disclose to the other (a) such
Party’s Additional Technology and (in the case of ABX) Antibody Technology
(other than Core Antibody Technology) and XenoMouse Methods (other than Core
XenoMouse Technology), in each case that such Party reasonably believes would
be useful for the research and development of Antibodies and Antibody
Equivalents that bind to and are directed against such Antigen, and
(b) any Third Party intellectual property rights and (in the case of ABX)
any Third Party payments associated with the use of such Additional Technology,
Antibody Technology or XenoMouse Methods described in clause (a)
above.  The Parties shall use good faith
efforts to agree on which of such Additional Technology, Antibody Technology
and XenoMouse Methods described in clause (a) above shall be used in the
Research Program Work Plan for such Antigen and such technologies shall be
described in such Research Program Work Plan. 
If, despite such good faith efforts, the Parties are unable to agree on
such Additional Technology, Antibody Technology or XenoMouse Methods described
in clause (a) above, such dispute shall be referred to the Research
Management Committee for resolution.  Once the Target Review Committee has
agreed on the CDTP criteria and Research Program Work Plan for a Prioritized
Antigen, such criteria and plan shall be provided to the Research Management
Committee for final review and approval. 
Notwithstanding the foregoing, the Parties shall have the right,
on mutual written agreement, to approve the CDTP criteria or the Research
Program Work Plan for a Prioritized Antigen in advance of a Research Management
Committee meeting.

 

(c)                                  Once
the Research Management Committee or the Parties have approved the CDTP
criteria and Research Program Work Plan for a Prioritized Antigen, or any
dispute with respect thereto has been resolved, and AZ has completed its review
of the proprietary status of such Prioritized Antigen pursuant to
Section 2.2.2(a), or earlier at the election of AZ, the Research
Management Committee or AZ shall determine whether or not to select such Prioritized
Antigen as a Collaboration Antigen.  If
AZ elects to designate a Proposed Antigen as a Collaboration Antigen prior to
the completion of the CDTP criteria and Research Program Work Plan for such
Antigen, the Parties shall use
good faith efforts to agree upon the CDTP criteria and Research Program Work
Plan for such Antigen promptly after such designation.  Upon written notice to ABX that a
Prioritized Antigen is selected as a Collaboration Antigen, such Antigen shall
be designated a Collaboration Antigen, deleted from Exhibit Q and
Exhibit A-1 or A-2, as applicable, and shall be added to Exhibit B.  If the Research Management Committee or AZ rejects a Prioritized
Antigen, such Antigen shall be designated a Non-Selected Antigen and shall be
deleted from Exhibit Q and Exhibit A-1 or A-2, as applicable, and neither
Party shall have any further rights or obligations to the other Party with
respect to such Antigen under this Agreement. 
Any Prioritized Antigen that is not designated as a Collaboration
Antigen or a Non-Selected Antigen pursuant to this Section 2.2.2(c) shall
remain a Proposed Antigen and, at the election of AZ, a Prioritized Antigen for
further consideration at a later date, subject to Sections 2.2.1(j), 2.2.1(k),
2.2.1(l), 2.2.1(n) or 2.2.2(d).  Upon
the

 

36

 

designation of an Antigen
as a Collaboration Antigen, AZ shall disclose any AZ In-License Information
that is necessary for ABX to conduct its obligations under the Research Program
Work Plan for such Collaboration Antigen. 
[Confidential treatment requested]

 

(d)                                 Notwithstanding
Section 2.2.2(a), [Confidential treatment requested].  If AZ fails to timely designate such
Proposed Antigen as a Collaboration Antigen within the applicable period, then
such Antigen shall be designated a Non-Selected Antigen, shall be deleted from
Exhibit A-1 or A-2, as applicable, and neither Party shall have any
further rights or obligations to the other Party with respect to such Antigen
under this Agreement; provided, however, that if such Antigen
does not become a Committed Antigen under such Existing Collaboration after the
designation of such Antigen as a Non-Selected Antigen, ABX shall promptly
re-propose such Antigen during the Antigen Designation Term under Section 2.2.1(a)
for consideration as a Proposed Antigen. 
[Confidential treatment requested]

 

(e)                                  Notwithstanding anything to the
contrary in this Agreement, if, at any time during the Antigen Designation
Term, either Party identifies additional scientific information that reasonably
indicates that a Non-Selected Antigen has utility for the development of
antibody products, such Party shall have the right to propose such Antigen for
acceptance as a Proposed Antigen pursuant to Section 2.2.1(a), subject to
the caps on substitutions of Proposed Antigens set forth in Sections 2.2.1(o)
and the caps on the number of Collaboration Antigens set forth in
Section 2.2.2(f).  Notwithstanding
Section 2.2.1(b), ABX shall have the right to reject such Antigen if,
after the date such Antigen first became a Non-Selected Antigen, ABX
(i) has granted rights to a Third Party that would preclude ABX from
granting a license to such Antigen to AZ under this Agreement, or [Confidential
treatment requested].

 

(f)                                    Unless otherwise agreed by the Parties,
the maximum number of Antigens that may be designated as Collaboration
Antigens, at any time, shall be thirty-six (36), subject to AZ’s right to
substitute an additional Collaboration Antigen for a Failed Antigen pursuant to
Section 2.3.1 or 4.15.  Except for
the limited right pursuant to Sections 2.3.1 and 4.15 to substitute an
additional Collaboration Antigen for any Failed Antigen that is designated pursuant to Section 2.3.1 or 4.15,
neither the Research Management Committee nor AZ shall have the right to
substitute Collaboration Antigens unless otherwise agreed by the Parties.

 

2.2.3                        Research Program Work Plan.

 

(a)                                  The Research Program Work Plan for each
Antigen shall be sufficiently robust with the goal to (i) deliver
Antibodies that have the greatest likelihood of meeting or exceeding the
applicable CDTP criteria and (ii) generate sufficient data as set forth in
the applicable CDTP criteria to determine whether such Antibodies meet or
exceed such CDTP criteria.  The Research
Program Work Plan for each Antigen shall be approved by the Research Management
Committee in accordance with Section 2.2.2(b).  If AZ has sufficient quantities of the immunogen of an Antigen in
stock or if such immunogen is otherwise uniquely available to AZ, in each case
in such form and purity as determined by the Research Management Committee for
use in the Research Program, then the Research Program Work Plan for such
Antigen shall require AZ to provide such immunogen.  For the avoidance of doubt, AZ shall not be required to provide
any immunogen from other programs (unless such immunogen is uniquely available
to AZ), purchase any immunogen (unless such immunogen is uniquely available to
AZ) or develop

 

37

 

a program to generate any immunogen for use in the Research
Program.  If AZ believes that certain
additional work should be included in the initial Research Program Work Plan
for an Antigen and the Parties cannot agree on whether such additional work
should be included in such Research Program Work Plan, then such additional
work shall be included in such Research Program Work Plan (provided that,
unless ABX otherwise consents in writing, all such additional work for all
Collaboration Antigens does not exceed [Confidential treatment
requested] additional FTEs
in the aggregate for each year for all Research Programs).  The Parties shall share equally in the costs
of up to [Confidential treatment requested] FTEs per year for such additional work and AZ shall bear [Confidential
treatment requested] of the costs
of any additional FTEs over such [Confidential treatment requested] FTEs (up to a total of [Confidential
treatment requested] FTEs in the
aggregate per year for all Research Programs) and any reasonable and verifiable
external expenses (other than FTE costs) required for such additional work
pursuant to Section 9.1.

 

(b)                                 Once the initial Research Program Work
Plan for a Collaboration Antigen has been approved by the Research Management
Committee or the Parties, the Parties may amend a Research Program Work Plan
from time to time upon mutual written agreement to include additional
activities, whereupon the Parties shall each bear [Confidential
treatment requested] of the FTE
costs and expenses for such additional activities pursuant to Section 9.1.  If there is a dispute with respect to such
additional activities, such Research Program Work Plan may be amended by AZ to
include such additional activities (provided
that, unless ABX otherwise consents in writing, all such additional work for
all Collaboration Antigens does not exceed [Confidential treatment
requested] additional FTEs in the
aggregate for each year for all Research Programs).  The Parties shall share equally in the costs of up to [Confidential
treatment requested] FTEs per
year for such additional activities and AZ shall bear [Confidential
treatment requested] of the costs
of any additional FTEs over such [Confidential treatment requested] FTEs (up to a total of [Confidential
treatment requested] FTEs in the
aggregate per year for all Research Programs) and any reasonable and verifiable
external expenses (other than FTE costs) required for such additional
activities pursuant to Section 9.1. 
In connection with the preparation of any such amendment to the
Research Program Work Plan for an Antigen, each Party shall promptly disclose
to the other (i) such Party’s Additional Technology and (in the case of
ABX) Antibody Technology (other than Core Antibody Technology) and XenoMouse
Methods (other than Core XenoMouse Technology), in each case that such Party
reasonably believes would be useful for the research and development of
Antibodies and Antibody Equivalents that bind to and are directed against such
Antigen and (ii) any Third Party intellectual property rights and (in the
case of ABX) Third Party payments associated with the use of such Additional
Technology, Antibody Technology or XenoMouse Methods described in
clause (i) above.  If (x) either Party wishes to
include Additional Technology of the other Party, or (y) AZ wishes to
include any XenoMouse Methods (other than Core XenoMouse Technology) or
Antibody Technology (other than Core Antibody Technology), in each case in such
amendment, the Parties shall use good faith efforts to agree on which of
such Additional Technology, Antibody Technology or XenoMouse Methods described
in clause (x) above shall be used in such Research Program Work Plan,
subject to any Third Party Royalties. 
If, despite such good faith efforts, the Parties are unable to agree on
such Additional Technology, Antibody Technology or XenoMouse Methods described
in clause (x) above, such dispute shall be referred to the Research
Management Committee for resolution.

 

38

 

2.2.4                        Antigen
Designation Term.  The expiration or
termination of the Antigen Designation Term shall not constitute a termination
of this Agreement or any Research Program with respect to a Collaboration
Antigen that was designated prior to the expiration or earlier termination of
the Antigen Designation Term.  Upon the
expiration or earlier termination of the Antigen Designation Term, all Proposed
Antigens that have not been designated as Prioritized Antigens or Collaboration
Antigens shall become Non-Selected Antigens, and neither Party shall have any
further rights and obligations to the other Party with respect to such Antigens
hereunder.  Notwithstanding anything to
the contrary in this Agreement, but subject to Section 2.2.2(f), up to
[Confidential treatment requested] Prioritized Antigens that have been
designated by the Target Review Committee pursuant to Section 2.2.2(a) or
AZ pursuant to Section 2.2.1 prior to the expiration or earlier
termination of the Antigen Designation Term shall continue to be Proposed Antigens,
subject to the exclusivity provisions set forth in this Agreement, until the
first to occur of (i) the date on which it is designated as a
Collaboration Antigen pursuant to Section 2.2.2(c), and (ii) the date on which it is designated as a Non-Selected
Antigen pursuant to Section 2.2.2(c)
or 2.2.2(d).  With respect to each such
Prioritized Antigen, the
Parties shall use good faith efforts to agree upon the CDTP criteria and
Research Program Work Plan for such Antigen pursuant to Section 2.2.2(b)
within [Confidential treatment requested] after the expiration or earlier termination of
the Antigen Designation Term and once such CDTP criteria and Research Program
Work Plan have been finalized in accordance with Section 2.2.2(b), the
Research Management Committee or AZ shall decide whether to select such
Prioritized Antigen as a Collaboration Antigen pursuant to
Section 2.2.2(c), whether or not AZ has completed its review of the
proprietary status of such Antigen.  Upon
the expiration of such additional [Confidential treatment requested] period
(which period shall be extended if the CDTP criteria or Research Program Work
Plan for a Prioritized Antigen has not been agreed upon by the Parties because
of ABX’s delay or because of disputes), all Prioritized Antigens that have not
been designated as Collaboration Antigens shall become Non-Selected Antigens,
and neither Party shall have any further rights and obligations to the other
Party with respect to such Antigens hereunder. 
Notwithstanding the
foregoing, if at the end of the Antigen Designation Term there are Prioritized
Antigens delayed by ABX or for which there are disputes, then the Antigen
Designation Term shall be extended for such Prioritized Antigens and such
Antigens shall not count against the [Confidential treatment requested] Prioritized Antigen cap.  Upon the designation of thirty-six (36)
Collaboration Antigens or such other number as the Parties may mutually agree
in writing, AZ shall have the right to terminate the Antigen Designation Term
in its entirety on written notice to ABX.

 

2.2.5                        Use
of XenoMouse Animals. 
Unless the Parties otherwise mutually agree in writing or as necessary
to use or generate control, polyclonal or surrogate antibodies as research
tools, ABX shall use XenoMouse Animals, and not use other animals or
technologies (other than Core Technology), for the generation of Antibodies and
Antibody Equivalents, and not use any Antibody Equivalents not Derived from the
XenoMouse Animals, under its research activities described in Section 2.2
for any Antigen that is a Collaboration Antigen or which AZ has the right to
designate as a Collaboration Antigen hereunder.

 

2.3                                 Conduct
of Research Program.

 

2.3.1                        Immunization. 
With respect to each Collaboration Antigen, within such period as
determined by the Research Management Committee, if AZ agrees in the

 

39

 

applicable Research Program Work Plan to provide such Collaboration
Antigen, then AZ shall (a) deliver to ABX a reasonable sufficient quantity
of the applicable immunogen, in the form and purity, as set forth in such
Research Program Work Plan, provided that if AZ does not agree to provide such
Collaboration Antigen, ABX shall be responsible for providing such immunogen,
in the form and purity, as set forth in such Research Program Work Plan (and
shall use Commercially Reasonable Efforts to promptly acquire or generate such
immunogen), and (b) provide ABX with such information and data regarding
such Collaboration Antigen (or construct) (including the nucleotide sequence
encoding, and the amino acid sequence of, such Antigen or construct), in each
case as is in the Control of AZ and Reasonably Necessary for ABX to conduct its
obligations under the applicable Research Program.  Promptly after receiving such quantities of such immunogen, in
the form and purity, as set forth in such Research Program Work Plan and
related information from AZ or, if AZ is not providing such Collaboration
Antigen, promptly after ABX acquires or generates such immunogen, in the form
and purity, as set forth in such Research Program Work Plan, or at such later
time as the Research Management Committee may determine, ABX shall immunize
XenoMouse Animals with such Collaboration Antigen (or construct) in accordance
with such Research Program Work Plan and otherwise conduct its obligations
under the Research Program for such Collaboration Antigen.  Notwithstanding anything in this Agreement
to the contrary, ABX shall not be required to conduct any immunizations with
any immunogen or construct of a Collaboration Antigen if ABX reasonably
determines that such immunization constitutes an unreasonable or unnecessary
risk to its personnel, provided that no such risk or similar risk has been
assumed by ABX in the past for any other immunizations on behalf of ABX or any
other Person.  To the extent known to
ABX, ABX shall notify AZ of any such risks with respect to an Antigen prior to
its designation as a Proposed Antigen, Prioritized Antigen or Collaboration
Antigen, whichever is earlier.  In such
event, ABX shall consult with AZ and ABX shall use Commercially Reasonable
Efforts to provide an additional immunogen of such Collaboration Antigen that
does not pose such risk.  If,
notwithstanding the Commercially Reasonable Efforts of ABX, a safe immunogen
cannot be provided with respect to such Collaboration Antigen, then such
Antigen shall cease to be a Collaboration Antigen and shall be designated a
Failed Antigen, and Exhibit B shall be amended accordingly.  In such event (irrespective of whether it
occurs prior to the expiration or earlier termination of the Antigen
Designation Term), the Research Management Committee or AZ shall have the right
to substitute an additional Proposed Antigen as a Collaboration Antigen in
accordance with Sections 2.2.2(b) and 2.2.2(c), which Antigen shall not count
against the Collaboration Antigen totals set forth in Section 2.2.2(f).

 

2.3.2                        Selection of Research Antibodies. 
With respect to each Collaboration Antigen, ABX, in consultation with
the Research Management Committee and using the XenoMouse Technology,
the Antibody Technology and the Additional Technology in accordance with the
applicable Research Program Work Plan, shall use Commercially Reasonable
Efforts to generate Antibodies that meet the binding criteria to such
Collaboration Antigen as is set forth in such Research Program Work Plan.  ABX shall provide the Research Management
Committee with the Information generated under or in connection with the
Research Program on the Antibodies generated pursuant to this Section 2.3
with respect to such Collaboration Antigen (including the data relating to the
screening of such Antibodies and the process and criteria used by ABX to
determine which Antibodies to give to AZ and which Antibodies to retain).  The Parties shall review such information
and data and select a panel of Antibodies (in such number as is set forth in
such Research Program Work Plan, unless the

 

40

 

Parties agree otherwise
(such agreement not to be unreasonably withheld or delayed)) that bind to and
are directed against such Collaboration Antigen and either (a) meet the
binding criteria to such Collaboration Antigen as set forth in such Research
Program Work Plan or (b) otherwise show promise for meeting the applicable
CDTP criteria (the “Research Antibodies”).  If there is a dispute as to whether an Antibody meets the
criteria set forth in clause (a), such dispute shall be submitted to the
Research Management Committee for resolution, and if there is a dispute as to
whether an Antibody meets the criteria set forth in clause (b), such
dispute shall be resolved by AZ.  ABX
shall provide AZ with reasonable research quantities of each Research Antibody
as specified in the applicable Research Program Work Plan, at ABX’s sole cost
and expense, in order for AZ to assess such Antibody and perform its activities
under the applicable Research Program and exercise its rights under this
Article 2.  If AZ requests
additional quantities of such Antibodies to perform such activities or exercise
such rights and ABX does not have sufficient quantities available, ABX shall
provide AZ with the cell line for each such Antibody to enable AZ to produce
such Antibody.  Any Antibodies that were
generated with respect to a Collaboration Antigen that show no binding affinity
to such Collaboration Antigen shall be destroyed unless the Parties agree
otherwise.  If the Parties do not screen
an Antibody or are otherwise unable to determine whether an Antibody meets the
binding criteria set forth in the Research Program Work Plan, such Antibody
shall be retained by ABX for consideration by AZ at a later time.  ABX shall retain any such Antibody and all
Research Antibodies that are generated with respect to a Collaboration Antigen
(and any Antibody Cells and Genetic Materials with respect to such Antibodies),
until such time, if any, that such Collaboration Antigen is designated as a
Failed Antigen subject to Section 4.15 or a Discontinued Antigen subject
to Section 4.5.1, unless the Parties agree otherwise.

 

2.3.3                        Failure
or Discontinuation of Research Programs. 
If, notwithstanding ABX’s Commercially Reasonable Efforts, no Research
Antibodies have been generated that bind to and are directed against a
particular Collaboration Antigen within [Confidential treatment requested], or
such other period as the Parties mutually agree in writing, after initiation of
immunization of XenoMouse Animals with the applicable immunogen pursuant to the
applicable Research Program Work Plan, then, at AZ’s election, such Antigen
shall be designated a Failed Antigen and Exhibit B shall be amended
accordingly.  The Parties shall monitor
the progress of each Research Program and if, at any time during a Research
Program, either Party believes in good faith that any of the scientific
decision points set forth in the applicable Research Program Work Plan cannot
be achieved and that such failure to achieve such scientific decision point
would result in the inability to produce a Candidate Drug, the Parties will
discuss such situation in good faith and mutually decide whether to continue
with such Research Program.  If the
Parties jointly agree not to continue with such Research Program, such
agreement not to be unreasonably withheld or delayed, such Collaboration
Antigen shall be designated a Failed Antigen and Exhibit B shall be
amended accordingly.  If, during a
Research Program, AZ learns of new information with respect to the proprietary
status of the applicable Collaboration Antigen or Antibodies that bind to and
are directed against such Collaboration Antigen that indicates that the Parties
will not be able to successfully complete such Research Program or Exploit
Antibodies generated under such Research Program on commercially reasonable
terms, then the Parties will discuss such information in good faith.  If AZ decides not to continue with such
Research Program based on such information, such Collaboration Antigen shall be
designated a Failed Antigen and Exhibit B shall be amended
accordingly.  [Confidential treatment
requested]

 

41

 

2.3.4                        ABX Activities. 
Except as otherwise expressly set forth in the applicable Research
Program Work Plan, ABX shall be solely responsible, at its sole cost and
expense, for conducting its obligations under such Research Program Work Plan,
which shall include any additional activities pursuant to Section 2.2.3 or
2.6.2, unless otherwise agreed by AZ.  ABX
or its Affiliates shall perform all of its responsibilities under this Section 2.3.4
and shall not enter into any subcontract with a Third Party to perform any such
responsibilities except as expressly permitted in the applicable Research
Program Work Plan or as otherwise agreed to by the Parties, provided in any
event that any such permitted subcontractor shall be reasonably acceptable to
AZ.

 

2.3.5                        AZ Activities. 
Except as otherwise expressly set forth in the applicable Research
Program Work Plan, AZ shall be solely responsible, at its sole cost and
expense, for conducting its obligations under such Research Program Work
Plan.  AZ or its Affiliates shall
perform all of its responsibilities under this Section 2.3.5, provided
that AZ shall have the right to use subcontractors, reasonably acceptable to
ABX, to perform any such responsibilities subject to Section 4.2.3.  Nothing
in this Section 2.3.5 shall restrict AZ’s right, in its sole discretion and at its sole cost and expense,
to Exploit Non-Licensed Products with respect to Collaboration Antigens itself
or with or through one or more Affiliates or Third Parties.

 

2.3.6                        Performance Standards. 
The Parties shall conduct their respective obligations under each
Research Program in accordance with the applicable Research Program Work Plan,
and shall use Commercially Reasonable Efforts to accomplish the objectives
thereof within the time frame set forth therein.  Each Party shall provide the personnel, materials, equipment and
other resources as set forth in each Research Program Work Plan or as otherwise
required to conduct its obligations under each Research Program.  Each Party shall perform its obligations
under each Research Program (whether itself, or with or through its permitted
subcontractors) in accordance with the highest scientific and professional
standards, and in compliance in all material respects with the requirements of
all Applicable Law and good scientific practices.  All activities under the Research Programs shall be conducted
under the general direction of the Research Management Committee.

 

2.3.7                        Non-Performance. 
If either Party (the “Non-Performing Party”) fails to timely
perform its obligations under any Research Program (following the generation
and selection of one or more Research Antibodies in accordance with the
applicable Research Program Work Plan), then the other Party (the “Performing
Party”) shall have right (but not the obligation), on written notice to the
Non-Performing Party, to perform or have performed such activities in the event
that the Non-Performing Party does not commence such activities and thereafter
diligently continue such activities within [Confidential treatment
requested] of such notice.  The Non-Performing Party shall reimburse the
Performing Party for the reasonable out-of-pocket costs incurred and FTEs
employed by the Performing Party to perform or have performed such activities
(determined in accordance with applicable generally accepted accounting
principles consistently applied).  The
Performing Party shall invoice the Non-Performing Party for such amounts at
least quarterly and shall provide the Non-Performing Party with such
documentation in support thereof as the Non-Performing Party may reasonably
request, and the Non-Performing Party shall pay each such invoice within [Confidential
treatment requested] after the
date of receipt of such invoice and supporting documentation.  The performance of the Non-Performing
Party’s activities by or on behalf of the Performing Party

 

42

 

pursuant to this Section 2.3.7 shall in no way affect or
limit any other rights or remedies to which such Party may be entitled in law
or equity; provided, however, in the event of a failure by AZ to
perform its obligations under a Research Program Work Plan, ABX shall not have
any right to terminate such Research Program or this Agreement pursuant to
Section 16.4 as a result of such failure.

 

2.4                                 Records.  Each Party shall maintain records, in
sufficient detail and in a good scientific manner appropriate for patent and
regulatory purposes, which shall be complete and accurate and shall fully and
properly reflect work done and results achieved in the performance of each
Research Program.  Each Party shall have
the right, during normal business hours and upon reasonable notice, to inspect
and copy all such records of the other Party to the extent reasonably required
in connection with the performance of its obligations or exercise of its rights
under this Agreement.  Each Party shall
maintain such records and the information of the other Party contained therein
in confidence in accordance with Article 13.

 

2.5                                 Reports
and Notices. 
In addition to regular communications through the Project Leaders, each
Party shall keep the Research Management Committee informed of the progress of
its activities under each Research Program by means of written reports to the
Research Management Committee.  With
respect to each Collaboration Antigen, within twenty-one (21) days, but in
no event less than seven (7) days, prior to the next Research Management
Committee meeting during the applicable Research Program Term, and within
thirty (30) days following termination of the applicable Research Program,
each Party shall prepare, and provide to the Research Management Committee, a
reasonably detailed written report which shall (a) describe work done and
include all results achieved and data generated in the performance of such
Research Program since the last such report, (b) evaluate the work
performed in relation to the goals of this Agreement and the applicable
Research Program Work Plan, and (c) provide such other information as may
be required by Section 2.3.2 or 2.6.2(d) or the applicable Research
Program Work Plan.

 

2.6                                 Identification of Candidate Drugs.

 

2.6.1                        Working with the Collaboration
Antigens, the primary objective of the Research Programs shall be to identify
Candidate Drugs that bind to and are directed against each Collaboration
Antigen for development and commercialization. 
At the first regularly scheduled Research Management Committee meeting
after completion of all activities set forth in a Research Program and receipt
of the final report from ABX for such Research Program for a Collaboration
Antigen (which report contains the data Reasonably Necessary to determine
whether or not the Research Antibodies with respect to such Collaboration
Antigen meet or exceed the applicable Candidate Drug Target Profile) or at such
earlier time as AZ may elect, the Research Management Committee shall determine
whether or not one or more Research Antibodies to such Collaboration Antigen
meet or exceed the applicable Candidate Drug Target Profile and shall provide
AZ with a recommendation as to whether or not to select one or more such
Research Antibodies as Candidate Drugs. 
Notwithstanding the foregoing, AZ shall have the right to select a
Candidate Drug that binds to and is directed against a Collaboration Antigen
even before the Research Management Committee issues its recommendation with
respect to such Collaboration Antigen. 
If AZ selects at least one Antibody that binds to and is directed
against a Collaboration Antigen as a Candidate Drug, then the license grants
set forth in Article 4

 

43

 

shall apply to all Antibodies that bind to and are directed against
such Collaboration Antigen as Candidate Drugs.

 

2.6.2                        Irrespective of whether a Research
Antibody that binds to and is directed against a Collaboration Antigen achieves
the applicable CDTP criteria, AZ shall have the right, on written notice to ABX
within [Confidential treatment requested] after the later of (i) the completion of the Research Program
with respect to such Collaboration Antigen and the delivery of ABX’s final
report pursuant to Section 2.5, and (ii) the recommendation of the
Research Management Committee with respect to the Research Antibodies that bind
to and are directed against such Collaboration Antigen pursuant to
Section 2.6.1, (A) to request to continue the Research Program for
such Collaboration Antigen or perform any additional activities outside of the
Research Program that are directed in good faith to selecting a Candidate Drug,
(B) to select at least one Research Antibody that binds to and is directed
against such Collaboration Antigen as a Candidate Drug, or (C) not to
select any Research Antibody that binds to and is directed against such
Collaboration Antigen as a Candidate Drug, in each case are more fully
described below:

 

(a)                                  If no Research Antibody that binds to
and is directed against a Collaboration Antigen achieves the applicable CDTP
criteria, AZ shall have the one-time right with respect to such Collaboration
Antigen, prior to the expiration of such [Confidential treatment
requested] period, to request to
continue the Research Program for such Collaboration Antigen, using one or more
existing Research Antibodies (or one or more other Antibodies) that bind to and
are directed against such Collaboration Antigen or new Research Antibodies
generated in an additional immunization of the XenoMouse Animals.  In such event, such Research Program
shall continue and the applicable
Research Program Work Plan for such Collaboration Antigen shall be
amended to include such additional activities (provided that, unless ABX otherwise consents in writing, all such
additional work for all Collaboration Antigens does not exceed [Confidential
treatment requested] in the
aggregate for each year for all Research Programs).  The Parties shall share equally in the costs of up to [Confidential
treatment requested] per year for
such additional work and AZ shall bear [Confidential treatment
requested] of the costs of any
additional [Confidential treatment requested] required for such additional activities pursuant to Section 9.1.

 

(b)                                 If
at least one Research Antibody
that binds to and is directed against a Collaboration Antigen achieves the
applicable CDTP criteria, AZ shall have the one-time right with respect to such
Collaboration Antigen, prior to the expiration of such [Confidential
treatment requested] period, to
request to continue the Research Program or conduct further research and
development for such Collaboration Antigen directed to selecting a Candidate
Drug, using one or more existing Research Antibodies (or one or more other
Antibodies) that bind to and are directed against such Collaboration Antigen.  In such event, the applicable
Research Program shall continue
and, to the extent AZ wishes for ABX to perform additional activities, the
applicable Research Program Work Plan for such Collaboration Antigen shall
be amended to include such additional activities (provided that, unless ABX otherwise consents in writing, all such
additional work for all Collaboration Antigens does not exceed [Confidential
treatment requested] additional
FTEs in the aggregate for each year for all Research Programs).  The Parties will share equally in the costs
of up to [Confidential treatment requested] per year for such additional work and AZ shall bear [Confidential
treatment 

 

44

 

requested] of the costs of any additional [Confidential
treatment requested] over such
[Confidential treatment requested] required for such additional activities pursuant to Section 9.1.

 

(c)                                  If AZ elects to perform, itself or
through an Affiliate or Third Party, any additional activities with respect to
such Collaboration Antigen that are directed to selecting a Candidate Drug that
binds to and is directed against such Collaboration Antigen, it shall have the
right to do so outside the applicable Research Program and any
Information and inventions conceived or generated in connection with such
additional activities shall be Additional Development Program Technology.

 

(d)                                 If
additional activities are performed in accordance with this Section 2.6.2
for a Collaboration Antigen before the Research Management Committee has made a
recommendation with respect to such Collaboration Antigen pursuant to
Section 2.6.1, the Research Management Committee shall defer its
recommendation with respect to such Collaboration Antigen until the next
regularly scheduled meeting of the Research Management Committee after the
Research Management Committee has received complete disclosure of any and all
Information with respect to such additional activities, provided that the
Research Management Committee has had at least fifteen (15) days to review such
Information in advance of such meeting.

 

2.6.3                        Notwithstanding the recommendation of
the Research Management Committee, AZ shall have the right, in its sole
discretion, to select one or more Research Antibodies that bind to and are
directed against each Collaboration Antigen (or one or more other Antibodies)
that bind to and are directed against such Collaboration Antigen as Candidate
Drugs.  ABX acknowledges and agrees that
the final decision as to whether or not to select a Research Antibody (or other
Antibody) that binds to and is directed against a Collaboration Antigen as a
Candidate Drug shall rest with AZ and that such decision will be made by AZ in
accordance with AZ’s standard internal procedures for the nomination and
selection of Candidate Drugs.  In order
to be designated a Candidate Drug, a Research Antibody must meet or exceed the
applicable Candidate Drug Target Profile, unless AZ, in its sole discretion,
decides otherwise.  However, a Research
Antibody that meets or exceeds the applicable Candidate Drug Target Profile
may, nonetheless, not be designated as a Candidate Drug.  Each Research Antibody (or other Antibody)
that binds to and is directed against a Collaboration Antigen for which AZ
selects a Candidate Drug prior to the expiration of the [Confidential
treatment requested] period set
forth in Section 2.6.2 shall be designated a “Candidate Drug”.

 

2.6.4                        With respect to each Collaboration
Antigen, if (a) no Research Antibody achieves the applicable Candidate
Drug Target Profile, and (b) AZ elects not to designate at least one
Research Antibody (or other Antibody) that binds to and is directed against
such Collaboration Antigen as a Candidate Drug prior to the expiration of the
[Confidential treatment requested] period set forth in Section 2.6.2, then unless the applicable
Research Program is continued or such additional activities are performed
pursuant to Section 2.6.2 such Collaboration Antigen shall be designated a
Failed Antigen and Exhibit B shall be amended accordingly.

 

45

 

2.6.5                        With respect to each Collaboration
Antigen, if (a) at least one Research Antibody meets or exceeds the
applicable Candidate Drug Target Profile, and (b) AZ elects not to
designate at least one Research Antibody (or other Antibody) that binds to and
is directed against such Collaboration Antigen as a Candidate Drug prior to the
expiration of the [Confidential treatment requested] period set forth in
Section 2.6.2, then unless the applicable Research Program is continued or
such additional activities are performed pursuant to Section 2.6.2 such
Collaboration Antigen shall be designated a Discontinued Antigen and
Exhibit B shall be amended accordingly. 
AZ shall notify ABX in writing of such designation and ABX shall have
the right for a period of [Confidential treatment requested] from the date of such written
notification to elect, on written notice to AZ (an “Exercise Notice”),
to Exploit any Research Antibody that binds to and is directed against such
Discontinued Antigen.  Upon the receipt
by AZ of an Exercise Notice for a Discontinued Antigen, each such Research
Antibody shall be deemed to be a Candidate Drug and the license grant set forth
in Sections 4.5.1(a)(i), 4.5.1(b), 4.5.1(c) and 4.5.1(d)(i) with respect to
such Discontinued Antigen shall become effective.  In the event ABX delivers an Exercise Notice to AZ with respect
to a Discontinued Antigen, ABX shall have the right to purchase from AZ, at
AZ’s fully burdened cost, any Research Antibodies that bind to and are directed
against such Discontinued Antigen.  In
the event that ABX does not deliver an Exercise Notice to AZ with respect to a
Discontinued Antigen within such one (1)-year period, (a) ABX shall have
no rights with respect to such Antigen under Sections 4.5.1(a)(i), 4.5.1(b),
4.5.1(c) or 4.5.1(d) or any Antibodies that bind to and are directed against
such Antigen, and (b) AZ shall retain all such Antibodies (and any
Antibody Cells and Genetic Materials with respect to such Antibodies), which
Antibodies shall be deemed to be Candidate Drugs, whereupon the license grant
set forth in Section 4.3.1 shall continue in effect subject to
Section 4.5.1(e), provided that (i) ABX shall have no further
obligations with respect to the development, process development or
manufacturing of such Candidate Drugs (other than work previously performed or
obligations incurred under a Contract Services Agreement, Process
Science/Clinical Manufacture Agreement or the Manufacturing and Supply
Agreement), (ii) the diligence obligations set forth in
Section 4.12.1 (other than the reporting obligations set forth in
Section 4.12.1(c)) shall not apply to such Candidate Drugs and
(iii) the milestone payments set forth in Section 9.3.1 and the
royalties payable to ABX under Section 9.3.2 shall apply to such Candidate
Drugs, subject to any reductions required under Section 9.7 or elsewhere
under Article 9.

 

2.7                                 Research
Program Term. 
With respect to each Collaboration Antigen, unless earlier terminated
pursuant to Section 16.2, 16.3 or 16.6, the term of the applicable
Research Program shall continue until the earlier of (a) the completion of
the activities described in the applicable Research Program Work Plan and the
delivery of the final reports with respect thereto pursuant to
Section 2.5, (b) the designation of a Collaboration Antigen as a
Failed Antigen subject to Section 4.15 or a Discontinued Antigen, and
(c) the date that is [Confidential treatment requested] after the first immunization with the
last Collaboration Antigen, provided that such period shall be tolled in the
event of any delays caused by ABX or its Affiliates in performing their
activities under this Agreement or in the event of any bona fide disputes
between the Parties.  The expiration or
termination of the Research Programs shall not constitute a termination of this
Agreement.

 

2.8                                 Project
Leaders. 
Upon the designation of an Antigen as a Prioritized Antigen or
Collaboration Antigen, each Party shall, on written notice to the other Party,
appoint a

 

46

 

person (a “Project Leader”) to coordinate its activities prior
to and under the Research Program for such Antigen.  The Project Leaders shall be the primary contacts between the
Parties prior to and under the applicable Research Program and shall be
responsible for coordinating the day-to-day communications regarding the
performance and results of the activities of the Parties prior to and under
such Research Program.  Each Party shall notify in writing the other
Party as soon as practicable prior to changing its Project Leader with respect
to an Antigen.  ABX shall obtain the
consent of AZ before appointing or replacing a Project Leader, such consent not
to be unreasonably withheld or delayed.

 

2.9                                 Key Positions. 
The qualifications and experience of certain ABX scientific and
technical positions considered by AZ to be important to the conduct of the
Research Programs and Development Programs (the “Key Positions”) are
listed on Exhibit I.  If any persons
serving in Key Positions are to be substituted, then ABX shall give written
notice to AZ thereof, and the Parties shall meet and discuss in good faith
ABX’s plans for the substitution thereof. 
ABX shall not substitute persons to serve in the Key Positions who do
not have the specified qualifications and experience, without the prior written
approval of AZ, which approval shall not be unreasonably withheld or
delayed.  Notwithstanding the foregoing,
ABX shall continue to be responsible for performing its activities under the
Research Programs and Development Programs, and any substitution pursuant to
this Section 2.9 shall not be deemed to be a waiver of any failure of ABX
to conduct its activities under this Agreement.

 

3.                                       RESEARCH
MANAGEMENT COMMITTEE.

 

3.1                                 Composition
of the Committee. 
Each Research Program shall be conducted under the direction and
supervision of the Research Management Committee, which shall be comprised of
an equal number of representatives from ABX and AZ with the requisite experience
and seniority to enable them to make decisions on behalf of the Parties with
respect to the Research Programs.  The
initial representatives of the Research Management Committee are set forth on
Exhibit J.  Each Party may substitute one or more of its
representatives, in its sole discretion, effective upon written notice to the
other Party of such change, provided that any such substitute representative
shall have substantially the equivalent experience and seniority as the
representative that such Person replaces.

 

3.2                                 Meetings.  ABX shall be responsible for organizing and
chairing the Research Management Committee Meetings.  The Research Management Committee shall meet not less than once
each calendar quarter during the Antigen Designation Term and any Research
Program Term, on such dates and at such times as agreed to by ABX and AZ.  In person meetings shall be at such
locations as the Parties mutually agree. 
Upon the mutual agreement of the Parties, any such meeting may be
conducted by telephone or videoconference; provided, however,
that not less than every other such meeting shall be in person.  At such meetings, the Research Management
Committee shall discuss the activities conducted under each Research Program
and the results thereof.  Each Party may
permit visitors, including its employees and agents, other than the members of
the Research Management Committee to meetings of the Research Management
Committee as the Parties mutually agree in writing prior to such meetings.  Each Party shall be responsible for its own
costs in connection with the meetings of the Research Management
Committee.  In the event of a dispute
that is to be referred to the Research Management Committee under this
Agreement, either Party has the right to request a

 

47

 

special meeting of the Research Management Committee, which shall
occur promptly following such request.

 

3.3                                 Purpose
of Committee. 
The Research Management Committee shall be responsible for supervising
and directing the Research Programs.  As
such, the Research Management Committee may recommend to the Parties proposed
modifications to any Research Program Work Plan from time to time; provided,
however, that, except as otherwise provided in Section 2.2.2(b),
2.2.3 or 2.6.2, no such modification shall be effective unless approved in
writing by a duly authorized signatory of each Party.  Any approval, determination or other action agreed to by the
Research Management Committee, with ABX and AZ each having one (1) vote, shall
be the approval, determination or other action of the Research Management
Committee.

 

3.4                                 Areas
of Responsibility. 
The Research Management Committee’s responsibilities shall include:
(a) selecting Collaboration Antigens from Prioritized Antigens or other
Proposed Antigens and determining where such Collaboration Antigens will be
sourced from, (b) reviewing, revising and approving the Research Program
Work Plan prepared by ABX for each Collaboration Antigen and supervising the
Research Program Work Plan for each Collaboration Antigen, (c) reviewing,
revising and approving the CDTP criteria; (d) establishing a Collaboration
Antigen portfolio strategy that will prioritize the Research Programs
with respect to various Collaboration Antigens and the research activities
within each such Research Program;
(e) supervising, directing, reviewing and reporting on the Research
Programs to ABX and AZ; (f) establishing such subcommittees as deemed
appropriate by the Research Management Committee and (g) taking such other actions as are set forth in
this Article 3 or as the Parties may unanimously agree.

 

3.5                                 Minutes.  Within fourteen (14) days following each
Research Management Committee meeting, a representative of a Party to the
Research Management Committee, on an alternating basis, shall prepare and
provide to each Party a copy of the minutes of such meeting which shall set
forth, in reasonably specific detail, any approval, determination or other
action agreed to by all of the members of the Research Management Committee,
provided that such minutes are reasonably acceptable to both Parties.

 

3.6                                 Disputes.  Any disputes or disagreements arising in, or
referred to, the Research Management Committee that cannot be resolved by the
members of the Research Management Committee shall be referred to the Chief
Executive Officer of ABX and the Executive Vice President of Discovery (or one
of his or her direct reports) of AZ for resolution.  If such senior officers are unable to
resolve any such dispute within [Confidential treatment requested] following
the date of the meeting at which such dispute first arose, then (a) if
such dispute relates to whether to designate a Proposed Antigen as a
Prioritized Antigen, whether to designate a Prioritized Antigen as a Collaboration
Antigen, the prioritization of Proposed Antigens and Prioritized Antigens for
review, the selection of an Antibody as a Research Antibody, the prioritization
of Research Programs with respect to Collaboration Antigens, the overall
allocation of resources among the Research Programs, whether AZ is to perform
an activity under a Research Program Work Plan, including providing quantities
of Antigen for immunization pursuant to Section 2.3.1, whether or not to designate a Research
Antibody as a Candidate Drug or whether to perform additional work under a
Research Program Work Plan

 

48

 

(provided in no event shall ABX be required to perform more than [Confidential
treatment requested] of
such additional work in any year in the aggregate as provided for herein,
without its consent), AZ shall have the deciding vote, (b) if such dispute
relates to any other matter other than a Party’s interpretation of, or
any allegation of breach of, this Agreement, including a dispute as to what the CDTP criteria should be
for a particular Antigen, whether or not a Research Antibody meets or exceeds
the applicable Candidate Drug Target Profile, then either Party shall have the
right to refer such dispute to an Expert for expedited arbitration as
set forth in Section 3.6.1,
and (c) if such dispute relates to a Party’s interpretation of, or
any allegation of breach of, this Agreement, then either Party shall have the
right to litigate such dispute in accordance with Section 20.1 or to pursue
such other dispute resolution mechanism as the Parties may agree. 
The Parties acknowledge and agree that, subject to the provisions of
this Section 3.6, ABX shall have the right to make day-to-day operational
decisions regarding the implementation of each Research Program within the
scope of the applicable Research Program Work Plan.

 

3.6.1                        With
respect to disputes under Section 3.6(b) above that are not resolved by
the applicable senior officers of the Parties pursuant to Section 3.6 or
any disputes with respect to Additional Technology, Antibody Technology (other
than Core Antibody Technology) or XenoMouse Methods (other than Core XenoMouse
Technology) to be included in the applicable Research Program Work Plan or
Development Program Work Plan pursuant to Sections 2.2.2(b), 2.2.3(b) and
5.3.1, upon written request by either Party to the other Party, the Parties
shall appoint a mutually acceptable, independent Third Party to resolve such
dispute; provided, however, that in no event shall the Parties utilize any
Additional Technology, XenoMouse Methods (other than Core XenoMouse Technology)
or Antibody Technology (other than Core Antibody Technology) in a Research
Program Work Plan or Development Program Work Plan over the objection of AZ.  Such independent Third Party shall have the
scientific, technical and regulatory experience with respect to the research
and development of antibody-based products necessary to resolve such dispute
(an “Expert”).  If the Parties
cannot agree upon an Expert within [Confidential treatment requested] following
the date of the meeting at which such dispute first arose, then such Expert
shall be appointed by the Chief
Executive Officer of ABX and the Executive Vice President of Discovery of AZ,
provided that if such Parties cannot agree, each Party shall appoint one Expert
and such Experts shall jointly appoint a third Expert, which Expert shall be
the sole Expert for the resolution of such dispute.  Within [Confidential treatment requested]
after the appointment of such Expert, the Parties shall each simultaneously
submit to the Expert a written statement of their respective positions on such
dispute.  Upon the receipt of the
written statements of both Parties, the Expert shall promptly provide each
Party with the written statement of the other Party.  Each Party shall have [Confidential treatment requested] from
receipt of the other Party’s submission to submit a written response thereto,
which shall include any scientific and technical information in support
thereof.  The Expert shall have the
right to meet with the Parties, either alone or together, as necessary to make
a determination.  No later than
[Confidential treatment requested] after the designation of the Expert, the
Expert shall make a determination by selecting the resolution proposed by one
of the Parties that as a whole is the most fair and reasonable to the Parties
in light of the totality of the circumstances and shall provide the Parties
with a brief written statement setting forth the basis of the determination in
connection therewith.  The decision of
the Expert shall be final and conclusive, absent manifest error.  The
fees and costs of such Expert shall be borne by the Party whose proposed
resolution was not accepted by the Expert.

