Document:

Exhibit 10.13

 

SECOND AMENDMENT TO THE

2003
INCENTIVE AWARD PLAN

OF REALTY
INCOME CORPORATION

 

This Second Amendment
(“Amendment”) to The 2003 Incentive Award Plan of Realty Income Corporation
(the “Plan”) is made as of February 17, 2004 by Realty Income Corporation,
a Maryland corporation (the “Company”).

 

W I T N E S S E TH

 

WHEREAS, the Board of
Directors approved the Plan on March 12, 2003 and the Stockholders have
approved the Plan on May 6, 2003; and

 

WHEREAS, the Board of
Directors approved amending Section 5.1 of the Plan on May 6, 2003; and

 

WHEREAS, the Board of Directors of the Company has
determined that it is appropriate and in the best interests of the Company to
amend the Plan as set forth herein;

 

NOW, THEREFORE, in consideration of the foregoing
recitals, the Plan is hereby amended as set forth herein:

 

1.                                       Capitalized
terms used herein which are not otherwise defined herein but are defined in the
Plan shall have the meanings given to such terms in the Plan.

 

2.                                       Section
11.2 of the Plan is hereby amended in its entirety to read as follows:

 

“11.2       Amendment, Suspension or Termination
of the Plan.  Except as otherwise
provided in this Section 11.2, the Plan may be wholly or partially amended or otherwise modified, suspended or terminated at any time
or from time to time by the Administrator (including, but not limited to, an
amendment to the number of shares that may be subject to future awards of
Restricted Stock pursuant to Section 7.3).  However, without approval of the Company’s stockholders given
within 12 months before or after the action by the Administrator, no action of
the Administrator may, except as provided in Section 11.3, increase the limits
imposed in Section 2.1 on the maximum number of shares which may be issued
under the Plan.  No amendment,
suspension or termination of the Plan shall, without the consent of the Holder,
alter or impair any rights or obligations under any Award theretofore granted
or awarded, unless the Award itself otherwise expressly so provides.  No Awards may be granted or awarded during
any period of suspension or after termination of the Plan, and in no event may
any Award be granted under the Plan after the first to occur of the following
events:

 

(a)                                  The expiration of 10 years from the date the
Plan is adopted by the Board; or

 

(b)                                 The
expiration of 10 years from the date the Plan is approved by the Company’s stockholders under Section 11.4.”Exhibit 10.15

 

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 24b-2 OF THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED.

 

 

 

RESTRUCTURED
AND RESTATED HspE7 COLLABORATION AGREEMENT

 

 

AMONG

 

 

STRESSGEN
DEVELOPMENT CORPORATION AND

 

STRESSGEN
BIOTECHNOLOGIES CORPORATION

 

 

AND

 

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

 

 

December 1,
2003

 

 

This RESTRUCTURED AND RESTATED  HSPE7
COLLABORATION AGREEMENT (“Agreement”) is made as of December 1,
2003 (the “Effective Date”) by and among, on the one hand, STRESSGEN
DEVELOPMENT CORPORATION, a Barbados corporation, with its principal
office at Whitepark House, White Park Road, P.O. Box 806E, Bridgetown, Barbados
(“Stressgen”),
and STRESSGEN
BIOTECHNOLOGIES CORPORATION, a corporation organized under the laws
of Yukon Territory, Canada, with its principal office at #350 – 4243 Glanford
Avenue, Victoria, BC Canada V8Z 4B9 (“SBC”), and, on the other hand, F.HOFFMANN-LA
ROCHE LTD, a Swiss corporation, with its principal office at
Grenzacherstrasse 124, CH-4070-Basel Switzerland and HOFFMANN-LA ROCHE INC., a New
Jersey corporation, with its principal office at 340 Kingsland Street, Nutley, New
Jersey 07110 (collectively, “Roche”).

 

RECITALS

 

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

 

2.                                      Roche
has expertise in the development and commercialization of pharmaceutical
products.

 

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

 

4.                                      The
Parties now desire to restructure their collaborative efforts with respect to
HspE7, to provide that Stressgen take the lead in the manufacture, continued
clinical development and commercialization of HspE7 for certain indications,
that Roche be granted an exclusive option to obtain exclusive, worldwide rights
to such product, and that Roche be granted a license to develop and commercialize
a second generation

 

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

 

AGREEMENT

 

NOW, THEREFORE, in
consideration of the premises and the mutual covenants and agreements contained
in this Agreement, the Parties, intending to be legally bound, do hereby agree
as follows:

 

ARTICLE 1

DEFINITIONS

 

The following
capitalized terms, whether used in the singular or the plural, shall have the
following meanings as used in this Agreement unless otherwise specifically
indicated:

 

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

 

1.2                               “BLA
Filing” shall mean a Biologics Licensing Application or New Drug
Application filed with the FDA, or the equivalent application to the equivalent
agency in any other country, the filing of which is necessary to market and
sell a Target Product, including all amendments and supplements to any of the
foregoing.

 

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

 

1.4                               “Confidential
Information” shall have the meaning set forth in Section 12.1.

 

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

 

1.6                               “Executive
Officers” shall mean, for Roche, the Head of the Roche Pharma Division (or
a designee), and for Stressgen, the Chief Executive Officer of Stressgen (or a
designee).

 

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

 

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

 

1.9                               “First
Generation Product License Agreement” shall have the meaning set
forth in Section 4.4.

 

1.10                        “GW
Indication” shall mean treatment or prevention of any one or more of the
following diseases or disorders, caused by any type of the human papilloma
virus: benign internal and external genital and perianal warts, including those
urethral, intravaginal, cervical, rectal and intra-anal sites.

 

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

 

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

 

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

 

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

 

1.15                        “Naïve
Genital Warts Indication” shall mean the GW Indication limited to treating
naïve patients having warts that have had no prior drug, ablative or surgical
treatment.

