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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
AMENDMENT NO.1 TO
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: JUNE 30, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to ________
Commission File Number: 0-30235
EXELIXIS, INC.
(Exact name of registrant as specified in its charter)
Delaware 04-3257395
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
170 Harbor Way
P.O. Box 511
South San Francisco, CA 94083
(Address of principal executive offices, including zip code)
(650) 837-7000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days:
Yes [X] No [ ]
As of July 31, 2001, there were 49,161,649 shares of the registrant's common
stock outstanding.
EXPLANATORY NOTE
Exelixis, Inc. is filing this Amendment No. 1 to Form 10-Q as an exhibit-only
filing. Exelixis is refiling Exhibit 10.28, Collaboration Agreement, dated May
22, 2001, by and between Exelixis, Inc. and Protein Design Labs, Inc., and
confidential treatment has been requested for certain portions of such exhibit.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Date: September 17, 2001
EXELIXIS, INC.
/s/ Glen Y. Sato
-------------------
Glen Y. Sato
Chief Financial Officer, Vice President of
Legal Affairs and Secretary
(Principal Financial and Accounting Officer)
INDEX TO EXHIBITS
Exhibit
Number Description of Document
------ -------------------------
2.1 Share Exchange and Assignment Agreement, dated April 23, 2001,
by and among Exelixis, Inc. and the Artemis stockholders
named therein. (1)
3.1 Amended and Restated Certificate of Incorporation (2)
3.2 Amended and Restated Bylaws (2)
4.1 Specimen Common Stock Certificate (2)
4.2* Form of Convertible Promissory Note, dated May 22, by and
between Exelixis, Inc. and Protein Design Labs, Inc.
4.3* Form of Note Purchase Agreement, dated May 22, by and between
Exelixis, Inc. and Protein Design Labs, Inc.
10.28** Collaboration Agreement, dated May 22, 2001, by and between
Exelixis, Inc. and Protein Design Labs, Inc.
--------------------------------------------------------------------------------
(1) Filed with Exelixis' Item 2 Current Report on Form 8-K filed on May 15,
2001 and incorporated herein by reference.
(2) Filed with Exelixis' Registration Statement on Form S-1, as amended (No.
333-96335), declared effective by the Securities and Exchange
Commission on April 10, 2000, and incorporated herein by
reference.
* Previously filed.
** Filed herewith, and confidential treatment requested for certain
portions of this exhibit.
38.
1.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
EXHIBIT 10.28
COLLABORATION AGREEMENT
THIS COLLABORATION AGREEMENT (the "Agreement") is dated as of May 22, 2001
(the "Effective Date") by and between EXELIXIS, INC., a Delaware corporation
having its principal place of business at 170 Harbor Way, P.O. Box 511, South
San Francisco, California 94083-0511 ("EXEL"), and PROTEIN DESIGN LABS, INC., a
Delaware corporation having its principal place of business at 34801 Campus
Drive, Fremont, California 94555-3606 ("PDL"). EXEL and PDL are sometimes
referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
A. PDL has expertise and capability in developing antibodies, in
particular humanized antibodies, as pharmaceuticals.
B. EXEL has expertise and proprietary technology relating to drug
discovery focused particularly on genetic model systems, genomics and
computational biology and is applying such technology to discover and validate
targets and products for drug discovery in a variety of disease areas.
C. PDL and EXEL desire to establish a collaboration to utilize the
technology and expertise of PDL and EXEL to identify and characterize targets
for the treatment of cancer and precancerous conditions, controlling cell
growth, apoptosis, and proliferation, to generate antibodies directed against
such targets, and to develop and commercialize novel antibody products for
diagnostic, prophylactic and therapeutic uses.