 

49

 

3.7                                 Target Review
Committee.   The Parties shall establish a joint target review
committee (the “Target Review Committee”), which shall oversee the
review of Proposed Antigens, the selection of Prioritized Antigens and the
recommendation of Collaboration Antigens for approval by the Research
Management Committee.  The chairperson
of the Target Review Committee shall be appointed by AZ (the “Chair”).  Each Party shall appoint at least
three (3) representatives with appropriate experience and seniority to
contribute to the review processes.  The
Target Review Committee shall meet not less than once every six (6) months
during the Antigen Designation Term at an appropriate venue to be decided by
AZ.  Prior to each meeting of the Target
Review Committee, the Parties shall agree in writing on which representatives
of each Party shall attend such meeting. 
The Target Review Committee shall endeavor to reach decisions by
consensus, provided that the Chair shall have final decision-making authority
with respect to the attendees for each Target Review Committee meeting, the
selection of Prioritized Antigens and the recommendation of Collaboration
Antigens to the Research Management Committee. 
Disputes concerning either the CDTP criteria or, subject to
Section 2.2.2(b), the Research Program Work Plan for a Prioritized Antigen
shall be referred to the Research Management Committee for resolution.  Each Party shall be responsible for its own
costs in connection with the meetings of the Target Review Committee.

 

4.                                       LICENSES/GRANTS
OF RIGHTS 

 

4.1                                 Collaboration
Antigens. 
With respect to each Collaboration Antigen until such time, if any, as
such Collaboration Antigen becomes a Discontinued Antigen or Failed Antigen,
ABX and its Affiliates hereby grant to AZ and its Affiliates: (a) an
exclusive, worldwide right and license (with the right to grant sublicenses through multiple tiers of
sublicensees) under (i) the Licensed ABX IP Rights (other than the
XenoMouse Know-How Rights and XenoMouse Patent Rights) and the ABX Process
Know-How Rights and ABX Process Patent Rights, and (ii) subject to the
Supplementary XenoMouse Agreement, the XenoMouse Know-How Rights and XenoMouse
Patent Rights, in each case to Exploit Licensed Products that bind to and are directed
against such Collaboration Antigen for use in the Commercial Field subject to
Sections 4.12 and 9.3; (b)(i) an exclusive, worldwide right and
license (with the right to grant
sublicenses through multiple tiers of sublicensees) under the ABX Subsequent
Antigen-Specific Know-How Rights, ABX Subsequent Antigen-Specific Patent
Rights, ABX’s rights in the Collaboration Know-How Rights and Collaboration
Patent Rights, ABX Oncology Know-How Rights, ABX Oncology Patent Rights, ABX
Other Know-How Rights and ABX Other Patent Rights, and (ii) an exclusive,
worldwide right and license (with the right to grant sublicenses through
multiple tiers of sublicensees) under the ABX Prior Antigen-Specific Know-How
Rights and ABX Prior Antigen-Specific Patent Rights (and the other Licensed ABX IP Rights solely to the extent necessary
to enable AZ to utilize Additional Technology applicable to such Collaboration
Antigen, Collaboration Technology, Oncology Technology, Other Technology and
Antigen-Specific Technology), in each case to Exploit Non-Antibody Products with respect to such Collaboration
Antigen for use in the Commercial Field subject to Section 9.3.4; (c) an exclusive, worldwide
right and license (with the right
to grant sublicenses through multiple tiers of sublicensees) under the Licensed
ABX IP Rights (other than the XenoMouse Know-How Rights, (except solely to the
extent necessary to enable AZ to utilize Additional Technology applicable to
such Collaboration Antigen, Antibody Technology, Collaboration Technology,
Oncology Technology, Other Technology and Antigen-Specific Technology to
Exploit Non-Licensed Products (other than Non-Antibody Products)) XenoMouse

 

50

 

Patent Rights, ABX Process Know-How Rights and ABX Process Patent
Rights) to Exploit Non-Licensed Products (other than Non-Antibody Products)
that bind to and are directed against such Collaboration Antigen for use in the
Commercial Field subject to the last sentence of Section 4.4.1(a) and to
Section 9.3.4, provided that in each case ABX retains such rights as are
necessary to perform its activities under this Agreement.  AZ covenants to ABX that, during the term of
this Agreement, it will not exercise its rights under such license grant in any
way that is inconsistent with the remaining license grants set forth in
Sections 4.2, 4.3 and 4.4.  Any
breach of this Section 4.1 shall be a material breach of a material
obligation of AZ and shall give rise to the right to terminate under
Section 16.4, which right shall be in addition to any other rights and
remedies that may be available.

 

4.2                                 Research and Development Program Licenses. 

 

4.2.1                        By ABX. 
Subject to the terms and conditions of this Agreement, with respect to
each Collaboration Antigen (other than Discontinued Antigens or Failed
Antigens), prior to the designation of a Candidate Drug that binds to and is
directed against such Collaboration Antigen, ABX and its Affiliates hereby
grant to AZ an exclusive, worldwide right and license (without the right
to grant sublicenses except as set forth in Section 4.2.3) under and to
the Licensed ABX IP Rights
applicable to such Collaboration Antigen, to conduct its obligations, and
exercise its rights, under the applicable Research Program, Development Program
and Articles 2 and 5; provided, however, that ABX retains the
right to conduct its activities under such Research Program and, prior to the
designation of a Candidate Drug that binds to and is directed against such
Collaboration Antigen, such Development Program.

 

4.2.2                        By AZ.  Subject to the terms and
conditions of this Agreement, with respect to each Collaboration Antigen (other
than Discontinued Antigens or Failed Antigens), prior to the designation of a
Candidate Drug that binds to and is directed against such Collaboration
Antigen, AZ and its Affiliates hereby grant to ABX an exclusive,
worldwide right and license (without the right to grant sublicenses except as
set forth in Section 4.2.3) under and to the Licensed AZ IP Rights applicable to such Collaboration Antigen, to
conduct its obligations, and exercise its rights, under the applicable Research
Program and Development Program; provided, however, that AZ
retains the right to conduct its activities under such Research Program and,
prior to the designation of a Candidate Drug that binds to and is directed
against such Collaboration Antigen, such Development Program and exercise its
rights under Articles 2 and 5.

 

4.2.3                        Sublicenses. 
The licenses granted under this Section 4.2 shall only include the
right to grant sublicenses to Affiliates; provided, however, that
either Party shall have the right to engage Third Party subcontractors to
perform such Party’s obligations under the Research Programs solely to the
extent such subcontracting is provided for in Sections 2.3.4 and 2.3.5, and to
transfer the Research Antibodies (and any other Antibodies) that bind to and
are directed against the applicable Collaboration Antigen in the form or
formulations developed under the applicable Research Program or Development Program,
the applicable Collaboration Technology and Antigen-Specific Technology to
Third Party subcontractors performing such obligations for and on behalf of
such Party under the terms of written agreements having provisions regarding
confidentiality, non-use and ownership of intellectual property consistent

 

51

 

with those contained herein prohibiting the further transfer or
disclosure of such Information, inventions or materials (other than to a Party
hereto or its Affiliates).

 

4.3                                 Licensed
Products.

 

4.3.1                        Licenses.

 

(a)                                  Subject to the terms and conditions of
this Agreement, with respect to each Collaboration Antigen (other than
Discontinued Antigens and Failed Antigens) with respect to which a Candidate
Drug has been selected pursuant to Section 2.6.3, ABX and its Affiliates
hereby grant to AZ the exclusive (including with regard to ABX and its
Affiliates), worldwide, right and license (with the right to grant sublicenses through multiple tiers of sublicensees)
under the Licensed ABX IP Rights applicable to such Collaboration Antigen to
Exploit Candidate Drugs that bind to and are directed against such
Collaboration Antigen for use in the Commercial Field and, after AZ has
delivered an Election Notice to ABX with respect to such Collaboration Antigen,
all Licensed Products  that
bind to and are directed against such Collaboration Antigen for use in
the Commercial Field.

 

(b)                                 Subject to the terms and conditions of
this Agreement, with respect to each Collaboration Antigen (other than
Discontinued Antigens and Failed Antigens) with respect to which a Candidate
Drug has been selected pursuant to Section 2.6.3, ABX and its Affiliates
hereby grant to AZ the exclusive (including with regard to ABX and its
Affiliates) license and right of
reference (with the right to grant sublicenses through multiple tiers of
sublicensees as set forth in Section 4.3.2) under ABX’s and its
Affiliates’ rights, titles and interests in and to any Registrations (and the
data included or referenced therein), to the extent not otherwise assigned
pursuant to Section 5.7.4 or 7.12, to Exploit Candidate Drugs and Licensed
Products that bind to and are directed against such Collaboration Antigen for
use in the Commercial Field.

 

4.3.2                        Sublicenses.

 

(a)                                  Prior
to an Election Notice with respect to a Collaboration Antigen, AZ shall not
grant sublicenses to any Person (other than an Affiliate of AZ) under the
licenses granted under Section 4.3.1 with respect to such Candidate Drugs
that bind to and are directed against such Collaboration Antigen.  Any purported sublicense under the licenses
granted under Section 4.3.1 (other than to an Affiliate) prior to the
applicable Election Notice shall be void ab
initio and of no force and effect. 
Any breach of this Section 4.3.2(a) shall be a material breach of a
material obligation of AZ and shall give rise to the right to terminate under
Section 16.4, which right shall be in addition to any other rights and
remedies that may be available.

 

(b)                                 Once
AZ has provided an Election Notice with respect to a Collaboration Antigen
pursuant to Section 5.9, the restrictions in Section 4.3.2(a) shall
cease and AZ may, in its sole discretion, grant sublicenses under the licenses through multiple tiers of
sublicensees, to its Affiliates and to any other Persons.  Each
sublicense under Section 4.3.1 shall be subject to the terms and
conditions of this Agreement.  AZ shall
provide ABX with written notice prior to granting any such sublicense (other
than a sublicense to an Affiliate or in

 

52

 

connection with a co-promotion or a co-marketing arrangement, a
cross-license in connection with a bona fide intellectual property dispute or
any other strategic relationship (such as, by way of example, a product or
disease alliance or a joint venture or other collaboration)), and ABX shall
have the right to submit a bid for such sublicense.  If AZ elects to enter into a sublicense with a Third Party, AZ
shall provide ABX with prompt written notice identifying the sublicensee and
the Collaboration Antigen.

 

(c)                                  For the avoidance of doubt, AZ shall
have the right to engage Third Party subcontractors in connection with the
Exploitation of Licensed Products, and to transfer (i) applicable Research
Antibodies (and any other Antibodies) that bind to and are directed against the
applicable Collaboration Antigen in the form or formulations developed under
the applicable Research Program or Development Program, Licensed Products,
Collaboration Technology, Oncology Technology and Other Technology,
(ii) the Antibody Technology and Additional Technology in each case to the
extent that it is specific to such Licensed Products, and (iii) applicable
Antigen-Specific Technology included in the Licensed ABX IP Rights to such
Third Party subcontractors performing activities for and on behalf of AZ under
the terms of written agreements having provisions regarding confidentiality,
non-use and ownership of intellectual property consistent with those contained
herein prohibiting the further transfer or disclosure of such Information,
inventions or materials (other than to a Party hereto or its Affiliates).

 

4.3.3                        Covenant by ABX. 
During the term of this Agreement, ABX and its Affiliates shall not, and
shall not grant any license or right to any Third Party under the Licensed ABX
IP Rights to, Exploit Antibody Equivalents that bind to and are directed
against, or any other products with respect to, a Collaboration Antigen with
respect to which AZ has timely delivered, or still has the right to deliver, an
Election Notice to ABX pursuant to Section 5.9.  Any grant of any such license or right by ABX shall be
void ab initio and of no force
and effect.  Any breach of this
Section 4.3.3 shall be a material breach of a material obligation of ABX
and shall give rise to the right to terminate under Section 16.3, which
right shall be in addition to any other rights and remedies that may be
available.

 

4.4                                 Non-Licensed
Products.

 

4.4.1                        Licenses.

 

(a)                                  Subject to the terms and conditions of
this Agreement, with respect to each Collaboration Antigen (other than
Failed Antigens or Discontinued Antigens), ABX and its Affiliates hereby grant to AZ (i) the exclusive
(including with regard to ABX and its Affiliates), worldwide, right and
license (with the right to grant
sublicenses through multiple tiers of sublicensees) under ABX’s right, title
and interest in and to the Collaboration Know-How Rights and Collaboration
Patent Rights, ABX Oncology Know-How Rights, ABX Oncology Patent Rights, ABX
Other Know-How Rights, ABX Other Patent Rights and the ABX Subsequent
Antigen-Specific Know-How Rights and ABX Subsequent Antigen-Specific Patent
Rights applicable to such Collaboration Antigen (and the other Licensed ABX IP
Rights solely to the extent necessary to enable AZ to utilize Collaboration
Technology, Oncology Technology, Other Technology and Antigen-Specific
Technology), and (ii) the exclusive, worldwide right and license
(with the right to grant sublicenses through multiple tiers of sublicensees)
under the ABX

 

53

 

Prior Antigen-Specific
Know-How Rights and ABX Prior Antigen-Specific Patent Rights applicable to such
Collaboration Antigen, in each case to Exploit Non-Antibody Products with respect to such Collaboration
Antigen for use in the Commercial Field; provided, however,
that the license grant under clause (ii) above is subject to the Parties’
prior written agreement on the financial terms of such license pursuant to the
following sentence.  Promptly following the designation of an Antigen as a
Collaboration Antigen, the Parties shall negotiate in good faith to
determine the financial terms on which the license grant to AZ under
clause (ii) above shall be made.

 

(b)                                 Subject to the terms and conditions of
this Agreement, with respect to each Collaboration Antigen (other than
Discontinued Antigens and Failed Antigens) for which AZ has delivered an
Election Notice, ABX and its Affiliates hereby grant to AZ the exclusive (including
with regard to ABX and its Affiliates), worldwide, right and license (with the right to grant sublicenses
through multiple tiers of sublicensees) under the Licensed ABX IP Rights (other
than the XenoMouse Know-How Rights and (except solely to the extent necessary to
enable AZ to utilize Additional Technology applicable to such Collaboration
Antigen, Antibody Technology, Collaboration Technology, Oncology Technology,
Other Technology and Antigen-Specific Technology) XenoMouse Patent Rights)
applicable to such Collaboration Antigen to Exploit Non-Licensed Products
(other than Non-Antibody Products) with respect to such Collaboration Antigen
for use in the Commercial Field.

 

(c)                                  Subject to Sections 4.5.1(d) and 5.7.2
and the other terms and conditions of this Agreement, with respect to each
Collaboration Antigen, ABX and its Affiliates hereby grant to AZ the exclusive (including
with regard to ABX and its Affiliates) license and right of reference (with the right to grant sublicenses
through multiple tiers of sublicensees as set forth in Section 4.3.2)
under ABX’s and its Affiliates’ rights, titles and interests in and to any
Registrations (and the data included or referenced therein), to the extent not
otherwise assigned pursuant to Section 5.7.4 or 7.12, to Exploit Non-Licensed
Products with respect to such Collaboration Antigen for use in the Commercial
Field.

 

4.4.2                        Sublicenses. 
The licenses granted under Section 4.4.1 shall include the right to
grant sublicenses under the licenses through multiple tiers of sublicensees,
to its Affiliates and to any other Persons. 
Each sublicense under
Section 4.4.1 shall be subject to the terms and conditions of this
Agreement.  If AZ elects to enter into
such a sublicense with a Third Party, AZ shall provide ABX with prompt written
notice identifying the sublicensee and the Collaboration Antigen.  For the avoidance of doubt, subject to the
provisions of this Agreement, AZ shall have the right to engage Third Party
subcontractors in connection with the Exploitation of Non-Licensed Products,
and to transfer (a) applicable Research Antibodies (and any other
Antibodies) that bind to and are directed against the applicable Collaboration
Antigen in the form or formulations developed under the applicable Research
Program or Development Program, Licensed Products, Collaboration Technology,
Oncology Technology and Other Technology, (b) the Antibody Technology and
Additional Technology in each case to the extent that it is specific to such
Non-Licensed Products, and (c) applicable Antigen-Specific Technology
included in the Licensed ABX IP Rights, to such Third Party subcontractors
performing activities for and on behalf of AZ under the terms of written
agreements having provisions regarding confidentiality, non-use and ownership
of intellectual property consistent

 

54

 

with those contained herein prohibiting the further transfer or
disclosure of such Information, inventions or materials (other than to a Party
hereto or its Affiliates).

 

4.5                                 Discontinued
Antigens.

 

4.5.1                        ABX Products.

 

(a)                                  Subject to the terms and conditions of
this Agreement, with respect to each Discontinued Antigen (i) for which
ABX delivers an Exercise Notice to AZ, AZ and its Affiliates hereby grant to
ABX an exclusive (including with regard to AZ and its Affiliates),
worldwide, right and license (with
the right to grant sublicenses through multiple tiers of sublicensees as
provided in Section 4.5.3) under AZ’s right, title and interest in and to
the Collaboration Know-How Rights and Collaboration Patent Rights (and the
other Licensed AZ IP Rights solely to the extent necessary to enable ABX to
utilize the applicable Collaboration Technology) applicable to such
Discontinued Antigen solely to Exploit any Candidate Drug generated pursuant to
Section 2.3.1 (or any Antibody disclosed or delivered to AZ under
Section 2.2.1) that binds to
and is directed against such Discontinued Antigen, in the form and
formulations developed under the applicable Research Program or Development
Program, for use in the
Commercial Field, and (ii) AZ and its Affiliates hereby grant to ABX a
non-exclusive, worldwide right and license (with the right to grant sublicenses through multiple tiers of
sublicensees as provided in Section 4.5.3) under AZ’s right, title and
interest in and to the Collaboration Know-How Rights and Collaboration Patent
Rights (and the other Licensed AZ IP Rights solely to the extent necessary to
enable ABX to utilize the applicable Collaboration Technology) applicable to
such Discontinued Antigen to Exploit ABX Products (but not Antibodies,
Candidate Drugs or Licensed Products) that bind to and are directed against
such Discontinued Antigen for use in the Commercial Field; provided, however,
that AZ retains the right to Exploit Non-Licensed Products with respect to such
Discontinued Antigen.

 

(b)                                 Subject to the terms and conditions of
this Agreement, with respect to each Discontinued Antigen for which ABX
delivers an Exercise Notice to AZ, AZ and its Affiliates hereby grant to ABX a
non-exclusive, worldwide right and license (with the right to grant
sublicenses through multiple tiers of sublicensees in connection with the
Exploitation of the applicable Candidate Drugs) under the Additional
Development Program Know-How Rights, Additional Development Program Patent
Rights, Development Program Know-How Rights, Development Program Patent Rights,
AZ Prior Antigen-Specific Know-How Rights, AZ Prior Antigen-Specific Patent
Rights and AZ’s rights in the Additional Know-How Rights and Additional Patent
Rights applicable to such Discontinued Antigen solely to Exploit Candidate
Drugs generated pursuant to
Section 2.3.1 (or any Antibody disclosed or delivered to AZ under
Section 2.2.1) that
bind to and are directed against such Discontinued Antigen, in the form and
formulations developed under the applicable Research Program or Development
Program, for use in the Commercial Field; provided, however, that
the license grant under the AZ Prior Antigen-Specific Know-How Rights and AZ
Prior Antigen-Specific Patent Rights is subject to the Parties’ prior written
agreement on the financial terms of such license pursuant to the following
sentence.  Immediately after the
delivery of an Exercise Notice to AZ with respect to a Discontinued Antigen, or
earlier as requested by ABX, the Parties shall negotiate in good faith to
determine the financial terms on which such license grant under the AZ Prior
Antigen-Specific Know-How Rights and AZ Prior Antigen-Specific Patent Right to
ABX shall be made.

 

55

 

(c)                                  Subject to the terms and conditions of
this Agreement, with respect to each Discontinued Antigen for which ABX
delivers an Exercise Notice to AZ, AZ shall make available to ABX the results
of any freedom to operate analysis performed by AZ pursuant to
Section 2.2.2(a) for such Antigen, provided that AZ shall not be obligated
to disclose any legal opinions in connection with such freedom to operate
analysis, and any Information included in the Development Program Technology
and Additional Development Program Technology that relate to any Candidate Drug
generated pursuant to Section 2.3.1 (or any Antibody disclosed or
delivered to AZ under Section 2.2.1) that binds to and is directed against such Discontinued Antigen, in
each case that is Reasonably Necessary in order to Exploit such Candidate Drug
that binds to and is directed against such Discontinued Antigen for use in the
Commercial Field; provided, however, that AZ retains the right to
use such results and retains its rights under the Development Program
Technology and Additional Development Program Technology for all other
purposes.

 

(d)                                 Subject to the terms and conditions of
this Agreement, (i) with respect to each Discontinued Antigen for which
ABX delivers an Exercise Notice to AZ, AZ and its Affiliates hereby grant to
ABX the exclusive license
and right of reference (with the right to grant sublicenses through multiple
tiers of sublicensees as set forth in Section 4.5.3) under AZ’s and its
Affiliates’ rights, titles and interests in and to any Registrations (and the
data included or referenced therein) for any Candidate Drug that binds to and
is directed against such Discontinued Antigen solely to Exploit ABX Products
containing such Candidate Drugs generated pursuant to Section 2.3.1 (or
any Antibody disclosed or delivered to AZ under Section 2.2.1) that bind to and are directed against
such Discontinued Antigen for use in the Commercial Field, and (ii) with
respect to each Discontinued Antigen, AZ and its Affiliates hereby grant to ABX
the non-exclusive license
and right of reference (with the right to grant sublicenses through multiple
tiers of sublicensees as set forth in Section 4.5.3) under AZ’s and its
Affiliates’ rights, titles and interests in and to any Registrations (and the
data included or referenced therein) for any Candidate Drug that binds to and
is directed against such Discontinued Antigen solely to Exploit ABX Products
(other than ABX Products containing such Candidate Drugs generated pursuant to
Section 2.3.1 (or any Antibody disclosed or delivered to AZ under
Section 2.2.1) that bind to
and are directed against such Discontinued Antigen for use in the Commercial
Field); provided, however, that AZ retains the right to use such
Registrations (and the data included or referenced therein) to Exploit
Non-Licensed Products.

 

(e)                                  Subject to the terms and conditions of
this Agreement, with respect to each Discontinued Antigen for which ABX fails
to deliver an Exercise Notice to AZ within the applicable [Confidential
treatment requested] period, the
exclusive licenses and rights under Section 4.3.1 granted by ABX and its
Affiliates under the Licensed ABX IP Rights applicable to such Discontinued
Antigen to Exploit any Candidate Drug that binds to and is directed against
such Discontinued Antigen for use in the Commercial Field shall continue (with
the right to grant sublicenses through multiple tiers of sublicensees as
provided in Section 4.5.3, except that the licenses and rights to
commercialize such Candidate Drugs may only be exercised by one or more
sublicensees); provided, however, that ABX shall retain the right
to Exploit other ABX Products (but not Antibodies, Candidate Drugs or Licensed
Products) that bind to and are directed against such Discontinued Antigen.

 

56

 

4.5.2                        Non-Licensed Products. 
Subject to the terms and conditions of this Agreement, with respect to
each Discontinued Antigen, ABX and its Affiliates hereby grant to AZ the
(a) non-exclusive, worldwide right and license (with the right to grant sublicenses
through multiple tiers of sublicensees as provided in Section 4.5.3) under
ABX’s right, title and interest in and to the Collaboration Patent Rights and
Collaboration Know-How Rights applicable to such Discontinued Antigen (and
under the Licensed ABX IP Rights solely to the extent necessary to enable AZ to
utilize Collaboration Technology applicable to such Discontinued Antigen) to
Exploit all Non-Licensed Products (other than Non-Antibody Products), and
(b) exclusive, worldwide right and license (with the right to grant
sublicenses through multiple tiers of sublicensees) under ABX’s right, title and interest in and
to the Collaboration Patent Rights and Collaboration Know-How Rights and the
ABX Prior Antigen-Specific Know-How Rights and ABX Prior Antigen-Specific
Patent Rights applicable to such Discontinued Antigen (and under the Licensed ABX IP Rights solely to the extent necessary
to enable AZ to utilize Collaboration Technology and Antigen-Specific
Technology applicable to such Discontinued Antigen) to Exploit Non-Antibody Products, in each
case with respect to such Discontinued Antigen for use in the Commercial Field;
provided, however, that the license grant under clause (b)
above with respect to the ABX Prior Antigen-Specific Know-How Rights and ABX
Prior Antigen-Specific Patent Rights is subject to the financial terms agreed
to by the Parties pursuant to the last sentence of Section 4.4.1(a).

 

4.5.3                        Sublicenses. 
The licenses granted under Sections 4.5.1 and 4.5.2 shall include the
right to grant sublicenses under the licenses through multiple tiers of
sublicensees, to Affiliates and to any other Persons.  Each sublicense
under Sections 4.5.1 and 4.5.2 shall be subject to the terms and conditions of
this Agreement.  If either Party elects
to enter into such a sublicense with a Third Party, such Party shall provide
the other Party with prompt written notice identifying the sublicensee and the
Discontinued Antigen.  For the avoidance
of doubt, each Party shall have the right to engage Third Party subcontractors
in connection with the Exploitation of ABX Products or AZ Products, as
applicable, and to transfer the applicable technology to such Third Party
subcontractors performing activities for and on behalf of such Party under the
terms of written agreements having provisions regarding confidentiality,
non-use and ownership of intellectual property consistent with those contained
herein prohibiting the further transfer or disclosure of such Information,
inventions or materials (other than to a Party hereto or its Affiliates).

 

4.6                                 Antigen-Specific
Technology.

 

4.6.1                        By ABX. 
Subject to the terms and conditions of this Agreement and any applicable
ABX In-License, with respect to each Discontinued Antigen, Failed Antigen and Non-Selected
Antigen, ABX and its Affiliates hereby grant to AZ (a) the non-exclusive,
worldwide right and license (with the right to grant sublicenses through
multiple tiers of sublicensees) under the ABX Subsequent Antigen-Specific
Know-How Rights and ABX Subsequent Antigen-Specific Patent Rights applicable to
each such Antigen to Exploit Non-Licensed Products (other than Non-Antibody
Products) that bind to and are directed against such Antigen for use in the
Commercial Field, and (b) the
exclusive, worldwide right and license (with the right to grant
sublicenses through multiple tiers of sublicensees) under the ABX Subsequent
Antigen-Specific Know-How Rights and ABX Subsequent Antigen-Specific Patent

 

57

 

Rights applicable to each
such Antigen to Exploit Non-Antibody Products with respect to such Antigen for
use in the Commercial Field.

 

4.6.2                        By AZ.  Subject to the terms and
conditions of this Agreement and any applicable AZ In-License, with respect to
each Discontinued Antigen, Failed Antigen and Non-Selected Antigen, AZ and its
Affiliates hereby grant to ABX a non-exclusive, worldwide right and
license (with the right to grant sublicenses through multiple tiers of
sublicensees) under the AZ Subsequent Antigen-Specific Know-How Rights and AZ
Subsequent Antigen-Specific Patent Rights applicable to each such Antigen to
Exploit ABX Products that bind to and are directed against such Antigen for use
in the Commercial Field.

 

4.7                                 Other
Technology.

 

4.7.1                        Subject to the terms and conditions of
this Agreement, ABX and its Affiliates hereby grant to AZ a non-exclusive,
worldwide right and license (with the right to grant sublicenses through
multiple tiers of sublicensees) under the ABX Other Know-How Rights and ABX Other
Patent Rights for all purposes for use in the Commercial Field.

 

4.7.2                        Subject to the terms and conditions of
this Agreement, AZ and its Affiliates hereby grant to ABX a non-exclusive,
worldwide right and license (with the right to grant sublicenses through
multiple tiers of sublicensees) under the AZ Other Know-How Rights and AZ Other
Patent Rights for all purposes for use in the Commercial Field (other than with
respect to Collaboration Antigens that are not Failed Antigens or Discontinued
Antigens).

 

4.8                                 Oncology
Technology.   Subject to the terms and conditions of this Agreement, ABX and
its Affiliates hereby grant to AZ an exclusive (including with regard to ABX
and its Affiliates), worldwide right and license (with the right to grant sublicenses through multiple tiers of
sublicensees) under the ABX Oncology Know-How Rights and ABX Oncology Patent
Rights to Exploit products that do not contain Antibodies or Antibody
Equivalents for use in the Commercial Field.

 

4.9                                 Development
Program Technology.   Subject to the terms and conditions of this Agreement, AZ and its
Affiliates hereby grant to ABX a non-exclusive, worldwide right and
license (with the right to grant sublicenses through multiple tiers of
sublicensees) under the Development Program Know-How Rights and Development
Program Patent Rights (but excluding any data or Information resulting from the
pre-clinical, clinical or any other similar tests or studies of a Research
Antibody or a Candidate Drug or any Know-How Rights or Patent Rights with respect
to uses of a Candidate Drug) to
Exploit ABX Products for all purposes in the Commercial Field (other than to
Exploit products with respect to a Collaboration Antigen, other than, subject
to Section 4.15, a Failed Antigen or Discontinued Antigen for which ABX
provided an Exercise Notice).

 

4.10                           Failed Antigens. 

 

4.10.1                  Subject to the
terms and conditions of this Agreement, ABX and its Affiliates hereby grant to
AZ an exclusive, worldwide
right and license (with the right to grant sublicenses through multiple tiers
of sublicensees) under the ABX Antigen-Specific Know-How Rights, ABX
Antigen-Specific Patent Rights and ABX’s right, title and interest in and to

 

58

 

the Collaboration Patent Rights and Collaboration Know-How Rights to
Exploit Non-Antibody Products with respect to Failed Antigens for use in the
Commercial Field.

 

4.10.2                  Subject to the
terms and conditions of this Agreement, with respect to each Failed Antigen, AZ
and its Affiliates hereby grant to ABX a non-exclusive, worldwide right and license (with the right to grant
sublicenses through multiple tiers of sublicensees) solely under the Additional
Development Program Know-How Rights and Additional Development Program Patent
Rights that are conceived or generated in connection with any additional
activities conducted by or on behalf of AZ pursuant to Section 2.6.2(c)
with respect to Research Antibodies that bind to and are directed against such
Failed Antigen prior to its designation as such, to Exploit ABX Products (other
than Antibodies or Research Antibodies) that bind to and are directed against
such Failed Antigen for use in the Commercial Field.

 

4.11                           Cross
Licenses.   AZ shall have the right, without the prior consent of ABX, to
grant cross-licenses under the license grants in Article 4 under the
Licensed ABX IP Rights with respect to a Collaboration Antigen (other than
XenoMouse Know-How Rights, XenoMouse Patent Rights, ABX Antibody Know-How
Rights, ABX Antibody Patent Rights or any of ABX’s rights in Additional
Technology Know-How Rights and Additional Technology Patent Rights) in
connection with any bona fide intellectual property dispute with respect to the
Exploitation of the AZ Products with respect to such Collaboration Antigen.  With respect to any ABX Prior
Antigen-Specific Know-How Rights and ABX Prior Antigen-Specific Patent Rights
that are first Controlled by ABX or its Affiliates pursuant to an ABX
In-License listed on Exhibit K-2, AZ shall notify ABX prior to granting
any such cross-license and, within thirty (30) days of such notice, ABX shall
inform AZ in writing of any Third Party royalty payments that are calculated on
the basis of sales of the applicable product and that are associated with the
grant of such cross-license.  Any such
cross-license granted by AZ shall be subject to such Third Party Royalties to
the extent disclosed to AZ pursuant to the foregoing sentence.

 

4.12                           Diligence. 

 

4.12.1                  Obligations.

 

(a)                                  Collaboration Antigens. 
With respect to each Collaboration Antigen (other than Discontinued
Antigens and Failed Antigens) for which AZ has designated a Candidate Drug
pursuant to Section 2.6.3, AZ shall use Commercially Reasonable
Efforts (whether alone, or with one or more Third Parties) at its (or such
Third Parties’) own cost to (i) conduct all development necessary to
obtain a Registration for one Licensed Product for use in humans in each of the
Major Markets; and (ii) commercialize one Licensed Product for use in
humans in each of the Major Markets; provided, however,
that such obligations are expressly conditioned upon ABX and its Affiliates
performing their respective obligations under this Agreement and the Related
Agreements, including the performance of any activities pursuant to Articles 4,
5 and 7, as applicable, including the supply of sufficient quantities of
Candidate Drugs and Licensed Products pursuant to Article 7 and the
Related Agreements,  and such
obligations of AZ shall be delayed or suspended as long as any failure to meet
or satisfy such condition exists. 
Further, ABX acknowledges and agrees that nothing in this
Section 4.12.1(a) is intended, or shall be construed, to require AZ (or
such Third Party) to develop or commercialize a specific Candidate Drug or Licensed Product
or to obtain Registrations for, or commercialize,

 

59

 

more than one Candidate
Drug or Licensed Product that binds to and is directed against any such Collaboration
Antigen.  In the event that AZ decides to discontinue
the development or commercialization of a Licensed Product in favor of another Licensed Product that binds to and is directed against the same Collaboration Antigen, its
obligations under this Section 4.12.1(a) shall cease with respect to such
initial Licensed Product in favor of such other Licensed Product.

 

(b)                                 Discontinued Antigens. 
With respect to
each Discontinued Antigen for which ABX delivers an Exercise Notice, ABX
shall use Commercially Reasonable Efforts (whether alone, or with one or more
Third Parties) at its (or such Third Parties’) own cost to (i) conduct all
development necessary to obtain a Registration for one ABX Product for use in
humans in each of the Major Markets; and (ii) commercialize one ABX
Product for use in humans in each of the Major Markets. 
Further, AZ acknowledges and agrees that nothing in this
Section 4.12.1(b) is intended, or shall be construed, to require ABX (or
such Third Party) to develop or commercialize a specific ABX Product or to obtain
Registrations for, or commercialize, more than one ABX Product that binds to and is directed against
any Discontinued Antigen for which ABX has delivered an Exercise Notice. 
In the event that ABX decides to discontinue the development or commercialization of an ABX Product in favor of another ABX Product that binds to and is directed against the same Discontinued Antigen, its
obligations under this Section 4.12.1(b) shall cease with respect to such
initial ABX Product in favor of such other ABX Product.

 

(c)                                  Reports.  Each
Party shall provide the other Party with updates on the current status of the
research, development and commercialization of, with respect to AZ, the
Licensed Products and, with respect to ABX, the ABX Products on a semiannual
basis, provided that AZ shall have no obligation to provide such updates to ABX
during any period in which ABX is performing activities under the Research
Program or Development Program for the applicable Collaboration Antigen.

 

4.12.2                  Breach of
Diligence Obligations.

 

(a)                                  Notification
and Meeting.  If at any time a Party
has a reasonable basis to believe that the other Party (the “Pursuing Party”)
is in material breach of a material obligation under Section 4.12.1 with
respect to a Collaboration Antigen or Discontinued Antigen, as applicable, then
the non-Pursuing Party shall so notify the Pursuing Party, specifying the basis
for its belief, and the Parties shall meet within [Confidential treatment
requested] after such notice to discuss in good faith the non-Pursuing Party’s
concerns and the Pursuing Party’s development and commercialization plans with
respect to such Antigen.

 

(b)                                 Right
of Termination.  If, after such good
faith discussions, (i) the Pursuing Party is in material breach of a
material obligation under Section 4.12.1 with respect to such Antigen, and
(ii) the Pursuing Party does not take reasonable steps designed to rectify
such breach within sixty (60) days of meeting with the non-Pursuing Party
pursuant to Section 4.12.2(a) (or, if such failure cannot be rectified
within such [Confidential treatment requested] period, if the Pursuing Party
does not commence actions to rectify such breach within such period and
thereafter diligently pursue such actions), the non-Pursuing Party may initiate
termination procedures with respect to such Antigen pursuant to
Section 16.3 or 16.4, as applicable, after it has complied with the
procedures set forth in this Section 4.12.2.

 

60

 

4.13                           Distributors.   Each Party shall have the
right, in its sole discretion, to appoint its Affiliates, and such Party and
its Affiliates shall have the right, in their sole discretion, to appoint
Distributors.

 

4.14                           Covenant Not to Sue.   Neither AZ nor any of its Affiliates shall
ever, anywhere in the world, institute or prosecute (or in any way aid any
Third Party (other than to the extent required by law, regulation, court order
or subpoena) in instituting or prosecuting), at law or in equity, any claim,
demand, action or other proceeding for damages, costs, expenses or compensation,
or for an enjoinment, injunction, or any other equitable remedy, against ABX,
its Affiliates, sublicensees, suppliers, distributors, vendors or customers
alleging the Exploitation by any such Person of (a) XenoMouse Technology,
or (b) another rodent strain that contains human antibody genes and is
able to produce fully human antibodies or any part thereof, infringes any
XenoMouse Supported Patent Rights (in each case, other than the Exploitation of
products with respect to Collaboration Antigens (other than Discontinued
Antigens for which ABX has provided an Exercise Notice or, subject to
Section 4.15, Failed Antigens)). 
In AZ’s or its Affiliates’ agreements with each of its sublicensees of XenoMouse Supported Patent Rights,
AZ or its Affiliate, as applicable, shall use good faith efforts to include
provisions requiring a covenant, materially identical to that which AZ is
making in this Section 4.14, on the part of the sublicensee.  Further, in the event of an assignment or
transfer by AZ, its Affiliate or sublicensee of any XenoMouse Supported Patent
Rights, such assignee shall be bound by the covenant set forth in this
Section 4.14.  Nothing in this
Section 4.14 is intended or shall be construed to limit AZ’s rights or
ABX’s obligations under this Agreement, including with respect to
Article 17.

 

4.15                           Covenant by
ABX.   With respect to each Failed Antigen, neither ABX nor its
Affiliates will independently sell or offer for sale, or enter into an
agreement with, or grant any license to, a Third Party to sell or offer for
sale or otherwise Exploit, any Antibodies or Antibody Equivalents that bind to
and are directed against such Failed Antigen for a period of [Confidential
treatment requested] after the date that such Antigen was designated as a
Failed Antigen.  If, at any time during such [Confidential treatment requested] period, ABX wishes to independently
perform work with respect to such Failed Antigen, ABX shall provide written
notice to AZ.  ABX shall provide AZ with
any Information, Antibodies, Antibody Equivalents and other materials generated
in connection with such work on a quarterly basis and, at the end of such [Confidential
treatment requested] period, ABX
shall provide AZ with a final report on all work it has performed with respect
to such Failed Antigen and such Information and materials as AZ may reasonably
request.  Upon receipt of such report,
Information and materials, AZ shall have the right, for a period of
[Confidential treatment requested],
to designate such Antigen as a Collaboration Antigen under the terms set forth
herein, regardless of the number of Collaboration Antigens that have
been designated as of such date or whether the Antigen Designation Term has
expired.  If such Antigen is designated
as a Collaboration Antigen pursuant to the foregoing sentence, any such work
performed by ABX during such one (1) year period shall be deemed to have been
performed under the Research Program for such Collaboration Antigen and the
provisions of Sections 11.1.1, 11.1.3, 11.1.4, 11.1.5 and 11.1.7 shall
apply.  If such Antigen is not
designated as a Collaboration Antigen, then all Information and inventions conceived or generated in connection
with any such work performed by ABX during such [Confidential treatment
requested] period that would have
been Collaboration Technology if such work had been performed under a Research
Program shall be Collaboration Technology and the provisions of
Section 11.1.3 shall apply thereto. 
If AZ declines to designate such Antigen as a

 

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Collaboration Antigen, AZ
shall notify ABX in writing and, if ABX wishes to pursue Antibodies or Antibody
Equivalents that
bind to and are directed against such Antigen, ABX shall provide an
Exercise Notice to AZ and such Antigen shall be designated a Discontinued
Antigen, but only with respect to those Antibodies that have been offered to AZ
either before such Antigen was designated a Failed Antigen or during such
[Confidential treatment requested] period. 
If neither Party wishes to pursue such Antigen, either as a
Collaboration Antigen or a Discontinued Antigen, then such Antigen shall remain
a Failed Antigen at the end of such [Confidential treatment requested] period
and, unless the Parties agree otherwise, any Antibodies that bind to and are directed against such Failed Antigen (and
any Antibody Cells and Genetic Materials with respect to such Antibodies)
created under this Agreement with respect to such Failed Antigen shall be
destroyed.

 

4.16                           Covenant by
AZ.   With respect to each Failed Antigen, neither AZ nor its
Affiliates will independently generate, or enter into an agreement with,
or grant any license to, a Third Party to generate, Antibody Equivalents that
bind to and are directed against such Failed Antigen using XenoMouse Animals or
other similar transgenic rodents for a period of [Confidential treatment
requested] after the date that such Antigen was designated as a Failed
Antigen.  For the avoidance of doubt,
during such [Confidential treatment requested] period, subject to this
Section 4.16, AZ shall have the right to Exploit Non-Licensed Products
with respect to such Failed Antigen.

 

4.17                           Third
Party Rights. 

 

4.17.1                  Notwithstanding anything to the
contrary in this Agreement, subject to the provisions of this Section 4.17,
the licenses and grants of rights by ABX under this Agreement shall be subject
to and limited in all respects by the terms of the applicable (a) ABX
Antigen In-License(s), (b) ABX In-Licenses with respect to any XenoMouse
Methods (other than Core XenoMouse Technology), (b) ABX In-Licenses with
respect to any Antibody Technology (other than Core Antibody Technology), or
(d) ABX In-Licenses with respect to any Additional Technology, and all
rights or sublicenses granted under this Agreement shall be limited to the
extent that ABX may grant such rights and sublicenses under such ABX
In-License(s), but only to the extent that AZ is notified of such terms and limitations
pursuant to Section 2.2.1(c), 2.2.1(j), 2.2.1(k), the second sentence of
Section 4.17.2, 2.2.2(b), 2.2.3(b) or 5.3.1 and AZ elects to include the
applicable Licensed ABX IP Rights
under this Agreement pursuant to Section 4.17.2. 
ABX represents, warrants and covenants to AZ that the terms and
conditions of this Agreement are fully consistent with the ABX In-Licenses with
respect to XenoMouse Technology (other than XenoMouse Methods), Core XenoMouse
Technology and Core Antibody Technology and the licenses and grants of rights
to AZ under this Agreement will not be subject to or limited in any respect by
any terms or conditions of such ABX In-Licenses, except to the extent that such
terms and conditions are expressly set forth in this Agreement.  Additionally, and without limiting
the foregoing, the Parties acknowledge and agree that pursuant to the GenPharm
Cross License Agreement, the rights granted to AZ hereunder under certain
XenoMouse Patent Rights, including any grant of “exclusive” rights, shall be
subject to the rights granted to or retained by GenPharm International, Inc.
under the GenPharm Cross License Agreement to the extent disclosed to AZ in the
redacted copy of the GenPharm Cross License Agreement provided to AZ prior to
the Effective Date.  Notwithstanding the
foregoing, neither ABX nor its Affiliates shall disclose any AZ Antigen-Specific
Know-How Rights or AZ

 

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Antigen-Specific Patent
Rights, Collaboration Technology (other than Information specific and unique to
the applicable Collaboration Antigen, solely to the extent ABX is obligated to
disclose such Information pursuant to an ABX Antigen In-License listed on
Exhibit K-2), Development Program Technology, Additional Development
Program Technology or other Confidential Information of AZ or its Affiliates or
sublicensees (including AZ Information) to GenPharm or its Affiliates or any
other party to an ABX In-License without the prior written consent of AZ.