 

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

 

As used herein, the term “Adjusted Gross Sales” shall mean the gross
amount invoiced for sales of Target Products to Third Parties in the Territory
by a Party, its Affiliates and their respective sublicensees to Third Parties
that are not Affiliates or

 

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sublicensees of the selling party, less the following items, as
allocable to such Target Product (if not previously deducted from the amount
invoiced):

 

(a)                                  volume
(quantity) discounts;

 

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

 

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

 

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

 

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

 

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

 

1.18                        “Option” or
“The Option” shall have the
meaning set forth in Section 4.1.

 

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

 

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

 

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

 

1.22                        “Phase
II Clinical Trial” shall mean the second phase of human clinical trials
required by the FDA to gain evidence of efficacy of Target Product in a target
population, and to determine common short term side effects and risks for
Target Product, as described in 21 CFR 312.21(b), as it may be amended (or its
successor regulation).

 

1.23                        “Phase
III Clinical Trial” shall mean the third phase of human clinical trials
required by the FDA to gain evidence of efficacy of Target Product in a target
population, and to obtain expanded evidence of safety for Target Product that
is needed to evaluate the overall benefit-risk relationship of Target Product
and provide an adequate basis for physician labeling, as described in 21 CFR
312.21(c), as it may be amended (or its successor regulation).

 

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

 

1.25                        “Regulatory
Approval” shall mean any and all approvals, licenses, registrations or
authorizations (including pricing and reimbursement approvals) of any national
or international or local regulatory agency, department, bureau or other
governmental entity, whether or not conditional, that are necessary for the
commercial sale of a Target Product in a regulatory jurisdiction in the
Territory and obtained as a result of activities under this Agreement.

 

6

 

1.26                        “Second Generation Product” shall
mean any product containing HspE7, developed by or on behalf of Roche for the
GW Indication, or where allowed pursuant to Section 6.8, a Non-GW
Indication.

 

1.27                        “Start
of Phase II” shall mean the date that a patient is first dosed in a Phase
II Clinical Trial for Target Product, as a result of activities under this
Agreement

 

1.28                        “Start
of Phase III” shall mean the date that a patient is first dosed in a Phase
III Clinical Trial for Target Product, as a result of activities under this
Agreement

 

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

 

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

 

1.31                        “Target
Product” shall mean either the First Generation Product and/or the Second
Generation Product, as the context requires.

 

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

 

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

 

1.34                        “Third
Party” shall mean any Person other than a Party, its Affiliates and
sublicensee.

 

7

 

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

 

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

 

ARTICLE 2

AMENDMENT AND RESTATEMENT OF PRIOR AGREEMENT

 

The Prior Agreement is hereby amended and replaced in its entirety with
this Agreement.  As a result, all
licenses and rights conveyed to, and obligations undertaken by, either Party
pursuant to the Prior Agreement are hereby terminated (except for any payment
obligations which accrued prior to the Effective Date) and replaced with those
licenses, options, and obligations undertaken by the Parties pursuant to this
Agreement.  It is further understood and
agreed that Confidential Information subject to the Prior Agreement shall be
considered Confidential Information under the Agreement.

 

ARTICLE 3

STRESSGEN RIGHTS TO FIRST GENERATION PRODUCT

 

3.1                               Stressgen
Rights.  As of the Effective Date,
Stressgen shall have all rights to, and be solely responsible for, but shall
not be obligated to undertake, all non-clinical and clinical development,
process development and manufacture of the First Generation Product and
obtaining Regulatory Approval therefor in the Territory, subject to the
restrictions set forth in Section 3.2
and Article 4.  Stressgen shall (a) be solely
responsible for all interactions with Regulatory Authorities, (b) hold and
own all INDs, BLAs and other filings for Regulatory Approval of the First
Generation Product in the

 

8

 

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

 

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

 

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

 

3.4                               Assistance with Manufacture of Batch
Material.

 

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

 

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

 

9

 

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

 

3.5                               Roche
Right to Review BLA.  Promptly after
Stressgen submits a BLA Filing for the First Generation Product, Stressgen
shall notify Roche in writing.  Upon the
reasonable request of Roche, Stressgen shall make available to Roche a copy of
such BLA filing, including all submitted documentation, in either electronic or
printed form, as available.  Roche shall
be permitted to conduct reasonable due diligence, upon reasonable notice to
Stressgen, with respect to the First Generation Product beginning at the time
it is provided with notice of the BLA Filing and continuing until [***] after
the BLA Approval Date (defined in Section 4.2 below).

 

ARTICLE 4

ROCHE OPTION TO FIRST GENERATION PRODUCT

 

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

 

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

 

4.3                               Exercise of Option.  If during the Notice Period Roche notifies
Stressgen that it desires to immediately exercise the Option, then Roche shall
exercise the Option

 

10

 

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

 

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

 

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

 

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

 

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

 

11

 

the First Generation Product in the United States to
physicians prescribing for  any other Non-GW Indications (to be more
fully described in the First Generation Product License Agreement and a
commercialization plan to be agreed upon by the Joint Commercialization
Committee described in Appendix A). 
Stressgen shall be responsible for the training and compensation of all
Stressgen sales representatives devoted to promoting the First Generation
Product, and Roche shall provide Stressgen with appropriate promotional
materials for such co-promotion efforts, at no cost to Stressgen.