NOW, THEREFORE, the Parties agree as follows:
1. DEFINITIONS
The following terms shall have the following meanings as used in this
Agreement:
1.1 "AFFILIATE" means, with respect to a particular Party, a person,
corporation, partnership, or other entity that controls, is controlled by, or is
under common control with such Party. For the purposes of the definition in
this Section 1.1, the word "control" (including, with correlative meaning, the
terms "controlled by" or "under the common control with") means the actual
power, either directly or indirectly through one or more intermediaries, to
direct or cause the direction of the management and policies of such entity,
whether by the ownership of at least fifty percent (50%) of the voting stock of
such entity, or by contract or otherwise.
1.2 "ANTIBODY" means a Humanized Antibody or Precursor Antibody.
1.3 "ANTIBODY INVENTIONS" means an Invention directed to Antibodies,
including without limitation, composition of matter, methods of manufacture,
methods of use, formulations, dosing regimens, etc.
1.4 "ANTIBODY TARGET" means [ * ].
1.5 "ANTIBODY TARGET CANDIDATE" means [ * ].
1.6 "BLA" means a Biologics License Application as defined in the current
Federal Food, Drug and Cosmetic Act, and applicable regulations promulgated
thereunder by the FDA or the equivalent application to the equivalent agency of
any other regulatory jurisdiction, as amended from time to time during the term
of this Agreement.
1.7 "CO-FUNDED PRODUCT" means a Product for which EXEL has made an
effective election to co-fund pursuant to Section 5.1 and which has not ceased
to be a Co-Funded Product pursuant to Section 5.9.
1.8 "COLLABORATION" means all of the research activities performed by, or
on behalf of, EXEL or PDL during the Research Term pursuant to the Research
Plan, through the stage of evaluation of Precursor Antibodies.
1.9 "COMBINATION PRODUCT" means any product containing both (i)
substantially all of at least one variable region of an Antibody, and (ii) one
or more other therapeutically active ingredients.
1.10 "COMMERCIALIZATION PLAN" shall have the meaning set forth in Section
3.4(b).
1.11 "CONTROLLED" means, with respect to all or any portion of any gene,
protein, compound, material, Information or intellectual property right, that
the Party owns or has a license to such gene, protein, compound, material,
Information or intellectual property right and has the ability to grant to the
other Party access, a license or a sublicense (as applicable) to such gene,
protein, compound, material, Information or intellectual property right as
provided for herein without violating the terms of any agreement or other
arrangements with any Third Party existing at the time such Party would be first
required hereunder to grant the other Party such access, license or sublicense.
1.12 "COST OF GOODS SOLD" means [ * ].
1.13 "COST OF MANUFACTURE" means [ * ].
1.14 "DEVELOPMENT" means those activities undertaken with respect to a
Product that are directed toward obtaining Regulatory Approval and the
pre-marketing, marketing research, marketing and sale of such Product, including
without limitation, humanization, cell line optimization, pre-clinical testing
and toxicology studies, human clinical trials, formulation, bulk production,
fill/finish, manufacturing process development, manufacturing scale-up costs and
validation, qualification and certification costs and preparation of regulatory
filings.
1.15 "DEVELOPMENT PLAN" means the plan describing the Development intended
to be conducted for a given Co-Funded Product, including an estimated schedule
and budget, as such plan may be amended by the relevant Joint Development
Committee from time to time.
1.16 "DEVELOPMENT COSTS" means [ * ].
1.17 "DILIGENT EFFORTS" means the carrying out of obligations or tasks in a
sustained manner consistent with the efforts a Party devotes to a product or a
research, development or marketing project of similar market potential, profit
potential or strategic value resulting from its own research efforts, based on
conditions then prevailing and taking into account its relative risk profile,
time to market, and other factors considered in portfolio management. Diligent
Efforts requires that the Party: (i) promptly assign responsibility for such
obligations to specific employee(s) who monitor such progress on an on-going
basis, (ii) set and consistently seek to achieve specific and meaningful
objectives for carrying out such obligations, and (iii) allocate resources
designed to advance progress with respect to such objectives.
1.18 "DRUG APPROVAL APPLICATION" means an application for Regulatory
Approval required before commercial sale of a Product as a pharmaceutical
product in a regulatory jurisdiction.