 

4.17.2                  With respect to each Antigen proposed
by a Party after the Effective Date pursuant to Section 2.2.1,
(a) ABX shall provide AZ with (i) such Information Controlled by ABX
in writing as is necessary to determine the applicable restrictions and Third
Party Royalties under each ABX Antigen In-License applicable to such Antigen,
which ABX reasonably believes would restrict AZ’s ability to perform the
applicable Research Program with respect to such Antigen or attach to the
Exploitation of AZ Products with respect to such Antigen under this
Agreement, and (ii) any freedom to operate analyses performed by ABX and
any other Information Controlled by ABX with respect to the proprietary status
of such Antigen, provided that ABX shall not be obligated to disclose any legal
opinion in connection with such freedom to operate analyses, (b) ABX shall
notify AZ whether such Antigen is a Proprietary ABX Antigen and provide
documentation in support thereof, and (c) ABX shall provide AZ with
(i) documentation to support any royalties owing to Third Parties under an
ABX In-License listed on Exhibit K-2 that may extend beyond the applicable
Royalty Term, and (ii) notice of any pre-existing option or contractual right to negotiate pursuant to
a written agreement to obtain further licenses with respect to such Antigen,
together with any applicable rights and restrictions with respect thereto (collectively
((a), (b) and (c)), the “ABX In-License Information”). 
Promptly following the Effective Date, ABX shall prepare and provide AZ
with such ABX In-License Information for each Proposed Antigen listed on
Exhibit Q or Exhibits A-1 and A-2 as of the Effective Date.  Within thirty (30) days after receipt by AZ
of the applicable ABX In-License Information, AZ shall have the right to
withdraw a Proposed Antigen, by written notice to ABX, if such ABX In-License Information
includes information regarding restrictions, financial obligations or Third
Party intellectual property rights that are not acceptable to AZ, in which case
such withdrawn Proposed Antigen shall be designated a Non-Selected Antigen, but
shall not count against the cap on the number of Proposed Antigens under
Section 2.2.1(n).  With respect to
each Proposed Antigen and each Collaboration Antigen, ABX shall have an ongoing
obligation to update such Information with new Information Controlled by ABX
throughout the term of this Agreement; [Confidential treatment
requested]  If a Proprietary ABX Antigen is not
designated as such prior to the designation of such Antigen as a Proposed
Antigen pursuant to Section 2.2.1(c), 2.2.1(j), 2.2.1(k) or pursuant to
the second sentence of this Section 4.17.2, it shall be deemed to be a
Non-Proprietary ABX Antigen.  If, within
thirty (30) days following the receipt of such ABX In-License Information, AZ
gives express written notice that it does not desire to have such intellectual
property rights included in any license grant with respect to an Antigen, then
such intellectual property rights thereafter shall be excluded from the
definition of Licensed ABX IP Rights for purposes of such license grant.  [Confidential treatment requested] 
If AZ fails to give timely written notice of its election to not include
such intellectual property rights in such license grant with respect to an
Antigen, then such ABX Antigen In-License shall be accepted and such
intellectual property rights thereafter shall be included in the Licensed ABX
IP Rights with respect to such Antigen and Exhibit L shall be amended to
reflect such Third Party Royalties. 
[Confidential treatment requested]

 

63

 

4.17.3                  Notwithstanding anything to the contrary
in this Agreement, the licenses and grants of rights by AZ under this Agreement
shall be subject to and limited in all respects by the terms of the applicable
AZ In-License(s), and all rights or sublicenses granted under this Agreement
shall be limited to the extent that AZ may grant such rights and sublicenses
under such AZ In-License(s). 
Notwithstanding the foregoing, promptly after (a) the
designation of a Potential Co-Development Antigen, (b) the designation of a Collaboration Antigen or (c) the
designation of a Discontinued Antigen, as applicable, AZ shall provide ABX with
such Information Controlled by AZ in writing as is necessary to determine the
applicable restrictions and Third Party Royalties under each AZ In-License
pursuant to which AZ acquired any AZ Prior Antigen-Specific Know-How Rights, AZ
Prior Antigen-Specific Patent Rights, Additional Technology Know-How Rights or
Additional Technology Patent Rights applicable to such Antigen, which AZ
reasonably believes would restrict ABX’s ability to perform the Research
Program with respect to such Collaboration Antigen as set forth in
Section 2.2.2(c) or attach to the Exploitation of (i) Antibodies that
bind to and are directed against Potential Co-Development Antigen or (ii) ABX
Products that bind to and are directed against such Discontinued Antigen, as
applicable, under this Agreement (collectively, the “AZ In-License
Information”).  With respect to each Collaboration Antigen,
AZ shall have an ongoing obligation throughout the applicable Research Program
to update the AZ In-License Information with respect to any restrictions on
ABX’s ability perform such Research Program for such Collaboration Antigen with
new Information Controlled by AZ.  If,
within thirty (30) days following the designation of an Antigen as a
Discontinued Antigen, ABX gives express written notice that it does not desire
to have the intellectual property rights that are the subject of such AZ
In-License included in the license grants with respect to such Discontinued Antigen,
then such intellectual property rights thereafter shall be excluded from the
definition of Licensed AZ IP Rights for purposes of such license grants.  [Confidential treatment requested] 
If ABX fails to gives timely written notice of its election to not
include such intellectual property rights in such license grant with respect to
a Discontinued Antigen, then such AZ In-License shall be accepted and such
intellectual property rights thereafter shall be included in the Licensed AZ IP
Rights with respect to such Discontinued Antigen.

 

4.17.4                  ABX shall, at
its sole cost and expense, obtain such license and other rights in and to the
XenoMouse Technology (other than
XenoMouse Methods), Core XenoMouse Technology and Core Antibody
Technology as are necessary to Exploit Antibodies generated therefrom as
Candidate Drugs and Licensed Products in the Commercial Field.

 

4.18                           Further Covenants and Agreements.

 

4.18.1                  AZ shall not
exploit the Licensed ABX IP Rights for any purpose other than as expressly
licensed to AZ under this Article 4. 
ABX shall not exploit the Licensed AZ IP Rights for any purpose other
than as expressly licensed to ABX under this Article 4.

 

4.18.2                  Subject to the
following sentence, if, at any time during the Antigen Designation Term or any
Research Program Term, ABX Controls Know-How Rights or Patent Rights in any
technology, other than the XenoMouse Technology, that is capable of producing fully human antibodies, ABX
shall notify AZ and if AZ wishes to obtain rights to such technology under this
Agreement, the Parties shall negotiate in good faith to amend this

 

64

 

Agreement to address the financial obligations associated with the
Exploitation of Antibody Equivalents generated using such technology.  [Confidential treatment requested]

 

4.18.3                  Except as
otherwise expressly set forth in the Supplementary XenoMouse Agreement and in
Sections 16.8.2 and 16.13, the Parties acknowledge and agree that ABX shall
have no obligation to transfer to AZ the XenoMouse Technology or any portion
thereof.

 

4.18.4                  If either Party
reasonably believes that technology may be available to enable the
administration or other medical use of an antibody that binds to and is
directed against intracellular antigens, then, upon the written request to the
other Party, the Parties shall negotiate in good faith to amend the definition
of Antigen to include intracellular antigens, subject to the ability to
successfully access such technology for purposes of this Agreement.

 

4.19                           Trademarks.   For the avoidance of doubt,
neither Party shall have the right under this Agreement to any trademark, trade dress,
brand mark, trade name, brand name, logo or business symbol owned or Controlled
by the other Party or its Affiliates.

 

4.20                           Certain Restrictions and Rights Regarding Failed and Discontinued Antigens.   For the avoidance of doubt, notwithstanding anything to the
contrary in this Agreement (including Section 4.1), (a) neither Party
shall have the right to use the compositions of matter of Antibodies that bind
to and are directed against any Failed Antigen (and related Genetic Material
and Antibody Cells) within the Collaboration Technology; provided, however,
that (i) AZ shall have the right to use all other Collaboration Technology
with respect to such Failed Antigen to Exploit Non-Licensed Products, and
(ii) ABX shall have the right to use all other Collaboration Technology
with respect to such Failed Antigen to Exploit ABX Products; (b) AZ shall
not have the right to use the compositions of matter of Antibodies that bind to
and are directed against any Discontinued Antigen (and related Genetic Material
and Antibody Cells) within the Collaboration Technology, other than solely with
respect to Licensed Products that bind to and are directed against a
Discontinued Antigen for which ABX has not delivered an Exercise Notice; provided,
however, AZ shall have the right to use all other Collaboration
Technology with respect to such Discontinued Antigen to Exploit Non-Licensed
Products; and (c) ABX shall not have the right to use the compositions of
matter of Antibodies that bind to and are directed against any Discontinued
Antigen for which ABX has not delivered an Exercise Notice (and related Genetic
Material and Antibody Cells) within the Collaboration Technology; provided,
however, ABX shall have the right to use all other Collaboration
Technology with respect to such Discontinued Antigen to Exploit ABX Products.

 

5.                                       DEVELOPMENT
PROGRAM.

 

5.1                                 General.  Upon the designation
of at least one Candidate Drug that
binds to and is directed against a Collaboration Antigen (other than a Discontinued Antigen or
Failed Antigen), subject to the terms and conditions of this Agreement
including all of the license grants set forth in Article 4, AZ shall have
the exclusive right to research, develop and otherwise Exploit throughout the
world (a) any Candidate Drugs that
bind to and are directed against such Collaboration Antigen,
(b) any Non-Antibody Products with respect to such Collaboration

 

65

 

Antigen, and
(c) after AZ has provided an Election Notice with respect to such Antigen,
any other Non-Licensed Products with respect to such Collaboration Antigen, in
each case for use in the Commercial Field. 
For purposes of clarity, nothing in this Section 5.1 is intended to
expand the scope of the license grants expressly set forth in Article 4.

 

5.2           Conduct of Development.

 

5.2.1        ABX shall perform its obligations under the Development Program for
each Candidate Drug through Phase II Completion for such Candidate Drug as set
forth in the applicable Development Program Work Plan pursuant to a mutually
acceptable contract research services agreement (the “Contract Services
Agreement”).  The Contract Services
Agreement shall include standard contract research services provisions, which
the Parties shall negotiate in good faith and on commercially reasonable terms
within [Confidential treatment requested] after the Effective Date (or such longer period as the Parties may
mutually agree).

 

5.2.2        ABX and AZ shall conduct their respective obligations under such
Development Program in accordance with this Article 5, the Contract
Services Agreement and the applicable Development Program Work Plan and Program
Budget, and shall use Commercially Reasonable Efforts to accomplish the
objectives thereof in accordance with the timelines set forth therein.  Each Party shall provide the personnel,
materials, equipment and other resources required to conduct its obligations
under each Development Program.  Each
Party shall perform its obligations under each Development Program in
accordance with high scientific and professional standards, and in compliance
in all material respects with the requirements of Applicable Law and good
clinical practices.  ABX and its
Affiliates shall perform all of ABX’s responsibilities under the Development
Programs and shall not enter into any subcontract with a Third Party to perform
any such responsibilities except as expressly permitted in the applicable Development
Program Work Plan or as otherwise agreed to by the Parties, provided that in
any case any such permitted subcontractor shall be reasonably acceptable to
AZ.  Notwithstanding the foregoing, AZ shall have the right, in its sole
discretion, to enter into any subcontract with a Third Party to perform
any of its responsibilities under a Development Program.

 

5.3           Development Program Work Plan and Budget.

 

5.3.1        Within [Confidential treatment requested] following the designation of the first
Research Antibody that binds to and is directed against a Collaboration Antigen
or at such other time as AZ may elect, AZ and ABX shall jointly commence, and
thereafter diligently proceed with, the preparation, for review and approval by
the Development Management Committee, of (a) an overall Development
Program Work Plan for all activities through Phase II Completion for the
development of one or more Research Antibodies and Candidate Drugs that bind to
and are directed against such Collaboration Antigen and (b) from time to
time during the applicable Development Program, at the request of AZ, more
detailed Development Program Work Plans for each stage of such Development
Program, such as, by way of example, plans for (i) identifying and,
if necessary or useful, conducting any further research, development or
optimization of a Candidate Drug and, once a Candidate Drug has been identified
for clinical development, the toxicology and pre-clinical and other IND
enabling studies for such
Candidate Drug, and (ii) Phase I Clinical Trials and applicable Phase II
Clinical

 

66

 

Trials for such Candidate Drug. 
The Development Program Work Plan shall include a budget for the
activities set forth therein.  The
Development Program Work Plan for a Collaboration Antigen shall, at the request
of AZ, also include the use of any Core Technology and any Additional
Technology, Antibody Technology (other than Core Antibody Technology) or
XenoMouse Methods (other than Core XenoMouse Technology) used in the Research
Program for such Collaboration Antigen. 
In connection with the preparation of the Development Program Work Plan
for a Collaboration Antigen, each Party shall promptly disclose to the other
(a) all of such Party’s Additional Technology and (in the case of ABX)
Antibody Technology (other than Core Antibody Technology) and XenoMouse Methods
(other than Core XenoMouse Technology), in each case that such Party reasonably
believes would be useful for the development of Antibodies and Antibody
Equivalents that bind to and are directed against such Collaboration Antigen,
and (b) any Third Party intellectual property rights and (in the case of
ABX) Third Party payments associated with the use of such Additional
Technology, Antibody Technology or XenoMouse Methods described in
clause (a) above.  The Parties
shall use good faith efforts to agree on which of such Additional Technology,
Antibody Technology or XenoMouse Methods described in clause (a) above
shall be used in the Development Program Work Plan for such Antigen and such
technologies shall be described in such Development Program Work Plan. 
If, despite such good faith efforts, the Parties are unable to
agree on such Additional Technology, Antibody Technology or XenoMouse Methods
described in clause (a) above, such dispute shall be referred to the
Expert for resolution.  Subject to the
foregoing, the Development
Management Committee shall be responsible for reviewing, revising and approving
each Development Program Work Plan and any amendments thereto with respect to
Development Programs that are performed by ABX.

 

5.3.2        Based on the applicable Development Program Work Plan, ABX shall, from
time to time at the request of AZ, prepare, for review and acceptance or
rejection (as provided below) by AZ, a reasonably detailed proposed Program
Budget for implementing ABX’s obligations under the applicable Development
Program Work Plan, including details of FTEs to be utilized, including the name
and title of the Development Program Leader, and the projected fees and
expenses projected to be incurred in accordance with Section 9.2.  [Confidential treatment requested] 
Any changes to the Program Budget accepted by AZ pursuant to this
Section 5.3.2 shall be governed by the provisions of the Contract Services
Agreement.

 

5.4           Process
Development Program. 
At such time after the selection of the first Research Antibody that
binds to and is directed against a Collaboration Antigen as AZ requests, ABX
shall perform the Process Development Program for such Candidate Drug as set
forth in the Process Science/Clinical Manufacture Agreement.  The Development Management Committee, in
consultation with the Manufacturing and Supply Committee, shall be responsible
for overseeing the performance of each Process Development Program.

 

5.5           Records.  ABX shall maintain records,
in sufficient detail and in a good scientific manner appropriate for patent and
regulatory purposes, which shall be complete and accurate and shall fully and
properly reflect work done and results achieved in the performance of each
Development Program.  AZ shall have the
right, during normal business hours and upon reasonable notice, to inspect and
copy such records of ABX to the extent necessary or reasonably useful to
perform AZ’s obligations or exercise its rights under this Agreement.  ABX shall

 

67

 

maintain such records and the information contained therein in
confidence in accordance with Article 13.

 

5.6           Reports and Notices. 
In addition to day-to-day communications through the Development Program
Leaders, ABX shall keep AZ informed of the progress of its activities under
each Development Program by means of written reports to the Development
Management Committee.  With respect to
each Candidate Drug, within [Confidential treatment requested] following the last day of each
calendar quarter during the applicable Development Program Term, and within
[Confidential treatment requested] following each of the completion of a Phase II Clinical Trial
for such Candidate Drug that [Confidential treatment requested] with the
disease target being studied and
the termination of the applicable Development Program, ABX shall prepare, and
provide to the Development Management Committee for submission to AZ, a
reasonably detailed written report which shall describe work done and results
achieved in the performance of such Development Program.

 

5.7           ABX
Registrations. 
With respect to those certain Development Program activities required to
be performed by ABX pursuant to a Development Program Work Plan for a Candidate
Drug, the following shall
apply (but only to the extent applicable to such activities):

 

5.7.1        ABX shall use Commercially Reasonable Efforts to prepare, file and
maintain the INDs and other regulatory approvals for the conduct of the
Development Program for such Candidate Drug through Phase II Completion in
accordance with the applicable Development Program Work Plan.  ABX and AZ through the Development
Management Committee shall consult and cooperate in preparing each such
IND.  Each Party shall have the right to
review and comment on all such INDs.  No
IND shall be filed with any governmental or regulatory authority unless and
until it has been approved by the Development Management Committee.  ABX shall assume all obligations as the
sponsor of clinical investigations, including those under 21 C.F.R. Part 312
and the FDA’s Guidance for Industry on Good Clinical Practice (April 1996)
and other similar foreign requirements, with respect to such INDs and other
regulatory approvals for each Candidate Drug for which ABX is performing the
Development Program through Phase II Completion.  The foregoing shall not apply if, with respect to an IND or other regulatory approval, AZ
decides to prepare, file and maintain the INDs and other regulatory approvals
for the conduct of the Development Program for such Candidate Drug to the
extent permitted by Applicable Law.

 

5.7.2        Subject to the terms and conditions of this Agreement, ABX shall own
all INDs filed by it pursuant to Section 5.7.1 through Phase II Completion
for such Candidate Drug until such time as AZ elects to assume responsibility
for such INDs, subject to Section 5.7.4. 
ABX shall have no right to use such INDs for any purpose other than the
performance of its activities under the applicable Development Program.  For so long as ABX retains ownership
of such INDs for a Candidate Drug, ABX does hereby grant to AZ and its
Affiliates the right and license to
reference such INDs and to use all data and information contained or referenced
therein (a) to perform its activities under the applicable Development Program
Work Plan and to otherwise Exploit any AZ Products and (b) to support the
filing of any Registrations for any such AZ Products.  In addition, ABX shall permit AZ to acquire such other
rights to such submissions, to the extent necessary or useful for AZ to perform
its responsibilities or exercise its rights under this Agreement.

 

68

 

5.7.3        ABX shall serve as the
primary regulatory contact with respect to such INDs for so long as ABX holds
such INDs.  At such times as ABX
receives communications from the FDA or other governmental or regulatory
authority, ABX shall notify AZ as soon as possible (but not more than one week)
thereafter, and shall inform AZ of the content of any such oral communications
and provide AZ with copies of any such written communications.  ABX shall not provide any response to such
communications or submit any other information or materials to such
governmental or regulatory authority without the prior approval of AZ.  ABX shall (a) notify AZ as soon as
possible in advance of all meetings and significant communications with the FDA
or other governmental or regulatory authority concerning the Candidate Drugs or
Collaboration Antigens and permit representatives of AZ to attend and
participate in such meetings, and (b) promptly prepare and deliver to AZ
complete and accurate minutes of any such meeting or communications.  The foregoing shall not apply if, with
respect to an IND, AZ decides
to serve as the primary regulatory contact with respect to such IND to the
extent permitted by Applicable Law.

 

5.7.4        As soon as reasonably practicable following AZ’s written request, ABX
shall assign and transfer to AZ all of its and its Affiliates’ rights, titles
and interests in and to such INDs for such Candidate Drug.

 

5.7.5        If the Development Program Work Plan for a Candidate Drug includes the
conduct of clinical trials outside the United States, the Parties shall consult
with each other to determine the appropriate regulatory filing approach
therefor.

 

5.8           AZ
Registrations. 
Except as provided in Section 5.7, all INDs and other
filings, applications or requests for Candidate Drugs pursuant to or in connection
with the Registrations and other regulatory documentation shall be owned by and
made in the name of AZ or its designee(s), and AZ shall have the sole right to
conduct all communications with the regulatory authorities with regard to the
Candidate Drugs and AZ Products with respect to a Collaboration Antigen.  To the extent permitted by Applicable Law,
AZ shall have the sole right to prepare,
file and maintain all INDs and other filings, applications or requests
for Candidate Drugs pursuant to or in connection with the Registrations and
conduct all communications with the regulatory authorities with regard to the
Candidate Drugs and AZ Products with respect to a Collaboration Antigen, except
as provided in Section 5.7.  ABX
shall cooperate with reasonable requests for assistance from AZ with respect to
AZ’s preparation, filing or maintenance of any such INDs or other filings,
applications or requests for Candidate Drugs or any communications with the
regulatory authorities with regard to the Candidate Drugs made pursuant to this
Section 5.8.  Notwithstanding
anything to the contrary in this Agreement, for the purposes of clarity, the
provisions of Section 7.12 shall govern the ownership and control of DMFs.

 

5.9           Election
Notice. 
With respect to each Development Program performed by ABX for which ABX
is conducting a Phase II Clinical Trial (that has [Confidential treatment
requested])that is completed, ABX shall notify AZ in writing upon Phase II
Completion for a Candidate Drug that binds to and is directed against a given
Collaboration Antigen.  Otherwise, the
Parties shall use good faith efforts to agree when the completion of, and
delivery to AZ of the complete data package for, the first Phase II Clinical
Trial (that has [Confidential treatment requested])has occurred, which shall
then be deemed to be Phase II Completion for purposes of this Agreement.  After the first Phase II Completion for a
Candidate Drug that binds to and is

 

69

 

directed against a Collaboration Antigen (other than a Discontinued
Antigen or Failed Antigen), or earlier, at the election of AZ, AZ shall
determine whether it wishes to proceed with the further development and
commercialization of any Candidate Drug(s) that bind to and are directed
against such Collaboration Antigen as a Licensed Product(s) by providing
written notice to ABX (an “Election Notice”).  ABX
acknowledges and agrees that the final decision as to whether or not to proceed
with a Candidate Drug as a Licensed Product will be made by AZ in accordance
with AZ’s standard internal procedures for the evaluation and prioritization of
Candidate Drugs.  If AZ fails to
provide an Election Notice to ABX for a Candidate Drug that binds to and is directed against a Collaboration Antigen,
within [Confidential treatment
requested] after the first
Phase II Completion for a Candidate Drug that binds to and is directed against
such Collaboration Antigen, or such longer period as the Parties mutually agree
in writing, then such Collaboration Antigen shall be designated a
Discontinued Antigen and Exhibit B shall be amended accordingly.  If ABX delivers an Exercise Notice to AZ
with respect to such Discontinued Antigen within [Confidential treatment requested] after the earlier of (x) the
expiration of such period and (y) the delivery of written notification
from AZ to ABX that AZ does not wish to proceed with the further development
and commercialization of any Candidate Drug(s) that bind to and are directed
against such Antigen, ABX shall
have the right to purchase any quantities of Candidate Drugs Controlled by AZ,
at AZ’s fully burdened cost, that bind to and are directed against such
Discontinued Antigen, provided that if ABX fails to provide such an Exercise
Notice within such [Confidential treatment requested] period, (a) ABX
shall have no rights with respect to such Antigen under Sections 4.5.1(a)(i),
4.5.1(b), 4.5.1(c) and 4.5.1(d)(i) or such Candidate Drugs that bind to and are
directed against such Antigen, and (b) AZ shall retain all such Antibodies
(and any Antibody Cells and Genetic Materials with respect to such Antibodies),
whereupon the license grant set forth in Section 4.3.1 shall continue in
effect subject to Section 4.5.1(e), provided that (i) ABX shall have
no further obligations with respect to the development, process development or
manufacturing of such Candidate Drugs (other than work previously performed or
obligations incurred under a Contract Services Agreement, Process
Science/Clinical Manufacture Agreement or the Manufacturing and Supply
Agreement or material transfer obligations pursuant to Section 11.3),
(ii) the diligence obligations set forth in Section 4.12.1 (other
than the reporting obligations set forth in Section 4.12.1(c)) shall not
apply to such Candidate Drugs and (iii) the milestone payments set forth
in Section 9.3.1 and the royalties payable to ABX under Section 9.3.2
shall apply to such Candidate Drugs, subject to any reductions required under
Section 9.7 or elsewhere under Article 9.  For the avoidance of doubt, such Collaboration Antigen
shall not be deemed to be a Discontinued Antigen if AZ provides an Election
Notice for at least one Candidate Drug that binds to and is directed against such Collaboration
Antigen.

 

5.10         Non-Licensed
Products.  Subject to the
terms and conditions of this Agreement including all of the license grants set
forth in Article 4, AZ shall have the exclusive right to Exploit
Non-Antibody Products with respect to each Collaboration Antigen (including
Discontinued Antigens and Failed Antigens) and, upon the delivery of an
Election Notice with respect to a Collaboration Antigen, all other Non-Licensed
Products with respect to such Collaboration Antigen, which Exploitation in each
case may be performed by AZ or
with or through one or more Affiliates or Third Parties throughout the
world.  For purposes of clarity, nothing
in this Section 5.10 is intended to expand the scope of the license grants
expressly set forth in Article 4.

 

70

 

5.11         Right to Abandon.   Notwithstanding the
foregoing, AZ shall have the right to terminate the development of all
Candidate Drug(s) that bind to and are directed against a Collaboration
Antigen, including all Development Programs, at any time for any reason or no
reason prior to the delivery of an Election Notice with respect to such
Collaboration Antigen by giving express written notice thereof (a “Notice to
Abandon”) to ABX.  If, at any time
prior to the delivery of an Election Notice for a Collaboration Antigen, ABX
has a reasonable basis to believe that AZ has abandoned the development of all
Candidate Drug(s) that bind to and are directed against such Collaboration
Antigen, including all Development Programs, ABX shall so notify AZ pursuant to
Section 4.12.2, whereupon the procedures in Section 4.12.2 shall
apply.  Upon receipt by ABX of the
Notice to Abandon (a) such Collaboration Antigen shall be designated a
Discontinued Antigen and Exhibit B shall be amended accordingly and
(b) the applicable Development Program Work Plan(s) automatically shall be
amended without further action by either Party to include only those activities
of the Parties that are necessary to safely wind down the applicable
Development Program(s).  Unless the
Parties otherwise expressly agree in writing, the Parties shall conduct and
fund such activities in accordance with such Development Program Work Plan(s)
and Program Budget(s), as amended.  If
ABX delivers an Exercise Notice to AZ with respect to such Discontinued Antigen
within one (1) year after receipt of such Notice to Abandon, ABX shall have the right to purchase
any quantities of Candidate Drugs controlled by AZ, at AZ’s fully burdened
cost, that bind to and are directed against such Discontinued Antigen.  If ABX fails to deliver such Exercise
Notice, (a) ABX shall have no rights with respect to such Antigen under
Sections 4.5.1(a)(i), 4.5.1(b), 4.5.1(c) and 4.5.1(d)(i) or such Candidate
Drugs that bind to and are directed against such Antigen, and (b) AZ shall
retain all such Antibodies (and any Antibody Cells and Genetic Materials with
respect to such Antibodies), whereupon the license grant set forth in
Section 4.3.1 shall continue in effect subject to Section 4.5.1(e),
provided that (i) ABX shall have no further obligations with respect to
the development, process development or manufacturing of such Candidate Drugs
(other than work previously performed or obligations incurred under a Contract
Services Agreement, Process Science/Clinical Manufacture Agreement, Manufacturing
and Supply Agreement or as set forth in Section 5.14.2 or material
transfer obligations pursuant to Section 11.3), (ii) the diligence
obligations set forth in Section 4.12.1 (other than the reporting
obligations set forth in Section 4.12.1(c)) shall not apply to such
Candidate Drugs and (iii) the milestone payments set forth in
Section 9.3.1 and the royalties payable to ABX under Section 9.3.2
shall apply to such Candidate Drugs, subject to any reductions required under
Section 9.7 or elsewhere under Article 9.  Notwithstanding the foregoing, after receipt of a Notice to
Abandon with respect to a Collaboration Antigen and the delivery to AZ of an
Exercise Notice with respect to the applicable Discontinued Antigen, ABX shall
have the right, in its sole discretion and at its sole cost and expense, to
independently assume responsibility for the completion of the Development
Program(s) with respect to such Candidate Drug(s) at its request.  Notwithstanding the foregoing, AZ shall have
the right, in its sole discretion, to immediately suspend or terminate a
Development Program or any other development and commercialization of a
Candidate Drug because of safety concerns, without terminating this Agreement
with respect to the applicable Collaboration Antigen pursuant to
Section 16.9; provided, however, that AZ shall be
responsible for ABX’s FTE costs and expenses incurred in connection with a safe
and orderly wind down of the applicable Development Program in accordance with
customary industry practices.  For the
avoidance of doubt, AZ shall have the right to discontinue the Exploitation of
any Candidate Drug that binds to and is directed against a Collaboration
Antigen

 

71

 

in favor of another Candidate Drug that binds to and is directed
against such Collaboration Antigen and any such substitution shall not be
deemed an abandonment of a Collaboration Antigen.

 

5.12         Development
Program Leaders.   Each Party shall appoint a
person (each a “Development Program Leader”) to coordinate activities of
the respective Parties under such Development Program, which Development
Program Leader of ABX shall be reasonably acceptable to AZ.  The Development Program Leaders shall be the
primary contacts between the Parties with respect to the applicable Development
Program and shall be responsible for coordinating the day-to-day
communications regarding the performance and results of the activities of the
Parties under such Development Program. 
Each Party shall notify in
writing the other Party as soon as practicable upon such appointment and upon
any change to such appointment, provided that ABX shall obtain the consent of
AZ prior to appointing or replacing a Development Program Leader, such consent
not to be unreasonably withheld or delayed.

 

5.13         Performance of Development Program by AZ. 

 

5.13.1      Notwithstanding the
foregoing, in the event (a) that AZ determines, in good faith, that ABX
lacks the necessary capacity, personnel, resources or expertise, or is
otherwise unable, to perform all or part of its obligations under a Development
Program Work Plan on a timely basis in accordance with industry standards or
(b) that ABX has materially breached a material obligation under another Development Program with
respect to another Candidate Drug or Licensed Product, or (c) of a
Change in Control of ABX, then AZ
shall have the right to provide written notice to ABX specifying AZ’s concerns
with respect to ABX’s (or its successor’s) capabilities for the performance of
such Development Program.  Within ten
(10) days of such notice, or at such other time as the Parties may agree, the
Parties shall meet to discuss AZ’s concerns under clause (a) or (c) above
and any plans ABX (or its successor) may have to address such concerns.  If ABX (or its successor) is not able to
address AZ’s concerns to AZ’s satisfaction within thirty (30) days after such
meeting or in the event ABX has materially breached a material obligation under
another Development Program, AZ shall have the right to conduct all or
such part of such Development Program itself or through one or more
subcontractors or sublicensees in addition to, or in substitution for,
ABX.  In such event, Sections 5.2,
5.3, 5.5, 5.6, 5.7, 5.12 and Article 6 shall not apply with respect to all
or such parts of such Development Program.

 

5.13.2      ABX shall reasonably
cooperate with reasonable requests from AZ for technical assistance with
respect to activities under a Development Program that ABX is not performing or
any other development of a Candidate Drug or Licensed Product, including by
making its employees available upon reasonable notice during normal business
hours to consult with AZ on issues arising in connection with the performance
of such development.  If AZ requests any
such technical assistance from ABX, (a) the Parties shall agree upon a
plan and budget for the activities to be performed by ABX, (b) ABX shall
use Commercially Reasonable Efforts to promptly complete such activities in
accordance with such plan and budget, (c) ABX shall provide AZ with any
Information generated from such activities, which Information shall be deemed
to be Development Program Technology and shall be subject to the terms and
conditions of this Agreement, and (d) AZ shall reimburse ABX for all reasonable and verifiable direct
out-of-pocket expenses incurred and FTEs employed by ABX in performing
such

 

72

 

activities in accordance
with such budget pursuant to Section 9.2. 
ABX shall provide to AZ, at AZ’s expense for reasonable out-of-pocket
costs incurred, any unused Biological Materials (other than Antibodies, which
are governed by Article 7) from such activities.

 

5.14         Term
of Development Program. 

 

5.14.1      The Development Program for each Candidate Drug that binds to and is
directed against a Collaboration Antigen shall commence on such date as AZ may
request after the designation of the first Research Antibody that binds to and
is directed against such Collaboration Antigen and, unless earlier abandoned
under Section 5.11 or terminated under Article 16, continue until the
earlier of (a) the completion of the activities described in the
applicable Development Program Work Plan through Phase II Completion for such
Candidate Drug, (b) the designation of such Collaboration Antigen as a
Discontinued Antigen, and (c) such time as AZ notifies ABX in writing of
its election, in its sole discretion, to terminate such Development Program for
scientific (including safety or efficacy), intellectual property or commercial considerations.  The expiration or termination of the
Development Programs with respect to a Collaboration Antigen shall not
constitute a termination of this Agreement with respect to such Collaboration
Antigen or, subject to Section 5.11, an abandonment of such Collaboration
Antigen.  In the event that a
Development Program with respect to a Candidate Drug is terminated prior to
completion of the activities described in the applicable Development Program
Work Plan (x) because of the designation of the applicable Collaboration
Antigen as a Discontinued Antigen, (y) because of a material breach of a
material obligation under such Development Program by ABX or (z) for
scientific (including safety or efficacy), intellectual property or commercial
considerations, AZ shall have the right to terminate the Process
Science/Clinical Manufacture Agreement and the Manufacturing and Supply
Agreement with respect to such Candidate Drug.

 

5.14.2      Upon the termination of ABX’s activities under a Development Program,
AZ or its designee shall have the right to assume full control of such
Development Program and ABX shall provide AZ, at AZ’s sole cost and expense
(except for a termination pursuant to Section 16.3, which shall be at
ABX’s sole cost and expense), with such reasonable assistance as is necessary
to accomplish a smooth and orderly transition of such Development Program to AZ
or its designee.  For the avoidance of doubt, any termination
by AZ of a Development Program for a Candidate Drug, either pursuant to
Section 5.14.1, 16.2 or 16.3, shall not constitute a termination of AZ’s
rights with respect to such Candidate Drug, which shall remain in full force
and effect, subject to Section 4.3.2.

 

6.             DEVELOPMENT
MANAGEMENT COMMITTEE.

 

6.1           Composition
of the Committee. 
Each Development Program and each Process Development Program shall be
conducted under the direction and supervision of the Development Management
Committee, which shall be comprised of an equal number of representatives from
ABX and AZ with the requisite experience and seniority to enable them to make
decisions on behalf of the Parties with respect to such programs.  Each Party shall appoint its initial members
of the Development Management Committee within six (6) months following the
Effective Date, or such longer period as the Parties mutually agree.  Each Party may substitute one or more of its
representatives, in its sole discretion, effective upon written notice

 

73

 

to the other Party of such change, provided that any such substitute
representative shall have substantially the equivalent experience and
seniority as the representative that such Person replaces.

 

6.2           Meetings.  AZ shall be responsible for
organizing and chairing the Development Management Committee meetings.  The Development Management Committee shall
meet not less than once each calendar quarter during each Development Program
Term, on such dates and at such times as agreed to by ABX and AZ.  In person meetings shall be at such
locations as the Parties mutually agree. 
Upon the mutual agreement of the Parties, any such meeting may be
conducted by telephone or videoconference; provided, however,
that not less than every other such meeting shall be in person.  At such meetings, the Development Management
Committee shall discuss the activities conducted under the Development Programs
and the Process Development Programs and the results thereof.  Each Party may permit visitors, including
its employees or agents, other than the members of the Development Management
Committee to meetings of the Development Management Committee as the Parties
mutually agree in writing prior to such meetings.  Each Party shall be responsible for its own costs in connection
with the meetings of the Development Management Committee.

 

6.3           Purpose
of Committee. 
The Development Management Committee shall be responsible for
supervising and directing the Development Programs, in each case during the
applicable Development Program Terms and, in consultation with the Manufacturing
and Supply Committee, overseeing the Process Development Programs.  To the extent that ABX is performing a
Development Program, the Development Management Committee shall review, revise
and approve the Development Program Work Plan for each stage of such Development
Program, and review and approve any amendments thereto.  For the avoidance of doubt, AZ shall have
the sole right to accept any Program Budgets, submitted by ABX, in accordance
with Section 5.3, provided that any changes to a Program Budget for a Development
Program shall be governed by the provisions of the Contract Services
Agreement.  Any approval, determination
or other action agreed to by the Development Management Committee, with ABX and
AZ each having one (1) vote, shall be the approval, determination or other
action of the Development Management Committee.

 

6.4           Areas of Responsibility. 
During each Development Program Term for each Development Program that
is performed in whole or in part by ABX, the Development Management Committee
shall have responsibility for the following identified matters: (a) design
of any optimization studies, as necessary, and all toxicology and other pre-clinical IND enabling studies;
(b) establish a clinical strategy, program and protocols for each
Candidate Drug; (c) establish an overall Development Program Work Plan, as
well as more detailed Development Program Work Plans for each stage of such
Development Program, for each Candidate Drug, including recommendations for
resourcing; (d) preliminarily evaluate Research Antibodies and Candidate
Drugs, including their productivity and viability, to determine which Candidate
Drugs to introduce into production process development; (e) oversee,
review and report on each Development Program to ABX and AZ; and (f) in the
event of a termination of a Development Program, establish a plan for the
orderly wind down or transition of such Development Program in accordance with
Section 5.11 or 5.14.2, as applicable. 
Upon the expiration or termination of a Development Program that is performed
in whole or in part by ABX for a Candidate Drug, the Development Management
Committee shall have no further obligation, responsibility or

 

74

 

authority regarding such
Candidate Drug, except with respect to the Process Development Program for such
Candidate Drug as described below.  The
Development Management Committee shall also be responsible for
(a) overseeing the performance of each Process Development Program by ABX,
including, in
consultation with the Manufacture and Supply Committee, overseeing the design
and implementation of each such Process Development Program for each Research
Antibody or Candidate Drug and the supply of each Candidate Drug and any
placebo or comparator with respect thereto, and (b) reviewing, revising
and approving the Process Development and Manufacturing Plans prepared by ABX
pursuant to Section 7.2.5, and all amendments thereto, for each such
Process Development Program for each Candidate Drug.

 

6.5           Minutes.  Within fourteen (14) days
following each Development Management Committee meeting, a representative of
the Parties to the Development Management Committee, on an alternating basis,
shall prepare and provide to each Party a copy of the minutes of such meeting
which shall set forth, in reasonably specific detail, any approval,
determination or other action agreed to by all of the members of the
Development Management Committee, provided that such minutes are reasonably
acceptable to both Parties.

 

6.6           Disputes.  Any disputes or
disagreements arising in the Development Management Committee that cannot be
resolved by the members of the Development Management Committee shall be
referred to the Chief Executive Officer of ABX and the Executive Vice President
of Development (or the Head of the Oncology Therapeutic Area) of AZ for
resolution.  If unable to resolve
any such dispute (other than disputes relating to a Party’s interpretation of,
or any allegation of breach of, this Agreement), then AZ shall have the final deciding vote.  Notwithstanding the foregoing, neither Party shall be obligated
to perform any activities under a Development Program that are not expressly
set forth in writing in a Development Program Work Plan.

 

7.             PROCESS
SCIENCE AND MANUFACTURING

 

7.1           Negotiation
and Execution of Agreements.   Within [Confidential treatment requested] after the Effective
Date (or such longer period as the Parties may mutually agree), the Parties
shall enter into the Process Science/Clinical Manufacture Agreement and the
Manufacturing and Supply Agreement, which agreements shall be negotiated within
the parameters of the applicable terms and conditions set forth in
Articles 6 and 7.  In addition to
such provisions, the Process Science/Clinical Manufacture Agreement and the
Manufacturing and Supply Agreement shall include standard contract service and
manufacturing and supply provisions, which the Parties shall negotiate in good
faith and on commercially reasonable terms. 
In the event of any conflict between this Agreement and the Process
Science/Clinical Manufacture Agreement or the Manufacturing and Supply
Agreement, this Agreement shall govern, except to the extent that the Process
Science/Clinical Manufacture Agreement or the Manufacturing and Supply
Agreement (as applicable) expressly states that it amends a specific provision
of this Agreement.

 

75

 

7.2           Prior
to First Commercial Sale.

 

7.2.1        Discovery Phase.

 

(a)           ABX shall provide AZ
with reasonable research quantities of each Research Antibody as specified in
the applicable Research Program Work Plan, at ABX’s sole cost and expense, in
order for AZ to assess such Antibody and perform its activities under the
applicable Research Program and exercise its rights under Article 2.  Notwithstanding the foregoing, AZ shall have the right to reasonably
request additional research quantities of an Antibody, beyond those quantities
set forth in the Research Program Work Plan, for the sole purpose of performing
activities outside of the Research Programs that are directed towards
designating a Candidate Drug, but not for the purpose of furthering any other
AZ activities.  If AZ reasonably
requests additional research quantities of an Antibody for such purpose, then
ABX, at AZ’s sole cost and expense, shall be responsible for manufacturing and
supplying such additional research quantities for such purpose.  ABX, at its sole cost and expense, shall be
responsible for such Antibody scale up activities as are necessary to complete
the activities set forth in the Research Programs.  If AZ requests additional quantities of any Antibodies as
permitted under this Section 7.2.1(a) and ABX does not have sufficient
uncommitted quantities available, ABX shall, at its sole cost and expense,
provide AZ with the cell line for each such Antibody to enable AZ to produce
such Antibody for such purposes.

 

(b)           Except as otherwise described in
Section 7.2.1(a) and
as provided in Sections 7.5, 7.5 and 7.13, ABX, at AZ’s sole cost and
expense subject to Section 7.13, shall be responsible for all process
development and manufacturing activities (including cell line development and
scale up) required to be conducted, prior to the designation of a Candidate
Drug, in accordance with the Process Science/Clinical Manufacture Agreement.

 

7.2.2                        Development Phase.

 

(a)                                  Except as provided in
Sections 7.2.1, 7.5, 7.5 and 7.13, under the Process Science/Clinical
Manufacture Agreement, ABX, at AZ’s sole cost and expense subject to
Section 7.13, shall be responsible for all process development activities
required to be conducted for completion of the Development Programs and such
other Phase II Clinical Trials, Phase III Clinical Trials and other development
activities in support of the Registrations for, and launch of, each Candidate
Drug and Licensed Product, as applicable.

 

(b)           Except as provided in
Sections 7.2.1, 7.5, 7.5 and 7.13, under the Process Science/Clinical
Manufacture Agreement or the Manufacturing and Supply Agreement, ABX, at AZ’s
sole cost and expense subject to Section 7.13, shall manufacture or have
manufactured (and AZ shall purchase from ABX) AZ’s requirements of each
Candidate Drug and Licensed Product in finished, formulated bulk or, if
selected by AZ, vialed form for use under the applicable Development Program
and in such other Phase II Clinical Trials, Phase III Clinical Trials and other
development activities in support of the Registrations for, and launch of, a
Candidate Drug or Licensed Product.

 

76

 

7.2.3                        Process Development Programs.

 

(a)                                  The Development Management Committee
shall decide which process technologies—e.g., hybridoma, recombinant, Cell:
Cell Fusion—shall be used in the Process Development Program for each lead
Research Antibody and Candidate Drug. 
AZ shall have the sole right to make decisions regarding (x) the
use of any Third Party royalty bearing technology Controlled by ABX, and the
in-licensing of Third Party intellectual property in connection with the use of
technologies that are not already Controlled by ABX or that are specific to
such Research Antibody and Candidate Drug, and (y) without limiting the
obligation of AZ to purchase (and ABX to supply) AZ’s requirements of each of
its Research Antibodies and Candidate Drugs from ABX as provided herein
[Confidential treatment requested], the need for any backup facility, and
selection, qualification and use of any Third Party manufacturing facility for
each such Research Antibody and Candidate Drug.  The Parties acknowledge and agree that (i) the decision to
commence a Process Development Program should take into consideration the
likelihood that an Antibody will be designated a Candidate Drug, (ii) it
may be necessary or useful to simultaneously pursue the development of multiple
process technologies for a particular Candidate Drug based on scientific,
technical, intellectual property or commercial considerations, (iii) the
process technology used to manufacture early clinical supplies of a Candidate
Drug may be different than the process technology used to manufacture later
stage clinical and commercial supplies of such Candidate Drug or the applicable
Licensed Product, (iv) the Parties intend that the process technology and
the facility (or facilities) to be used to manufacture a Licensed Product for
Phase III Clinical Trials will be the same as that used for commercial supply,
(v) the Process Development and Manufacturing Plan for each Licensed
Product will include reasonable plans for fully-qualified back-up manufacturing
facilities to provide for uninterrupted supply upon the occurrence of a Force
Majeure event or increased product requirements beyond the quantities that ABX
is able to supply, and (vi) the Process Development and Manufacturing Plan
for each Licensed Product will include a plan for technology transfer to AZ (or
its designee) in accordance with Section 7.10.