 

4.7                               Stressgen [***].

 

(a)                                  Notwithstanding
the grant to Roche of the Option, and the Second Generation Development
License, commencing upon the Effective Date and extending until the earlier
of:  (i) the exercise by Roche of
the Option; or (ii) the receipt by Stressgen of [***], Stressgen shall
have the right to enter into discussions and negotiations and to execute an
agreement [***]; provided, however,
that in no event shall Roche have the right to [***]

 

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

 

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

 

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

 

12

 

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

 

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

 

4.9                               Stressgen Right to Terminate Option [***]

 

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

 

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

 

[***]

 

13

 

ARTICLE 5

RIGHTS TO OTHER FUSION PROTEINS

 

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

 

5.2                               Option to Obtain Right of First Negotiation
for HCV.  Upon reasonable
request of Roche, SBC agrees to meet and negotiate with Roche the terms of a
collaboration and/or license agreement with respect to the development and/or
commercialization of one or more fusion proteins containing both a Hepatitis C
Virus (HCV) antigen and a bacterial stress protein for treatment of Hepatitis C
(the “HCV Rights”).  In addition,
following the date on which Roche has paid to SBC at least [***] pursuant to Section 6.2, and continuing until
December 31, 2006, Roche shall have the option, upon written notice and
payment of an additional [***] to SBC, to enter into exclusive negotiations
with Stressgen with respect to the HCV Rights worldwide, for a period of
one-hundred twenty (120) days following such written notice and payment, it
being understood that such agreement to negotiate does not imply any obligation
on the part of SBC or Roche to consummate a transaction with respect to the HCV
Rights.

 

5.3                               Notwithstanding
Roche’s option to acquire the right to negotiate exclusively with Stressgen and
SBC granted in Section 5.1 and 5.2, if:

 

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

 

14

 

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

 

(b)                                  Stressgen
terminates the Second Generation Product License pursuant to
Section 4.7(d), then the such termination shall cause the immediate termination
of Roche’s options to obtain such exclusive negotiation rights under Sections
5.1 and 5.2, to the extent such options are unexercised as of [***]; or

 

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

 

ARTICLE 6

GRANT OF SECOND GENERATION PRODUCT RIGHTS TO
ROCHE

 

6.1                               License
Grant to Roche.  As of the Effective
Date (a) Stressgen grants, and shall cause its Affiliates to grant, to
Roche a non-exclusive, worldwide (excluding Canada) license, including a
license under the MIT Agreement, under the Stressgen Patent Rights and the
Stressgen Know-How to develop, manufacture, have manufactured, use, and import
the Second Generation Product for the GW Indication; and (b) SBC grants,
and shall cause its Affiliates to grant, to Roche a non-exclusive license,
including a license under the MIT Agreement, under the Stressgen Patent Rights
and the Stressgen Know-How to develop, manufacture, have manufactured, use, and
import the Second Generation Product in Canada for the GW Indication
(collectively, the “Second Generation
Development License”).  The
Second Generation Development License shall terminate on March 31, 2005,
unless extended

 

15

 

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

 

6.2                               Roche
Right to Maintain License.

 

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

 

(b)                                  If
Roche does not maintain its Second Generation Development License, either
because (i) [***] it does not [***] or [***] Roche does not [***], then
the Second Generation License shall terminate.

 

6.3                               Right
to Make Exclusive the Second Generation
Development  License.

 

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

 

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

 

16

 

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

 

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

 

6.4                               Milestone
Payments for Maintenance of Exclusive License. If the Second Generation Development License has been made
exclusive as provided in Section 6.3,
then Roche shall pay to Stressgen the following one-time, nonrefundable amounts
indicated below, within thirty (30) days after the first occurrence for the
Later Stage Second Generation Product of each of the following events for GW
Indications and receipt of an invoice from Stressgen:  

 

	
  Event

  	
   

  	
  Payment
  (millions of

  dollars)

  
	
   

  	
   

  	
   

  
	
  1.  [***]

  	
   

  	
  [***]

  
	
  2.  [***]

  	
   

  	
  [***]

  
	
  3.  [***]

  	
   

  	
  [***]

  
	
  3.  [***]

  	
   

  	
  [***]

  
	
  Total:  

  	
   

  	
  [***]

  

 

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

 

17

 

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

 

6.5                               Exclusive
Commercialization License.  If the
Second Generation Development License has been made exclusive as provided in Section 6.3 and Roche timely makes all
payments set forth in Section 6.4,
then effective only in such event, Stressgen hereby grants to Roche the
exclusive right to use, sell, offer to sell, market, promote and otherwise
commercialize the Second Generation Product for the GW Indication, which such
license shall extend, on a country-by-country basis, until the last to expire
Valid Claim covering the manufacture, use, sale, offer for sale or importation
of the Second Generation Product (the “Second
Generation Commercial License”), unless earlier terminated as
provided hereunder.

 

6.6                               Diligent Efforts by Roche.  Following Roche’s exercise of its rights
under Section 6.3, Roche
agrees to use Diligent Efforts to develop, obtain Regulatory Approval for, and
commercialize the Second Generation Product. 
In the event Roche determines that Roche or its Affiliates is no longer
able, or ceases to desire, to develop, obtain Regulatory Approval for, or
commercialize the Second Generation Product, for any reason, then Roche shall
so notify Stressgen in writing, and the Second Generation Commercial License
shall terminate.

 

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

 

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

 

18

 

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

 

6.9                               Restrictions on Roche.

 

(a)                                  Unless
and until Roche obtains the right to develop the Second Generation Product for
Non-GW Indications as provided under Section 6.8,
Roche shall not itself, nor shall it permit any third party to, conduct any
clinical trials of the Second Generation Product for Non-GW Indications in the
Territory, or  market, promote or
advertise  the use of the Second Generation
Product for Non-GW Indications in the Territory, or use any tradename,
trademark or trade dress, in connection with the marketing and sale of the
Second Generation Product that is substantially similar to the Trademarks so as
to create a likelihood of confusion in the market place as to the origin of the
Second Generation Product, absent an agreement in writing by the Parties to the
contrary.  It is expressly understood
and agreed by Roche that, even if Roche exercises the Option, the foregoing
restrictions shall remain in place unless otherwise agreed in writing by
Stressgen in order to permit Stressgen to recognize the anticipated economic
value of its license to Roche of the First Generation Product pursuant to the
Option and as contemplated under this Agreement.