1.19 "EXEL DIAGNOSTIC PRODUCT" means [ * ].
1.20 "EXEL KNOW-HOW" means all Information Controlled by EXEL during the
term of the Agreement that is necessary or reasonably useful for PDL (a) to
fulfill its obligations under the Research Plan, or (b) to research, develop,
use, import, manufacture, market or sell Antibodies or Products, but excluding
the EXEL Patents.
1.21 "EXEL PATENTS" means all (i) unexpired letters patent (including
inventor's certificates) which have not been held invalid or unenforceable by a
court of competent jurisdiction from which no appeal can be taken or has been
taken within the required time period, including without limitation any
substitution, extension, registration, confirmation, reissue, re-examination,
renewal, patent of addition or any like filing thereof and (ii) pending
applications for letters patent, including without limitation any continuation,
division, or continuation-in-part thereof and any provisional applications
Controlled by EXEL related to Targets or Antibodies, including the
identification and generation of Antibody Target Candidates and Antibody Targets
for use in identifying and generating Antibodies, including but not limited to
issued patents and pending applications that claim the composition of matter,
manufacture, import or use of a Target, Antibody Target Candidate, Antibody
Target, Antibody or Product, which are filed prior to or during the term of this
Agreement in the United States or any foreign jurisdiction. "EXEL Patents" shall
not include Joint Patents or PDL Patents or, after assignment to PDL, Antibody
Patents.
1.22 "EXEL PRODUCTS" means those Products which previously were Co-Funded
Products, but which EXEL has assumed responsibility for Development and
commercialization as described in Section 5.9(c).
1.23 "FIRST COMMERCIAL SALE" means the first sale of the applicable Product
to a Third Party following Regulatory Approval of the Product in the country
where sold.
1.24 "HUMANIZED ANTIBODY" means [ * ] pursuant to this Agreement by [ * ].
The term "Humanized Antibody" shall include, without limitation [ * ].
1.25 "INDEPENDENT RESEARCH" means [ * ].
1.26 "IND" means an Investigational New Drug Application as defined in the
current Federal Food, Drug and Cosmetic Act and applicable regulations
promulgated thereunder by the FDA or the equivalent application to the
equivalent agency in any other regulatory jurisdiction, as amended from time to
time during the term of this Agreement, and any equivalent application or filing
for diagnostics or medical devices.
1.27 "INFORMATION" means information, results and data of any type
whatsoever, in any tangible or intangible form whatsoever, including without
limitation, databases, inventions, practices, methods, techniques,
specifications, formulations, formulae, knowledge, know-how, skill, experience,
test data including pharmacological, biological, chemical, biochemical,
toxicological and clinical test data, analytical and quality control data,
stability data, studies and procedures, and patent and other legal information
or descriptions.
1.28 "INVENTIONS" means any and all inventions, results, know-how and other
Information, and all intellectual property relating thereto, made, discovered or
developed by one or more Parties and their employees or agents (including,
without limitation, consultants or contractors who have assigned rights to
inventions to a Party) pursuant to work performed under the Collaboration or in
the course of developing a Pre-Opt-In Product or developing or marketing a
Co-Funded Product.
1.29 "JOINT INVENTIONS" means any and all Inventions (other than Antibody
Inventions) made jointly by employees or agents of both Parties (including,
without limitation, consultants or contractors who have assigned rights to
inventions to a Party), as determined in accordance with United States patent
laws.
1.30 "JOINT PATENTS" means all (i) unexpired letters patent (including
inventor's certificates) which have not been held invalid or unenforceable by a
court of competent jurisdiction from which no appeal can be taken or has been
taken within the required time period, including without limitation any
substitution, extension, registration, confirmation, reissue, re-examination,
renewal, patent of addition or any like filing thereof, and (ii) pending
applications for letters patent, including without limitation any continuation,
division, or continuation-in-part thereof and any provisional applications
claiming Joint Inventions, which are filed during the term of this Agreement in
the United States or any foreign jurisdiction. "Joint Patents" shall not include
EXEL Patents or PDL Patents or Antibody Patents.