 

(b)           The process development work conducted
by or on behalf of ABX under the Process Science/Clinical Manufacture Agreement
for each Process Development Program shall, for example, include the following:
(i) establishment of product specifications for finished, formulated bulk
and vialed form of the Candidate Drugs and Licensed Products; (ii) cell
line development and optimization; (iii) development and characterization
of a research cell bank and a master cell bank; (iv) cell culture development
and purification process (using the manufacturing process technology(ies)
designated by the Development Management Committee) for producing each
Candidate Drug and Licensed Product using such master cell bank;
(v) performance of appropriate qualified, and when necessary validated,
assays to quantify the biochemical, immunological and functional
characteristics of each Candidate Drug and Licensed Product produced;
(vi) performance of stability studies; (vii) release of each Candidate Drug and Licensed
Product; and (viii) development of a transferable and scalable cGMP
process for each Candidate Drug and Licensed Product to enable AZ or its
designee (subject to Sections 7.2.2(b) and 7.3) to manufacture clinical
and commercial grade materials (including sufficient clinical and commercial
quantities thereof).

 

7.2.4        ABX Right to
Subcontract.  ABX shall perform its
obligations under each Process Development Program and shall not enter into any
subcontract with a Third

 

77

 

Party to perform any such
activities except as expressly permitted in the applicable Process Development
and Manufacturing Plan or as otherwise agreed to by the Parties, provided in
any event that any such permitted subcontractor shall be reasonably acceptable
to AZ, the fees and expenses of any such subcontractor shall not exceed those
budgeted in the applicable Program Budget (unless such excess costs are
pre-approved by AZ), and any such fees and expenses of any such subcontractor
shall be passed through to AZ without mark-up by ABX.

 

7.2.5        Process Development and
Manufacturing Plans.  Upon the
request of the Development Management Committee or AZ, ABX, in consultation
with AZ, shall prepare an overall written plan for the process development of
one or more Research Antibodies and Candidate Drugs that bind to and are
directed against the applicable Collaboration Antigen and the manufacture and
supply of clinical and commercial quantities of the resulting Licensed
Products, which plan has as its goals (based upon the reasonable projections
and other assumptions provided by the Development Management Committee) the
earliest possible launch of such Licensed Products in each of the Major Markets
and a secure supply chain to be able to meet the market demand for such
Licensed Products in the Major Markets through at least the fifth (5th)
anniversary of the First Commercial Sale of such Licensed Products (the “Process
Development and Manufacturing Plan”). 
In addition to the overall plan, the initial Process Development and
Manufacturing Plan for a Collaboration Antigen will include a more detailed
plan for the Process Development Program for one or more lead Research
Antibodies and the resulting Candidate Drug(s) that details the activities set
forth in Section 7.2.3 and such other activities as are necessary to
complete such Process Development Program, including specific details of FTEs
to be utilized by ABX, technologies to be employed by ABX in accordance with
Section 7.13 and any Third Party contractors proposed to be used to
implement such Process Development and Manufacturing Plan.  As soon as practicable after the designation
of a Candidate Drug, the Parties will amend the Process Development and
Manufacturing Plan to include additional detail around the clinical and
commercial manufacture and supply of such Candidate Drug and any resulting
Licensed Product.  The Parties
acknowledge and agree that each Process Development Program may be an iterative
process and, therefore, each Process Development and Manufacturing Plan will be
amended from time to time to include specific detail regarding activities to be
performed and the learning developed in the course of such Process Development
Program as well as the specific manufacturing and supply requirements for the
resulting Licensed Products.

 

7.3           Manufacture of Licensed Product for Commercial Sale.  Under the Manufacturing and
Supply Agreement, ABX shall manufacture or, subject to Section 7.4, have
manufactured (and AZ shall purchase from ABX subject to Sections 7.4, 7.5,
7.5 and 7.13) AZ’s requirements of the applicable Licensed Product for a
minimum of five (5) years (or for such other period as the Parties mutually
agree in writing) following the First Commercial Sale of such Licensed Product
in a Major Market.

 

7.4           Manufacturing Commitment and
Capacity.

 

7.4.1        The Parties acknowledge
and agree that wherever possible Candidate Drugs and Licensed Products should
be manufactured at ABX’s facilities and not by subcontractors.  Accordingly, except as provided in
Section 7.5, AZ shall give priority to ABX facilities (and then to the
facilities of ABX subcontractors), provided that such facilities (and

 

78

 

subcontractors) are
reasonably acceptable to AZ, in selecting additional (backup or second source)
manufacturing facilities for Candidate Drugs and Licensed Products.  [Confidential treatment requested] 
To assist the Parties in managing the supply chain for the various
Candidate Drugs and Licensed Products, the Process Science/Clinical Manufacture
Agreement and the Manufacturing and Supply Agreement shall require that
(x) ABX provide AZ with periodic good faith forecasts of its process development
and clinical and commercial manufacturing capacity and commitments, (y) AZ
provide ABX with long range planning forecasts (which will be non-binding) of
AZ’s good faith reasonably anticipated long term requirements for the various
Candidate Drugs and Licensed Products, and (z) AZ provide ABX with
customary rolling firm forecasts for the various Candidate Drugs and Licensed
Products, in each case which forecasts shall be of sufficient duration and with
sufficient frequency to enable the Parties to effectively plan and implement
secure chains for supply of the various Candidate Drugs and Licensed
Products.  ABX shall provide capacity
within its own manufacturing facility based on AZ’s forecasts for Candidate Drugs
and Licensed Products provided to ABX as described in clauses (y) and (z)
above, unless such forecasts for all Candidate Drugs and Licensed Products
utilize more than [Confidential
treatment requested] (or more if additional uncommitted capacity is
available) of ABX’s total manufacturing capacity at any given time.  AZ shall be committed to using and paying
for all required manufacturing slots in AZ’s firm forecasts; provided, however,
if AZ should subsequently cancel such slots due to product failure or a
significant delay in the program, [Confidential treatment requested].

 

7.4.2        If, notwithstanding its
good faith efforts, ABX does not have sufficient capacity to meet its
obligations under a Process Development and Manufacturing Plan (including
back-up manufacturing capabilities), ABX shall notify AZ and, without
additional cost to AZ, at AZ’s election, ABX shall either (a) perform such
activities itself through a Third Party manufacturer reasonably acceptable to
AZ, or (b) permit AZ to perform such activities itself or with or through
a Third Party manufacturer.  The Parties
acknowledge and agree that continuity of supply sourcing is desirable and,
accordingly, if AZ or a Third Party manufacturer is retained to perform certain
activities or to manufacture all or a portion of a Licensed Product, unless AZ
agrees otherwise, AZ shall have the right to continue to conduct such
activities or manufacturing or to cause ABX to continue to use such Third Party
to perform such activities or manufacturing, as applicable, even if ABX later
obtains sufficient capacity to do so itself.

 

7.4.3        [Confidential treatment requested]

 

7.5           Failure
or Inability to Perform.   Notwithstanding the foregoing, in the event that, at any time
prior to the commencement of a particular Process Development Program activity
or the manufacture and supply under the Process Science/Clinical Manufacture
Agreement or the Manufacturing and Supply Agreement for a particular Candidate
Drug or Licensed Product, [Confidential treatment requested], or (e) there
is a Change in Control of ABX, then AZ shall have the right to provide written
notice to ABX specifying AZ’s concerns with respect to ABX’s (or its
successor’s) capabilities [Confidential treatment requested].  Within [Confidential treatment requested]
after receipt by ABX of such notice, or at such other time as the Parties may
agree, the Parties shall meet and discuss in good faith AZ’s concerns under
clause [Confidential treatment requested] (e) above and any plans ABX (or its
successor) may have to address such concerns. 
[Confidential treatment requested]

 

79

 

7.6           Additional Capacity or Technologies.
  The Parties acknowledge and agree that
in executing a Process Development and Manufacturing Plan, ABX shall not be
required to acquire or establish facilities or technologies in addition to
those customarily used in ABX’s business from time to time.  If, at any time, AZ wishes to have process
development or manufacturing activities performed for a Research Antibody,
Candidate Drug or Licensed Product that would require ABX to acquire or
establish such additional facilities or technologies, and ABX (either alone or,
subject to Section 7.4.3, through its Third Party subcontractors) is
unable or unwilling to do so, then AZ shall have the right, at its sole cost
and expense, either itself or with or through a Third Party, to have such
activities performed, provided that in the event that AZ or a Third Party is
required to establish and validate a manufacturing facility for a Candidate
Drug or Licensed Product, AZ shall have the right to have all, or such portion
as it may determine, of its clinical and commercial requirements of such
Candidate Drug and Licensed Product manufactured at such facility.

 

7.7           Manufacturing and Supply Committee.   The Process Science/Clinical Manufacture Agreement shall include
a Manufacturing and Supply Committee consisting of an equal number of
representatives from each Party, with the responsibility to oversee the
manufacturing and supply process during each Process Development Program and to
assist the Development Management Committee to (a) establish criteria and
timelines for implementation of process development, manufacturing and supply
of Candidate Drugs and Licensed Products; (b) oversee the planning and resourcing
for an approved manufacturing program; (c) decide on the use of the AZ ABL
facility in the manufacturing and supply of Candidate Drugs and Licensed
Products; (d) recommend Third Party support, as appropriate; and
(e) take such other actions as are set forth in this Article 7 or in
the Process Science/Clinical Manufacture Agreement or the Manufacturing and
Supply Agreement.  The Development
Management Committee shall have oversight over the Manufacturing and Supply
Committee and each Process Development Program.  Any disputes or disagreements arising in the Manufacturing and
Supply Committee that cannot be resolved by the members of the Manufacturing
and Supply Committee shall be referred to the Chief Executive Officer of ABX
and the Executive Vice President of Operations of AZ (or one of his or her
direct reports) for resolution. 
If any such dispute (other than disputes relating to a Party’s
interpretation of, or any allegation of breach of, this Agreement, the Process
Science/Clinical Manufacture Agreement or the Manufacturing and Supply
Agreement) is unable to be
resolved, then AZ shall have the
final deciding vote; provided, however, that, subject to the
relevant provisions of this Article 7, (x) neither Party shall be
obligated to perform any activities under a Process Development Program that
are not set forth in the applicable Process Development and Manufacturing Plan
and any changes to a Process Development and Manufacturing Plan that result in
changes to the applicable Program Budget shall require that ABX submit a
revised Program Budget proposal pursuant to Section 7.13, and (y) certain
technical disputes under the Process Science/Clinical Manufacture Agreement or
the Manufacturing and Supply Agreement, such as whether a particular Candidate Drug
or Licensed Product conforms to the applicable specifications, shall be
referred to an independent testing laboratory for resolution. The Parties acknowledge and agree that,
subject to the provisions of this Section 7.7, ABX shall have the right to
make day-to-day operational decisions regarding the implementation of each
Process Development Program and the conduct of its (or its subcontractors’)
manufacturing activities, each within the scope of the applicable Process
Development and Manufacturing Plan.  For
the avoidance of doubt, AZ shall have the right to accept or reject any Program
Budgets submitted by ABX pursuant to Section 7.13.

 

80

 

Except as otherwise provided in this Agreement, any changes to an
accepted Program Budget shall be made as provided in the Process
Science/Clinical Manufacture Agreement or the Manufacturing and Supply
Agreement, as applicable.

 

7.8           Information
Disclosure.   From time to time during the term of the Process Science/Clinical
Manufacture Agreement and the Manufacturing and Supply Agreement, ABX shall
make available for AZ’s review, and AZ shall have customary rights to copy, in
each case at AZ’s reasonable request, documentation regarding the process
development and the manufacturing and supply of any Research Antibody,
Candidate Drug or Licensed Product and any other testing or services performed
in accordance with such agreements for such Research Antibody, Candidate Drug
or Licensed Product, including the certificate of analysis, batch records,
quality control SOPs, or regulatory records directly relating to the Candidate
Drug (including filings or communications with any governmental or regulatory
authorities) (the “Manufacturing Data”).

 

7.9           Process Technology.   ABX shall own all ABX Process Technology; provided,
however, that, on and after the designation of a Candidate Drug that
binds to and is directed against a Collaboration Antigen, AZ shall own, and ABX
and its Affiliates shall assign to AZ, the Manufacturing Data and any cell
lines, including research and master cell banks, expressing Candidate Drugs,
Licensed Products or other Antibodies that bind to and are directed against
such Collaboration Antigen.  Subject to
the process development and manufacturing and supply commitments set forth in
this Article 7 and in the Process Science/Clinical Manufacture Agreement
and the Manufacturing and Supply Agreement, ABX and its Affiliates shall grant to AZ a [Confidential treatment
requested] worldwide, right and license (with the right to grant sublicenses through multiple tiers of
sublicensees subject to the last sentence of this Section 7.9) under the
ABX Process Patent Rights and ABX Process Know-How Rights to Exploit
Antibodies, Candidate Drugs and Licensed Products for which ABX is performing
activities under the Process Science/Clinical Manufacture Agreement for
use in the Commercial Field.  From and
after the date that ABX ceases to perform process development or manufacturing
and supply activities with respect to an Antibody, a Candidate Drug or a
Licensed Product under the Process Science/Clinical Manufacture Agreement and
the Manufacturing and Supply Agreement, ABX and its Affiliates shall grant to
AZ the exclusive, worldwide, [Confidential
treatment requested] right and license (with the right to grant
sublicenses through multiple tiers of sublicensees subject to the last sentence
of this Section 7.9) under the
ABX Process Patent Rights and ABX Process Know-How Rights to Exploit such
Antibody, Candidate Drug and Licensed Product for use in the Commercial
Field.  Notwithstanding anything to the
contrary in this Agreement, the right of AZ to grant sublicenses under the ABX Process Patent Rights and ABX
Process Know-How Rights applicable to an Antibody, Candidate Drug or Licensed
Product shall be limited solely to the extent Reasonably Necessary to
manufacture and supply such Antibody, Candidate Drug or Licensed Product
for use in the Commercial Field (and related process development and testing
activities).

 

7.10         Technology
Transfer. 

 

7.10.1      If the Process Science/Clinical Manufacture Agreement or the
Manufacturing and Supply Agreement with respect to a particular Candidate Drug
or Licensed Product is terminated for any reason or expires, or if (a) ABX
does not have sufficient capacity

 

81

 

to meet its obligations under a Process Development and Manufacturing
Plan pursuant to Section 7.4, (b) AZ determines, pursuant to
Section 7.5, [Confidential treatment requested] (c) AZ elects to
establish additional capacity or a back-up manufacturing facility pursuant to
Section 7.5, or (d) ABX does not provide a competitive Program Budget
for a Process Development Program or supply price for clinical or commercial
supplies of a Candidate Drug or Licensed Product pursuant to Section 7.13,
ABX shall (x) transfer to AZ (or its designee) documentation, relevant
manufacturing know-how and materials that are Reasonably Necessary to enable AZ
or such designee to manufacture clinical or commercial supplies of such
Candidate Drug or Licensed Product, and (y) comply with applicable
regulatory requirements (including obtaining any necessary regulatory
approvals, conducting any required studies and developing any other regulatory
documentation) in connection with such transfer, all as more fully described in the Process
Science/Clinical Manufacture Agreement and Manufacturing and Supply
Agreement.  In such event, ABX shall
also transfer to AZ (or its designee) (i) the cell lines for each Antibody
that binds to and is directed against the applicable Collaboration Antigen for
which process development was conducted under the Process Development and
Manufacturing Plan, and (ii) all process and analytical samples, including
stability samples, of any Candidate Drug or Licensed Product manufactured or
supplied by or on behalf of ABX. 
Further, in such event, if the ABX Process Technology for such Candidate
Drug or Licensed Product includes media, reagents or other materials that are
not available to AZ on terms and prices at least as favorable as the terms and
prices available to ABX, then ABX shall make such materials available to AZ or
its designee(s) on such terms and prices or, if such materials are proprietary
to ABX, on commercially reasonable terms and prices.

 

7.10.2      ABX shall provide AZ with
reasonable assistance required in order to transfer the documentation,
materials and other know-how as set forth above to AZ or its designee(s) in a
timely manner and assist AZ or its designee(s) with respect to the process
development and manufacture of the Research Antibodies, Candidate Drugs and
Licensed Products, including establishing, validating and securing regulatory
approval for one or more manufacturing facilities (to the extent applicable to
the technology transferred).  The
Parties shall use Commercially Reasonable Efforts to implement any technology
transfers pursuant to this Section 7.10 sufficiently in advance of any
such termination event or expiration. 
ABX shall commit (for a period not to exceed [Confidential treatment requested] after any such termination) to
supplying AZ pursuant to its existing commitments to AZ unless AZ has not been
reasonably timely in establishing another facility or manufacturer.

 

7.10.3      Except as set forth in the
last sentence of Section 7.10.1, ABX shall transfer the technologies and
materials and provide AZ with the assistance, in each case as set forth in this
Section 7.10, at [Confidential
treatment requested], unless such transfer is because (a) [Confidential treatment requested],
(b) ABX does not provide a
competitive Program Budget for a Process Development Program or supply price
for clinical or commercial supplies of a Candidate Drug or Licensed Product
pursuant to Section 7.13, (c) of a termination of the Process Science/Clinical
Manufacture Agreement or the Manufacturing and Supply Agreement upon a material
breach by AZ, or (d) AZ determines in accordance with this
Article 7 ([Confidential
treatment requested]) to establish another manufacturing facility or
manufacturer, despite that ABX (or its subcontractor reasonably acceptable to
AZ) has the capability and capacity, and is willing and able, to manufacture
and supply AZ’s forecasted requirements for a Candidate Drug or Licensed
Product, in which case AZ shall
reimburse ABX for its reasonable

 

82

 

and verifiable costs and expenses incurred in making such transfers or
providing such assistance. 
[Confidential treatment requested]

 

7.11         Disengagement.  If the Process Science/Clinical Manufacture
Agreement or the Manufacturing and Supply Agreement with respect to a
particular Candidate Drug or Licensed Product is terminated for any reason, ABX
shall, at the request of AZ, transfer to AZ or its designee any ongoing stability
studies.  In any such event, the Process
Science/Clinical Manufacture Agreement or the Manufacturing and Supply
Agreement shall specify the procedures for such transfer as well as the
procedures for the orderly transition and transfer of inventory and work in
process.

 

7.12         DMF.  ABX shall be responsible for the
preparation, filing, prosecution and maintenance of, and shall own, the DMF
specific for each Candidate Drug and Licensed Product (“Drug DMF”) that
ABX manufactures or has manufactured until such time, after ABX or its
subcontractor is no longer manufacturing such Candidate Drug or Licensed
Product, as AZ requests that such Drug DMF be assigned and transferred to AZ or
its designee.  ABX shall provide AZ with sufficient
opportunity to review and comment on such Drug DMF prior to any filing with any
regulatory authority, and ABX shall incorporate the reasonable requests of AZ
regarding the filing, prosecution and maintenance of the Drug DMF for each such
Candidate Drug and Licensed Product. 
ABX shall (a) notify AZ as early as
reasonably practicable in advance of all meetings and significant
communications with any regulatory or governmental authority concerning any
such Drug DMF and shall permit AZ to participate in such meetings, (b) promptly
prepare and deliver to AZ complete and accurate minutes of any such meeting or
communications, and (c) promptly forward to AZ copies of all written
communications received from any regulatory or governmental authorities with
respect to any such Drug DMF upon receipt therefrom.  AZ and its
employees shall otherwise assist ABX, upon the request of ABX, and to the
extent commercially reasonable, in preparing, filing or maintaining such
registrations and such Drug DMF.  At
AZ’s request, as permitted above, ABX shall assign and transfer all of its
right, title and interest in and to such Drug DMF to AZ or its designee.  Notwithstanding the ownership of a
Drug DMF, ABX shall grant to AZ and its sublicensees the right and license to
use and reference each Drug DMF with respect to a Candidate Drug and Licensed
Product, and the data included or referenced therein, for purposes of
exercising its rights under this Agreement. 
ABX shall file and maintain, and shall solely own, its Plant V DMF,
and shall permit AZ to cross reference the same for Candidate Drugs and Licensed Products.

 

7.13         Process Development Funding and Supply Price.

 

7.13.1      Costs and Expenses of Process Development. 
Based on the applicable Process Development and Manufacturing Plan, ABX
shall, from time to time at the request of AZ, prepare, for review and approval
by AZ, a reasonably detailed Program Budget for implementing ABX’s process
development obligations under the applicable Process Development and
Manufacturing Plan, including details of FTEs to be utilized, and the projected
fees and expenses projected to be incurred, including associated technology
access fees, royalties and other similar Third Party payments in accordance
with this Section 7.13.1 and Section 7.13.3.  [Confidential treatment requested]  If AZ accepts a Program Budget pursuant to
this Section 7.13.1, then such Program Budget shall represent a binding
contract between ABX

 

83

 

and AZ and shall be incorporated into the Process Science/Clinical
Manufacture Agreement.  [Confidential
treatment requested]

 

7.13.2      Price for each Candidate Drug and Licensed Product. 
Subject to this Section 7.13.2, [Confidential treatment requested].

 

7.13.3      If, in the course of
preparing the applicable Process Development and Manufacturing Plan or
performing the applicable Process Development Program, ABX becomes aware of any
technologies that would be Reasonably Necessary in performing such Process
Development Program, ABX shall disclose to AZ such technologies and any
royalties or other payments to Third Parties (of which ABX is aware) associated
with the use of such technologies (whether such payments would be required by
ABX or AZ).  AZ shall have the right to
determine whether to use any such technologies.  [Confidential
treatment requested]

 

7.14         Termination.  Except as expressly set forth in
Article 16, the right to terminate a Process Development Program or the
Process Science/Clinical Manufacture Agreement or the Manufacturing and Supply
Agreement and the effects of such termination shall be set forth in the Process
Science/Clinical Manufacture Agreement or the Manufacturing and Supply
Agreement, as applicable. 
Notwithstanding the foregoing, in the event of an uncured material
breach of ABX’s material obligations under (a) the Process
Science/Clinical Manufacture Agreement, AZ shall have the right to terminate
the Manufacturing and Supply Agreement, (b) the Process Science/Clinical
Manufacture Agreement, AZ shall have the right to terminate all Process
Development Programs then in effect, or (c) a Process Development Program
with respect to a Candidate Drug or Licensed Product, AZ shall have the right
to terminate the Manufacturing and Supply Agreement with respect to such
Candidate Drug or Licensed Product.

 

7.15         Use of
Technologies. 
Notwithstanding anything to the contrary in this Agreement (including
AZ’s right to make certain decisions, in accordance with this Article 7,
regarding the use of any Third Party royalty bearing technology Controlled by ABX,
and the in-licensing of Third Party intellectual property in connection with
the use of technologies that are not already Controlled by ABX or that are
specific to such Research Antibody and Candidate Drug)), ABX shall have no
obligation to use technologies (other than Cell: Cell Fusion) selected by AZ,
if ABX reasonably believes the use of such technologies in connection with the
Process Development Programs, the Process Science/Clinical Manufacture
Agreement or the Manufacturing and Supply Agreement could infringe, or
constitute a misappropriation, of Third Party intellectual property rights.

 

8.             CO-DEVELOPMENT AND COMMERCIALIZATION  

 

8.1           Co-Development
Agreement. 
If AZ designates a Potential Co-Development Antigen as a Co-Development
Antigen pursuant to Section 2.2.1(l), the Parties shall negotiate in good
faith to enter into a mutually acceptable written co-development and
commercialization agreement (“Co-Development Agreement”) for the
Exploitation of Antibody Equivalents that bind to and are directed against such
Co-Development Antigen on a worldwide basis. 
The Co-Development Agreement shall provide (a) the sharing of the
responsibility and control over the research, development and commercialization
for such Antibody Equivalents by

 

84

 

the Parties, (b) a mechanism, including the choice of legal
vehicle, for the equal sharing of costs incurred in connection with the
research and development of such Antibody Equivalents after such designation,
and the equal sharing of profits and losses resulting from the
commercialization of such Antibody Equivalents, (c) that ABX will have
responsibility for the process development work for such Antibody Equivalents
antibody products, and (d) such other commercially reasonable terms as the
Parties may mutually agree.

 

8.2           Offer.
  At AZ’s sole election, AZ may offer to
ABX the opportunity to co-develop one or more Candidate Drugs or Licensed
Products.  If AZ makes any such offer to
ABX, AZ shall provide to ABX all data and Information Reasonably Necessary to
assist ABX in making a decision with respect to such co-development proposal,
and shall grant ABX a reasonable time to make such decision.

 

9.             FUNDING, MILESTONE PAYMENTS AND ROYALTIES 

 

9.1           Research
Program Funding. 
Except as provided in Section 2.2.3 or 2.6.2, each Party shall be
responsible for funding the cost of performing its obligations under each
Research Program.  In the event that
either Party determines that additional activities not set forth in the Research
Program Work Plan for a Collaboration Antigen should be performed under the
applicable Research Program pursuant to Section 2.2.3 or 2.6.2, the
Parties shall use good faith efforts to agree on a budget for such additional
activities, which budget shall, subject to Sections 2.2.3 and 2.6.2, set
forth the direct out-of-pocket costs to be incurred, and FTEs to be employed, by
the Parties in performing such
activities.  Unless otherwise agreed by
AZ, such additional activities with respect to a Collaboration Antigen shall be
performed by ABX (provided that, unless ABX otherwise consents in writing, all
such additional work for all Collaboration Antigens does not exceed
[Confidential treatment requested] additional FTEs in the aggregate for each
year).  Within [Confidential treatment requested]
after the end of each calendar month in which additional activities (not
included in the Research Program Work Plan) are conducted, ABX and AZ each
shall furnish the other with a statement showing the direct out-of-pocket
expenses incurred, and the FTEs employed, by such Party in performing such
activities during such calendar month, provided that such costs or expenses may
not exceed the amounts set forth in such agreed upon budget for such activities
(the “Authorized Research Expenses”). 
Within [Confidential
treatment requested] after the end of each calendar month, ABX and AZ
shall make payments to one another so that each Party shall bear the applicable
percentage of the total Authorized Research Expenses for such calendar month as
set forth in Section 2.2.3
or 2.6.2, as applicable.

 

9.2           Development
Program Funding. 
AZ shall reimburse ABX for the fees and expenses incurred by ABX in
performing its activities under each Development Program or pursuant to
Section 5.13.2, provided that such fees and expenses are determined
pursuant to Section 5.3 and do not exceed the amounts set forth in the
applicable Program Budget for the relevant activities without the approval of
AZ (the “Authorized Development Expenses”); and provided  further
that if ABX uses, subject to Section 5.2.2, a Third Party contract
research organization to perform any of its activities under such Development
Program any fees charged by such Third Party or any other external costs
incurred by or on behalf of ABX shall be passed through to AZ without any
mark-up by ABX.  ABX shall invoice AZ
for its Authorized Development Expenses incurred during each calendar month,
which invoice shall be

 

85

 

accompanied by expense
reports and such other supporting documentation as may be requested by AZ.  AZ shall pay each such invoice within [Confidential treatment
requested] after the date of receipt of such invoice and supporting
documentation.

 

9.3           AZ Milestone Payments and Royalties.

 

9.3.1        Milestone Payments.  AZ shall pay to ABX the
following milestone payments within [Confidential treatment requested] of the achievement of the applicable milestone described below,
as applicable, for each Candidate Drug that binds to and is directed against a
Collaboration Antigen:

 

	
  Milestone
  Payment

  	
   

  	
  Milestone Event

  
	
   

  	
   

  	
   

  
	
  U.S. [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  
	
   

  	
   

  	
   

  
	
  U.S. [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  
	
   

  	
   

  	
   

  
	
  U.S. [Confidential treatment requested]

  	
   

  	
  Acceptance of BLA for such Licensed Product by the applicable
  regulatory authorities in a Major Market

  
	
   

  	
   

  	
   

  
	
  U.S. [Confidential treatment requested]

  	
   

  	
  First approval of all Registration(s) of such Licensed Product required
  for First Commercial Sale in a Major Market

  

 

Each milestone
shall be payable [Confidential treatment requested] for a Candidate Drug or Licensed
Product containing such Candidate Drug [Confidential treatment requested] 
Further, in the event that AZ discontinues the development or
commercialization of a Candidate Drug or Licensed Product, as applicable, that binds to and is directed against
a Collaboration Antigen in favor of another Candidate Drug or Licensed Product that binds to and is directed against
such Collaboration Antigen, any milestones paid to ABX with respect to such
first Candidate Drug or Licensed Product shall be credited against any
milestones, if any, due with respect to such subsequent Candidate Drug or
Licensed Product.

 

9.3.2        Licensed Product Royalties.  AZ shall pay to ABX the
following royalties based on the annual Net Sales of each Licensed Product sold
by AZ and its Affiliates during the Royalty Term for such Licensed
Product.  The royalty rates shall
be determined on a Product-by-Product basis as follows:

 

86

 

	
  Annual Net
  Sales

  	
   

  	
  Non-Proprietary

  ABX Antigen

  	
   

  	
  Proprietary

  ABX Antigen

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  For that portion of aggregate Net Sales
  that is less than U.S.$[Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  For that portion of aggregate Net Sales
  that equals or exceeds U.S.$[Confidential treatment requested] but is less than U.S.$[Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  For that portion of aggregate Net Sales
  that equals or exceeds U.S.$[Confidential treatment requested] but is less than U.S.$[Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  For that portion of aggregate Net Sales
  that equals or exceeds U.S.$[Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  	
   

  

 

For purposes of this
Section 9.3.2, a Non-Proprietary ABX Antigen shall be any Collaboration
Antigen other than a Proprietary ABX Antigen. 
For the avoidance of doubt, if ABX does not designate an Antigen as a
Proprietary ABX Antigen pursuant to Section 4.17.2 before such Antigen is
designated as a Proposed Antigen, such Antigen shall be a Non-Proprietary ABX
Antigen.  Further, the determination as
to whether a Proprietary ABX Antigen remains a Proprietary ABX Antigen shall,
with respect to any royalty payment, be made at the time such royalty payment
obligation arises.

 

The calculation of royalties
under this Section 9.3.2 shall be
conducted separately for each Licensed Product.  Thus, if AZ sells more than one Licensed Product, the thresholds
and ceilings in this Section 9.3.2 shall
apply separately to each Licensed Product.

 

9.3.3        Third Party Royalties.  [Confidential treatment requested]

 

9.3.4        Non-Licensed Product Royalties.  [Confidential treatment
requested]

 

9.4           ABX
Milestone Payments and Royalties.

 

9.4.1        Discontinued Antigen Milestones.

 

(a)           For each Discontinued Antigen that is
so designated at any time prior to the designation of a Candidate Drug that
binds to and is directed against such Antigen

 

87

 

(other than pursuant to Section 2.6.5), ABX shall pay to AZ the
following milestone payments within [Confidential treatment requested] of the
achievement of the applicable milestone described below, as applicable, for
each ABX Product that binds to and is directed against such Discontinued
Antigen:

 

	
  Milestone Payment

  	
   

  	
  Milestone Event

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  U.S.[Confidential
  treatment requested]

  	
   

  	
  [Confidential
  treatment requested]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  U.S.[Confidential treatment requested]

  	
   

  	
  First approval of all
  Registration(s) of such ABX Product required for First Commercial Sale in a
  Major Market

  	
   

  

 

(b)           For each Discontinued Antigen that is
so designated at any time after a Candidate Drug is designated with respect to
such Antigen or pursuant to Section 2.6.5 but before the commencement of
the first Phase II Clinical Trial for a Candidate Drug that binds to and is
directed against such Antigen, ABX shall pay to AZ the following milestone
payments within [Confidential treatment requested] of the achievement of the
applicable milestone described below for each ABX Product:

 

	
  Milestone Payment

  	
   

  	
  Milestone Event

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  U.S.[Confidential
  treatment requested]

  	
   

  	
  [Confidential
  treatment requested]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  U.S.[Confidential treatment requested]

  	
   

  	
  [Confidential treatment
  requested]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  U.S.[Confidential treatment requested]

  	
   

  	
  First approval of all
  Registration(s) of such ABX Product required for First Commercial Sale in a
  Major Market

  	
   

  

 

(c)           For each Discontinued Antigen that is
so designated at any time after the commencement of the first Phase II Clinical
Trial for a Candidate Drug that binds to and is directed against such Antigen,
but before an Election Notice is provided by AZ with respect to such Antigen,
ABX shall pay to AZ the following milestone payments within [Confidential
treatment requested] of the achievement of the applicable milestone described
below for each ABX Product:

 

88

 

	
  Milestone Payment

  	
   

  	
  Milestone Event

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  U.S.[Confidential
  treatment requested]

  	
   

  	
  [Confidential
  treatment requested]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  U.S.[Confidential treatment requested]

  	
   

  	
  [Confidential treatment
  requested]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  U.S.[Confidential treatment requested]

  	
   

  	
  First approval of all
  Registration(s) of such ABX Product required for First Commercial Sale in a
  Major Market

  	
   

  

 

Each milestone under Section 9.4.1 shall be payable [Confidential treatment requested]
for an ABX Product that binds to
and is directed against a Discontinued Antigen [Confidential treatment requested]  Further, in the event that ABX discontinues
the development or commercialization of an ABX Product that binds to and is directed against a Discontinued Antigen in
favor of another ABX Product that
binds to and is directed against such Discontinued Antigen, any
milestones paid to AZ with respect to such first ABX Product shall be credited
against any milestones, if any, due with respect to such subsequent ABX
Product.

 

9.4.2        ABX Product Royalties.  ABX shall pay to AZ the
following royalties based on the Net Sales of all ABX Products sold by ABX and
its Affiliates:

 

(a)           For the ABX Products that bind to and are directed against each
Discontinued Antigen that is so designated at any time prior to the designation
of a Candidate Drug that binds to and is directed against such Antigen (other
than pursuant to Section 2.6.5), the royalty rate shall be [Confidential treatment requested]
of Net Sales.

 

(b)           For the ABX Products that bind to and are directed against each
Discontinued Antigen that is so designated at any time after a Candidate Drug
is designated with respect to such Antigen or pursuant to Section 2.6.5
but before the commencement of the first Phase II Clinical Trial for a
Candidate Drug that binds to and is directed against such Antigen, the
royalty rate shall be [Confidential
treatment requested] of Net Sales.

 

(c)           For the ABX Products that bind to and are directed against each
Discontinued Antigen that is so designated at any time after the commencement
of the first Phase II Clinical Trial for a Candidate Drug that binds to and is
directed against such Antigen, but before an Election Notice is provided by AZ
with respect to such Antigen, the royalty rate shall be [Confidential treatment requested]
of Net Sales.  For the avoidance of
doubt, once AZ has provided an Election Notice with respect to a Collaboration
Antigen, such Antigen shall never become a Discontinued Antigen and this
Section 9.4.2 shall not apply with respect thereto.

 

(d)           For ABX Products that bind to and are directed against Failed Antigens
that are Derived [Confidential
treatment requested].

 

89

 

(e)           [Confidential treatment requested]

 

9.5           Diagnostic or Veterinary Products.
  [Confidential treatment requested]

 

9.6           Net
Sales by Sublicensees.   [Confidential
treatment requested]

 

9.7           Reduction of Royalty. 

 

9.7.1        Compulsory Licenses.  [Confidential treatment requested]

 

9.7.2        No Valid Claim.  [Confidential treatment requested]

 

9.7.3        Royalty Stacking.  For Licensed Products sold by AZ or its
Affiliates or, solely for purposes of royalty calculations pursuant to
Section 9.6(a), sublicensees to Third Parties, in any country where the
sum of royalty payments owed by AZ and its Affiliates to any Third Parties in
consideration for the license under Patent Rights of such Third Parties to the
extent containing claims that cover such Licensed Products (including any
royalties on the making, having made or exporting of such Licensed Products in
or from the country(ies) where such Licensed Products are manufactured) [Confidential treatment requested].

 

9.7.4        Royalty Floor.  [Confidential treatment requested] 
ABX shall invoice AZ for any additional royalties owing by reason of the
previous sentence, in excess of the royalties already paid by AZ, within [Confidential treatment requested]
after receiving the applicable royalty report from AZ under Section 9.9
setting forth the quarterly Net Sales of each Product in each country, and AZ
shall pay such additional royalties to ABX within [Confidential treatment requested] after delivery of such
invoice.  Except to the extent
restricted by ABX’s confidentiality obligations under ABX In-Licenses, each
such invoice shall be accompanied by such documentation as AZ reasonably
requests to confirm the amount of such additional royalties.  If, due to confidentiality obligations, ABX
is precluded from providing such documentation to AZ or AZ otherwise wishes to
confirm such additional royalties, then AZ shall have the right to have an
independent Third Party, selected by AZ and reasonably acceptable to ABX,
review such documentation; provided, however, that such Third
Party shall agree to be bound by confidentiality obligations reasonably
required by ABX, shall disclose to AZ only whether or not the invoiced amount
of such additional royalties applies the correct royalty rates, and shall not
disclose any other information or details to AZ or any other Person.  [Confidential treatment requested]

 

9.8           Sales
Subject to Royalties.   [Confidential
treatment requested]

 

9.9           Royalty Reports and Payments.   During the Royalty Term for a Product (or
such longer period as royalties are owing under the last sentence of
Section 9.10), AZ in the case of AZ Products and ABX in the case of ABX
Products (the “Payor”) shall make written reports to the other Party
(the “Payee”) within [Confidential
treatment requested] after the end of each calendar quarter, stating in
each such report the number, description and aggregate [Confidential treatment requested]
of such Product sold during the calendar quarter, and the calculation of the
royalties and other amounts payable under this Article 9.  Concurrently with

 

90

 

the making of such
reports, the Payor shall pay to the Payee all royalties payable under this
Article 9.

 

9.10         Royalty
Term.   [Confidential treatment requested]

 

9.11         Records; Inspection.   Each Party shall keep (and cause its
sublicensees and its and their respective Affiliates to keep) complete, true
and accurate books of account and records that fairly reflect its Net Sales of
Products and, with respect to ABX, the FTE costs and expenses incurred in
connection with the Research Programs and the Development Programs, all in
sufficient detail to confirm the accuracy of any payments required or made
hereunder.  Such books and records shall
be maintained by each Party for at least three (3) years following the end of
the calendar quarter to which they pertain. 
Such records of a Party and its Affiliates shall be open for inspection
during such three-year period by an independent certified public accounting
firm of internationally recognized standing, chosen by the other Party, and
reasonably acceptable to the audited Party, which approval shall not be
unreasonably withheld or delayed, for the purpose of verifying the accuracy of
any payments required or made hereunder. 
All such inspections may be made no more than once each calendar year at
reasonable times mutually agreed by the Parties.  The independent accountants chosen by the auditing Party will be
obliged to execute a reasonable confidentiality agreement prior to commencing
any such inspection.  Inspections
conducted under this Article 9 shall be at the expense of the auditing
Party, unless a variation or error producing an increase exceeding [Confidential treatment requested]
of the amount stated for any period is established in the course of any such
inspection, whereupon all costs relating to the audit of such period will be
paid by the audited Party.

 

9.12         Payment
Method.   All payments by a
Party under this Agreement shall be in United States Dollars in immediately
available funds and shall be made by wire transfer to such bank account as
designated in writing by the receiving Party to the paying Party.

 

9.13         Currency Conversion.   For the purpose of computing the Net Sales of Products sold in a
currency other than U.S. Dollars, such currency will be converted from local
currency to U.S. Dollars by: (a) AZ in accordance with the rates of
exchange for the relevant month for converting such other currency into U.S.
Dollars used by AZ’s internal accounting systems, which are independently audited
on an annual basis (which rates shall be disclosed in each applicable royalty
report), and (b) ABX using the average of the exchange rates for
the purchase of U.S. Dollars, quoted for current transactions reported under
the heading “Currency Trading – Exchange Rates” in The Wall Street Journal
in the United States Western edition on the last business day of each month in
the calendar quarter to which such payment pertains.  If The Wall Street Journal ceases to be published, then
the rate of exchange to be used shall be that reported in such other business
publication of national circulation in the United States as the Parties
reasonably agree.

 

9.14         Late
Payments.   Any payments due
from a Party that are not paid on the date such payments are due under this
Agreement shall bear interest at the lesser of (a) the Prime Rate as
reported under the heading “Money Rates” in The Wall Street Journal in
the United States Western edition on the date such payment is due, plus an
additional [Confidential
treatment requested], compounded annually, or (b) the maximum rate
permitted by Applicable Law, in each case calculated on the number of days such
payment is delinquent.  This 

 

91

 

Section 9.14 shall
in no way limit any other remedies available to any Party.  If The Wall Street Journal ceases to
be published, then the prime rate to be used shall be that reported in such
other business publication of national circulation in the United States as the
Parties reasonably agree.

 

9.15         Taxes.
  Any payments to be made by the Payor to the Payee under this Agreement
shall be without deduction of any bank or transfer charges.  The Payee shall pay any and all taxes levied
on account of, or measured exclusively by, all payments it receives under this
Agreement.  Amounts payable under this
Agreement shall be paid by the Payor without deduction for any tax or duty
levied outside the Payee’s country; provided, however, that the
Payor shall have the right to withhold income tax (and other withholding tax)
as required by applicable tax laws.  In
the case of such withholding being applicable, the Payee may apply for the
reduction of rate of withholding tax under any applicable tax treaty with the assistance
of the Payor, and provided that evidence of acceptance of this claim is
submitted to the Payor before payment is due, the Payor shall apply the reduced
rate accordingly.  If applicable laws
require that taxes be withheld, the Payor will deduct those taxes from the
remittable payments, make timely payment of the taxes to the proper taxing
authority and send proof of such payment to the Payee within [Confidential treatment requested] following that payment.  All amounts payable under this Agreement are
stated inclusive of any Value Added Taxes, sales taxes, consumption taxes or
other similar taxes which the Payor may be obliged to charge.

 

9.16         Imports.   For the avoidance of doubt,
the Parties acknowledge and agree that none of the milestones or royalties
payable under this Agreement are related directly to any import of Antibodies,
Candidate Drugs, Licensed Products or other goods or materials transferred to
either Party pursuant to this Agreement. 
The receiving Party shall be responsible for any import clearance,
including payment of any import duties and similar charges, in connection with
any Antibodies, Candidate Drugs, Licensed Products or other goods or materials
transferred to such Party under this Agreement.

 

10.           FINANCING TERMS.

 

Concurrent with the execution of this Agreement, ABX
and AZ shall execute and deliver the Purchase Agreement (together with all
other documents, instruments and agreements (other than this Agreement)
required to be executed and delivered in connection with such agreement)
(collectively, the “Financing Documents”).

 

11.           TECHNOLOGY 

 

11.1         Ownership.

 

11.1.1      Antibody Technology.  Subject to the license grants to AZ under
this Agreement, as between the Parties, ABX shall solely own and retain all right, title and interest in and
to all Antibody Technology described in clause (a) of Section 1.36 that is
Controlled by ABX and all Antibody Technology described in clause (b) of
Section 1.36, subject to the proviso contained therein (together with all
Patent Rights and other intellectual property rights therein).

 

92

 

11.1.2      Antigen-Specific Technology.

 

(a)           Subject
to the license grants to AZ under this Agreement, as between the Parties, ABX shall solely own and retain all
right, title and interest in and to all ABX Prior Antigen-Specific Know-How
Rights, ABX Prior Antigen-Specific Patent Rights, ABX Subsequent
Antigen-Specific Know-How Rights and ABX Subsequent Antigen-Specific Patent
Rights, together with all Antigen-Specific Technology included therein.

 

(b)           Subject
to the license grants to ABX under this Agreement, as between the Parties, AZ shall solely own and retain all
right, title and interest in and to all AZ Prior Antigen-Specific Know-How
Rights, AZ Prior Antigen-Specific Patent Rights, AZ Subsequent Antigen-Specific
Know-How Rights and AZ Subsequent Antigen-Specific Patent Rights, together with
all Antigen-Specific Technology included therein.