 

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

 

(c)                                  The
Second Generation Commercial License granted to Roche hereunder shall include
the right to grant sublicenses to its Affiliates and Third Parties

 

19

 

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

 

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

 

20

 

	
  Incremental annual worldwide

  Net Sales

  	
   

  	
  Percent
  (%) of Net Sales

  
	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  

 

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

 

ARTICLE 7

PAYMENTS UPON EXERCISE OF THE OPTION

 

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

 

7.2                               First Generation Product Development Event
Payments.

 

(a)                                  If
Roche exercises the Option, then Roche shall pay to Stressgen the following
one-time, nonrefundable and non-creditable amounts, within thirty (30) days
after the first occurrence of each of the following events and receipt of an
invoice from Stressgen (except as may be otherwise provided in
Section 7.2(b), with respect to

 

21

 

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

 

	
  Event 

  	
   

  	
  Payment 

  (millions of dollars)

  	
   

  
	
  1.

  	
  [Intentionally
  Omitted]

  	
   

  	
   

  	
   

  
	
  2.

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  3.

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  4.

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  5.

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  6.

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  7.

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  8.

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
  Total:

  	
   

  	
   

  	
  [***]

  	
   

  
						

 

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

 

(c)                                  If
Roche elects to extend the period of time in which to exercise its Option
pursuant to Section 4.2, and if, during the period extending from the
Notice Period to the Extension Date, 
Stressgen has a Start of Phase III Clinical Trial with 

 

22

 

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

 

7.3                               Commercial
Success Payments.  Roche shall pay
to Stressgen the following one time, nonrefundable and non-creditable amounts,
within thirty (30) days after the amount of cumulative worldwide Net Sales of
First Generation Products, Second Generation Products, or both, whichever is
the first to reach such Net Sales levels, referred to in the chart below has
been achieved by the Roche Group:

 

23

 

	
  Commercial Event

  	
   

  	
  Amount
  (millions

  of dollars)

  
	
  Aggregate Net Sales of Target Products in the
  Territory equal [***] in a calendar year

  	
   

  	
  [***]

  
	
  Aggregate Net Sales of Target Products in the
  Territory equal [***] in a calendar year

  	
   

  	
  [***]

  
	
  Aggregate Net Sales of Target Products in the
  Territory equal [***] in a calendar year

  	
   

  	
  [***]

  
	
  Aggregate Net Sales of Target Products in the
  Territory equal [***] in a calendar year

  	
   

  	
  [***]

  

 

Notwithstanding anything herein to the contrary, Roche shall make each
of such payments in this Section 7.3
only once for the first occurrence of a respective event, whether for the First
Generation Product alone, the Second Generation Product alone, or the
combination of the Target Products.  If
Net Sales by the Roche Group in a given calendar year surpass more than one
milestone event [***], then Stressgen shall be paid both milestones achieved
during such calendar year.  No sales by
Stressgen during the Stressgen Sales Period shall be included for purposes of
determining the payments due under this Section 7.3.

 

7.4                               First Generation Product Sales-Based Payments
to Stressgen.

 

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

 

24

 

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

 

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

 

	
  Incremental Annual  Net Sales

  	
   

  	
  Percent
  (%) of Net Sales

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  

 

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

 

7.6                               Sales-Based Payments to Roche.  If Roche exercises the Option, and during
the Stressgen Sales Period, Stressgen shall owe to Roche sales-based payments
equal to [***] of annual Stressgen Net Sales; provided,
however, that where Roche did not
exercise the Option following BLA Approval but elected to extend its

 

25

 

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

 

ARTICLE 8

ADJUSTMENTS TO SALES-BASED PAYMENTS

 

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

 

8.2                               Adjustments Related to Third Party
Competition.

 

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

 

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

 

26

 

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

 

8.3                               Adjustments Related to Third Party
Payments.  Roche shall pay
and be responsible for the entire consideration owed to any Third Party
pursuant to the terms of any licensing arrangement entered into by Roche after
exercising its Option or with respect to the Second Generation Product related
to a Third Party Right, but shall keep Stressgen informed as reasonably
requested by Stressgen regarding progress of negotiations with such Third Party
regarding such licensing arrangement. 
Stressgen shall be solely responsible for paying the entire
consideration owed to any Third Party pursuant to the terms of any licensing arrangement
entered into by Stressgen before Roche exercising its Option.  Roche shall have the right to deduct a
maximum of [***] of the consideration actually paid to a Third Party with
respect to such Third Party Right (“Deductible
Consideration”) from payments otherwise due and payable by Roche to
Stressgen under Section 6.10 or
Section 7.4, solely to the
extent such Deductible Consideration is allocable, in good faith, to
HspE7.  In no event shall the
sales-based payment owed to Stressgen be reduced pursuant to this Section 8.3 in any given year below
[***] of that otherwise due and owing, subject further to Section 8.4.  As used herein, “Third Party Right” shall mean a patent
owned or controlled by a Third Party

 

27

 

under which Roche or its Affiliate obtains a license
to use, offer for sale, sell or import Target Product in the country following
an opinion of competent legal counsel or an agreement of the Parties that risk
exists that a court could find that the use, offer for sale, sale or import of
HspE7 in such country infringes such patent in the absence of such license.

 

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

 

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

 

8.6                               Combination Products.  If Roche or its Affiliates sell a
Target Product that is comprised of the Target Product as well as other
pharmaceutically active agent(s) (a “Combination
Product”), then the Parties shall meet approximately one (1) year
prior to the anticipated commercial launch of such Combination Product to
negotiate in good faith and agree to an appropriate adjustment to Net Sales to
reflect the relative significance and value of the Target Product and the other
pharmaceutically active agent(s) contained in the Combination Product.  If, after good faith negotiations (not to
exceed ninety (90) days), the Parties cannot agree to an appropriate
adjustment, Net Sales shall equal Net Sales of the Combination Product
multiplied by a fraction, the numerator of which is the reasonable fair market
value of the Target Product and the denominator of which is the reasonable fair
market value in the aggregate, of all pharmaceutically active agents contained
in the Combination Product.