1.31 "MODEL SYSTEM TARGETS" means [ * ].
1.32 "NET SALES" means [ * ]. In the case of Combination Products for which
a Product and each of the other therapeutically active ingredients contained in
the Combination Product have established market prices when sold separately, Net
Sales shall be determined by multiplying the Net Sales for each such Combination
Product by a fraction, the numerator of which shall be the established market
price for the Product(s) contained in the Combination Product, and the
denominator of which shall be the sum of the established market prices for the
Product(s) plus the other active ingredients contained in the Combination
Product. When such separate market prices are not established, then the Parties
shall negotiate in good faith to determine the method of calculating Net Sales
for Combination Products.
If PDL, its Affiliates or sublicensees receive non-cash consideration for
any Product sold or otherwise transferred to a Third Party, the fair market
value of such non-cash consideration on the date of the transfer as known to
PDL, or as reasonably estimated by PDL if unknown, shall be included in the
definition of Net Sales. EXEL shall have a right to review the basis of such
determination and upon written notice, audit such estimates as provided in
Section 9.16.
1.33 "ONCOLOGY SCREENS" shall have the meaning [ * ].
1.34 "OPT-IN PERIOD" shall have the meaning set forth in Section 5.1.
1.35 "PATENTS" means EXEL Patents, PDL Patents and/or Joint Patents as the
context requires.
1.36 "PDL DIAGNOSTIC PRODUCT" means a product that is being or has been
developed for [ * ] for use with a [ * ].
1.37 "PDL KNOW-HOW" means all Information Controlled by PDL during the term
of the Agreement that is necessary or reasonably useful for EXEL to (a) fulfill
its obligations under the Research Plan, or (b) develop, import, use,
manufacture, market or sell EXEL Products, but excluding the PDL Patents and
excluding all Information Controlled by PDL that relates to antibodies other
than EXEL Products (including, without limitation, general methods for the
humanization or manufacture of antibodies), except to the extent the Parties
agree pursuant to Section 5.9(c).
1.38 "PDL PATENTS" means all (i) unexpired letters patent (including
inventor's certificates) which have not been held invalid or unenforceable by a
court of competent jurisdiction from which no appeal can be taken or has been
taken within the required time period, including without limitation any
substitution, extension, registration, confirmation, reissue, re-examination,
renewal, patent of addition or any like filing thereof and (ii) pending
applications for letters patent, including without limitation any continuation,
division, or continuation-in-part thereof and any provisional applications,
Controlled by PDL related to the development of Antibodies, including but not
limited to applications that claim the composition of matter, manufacture, or
use of a Target, Antibody or Product, which are issued or filed prior to or
during the term of this Agreement in the United States or any foreign
jurisdiction. "PDL Patents" shall not include Joint Patents or EXEL Patents or,
until assigned to PDL, Antibody Patents.
1.39 "PDL PRODUCT" means any Product developed under this Agreement which
(a) [ * ], or (b) [ * ].
1.40 "PHASE III CLINICAL TRIAL" means a trial on sufficient numbers of
patients that is designed to establish that a pharmaceutical product is safe and
efficacious for its intended use, and to define warnings, precautions and
adverse reactions that are associated with the pharmaceutical product in the
dosage range to be prescribed, and to support Regulatory Approval of such
pharmaceutical product or label expansion of such pharmaceutical product.
1.41 "PRECURSOR ANTIBODY" means [ * ] pursuant to this Agreement from [ *
]. The term "Precursor Antibody" shall include, without limitation [ * ].
1.42 "PRE-OPT-IN PRODUCT" means a Product for which EXEL has not made a
decision under Section 5.1 whether to co-fund and for which the Opt-In Period
has not expired.
1.43 "PRODUCT" means any therapeutic or prophylactic product developed
under this Agreement, for [ * ], incorporating [ * ].