 

11.1.3      Collaboration Technology.  Subject to the license grants under this
Agreement and the last sentence of this Section 11.1.3, the Parties shall
each own an equal, undivided interest in any Collaboration Technology (together
with all Patent Rights and other
intellectual property rights therein), provided that, except as
expressly permitted in this Agreement, neither a Party nor any of its
Affiliates shall Exploit,
transfer, license or encumber its rights in any Collaboration Technology with
respect to a Collaboration Antigen, and the Patent Rights and other
intellectual property rights therein, without the consent of the other Party
prior to the earlier of the date of the designation of a Candidate Drug by AZ
with respect to such Collaboration Antigen and the date of the designation of
such Collaboration Antigen as a Discontinued Antigen subject to
Section 4.5.1 or a Failed Antigen subject to Section 4.15.  After such date, subject to
Sections 4.15, 12.1, 12.2.1 and 12.3 and the last sentence of this
Section 11.1.3, the Party or Parties shall be free to Exploit, transfer, license or encumber its or
their rights in any Collaboration Technology with respect to such Antigen,
except to the extent expressly prohibited by this Agreement.  Each Party shall promptly disclose to the
other Party in writing the conception or generation of Collaboration
Technology, and shall, and does hereby, assign, and shall cause its Affiliates,
licensees, sublicensees and subcontractors to so assign, to the other Party,
without additional compensation, such right, title and interest in and to any
Collaboration Technology (together with all Patent Rights and other intellectual property rights therein)
as is necessary to fully effect the joint ownership provided for in the first
sentence of this Section 11.1.3. 
[Confidential treatment
requested]

 

11.1.4      Oncology Technology.  Subject to the license grants under this
Agreement and the last two sentences of this Section 11.1.4, the Parties
shall each own an equal, undivided interest in any Oncology Technology
(together with all Patent Rights
and other intellectual property rights therein).  Each Party shall promptly disclose to the
other Party in writing the conception or generation of Oncology Technology, and
shall, and does hereby, assign, and shall cause its Affiliates, licensees,
sublicensees and subcontractors to so assign, to the other Party, without
additional compensation, such right, title and interest in and to any Oncology
Technology (together with all Patent
Rights and other intellectual property rights therein) as is necessary
to fully effect the joint ownership provided for in the foregoing
sentence.  ABX shall have the right, subject to the provisions of this Agreement, to
freely Exploit, transfer, license or encumber its rights in Oncology
Technology, and the Patent Rights and other intellectual property rights
therein, for use in connection with the Exploitation of Antibodies and

 

93

 

Antibody Equivalents (other than Antibodies and Antibody Equivalents
that bind to and are directed against Collaboration Antigens, other than,
subject to Section 4.15, Failed Antigens or Discontinued Antigens for
which ABX has provided an Exercise Notice) without the consent of, or payment
or accounting to, AZ.  AZ shall have the right, subject to the
provisions of this Agreement, to freely Exploit, transfer, license or encumber
its rights in Oncology Technology, and the Patent Rights and other intellectual
property rights therein, for all purposes without the consent of, or payment or
accounting to, ABX (other than Antibodies that bind to and are directed against
Discontinued Antigens for which ABX delivers an Exercise Notice).

 

11.1.5      Other Technology.  Subject to the license grants under this
Agreement, any Other Technology (together with all Patent Rights and other intellectual property rights therein)
that is first conceived or generated (a) by persons on behalf of ABX shall
be solely owned by ABX, (b) by persons on behalf of AZ shall be solely
owned by AZ, and (c) jointly by persons on behalf of ABX and by persons on
behalf of AZ, shall be jointly owned by ABX and AZ.  Each Party shall
have the right, subject to the provisions of this Agreement, to freely exploit,
transfer, license or encumber its rights in any jointly owned Other Technology,
and the Patent Rights and other intellectual property rights therein, without
the consent of, or payment or accounting to, the other Party.  Each Party shall promptly disclose to
the other Party in writing the conception or generation of Other Technology by
such Party, its Affiliates, licensees, sublicensees or subcontractors.

 

11.1.6      Development Program Technology and Additional Development Program
Technology.  Subject to the license grants to ABX
under this Agreement, as between the Parties, AZ shall own and retain all right, title and interest in and to any
Development Program Technology and any Additional Development Program
Technology (together with all Patent Rights and other intellectual property
rights therein).  ABX shall promptly disclose to AZ in
writing, and shall cause its Affiliates, licensees, sublicensees and
subcontractors to so disclose, the conception or generation of any Development
Program Technology and any Additional Development Program Technology, and
shall, and does hereby, assign, and shall cause its Affiliates, licensees,
sublicensees and subcontractors to so assign, to AZ, without additional
compensation, all of their right, title and interest in and to any Development
Program Technology and any Additional Development Program Technology (together
with all Patent Rights and other intellectual property rights therein).

 

11.1.7      XenoMouse Technology.  Subject to the
license grants to AZ under this Agreement, as between the Parties, ABX shall own and retain all right,
title and interest in and to all XenoMouse Technology (together with all
Patent Rights and other intellectual property rights therein). 
AZ shall promptly disclose to ABX in writing, and shall cause its
Affiliates to so disclose, the conception or generation of any XenoMouse Technology, and shall,
and does hereby, assign, and shall cause its Affiliates to so assign, to ABX,
without additional compensation, all of their right, title and interest in and
to any XenoMouse Technology
(together with all Patent Rights and other intellectual property rights
therein).

 

11.1.8      Process Technology.  Subject to the license
grants to AZ under this Agreement, as between the Parties, ABX shall own and
retain all right, title and interest in and to all of the ABX Process
Technology (together with all Patent Rights and other intellectual
property rights therein).  AZ shall own and retain all right, title and
interest in and to all of the

 

94

 

AZ Process Technology (together with all Patent Rights and
other intellectual property rights therein).

 

11.1.9      United States Law.  The determination of whether Information and
inventions are conceived or generated by a Party for the purpose of allocating
proprietary rights (including Patent Rights and other intellectual property
rights) therein, shall, for purposes of this Agreement, be made in accordance
with applicable United States law.

 

11.2         Restrictions Regarding the Technology. 

 

11.2.1      The transfer of physical possession of any XenoMouse Technology, and
the physical possession and use of any XenoMouse Technology by AZ shall not be
(nor be construed as) a sale, lease, offer to sell or lease, or other transfer
of title of such XenoMouse Technology to AZ.

 

11.2.2      The Parties acknowledge that the Collaboration Technology is
experimental in nature and may have unknown characteristics.  Each Party shall use prudence and reasonable
care in the use, handling, storage, transportation, disposition and containment
of the Collaboration Technology.

 

11.3         Material and Information Transfer.   The Parties shall transfer to each other the Antibodies,
Antibody Cells, Genetic Materials, Collaboration Antigens, reagents and other
tissues, cells, cell lines, organisms, blood samples, genetic material and
other biological substances and materials, and disclose to each other the
Information, in each case (a) as set forth in each Research Program Work
Plans (without additional compensation) and each Development Program Work Plan,
or (b) as otherwise set forth in Articles 2 and 5 to the extent
necessary to exercise their rights under this Agreement.

 

12.           PATENT RIGHTS 

 

12.1         Prosecution
and Maintenance.

 

12.1.1      XenoMouse Patent Rights.  ABX shall have the sole
right (but not the obligation), at its expense, to prepare, file, prosecute (including any interferences,
reissue and opposition proceedings and re-examinations) and maintain the XenoMouse Patent
Rights.

 

12.1.2      Other Licensed ABX IP Rights.

 

(a)           ABX shall have the sole right (but not
the obligation), at its expense, to prepare, file, prosecute (including any interferences,
reissue and opposition proceedings and re-examinations) and maintain the ABX Antibody Patent
Rights and the Additional Technology Patent Rights Controlled by ABX.

 

(b)           ABX (or its designee) shall have the
first right (but not the obligation), at its expense, to prepare, file,
prosecute and maintain the ABX Antigen-Specific Patent Rights.  If ABX (or its designee) elects not to (i) pursue or continue the
filing, prosecution (including any interferences, reissue and opposition
proceedings and re-examinations) or maintenance of any such Patent Right in a
particular country, or (ii) seek any patent term

 

95

 

extension, restoration or the like of any such Patent Right in a
particular country that may be available now or in the future, then in each such case ABX shall use
reasonable efforts to notify AZ in writing thereof not less than [Confidential treatment requested] before any deadlines by which an
action must be taken to establish or preserve any such rights in such Patent
Right in such country.  Upon receipt by
AZ of each such notice or if, at any time, ABX (or its designee) fails to
initiate any such action within [Confidential treatment requested] after a request by AZ that it do so (and
thereafter diligently pursue such action), subject to any ABX Antigen
In-License by which ABX Controls such Patent Right, AZ or its Affiliate or
sublicensee shall have the right, but not the obligation, through counsel of
its choosing, to (x) pursue the filing or registration, or support the
continued prosecution (including any interferences, reissue and opposition
proceedings and re-examinations) or maintenance, of such Patent Right at its
expense in such country or (y) seek any patent term extension, restoration
or the like of any such Patent Right in a particular country that may be
available now or in the future.  If AZ
or its Affiliate or sublicensee elects to pursue such filing or registration,
as the case may be, or continue such support, then AZ shall notify ABX of such
election and ABX shall, and shall cause its Affiliates to, promptly release or
assign to AZ, without consideration, all right, title and interest (or,
if and only to the extent ABX or any of its Affiliates is not able (whether by
law or contract) to so release or assign, such Person shall, and does hereby,
grant to AZ, subject to any
ABX Antigen In-License by which ABX Controls such Patent Right, a fully
paid, royalty-free (except that AZ shall continue to be responsible for any
Third Party royalty obligations under an ABX Antigen In-License that it would
otherwise have been responsible for under Section 4.17.2), perpetual,
irrevocable, exclusive, worldwide right and license) in and to such Patent Rights in such country,
which Patent Rights shall be deemed AZ Prior  Antigen-Specific
Patent Rights for purposes of this Agreement.

 

(c)           Except
to the extent provided in Section 12.1.2(b), 12.1.3(c) or 12.1.4,
following the date that an Antigen is designated as a Collaboration Antigen,
neither ABX nor its Affiliates shall file any patent application claiming any
Collaboration Antigen, any Antibodies or Antibody Equivalents that bind to and
are directed against such Collaboration Antigen or the use of any of the
foregoing in the Commercial Field without AZ’s prior written consent, unless
and until such Collaboration Antigen becomes a Discontinued Antigen or Failed
Antigen.

 

12.1.3      Licensed AZ IP Rights.

 

(a)           AZ shall have the sole right (but not
the obligation), at its expense, to prepare, file, prosecute (including any interferences, reissue
and opposition proceedings and re-examinations) and maintain the Development Program Patent Rights, the Additional
Development Program Patent Rights and the Additional Technology Patent Rights
Controlled by AZ.

 

(b)           AZ (or its designee) shall have the first right (but not the
obligation), at its expense, to prepare, file, prosecute (including any interferences,
reissue and opposition proceedings and re-examinations) and maintain the AZ Antigen-Specific
Patent Rights.  If AZ (or its designee) elects not to
(i) pursue or continue the filing, prosecution (including any
interferences, reissue and opposition proceedings and re-examinations) or
maintenance of any such Patent Rights applicable to a Discontinued Antigen in a
particular

 

96

 

country, or (ii) seek any patent term extension, restoration or the
like of any such Patent Rights applicable to a Discontinued Antigen in a
particular country that may be available now or in the future, then in each
such case AZ shall use reasonable efforts to notify ABX in writing thereof not
less than [Confidential
treatment requested]
before any deadlines by which an action must be taken to establish or preserve
any such rights in such Patent Right in such country.  Upon receipt by ABX of each such notice or if, at any time, AZ
(or its designee) fails to initiate any such action within [Confidential treatment requested] after a request by ABX that it do
so (and thereafter diligently pursue such action), subject to any agreement
with a Third Party by which AZ or its Affiliates Control such Patent Rights,
ABX shall have the right, but not the obligation, through counsel of its
choosing, to (x) pursue the filing or registration, or support the
continued prosecution (including any interferences, reissue and opposition
proceedings and re-examinations) or maintenance, of such Patent Right at its
expense in such country or (y) seek any patent term extension, restoration
or the like of any such Patent Rights applicable to a Discontinued Antigen in a
particular country that may be available now or in the future.  If ABX elects to pursue such filing or
registration, as the case may be, or continue such support, then ABX shall
notify AZ of such election and AZ shall, and shall cause its Affiliates to,
promptly release or assign to ABX, without consideration, all right, title and
interest (or, if and only to the extent AZ or any of its Affiliates is
not able (whether by law or contract) to so release or assign, such Person
shall, and does hereby, grant to ABX, subject to any agreement with a Third Party by which such Person
Controls such Patent Rights, a fully paid, royalty-free (except that ABX
shall continue to be responsible for any Third Party royalty obligations under
an AZ in-license that ABX would otherwise have been responsible for under
Sections 4.17.2 and 4.17.3), perpetual, irrevocable, exclusive, worldwide
right and license) in and to
such Patent Rights in such country, which Patent Rights shall be deemed ABX
Prior Antigen-Specific Patent Rights for purposes of this Agreement.

 

(c)           AZ (or its designee) shall have the
first right (but not the obligation) to prepare, file, prosecute (including any interferences,
reissue and opposition proceedings and re-examinations) and maintain the Oncology Patent
Rights.  If AZ (or its designee) elects not to
(i) pursue or continue the filing, prosecution (including any
interferences, reissue and opposition proceedings and re-examinations) or
maintenance of any such Patent Rights in a particular country, or
(ii) seek any patent term extension, restoration or the like of any such
Patent Rights in a particular country that may be available now or in the
future, then in each such case AZ shall use reasonable efforts to notify ABX in
writing thereof not less than two (2) months before any deadlines by which an
action must be taken to establish or preserve any such rights in such Patent
Right in such country.  Upon receipt by
ABX of each such notice or if, at any time, AZ (or its designee) fails to
initiate any such action within thirty (30) days after a request by ABX that it
do so (and thereafter diligently pursue such action), ABX shall have the right,
but not the obligation, through counsel of its choosing, to (x) pursue the
filing or registration, or support the continued prosecution (including any
interferences, reissue and opposition proceedings and re-examinations) or
maintenance, of such Patent Right in such country or (y) seek any patent
term extension, restoration or the like of any such Patent Rights in a
particular country that may be available now or in the future.  Notwithstanding the Party that is pursuing
the preparation, filing,
prosecution (including
any interferences, reissue and opposition proceedings and re-examinations) or maintenance of the Oncology Patent
Rights in a particular
country, AZ shall pay two-thirds (2/3) and ABX shall pay one-third (1/3) of the
cost and expense of such preparation, filing, prosecution and
maintenance.  Notwithstanding the above,
either

 

97

 

Party may decline to pay
its share of the costs for preparing, filing, prosecuting and maintaining any
Oncology Patent Right in a particular country, in which case the declining
Party shall, and
shall cause its Affiliates to, promptly release or assign to the other Party,
without consideration, all right, title and interest in and to such Patent Rights in such
country, whereupon the declining Party shall have no further right, title,
license or other interest in such Patent Rights under this Agreement or
otherwise.

 

12.1.4      Collaboration and Other Patent Rights.

 

(a)           Subject to
Section 12.1.4(b), the Parties shall, using counsel reasonably acceptable to the Parties, jointly prepare, file, prosecute (including any
interferences, reissue or opposition proceedings or re-examinations) and
maintain (i) the Collaboration Patent Rights relating to Collaboration
Antigens, Discontinued Antigens and Failed Antigens unless and until such
Patent Rights are assigned (or licensed) to AZ pursuant to Section 11.1.3,
whereupon AZ shall have the first right (but not the obligation), to prepare,
file, prosecute (including any interferences, reissue and opposition
proceedings and re-examinations) and maintain such Collaboration Patent Rights,
unless and until a Collaboration Antigen becomes a Discontinued Antigen and ABX
delivers an Exercise Notice to AZ, whereupon ABX shall have the first right
(but not the obligation), to prepare, file, prosecute (including any
interferences, reissue and opposition proceedings and re-examinations) and
maintain Collaboration Patent Rights applicable to such Discontinued Antigen,
and (ii) the Other Patent Rights that are jointly owned by the
Parties.  The Research Management
Committee shall formulate a strategy for such joint filing, prosecution and
maintenance of Collaboration Patent Rights and such Other Patent Rights.  The Research Management Committee shall also
establish a process under which each Party shall have a reasonable opportunity
to review and comment upon drafts of each new application for such Other Patent
Rights and, prior to their assignment (or license) to AZ pursuant to
Section 11.1.3, Collaboration Patent Rights and all substantive
correspondence to or from any patent authority with respect thereto, prior to
the filing of such application or correspondence, recognizing that such process shall not delay any priority
filing of a Patent Right. 
Subject to Section 12.1.4(b), the Parties shall share equally in
the expenses associated with the filing, prosecution (including any
interferences, reissue and opposition proceedings and re-examinations) and
maintenance of all (x) Collaboration Patent Rights, unless and until such
Patent Rights are assigned (or licensed) to AZ pursuant to Section 11.1.3,
whereupon AZ shall be responsible for all such expenses incurred after such
assignment (or license), unless
and until a Collaboration Antigen becomes a Discontinued Antigen and ABX
delivers an Exercise Notice to AZ, whereupon ABX shall be responsible
for all such expenses for the applicable Collaboration Patent Rights incurred
after delivery of such Election Notice, and (y) such Other Patent
Rights.  Subject to
Section 12.1.4(b), each Party shall
have the first right (but not the obligation), at its expense, to prepare,
file, prosecute and maintain its Other Patent Rights that are not jointly-owned
with the other Party.

 

(b)           If (i) with respect to Other
Patent Rights, either Party, or (ii) with respect to Collaboration Patent
Rights, prior to the assignment (or license) of such Collaboration Patent
Rights to AZ pursuant to Section 11.1.3, either Party or, thereafter, AZ unless and
until a Collaboration Antigen becomes a Discontinued Antigen and ABX delivers
an Exercise Notice to AZ, ABX solely for purposes of the Collaboration Patent
Rights to the extent that they include a claim that covers Collaboration
Technology to the extent applicable to such Discontinued

 

98

 

Antigen (for
purposes of this Section 12.1.4(b), each such Party shall be referred to as the
“Notifying Party”), elects not to (x) pursue or continue the filing,
prosecution (including any interferences, reissue and opposition proceedings
and re-examinations) or maintenance of any such Patent Rights in a particular
country, or (y) seek any patent term extension, restoration or the like of
any such Patent Rights in a particular country that may be available now or in
the future, then in each such case
the Notifying Party shall use reasonable efforts to notify the other Party
thereof in writing not less than two (2) months before any deadlines by which
an action must be taken to establish or preserve any such rights in such Patent
Rights in such country.  Upon receipt by
such other Party of each such notice, such other Party shall have the right,
but not the obligation, at its sole cost and expense, through counsel of its
choosing, to (i) pursue the filing or support the continued prosecution
(including any interferences, reissue and opposition proceedings and re-examinations)
or maintenance, of such Patent Rights or (ii) seek any patent term
extension, restoration or the like of any such Patent Rights in a particular
country that may be available now or in the future.  If such other Party elects to pursue such filing or
continue such support, then such other Party shall notify the Notifying Party
of such election and, solely with respect to all Other Patent Rights and those
Collaboration Patent Rights for
which the Parties are sharing the cost of prosecution, the Notifying
Party shall, and shall cause its Affiliates, licensees and sublicensees, as
applicable, to promptly
release or assign to such other Party, without consideration, all right, title
and interest (or, if and only to the extent the Notifying Party or any
of its Affiliates is not legally able to so release or assign, such Person
shall, and does hereby, grant to such other Party a fully paid, royalty-free,
perpetual, irrevocable, exclusive, worldwide right and license) in and to such Patent Rights in such
country, and the Notifying Party shall have no further right or interest in
such Patent Rights.

 

12.1.5      Cooperation.  Each Party shall, and shall cause its
Affiliates, licensees and sublicensees, as applicable, to, cooperate, to the extent commercially reasonable,
in the preparation, filing, prosecution and maintenance of the Collaboration
Patent Rights, the Oncology Patent Rights, the jointly-owned Other Patent
Rights and, if requested by the other Party, such other Party’s other Patent
Rights, provided that such other Party shall reimburse the cooperating Party
for its reasonable out-of-pocket expenses incurred in connection with such
requested cooperation.  Such cooperation
includes (a) promptly executing all papers and instruments and requiring
employees to execute such papers and instruments as reasonable and appropriate
so as to enable such other Party to file, prosecute, and maintain its Patent
Rights in any country; and (b) promptly informing such other Party of, and
providing relevant documentation with respect to, matters that may affect the
preparation, filing, prosecution or maintenance of any such Patent Rights.  Regardless of the Party that is seeking any
patent term extension of any Patent Rights pursuant to this Section 12.1,
the Parties shall coordinate their activities with respect to any such patent
term extension in order to secure the optimal protection for each Product
available under Applicable Law.  For the
avoidance of doubt, a decision not to seek patent term extension with respect
to a patent so as to preserve the right to seek patent term extension with
respect to one or more other patents shall not, in and of itself, be deemed to
be a failure to diligently prosecute a patent under this Section 12.1 and
shall not give rise to any obligation to release or assign a patent to the
other Party under this Section 12.1.

 

99

 

12.2         Enforcement.

 

12.2.1      Rights and Procedures.  If AZ or ABX
determines that any Licensed IP Rights are being infringed by a Third Party’s
activities and that such infringement is reasonably likely to affect the
exercise by the Parties of their respective rights and obligations under this
Agreement, it shall promptly notify the other Party in writing and provide such
other Party with any evidence of such infringement that is reasonably
available.

 

(a)           With
respect to XenoMouse Patent Rights, ABX Antibody Patent Rights and ABX
Additional Technology Patent Rights, ABX shall have the sole right (but not the obligation), at its expense,
to remove such infringement.

 

(b)           With
respect to Development Program Patent Rights, Additional Development Program
Patent Rights, Oncology Patent Rights and AZ Additional Technology Patent
Rights, AZ or its nominee shall
have the sole right (but not the obligation), at its expense, to remove such
infringement.

 

(c)           With respect to Antigen-Specific Patent
Rights and Collaboration Patent Rights, AZ shall have the sole right (but not
the obligation), at its expense, to remove such infringement, except to the
extent that such infringement relates to a Discontinued Antigen or a Failed
Antigen.  With respect to
Antigen-Specific Patent Rights to the extent they cover a Discontinued Antigen
or a Failed Antigen, ABX shall have the sole right (but not the obligation), at
its expense, to remove any such infringement of the ABX Antigen-Specific Patent
Rights and AZ shall have the sole right (but not the obligation), at its
expense, to remove any such infringement of the AZ Antigen-Specific Patent
Rights.  With respect to Collaboration
Patent Rights that relate to a Discontinued Antigen or a Failed Antigen and
Other Patent Rights, the Parties shall use good faith efforts to determine
whether to seek to remove such infringement and, if applicable, a strategy for
seeking to remove such infringement, provided that the Party or Parties whose
products are adversely affected by such infringement shall have the first right
(but not the obligation), at such Party’s(ies’) expense, to remove such
infringement.  For purposes of
Section 12.2.1(d), the Party having the first right to control the
enforcement of any Patent Rights as set forth in the preceding sentence shall
be referred to as the “Controlling Party”, and the other Party shall be
referred to as the “Non-Controlling Party”, with respect to such Patent Rights.

 

(d)           If the Controlling Party fails to abate
any such infringement of the Collaboration Patent Rights that relate to a
Discontinued Antigen or Failed Antigen or the Other Patent Rights, or to file
an action to abate such infringement, within sixty (60) days after a written
request from the Non-Controlling Party to do so, or if the Controlling Party
discontinues the prosecution of any such action after filing, the
Non-Controlling Party at its expense may, in its discretion, undertake such
action as it determines appropriate to enforce such Patent Rights against any
such infringement; provided, however, if the Controlling
Party has commenced negotiations with an alleged infringer for discontinuance
of such infringement within such [Confidential
treatment requested] period, the Controlling Party shall have an
additional ninety (90) days to conclude its negotiations before the
Non-Controlling Party unilaterally may bring suit for such infringement.

 

100

 

12.2.2      Generic Competition.  Notwithstanding the foregoing, if either
Party receives any notice of (a) any certification filed under the U.S.
“Drug Price Competition and Patent Term Restoration Act” of 1984 (21 United States
Code §355(b)(2)(A)(iv) or (j)(2)(A)(vii)(IV)), as may be amended from time to
time (“ANDA ACT”) with respect to a Product claiming that any Licensed
IP Rights are invalid or unenforceable or claiming that such Patents Rights
will not be infringed by the manufacture, use, marketing or sale of a product
for which an application under the ANDA ACT is filed, or (b) any
equivalent or similar certification or notice in any other jurisdiction, it
shall within [Confidential
treatment requested] advise the other Party of such receipt.  The Parties’ rights and obligations with
respect to any legal action as a result of such certification shall be as set
forth in this Section 12.2.

 

12.2.3      Cooperation.  The Party enforcing the applicable Licensed
IP Rights under Section 12.2.1 shall keep the other Party informed,
consult with such Party and consider in good faith the reasonable comments of
such Party, both prior to and during any such enforcement.  The Party not enforcing the applicable
Patent Rights shall have the right to participate in, but not control, any such
enforcement at its own expense and shall assist and provide any relevant
documentation to the other Party, upon request and at such other Party’s
expense, and to the extent commercially reasonable, in taking any action to
enforce the applicable Patent Rights, including joining the action to
the extent necessary to allow the such other Party to maintain the action.

 

12.2.4      Recovery.  [Confidential treatment requested]

 

12.3         Invalidity or Unenforceability Defenses
or Actions.

 

12.3.1      In the event that a Third
Party asserts, as a defense or as a counterclaim in any infringement action
under Section 12.2, that any Licensed IP Rights are invalid or
unenforceable, then the Party pursuing such infringement action shall promptly
give written notice to the other Party. 
The Party that is the plaintiff in the underlying suit or action against
such Third Party shall, at its sole cost and expense, respond to such defense
or defend against such counterclaim (as applicable), provided that  to the extent that the other Party’s
Patent Rights are the subject of such invalidity or unenforceability defense or
counterclaim, the Party that has the right to enforce such Patent Rights under
Section 12.2, at its sole cost and expense, shall control all decisions as
to such response or defense (in consultation with the other Party), provided
further that, except as permitted in Section 12.5, neither Party
shall settle or otherwise compromise such defense or counterclaim in any way that
materially adversely affects the other Party’s Patent Rights or its interest
therein, or rights under this Agreement, without such other Party’s written
consent, not to be unreasonably withheld or delayed.

 

12.3.2      In the event that a Third
Party asserts, in a declaratory judgment action or similar action or claim
filed by such Third Party, that any Licensed IP Rights are invalid or
unenforceable, then the Party first becoming aware of such action or claim
shall promptly give written notice to the other Party.  The Party that is the defendant in such suit
or action or claim by such Third Party shall, at its sole cost and expense,
respond to such defense or defend against such action or claim (as applicable),
provided that  to the
extent that the other Party’s Patent Rights are the subject of such invalidity
or unenforceability action or claim, the Party that has the right to enforce
such Patent Rights under Section 12.2, at its sole cost and

 

101

 

expense,
shall control all decisions as to such response or defense (in consultation
with the other Party).  Notwithstanding
the foregoing, subject to Section 12.5, neither Party shall settle or
otherwise compromise such declaratory judgment action or similar action or
claim in any way that materially adversely affects the other Party’s Patent
Rights or its interest therein, or rights under this Agreement, without such
other Party’s written consent, not to be unreasonably withheld or delayed.

 

12.4         Third
Party Litigation.

 

12.4.1      In the event of any actual
or threatened suit against ABX, AZ or their respective Affiliates,
sublicensees, Distributors or customers alleging that the Exploitation of a
Product hereunder infringes the Patent Right or other intellectual property
rights of any Person (an “Infringement Suit”), the Party first becoming
aware of such Infringement Suit shall promptly give written notice to the other
Party.  Except as otherwise provided in
Article 15, AZ shall have the sole right, but not the obligation, at its
sole cost and expense, through counsel of its choosing, to assume direction and
control of the defense of any such Infringement Suit with respect to the AZ
Products (including the right to settle such claims at its sole discretion) and
ABX shall have the sole right, but not the obligation, at its sole cost and
expense, through counsel of its choosing, to assume direction and control of
the defense of any such Infringement Suit with respect to the ABX Products
(including the right to settle such claims at its sole discretion).

 

12.4.2      Notwithstanding
Section 12.4.1, in the event any such Infringement Suit alleges that the
use of the Core Technology in the Research Programs or the Antibodies and
Candidate Drugs resulting therefrom, infringes the Patent Rights or other
intellectual property rights of a Third Party, ABX shall have the first right,
but not the obligation, at its sole cost and expense, through counsel of its
choosing, to assume direction and control of the defense of any such Infringement
Suit (including the right to settle such claims at its sole discretion,
provided that ABX shall obtain the consent of AZ (which consent shall not be
unreasonably withheld or delayed) prior to compromising, settling or ceasing to
defend any such claim that could have an adverse effect on AZ or an AZ Product)
and, irrespective of the Party that assumed such direction and control, shall
be solely responsible for all costs and expenses and any damage awards or other
payments (including royalties) or penalties to the extent incurred therefrom
that are not offset by proceeds therefrom. 
[Confidential treatment
requested]

 

12.5         Retained Rights.  [Confidential treatment requested]

 

13.           CONFIDENTIALITY

 

13.1         Confidentiality.  During the term of this
Agreement and for a period of five (5) years following the expiration or
earlier termination hereof, each Party (the “Receiving Party”)
shall, and shall cause its officers, directors, employees, agents, Affiliates
and sublicensees to, keep confidential and not publish or otherwise disclose
and not use, directly or indirectly, for any purpose, any Confidential
Information of the other Party (the “Disclosing Party”) except to the
extent such disclosure or use is expressly permitted by the terms of this
Agreement, and shall restrict the
disclosure of the Confidential Information of the Disclosing Party within its
own organization to the Receiving Party’s and its Affiliates’ directors,
officers,

 

102

 

employees, consultants, distributors and permitted sublicensees and
subcontractors, in each case to the extent such disclosure is Reasonably
Necessary in connection with such Party’s activities as expressly authorized by
this Agreement or is Reasonably Necessary for such Party’s performance
of, or exercise of its rights under, this Agreement.  To the
extent that disclosure to any Person is authorized by this Agreement, prior to
disclosure, the Receiving Party shall ensure that such Person is bound by
confidentiality and non-use restrictions no less onerous than those set forth
in this Article 13. 
Notwithstanding the foregoing, in no event shall ABX disclose the
Confidential Information of AZ to any Person (a) that becomes an Affiliate
of ABX as a result of a Change in Control, or (b) that is a Competitor,
and obtains a seat on the Board of Directors of ABX as a result of an equity
investment in ABX (other than a Change in Control by which ABX is merged into
the surviving entity).

 

13.2         AZ
Information.  Notwithstanding
anything to contrary in this Agreement, ABX shall, and shall cause its
officers, directors, employees, agents, Affiliates and sublicensees to, keep
confidential and not publish or otherwise disclose and not use, directly or
indirectly, for any purpose, any Collaboration Technology, Development Program
Technology, Additional Development Program Technology or Antigen-Specific
Technology relating to, or Antibody Technology, Additional Technology, Oncology
Technology or other Information to the extent that it is specific to, the
Research Antibodies or the Candidate Drugs or the AZ Products (including such
types of Information contained in Registrations with respect thereto or
regarding the development, sales or marketing plans for the AZ Products), in
each case with respect to the Collaboration Antigens (other than Failed
Antigens or Discontinued Antigens) (the “AZ Information”), except to the
extent (a) the AZ Information is in the public domain through no fault of
ABX, its Affiliates or any of their respective officers, directors, employees
and agents, (b) such disclosure or use would be permitted under
Section 13.1, or (c) such disclosure or use is otherwise expressly
permitted by the terms of this Agreement or is Reasonably Necessary for the
performance of this Agreement.  For
clarification, the disclosure by ABX to AZ or by AZ to ABX of AZ Information
shall not cause such information to cease to be subject to the confidentiality
provisions of this Section 13.2. 
AZ shall have the right to use and disclose the AZ Information as
necessary or reasonably useful to Exploit (x) Antibodies, Candidate Drugs and
AZ Products with respect to the Collaboration Antigens (other than Failed
Antigens and Discontinued Antigens (other than Discontinued Antigens for which
ABX failed to deliver an Exercise Notice)) and (y) Non-Licensed Products with
respect to Failed Antigens or Discontinued Antigens.  ABX shall have the right to use and disclose the AZ Information
as necessary or reasonably useful to Exploit Antibodies, Candidate Drugs and
ABX Products with respect to the Discontinued Antigens for which ABX delivers
an Exercise Notice.

 

13.3         Permitted
Disclosures.   Each Party may disclose Confidential Information of the other
Party to the extent that such disclosure is:

 

13.3.1      made in response to a valid
order of a court of competent jurisdiction or other competent authority; provided,
however, that the Receiving Party shall first have given written notice
to the Disclosing Party and given the Disclosing Party a reasonable opportunity
to obtain a protective order requiring that the Confidential Information and
documents that are the subject of such order be held in confidence by such
court or authority or, if disclosed, be used only for the purpose for which the
order was issued; and provided  further that if a protective order
is not obtained, the Confidential Information disclosed in response to

 

103

 

such court or
governmental order shall be limited to that information that is legally
required to be disclosed in response to such court or governmental order;

 

13.3.2      made by the Receiving Party
to a governmental or other regulatory authority as may be necessary or useful
in connection with any filing, application or request for a Registration; provided,
however, that reasonable measures will be taken to obtain confidential
treatment of such information;

 

13.3.3      made by the Receiving Party
to a patent authority as may be necessary or useful for purposes of obtaining
or enforcing a Patent Right; provided, however, that reasonable
measures will be taken to assure confidential treatment of such information; or

 

13.3.4      made by the Receiving Party
or its Affiliates, distributors or sublicensees to Third Parties as may be
necessary or useful in connection with the performance of this Agreement, or
the exercise of its rights hereunder, including permitted subcontracting or
sublicensing transactions in connection therewith, provided that the Receiving
Party making such disclosure shall require that such Third Party receiving such
Confidential Information shall observe at least the same obligations of
confidentiality as such Party owes under this Agreement.

 

13.4         Terms of Agreement.   Neither Party shall
disclose any terms or conditions of this Agreement to any Third Party without
the prior consent of the other Party; provided, however, that a
Party may disclose the terms or conditions of this Agreement (but not any other
Confidential Information), (a) on a need-to-know basis to its legal and
financial advisors to the extent such disclosure is reasonably necessary,
(b) to a Third Party in connection with (i) an equity investment in
such Party, (ii) a merger, consolidation or similar transaction by such
Party, or (iii) the sale of all or substantially all of the assets of such
Party or (c) as otherwise required by law or regulation, provided that
the disclosing Party shall (i) if practicable, provide the other Party
with reasonable advance notice of and an opportunity to comment on any such
required disclosure, (ii) if requested by such other Party, seek, or
cooperate with such Party’s efforts to obtain, confidential treatment or a
protective order with respect to any such disclosure to the extent available at
such other Party’s expense, provided that, at AZ’s request, ABX shall seek a
confidential treatment request for any such disclosure filed by ABX with the
United States Securities and Exchange Commission at ABX’s sole cost and
expense, and (iii) use good faith efforts to incorporate the comments of
such other Party in any such disclosure or request for confidential treatment
or protective order; and provided  further that such terms and
conditions shall be deemed Confidential Information and the Party making such
disclosure shall require that such Third Party receiving such Confidential
Information shall observe the same obligations of confidentiality as such Party
owes under this Agreement with respect to Confidential Information of the other
Party.  Notwithstanding the foregoing, prior to execution of this
Agreement, the Parties have agreed upon the substance of information that can
be used to describe the terms and conditions of this transaction in the form of
a press release attached as Exhibit M, and each Party may disclose such
information, as modified by mutual written agreement of the Parties, without
the consent of the other Party.

 

13.5         Use of Name/Publicity.  Neither Party shall mention or otherwise use
the name, insignia, symbol, trademark, trade name or logotype of the other
Party or its Affiliates in any manner without the prior written consent of the
other Party in each instance (which shall not

 

104

 

be unreasonably withheld
or delayed).  The restrictions imposed
by this Section shall not prohibit any Party from making any disclosure
identifying the other Party that is required by Applicable Law or the
requirements of a national securities exchange or another similar regulatory
body, provided that (a) any other information that is legally required to be
disclosed shall be governed by Sections 13.3.1 and 13.4, as applicable,
and (b) the disclosing Party shall use reasonable efforts to notify the
other Party prior to making such disclosure.

 

13.6         Publications and Presentations.   The Parties acknowledge that scientific
lead-time is a key element of the value of the activities during the Antigen
Designation Term and under each Research Program and each Development Program
and further agree that scientific publications must be strictly monitored to
prevent any adverse effect from premature publication of results of such
activities.  Accordingly,
(a) neither Party shall publish, present or otherwise publicly disclose
any Antigen-Specific Technology, Collaboration Technology or Development
Program Technology relating to a Collaboration Antigen, without the prior
written consent of the other Party, until the designation of a Candidate Drug
that binds to and is directed against such Collaboration Antigen; (b) ABX
shall not publish, present or otherwise publicly disclose any Antigen-Specific
Technology, Collaboration Technology, Development Program Technology,
Additional Development Program Technology or other AZ Information relating to a
Collaboration Antigen without the prior written consent of AZ, after the
designation of a Candidate Drug that binds to and is directed against such
Collaboration Antigen, until such Collaboration Antigen is designated (i) a Failed Antigen subject
to Section 4.15, (ii) a
Discontinued Antigen for which ABX has provided an Exercise Notice within the
applicable one (1) year period and then only with respect to such
Collaboration Technology, Development Program Technology and Additional
Development Program Technology relating
to Candidate Drugs that bind to and are directed against such Discontinued
Antigen, or (iii) a Discontinued Antigen for which ABX has not provided an
Exercise Notice and then only with respect to such ABX Antigen-Specific
Know-How Rights and ABX Antigen-Specific Patent Rights and Collaboration
Technology that does not relate
to Candidate Drugs that bind to and are directed against such Discontinued
Antigen; and (c) AZ shall not publish, present or otherwise
publicly disclose any Collaboration Technology, Development Program Technology
or Additional Development Program Technology relating to a Failed Antigen
during the one (1) year period in which ABX is independently pursuing such
Failed Antigen pursuant to Section 4.15 or a Discontinued Antigen for which ABX has provided an Exercise
Notice within the applicable one (1) year period, in each case, only with
respect to such Collaboration Technology, Development Program Technology
and Additional Development Program Technology that relates to Candidate Drugs that bind to and are
directed against such Failed Antigen or Discontinued Antigen, as
applicable, without the prior written consent of ABX.

 

14.           REPRESENTATIONS
AND WARRANTIES 

 

14.1         Representations and Warranties of the Parties. 
Each Party represents and warrants to the other Party, as of the date of
this Agreement, as follows:

 

14.1.1      Organization.  Such Party is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
organized.

 

105

 

14.1.2      Authorization and Enforcement of Obligations. 
Such Party (a) has the requisite power and authority and the legal
right to enter into this Agreement and the Purchase Agreement and to perform
its obligations hereunder and thereunder; and (b) has taken all requisite
action on its part to authorize the execution and delivery of this Agreement
and the Purchase Agreement and the performance of its obligations hereunder and
thereunder.  This Agreement and the
Purchase Agreement each has been duly executed and delivered on behalf of such
Party, and constitutes a legal, valid and binding obligation, enforceable
against such Party in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization or other laws affecting creditors’
rights generally and by general equitable principles.

 

14.1.3      Consents. 
All necessary consents, approvals and authorizations of all governmental
authorities and other Persons required to be obtained by such Party to enter
into, or perform its obligations under, this Agreement have been obtained, other
than in connection with the Hart-Scott-Rodino Antitrust Act of 1976, as
amended, and the regulations promulgated thereunder.

 

14.1.4      No Conflict.  The execution and delivery of this Agreement
and the performance of such Party’s obligations hereunder (a) will not
conflict with or violate any requirement of Applicable Law or orders of
governmental bodies except as individually or in the aggregate would not be
reasonably expected to have a material adverse effect on or a material adverse
change in the ability of such Party to perform its obligations under or with
respect to this Agreement; and (b) do not conflict with, or constitute a
default under, any contractual obligation of such Party, except as individually
or in the aggregate would not have a material adverse effect on or a material
adverse change in the ability of such Party to perform its obligations under or
with respect to this Agreement.

 

14.2         Additional
Representations,
Warranties and Covenants of ABX.  ABX represents and warrants
to AZ, as of the date of this Agreement (except as otherwise expressly set
forth below), that and covenants as set forth below:

 

14.2.1      The Core Technology is sufficient to conduct the activities described
in, and in accordance with, the template Research Program Work Plan generally
(without regard to any specific antibody or antigen).  Schedule 14.2.1 sets forth (a) all of the Core Patent
Rights, and (b) any agreements by which the Core Patent Rights are
Controlled by ABX or its Affiliates, in each case as such rights exist as of
the date of this Agreement.  Except
with respect to Excluded Antigens and Partially Committed Antigens or as
otherwise expressly disclosed to AZ in writing prior to the date of this
Agreement, neither ABX nor its Affiliates have granted any right or license, in
effect as of the date of this Agreement, under the Licensed ABX IP Rights or
any other intellectual property rights to Exploit Antibody Equivalents that
bind to and are directed against, or products (other than Antibody Equivalents)
with respect to, the Proposed Antigens listed on Exhibit A-1 or A-2 as of
the Effective Date.  During the term of
this Agreement, ABX shall not, except as expressly otherwise permitted by the
terms of this Agreement, (a) encumber the rights granted to AZ hereunder
with respect to the Patent Rights included in the Licensed ABX IP Rights or
such Patent Rights themselves, (b) commit any acts or permit the
occurrence of any omissions that would cause the termination of any ABX
In-Licenses, or (c) amend or otherwise modify or permit to be amended or
modified, any ABX In-License, in each of clauses (a) through (c) that
would have a material adverse effect on the rights

 

106

 

of AZ hereunder.  Neither ABX nor its Affiliates is in
material breach of any ABX In-License regarding the Core Technology.  ABX shall promptly provide AZ with notice of
any alleged or actual breach of any ABX In-License by ABX or its Affiliates
that becomes known to ABX or its Affiliates.

 

14.2.2      To the knowledge of ABX and
its Affiliates, (a) the Patent Rights included in the Licensed ABX IP
Rights are being diligently prosecuted and maintained in all material respects
in accordance with all applicable laws and regulations, and (b) all applicable
fees relating thereto have been within a time period and in a manner sufficient
to maintain such Patent Rights.

 

14.2.3      To the knowledge of ABX and
its Affiliates, there is no actual infringement of the Licensed ABX IP Rights
by any Third Party, and neither ABX nor its Affiliates has received express
written notice of the intended or threatened infringement of the Licensed ABX
IP Rights by any Third Party, in each case that would materially adversely
affect AZ’s rights under this Agreement.

 

14.2.4      The performance of the
activities that are Reasonably Necessary to conduct a Research Program
generally (but not with respect to a specific antibody or antigen) will not
infringe the Patent Rights of any Third Party (other than those Patent Rights
included in the Licensed ABX IP Rights).

 

14.2.5      To the knowledge of ABX and
its Affiliates, the XenoMouse Patent Rights, Antibody Patent Rights owned by
ABX or for which ABX controls the right to prosecute, Core Patent Rights and
the ABX Prior Antigen-Specific Patent Rights included in the Licensed ABX IP
Rights with respect to the Proposed Antigens set forth in Exhibit A have
not been held by a court of competent jurisdiction to be invalid or
unenforceable, in whole or in part.  ABX
has not received written notice of any claim or litigation by any Person
alleging that any of the XenoMouse Patent Rights, Antibody Patent Rights owned
by ABX or for which ABX controls the right to prosecute, Core Patent Rights or
the ABX Prior Antigen-Specific Patent Rights included in the Licensed ABX IP
Rights is invalid or unenforceable. 
Except with respect to the conduct alleged by Cell Genesys in litigation
between Cell Genesys and GenPharm International, Inc., which allegations were
subsequently released by Cell Genesys, to the knowledge of ABX and its
Affiliates, the conception, development and reduction to practice of the
Licensed ABX IP Rights existing as of the date of this Agreement have not
constituted or involved the misappropriation of trade secrets or other rights
or property of any Person.  ABX has not
received written notice of any claim or litigation asserted or commenced
against ABX or any of its Affiliates that would have a material adverse effect
on the rights granted to AZ under this Agreement.