 

28

 

ARTICLE 9

PAYMENT, REPORTING, AUDITING

 

9.1                               Currency
and Conversion.

 

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

 

(b)                                  Whenever
calculation of Net Sales requires conversion from any foreign currency, Roche
shall convert the amount of Net Sales in foreign currencies as computed in
Roche’s central Swiss Francs Sales Statistics for the countries concerned.  Roche shall first convert the amount of Net
Sales into Swiss Francs and then into U.S. Dollars, using the average
year-to-date rate of exchange for such currencies as retrieved from the
Reuters’ system for the applicable period, in accordance with Roche’s then
current standard practices.  Whenever
calculation of Net Sales requires conversion from any foreign currency ,
Stressgen shall convert the amount of Net Sales directly into U.S. Dollars,
using the average rate of exchange for such currencies published in the Wall
Street Journal for the applicable period, in accordance with Stressgen’s then
current standard practices

 

(c)                                  For
sublicensees in a country, when calculating the Net Sales, the sublicensee
shall report to Roche the amount of such sales within thirty (30) days from the
end of the reporting period, after having converted each applicable monthly
sales in foreign currency into Swiss Francs using the average rate of exchange
published in the Wall Street Journal (or some other source agreed upon by the
Parties for any particular country) for each respective month of the reporting
period.

 

9.2                               Sales-Based
Payments.  Each Party shall
calculate sales-based payments owed to the other Party pursuant to this
Agreement quarterly as of March 31, June 30, September 30 and
December 31 (each being the last day of a reporting

 

29

 

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

 

With each such
payment, the paying Party shall deliver to the other Party the following
information:

 

(a)                                  Adjusted
Gross Sales for Target Product;

 

(b)                                  Net
Sales for Target Product; and

 

(c)                                  Sales-based
payments due to such Party for the reporting period.

 

If a Party does
not pay to the other Party any amounts due under this Agreement within the
applicable time period set forth herein, then such payment shall bear interest,
to the extent permitted by applicable law, at the average one-month London
Interbank Offered Rate (LIBOR) as reported by Datastream (or a successor or
similar organization) from time to time, calculated on the number of days such
a payment is overdue.

 

9.3                               Taxes.

 

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

 

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

 

30

 

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

 

9.4                               Blocked
Countries.  If by reason of law
Roche is unable to convert to U.S. Dollars a portion of the amount due by Roche
under this Agreement, then Roche shall notify Stressgen in writing and
Stressgen shall have the right to receive such portion and, upon written
request from Stressgen, Roche shall pay to Stressgen such portion, in the currency
of any other country designated by Stressgen and legally available to Roche.

 

9.5                               Accounting.

 

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

 

(b)                                  Such
audits shall be conducted during normal business hours upon reasonable prior
written notice from the auditing Party (minimum of thirty (30) days) in such a
manner as to not unnecessarily interfere with the other Party’s normal business
activities, and shall include results of no more than three (3) preceding
calendar years prior to audit notification. 
The auditing Party shall have a right to request from the independent
certified public accountant full access to review all work papers and
supporting documents pertinent to such audit.

 

(c)                                  Such
audit shall not occur more frequently than once per calendar year nor more
frequently than once with respect to records covering any specific period of
time.  Notwithstanding the preceding, if
the auditing Party reasonably believes, after 

 

31

 

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

 

(d)                                  The
use of all information, data, documents and abstracts referred above shall be
for the sole purpose of verifying statements or compliance with this Agreement,
shall be treated as the audited Party’s Confidential Information subject to the
obligations of this Agreement and, except in the event of a dispute between the
Parties regarding amounts payable hereunder or the results of any audit, need
not be retained more than three (3) years from the end of the calendar year to
which each shall pertain.  Audit results
shall be shared by Roche and Stressgen.

 

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

 

(f)                                    The
failure of the Party to which a payment is made hereunder to request
verification of any payment calculation during which corresponding records are
required to be retained under this Section 9.5
shall be considered acceptance of such reporting by that Party.

 

32

 

ARTICLE 10

COORDINATION OF THE PARTIES; EXCHANGE OF INFORMATION

 

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

 

10.2                        Appointment of Liaisons.  Promptly after the Effective Date, each
Party shall appoint an individual to act as the Liaison from that Party with
respect to the other Party, and shall inform the other Party of the identity of
such Liaison.

 

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

 

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

 

33

 

into a Pharmacovigilance Agreement to coordinate
information with respect to safety, adverse events and the right with respect
to the First Generation Product and the Second Generation Product to ensure
that each Party is able to comply with its obligations to any and all regulatory
authorities with respect to the respective products.

 

10.5                        Effect of No Option Exercise.  The Parties also agree and acknowledge that
it may be the case that Roche elects not to exercise the Option, but
nonetheless proceeds with development and commercialization of the Second
Generation Product.  In light of the
foregoing sentence, Roche agrees that it shall endeavor in good faith to
develop and commercialize the Second Generation Product so as to be
distinguishable in the market from the First Generation Product and thereby to
minimize market confusion with respect to the prescription and use of the
Second Generation Product and the First Generation Product.

 

ARTICLE 11

INTELLECTUAL PROPERTY

 

11.1                        Ownership
of Intellectual Property.  As
between the Parties, Stressgen or SBC, as the case may be, shall own all
Stressgen Inventions, Roche shall own all Roche Inventions, and Stressgen and
Roche shall jointly own all Joint Inventions, if any. Except to the extent any
Joint Invention is exclusively licensed by one Party to the other Party
hereunder, each Party shall have the right to practice Joint Inventions, and to
grant licenses to Affiliates and Third Parties under Patents claiming Joint
Inventions, without the other party’s consent and without any duty to account
to the other Party with respect thereto. 
Each Party shall require all of its employees to assign all inventions
related to Target Products made by them to such Party.