1.44 "PRODUCT PROFIT" means the profit or loss for a particular Co-Funded
Product for a particular period calculated as described in Exhibit B.
1.45 "REGULATORY APPROVAL" means any and all approvals (including
supplements, amendments, pre- and post-approvals, pricing and reimbursement
approvals), licenses, registrations or authorizations of any national,
supra-national (e.g., the European Commission or the Council of the European
Union), regional, state or local regulatory agency, department, bureau,
commission, council or other governmental entity, that are necessary for the
manufacture, distribution, use and sale of a Product in a regulatory
jurisdiction.
1.46 "RESEARCH FUNDING" means the research funding and license payments
made by PDL to EXEL as described in Section 9.2.
1.47 "RESEARCH PLAN" means the research plan describing the goals and
activities to be conducted through the stage of Precursor Antibody evaluation
during the Research Term, including initially a detailed description of such
goals and activities for the first year of the Research Term and a general
description of the goals and intended activities for the remainder of the
Research Term, as such plan is amended from time to time during the Research
Term in accordance with Section 3.1(b). The Research Plan, including any amended
Research Plan, shall be attached as Exhibit A.
1.48 "RESEARCH TERM" means the period commencing on [ * ] and ending on the
termination [ * ].
1.49 "SOLE INVENTIONS" means any and all Inventions (other than Antibody
Inventions) made, discovered or developed solely by one Party and its employees
or agents (including, without limitation, consultants or contractors who have
assigned rights to inventions to a Party).
1.50 "TARGET(S)" means [ * ]. The term "Target(s)" shall include [ * ], but
shall exclude [ * ].
1.51 "TARGET POOL" means [ * ] whenever identified, [ * ].
1.52 "THIRD PARTY" means any entity other than (i) EXEL, (ii) PDL or (iii)
an Affiliate of either of them.
1.53 "THIRD PARTY ROYALTY" means any royalty paid by a Party or an
Affiliate to a Third Party in respect of the manufacture, importation, use or
sale of a Product.
2. THE COLLABORATION RELATIONSHIP
2.1 OVERVIEW. PDL and EXEL will collaborate to identify, develop,
market and sell antibodies for use in the diagnosis, prophylaxis and treatment
of one or more [ * ] cancerous conditions. EXEL will conduct activities under
the Research Plan to identify Targets and will present all such Targets to PDL [
* ]. Targets will be analyzed [ * ]. [ * ] conduct preclinical testing in
preparation for an IND and develop a Development Plan for any Product for which
PDL intends to file an IND. If EXEL elects to co-fund one or more Products [ *
]
3. MANAGEMENT OF THE COLLABORATION
3.1 JOINT SCIENTIFIC COMMITTEE.
(A) MEMBERSHIP. [ * ] the Effective Date, the Parties shall establish
a Joint Scientific Committee (the "JSC") to oversee the research activities of
EXEL and PDL under the Research Plan. The JSC shall be composed of four
representatives, two members appointed by each of the Parties. One
representative from each Party on the JSC shall be the individual at the Party
with primary responsibility for the management of the Collaboration. Initial
designees shall be Geoff Duyk and Greg Plowman on behalf of EXEL and William
Benjamin and Max Vasquez on behalf of PDL. Each Party may replace its appointed
JSC representatives at any time upon written notice to the other Party. EXEL
shall designate one of its representatives as Chairperson of the JSC, and PDL
shall designate one of its representatives as Vice-Chairperson. The Chairperson
shall be responsible for scheduling meetings and preparing and circulating a
draft agenda in advance of each meeting. Any member may add topics to the
agenda. The Vice-Chairperson shall be responsible for preparing and issuing
minutes of each meeting within thirty (30) days thereafter.