 

14.2.6      Except as expressly permitted
in Section 17.3.1 or 17.3.6, neither ABX nor its Affiliates will grant any
right, title or interest in or to the Licensed ABX IP Rights to any Person or
take any action with respect thereto (including by granting any covenant not to
sue) that is inconsistent with the rights and licenses granted to AZ under this
Agreement.

 

14.2.7      In respect of the pending
U.S. patent applications included in the Core Patent Rights and the ABX Prior
Antigen-Specific Patent Rights, in each case of which

 

107

 

ABX controls the
prosecution, to the knowledge of ABX, ABX has presented all material prior art
of which it and the inventors are aware to the U.S. Patent and Trademark Office
and, to the extent required by Applicable Law, all other relevant patent
offices.

 

14.2.8      To the knowledge of ABX, the
Information ABX has furnished AZ regarding or related to each Proposed Antigen
that is listed on Exhibit A is true and correct.

 

14.2.9      ABX has not been debarred
and is not subject to debarment and ABX will not use in any capacity in the
conduct of ABX’s obligations under the Development Program, Process Development
Program or the Manufacturing and Supply Agreement, any Person who has been
debarred pursuant to Section 306 of the United States Federal Food, Drug,
and Cosmetic Act, as amended, (or any similar Applicable Law outside the United
States) or who is the subject of a conviction described in such section.  ABX agrees to inform AZ in writing
immediately if it or any Person who is performing services hereunder is
debarred or is the subject of a conviction described in Section 306 (or
such other Applicable Law), or if any action, suit, claim, investigation or
legal or administrative proceeding is pending or, to the knowledge of ABX or
its Affiliates, is threatened, relating to the debarment or conviction of ABX
or any Person performing services hereunder.

 

14.2.10    Except as otherwise expressly
disclosed in writing to AZ prior to the date of this Agreement or permitted by
clause (j) of Section 17.1.1, ABX has not granted any rights or
entered into any agreement with a Third Party with respect to any Proposed
Antigen listed on Exhibit A-1 or A-2, except for those Antigens that are Partially Committed
Antigens and are expressly identified as such on Exhibit A-1 or A-2, as
applicable.  Other than Partially
Committed Antigens as are expressly identified as such on Exhibit A-1 or
A-2 (as applicable) and Committed Antigens as of the Effective Date, [Confidential treatment requested].

 

14.2.11    The Antigens listed on
Schedule 14.2.11A were Committed Antigens at the time they first were
proposed by AZ prior to the date of this Agreement, and within sixty (60) days
following the date of this Agreement, ABX shall verify whether such Antigens remain
Committed Antigens.  The Proposed
Antigens listed on Schedule 14.2.11B were Partially Committed Antigens at
the time they first were proposed by AZ prior to the date of this Agreement.

 

14.2.12    [Confidential treatment requested]

 

14.2.13    Except as expressly provided
by the terms of this Agreement or as otherwise agreed in writing between the
Parties, neither AZ nor its Affiliates will at any time have any liability to
any Third Party under an Existing Collaboration or any other agreement between
ABX or its Affiliates and such Third Party to the extent resulting from
(i) this Agreement, (ii) the execution of this Agreement,
(iii) the Parties’ exercise of their rights or the performance of their
obligations under or in accordance with this Agreement or (iv) ABX’s or
its Affiliates’ activities in connection with this Agreement.

 

14.3         Additional
Representation,
Warranty and Covenant of AZ.   AZ represents,
warrants and covenants that it is AZ’s intention, as of the date of the
designation of an Antigen as a Collaboration Antigen, to commercialize a
Licensed Product that binds to and is directed

 

108

 

against such
Collaboration Antigen for an application [Confidential treatment requested].  It is understood, however, that AZ may or
may not also intend to develop and commercialize Licensed Products that bind to
and are directed against such Collaboration Antigen for [Confidential treatment
requested].

 

14.4         DISCLAIMER
OF WARRANTIES. 

 

14.4.1      EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES
ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE LICENSED
IP RIGHTS, INCLUDING ANY REPRESENTATION OR WARRANTY REGARDING VALIDITY,
ENFORCEABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR
NONINFRINGEMENT.  EXCEPT AS EXPRESSLY
SET FORTH IN THIS AGREEMENT, THE LICENSED IP RIGHTS AND THE INFORMATION AND
INVENTIONS INCLUDED IN THE LICENSED IP RIGHTS PROVIDED TO A PARTY HEREUNDER ARE
PROVIDED “AS IS.”

 

14.4.2      NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT,
(A) BOTH PARTIES ACKNOWLEDGE AND AGREE THAT, NOTWITHSTANDING THE
COMMERCIALLY REASONABLE EFFORTS OF THE PARTIES, THE ACTIVITIES TO BE CONDUCTED
UNDER THE RESEARCH PROGRAMS AND DEVELOPMENT PROGRAMS ARE INHERENTLY UNCERTAIN, AND
THAT THERE ARE NO ASSURANCES THAT THE PARTIES WILL SUCCESSFULLY GENERATE
ANTIBODIES THAT BIND TO AND ARE DIRECTED AGAINST ANY COLLABORATION ANTIGEN,
THAT ANY SUCH ANTIBODIES THAT ARE GENERATED WILL MEET THE CDTP OR WILL BE
ACCEPTABLE FOR DESIGNATION AS CANDIDATE DRUGS, OR THAT ANY SUCH ANTIBODIES WILL
BE SUCCESSFULLY DEVELOPED AND COMMERCIALIZED AS COMMERCIAL PRODUCTS; AND
(B) EACH PARTY EXPRESSLY DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES,
EXPRESS OR IMPLIED, TO THE CONTRARY.

 

14.5         Additional Agreement of the Parties.
  Each Party shall obtain from each of
its Affiliates, employees, contractors and agents, who (a) are performing
the Research Programs or any activities under a Development Program,
(b) are otherwise participating in the Exploitation of the Licensed
Products or (c) otherwise have access to any Confidential Information of
the other Party, rights to any and all Information and inventions that relate
to the Collaboration Antigens, Antibodies, Candidate Drugs or Licensed
Products, such that the other Party shall, by virtue of this Agreement, receive
from such Party, without payments beyond those required by Article 9, the
licenses and other rights granted to the other Party.

 

15.           INDEMNIFICATION
AND INSURANCE   

 

15.1         AZ.  AZ shall indemnify and hold harmless ABX and
its Affiliates, their respective permitted sublicensees, Distributors and
subcontractors and each of their directors, officers, employees and agents (the
“ABX Indemnitees”) from and against all losses, liabilities, damages and
expenses, including reasonable attorneys’ fees and costs (collectively, “Liabilities”),
resulting from any claims, demands, actions or other proceedings (including for

 

109

 

personal injury, death or disability) by any Third Party (“Claims”)
to the extent resulting from (a) the gross negligence or willful
misconduct of AZ under, or material breach by AZ of, this Agreement (including
any representation, warranty or covenant therein); (b) the Exploitation by
AZ, its sublicensees (other than ABX) or their respective Affiliates of AZ
Products (but excluding any such Liabilities or Claims to the extent resulting
from the negligence of ABX or its Affiliates or their respective agents or
subcontractors under this Agreement, any Co-Development Agreement, the Process
Science/Clinical Manufacture Agreement, the Manufacturing and Supply Agreement
or any other Related Agreement); or (c) the infringement (or alleged
infringement) by any ABX Indemnitee in performing ABX’s obligations under the
Research Programs or the Development Programs, of the Patent Rights of one or
more Third Parties to the extent that such Patent Rights claim any
Collaboration Antigen (other than a Proprietary ABX Antigen) or the use thereof
or, to the extent AZ knew or reasonably should have known of Third Party Patent
Rights and did not disclose them to ABX pursuant to Section 2.2.2(c), the
Additional Technology Controlled by AZ that was originally disclosed by AZ for
use under the applicable Research Program or Development Program (to the extent
included in this Agreement pursuant to Section 2.2.2(b), 2.2.3(b) or
5.3.1); except in each case ((a), (b) or (c)) for those Liabilities for
which ABX has an obligation to indemnify AZ and its Affiliates pursuant to
Section 15.2, as to which Liabilities each Party shall indemnify the other
to the extent of their respective Liabilities.

 

15.2         ABX.  ABX shall indemnify and hold harmless AZ and
its Affiliates, their respective permitted sublicensees, Distributors and subcontractors
and each of their directors, officers, employees and agents (the “AZ
Indemnitees”) from and against all Liabilities resulting from any Claims to
the extent resulting from (a) the gross negligence or willful misconduct
of ABX under, or material breach by ABX of, this Agreement (including any
representation, warranty or covenant therein); (b) the Exploitation by
ABX, its sublicensees (other than AZ) or their respective Affiliates of ABX
Products (but excluding any such Liabilities or Claims to the extent resulting
from the negligence of AZ or its Affiliates or their respective agents or
subcontractors under this Agreement, any Co-Development Agreement, the Process
Science/Clinical Manufacture Agreement, the Manufacturing and Supply Agreement
or any other Related Agreement); (c) the infringement (or alleged
infringement) by (x) any AZ Indemnitee in performing AZ’s obligations, or
exercising AZ’s rights, or (y) any ABX Indemnitee in performing ABX’s
obligations, or exercising ABX’s rights, in each case under this Agreement to
the extent that such infringement results from (i) the use of the Core
Technology under this Agreement, or (ii) to the extent ABX knew or
reasonably should have known of Third Party Patent Rights and did not disclose them
to AZ pursuant to Section 2.2.1(c), 2.2.1(j), 2.2.1(k), the second
sentence of Section 4.17.2 or Section 2.2.2(b), 2.2.3(b) or 5.3.1,
the Additional Technology Controlled by ABX that was originally disclosed by
ABX for use under the applicable Research Program or Development Program or
Antibody Technology (other than Core Antibody Technology) or XenoMouse Methods
(other than Core XenoMouse Technology) (in each case to the extent included in
this Agreement pursuant to Section 2.2.2(b), 2.2.3(b) or 5.3.1); or
(d) the infringement (or alleged infringement) of other intellectual
property rights of any Third Party, by the performance of (i) any work by
or on behalf of ABX with respect to an Advanced ABX Antigen, Accelerated ABX
Antigen, Expedited ABX Antigen, Potential Co-Development Antigen or ABX
Diagnostic Antigen prior to each such Antigen being designated as a
Collaboration Antigen, or (ii) any work by or on behalf of ABX under an
internal program pursuant to Section 4.15 with respect to a Failed Antigen
prior to such Antigen being re-designated

 

110

 

as a Collaboration Antigen pursuant to Section 4.15; except
in each case ((a), (b), (c) or (d)) for those Liabilities for which AZ has an
obligation to indemnify ABX and its Affiliates pursuant to Section 15.1,
as to which Liabilities each Party shall indemnify the other to the extent of
their respective Liabilities.

 

15.3         Procedure.

 

15.3.1      Notice and Right to Participate.  Each Party (the “Indemnitee”)
shall promptly notify the other Party (the “Indemnitor”) in writing of
any Claim, and the Indemnitor shall have the right to participate in, and, to
the extent the Indemnitor so desires, to assume the defense thereof with
counsel mutually satisfactory (consent not to be unreasonably withheld or
delayed) to the Parties by giving written notice to the Indemnitee
within [Confidential treatment requested] after receipt of written notice of
such Claim from the Indemnitee; provided,
however, that an Indemnitee shall have the right to retain its own
counsel, with the fees and expenses to be paid (a) by the Indemnitor, if
representation of such Indemnitee by the counsel retained by the Indemnitor
would be inappropriate due to actual or potential differing interests between
the Indemnitee and any other Party represented by such counsel in such
proceeding; or (b) by Indemnitee in all other cases.  In no event shall the Indemnitor be
liable for any Liabilities that result from any delay by the Indemnitee in
providing the written notice pursuant to the first sentence of this
Section 15.3.1.  In the event that it is ultimately
determined that the Indemnitor is not obligated to indemnify, defend or hold
harmless an Indemnitee from and against such Claim, the Indemnitee shall
reimburse the Indemnitor for any and all costs and expenses (including
attorneys’ fees and costs of suit) and any Liabilities incurred by the
Indemnitor in its defense of such Claim with respect to the Indemnitee.  The
Indemnitee, its employees and agents shall reasonably cooperate with the
Indemnitor and its legal representatives in the investigation of any Claim
covered by this Article 15.

 

15.3.2      Settlement.  With respect to all Liabilities in
connection with Claims, where the Indemnitor has assumed the defense of the Claim
in accordance with Section 15.3.1, the Indemnitor shall have authority to
consent to the entry of any judgment, enter into any settlement or otherwise
dispose of such Claim provided it obtains the prior written consent of the
Indemnitee (which consent shall not be unreasonably withheld or delayed) if
such Claim could have adverse effect on the Indemnitee or Indemnitee’s Products
hereunder.  The Indemnitor shall not be
liable for any settlement or other disposition of a Claim by an Indemnitee that
is reached without the written consent of the Indemnitor.  Regardless of whether the Indemnitor chooses
to defend or prosecute any Claim, no Indemnitee shall admit any liability with
respect to, or settle, compromise or discharge, any Claim without the prior written
consent of the Indemnitor, not to be unreasonably withheld or delayed.

 

15.4         Insurance.  ABX and AZ agree to maintain
general liability insurance and shall, during the term of this Agreement,
maintain adequate insurance or self-insurance programs for liability insurance
adequately covering such Party’s obligations under this Agreement, which, with
respect to ABX, shall include at a minimum the insurance policies and limits
(or self-insurance amounts) that are maintained by ABX as of the Effective Date.  ABX and AZ shall provide to the other
evidence of such insurance, upon request. 
Notwithstanding the foregoing, once there is a First Commercial
Sale of an AZ Product or ABX Product, ABX shall maintain, at a minimum, during
the term of this Agreement and for a period of [Confidential treatment

 

111

 

requested] from the
expiration or earlier termination of this Agreement, (a) commercial
general liability insurance with a combined single limit for bodily injury of
not less than [Confidential treatment requested] each occurrence and
[Confidential treatment requested] in the aggregate, and (b) products
liability/completed operations coverage with a per claim limit of not less than
[Confidential treatment requested]. 
Such policies shall (x) be provided by insurance carrier(s) that
have a financial rating of A as reported in Best’s Key Rating Guide Standard
& Poors, (y) with
respect to the policies under clause (b), show AZ as an additional insured
and loss payee, and (z) provide that AZ will be given
thirty (30) days advance written notice of the termination or cancellation
thereof.  Such policies shall remain in
effect during any Research Program or Development Program and for so long as
ABX is Exploiting ABX Products and shall not be cancelled or subject to a
reduction of coverage without the prior written authorization of AZ.  To the extent that any of the insurance
policies required herein be issued on a “claims-made” basis, the Retrospective
Date (“Retro Date”) shall precede the Effective Date of this Agreement.  Furthermore, in the event that the Retro
Date of any required policy is changed, ABX must advise AZ of that event and
purchase an Extended Reporting Period policy or endorsement (“Tail Cover”)
covering a period of [Confidential treatment requested] prior to the effective
date of the change.

 

16.           TERM;
TERMINATION 

 

16.1         Term.

 

16.1.1      This Agreement shall commence on the Effective Date and, unless
earlier terminated pursuant to Article 16, shall continue in effect until
the expiration of the Parties’ obligations to pay royalties, provided that such
expiration shall not affect any obligations of the Parties under the Process
Science/Clinical Manufacture Agreement and the Manufacturing and Supply Agreement.

 

16.1.2      If the termination or
expiration of the applicable waiting period under the Hart-Scott-Rodino
Antitrust Act of 1976, as amended, and the regulations promulgated thereunder,
has not occurred on or before October 25, 2003, then the Parties shall meet
and in good faith discuss how to proceed. 
If the termination or expiration of the applicable waiting period under
the Hart-Scott-Rodino Antitrust Act of 1976, as amended, and the regulations
promulgated thereunder, has not occurred on or before November 25, 2003,
and the Parties fail to reach mutual agreement on how to proceed on or before
November 25, 2003, then this Agreement will, without any further
action of the Parties, terminate automatically on such date, provided
that the provisions of Articles 13 and 15 and Sections 14.4 and 20.9
shall survive any such termination and continue thereafter.  For the avoidance of doubt, such termination
shall not relieve either Party of any liability for any breach of this
Agreement occurring prior to the date of termination.

 

16.1.3      Notwithstanding the foregoing, this Agreement will, without any further action of the Parties,
terminate automatically upon any termination of the Purchase Agreement pursuant
to Section 9.1 thereof at a time when the Initial Closing Date has not
occurred, provided that the provisions of Articles 13 and 15 and
Sections 14.4 and 20.9 shall survive any such termination and continue
thereafter.  For the avoidance of doubt,
such

 

112

 

termination
shall not relieve either Party of any liability for any breach of this
Agreement occurring prior to the date of termination.

 

16.2         Change in Control or Acquisition of ABX.  If ABX undergoes a Change in Control or
engages in an Acquisition at any time prior to the completion of the Antigen
Designation Term, all Research Programs, all activities under the Development
Programs that ABX is to perform or all Process Development Programs, then ABX
(or its successor) shall provide AZ with a written notice of such Change in
Control or Acquisition on the date of the first public announcement of such
Change in Control or Acquisition and a written notice on the closing date or
effective date of such Change in Control or Acquisition, whichever is later.  The written notice on the closing date or
effective date of such Change in Control or Acquisition, whichever is later,
shall include a written list of any Competitive Product with respect to a
Collaboration Antigen or Prioritized Antigen. 
AZ shall have the right, in its sole discretion, at any time during the
[Confidential treatment requested] period following AZ’s receipt of such
written notice on the closing date, to (a) terminate the Research Program,
Development Program and Process Development Program, and (unless ABX and AZ
have a manufacturing agreement in place with respect to a Collaboration Antigen
for which there is a Competitive Product) terminate the Parties’ rights and
obligations under Article 7 and the Manufacturing and Supply Agreement,
with respect to a Collaboration Antigen for which there is a Competitive
Product, or (b) if the other party to the Change in Control or Acquisition
is a Competitor, terminate the Antigen Designation Term in its entirety, if
still in force, and terminate all Research Programs, all Development Programs
and all Process Development Programs with respect to all Collaboration
Antigens, and (unless ABX and AZ have a manufacturing agreement in place with
respect to a Collaboration Antigen) terminate the Parties’ rights and obligations
under Article 7 and the Manufacturing and Supply Agreement with respect to
such Collaboration Antigen.  As soon as
reasonably practicable after the public announcement of such Change in Control
or Acquisition, ABX (or its successor) shall meet with AZ to discuss in good
faith what effect, if any, the Change in Control or Acquisition will have on
ABX’s (or its successor’s) performance of its obligations under this
Agreement.  Notwithstanding any Change
in Control or Acquisition by ABX, or the announcement thereof, during the
Antigen Designation Term, AZ shall have the right, regardless of the cap on the
number of Prioritized Antigens or Collaboration Antigens that may be designated
during any period (other than the cap on the total number of designations
during the Antigen Designation Term) as set forth in Sections 2.2.1(n) and
2.2.1(a), respectively, to continue to designate Antigens as Proposed Antigens,
Proposed Antigens as Prioritized Antigens and Collaboration Antigens, and
Prioritized Antigens as Collaboration Antigens pursuant to
Sections 2.2.1(c), 2.2.2(a) and 2.2.2(c), and ABX (or its successor) shall
continue to be bound by the terms and conditions of this Agreement with respect
thereto, unless and until an Antigen becomes a Non-Selected Antigen or this
Agreement is terminated pursuant to Section 16.2(b), in which case the
provisions of Sections 16.8.2(a) and 16.8.2(b) shall apply.  Notwithstanding anything to the contrary in this Agreement, in the event
that AZ undergoes a Change in Control or Acquisition during the Antigen
Designation Term, AZ shall have the right, in its sole discretion, to designate
Proposed Antigens as Prioritized Antigens or Collaboration Antigens regardless
of the cap on the number of Prioritized Antigens or Collaboration Antigens that
may be designated during any period (other than the cap on the total
number of designations during the Antigen Designation Term) as set forth in Sections 2.2.1(n) and 2.2.1(a), respectively; provided,
however, that such acceleration of the designation of Collaboration
Antigens shall not require ABX to commence more than [Confidential
treatment requested] Research
Programs in

 

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any year.  If, at any time
after the closing date of a Change in Control or Acquisition, AZ proposes an
Antigen as a Proposed Antigen pursuant to Section 2.2.1(a) or wishes to
designate a Proposed Antigen as a Prioritized Antigen pursuant to
Section 2.2.2(a) or as a Collaboration Antigen pursuant to Section 2.2.2(c),
ABX (or its successor) shall, within [Confidential treatment requested] of
receipt of the applicable Antigen Notice or written notice from AZ pursuant to
Section 2.2.2(a) or Section 2.2.2(c), as applicable, notify AZ of any
Competitive Product with respect to such Antigen.  If there is such a Competitive Product, AZ shall have the right
to withdraw such Proposed Antigen or Collaboration Antigen, as applicable,
within [Confidential treatment requested] after such notice and such Antigen
shall not count against the Proposed Antigen totals set forth in
Sections 2.2.1(n) and 2.2.1(o) or the Collaboration Antigen totals set
forth in Sections 2.2.1(a) and 2.2.2(f). 
Notwithstanding the foregoing, in the event of any Change in Control or
Acquisition by or with ABX, the exclusivity provisions in Article 17 shall
continue in full force.  For the
avoidance of doubt, AZ shall have the right to designate Antigens for which
there are Competitive Products as Proposed Antigens, Prioritized Antigens and
Collaboration Antigens under this Agreement and neither ABX nor its successor
shall have any rights under this Agreement with respect to a Competitive
Product or the Antigen against which such Competitive Product is directed
(except as otherwise expressly provided in Sections 17.4.1 and 17.5.1) and
no such Antigen shall be deemed a Committed Antigen, Excluded Antigen or
Partially Committed Antigen for purposes of this Agreement.

 

16.3         Termination
by AZ for Breach.

 

16.3.1      If ABX has materially breached a material obligation under this
Agreement or the Process Science/Clinical Manufacture Agreement, and such
material breach shall continue for [Confidential treatment requested] after written notice thereof from AZ
to ABX (or if such breach cannot be cured within such [Confidential treatment
requested] period, ABX does not
commence actions to cure such breach within such [Confidential treatment
requested] period and thereafter
diligently continue such actions), then AZ shall have the right, at its option,
to terminate (a) the Antigen Designation Term in its entirety or
(b) all Research Programs, all Development Programs and all Process
Development Programs with respect to all Collaboration Antigens, and (unless
ABX and AZ have a manufacturing agreement in place with respect to a Collaboration
Antigen) terminate the Parties’ rights and obligations under Article 7 and
the Manufacturing and Supply Agreement with respect to such Collaboration
Antigen, provided that if the Antigen Designation Term has not expired, AZ must
also terminate the Antigen Designation Term under Section 16.3.1(a) to
exercise it rights under this Section 16.3.1(b).

 

16.3.2      If ABX has materially breached a material obligation under the
Research Program for a specific Collaboration Antigen, and such material breach
shall continue for [Confidential treatment requested] after written notice thereof from AZ
to ABX (or if such breach cannot be cured within such [Confidential
treatment requested] period, ABX
does not commence actions to cure such breach within such [Confidential
treatment requested] period and
thereafter diligently continue such actions), then AZ shall have the right at
its option to (a) perform or have performed pursuant to Section 2.3.7
any activities under such Research Program that ABX has failed to timely perform,
provided that AZ shall not have to provide the additional [Confidential
treatment requested] notice
required under Section 2.3.7 before commencing such performance,
(b) terminate the Research Program and the Development

 

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Program for such Collaboration Antigen, or (c) terminate this
Agreement with respect to such Collaboration Antigen.

 

16.3.3      If ABX has materially breached a material obligation under the
Development Program for a specific Collaboration Antigen, and such material
breach shall continue for [Confidential treatment requested] after written notice thereof from AZ
to ABX (or if such breach cannot be cured within such [Confidential
treatment requested] period, ABX
does not commence actions to cure such breach within such [Confidential
treatment requested] period and
thereafter diligently continue such actions), then AZ shall have the right at
its option to (a) terminate the Development Program for such Collaboration
Antigen, or (b) terminate this Agreement with respect to such
Collaboration Antigen.

 

16.3.4      If ABX has materially breached its obligation under this Agreement to
use Commercially Reasonable Efforts (either alone or through a sublicensee) as
required under Section 4.12.1(b) to develop and commercialize an ABX
Product that binds to and is directed against a Discontinued Antigen for which
ABX has provided an Exercise Notice in a Major Market, AZ shall have the right
to provide ABX with a written termination notice after AZ has complied with the
procedures in Section 4.12.2 with respect to such material breach, and if
such material breach shall continue for [Confidential treatment
requested] after such termination
notice with respect thereto (or if such breach cannot be cured within such [Confidential
treatment requested] period, ABX
does not commence actions to cure such breach within such [Confidential
treatment requested] period and
thereafter diligently continue such actions), then AZ shall have the right to
compel ABX to grant a sublicense with respect to such Antigen and any ABX
Products with respect thereto in such Major Market pursuant to
Section 16.8.2(d).

 

16.3.5      If ABX has materially breached a material obligation under
Section 9.4 with respect to a Discontinued Antigen, and such material
breach shall continue for [Confidential treatment requested] after written notice thereof from AZ
to ABX, then AZ shall have the right to (a) compel ABX to grant a
sublicense to AZ with respect to such Antigen and any ABX Products with respect
thereto pursuant to Section 16.8.2(d), or (b) to terminate this
Agreement with respect to such Discontinued Antigen.

 

16.4         Termination
by ABX for Breach.

 

16.4.1      If AZ has materially breached a material obligation under this
Agreement during the Antigen Designation Term, and such material breach shall
continue for [Confidential treatment requested] after written notice thereof from ABX to AZ (or if such breach cannot
be cured within such [Confidential treatment requested] period, AZ does not commence actions
to cure such breach within such [Confidential treatment requested] period and thereafter diligently
continue such actions), then ABX shall have the right at its option to
terminate the Antigen Designation Term.

 

16.4.2      If AZ has materially breached a material obligation under the Research
Program for a specific Collaboration Antigen, and such material breach shall
continue for [Confidential treatment requested] after written notice thereof from ABX to AZ (or if such breach cannot
be cured within such [Confidential treatment requested] period, AZ does not

 

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commence actions to cure such breach within such [Confidential
treatment requested]
period and thereafter diligently continue such actions), then ABX shall have
the right to perform or have performed pursuant to Section 2.3.7 any
activities under such Research Program that AZ has failed to timely perform,
provided that ABX shall not have to provide the additional [Confidential
treatment requested] notice
required under Section 2.3.7 before commencing such performance.

 

16.4.3      If AZ has materially breached a material obligation under the
Development Program for a specific Collaboration Antigen prior to the delivery
of an Election Notice, and such material breach shall continue for [Confidential
treatment requested] after
written notice thereof from ABX to AZ (or if such breach cannot be cured within
such [Confidential treatment requested] period, AZ does not commence actions to cure such breach within such
[Confidential treatment requested] period and thereafter diligently continue such actions), then ABX
shall have the right at its option to (a) terminate the Development
Program for such Collaboration Antigen and convert such Collaboration Antigen
into a Discontinued Antigen, or (b) terminate this Agreement with respect
to such Collaboration Antigen.

 

16.4.4      If AZ has materially breached its obligation under this Agreement to
use Commercially Reasonable Efforts (either alone or through a sublicensee) as
required under Section 4.12.1(a) to develop and commercialize a Licensed
Product that binds to and is directed against a Collaboration Antigen in a
Major Market prior to the delivery of an Election Notice for such Collaboration
Antigen to ABX, ABX shall have the right to provide AZ with a written
termination notice after ABX has complied with the procedures in
Section 4.12.2 with respect to such material breach, and if such material
breach shall continue for [Confidential treatment requested] after such termination notice with
respect thereto (or if such breach cannot be cured within such [Confidential
treatment requested] period, AZ
does not commence actions to cure such breach within such [Confidential
treatment requested] period and thereafter diligently continue such actions),
then ABX shall have the right at its option to (a) convert such
Collaboration Antigen into a Discontinued Antigen, or (b) terminate this Agreement
with respect to such Collaboration Antigen.

 

16.4.5      If AZ has materially breached its obligation under this Agreement to
use Commercially Reasonable Efforts (either alone or through a sublicensee) as
required under Section 4.12.1(a) to develop and commercialize a Licensed
Product that binds to and is directed against a Collaboration Antigen in a
Major Market after the delivery of an Election Notice for such Collaboration
Antigen to ABX, ABX shall have the right to provide AZ with a written
termination notice after ABX has complied with the procedures in
Section 4.12.2 with respect to such material breach, and if such material
breach shall continue for [Confidential treatment requested] after such
termination notice with respect thereto (or if such breach cannot be cured
within such [Confidential treatment requested] period, AZ does not commence
actions to cure such breach within such [Confidential treatment requested]
period and thereafter diligently continue such actions), then ABX shall have
the right to compel AZ to grant a sublicense with respect to such Antigen and
any Licensed Products with respect thereto in such Major Market pursuant to
Section 16.8.3(b).

 

16.4.6      If AZ has materially breached a material obligation under
Section 9.3 with respect to a Collaboration Antigen after the delivery of
an Election Notice to

 

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ABX for such Collaboration Antigen, and such material breach shall
continue for [Confidential treatment requested] after written notice thereof
from ABX to AZ, then ABX shall have the right at its option to (a) compel
AZ to grant a sublicense with respect to such Antigen and any Licensed Products
with respect thereto pursuant to Section 16.8.3(b), or
(b) terminate the Agreement with respect to such Collaboration Antigen.

 

16.5         Tolling
of Termination.   Notwithstanding Section 16.3 or 16.4, if the Party alleged
to be in breach disputes such termination pursuant to Section 20.1 or such
other dispute resolution as the Parties may agree, then such right to terminate
shall be tolled for so long as such dispute resolution procedures are being
pursued by such Party in good faith and if it is finally and conclusively
determined pursuant to such procedures that such Party is in breach, then such
Party shall have the right to cure such breach under Section 16.3 or 16.4
as provided above.

 

16.6         Termination for Safety Reasons.  If AZ determines, in good faith, that it is not
feasible for AZ or its sublicensees to pursue the research, development, launch
or sale of a Licensed Product that
binds to and is directed against a Collaboration Antigen in one or more Major Markets due to safety
concerns, including adverse events of such Licensed Product, then AZ shall
promptly notify ABX in writing of such determination and provide ABX with the
pertinent information with respect thereto. 
If ABX determines that it can solve AZ’s concerns by making the Licensed
Product more safe (e.g., by using a different dose or route of administration)
and ABX wishes to convert such Antigen into a Discontinued Antigen, then ABX
shall notify AZ in writing thereof, which notice shall include any information
supporting its determination.  Promptly
following the receipt of such notice from ABX, the Parties shall discuss the
situation in good faith.  If AZ
determines that it is safe for AZ or its sublicensees to pursue the research,
development, launch or sale of such Licensed Product in such Major Market(s),
then AZ shall have the right to elect not to terminate this Agreement with
respect to such Collaboration Antigen and instead continue to Exploit such
Licensed Product pursuant to this Agreement. 
If following such good faith discussion and review of such information
provided by ABX, AZ still believes in good faith that it is not feasible to
pursue the research, development, launch or sale of such Licensed Product due
to safety concerns, AZ may, in its sole discretion, terminate this Agreement
with respect to such Collaboration Antigen in its entirety or with respect to
such Major Market(s) [Confidential
treatment requested]
prior written notice to ABX.

 

16.7         Termination Upon Bankruptcy.  A Party may terminate the
Antigen Designation Term, one or more Research Programs, one or more
Development Programs or this Agreement in its entirety, if, at any time, the
other Party shall file in any court or agency pursuant to any statute or
regulation of any state, country or jurisdiction, a petition in bankruptcy or
insolvency or for reorganization or for an arrangement or for the appointment
of a receiver or trustee of that party or of its assets, or if the other Party
shall be served with an involuntary petition against it, filed in any
insolvency proceeding, and such petition shall not be dismissed within [Confidential treatment requested] after the filing thereof, or if the
other Party shall propose or be a party to any dissolution or liquidation, or
if the other Party shall make an assignment for the benefit of its creditors.

 

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16.8         Effect of Expiration and Termination.

 

16.8.1      Expiration of Agreement.  Except as otherwise
expressly set forth in this Agreement, upon the expiration of this Agreement
under Section 16.1, the license grants in effect as of the date of
expiration of this Agreement shall continue on a perpetual, irrevocable,
non-exclusive, royalty-free, fully paid up basis.

 

16.8.2      Termination for Change in Control or Breach by ABX.

 

(a)           Termination for Change in Control or
Breach of Research Program.  If AZ terminates (x) any or all
Research Programs with respect to the Collaboration Antigens pursuant to
Section 16.2 or 16.3.1, or (y) a Research Program with respect to a
Collaboration Antigen pursuant to Section 16.3.2(b), then the following
shall apply:

 

(i)            Licenses and Other Rights. 
The license and other rights granted by ABX to AZ under Section 4.1
with respect to such Collaboration Antigen(s) shall continue without the
obligations and restrictions on AZ under Articles 2, 3, the last
two sentences of Section 4.1, Section 4.12.1, Article 5 and
Article 6, provided that the milestone and royalties payable to ABX with
respect to such Collaboration Antigen(s) shall be governed by
Section 16.8.2(a)(ii).  The licenses
granted by ABX to AZ under Sections 4.2, 4.3 and 4.4 with respect to such
Collaboration Antigen(s) shall terminate to the extent covered by the license
grant in Section 4.1.  ABX (or its
successor) shall assign, and shall cause its Affiliates, licensees and sublicensees
to so assign, to AZ, without additional compensation, all of their right, title
and interest in and to any Collaboration Technology with respect to such
Collaboration Antigen(s) (together with all Patent Rights and other
intellectual property rights therein); provided, however, if and
only to the extent ABX or any of its Affiliates is not legally able to assign
an Antibody that binds to and is directed against such Collaboration Antigen
that was Controlled by ABX as of the date such Collaboration Antigen was
designated as such, such Person shall, and does hereby, grant to AZ, without
further compensation to ABX, a perpetual, irrevocable, exclusive, worldwide
right and license under the applicable Collaboration Know-How Rights and
Collaboration Patent Rights to Exploit such Antibody.  All licenses and
similar rights granted by AZ to ABX with respect to such Collaboration
Antigen(s) shall terminate, including ABX’s rights to such Collaboration
Antigen(s) as Discontinued Antigen(s) or Failed Antigen(s) and ABX’s right and,
except as otherwise provided in Article 5 with respect to a Program Budget
accepted by AZ pursuant to Section 5.3.2, obligation to perform the
Development Program with respect to a Collaboration Antigen if the Research
Program for such Collaboration Antigen is terminated, provided that, except
with respect to a termination of a Process Development Program with respect to
a Collaboration Antigen pursuant to Section 16.2 or 16.3.1, the Parties’ rights and obligations
under Article 7 with respect to Research Antibodies, Candidate Drugs and
Licensed Products that bind to and are directed against such Collaboration
Antigen shall continue in full force and effect.  Notwithstanding the foregoing, for the avoidance of doubt, the license and other rights granted by
the Parties under Sections 4.6, 4.7, 4.8 and 4.9 shall continue in full
force and effect.

 

(ii)           Financial Provisions. 
AZ’s obligation to pay milestones and royalties to ABX shall continue with respect to such
Collaboration Antigen(s) but the milestone payments set forth in
Section 9.3.1 and the royalty rate payable to ABX under Section 9.3.2
on

 

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Net Sales of Licensed
Products that bind to and are directed against such Collaboration Antigen(s) shall be reduced to the applicable
amounts and rates set forth in Exhibit O in addition to any other
reductions required under Article 9. 
With respect to Net Sales of Non-Antibody Products with respect to such
Collaboration Antigen(s), immediately after a request by AZ, the Parties
shall, if they have not already done so pursuant to Section 4.4.1(a),
negotiate in good faith to determine the ongoing financial terms solely for the
license grant in Section 4.1 to AZ under the ABX Prior Antigen-Specific
Know-How Rights and ABX Prior Antigen-Specific Patent Rights applicable to such
Collaboration Antigen(s) to Exploit such Non-Antibody Products for use in the
Commercial Field.

 

(iii)          XenoMouse Animals and Return of Confidential
Information.  With respect to each Collaboration Antigen
for which ABX has not completed three (3) rounds of immunizations in accordance
with the applicable Research Program Work Plan prior to the effective date of
such termination, ABX (or its successor) shall transfer to AZ sterile male XenoMouse
Animals and the associated protocols, solely for the purpose of generating
Antibodies that bind to and are directed against such Collaboration Antigen,
pursuant to the Supplementary XenoMouse Agreement. 
ABX (or its successor) shall
transfer to AZ all Collaboration Technology and return to AZ all Confidential
Information of AZ and its Affiliates (including any AZ Information) (and all
tangible embodiments thereof), in each case relating to such Collaboration
Antigen(s); provided, however, that ABX (or its successor)
shall have the right to retain
one (1) copy of such Confidential Information for its legal files for the sole
purpose of determining its obligations hereunder.

 

(iv)          Exclusivity. 
The exclusivity
restrictions with respect to AZ (but, subject to the last sentence of this
Section 16.8.2(a)(iv), not ABX (or its successor)) in Article 17 shall terminate with
respect to such Collaboration Antigen(s) and AZ shall have the right to grant
sublicenses under the license granted in Section 4.1 with respect to such
Collaboration Antigen, through multiple tiers of sublicensees, to its
Affiliates and to any other Persons.  If, at any time prior to AZ providing an
Election Notice (or making the first milestone payment to ABX pursuant to
Section 9.3.1, whichever is earlier) with respect to a Collaboration
Antigen, AZ ceases to Exploit all Licensed Products that bind to and are
directed against such Collaboration Antigen, AZ shall provide written notice to
ABX (or its successor),
provided if, at any time prior to such written notice and prior to AZ providing an Election
Notice (or making the first milestone payment to ABX pursuant to
Section 9.3.1, whichever is earlier) with respect to such Collaboration
Antigen, ABX (or its successor) has a reasonable basis to believe that
AZ has ceased Exploiting all Licensed Products that bind to and are directed
against such Collaboration Antigen, then ABX (or its successor) shall so notify
AZ, specifying the basis for its belief, and the Parties shall meet within [Confidential treatment requested]
after such notice to discuss in good faith ABX’s (or its successor’s) concerns
and AZ’s plans with respect to the Exploitation of Licensed Products that bind
to and are directed against such Collaboration Antigen.  On the
[Confidential treatment
requested] anniversary
of the earlier of the date of such written notice from AZ and the date that AZ
ceases to Exploit all Licensed Products that bind to and are directed against
such Collaboration Antigen if prior to AZ providing an Election Notice (or
making the first milestone payment to ABX pursuant to Section 9.3.1,
whichever is earlier) with respect to such Collaboration Antigen, the
exclusivity restrictions with respect to ABX (or its successor) in Article 17 shall terminate
with respect to the Exploitation of Antibody Equivalents (but not Antibodies)
that bind to and are directed against such Collaboration Antigen.  If a

 

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Research Program with respect to a Collaboration Antigen is terminated
pursuant to Section 16.2 because of a Change in Control of ABX with a
Competitor and AZ subsequently ceases to Exploit all Licensed Products that
bind to and are directed against such Collaboration Antigen, in each case prior
to AZ providing an Election Notice (or making the first milestone payment to
ABX pursuant to Section 9.3.1, whichever is earlier) with respect to such
Collaboration Antigen, then, on the [Confidential treatment requested] anniversary of the earlier of the date of such
written notice from AZ and the date that AZ ceases such Exploitation, the
exclusivity restrictions with respect to ABX (or its successor) in Article 17 shall terminate
with respect to the Exploitation of products with respect to such
Collaboration Antigen that do not contain Antibodies or Antibody Equivalents
that bind to and are directed against such Collaboration Antigen.

 

(b)           Termination for Change in Control or
Breach of Development Program.  If AZ terminates
(x) any or all Development Programs with respect to the Collaboration
Antigens pursuant to Section 16.2 or 16.3.1 or (y) a Development
Program with respect to a Collaboration Antigen pursuant to
Section 16.3.3(a), then (i) all licenses and other rights granted by
AZ to ABX with respect to such Collaboration Antigen(s) shall terminate,
including ABX’s right to such Collaboration Antigen(s) as Discontinued
Antigen(s) or Failed Antigen(s), provided that, unless the applicable Process
Development Program is terminated pursuant to Section 16.2 or 16.3.1, the Parties’ rights and obligations under
Article 7 with respect to Candidate Drugs and Licensed Products that bind
to and are directed against such Collaboration Antigen(s) shall continue in
full force and effect,
(ii) the license and other rights granted by ABX to AZ under
Section 4.1 with respect to such Collaboration Antigen(s) shall continue
without the obligations and restrictions on AZ under Articles 2, 3,
the last two sentences of Section 4.1, Section 4.12.1, Article 5
and Article 6, provided that AZ’s
obligation to pay milestones
and royalties to ABX shall continue with respect to such Collaboration
Antigen(s) but the milestone payments set forth in Section 9.3.1 and
royalty rate payable to ABX under Section 9.3.2 on Net Sales of Licensed
Products that bind to and are directed against such Collaboration Antigen shall
be reduced to the applicable amounts and rates set forth in Exhibit O in
addition to any other reductions required under Article 9, (iii) the
licenses granted by ABX to AZ under Sections 4.2, 4.3 and 4.4 with respect
to such Collaboration Antigen(s) shall terminate to the extent covered by the
license grant in Section 4.1, (iv) the exclusivity restrictions with respect to AZ (but not ABX (or
its successor)) in
Article 17 shall terminate with respect to such Collaboration Antigen and
AZ shall have the right to grant sublicenses under the license granted in
Section 4.1 with respect to such Collaboration Antigen, through multiple
tiers of sublicensees, to its Affiliates and to any other Persons, and (v) ABX (or its
successor) shall return all
Confidential Information of AZ (including any AZ Information ) (and all
tangible embodiments thereof) relating to such Collaboration Antigen; provided,
however, that ABX (or its successor) shall have the right to retain one (1) copy for its legal files for
the sole purpose of determining its obligations hereunder. 
For the avoidance of doubt, the license and other rights granted by the Parties under
Sections 4.6, 4.7, 4.8 and 4.9 shall continue in full force and effect.

 

(c)           Termination of Agreement. 
If AZ terminates this Agreement with respect to a Collaboration Antigen
pursuant to Section 16.3.2(c), 16.3.3(b) or 16.3.5(b), then (i) all
licenses and other rights granted by each Party to the other Party with respect
to such Collaboration Antigen shall terminate, except for the license and other
rights granted by the Parties under Sections 4.6, 4.7, 4.8 and 4.9, which
shall continue in full force and effect, (ii) the

 

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exclusivity restrictions with respect to each Party in Article 17
shall terminate with respect to such Collaboration Antigen, (iii) each
Party shall destroy all materials comprising Collaboration Technology with
respect to such Collaboration Antigen, and (iv) each Party shall return all Confidential Information
of the other Party (and all tangible embodiments thereof) relating to such
Collaboration Antigen; provided, however, that each Party shall
have the right to retain one (1) copy for its legal files for the sole
purpose of determining its obligations hereunder.

 

(d)           Termination for Failure to Use
Commercially Reasonable Efforts or Payment Default. 
If AZ elects to compel ABX to grant a sublicense with respect to a
Discontinued Antigen, including any ABX Products with respect thereto, pursuant
to Section 16.3.4 or 16.3.5, AZ shall provide written notice to ABX,
whereupon ABX shall use Commercially Reasonable Efforts to negotiate a
sublicense with a Person to Exploit one or more ABX Products, provided that AZ
shall have the right to submit a bid for such sublicense.  If AZ submits a bid for such sublicense, ABX shall be required to
negotiate in good faith with AZ to grant such sublicense to AZ, provided that
if other Persons are interested in obtaining such sublicense ABX shall not be
required to negotiate exclusively with AZ. 
In the event that AZ elects to compel such a sublicense because of ABX’s
material breach of its
obligation to use Commercially Reasonable Efforts in a Major Market as required
under Section 4.12.1(b), such sublicense shall only apply with respect to
such Major Market.  Nothing in this
Section 16.8.2(d) is intended or should be construed to limit ABX’s rights
to grant sublicenses to Affiliates or Third Parties to Exploit ABX Products
that bind to and are directed against a Discontinued Antigen pursuant to
Section 4.5.1 prior to any such breach.