 

11.2                        Patent
Prosecution and Maintenance.  The
Parties, through the Liaisons, shall discuss in good faith the preparation,
filing and maintenance of any patent applications and patents issuing therefrom
with respect to any Joint Inventions, including which Party should take the
lead with respect to such activities, and the sharing of costs associated
therewith.

 

34

 

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

 

ARTICLE 12

CONFIDENTIAL INFORMATION

 

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

 

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

 

(a)                                  not
to use such Confidential Information for any purpose other than in connection
with the purpose of carrying out its rights and obligation under this
Agreement;

 

(b)                                  to
treat such Confidential Information as it would its own information of the same
nature and importance, and in any event, to use no less than a reasonable
degree to care to protect the proprietary nature of such Confidential
Information; and

 

(c)                                  to
take all reasonable precautions to prevent the disclosure of such Confidential
Information to any non-Affiliate Third Party without the prior written consent
of the Discloser.

 

12.2                        Exceptions.  A
Recipient shall be relieved of any and all obligations under Section 12.1 regarding Confidential
Information which:

 

35

 

(a)                                  was
known to the Recipient or its Affiliate prior to receipt hereunder; or

 

(b)                                  as
demonstrated by the Recipient by competent written proof, is independently
generated by the Recipient or its Affiliate by persons who have not had access
to or knowledge of the Confidential Information disclosed hereunder; or

 

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

 

(d)                                  is
hereafter made available to the Recipient or its Affiliate for use and
unrestricted disclosure by the Recipient from any Third Party having a right to
do so.

 

12.3                        Authorized
Disclosure.  Nothing in this Agreement shall
prohibit disclosure by a Party of Confidential Information received from the
other Party to its consultants, sublicensees, investment bankers, potential
strategic partners, advisors, clinical investigators and contract manufacturers,
if any, but only on a need to know basis for purposes provided for in this
Agreement, provided such disclosure occurs pursuant to a written
confidentiality agreement containing provisions substantially as protective as
those of this Article.

 

The restrictions
set forth in this Article shall not prevent disclosure to the extent
required pursuant to a judicial or governmental order, provided that the
Recipient gives the Discloser sufficient notice to permit the Discloser to seek
a protective order or other similar order with respect to such Confidential
Information.

 

This Agreement
supercedes the Confidentiality provisions of the Prior Agreement.  All information exchanged thereunder shall
be deemed Confidential Information under this Agreement and shall be subject to
this Article 12.

 

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

 

36

 

ARTICLE 13

PUBLICATION AND PRESS RELEASE

 

13.1                        Publications.  Unless and until Roche exercises the Option,
Roche shall not publish (publish shall include all disclosures, including oral,
written or otherwise) the results of any non-clinical studies or clinical
trials related to the First Generation Product without the opportunity for
reasonable prior review by Stressgen. Roche agrees, upon written request from
Stressgen, not to so publish such results either (i) until Stressgen is
given up to thirty (30) days from the date of such written request to seek
appropriate patent protection for any material in such publication or
presentation which it reasonably believes is patentable; or (ii) where
Stressgen believes in good faith that the publication of such data would have
an adverse effect on the development, Regulatory Approval for, or
commercialization of, the First Generation Product.  Stressgen also shall have the right to require deletion of its
Confidential Information that may be in any such proposed publication, prior to
such publication.  If Roche exercises
its Option, then all proposed publications shall be handled through the Joint
Commercialization Committee described in Appendix A.  If Roche wishes to publish the results of non-clinical studies or
clinical trials related to the Second Generation Product, then the Liaisons
from both Parties shall establish a committee to handle such proposed
publications, it being understood that where Stressgen believes in good faith
that the publication of such data would have an adverse effect on the
development, Regulatory Approval for, or commercialization of, the First
Generation Product, Roche shall not have the unilateral right to publish such
results.

 

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

 

37

 

other Party to review and comment on such
statement.  Notwithstanding the
foregoing, either Party shall have the right to publicly disclose information
regarding this Agreement or the Parties’ activities hereunder, to the extent
such information has already been made publicly available in a manner
consistent with this Section 13.2.

 

ARTICLE 14

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

14.1                        Mutual
Representations and Warranties. 
Each Party hereby represents and warrants, that, as of the Effective
Date, it has the full right and authority to enter into this Agreement, and
that it is not aware of any impediment that would inhibit its ability to
perform its obligations under this Agreement.

 

14.2                        No
Other Representations or Warranties. 
EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, THE FOREGOING
REPRESENTATION AND WARRANTY IS IN LIEU OF, AND EACH PARTY EXPRESSLY DISCLAIMS,
ANY AND ALL REPRESENTATIONS AND WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED,
INCLUDING, WITHOUT LIMITATION, WARRANTIES OF DESIGN, MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS
OF THIRD PARTIES, OR ARISING FROM A COURSE OF DEALING, USAGE OR TRADE
PRACTICES.  IN NO EVENT SHALL EITHER
PARTY BE LIABLE TO THE OTHER PARTY FOR SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE
OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT; provided, however, that the
foregoing shall not be construed to limit either Party’s indemnification
obligations under Article 16.

 

ARTICLE 15

TERM AND TERMINATION

 

15.1                        Term. 
The Term of this Agreement shall commence upon the Effective
Date.  Unless this Agreement is
terminated sooner as provided in this Article, this Agreement shall continue in
full force and effect until the date on which both the Option and the Second
Generation Development License have expired without exercise or have terminated
early; provided, however, that
where the Second Generation

 

38

 

Commercial License has been granted pursuant to Section 6.5, this Agreement shall
continue, on a country-by-country basis, in full force and effect until no
payment obligations under this Agreement are or will become due with respect to
Net Sales of the Second Generation Product in such country, at which time all
the rights and licenses granted to Roche by Stressgen under Article 6 of this Agreement for the
Second Generation Product shall automatically become non-exclusive, irrevocable
and fully-paid.