(B) RESPONSIBILITIES. During the [ * ], the JSC shall meet on a
quarterly basis as provided in Section 3.5. Following the Research Term, the JSC
shall meet on a quarterly basis for [ * ] for the purposes of winding down or
completing work [ * ]. [ * ] may elect to continue to work in the same manner as
described in the Research Plan on [ * ] and [ * ] on a case-by-case basis. For
those [ * ] for which [ * ] continues to conduct such work and that complete the
stage of in vitro and in vivo validation as described in Section 2.7 of the
Research Plan (to the extent specified by the JSC), for each such resulting
Product, the Opt-In Decision as set forth in Section 5.1 (i.e., EXEL's right to
co-fund) shall survive; otherwise, such rights shall terminate. The JSC shall
operate [ * ] and in accordance with the principles set forth in this Article 3.
The JSC shall: (i) evaluate the data generated by the Parties in the course of
the Collaboration, (ii) decide what research activities the Parties shall
perform on Targets or Precursor Antibodies under the Collaboration, except as
provided in Section 4.2, and (iii) review and amend the Research Plan from time
to time as appropriate, including not less than an annual review to detail the
activities and goals for the upcoming year; provided that any amendment of the
Research Plan that varies any material terms of this Agreement shall be subject
to Section 15.4, which requires that any such amendment shall be reduced to
writing and signed by an authorized officer of each Party.
3.2 JOINT PATENT COMMITTEE. Within [ * ] the Effective Date, a Joint
Patent Committee (the "JPC") shall be formed. The JPC, in consultation with the
JSC, will devise a strategy for the protection of intellectual property arising
from the Collaboration, including Antibody Target Candidates, Antibody Targets
and Antibody Inventions, and will supervise and direct the filing, prosecution
and maintenance of all Patents covering the Joint Inventions, as further
described in Article 10. This committee will consist of one member from each
Party's management team or the Party's designated alternate. The PDL
representative will serve as the Chairperson of the JPC. During the term of this
Agreement, the JPC will meet at [ * ], as provided in Section 3.5, and may hold
additional meetings at the request of either Party.
3.3 JOINT DEVELOPMENT COMMITTEE.
(A) MEMBERSHIP. [ * ] as EXEL exercises its option to co-fund a
Product, as provided in Section 5.1, the Parties promptly shall establish a
Joint Development Committee (a "JDC") to oversee the development and
commercialization of that Co-Funded Product. The JDC shall be composed of four
representatives, two members appointed by each of the Parties. One JDC
representative from PDL shall be the individual at PDL with primary
responsibility for the management of the development of the Product. Each Party
may replace its appointed JDC representatives at any time upon written notice to
the other Party. PDL shall designate one of its representatives as Chairperson
of the JDC, and EXEL shall designate one of its representatives as
Vice-Chairperson. The Chairperson shall be responsible for scheduling meetings
and preparing and circulating an agenda in advance of each meeting. The
Vice-Chairperson shall be responsible for preparing and issuing minutes of each
meeting within thirty (30) days thereafter.
(B) RESPONSIBILITIES. During the Development of a Co-Funded Product,
the JDC for that Co-Funded Product shall meet on a quarterly basis as provided
in Section 3.5. Each JDC shall operate [ * ] and in accordance with the
principles set forth in this Article 3. Each JDC shall: (i) oversee the progress
of the Development conducted by PDL for its Co-Funded Product, and (ii) review
and approve any material amendments to the Development Plan for its Co-Funded
Product.
3.4 JOINT COMMERCIALIZATION COMMITTEE.
(A) MEMBERSHIP. [ * ] for each Co-Funded Product, the Parties shall
establish a Joint Commercialization Committee ("JCC") for that Co-Funded
Product. The JCC shall be composed of four representatives, two members
appointed by each of the Parties. One representative from PDL on the JCC shall
be the individual at PDL with primary responsibility for the commercialization
of the Product. Each Party may replace its appointed JCC representatives at any
time upon written notice to the other Party. PDL shall designate one of its
representatives as Chairperson of the JDC, and EXEL shall designate one of its
representatives as Vice-Chairperson. The Chairperson shall be responsible for
scheduling meetings and preparing and circulating an agenda in advance of each
meeting. The Vice-Chairperson shall be responsible for preparing and issuing
minutes of each meeting within thirty (30) days thereafter.