 

16.8.3     Termination by ABX.

 

(a)           Termination for Breach of Development
Program or Failure to Use Commercially Reasonable Efforts Prior to Election
Notice.  If, as a result of a material breach by AZ
of (i) a Development Program with respect to a specific Collaboration
Antigen or (ii) its obligation to use Commercially Reasonable Efforts with
respect to a specific Collaboration Antigen in a Major Market prior to the delivery
of an Election Notice for such Collaboration Antigen to ABX, ABX elects to
convert such Collaboration Antigen into a Discontinued Antigen pursuant to
Section 16.4.3 or 16.4.4, then, upon written notice to AZ, such
Collaboration Antigen shall, subject to Section 16.5, be converted into a
Discontinued Antigen and Exhibit B shall be amended accordingly.  In the event that ABX provides an Exercise
Notice with respect to such Discontinued Antigen, ABX shall have the right to purchase
any quantities of Candidate Drugs controlled by AZ, at AZ’s fully burdened
cost, that bind to and are directed against such Discontinued Antigen.  If ABX fails to provide such Exercise
Notice, ABX shall have no rights to such Antigen under
Sections 4.5.1(a)(i), 4.5.1(b), 4.5.1(c) or 4.5.1(d)(i) or any such
Candidate Drugs (including any Genetic Material or cell lines with respect
thereto).  For the avoidance of doubt,
if ABX fails to provide such Exercise Notice, AZ shall retain all such Antibodies
(and any Antibody Cells and Genetic Materials with respect to such Antibodies),
whereupon the license grant set forth in Section 4.3.1 shall continue in
effect subject to Section 4.5.1(e).

 

(b)           Termination for Failure to Use
Commercially Reasonable Efforts After Election Notice or Payment Default. 
If ABX elects to compel AZ to grant a sublicense with respect to a
Collaboration Antigen, including any Licensed Products with respect thereto,
pursuant to Section 16.4.5 or 16.4.6(a), ABX shall provide written notice
to AZ, whereupon AZ

 

121

 

shall use Commercially Reasonable Efforts to negotiate a sublicense
with a Person to Exploit one or more Licensed Products, provided that ABX shall
have the right to submit a bid for such sublicense.  If
ABX submits a bid for such sublicense, AZ shall be required to negotiate in
good faith with ABX to grant such sublicense to ABX, provided that if other
Persons are interested in obtaining such sublicense AZ shall not be required to
negotiate exclusively with ABX.  In the
event that ABX elects to compel such a sublicense because of AZ’s material breach of its obligation to use
Commercially Reasonable Efforts in a Major Market as required under
Section 4.12.1(a), such sublicense shall only apply with respect to such
Major Market.  Nothing in this Section 16.8.3(b) is
intended or should be construed to limit AZ’s rights to grant sublicenses to
Affiliates or Third Parties to Exploit Licensed Products that bind to and are
directed against a Collaboration Antigen pursuant to Section 4.3.2 prior
to any such breach.

 

(c)           Termination of Agreement. 
If ABX terminates this Agreement with respect to a Collaboration Antigen
pursuant to Section 16.4.3(b), 16.4.4(b) or 16.4.6(b), then (i) all
licenses and other rights granted by each Party to the other Party with respect
to such Collaboration Antigen shall terminate, except for the license and other
rights granted by the Parties under Sections 4.6, 4.7, 4.8 and 4.9, which
shall continue in full force and effect, (ii) the exclusivity restrictions with respect
to each Party in Article 17 shall terminate with respect to such
Collaboration Antigen, (iii) each Party shall destroy all materials
comprising Collaboration Technology with respect to such Collaboration Antigen, and (iv) each Party shall return
all Confidential Information of the other Party (and all tangible embodiments
thereof) relating to such Collaboration Antigen; provided, however,
that each Party shall have the right to retain one (1) copy for its legal files
for the sole purpose of determining its obligations hereunder.

 

16.8.4      Transition of
Programs.  All
terminations under this Article 16 shall become effective within [Confidential treatment requested]
after the date that it is finally
and conclusively determined, pursuant to Section 20.1 or
such other dispute resolution procedure as the Parties may agree, if applicable, that a Party is in breach and
the expiration of any cure periods. 
After the effective date of a termination of a Research Program,
Development Program or Process Development Program or this Agreement by AZ
pursuant to Section 16.2 or 16.3 or a Development Program or this
Agreement by ABX pursuant to Section 16.4, the terminating Party or its
designee shall have the right to assume full control of such Research Program
or Development Program, as applicable, and the other Party, at the request of
the terminating Party, shall continue to perform its obligations under this
Agreement for a reasonable period of time and provide the terminating Party
with such assistance as is Reasonably Necessary to effectuate a smooth and
orderly transition of such Research Program or Development Program or other
activities under this Agreement to the terminating Party or its designee so as
to minimize any disruption of the applicable activities or studies.

 

16.9         Termination
for Safety Reasons.   If AZ
terminates this Agreement with respect to a Collaboration Antigen in its
entirety pursuant to Section 16.6, then (a) all licenses and other
rights granted by each Party to the other Party with respect to such
Collaboration Antigen shall terminate, (b) the exclusivity restrictions with respect
to each Party in Article 17 shall terminate with respect to such
Collaboration Antigen, and (c) each Party shall return all Confidential Information of the other
Party (and all tangible embodiments thereof) relating to such Collaboration
Antigen; provided, however, that each Party shall have the right
to retain one (1) copy for its legal files for the sole purpose of determining
its obligations hereunder.

 

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16.10       Process Development Program.   The
effect of any termination of a Process Development Program as a result of a
Change in Control and, subject to Sections 7.14 and 16.3.1, the right to
terminate a Process Development Program for breach and the effects thereof
shall be addressed in the Process Science and Clinical Manufacture Agreement.

 

16.11       Remedies.
  Unless otherwise stated herein, the
rights and remedies in this Article 16 shall be cumulative and in addition
to any other rights or remedies that may be available to the Parties.

 

16.12       Survival.
  Expiration or termination of this
Agreement shall be without prejudice to any rights that shall have accrued to
the benefit of a Party prior to such expiration or termination.  Without limiting the foregoing, the
first sentence of Section 2.4, and each of Sections 4.6, 4.7, 4.8, 4.9, 4.10, 4.14, 4.17 (but only
with respect to the surviving licenses under Sections 4.6 through 4.10), 4.19,
the first sentence of Section 5.5, 5.7.4, 5.8, 7.9. 7.10, 7.11, 7.12,
9.3.3 (but only with respect to the surviving licenses under Sections 4.6
through 4.10), 9.11, 11, 12, 13, 14.4, 15, 16.8, 16.9, 16.11, 16.12, 16.13, 18,
19, 20.1, 20.6, 20.7 and 20.9, shall
survive termination of this Agreement.

 

16.13       Rights in Bankruptcy.   All
rights and licenses granted under or pursuant to this Agreement by ABX or AZ
are, and shall otherwise be deemed to be, for purposes of Section 365(n)
of the United States Bankruptcy Code, licenses of rights to “intellectual
property” as defined under Section 101 of the United States Bankruptcy
Code.  The Parties agree that the
Parties, as licensees of such rights under this Agreement, shall retain and may
fully exercise all of their rights and elections under the United States
Bankruptcy Code.  The Parties further
agree that, in the event of the commencement of a bankruptcy proceeding by or
against a Party under the United States Bankruptcy Code, the Party hereto that
is not a party to such proceeding shall be entitled to a complete duplicate of
(or complete access to, as appropriate) any such intellectual property and all
embodiments of such intellectual property, which, if not already in the
non-subject Party’s possession, shall be promptly delivered to it (a) upon
any such commencement of a bankruptcy proceeding upon the non-subject Party’s
written request therefor, unless the Party subject to such proceeding continues
to perform all of its obligations under this Agreement or (b) if not
delivered under clause (a) above, following the rejection of this
Agreement by or on behalf of the Party subject to such proceeding upon written
request therefor by the non-subject Party.

 

17.           EXCLUSIVITY 

 

17.1         During the Antigen Designation Term.

 

17.1.1      Subject to the provisions of
Sections 17.3, 17.4, 17.5, 17.6 and 17.7, during the Antigen Designation
Term, neither a Party nor its Affiliates
shall, or shall cause, assist
or enter into any agreement with any Person to, directly or indirectly, research, develop, manufacture, commercialize
or otherwise Exploit Antibodies or Antibody Equivalents that bind to and are
directed against any Antigen, except that, (a) solely as required or
expressly permitted by this Agreement, both Parties shall have the right to
jointly research and develop (pursuant to the Research Programs and Development
Programs) Antibodies that bind to and are directed against Collaboration
Antigens (other than Discontinued Antigens and Failed Antigens) and AZ

 

123

 

shall
have the right (without regard to this clause (a)) to exercise its rights under Articles 2 and
5; (b) AZ shall have the right, whether alone or with a Third Party, to
Exploit Antibodies and Antibody Equivalents that bind to and are directed
against Collaboration Antigens (other than Discontinued Antigens and Failed
Antigens) for which AZ has provided an Election Notice; (c) AZ shall have
the right, whether alone or with a Third Party, to Exploit (without Exploiting
the Licensed ABX IP Rights other than to the extent expressly licensed under
this Agreement) Antibody Equivalents that bind to and are directed against
(i) Excluded Antigens and (ii) Non-Selected Antigens; (d) AZ
shall have the right, whether alone or with a Third Party, to Exploit Antibody
Equivalents and, subject to Section 4.5.1(e) with respect to Discontinued
Antigens and Section 4.15 with respect to Failed Antigens, Antibodies that
bind to and are directed against Discontinued Antigens and Failed Antigens;
(e) ABX shall have the right to conduct internal research and development
of Antibodies and Antibody Equivalents that bind to and are directed against
Potential Co-Development Antigens subject to Section 2.2.1(l), the
Advanced ABX Antigen subject to Section 2.2.1(j), and Accelerated ABX
Antigens subject to Section 2.2.1(j); (f) ABX shall have the right to
generate and characterize Antibodies that bind to and are directed against ABX
Diagnostic Antigens subject to Section 2.2.1(m); (g) ABX shall have
the limited right, whether alone or with a Third Party, to Exploit Antibodies
and Antibody Equivalents that bind to and are directed against Discontinued
Antigens and Failed Antigens subject to Sections 2.6.5, 4.5.1, 4.15, 5.9
and 5.11; (h) ABX shall have the right, whether alone or with a Third
Party, to Exploit (without Exploiting the Licensed AZ IP Rights or any
Collaboration Technology other than to the extent expressly licensed under this
Agreement) Antibody Equivalents that bind to and are directed against [Confidential treatment requested] (ii) Non-Selected Antigens, and (iii) [Confidential treatment requested]; (i) solely as permitted by Article 8,
both Parties shall have the right to jointly Exploit Antibodies and Antibody
Equivalents that bind to and are directed against Co-Development Antigens; and
(j) ABX shall have the right to perform process development, contract
manufacturing and related services for AZ and for Third Parties, provided that
ABX shall have no right to perform such services for Third Parties with respect
to Collaboration Antigens; provided, however, that ABX shall have
the right to conduct process development, contract manufacturing and related
services with respect to an Antigen for a Third Party if ABX already had an
obligation to perform such process development, contract manufacturing and
related services at the time such Antigen was designated a Collaboration
Antigen.

 

17.1.2      [Confidential treatment requested]

 

17.1.3      [Confidential treatment requested]

 

17.1.4      [Confidential treatment requested]

 

17.2         Following the Antigen Designation Term.

 

17.2.1      Subject to the provisions of
Sections 17.3, 17.4, 17.5, 17.6 and 17.7, following the Antigen
Designation Term, neither a Party nor its
Affiliates shall, or shall cause, assist or enter into any agreement with any Person to, directly or indirectly, research, develop,
manufacture, commercialize or otherwise Exploit Antibodies or Antibody
Equivalents that bind to and are directed against (x) any Collaboration
Antigen or (y) subject to Section 2.2.4, any Prioritized Antigen that
has been designated as such during the Antigen Designation Term

 

124

 

until
designated as a Non-Selected Antigen, except that, (a) solely as required
or expressly permitted by this Agreement, both Parties shall have the right to
jointly research and develop (pursuant to the Research Programs and Development
Programs) Antibodies that bind to and are directed against Collaboration
Antigens (other than Discontinued Antigens and Failed Antigens) and AZ shall
have the right (without regard to this clause (a)) to exercise its rights under Articles 2 and
5; (b) AZ shall have the right, whether alone or with a Third Party, to
Exploit Antibodies and Antibody Equivalents that bind to and are directed
against Collaboration Antigens (other than Discontinued Antigens and Failed
Antigens) for which AZ has provided an Election Notice; (c) AZ shall have
the right, whether alone or with a Third Party, to Exploit Antibody Equivalents
and, subject to Section 4.5.1(e) with respect to Discontinued Antigens and
Section 4.16 with respect to Failed Antigens, Antibodies that bind to and
are directed against Discontinued Antigens and Failed Antigens; (d) ABX
shall have the right, whether alone or with a Third Party, to Exploit
Antibodies and Antibody Equivalents that bind to and are directed against
Discontinued Antigens and Failed Antigens subject to Sections 2.6.5,
4.5.1, 4.15, 5.9 and 5.11, and (e) ABX shall have the right to perform process
development, contract manufacturing and related services for AZ and for Third
Parties, provided that ABX shall have no right to perform such services for
Third Parties with respect to Collaboration Antigens, except as provided in
Section 17.1.1.

 

17.2.2      Subject to Sections 17.4 and 17.5, following the Antigen Designation
Term, neither ABX nor any of its Affiliates shall have the right to
research, develop, commercialize or otherwise Exploit any products with respect
to (a) any Collaboration Antigen (including a Discontinued Antigen or
Failed Antigen) or (b) subject to
Section 2.2.4, any Prioritized Antigen that has been designated as such
during the Antigen Designation Term until designated as a Non-Selected Antigen,
in each case that do not contain Antibodies or Antibody Equivalents that bind to and are directed against
such Antigen.  Notwithstanding
anything to the contrary in this Agreement, including the license grants
herein, even if such Collaboration Antigen becomes a Discontinued Antigen or Failed Antigen, neither ABX nor its
Affiliates shall have the right to Exploit Collaboration Technology, Oncology
Technology, ABX Antigen-Specific Patent Rights, ABX Antigen-Specific Know-How
Rights or Licensed AZ IP Rights in connection with the Exploitation of such products
that do not contain Antibodies or Antibody Equivalents.

 

17.3         No Breach.

 

17.3.1      ABX and AZ acknowledge and agree that in the course of generating
antibodies that bind to and are directed against an antigen that is not an
Antigen (during the Antigen Designation Term) or a Collaboration Antigen
(thereafter), ABX, or a Third Party under license from ABX, may also generate
antibodies that bind to an Antigen (during the Antigen Designation Term) or a
Collaboration Antigen (thereafter, other than a Discontinued Antigen or Failed
Antigen), and such generation shall not constitute a breach of the exclusivity
provisions of this Agreement except to the extent that such antibodies were
generated from the immunization with, or were initially selected by screening against,
a Collaboration Antigen; provided, however, that ABX shall not
agree to, and shall not grant to such Third Party any license to make, have
made, use, offer for sale, sell or import or otherwise Exploit such antibodies
to such Antigen (during the Antigen Designation Term) or a Collaboration
Antigen

 

125

 

(thereafter, other than a Discontinued Antigen or Failed Antigen to
the extent expressly permitted in this Agreement).

 

17.3.2      ABX and AZ acknowledge and agree that
in the course of generating Antibodies that bind to and are directed against a
Collaboration Antigen, AZ or ABX may also generate Antibodies that bind to
another antigen and such generation shall not constitute a breach of this
Agreement and such Antibody shall fall within the scope of the license grants
set forth in this Agreement, except to the extent that such Antibodies are
generated from the immunization with, or were initially selected by screening
against, such other antigen.

 

17.3.3      Nothing in this Agreement shall prohibit ABX from
granting a license under ABX intellectual property rights to a Third Party to
research, develop, manufacture or commercialize Antibody Equivalents that bind
to and are directed against an antigen that is a post transcriptional splice
variant of an Antigen (during the Antigen Designation Term) or a Collaboration
Antigen (thereafter) if
such Third Party can demonstrate that such Antibody Equivalents bind to only
the unique portion of such splice variant and not to such Antigen or
Collaboration Antigen (as applicable), provided that such license shall only
apply to Antibody Equivalents that bind to such splice variant and not to such
Antigen or Collaboration Antigen (as
applicable).

 

17.3.4      Except as provided in Section 2.2.1(a),
nothing in this Agreement shall prohibit ABX from granting a license under ABX
intellectual property rights to a Third Party under an Existing Collaboration
to research, develop, manufacture or commercialize Antibody Equivalents that
bind to and are directed against a Committed Antigen, or to perform its
obligations or exercise its rights with respect to any Committed Antigen; provided,
however, [Confidential treatment requested].

 

17.3.5      Except as provided in Section 2.2.1(i),
nothing in this Agreement shall prohibit [Confidential treatment requested].

 

17.3.6      [Confidential
treatment requested]

 

17.3.7      Notwithstanding
anything to the contrary in this Agreement, AZ and its Affiliates shall have
the right at any time (a) to obtain from Third Parties, whether by
acquisition, license or otherwise, rights to specific Antibody Equivalent
candidate drugs generated by or on behalf of such Third Parties that bind to
and are directed against Antigens, including Non-Selected Antigens, Proposed
Antigens and Collaboration Antigens, and (b) to Exploit, whether
themselves or with or through one or more Third Parties, such Antibody
Equivalents outside of this Agreement.  In
the event AZ or its Affiliates obtain from a Third Party rights to an Antibody
Equivalent that binds to and is directed against a Collaboration Antigen, AZ’s
diligence obligations in Section 4.12.1(a) with respect to Licensed
Products that bind to and are directed against such Collaboration Antigen shall
not, notwithstanding the definition of Commercially Reasonable Efforts, take
into consideration such Third Party Antibody Equivalent.

 

17.3.8      Nothing in this Article 17 or elsewhere in this Agreement is
intended, or shall be construed, to limit or prohibit AZ and its Affiliates
from Exploiting (without

 

126

 

infringing the Licensed ABX IP Rights other than to the extent
expressly licensed under Article 4), whether themselves or with or though
any Person, products, including Non-Antibody Products, that do not contain
Antibodies or Antibody Equivalents, irrespective of whether such products are
directed at an Antigen.

 

17.4         Certain Provisions Applicable Upon
a Change in Control Involving ABX.   Notwithstanding anything to the contrary in this Agreement, after
a Change in Control involving ABX, the exclusivity provisions in this
Article 17 shall continue in full force except as set forth below:

 

17.4.1      ABX (or its successor) and
its Affiliates shall have the right directly or indirectly to Exploit, and to
enter into any agreement with any Third Party directly or indirectly to
Exploit, Competitive Products, in each case without the use of Licensed ABX IP
Rights or Collaboration Technology, other than Collaboration Technology with
respect to, subject to Section 4.15, Failed Antigens and Discontinued
Antigens for which ABX has provided an Exercise Notice.

 

17.4.2      ABX (or its successor) and
its Affiliates shall have the right directly or indirectly to Exploit, and to
enter into any agreement with any Third Party directly or indirectly to
Exploit, (a) products (other than products containing Antibodies or
Antibody Equivalents) with respect to any Antigen (other than a Collaboration
Antigen that has not been designated, subject to Section 4.15, a Failed Antigen
or a Discontinued Antigen for which ABX has provided an Exercise Notice), and
(b) products (other than products containing Antibodies or Antibody
Equivalents) with respect to any Collaboration Antigen (other than, subject to
Section 4.15, a Failed Antigen or a Discontinued Antigen for which ABX has
provided an Exercise Notice) for which there was a Pre-Existing Non-Antibody
Program or for which a program to research, develop or commercialize products
(other than Antibodies or Antibody Equivalents) with respect to such
Collaboration Antigen was being actively and materially conducted by such other
party(ies) to such Change in Control prior to the designation of such Antigen
as a Collaboration Antigen, provided that ABX (or its successor) discloses to AZ
in writing the existence of such products under clause (a) or such
Pre-Existing Non-Antibody Program or other such program under clause (b)
pursuant to Section 2.2.1(d). 
Notwithstanding anything to the contrary in this Agreement, other than
with respect to a Pre-Existing Non-Antibody Program or other program under
clause (b) disclosed pursuant to Section 2.2.1(d), neither ABX (or
its successor) nor its Affiliates shall have the right directly or indirectly
to Exploit, or to enter into any agreement with any Third Party directly or
indirectly to Exploit, any products (other than products containing
Antibodies or Antibody Equivalents as permitted under this Article 17)
with respect to any Failed Antigen or Discontinued Antigen for which ABX has provided
an Exercise Notice until after the [Confidential
treatment requested] of the date that such Antigen is designated a
Failed Antigen subject to Section 4.15 or the date that ABX provides an
Exercise Notice for such Discontinued Antigen.

 

17.4.3      Neither ABX (or its
successor) nor its Affiliates shall have the obligation to disclose to AZ any
Antigens, or any Patent Rights or other intellectual property rights, that are
Controlled by the other party(ies) to such Change in Control (or its
Affiliates) as of the Trigger Date.

 

127

 

17.4.4      All Antigens (subject to
Sections 2.2.1(d) and 16.2 and AZ’s right to continue to designate
Antigens as Proposed Antigens, Prioritized Antigens and Collaboration Antigens
pursuant to this Agreement), Antibody Equivalents, other products and related
inventions and Information (together with all Patent Rights and other
intellectual property rights therein) that are Controlled by the other
party(ies) to such Change in Control (or its Affiliates) as of the Trigger Date
shall be excluded from this Agreement, including the definition of Licensed ABX
IP Rights.

 

17.4.5      Neither ABX (or its
successor) nor its Affiliates shall use any Licensed ABX IP Rights, including
any XenoMouse Technology or Collaboration Technology, or Licensed AZ IP Rights
to Exploit any Competitive Products or Pre-Existing Non-Antibody Programs (or
any other products with respect to any Antigen Exploited in accordance with
Section 17.4.2).

 

17.5         Certain Provisions Applicable Upon
an Acquisition by or with ABX.   Notwithstanding anything to the contrary in this Agreement, after
any Acquisition by or with ABX, the exclusivity provisions in this
Article 17 shall continue in full force except as set forth below:

 

17.5.1      ABX and its Affiliates shall
have the right directly or indirectly to Exploit, but only in accordance with
the provisions of any bona fide agreement with a Third Party entered into in
good faith prior to the date of such Acquisition, Competitive Products, in each
case without the use of Licensed ABX IP Rights or Collaboration Technology,
other than Collaboration Technology with respect to, subject to
Section 4.15, Failed Antigens and Discontinued Antigens for which ABX has
provided an Exercise Notice.

 

17.5.2      ABX and its Affiliates shall
have the right directly or indirectly to Exploit, and to enter into any
agreement with any Third Party directly or indirectly to Exploit,
(a) products (other than products containing Antibodies or Antibody
Equivalents) with respect to any Antigen (other than a Collaboration Antigen
that has not been designated, subject to Section 4.15, a Failed Antigen or
a Discontinued Antigen for which ABX has provided an Exercise Notice), and
(b) products (other than products containing Antibodies or Antibody
Equivalents) with respect to any Collaboration Antigen (other than, subject to
Section 4.15, a Failed Antigen or a Discontinued Antigen for which ABX has
provided an Exercise Notice) for which there was a Pre-Existing Non-Antibody
Program or for which a program to research, develop or commercialize products
(other than Antibodies or Antibody Equivalents) with respect to such
Collaboration Antigen was being actively and materially conducted by the other
party to such Acquisition prior to the designation of such Antigen as a
Collaboration Antigen, provided that ABX discloses to AZ in writing the
existence of such products under clause (a) or such Pre-Existing
Non-Antibody Program or other such program under clause (b) pursuant to
Section 2.2.1(d).  Notwithstanding
anything to the contrary in this Agreement, other than with respect to a
Pre-Existing Non-Antibody Program or other program under clause (b)
pursuant to Section 2.2.1(d), neither ABX nor its Affiliates shall have
the right directly or indirectly to Exploit, or to enter into any agreement
with any Third Party directly or indirectly to Exploit, any products
(other than products containing Antibodies or Antibody Equivalents as permitted
under this Article 17) with respect to any Failed Antigen or Discontinued
Antigen for which ABX has provided an Exercise Notice until after the [Confidential treatment requested] of the

 

128

 

date that such Antigen is
designated a Failed Antigen subject to Section 4.15 or the date that ABX
provides an Exercise Notice for such Discontinued Antigen.

 

17.5.3      Neither ABX nor its
Affiliates shall have the obligation to disclose to AZ any Antigens, or any
Patent Rights or other intellectual property rights, relating to Competitive
Products that as of the effective date of such Acquisition (a) are
Controlled by the other party(ies) to such Acquisition (or its Affiliates), and
(b) are the subject of any bona fide agreement that was entered into in
good faith with a third party prior to the applicable Trigger Date to Exploit,
directly or indirectly, such Competitive Products.

 

17.5.4      All Antigens (subject to
Sections 2.2.1(d) and 16.2 and AZ’s right to continue to designate
Antigens as Proposed Antigens, Prioritized Antigens and Collaboration Antigens
pursuant to this Agreement), Antibody Equivalents, other products and related
inventions and Information (together with all Patent Rights and other
intellectual property rights therein) shall be excluded from this Agreement, including
the definition of Licensed ABX IP Rights, if as of the effective date of such
Acquisition (i) they are Controlled by the other party(ies) to such
Acquisition, and (ii) either (A) they are the subject of any
agreement that was entered into in good faith with a Third Party prior to the
applicable Trigger Date to Exploit, directly or indirectly, Competitive
Products, or (B) they relate to a Pre-Existing Non-Antibody Program.

 

17.5.5      Neither ABX nor its
Affiliates shall use any Licensed ABX IP Rights, including any XenoMouse
Technology or Collaboration Technology, or Licensed AZ IP Rights to Exploit any
Competitive Products or any Pre-Existing Non-Antibody Programs (or any other
products with respect to any Antigen Exploited in accordance with Section 17.5.2).

 

17.6         Certain Provisions Applicable Upon a
Change in Control Involving AZ.   Notwithstanding anything to the contrary in this Agreement, after
a Change in Control involving AZ the exclusivity provisions in this
Article 17 shall continue in full force except as set forth below:

 

17.6.1      Neither AZ (or its
successor) nor its Affiliates shall have the obligation to disclose to ABX any
Antigens, or any Patent Rights or other intellectual property rights, that are
Controlled by the other party(ies) to such Change in Control (or its
Affiliates) as of the Trigger Date.

 

17.6.2      All Antigens, Antibody
Equivalents, other products and related inventions and Information (together
with all Patent Rights and other intellectual property rights therein) that are
Controlled by the other party(ies) to such Change in Control (or its
Affiliates) as of the Trigger Date shall be excluded from this Agreement,
including the definition of Licensed AZ IP Rights.

 

17.6.3      Without limiting AZ’s rights
under Section 17.3.7, AZ (or its successor) and its Affiliates shall have
the right directly or indirectly to Exploit Competitive Products and, as
required under the provisions of any bona fide agreement entered into in good
faith by the other party(ies) to the Change in Control prior to the Trigger
Date, other Antibody Equivalents that bind to and are directed against
Antigens.

 

129

 

17.6.4      Except as otherwise
permitted by this Agreement with respect to AZ Products with respect to
Collaboration Antigens (including Discontinued Antigens and Failed Antigens),
neither AZ (or its successor) nor its Affiliates shall use any Licensed ABX IP
Rights, including any XenoMouse Technology or, prior to an Election Notice with
respect to the applicable Collaboration Antigen, Collaboration Technology to
Exploit any Competitive Products (or any other Antibody Equivalents that bind
to and are directed against any Antigen Exploited in accordance with
Section 17.6.3) that are not AZ Products.

 

17.7         Certain Provisions Applicable
Upon an Acquisition by or with AZ.   Notwithstanding anything to the contrary in this Agreement, after
any Acquisition by or with AZ, the exclusivity provisions in this
Article 17 shall continue in full force except as set forth below:

 

17.7.1      Neither AZ nor its
Affiliates shall have the obligation to disclose to ABX any Antigens, or any
Patent Rights or other intellectual property rights, relating to Competitive
Products that as of the effective date of such Acquisition (i) are
Controlled by the other party(ies) to such Acquisition (or its Affiliates), and
(ii) are the subject of any bona fide agreement that was entered into in
good faith with a Third Party prior to the applicable Trigger Date to Exploit,
directly or indirectly, such Competitive Products.

 

17.7.2      All Antigens, Antibody
Equivalents, other products and related inventions and Information (together
with all Patent Rights and other intellectual property rights therein) shall be
excluded from this Agreement, including the definition of Licensed AZ IP
Rights, if as of the effective date of such Acquisition (i) they are
Controlled by the other party(ies) to such Acquisition, and (ii) either
(A) they are the subject of any agreement that was entered into in good
faith with a third party prior to the applicable Trigger Date to Exploit,
directly or indirectly, Competitive Products, or (B) they relate to a
Pre-Existing Non-Antibody Program.

 

17.7.3      Without limiting AZ’s rights
under Section 17.3.7, AZ and its Affiliates shall have the right directly
or indirectly to Exploit Competitive Products and, as required under the
provisions of any bona fide agreement with a Third Party entered into in good
faith prior to the applicable Trigger Date, other Antibody Equivalents that
bind to and are directed against Antigens.

 

17.7.4      Except as otherwise
permitted by this Agreement with respect to AZ Products with respect to
Collaboration Antigens (including Discontinued Antigens and Failed Antigens),
neither AZ (or its successor) nor its Affiliates shall use any Licensed ABX IP
Rights, including any XenoMouse Technology or, prior to an Election Notice with
respect to the applicable Collaboration Antigen, Collaboration Technology to
Exploit any Competitive Products (or any other Antibody Equivalents that bind
to and are directed against any Antigen Exploited in accordance with
Section 17.7.3) that are not AZ Products.

 

18.           ADVERSE
EVENT REPORTING.

 

18.1         Each Party shall provide the other Party with
Information reasonably necessary to comply with all Applicable Law with respect
to adverse experience reporting for

 

130

 

Candidate Drugs and Products.  In
furtherance thereof, the Parties shall (a) develop appropriate adverse
experience reporting procedures; (b) provide to each other any material
information on the Candidate Drugs or Products from preclinical or clinical
laboratory, animal toxicology and pharmacology studies, as well as serious or
unexpected adverse experience reports from clinical trials and commercial
experiences with the Candidate Drugs or Products; and (c) report and
provide such information to each other in such a manner and time so as to
enable each Party to comply with all Applicable Laws regarding adverse
experience reporting.  ABX shall provide
AZ with such Information when and in such form as AZ may reasonably require so
as to comply with the Applicable Law in countries for which regulatory approval
is or will be sought or in which the Candidate Drug or Licensed Product is
being developed, marketed or sold by or on behalf of AZ or its Affiliates or
sublicensees.

 

18.2         Each Party shall maintain a record of any and
all complaints it receives with respect to the Candidate Drugs or Products in
such form and manner as AZ may reasonably require.  Each Party shall notify the other in reasonable detail of any
complaint received by it within thirty (30) days after the event, and in any
event in sufficient time to allow the other to comply with all Applicable Laws
regarding adverse experience reporting.

 

18.3         The Parties agree to enter into such agreements
with each other regarding the foregoing obligations as reasonably necessary to
effectuate the foregoing.

 

19.           PRODUCT RECALL.

 

19.1         Notification
and Recall.

 

19.1.1      In the event that any government agency or
authority issues or requests a recall or takes similar action in connection
with the Candidate Drugs that bind to and are directed against a Collaboration
Antigen (other than a Discontinued Antigen for which ABX has provided an
Election Notice) or Licensed Products, or in the event a Party reasonably
believes that an event, incident, or circumstance has occurred that may result
in the need for a recall or market withdrawal, such Party shall promptly advise
the other Party thereof by telephone or facsimile.  Following notification of a recall, AZ shall decide and have
control of whether to conduct a recall or market withdrawal (except in the case
of a government-mandated recall) in any country and the manner in which any
such recall or market withdrawal shall be conducted.

 

19.1.2      In the event that any government agency or
authority issues or requests a recall or takes similar action in connection
with the Candidate Drugs that bind to and are directed against a Discontinued
Antigen for which ABX has provided an Election Notice) or ABX Products, or in
the event a Party reasonably believes that an event, incident, or circumstance
has occurred that may result in the need for a recall or market withdrawal,
such Party shall promptly advise the other Party thereof by telephone or
facsimile.  Following notification of a
recall, ABX shall decide and have control of whether to conduct a recall or
market withdrawal (except in the case of a government-mandated recall) in any
country and the manner in which any such recall or market withdrawal shall be
conducted.

 

131

 

19.2         Recall Expenses.

 

19.2.1      Except as may be otherwise set forth in a
Related Agreement, AZ shall bear the expenses of any recall of any Candidate Drug
that bind to and are directed against a Collaboration Antigen (other than a
Discontinued Antigen for which ABX has provided an Election Notice) or Licensed
Product; provided, however, [Confidential treatment requested].  Such expenses of recall shall include
expenses for notification, destruction and return of such recalled Candidate
Drug or Licensed Product and any refund to customers of amounts paid for such
recalled Licensed Product.

 

19.2.2      [Confidential
treatment requested]  Such expenses of recall shall include
expenses for notification, destruction and return of such recalled Candidate
Drug or ABX Product and any refund to customers of amounts paid for such
recalled ABX Product.

 

20.           MISCELLANEOUS 

 

20.1         Governing
Law, Jurisdiction, Venue and Service.

 

20.1.1      Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, excluding any
conflicts or choice of law rule or principle that might otherwise refer
construction or interpretation of this Agreement to the substantive law of
another jurisdiction.  The Parties agree
to exclude the application to this Agreement of the United Nations Convention
on Contracts for the International Sale of Goods.

 

20.1.2      Jurisdiction.  The
Parties hereby irrevocably and unconditionally consent to the exclusive
jurisdiction of the courts of the State of New York and the United States
District Court for the Southern District of New York for any action, suit or
proceeding (other than appeals therefrom) arising out of or relating to this
Agreement, and agree not to commence any action, suit or proceeding (other than
appeals therefrom) related thereto except in such courts.

 

20.1.3      Venue.  The Parties further hereby irrevocably and
unconditionally waive any objection to the laying of venue of any action, suit
or proceeding (other than appeals therefrom) arising out of or relating to this
Agreement in the courts of the State of New York or the United States District
Court for the Southern District of New York, and hereby further irrevocably and
unconditionally waive and agree not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.

 

20.1.4      Service.  Each Party further agrees that service of
any process, summons, notice or document by registered mail to its address set
forth in Section 20.6, or any other lawful means, shall be effective
service of process for any action, suit or proceeding brought against it under
this Agreement in any such court.

 

20.2         Waiver.  No waiver by a Party hereto of any breach or
default of any of the covenants or agreements herein set forth shall be deemed
a waiver as to any subsequent or similar breach or default.

 

132

 

20.3         Assignment.  Neither this Agreement nor
any right or obligation hereunder may be assigned or delegated, in whole or
part, whether by operation of law or otherwise, by either Party without the
prior express written consent of the other Party; provided, however,
that each Party may, without the written consent of the other Party, assign
this Agreement and its rights and delegate its obligations hereunder to any of
its Affiliates, provided that such Party remains jointly and severally
liable with the relevant Affiliate,
or to any successor in interest in the event of its merger, consolidation,
change in control or similar transaction,  provided that, in either case, such assignee assumes in
writing all of the assigning Party’s rights and obligations under this
Agreement.  Further, AZ shall have the right, without
the consent of ABX, to assign this Agreement and its rights and delegate its
obligations hereunder in connection with the transfer or sale of all or
substantially all of its oncology business. 
Any purported assignment in violation of this Section 20.3 shall be
void.  The terms and conditions of this
Agreement shall be binding upon and inure to the benefit of the permitted
successors and assigns of the Parties.

 

20.4         Independent
Contractors. 
The relationship of the Parties hereto is that of independent
contractors.  The Parties hereto are not
deemed to be agents, partners or joint venturers of the others for any purpose
as a result of this Agreement or the transactions contemplated thereby.

 

20.5         Further Actions.  Each Party agrees to
execute, acknowledge and deliver such further documents and instruments and to
perform all such other acts as may be necessary or appropriate in order to
carry out the purposes and intent of, or to confer on each Party its rights and
benefits under, this Agreement.

 

20.6         Notices.  All requests and notices required or
permitted to be given to the Parties hereto shall be given in writing, shall
expressly reference the section(s) of this Agreement to which they pertain, and
shall be delivered to the other Party, and shall be deemed given only if
delivered by hand or sent by facsimile transmission (with transmission
confirmed) or by internationally recognized overnight delivery service that
maintains records of delivery, at
the appropriate address as set forth below or to such other addresses as may be
designated in writing by the Parties from time to time during the term of this
Agreement.  Such notice shall be
deemed to have been given as of the date delivered by hand or transmitted by
facsimile (with transmission confirmed) or on the second delivery day after
deposit with an internationally recognized overnight delivery service.  Any notice delivered by facsimile shall be
confirmed by a hard copy delivered as soon as practicable thereafter.  This Section is not intended to govern
the day-to-day business communications necessary between the Parties in
performing their obligations under the terms of this Agreement.

 

If to ABX:

 

Abgenix,
Inc.

6701
Kaiser Drive

Fremont,
California 94555

United
States of America

Attn:
Chief Executive Officer

Facsimile: (510) 608-6547

Telephone: (510) 608-6500

 

133

 

with a
copy to:

 

Abgenix,
Inc.

6701
Kaiser Drive

Fremont,
California 94555

United
States of America

Attn:
General Counsel

Facsimile: (510) 790-5102

Telephone: (510) 608-6500

 

If to
AZ:

 

AstraZeneca
UK Ltd.

15
Stanhope Gate

London,
England W1K 1LN

United
Kingdom

Attn:
Company Secretary

Facsimile: +44 207 3045188

Telephone: +44 207 3045103

 

with a
copy to:

 

AstraZeneca
UK Ltd.

Alderley
House, Alderley Park

Macclesfield,
Cheshire SK 10 4 TF

United
Kingdom

Attn:
Assistant General Counsel

Facsimile: +44 1625 585618

Telephone: +44 1625 512591

 

20.7         No
Implied Licenses. 
Only licenses and rights granted expressly herein shall be of legal
force and effect.  No license or other
right shall be created hereunder by implication, estoppel or otherwise.

 

20.8         Force Majeure.

 

20.8.1      In this Agreement, “Force
Majeure” shall mean an event which is beyond a non-performing Party’s
reasonable control, including acts of God, acts of the other Party, strikes,
lock-outs or other industrial/labor disputes (whether involving the workforce
of the Party so prevented or of any other Person), war, riot, civil commotion,
terrorist act, malicious damage, epidemics, quarantines, fire, flood, storm,
natural disaster or compliance with any law or governmental order, rule,
regulation or direction (including changes in the requirements of the
regulatory authorities), whether or not it is later held to be invalid.

 

20.8.2      The Force Majeure Party,
shall within [Confidential treatment
requested] of the occurrence of a Force Majeure event, give notice in
writing to the other Party

 

134

 

specifying the nature and
extent of the event of Force Majeure, its anticipated duration and any action
being taken to avoid or minimize its effect. 
Subject to providing such notice and to Section 20.8.1, the Force
Majeure Party shall not be liable for delay in performance or for
non-performance of its obligations under this Agreement, in whole or in part,
nor shall the other Party have the right to terminate this Agreement, except as
otherwise provided in this Agreement, where non-performance or delay in
performance has resulted from an event of Force Majeure.  The suspension of performance allowed
hereunder shall be of no greater scope and no longer duration than is
reasonably required.

 

20.8.3      The Force Majeure Party
shall use Commercially Reasonable Efforts, without being obligated to incur any
expenditure or cost, to bring the Force Majeure event to a close or to find a
solution by which the Agreement may be performed despite the continuation of
the event of Force Majeure.

 

20.9         No
Consequential Damages. 
IN NO EVENT SHALL A PARTY BE LIABLE FOR SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT OR THE EXERCISE OF ITS
RIGHTS HEREUNDER, INCLUDING WITHOUT LIMITATION LOST PROFITS ARISING FROM OR
RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF SUCH
DAMAGES.  NOTHING IN THIS
SECTION 20.9 IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS
OR OBLIGATIONS OF EITHER PARTY UNDER ARTICLE 15 ABOVE.

 

20.10       Complete Agreement.  This Agreement (together
with the Financing Documents) constitutes the entire agreement between the
Parties regarding the subject matter hereof, and all prior representations,
understandings and agreements regarding the subject matter hereof (including
the Confidentiality Agreement, the Confidential Letter of Intent dated
April 7, 2003, as amended, between the Parties and the Memorandum of
Intent dated September 22, 2003, between the Parties), either written or
oral, expressed or implied, are superseded and shall be of no effect.  This Agreement may be amended, or any term
hereof modified, only by a written instrument duly executed by both parties.

 

20.11       Counterparts.  This Agreement may be
executed in counterparts, each of which shall be deemed to be an original and
together shall be deemed to be one and the same agreement.  Copies of executed counterparts of this
Agreement transmitted by facsimile shall be considered original executed
counterparts provided receipt of such facsimile is confirmed.

 

20.12       Construction.  Except where the context otherwise requires,
wherever used, the singular shall include the plural, the plural the singular,
the use of any gender shall be applicable to all genders and the word “or” is
used in the inclusive sense (and/or). 
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 shall
mean including, without limiting the generality of any description preceding
such term.  The language of this
Agreement shall be deemed to be the language mutually chosen by the Parties and
no rule of strict construction shall be applied against either Party hereto.

 

135

 

20.13       Severability.  If any provision of
this Agreement is held to be invalid, illegal or unenforceable, in any respect,
then, to the fullest extent permitted by Applicable Law and if the rights or
obligations of any Party will not be materially and adversely affected:
(a) such provision will be given no effect by the Parties and shall not
form part of this Agreement, (b) all other provisions of this Agreement
shall remain in full force and effect, and (c) the Parties shall use their
best efforts to negotiate a provision in replacement of the provision held
invalid, illegal or unenforceable that is consistent with Applicable Law and
achieves, as nearly as possible, the original intention of the Parties.  To the fullest extent permitted by
Applicable Law, the Parties waive any provision of law that would render any
provision in this Agreement invalid, illegal or unenforceable in any respect.

 

20.14       Non-Solicitation.  During the Antigen Designation Term, neither
a Party nor its Affiliates shall directly solicit or in any manner encourage
any employee of the other Party or its Affiliates to leave its employ.  This provision shall not prohibit the
engagement in good faith of individuals who (a) contact the other Party on
their own initiative without any direct solicitation or encouragement from such
other Party, (b) act in response to general recruitment advertisements or
calls from recruitment firms placed in the normal course of business, or
(c) have had their employment terminated by a Party or any of its
Affiliates prior to employment discussions with the other Party or any of its
Affiliates.

 

20.15       Conditions Precedent to Grants of
Exclusive Licenses.  The effectiveness of this Agreement
(other than Sections 2.2.1(a), 2.2.1(b), 14.4 and 20.9 and
Articles 13, 15 and 17), and the rights and obligations of the Parties
under this Agreement (other than Sections 2.2.1(a), 2.2.1(b), 14.4 and
20.9 and Articles 13, 15 and 17), shall be subject to the satisfaction (or
waiver by the Parties) of the following conditions precedent:

 

20.15.1    The Parties shall have duly
executed and delivered the Financing Documents, and the Initial Closing (as
defined in the Purchase Agreement) shall have been consummated in accordance
with the provisions of the Financing Documents.