 

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

 

The waiver by
either Party of any breach of any term or condition of this Agreement shall not
be deemed a waiver as to any subsequent or similar breach.

 

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

 

39

 

under this Section 15.3,
and if Roche at such time continues to market and sell the Second Generation
Product, it shall nonetheless owe to Stressgen the sales based payments as set
forth in Section 6.10 for
such time as provided in that Section.

 

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

 

ARTICLE 16

INDEMNIFICATION

 

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

 

16.2                        Indemnification
by Roche.  Unless otherwise provided
herein, Roche shall indemnify, hold harmless and defend Stressgen and SBC and
their directors, officers, employees and agents from and against any and all
Losses, and any amounts Stressgen or SBC becomes legally obligated to pay to a
Third Party, including MIT, because of any claim or claims against it to the
extent that such claim or claims arise

 

40

 

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

 

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

 

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

 

ARTICLE 17

DISPUTE RESOLUTIONS AND GOVERNING LAW

 

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

 

41

 

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

 

ARTICLE 18

 

MISCELLANEOUS

 

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

 

18.2                        Entire
Agreement.  This Agreement embodies
the entire understanding of the Parties with respect to the subject matter
hereof and supercedes all previous communications, representations or
understandings, and agreements, whether oral or written, between the Parties
relating to the subject matter hereof.

 

18.3                        Amendment.  No amendment or modification hereof shall be
valid or binding upon the Parties unless made in writing and signed by
authorized signing officers of both Parties expressly stating that it is
intended to amend or modify this Agreement.

 

18.4                        Assignment.  This
Agreement shall not be assigned or transferred in part or in whole by any Party
without the prior written consent of the other; provided, however, that
either Party, without notice and at any time for any reason, may assign or
transfer this Agreement in whole or in part to (a) any of its Affiliates
who agree to be bound by the terms and conditions of this Agreement or
(b) any successor of such Party as part of consolidation or merger,
corporate reorganization or sale of all or substantially all of its business
assets to which this Agreement relates (provided that intellectual property
rights of the acquiring party to such transaction, if other than one of the
Parties to this Agreement, shall not be included in the technology licensed
hereunder).  In the

 

42

 

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

 

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

 

In the case of Stressgen or SBC:

 

Stressgen Biotechnologies, Inc.

10241 Wateridge Circle Drive

Suite C200

San Diego, California  92121

USA

Attn:  General
Counsel

 

With a copy to:

 

Cooley Godward LLP

Five Palo Alto Square

3000 El Camino Real

Palo Alto, CA  94306

Attn:  Barbara A. Kosacz, Esq.

 

In the case of Roche:

 

F.Hoffmann-La Roche Ltd

Grenzacherstrasse 124

CH-4070

Basel, Switzerland

Attn:  Corporate Law

 

and

 

Hoffmann-La Roche Inc.

340 Kingsland Street

Nutley, New Jersey 07110

Attn: 
Corporate Secretary

 

43

 

Either Party may change
its address for communications by a notice in writing to the other Party in
accordance with this Section.

 

18.6                        Force
Majeure.  Any prevention, delay or
interruption of performance (collectively “Delay”) by any Party under this Agreement
shall not be a breach of this Agreement if and to the extent caused by
occurrences beyond the reasonable control of the Party affected by the force
majeure, including but not limited to acts of God, embargoes, governmental
restrictions, terrorism, strikes or other concerted acts of workers, fire,
flood, earthquake, explosion, riots, wars, civil disorder, rebellion or
sabotage.  The affected Party shall
immediately notify the other Party upon the commencement and end of the Delay.  During the Delay, any time for performance
hereunder by either Party shall extend by the actual time of Delay. If the
Delay resulting from the force majeure exceeds six (6) months, the other Party,
upon written notice to the affected Party, may elect to (a) treat such
Delay as a material breach, or (b) extend the term of this Agreement for
an amount of time equal to the Delay.

 

18.7                        Severability.  If a court of competent jurisdiction holds
any term or condition of this Agreement unenforceable for any reason,
interpretation of such term or condition shall, if possible, achieve the intent
of the Parties to this Agreement.  If
not capable of such interpretation, the Parties shall in good faith seek to
agree on an alternative provision reflecting the intent of the Parties which is
enforceable.  In such event, all other
terms, conditions and provision of this Agreement shall be valid and
enforceable to the full extent.

 

18.8                        No
Right to Use Names.  Except as
otherwise provided herein, this Agreement provides no grant of right to a
Party, express or implied, to use in any manner the trademarks, trade names,
trade dress or house marks of the other Party or its Affiliates.

 

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

 

44

 

agree that the Parties, as licensees of such rights
under this Agreement, will retain and may fully exercise all of their rights
and elections under the U.S. Bankruptcy Code. 
The Parties further agree that, in the event of the commencement of a
bankruptcy proceeding by or against either Party under the U.S. Bankruptcy
Code, the Party hereto that is not a party to such proceeding will be entitled
to a complete duplicate of (or complete access to, as appropriate) any such
intellectual property and all embodiments of such intellectual property, and
same, if not already in their possession, will be promptly delivered to them
(a) upon any such commencement of a bankruptcy proceeding upon their
written request therefor, unless the Party subject to such proceeding elects to
continue to perform all of its obligations under this Agreement, or (b) if
not delivered under (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.

 

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

 

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

 

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

 

45

 

IN WITNESS WHEREOF, the
Parties have executed this Agreement in duplicate originals by their proper
officers as of the date and year first above written.