(B) RESPONSIBILITIES. Each JCC shall meet on a quarterly basis as
provided in Section 3.5. Each JCC shall operate [ * ] and in accordance with the
principles set forth in this Article 3. Each JCC shall: (i) prepare a basic
commercialization plan, including a launch and marketing plan and budget for the
commercialization of its Co-Funded Product (the "Commercialization Plan"), (ii)
oversee the implementation of the Commercialization Plan by PDL, and (iii)
review and approve any material amendments to the Commercialization Plan. In any
event, the Commercialization Plan shall not include detailed Information
regarding PDL's implementation of the Plan, including without limitation, sales
force incentives, which shall be in PDL's sole discretion. The Commercialization
Plan shall be prepared taking into consideration such factors as: (i) the use of
Third Party collaborators to develop, market and sell in particular countries or
territories, (ii) market conditions, (iii) regulatory factors, and (iv)
competition. The Commercialization Plan budget will include all projected
additional Regulatory Approvals, and sales and marketing expenses for the
Co-Funded Product.
3.5 MEETINGS. All meetings of the JSC, JPC, JDCs and JCCs shall be
held at the headquarters of either EXEL or PDL (or at any other mutually agreed
upon location), on an alternating basis. Either Party may bring additional
representatives to attend meetings of a particular committee as nonvoting
observers. A meeting of a committee may be held by audio or video
teleconference with the consent of each Party, provided that at least half of
the minimum number of meetings for that committee shall be held in person.
Meetings of a committee shall be effective only if at least one representative
of each Party is present or participating.
3.6 OBLIGATIONS OF PARTIES. EXEL and PDL shall provide the JSC, JPC, JDCs
and JCCs and their authorized representatives with reasonable access during
regular business hours to all records, documents, and Information relating to
the Collaboration which any such committee may reasonably require in order to
perform its obligations hereunder; provided, however, that if such documents are
under a bona fide obligation of confidentiality to a Third Party, then EXEL or
PDL, as the case may be, may withhold access thereto to the extent necessary to
satisfy such obligation, such access not to be unreasonably withheld. EXEL and
PDL may also withhold documents relating to any evaluations of the
Collaboration, including documents relating to evaluating the activities under
this Agreement or relating to a decision whether to continue a Collaboration
project.
3.7 COLLABORATION GUIDELINES.
(A) GENERAL. In all matters related to the Collaboration and the
development and marketing of Co-Funded Products, the Parties shall be guided by
standards of reasonableness in economic terms and fairness to each of the
Parties, striving to balance as best they can the legitimate interests and
concerns of the Parties to further the goals of the Collaboration and to realize
the economic potential of the Products.
(B) [ * ]; DEADLOCKS. The JSC, JPC, JDCs and JCCs shall operate [ * ].
In the event of a deadlock within the JSC, the JPC, a JDC or a JCC concerning
any decision, such deadlock shall be resolved as follows:
(I) JSC DEADLOCKS. If a deadlock arises between the members of
the JSC, a non-JSC-member officer of each party shall be advised of the deadlock
in writing and shall attempt to provide the JSC with a mutually agreed upon
resolution within one (1) month. If such resolution is not timely provided, the
Chief Executive Officer ("CEO") of each Party shall be advised of the deadlock
in writing and the deadlock shall be resolved by mutual agreement of the
Parties' CEOs within one (1) month after they have been so advised. If the CEOs
do not agree on a resolution, [ * ] regarding any deadlock concerning target
selection (i.e., whether a Target meets the Antibody Target Candidate or
Antibody Target criteria) and all other deadlocks shall be submitted to and
resolved by binding arbitration pursuant to the Commercial Arbitration Rules of
the American Arbitration Association (the "AAA Rules"). In any event, each Party
shall submit a briefing document detailing its position in the deadlock not to
exceed 25 double-spaced 8.5"x11" pages within 10 business days of the selection
of the arbitrator, and the arbitrator shall be instructed to make such
determination within 30 days of submission of both position papers, but in any
event not later than 40 days following submission of the matter to arbitration.