 

20.15.2    ABX shall have delivered to AZ a certificate of the Chief Executive
Officer of ABX that the representations and warranties of ABX contained
herein shall be true and correct on and as of the Initial Closing Date with the
same force and effect as though made on and as of the Initial Closing Date (it
being understood and agreed that, in the case of any representation and
warranty of ABX contained herein which is not qualified by a materiality
standard elsewhere in this Agreement, such representation and warranty need be
true and correct only in all material respects in order to satisfy as to such
representation and warranty the condition precedent set forth in the foregoing
provision of this Section 20.15.2), which representations and warranties
as set forth therein and as above qualified shall be deemed to be
representations and warranties under this Agreement for all purposes.

 

136

 

IN WITNESS WHEREOF,
the Parties have caused this Agreement to be executed by their respective duly
authorized officers as of the day and year first above written.

 

	
   

  	
  ABGENIX, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Raymond M. Withy

  	
   

  
	
   

  	
   

  	
  (Signature)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Raymond M. Withy

  	
   

  
	
   

  	
   

  	
  (Printed Name)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Chief Executive Officer

  	
   

  
	
   

  	
   

  	
  (Title)

  
	
   

  	
   

  	
   

  
	
   

  	
  ASTRAZENECA UK LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J.R. Symonds

  	
   

  
	
   

  	
   

  	
  (Signature)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  J.R. Symonds

  	
   

  
	
   

  	
   

  	
  (Printed Name)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Chief
  Financial Officer

  	
   

  
	
   

  	
   

  	
  (Title)

  
								

 

137

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN
THIS DOCUMENT, MARKED BY

BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE

COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

 

EXHIBIT A-1

 

ANTIGENS PROPOSED BY ABGENIX

 

Exhibit intended to be blank upon execution

 

	
  Common Names(s)

  	
   

  	
  GenBank
  Accession Number

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

EXHIBIT A-2

 

ANTIGENS PROPOSED BY AZ

 

 

	
  Common Names(s)

  	
   

  	
  GenBank
  Accession Number

  
	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  

 

 

EXHIBIT B

 

COLLABORATION ANTIGENS

 

	
  Common Names(s)

  	
   

  	
  GenBank
  Accession Number

  
	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  

 

 

EXHIBIT C-1

 

ADVANCED ABX ANTIGENS

 

	
  Common Names(s)

  	
   

  	
  Other ABX
  Internal Designations

  	
   

  	
  GenBank
  Accession

  Number

  
	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  

 

 

EXHIBIT C-2

 

ACCELERATED ANTIGENS

 

	
  Common Names(s)

  	
   

  	
  GenBank
  Accession Number

  
	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  

 

 

EXHIBIT D

 

RESEARCH PROGRAM WORK PLANS

 

Exhibit intended to be blank upon execution

 

 

EXHIBIT E

 

DEVELOPMENT WORK PLANS

 

Exhibit intended to be blank upon execution

 

 

EXHIBIT F

 

[Confidential treatment requested]

 

 

EXHIBIT G

 

FORM OF CANDIDATE DRUG TARGET PROFILE

 

Abgenix and AZ have agreed upon set of decision criteria to guide the
compilation of specific Candidate Drug Target Profiles.  The specific CDTP will incorporate
[Confidential treatment requested] values for the affinity, selectivity and
functional cell potency in vitro activity criteria based on the characteristics
of the target.  The generic CDTP is
shown below.  An antigen specific CDTP
will be prepared for each Prioritized antigen:

 

[Confidential treatment requested]

 

 

EXHIBIT H

 

FORM OF RESEARCH PROGRAM WORK PLAN

 

[Confidential treatment requested]

 

 

EXHIBIT I

 

KEY PERSONNEL

 

[Confidential treatment requested]

 

 

EXHIBIT J

 

INITIAL RESEARCH MANAGEMENT COMMITTEE
REPRESENTATIVES

 

For Abgenix:

 

[Confidential treatment requested]

 

For AstraZeneca:

 

[Confidential treatment requested]

 

 

EXHIBIT K-1

 

ABX IN-LICENSES (AS OF THE EFFECTIVE DATE)

 

Japan Tobacco
Agreements:

 

•                  Limited
Partnership Agreement dated June 12, 1991 among Cell Genesys, Xenotech, Inc.
and JT Immunotech USA Inc.

 

•                  Amendment No. 2
dated January 1, 1994 to Limited Partnership Agreement

•                  Amendment No. 3
dated July 1, 1995 to Limited Partnership Agreement

•                  Amendment No. 4
dated June 28, 1996 to Limited Partnership Agreement.

 

•                  Joint Venture
Agreement dated June 12, 1991 between Cell Genesys and JT Immunotech USA Inc.,
as amended

 

•                  Amendment No. 1
dated January 1, 1994 to Joint Venture Agreement

•                  Amendment No. 2
dated June 28, 1996 to Joint Venture Agreement.

 

•                  Limited
Partnership Interest and Stock Purchase Agreement between Abgenix, Inc. and JT
America Inc. made December 20, 1999.

 

•                  Master Research
License and Option Agreement, dated June 28, 1996, between Cell Genesys, Japan
Tobacco and Xenotech LP

 

•                  Amendment to
Master Research License and Option Agreement, dated November, 1997, between
Cell Genesys, Japan Tobacco and Xenotech LP

•                  Agreement to
Terminate the Interest of Japan Tobacco Inc. in the Master Research License and
Option Agreement by and among Abgenix, Inc., Japan Tobacco Inc. and Xenotech
L.P. effective December 31, 1999.

 

•                  Collaboration
Agreement, dated June 12, 1991, between Cell Genesys, JT Immunotech USA and
Xenotech L.P., as amended

 

•                  Amendment No. 1
dated June 30, 1993 to Collaboration Agreement

•                  Amendment No. 2
dated January 1, 1994 to Collaboration Agreement

•                  Amendment No. 3
dated July 1, 1995 to Collaboration Agreement

•                  Amendment No. 4
dated June 28, 1996 to Collaboration Agreement

•                  Amendment No. 5
dated November 1997 to Collaboration Agreement

•                  Agreement to
Terminate the Collaboration Agreement by and among Abgenix, Inc., JT America
Inc., and Xenotech L.P. effective December 31, 1999.

 

•                  Field License,
dated June 12, 1991, between Cell Genesys and JT Immunotech USA, as amended

 

 

•                  Amendment No. 1
dated March 22, 1996 to Field License

•                  Amendment No. 2
dated June 28, 1996 to Field License

•                  Amended and
Restated Field License by and among Abgenix, Inc., JT America Inc. and Xenotech
L.P. effective December 31, 1999.

 

•                  Expanded Field
License, dated June 12, 1991, between Cell Genesys and JT Immunotech USA, as
amended

 

•                  Amendment No. 1
dated June 28, 1996 to Expanded Field Licens

•                  Amendment of the
Expanded Field License by and among Abgenix, Inc., JT America Inc. and Xenotech
L.P. effective December 31, 1999.

 

•                  Technology
Exchange Agreement dated March 22, 1996, as amended, among Cell Genesys, Inc.,
Japan Tobacco Inc., and Xenotech

 

•                  Amendment of The
Technology Exchange Agreement, effective June 28, 1996, made by and among Cell
Genesys, Inc., Japan Tobacco Inc. and Xenotech L.P.

•                  Second Amendment
of The Technology Exchange Agreement, effective December 31, 1999, made by and
among Abgenix, Inc., Japan Tobacco Inc. and Xenotech L.P.

 

•                  License
Agreement by and between Abgenix, Inc. and Japan Tobacco Inc. effective
December 31, 1999

 

•                  Agreements
between Dr. Tasuku Honjo and Japan Tobacco Inc. of April 21, 1992,
April 28, 1993, and April 21, 1997

 

Cell Genesys
Agreements:

 

•                  Stock Purchase
and Transfer Agreement dated July 15, 1996 by and between Cell Genesys and
Abgenix.

 

•                  Patent
Assignment Agreement dated July 15, 1996 by Cell Genesys in favor of Abgenix.

 

•                  Gene Therapy
Rights Agreement effective as of November 1, 1997 between Abgenix and Cell
Genesys.

 

GenPharm
International Agreements:

 

•                  Release and
Settlement Agreement dated March 26, 1997 among Cell Genesys, Abgenix,
Xenotech, L.P., Japan Tobacco Inc. and GenPharm International, Inc.

 

 

•                  Cross License
Agreement effective as of March 26, 1997, among Cell Genesys, Abgenix,
Xenotech, L.P., Japan Tobacco Inc. and GenPharm International, Inc.

 

•                  Interference
Settlement Procedure Agreement, effective as of March 26, 1997, among Cell
Genesys, Abgenix, Xenotech, L.P., Japan Tobacco Inc. and GenPharm
International, Inc.

 

•                  License
Agreement dated June 15, 1989, as amended, between GenPharm and the University
of Utah Research Foundation (licensed under the GenPharm Cross-license)

 

MRC Agreement:

 

•                  License
Agreement, dated March 29, 1994, between Medical Research Council and Cell
Genesys

 

AFRC Agreement:

 

•                  Agreement by and
between the Agricultural and Food Research Council and Cell Genesys, Inc. dated
June 29, 1993

 

XenoMax/SLAM
Technology Agreements:

 

•                  License
Agreement among BR Centre Limited, Ingenix Biomedical Inc. and
Dr. John W. Schrader, dated May 9, 1994

 

•                  License
Agreement Amendment among BR Centre Limited, Ingenix Biomedical Inc. and Dr.
John W. Schrader, dated May 9, 1994

 

•                  Assignment
Agreement among BR Centre Limited and The University of British Columbia
Foundation, dated March 10, 1998

 

•                  Assignment
Agreement between The University of British Columbia Foundation and the
University of British Columbia, dated June 25, 2001.

 

•                  License
Termination and Technology Assignment Agreement between the University of
British Columbia and Abgenix Biopharma, Inc., dated August 2, 2001.

 

Other Agreements:

[Confidential treatment requested]

 

 

EXHIBIT K-2

 

ABX ANTIGEN IN-LICENSES (AS OF THE EFFECTIVE
DATE)

 

Restated Collaboration Agreement dated November 27, 2000, by and
between Abgenix, Inc. and Curagen Corporation.

 

Research, Development and Commercialization Collaboration Agreement
dated June 22, 2001, by and between Abgenix, Inc. and MDS Proteomics, Inc.

 

Amended and Restated Collaboration Agreement dated January 3, 2002, by
and between Abgenix, Inc. and Lexicon Genetics Incorporated

 

Collaboration Agreement dated March 20, 2000, by and between Abgenix,
Inc. and Corixa Corporation

 

Codevelopment Agreement dated April 18, 2002, by and between Abgenix,
Inc. and Corvas International, Inc.(1)

 

(1)                                  Abgenix has potential
future in-license rights to certain antigens with a potential right to
sub-license those in-licensed rights

 

 

EXHIBIT L

 

THIRD PARTY ROYALTIES

 

Exhibit intended to be blank upon execution

 

 

EXHIBIT M

 

PRESS RELEASE

 

FOR RELEASE AT 5:00 AM PT

 

OCTOBER 16, 2003, THURSDAY

 

	
  Contacts:

  	
   

  	
  Ami Knoefler

  
	
   

  	
   

  	
  Abgenix

  
	
   

  	
   

  	
  510-284-6350 or 510-284-6605

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Steve Brown

  
	
   

  	
   

  	
  Astra Zeneca

  
	
   

  	
   

  	
  +44 (0) 207 304 5033

  

 

AstraZeneca and Abgenix announce

 

STRATEGIC ALLIANCE TO DISCOVER AND DEVELOP

ANTIBODY THERAPEUTICS FOR CANCER

 

AstraZeneca makes $100 million upfront equity investment to
broaden oncology research scope

 

Abgenix to receive milestone, royalty and
collaboration payments

 

London and Fremont, Calif., October 16, 2003 – AstraZeneca and Abgenix,
Inc. (Nasdaq:  ABGX) announced
today that they have entered into a broad collaboration, license and investment
alliance to discover, develop and commercialize fully human monoclonal
antibodies to treat cancer.  The
alliance involves:

 

•                  The joint discovery
and development of therapeutic antibodies for up to 36 cancer targets to be
commercialized exclusively worldwide by AstraZeneca.  For these products, Abgenix will receive milestone payments at
various stages of development and royalties on future product sales.  In addition, the collaboration will involve
the selection and development of an additional pool of antibodies by Abgenix,
which the companies may elect to further develop on an equal cost and profit
sharing basis.

 

•                  For those
product candidates for which AstraZeneca holds exclusive commercialization
rights, Abgenix will conduct early clinical trials, process development and
clinical manufacturing, as well as commercial manufacturing during the first
five years of commercial sales. 
AstraZeneca will compensate Abgenix for those activities.

 

-more-

 

Page 2 / AstraZeneca and Abgenix

•                  A $100 million
investment by AstraZeneca in Abgenix convertible preferred stock, initially
convertible into Abgenix common stock at $30 per share.  Upon the achievement of certain milestones,
Abgenix may also require AstraZeneca to invest an additional $60 million in
Abgenix convertible preferred stock.

 

AstraZeneca may select initial antibodies from Abgenix’s existing
preclinical oncology portfolio and both companies will also propose additional
targets for selection.  AstraZeneca will
be responsible for late stage clinical development of the portfolio and will
hold worldwide commercialization rights for any resulting products.  Upon commercialization, royalties will be
paid to Abgenix on sales of products that result from the collaboration.  The royalty range will vary from product to
product based on the level of product sales.

 

The alliance also includes a co-development component under which
Abgenix will generate additional antibody product candidates that AstraZeneca
will have the option to co-develop with Abgenix.  The companies will share development costs and responsibilities
for any co-developent candidates selected.

 

“This collaboration further strengthens our position at the forefront
of cancer research, allowing us to combine our oncology development expertise
and leading sales and marketing capabiligies with Abgenix’s expertise in the
discovery, early development and manufacture of fully human antibodies.  This alliance adds to our proven expertise
with small molecules and has the potential to significantly broaden and
strengthen AstraZeneca’s oncology pipeline,” said Sir Tom McKillip, Chief
Executive of AstraZeneca.

 

“This alliance reinforces the value of our antibody development
platform and enables the next wave of oncology products beyond our lead
candidate ABX-EGF,” said Raymond Withy, PhD, President and Chief Executive
Officer of Abgenix.  “By partnering with
AstraZeneca, a global leader in oncology research and development, we take a
major step towards bringing a portfolio of highly targeted and effective cancer
drugs to patients,” Withy continued.

 

The consummation of the collaboration and license agreement and the
issuance of the convertible preferred stock to AstraZeneca are subject to
customary closing conditions, including without limitation the expiration or
termination of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.

 

A conference call with executives from both companies will be held on
Thursday, October 16 at 6:00 AM PT, 2:00 PM BST to discuss today’s
announcement.  The call will be webcast
live and available for replay on Abgenix’s website at www.abgenix.com.  Participants can access the call by dialing
888-286-8010 (toll free from the US) or 617-801-6888 providing passcode
18137968.

 

-more-

 

Page 3 / AstraZeneca and Abgenix

 

About AstraZeneca

 

AstraZeneca is a major international healthcare business engaged in the
research, development, manufacture and marketing of prescription
pharmaceuticals and the supply of healthcare sales of over $17.8 billion in
2002 and leading positions in sales of gastrointestinal, oncology,
cardiovascular, neuroscience and respiratory products.  AstraZeneca is listed in the Dow Jones
Sustainability Index (Global and European) as well as the FTSE4Good Index.  AstraZeneca continues its tradition of
research excellence and innovation in oncology that led to the development of
its current anti-cancer therapies including ‘Arimidex’, ‘Casodex’, ‘Faslodex’,
‘Nolvadex’, ‘Zoladex’ and Iressa’. 
AstraZeneca is also harnessing rational drug design technologies to
develop new compounds that offer advantages over current cytotoxic and hormonal
treatment options.  The company has over
20 different anti-cancer projects in research and development including a range
of novel targeted products such as anti-proliferatives, anti-angiogenics,
vascular targeting and anti-invasive agents. 
For more information about AstraZeneca, please visit www.astrazeneca.com.

 

About Abgenix

 

Abgenix is a biopharmaceutical company focused on the discovery,
development and manufacturing of human therapeutic antibodies.  The company’s antibody development platform
includes a leading technology and state-of-the-art manufacturing capabilities
that enable the rapid generation, selection and production of high affinity,
fully human antibody product candidates to a variety of disease targets.  Abgenix leverages its leadership position in
human antibody technology to build a diversified product portfolio through the
establishment of collaborations with multiple pharmaceutical and biotechnology
companies.  For more information on
Abgenix, visit the company’s website at www.abgenix.com.

 

Statements
made in this press release about Abgenix’s technologies, product development
activities, collaborative arrangements and process science and manufacturing
capabilities, other than statements of historical fact, and about its projected
financial results and the achievement of milestone or similar payments, are
forward-looking statements are subject to a number of uncertainties that could
cause actual results to differ materially from the statements made, including
risks associated with the success of clinical trials, the progress of research
and product development programs, product manufacturing, regulatory approval
processes, competitive products and services future capital requirements and
the extent and breadth of Abgenix’s patent portfolio.  Please see Abgenix’s public filings with the Securities and
Exchange Commission for information about risks that may affect Abgenix.

 

 

EXHIBIT N

 

Intentionally left blank

 

 

EXHIBIT O

 

ROYALTY RATES ON CHANGE IN CONTROL AND
CERTAIN TERMINATIONS

 

Milestones & Royalties in the Event of Termination
due to Change of Control:

 

	
   

  	
   

  	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  
	
  Election Notice

  	
   

  	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  
	
  Phase III Start

  	
   

  	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  
	
  BLA Acceptance

  	
   

  	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  
	
  Approval

  	
   

  	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  
	
  Royalties – Non –Proprietary

  	
   

  	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  	
   

  	
  Per Section 9.3.2

  
	
  Royalties – Proprietary

  	
   

  	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  	
   

  	
  Per Section 9.3.2

  

 

Milestones & Royalties in the Event of
Termination due to Abgenix Breach:

 

	
   

  	
   

  	
  [Confidential

  treatment

  requested]

  	
   

  	
  [Confidential

  treatment

  requested]

  	
   

  	
  [Confidential

  treatment

  requested]

  	
   

  	
  [Confidential

  treatment

  requested]

  	
   

  	
  [Confidential

  treatment

  requested]

  
	
  Election Notice

  	
   

  	
  [Confidential

  treatment

  requested]

  	
   

  	
  [Confidential

  treatment

  requested]

  	
   

  	
  [Confidential

  treatment

  requested]

  	
   

  	
  [Confidential

  treatment

  requested]

  	
   

  	
  [Confidential

  treatment

  requested]

  
	
  Phase III Start

  	
   

  	
  [Confidential

  treatment

  requested]

  	
   

  	
  [Confidential

  treatment

  requested]

  	
   

  	
  [Confidential

  treatment

  requested]

  	
   

  	
  [Confidential

  treatment

  requested]

  	
   

  	
  [Confidential

  treatment

  requested]

  
	
  BLA Acceptance

  	
   

  	
  [Confidential

  treatment

  requested]

  	
   

  	
  [Confidential

  treatment

  requested]

  	
   

  	
  [Confidential

  treatment

  requested]

  	
   

  	
  [Confidential

  treatment

  requested]

  	
   

  	
  [Confidential

  treatment

  requested]

  
	
  Approval

  	
   

  	
  [Confidential

  treatment

  requested]

  	
   

  	
  [Confidential

  treatment

  requested]

  	
   

  	
  [Confidential

  treatment

  requested]

  	
   

  	
  [Confidential

  treatment

  requested]

  	
   

  	
  [Confidential

  treatment

  requested]

  
	
  Royalties – Non – Proprietary

  	
   

  	
  [Confidential

  treatment

  requested]

  	
   

  	
  [Confidential

  treatment

  requested]

  	
   

  	
  [Confidential

  treatment

  requested]

  	
   

  	
  [Confidential

  treatment

  requested]

  	
   

  	
  [Confidential

  treatment

  requested]

  
	
  Royalties – Proprietary

  	
   

  	
  [Confidential

  treatment

  requested]

  	
   

  	
  [Confidential

  treatment

  requested]

  	
   

  	
  [Confidential

  treatment

  requested]

  	
   

  	
  [Confidential

  treatment

  requested]

  	
   

  	
  [Confidential

  treatment

  requested]

  

 

 

EXHIBIT P

 

MATERIAL TRANSFER AGREEMENT BETWEEN THE
PARTIES

 

To be appended following execution of the
agreement

 

 

EXHIBIT Q

 

PRIORITIZED ANTIGENS

 

	
  Common Names(s)

  	
   

  	
  GenBank
  Accession Number

  
	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  

 

 

EXHIBIT R

 

SUPPLEMENTARY XENOMOUSE® AGREEMENT

 

[Confidential treatment requested]

 

 

SCHEDULE 14.2.1(A)

 

ABGENIX CORE PATENT RIGHTS

 

I.                                         Published
patents and patent applications that ABX owns or possesses an ownership
interest in related to its core technology:

 

	
  Subject Matter

  	
   

  	
  Representative
  Title

  	
   

  	
  Publication/Patent
  Family

  
	
  Core Technology

  
	
  Core Technology

  	
   

  	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  
	
  Other Technologies

  
	
  Kinetic Ranking

  	
   

  	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  
	
  Discovery

  	
   

  	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  
	
  Binning

  	
   

  	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  
	
  SLAM

  
	
  SLAM

  	
   

  	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  

 

II.                                     Patents
and patent applications that are licensed to ABX related to its core
technology:

 

 

A.                                   Pursuant
to the License Agreement by and between the Medical Research Council and Cell Genesys,
Inc. dated March 29, 1994:

 

British Patent Application No. 8823869.6, filed October 12, 1988,
by Bruggemann, entitled “Production of Antibodies from Transgenic Animals,” and
assigned to the Medical Research Council and the Agricultural and Food Research
Council (including US Patent No. [Confidential treatment requested])

 

B.                                     Pursuant
to the Agreement between the Agricultural and Food Research Council Babraham
Institute and Cell Genesys, Inc. dated June 29, 1993:

 

British Patent Application No. 9119338.3, filed September 10,
1992, by Bruggemann, entitled “Yeast Artificial Chromosomes and their Use in
the Control of Gene Expression”, and assigned to the Agricultural and Food
Research Council and the Institute of Animal Physiology and Genetics Research
(including US Patent No. [Confidential treatment requested] and [Confidential
treatment requested])

 

C.                                     Pursuant
to the Material Transfer and License Agreement by and between Universtat Koln
and Cell Genesys, Inc. dated December 1, 1992:

 

German Patent Application No. P 42 28 162.8, filed August 25, 1992, by
Rajewsky, entitled “Targeted Replacement of a Gene Without Endogenous and
Selectable Residual Sequences,” and assigned to Kölner Verein zur Förderung der Immunologie

 

D.                                    Pursuant
to Agreements between Dr. Tasuku Honjo and Japan Tobacco Inc. of
April 21, 1992 and April 28, 1993:

 

PCT Application No. PCT/JP93/00603, filed May 10, 1993, by Honjo
and Matsuda, entitled “Human Immunoglobulin VH Gene and DNA Fragment
Containing the Same,” and assigned to Japan Tobacco Inc. (including US Patent
No. 6,096,878)

 

E.                                      Pursuant
to the GenPharm Cross License

 

1.                                       U.S.
Patent Application Serial No. 07/574,748, filed August 29, 1990, by Kay
and Lonberg, entitled “Transgenic Non-Human Animals Capable of Producing
Heterologous Antibodies,” and assigned to GenPharm International, Inc.,
including (i) any continuations, continuations-in-part, patents of addition,
divisionals, reexamination certificates, reissues or extensions, including
supplemental protection certificates thereof, (ii) any patents issuing
from such application or upon an application under (i), and (iii) foreign
counterparts applied for, issued, or issuing on such application or any of (i)
or (ii).

 

 

2.                                       U.S.
Patent Application Serial No. 07/280,218, filed December 5, 1988, by
Krimpenfort and Berns, entitled “Transgenic Non-Human Animals Depleted in a
Mature Lymphocytic Cell-Type”, and assigned to GenPharm International, Inc.,
including (i) any continuations, continuations-in-part, patents of addition,
divisionals, reexamination certificates, reissues or extensions, including
supplemental protection certificates thereof, (ii) any patents issuing from
such application or upon an application under (i), and (iii) foreign
counterparts applied for, issued, or issuing on such application or any of (i)
or (ii).

 

Patents believed to relate to this class include US Patent Nos.
[Confidential treatment requested]

 

3.                                       Pursuant
to a License Agreement dated June 15, 1989 between GenPharm International,
Inc. and the University of Utah Research Foundation, as amended by an Agreement
dated April 20, 1990:

 

U.S. Patent Application Serial No. 07/397,707, filed August 22,
1989, by Capecchi and Thomas, entitled “Cells and Non-Human Organisms
Containing Predetermined Genetic Modifications and Positive-Negative Selection
Methods and Vectors for Making Same”, and assigned to the University of Utah:

 

Patents believed to relate to this class include US Patent Nos.
[Confidential treatment requested]

 

 

SCHEDULE 14.2.1(B)

 

AGREEMENTS BY WHICH THE CORE PATENT RIGHTS
ARE CONTROLLED

 

Japan Tobacco
Agreements:

 

•                                                                         Limited
Partnership Agreement dated June 12, 1991 between Cell Genesys, Xenotech,
Inc. and JP Immunotech USA Inc.

 

•                                                                                   Amendment
No. 2 dated January 1, 1994 to Limited Partnership Agreement

 

•                                                                                   Amendment
No. 3 dated July 1, 1995 to Limited Partnership Agreement

 

•                                                                                   Amendment
No. 4 dated June 28, 1996 to Limited Partnership Agreement.

 

•                                                                         Joint
Venture Agreement dated June 12, 1991 between Cell Genesys and JT Immunotech
USA Inc., as amended

 

•                                                                                   Amendment
No. 1 dated January 1, 1994 to Joint Venture Agreement.

 

•                                                                                   Amendment
No. 2 dated June 28, 1996 to Joint Venture Agreement.

 

•                                                                         Limited
Partnership Interest and Stock Purchase Agreement between Abgenix, Inc. and JT
America Inc. made December 20, 1999.

 

•                                                                         Master
Research License and Option Agreement, dated June 28, 1996, between Cell
Genesys, Japan Tobacco and Xenotech LP

 

•                                                                                   Amendment
to Master Research License and Option Agreement, dated November 1997,
between Cell Genesys, Japan Tobacco and Xenotech LP

 

•                                                                                   Agreement
License and Option Agreement by and among Abgenix, Inc., Japan Tobacco Inc. and
Xenotech L.P. effective December 31, 1999.

 

•                                                                         Collaboration
Agreement, dated June 12, 1991, among Cell Genesys, JT Immunotech USA and
Xenotech L.P., as amended

 

•                                                                                   Amendment
No. 1 dated June 30, 1993 to Collaboration Agreement

 

 

•                                                                                   Amendment
No. 2 dated January 1, 1994 to Collaboration Agreement

 

•                                                                                   Amendment
No. 3 dated July 1, 1995 to Collaboration Agreement

 

•                                                                                   Amendment
No. 4 dated June 28, 1996 to Collaboration Agreement

 

•                                                                                   Amendment
No. 5 dated November 1997 to Collaboration Agreement

 

•                                                                                   Agreement
to Terminate the Collaboration Agreement by and among Abgenix, Inc., JT America
Inc., and Xenotech L.P. effective December 31, 1999.

 

 

•                                                                         Field
License, dated June 12, 1991, between Cell Genesys and JT Immunotech USA,
as amended

 

•                                                                                   Amendment
No. 1 dated March 22, 1996 to Field License.

 

•                                                                                   Amendment
No. 2 dated June 28, 1996 to Field License.

 

•                                                                                   Amended
and Restated Field License by and among Abgenix, Inc., JT America Inc. and
Xenotech L.P. effective December 31, 1999.

 

•                                                                         Expanded
Field License, dated June 12, 1991, between Cell Genesys and JT Immunotech
USA, as amended

 

•                                                                                   Amendment
No. 1 dated June 28, 1996 to Expanded Field License

 

•                                                                                   Amendment
of the Expanded Field License by and among Abgenix, Inc., JT America Inc. and
Xenotech L.P. as effective December 31, 1999.

 

•                                                                         Technology
Exchange Agreement dated March 22, 1996, as amended, among Cell Genesys, Inc.,
Japan Tobacco, Inc., and Xenotech

 

•                                                                                   Amendment
of The Technology Exchange Agreement, effective June 28, 1996, made by and
among Cell Genesys, Inc., Japan Tobacco Inc. and Xenotech L.P.

 

•                                                                                   Second
Amendment of The Technology Exchange Agreement, effective December 31, 1999,
made by and among Abgenix, Inc., Japan Tobacco Inc. and Xenotech L.P.

 

•                                                                         License
Agreement by and between Abgenix, Inc. and Japan Tobacco Inc. effective
December 31, 1999

 

•                                                                         Agreements
between Dr. Tasuku Jonjo and Japan Tobacco, Inc. of April 21, 1992,
April 28, 1993, and April 21, 1997

 

Cell Genesys
Agreements:

 

•                                                                         Stock
Purchase and Transfer Agreement dated July 15, 1996 by and between Cell
Genesys and Abgenix

 

•                                                                         Patent
Assignment Agreement dated July 15, 1996 by Cell Genesys in favor of Abgenix.

 

 

•                                                                         Gene
Therapy Rights Agreement effective as of November 1, 1997 between Abgenix
and Cell Genesys.

 

GenPharm
International Agreements:

 

•                                                                         Release
and Settlement Agreement dated March 26, 1997 among Cell Genesys, Abgenix,
Xenotech, L.P., Japan Tobacco Inc. and GenPharm International, Inc.

 

•                                                                         Cross
License Agreement effective as of March 26, 1997, among Cell Genesys, Abgenix,
Xenotech, L.P., Japan Tobacco Inc. and GenPharm International, Inc.

 

•                                                                         Interference
Settlement Procedure Agreement, effective as of March 26, 1997, among Cell
Genesys, Abgenix, Xenotech, L.P., Japan Tobacco Inc. and GenPharm
International, Inc.

 

•                                                                         License
Agreement dated June 15, 1989, as amended, between GenPharm and the University
of Utah Research Foundation (licensed under the GenPharm Cross-license)

 

MRC Agreement:

 

•                                                                         License
Agreement, dated March 29, 1994, between Medical Research Council and Cell
Genesys

 

AFRC Agreement:

 

•                                                                         Agreement
by and between the Agricultural and Food Research Council and Cell Genesys,
Inc. dated June 29, 1993

 

XenoMax/SLAM
Technology Agreements:

 

•                                                                         License
Agreement among BR Centre Limited, Ingenix Biomedical Inc. and Dr. John W.
Schrader, dated May 9, 1994

 

•                                                                         License
Agreement Amendment among BR Centre Limited, Ingenix Biomedical Inc. and
Dr. John W. Schrader, dated May 9, 1994

 

•                                                                         Assignment
Agreement among BR Centre Limited and The University of British Columbia
Foundation, dated March 10, 1998

 

•                                                                         Assignment
Agreement between The University of British Columbia Foundation and the
University of British Columbia dated June 25, 2001.

 

 

•                                                                         License
Termination and Technology Assignment Agreement between the University of
British Columbia and Abgenix Biopharma, Inc., dated August 2, 2001.

 

Other Agreements:

 

[Confidential treatment requested]

 

 

SCHEDULE 14.2.10 (First Sentence)

 

AGREEMENTS WITH RESPECTS TO PROPOSED ANTIGENS

 

	
  Antigen

  	
   

  	
  Agreement

  
	
  [Confidential treatment requested]

  	
   

  	
  Cooperative Research and Development Agreement dated June 25,
  2001, between Abgenix and Public Health Service/National Center Institute
  (NCI Principal Investigator – Oppenheim)

   

  
	
   

  	
   

  	
  Amendment to Cooperative Research and Development Agreement between
  Abgenix and Public Health Service/National Cancer Institute (NCI Principal
  Investigator – Oppenheim), dated July 7, 2003

  

 

 

SCHEDULE 14.2.10

 

EXISTING MULTI-ANTIGEN COLLABORATIONS

 

[Confidential treatment requested]

 

 

SCHEDULE 14.2.11A

 

EXISTING COMMITTED ANTIGEN

 

	
  Target

  	
   

  	
  GenBank
  No.

  
	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]

  

 

 

SCHEDULE 14.2.11B

 

PARTIALLY COMMITTED ANTIGEN

 

	
  Common Name(s)

  	
   

  	
  GenBank
  Accession Number

  
	
  [Confidential treatment requested]

  	
   

  	
  [Confidential treatment requested]EXHIBIT 10.69

                              EMPLOYMENT AGREEMENT
                              --------------------

     This Employment Agreement (the "Agreement") is made effective the 28 day of
February, 2003 by and between Advanced Nutraceuticals, Inc. a Texas corporation
(the "Company") and Jeffrey G. McGonegal ("McGonegal").

     In consideration of the mutual covenants, promises and agreements herein
contained, the Company and McGonegal hereby covenant, promise and agree to and
with each other as follows:

     1. Employment. The Company shall employ McGonegal and McGonegal shall be
employed by the Company upon the terms and conditions set forth in this
Agreement.

     2. Positions and Duties of Employment. McGonegal shall be required to
devote his best efforts to the furtherance of his managerial duties with the
Company as the Company's Senior Vice President - Finance and Chief Financial
Officer. McGonegal agrees to devote such time to the business of the Company as
is necessary to competently perform his duties for the Company. While serving in
these corporate capacities, McGonegal shall have the responsibilities, duties,
obligations, rights, benefits and requisite authority as is customary for his
positions and as may be determined by the Company's President and as set forth
in the Bylaws of the Company.

     McGonegal understands that his employment as Senior Vice President -
Finance and Chief Financial Officer involves a high degree of trust and
confidence, that he is employed for the purpose of maintaining and furthering
the Company's financial reporting processes and SEC compliance and improving the
Company's operations and profitability, and that in executing this Agreement he
undertakes obligations set forth herein to accomplish such objectives. McGonegal
agrees that he shall serve the Company fully, diligently and competently, and to
the best of his ability. McGonegal certifies that he fully understands his right
to discuss this Agreement with his private attorney, that to the extent, if any,
he desires, he has availed herself of this right, that he has carefully read and
fully understands this entire Agreement, and that he is voluntarily entering
into this Agreement.

     3. Term. Except as otherwise provided in this Agreement, the term of this
Agreement (the "Term") shall be for a period of two years commencing on the
effective date of this Agreement and shall terminate two years thereafter.
Should McGonegal's employment be continued by the Company, by mutual informal
agreement among the parties, following the termination date of this Agreement,
the provisions of this Agreement, exclusive of this Section 3, shall remain as
binding between the parties until the employment is terminated, or until the
parties agree to revised employment terms.

     4. Compensation. McGonegal shall receive the following as compensation:

<PAGE>
     (a) McGonegal shall receive a base salary at an annual rate of $150,000 for
his employment by the Company pursuant to this Agreement, payable in accordance
with the Company's customary payroll practices.

     (b) In addition to his base salary, McGonegal shall be entitled to a
performance bonus at the discretion of the Board.

     (c) The Company shall provide McGonegal with participation in any group
plans or agreements maintained by the Company relating to health insurance or
other related benefits in accordance with their respective terms.

     (d) McGonegal shall be entitled to leaves for vacations for periods
reasonably determined by the Company. In addition, McGonegal shall be entitled
to reasonable absences for attendance at business seminars and conventions.

     (e) Any payment which the Company shall make to McGonegal pursuant to this
Agreement shall be reduced by standard withholding and other authorized
deductions.

     (f) During the term of his employment, McGonegal shall be reimbursed for
reasonable expenses incurred by his for the benefit of the Company. Any direct
payment or reimbursement of expenses shall be made only upon presentation of an
itemized accounting conforming in form and content to standards prescribed by
the Internal Revenue Service relative to the substantiation of the deductibility
of business expenses.

     5. Life Insurance. The Company may, but shall not be obligated to, apply
for and procure as owner and for its own benefit or the benefit of any lender of
the Company, insurance on McGonegal's life, in any amount and form or forms that
the Company may choose. McGonegal shall, at the Company's request, submit to all
medical examinations, supply all information and execute all documents required
by the insurance company or companies to whom the Company has applied for the
insurance.

     6. Corporate Data and Antisolicitation. Upon the termination of McGonegal's
employment under this Agreement for any reason, McGonegal shall return to the
Company all data and information, whether written, computer, magnetic,
electronic or in any other physical or tangible form, relating to the business
of the Company or any of its affiliates that McGonegal obtained during the time
of his employment. During the term of this Agreement or for a period of one year
thereafter, McGonegal shall neither disclose to any other person or entity, nor
use for his own personal benefit, any information obtained during his employment
by the Company that is not otherwise publicly known, relating to the financial
affairs or the business operations of the Company or any of its subsidiaries or
affiliates. During the term of this Agreement or for a period of one year
thereafter, McGonegal will not influence or attempt to influence any of the
Company's present or future subsidiaries or affiliates, either directly or
indirectly, to divert their business to any individual, partnership, firm,
corporation or other entity then in competition with the business of the Company
or any subsidiary or affiliate of the Company, nor will he solicit any of the
Company's employees who earned annually $25,000 or more as a Company employee
during the last six months of his or his own employment to work for any
individual, partnership, firm, corporation or other entity then in competition
with the business of the Company or any subsidiary or affiliate of the Company.

<PAGE>
     7. Termination.

     (a) The Company shall have the right at any time to terminate McGonegal's
employment under this Agreement without further liability or obligation pursuant
to this Agreement upon the occurrence of any of the following events:

     (i)  By mutual written agreement, signed by both parties; or

     (ii) The death of McGonegal; or

     (iii) If the Company determines in good faith that the Disability of
          McGonegal has occurred (pursuant to the definition of Disability set
          forth below), it may give to McGonegal written notice in accordance
          with Section 13 of its intention to terminate McGonegal's employment.
          In such event, McGonegal's employment with the Company shall terminate
          effective upon receipt of such notice by McGonegal, provided that,
          upon receipt, McGonegal shall not have returned to full-time
          performance of his duties. For purposes of this Agreement,
          "Disability" shall mean a physical or mental impairment which
          substantially limits a major life activity of McGonegal which renders
          McGonegal unable to perform the essential functions of his position,
          even with reasonable accommodation which does not impose an undue
          hardship on the Company. The Company reserves the right, in good
          faith, to make the determination of Disability under this Agreement
          based upon information supplied by McGonegal and/or his medical
          personnel as well as information from medical personnel (or others)
          selected by the Company or its insurers; or

     (iv) McGonegal is convicted of any crime constituting a felony under the
          law of the United States or any State; or

     (v)  A "Material Breach" of this Agreement as determined by the Board. The
          exercise of the right of the Company to terminate this Agreement shall
          not abrogate the rights and remedies of the Company in respect of the
          breach-giving rise to such termination. For purposes of this
          subsection, "Material Breach" shall mean that the Company, acting in
          good faith based upon the information then known to the Company,
          determines that McGonegal has engaged or committed: willful
          misconduct; gross negligence; theft, fraud or other illegal conduct;
          refusal or unwillingness to perform his duties; sexual harassment;
          violation of any fiduciary duties; violation of any duty of loyalty;
          or a material breach of any term of this Agreement. The "Material
          Breach" shall be specified in a notice of termination to be delivered
          by the Company no later than the date as of which the termination is
          effective.

<PAGE>
     (b) If McGonegal's employment is terminated by the Company for any reason
other than those set forth in sections 7(a)(iv) through 7(a)(v) above, then the
Company shall pay "Termination Pay" to McGonegal in full settlement of any and
all claims of McGonegal arising out of or in connection with his employment by
the Company which shall be evidenced by a general release and waiver of claims
against the Company and its affiliates in a form reasonably acceptable to the
Company executed by McGonegal. The "Termination Pay" shall consist of six
months' salary, which shall be paid in six equal monthly installments,
commencing on the first day of the month after the month in which termination
occurred and continuing on the first day of each month thereafter until all six
installments have been paid. Such payments shall be made in accordance with the
Company's customary payroll practices and shall be subject to applicable
withholding and payroll deductions.

     (c) If during the term of this Agreement, the Company effects a merger or
acquisition in which it is not the surviving entity or is a party to a stock
exchange or other form of corporate reorganization in which it becomes a
wholly-owned subsidiary of another entity (unless such entity is a holding
company and the shareholders of the Company have approved the reorganization)
and McGonegal's employment is thereafter terminated by the Company
notwithstanding that no "Material Breach" has occurred, then McGonegal shall be
entitled to "Termination Pay."

     (d) For purposes of this Section 7, voluntary termination of employment by
McGonegal as a result of a material change by the Company in McGonegal's job
responsibilities shall be deemed to be termination by the Company without a
"Material Breach" and McGonegal shall be entitled to "Termination Pay".

     (e) McGonegal shall have the right to terminate this Agreement in the event
of a default by the Company of any material provision of this Agreement but only
if McGonegal shall have first given written notice of the default to the Company
and if within thirty days after receipt of that notice the Company has not cured
that default. Upon termination neither McGonegal nor the Company shall have any
further obligations under any of the provisions of this Agreement except that
McGonegal shall be entitled to "Termination Pay".

     (f) If during the term of this Agreement, McGonegal shall be entitled to
"Termination Pay" under any of the above Section 7, provisions, then McGonegal
shall also granted an immediate vesting of any granted but not yet vested, stock
options under any of the Company's currently existing or here-after approved
stock option plans. McGonegal shall have the right to waive this vesting grant,
but only at his option and only in writing. The period for termination of any
rights to exercise any such stock options held by McGonegal, which would
otherwise lapse under the terms of such plans, with termination of employment,
shall not commence until the Company has given McGonegal notice of his rights
under this Section 7 (f).

<PAGE>
     (g) McGonegal agrees that the payments contemplated by this Agreement shall
constitute the exclusive and sole remedy for any termination of his employment
and McGonegal covenants not to assert or pursue any other remedies, at law or in
equity, with respect to any termination of employment.

     8. Remedies. If there is a breach or threatened breach of the provisions of
Section 2 or 6 of this Agreement, the Company shall be entitled to an injunction
restraining McGonegal from such breach. Nothing herein shall be construed as
prohibiting the Company from pursuing any other remedies for such breach or
threatened breach.

     9. Severability. It is the clear intention of the parties to this Agreement
that no term, provision or clause of this Agreement shall be deemed to be
invalid, illegal or unenforceable in any respect, unless such term, provision or
clause cannot be otherwise construed, interpreted, or modified to give effect to
the intent of the parties and to be valid, legal or enforceable. In the event
that such a term, provision, or clause cannot be so construed, interpreted or
modified, the validity, legality and enforceability of the remaining provisions
contained herein and other application(s) thereof shall not in any way be
affected or impaired thereby and shall remain in full force and effect.

     10. Waiver of Breach. The waiver by the Company or McGonegal of the breach
of any provision of this Agreement by the other party shall not operate or be
construed as a waiver of any subsequent breach by that party.

     11. Entire Agreement. This document contains the entire agreement between
the parties, supersedes all prior oral agreements, if any, and may not be
changed orally, but only by agreement in writing signed by the parties.

     12. Governing Law. This Agreement, its validity, interpretation and
enforcement, shall be governed by the laws of the State of Texas.

<PAGE>
     13. Notices. Any notice pursuant to this Agreement shall be validly given
or served if that notice is made in writing and delivered personally or sent by
certified mail, return receipt requested, postage prepaid, to the following
addresses:

         If to Company:             Advanced Nutraceuticals, Inc.
                                    106 South University Avenue, Unit 14
                                    Denver, CO 80209

         With a copy to:            Bactolac Pharmaceutical, Inc.
                                    7 Oser Avenue
                                    Hauppauge, NY 11788-3808

         If to McGonegal:           1905 W. Valley Vista Drive
                                    Castle Rock, CO  80109

All notices so given shall be deemed effective upon receipt. Either party, by
notice so given, may change the address to which his or its future notices shall
be sent.

     14. Assignment and Binding Effect.

     (a) This Agreement shall be binding upon McGonegal and the Company and
shall benefit the Company and its successors and assigns.

     (b) This Agreement shall not be assignable by McGonegal.

     15. Headings. The headings in this Agreement are for convenience only; they
form no part of this Agreement and shall not affect its interpretation.

<PAGE>
     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
the day and year first above written.

                                            Advanced Nutraceuticals, Inc.

                                         By:__________________________________
                                                Authorized Officer
                                            __________________________________
                                             Name Printed         Title

                                            __________________________________
                                            Jeffrey G. McGonegal, Individually

<PAGE>

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