 

	
  STRESSGEN
  DEVELOPMENT CORPORATION

  	
  F.
  HOFFMANN-LA ROCHE LTD

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   /s/ Donna
  Stoute

  	
   

  	
  By:

  	
   /s/ M.
  Mulqueen

  	
  /s/ B. Bollon

  	
   

  
	
  Name:

  	
   Donna Stoute

  	
   

  	
  Name:

  	
   M. Mulqueen

  	
  B. Bollon

  	
   

  
	
  Title:

  	
   Assistant
  Secretary

  	
   

  	
  Title:

  	
   Head of
  Operations

  	
  EVP, PL

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  STRESSGEN BIOTECHNOLOGIES
  CORPORATION

  	
  HOFFMANN-LA ROCHE INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   /s/ Daniel L.
  Korpolinski

  	
   

  	
  By:

  	
   /s/ Dennis
  E. Burns

  	
   

  
	
  Name:

  	
   Daniel L.
  Korpolinski

  	
   

  	
  Name:

  	
   Dennis E.
  Burns

  	
   

  
	
  Title:

  	
   President
  and Chief Executive Officer

  	
   

  	
  Title:

  	
   VP, Global
  Head of Business Dev.

  	
   

  
													

 

46

 

APPENDIX A

 

FIRST GENERATION PRODUCT LICENSE
AGREEMENT

 

ESSENTIAL TERMS

 

A.                                    Agreed
Upon Terms.

 

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

 

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

 

(b)                                  As
of the exercise of such Option, exclusively further develop the First
Generation Product for any indications for which such product has received
Regulatory Approval as of the date of exercise of the Option;

 

(c)                                  Following
the Stressgen Sales Period, exclusively market, promote, sell, offer for sale,
import and otherwise commercialize the First Generation Product in the United
States and Canada, subject to Section 4.5
and 4.6 of the
Agreement;

 

(d)                                  As
of the exercise of such Option, exclusively market, promote, sell, offer for
sale and otherwise commercialize, and book all sales for, the First Generation
Product in the Territory outside the United States and Canada; and

 

(e)                                  As
of the exercise of such Option, non-exclusively manufacture, or have
manufactured, the First Generation Product.

 

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

 

A-1

 

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

 

3.                                       Right to Sublicense. 
The rights and licenses granted to Roche hereunder shall
include the right to grant sublicenses to its Affiliates and Third Parties
under such rights and licenses, in whole or in part.  If Roche grants such a sublicense, Roche shall ensure that all of
the applicable terms and conditions of this Agreement shall apply to the
Affiliate or Third Party sublicensee to the same extent as they apply to Roche
for all purposes.  Roche assumes full
responsibility for the performance of all obligations so imposed on such
Affiliate or Third Party sublicensee and will itself account to Stressgen for
all payments due under this Agreement by reason of such sublicense.  Any sublicenses granted under this
Section by Roche shall terminate upon the early termination of this
Agreement, to the extent this Agreement becomes terminated.  Notwithstanding the foregoing, Roche shall
not have the right to sublicense the rights granted pursuant to Section 2
above to any Third Party in the United States or Canada, except upon the prior
written approval of Stressgen, which approval Stressgen shall not unreasonably
withhold.

 

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

 

5.                                     Following
the Stressgen Sales Period, Roche shall have responsibility for commercial
supply of First Generation Product, whether by assignment to Roche of any Third
Party manufacturing agreement Stressgen then has in place with respect to such

 

A-2

 

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

 

6.                                     Roche
shall use Diligent Efforts to further develop and commercialize the First
Generation Product, subject to final say of Roche as to what development/commercialization
continues and/or commences.  Roche
further agrees that it shall continue to market and sell the First Generation
Product under the Trademark, unless the Parties agree otherwise.  In the event Roche determines that it and
its Affiliates are no longer able, or ceases to desire, to develop or  commercialize the Second Generation Product,
for any reason, then Roche shall so notify Stressgen in writing, and the
exclusive license to the First Generation Product set forth herein shall
terminate.  Roche shall fund all
prospective costs for developing and commercializing and obtaining additional
Regulatory Approval for the First Generation Product in the Territory.

 

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

 

8.                                     Roche
shall pay milestones and sales-based payments as set forth in Sections 7.2, 7.3 and 7.4,
and payment, reporting and auditing rights and obligations shall be consistent
with Article 9 of the
Agreement.

 

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

 

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

 

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

 

A-3

 

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

 

(a)                                  Roche
shall, upon Stressgen’s written request, assign and transfer to Stressgen, at
no expense to Stressgen, all of Roche’s right, title and interest in and to all
regulatory filings (such as INDs and drug master files), Regulatory Approvals,
clinical trial agreements (to the extent assignable and not cancelled), and all
data, including clinical data, materials and information, in Roche’s possession
and Control related to the First Generation Product in the Territory.  Stressgen shall, upon such transfer, have
the right to disclose and submit such filings, approvals and data to
(i) governmental agencies of the country to the extent required or
desirable to secure government approval for the development, manufacturing or
sale of the First Generation Product in the Territory; (ii) Third Parties
acting on behalf of Stressgen, its Affiliates or sublicensees, to the extent
reasonably necessary for the development, manufacture, or sale of the First
Generation Product in the country; and (iii) Third Parties to the extent
reasonably necessary to market First Generation Product in the Territory.

 

(b)          In addition, Roche shall grant to
Stressgen an exclusive, non-royalty bearing license, under Roche intellectual
property (including Roche Inventions or other patents and know-how and
including any trademarks used or intended for use in connection with the sale
of the First Generation Product), to make, have made, use, offer for sale, sell
and import such First Generation Product in such country or the Territory, as
applicable

 

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

 

A-4

 

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

 

B.                                    Terms
to Be Negotiated.  The Parties shall
also have as an objective to agree upon additional terms related to:

 

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

 

2.                                     Confidentiality

 

3.                                     Product
liability and indemnification.

 

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

 

A-5

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