The arbitration shall be held in San Francisco, California and shall be
conducted by one arbitrator who is knowledgeable in the subject matter at issue
and who is selected by mutual agreement of the Parties or, failing such
agreement, shall be selected according to the AAA Rules. In conducting the
arbitration, the arbitrator shall apply the California Rules of Evidence, and
shall be able to decree any and all relief of an equitable nature, including
without limitation such relief as a temporary restraining order, a preliminary
injunction, a permanent injunction, and specific performance. Each Party shall
bear its respective costs and expenses and the fees of the arbitrator shall be
shared equally.
(II) JPC DEADLOCKS. If a deadlock arises between the members of
the JPC, the General Counsel of each Party shall be advised of the deadlock in
writing and shall attempt to provide the JPC with a mutually agreed upon
resolution within one (1) month. If such resolution is not timely provided by
the General Counsels of the Parties, the CEO of each Party shall be advised of
the deadlock in writing and the deadlock shall be resolved by mutual agreement
of the Parties' CEOs within one (1) month after they have been so advised. If
the CEOs do not agree on a resolution, then [ * ].
(III) JDC DEADLOCKS. If a deadlock arises between the
members of a JDC, the CEO of each Party shall be advised of the deadlock in
writing and shall attempt to provide the JDC with a mutually agreed upon
resolution within one (1) month. If such resolution is not timely provided by
the CEOs of the Parties, the deadlock shall be resolved by mutual agreement of
the Parties' CEOs within one (1) month after they have been so advised. If the
CEOs do not agree on a resolution, then [ * ].
(IV) JCC DEADLOCKS. If a deadlock arises between the members
of a JCC, the CEO of each Party shall be advised of the deadlock in writing and
shall attempt to provide the JCC with a mutually agreed upon resolution within
one (1) month. If such resolution is not timely provided by the CEOs of the
Parties, the deadlock shall be resolved by [ * ].
(C) INDEPENDENCE. Subject to the terms of this Agreement, the
activities and resources of each Party shall be managed by such Party, acting
independently and in its individual capacity. The relationship between EXEL and
PDL is that of independent contractors and neither Party shall have the power to
bind or obligate the other Party in any manner, other than as is expressly set
forth in this Agreement.
4. COLLABORATION; HUMANIZATION
4.1 COLLABORATION.
(A) GENERAL. [ * ], the Parties shall conduct collaborative research
with the general goals and objectives of: (a) applying EXEL technology to
discover and characterize Targets that may be useful as tools for the discovery
and development of therapeutic and diagnostic Antibodies for controlling cell
growth, apoptosis and proliferation in the diagnosis, prevention, treatment or
cure of cancer or pre-cancerous conditions, and (b) applying PDL technology [ *
]. Subject to [ * ], the obligations of EXEL described in [ * ] shall terminate
[ * ]. The rights and obligations of PDL in [ * ] shall terminate as provided
for in [ * ]. The obligations of PDL in [ * ] shall continue until the later of
(i) the [ * ] or (ii) the time [ * ]. The details of the Collaboration are set
forth below and in the Research Plan. In the event of any conflict between the
provisions of this Agreement and those of the Research Plan, the provisions of
this Agreement shall govern.
(B) PRESENTATION OF TARGETS. Promptly after the Effective Date, EXEL
shall present to the JSC all Model System Targets and Targets identified prior
to the Research Term. During the Research Term, EXEL will conduct activities as
described in Sections 2.1 and 2.2 of the Research Plan to identify additional
Model System Targets and Targets and, promptly after identification, will
present all such additional Model System Targets and Targets to the JSC. [ * ].
(C) ALLOCATION OF TARGETS TO [ * ]. As described in Section 2.3 of the
Research Plan, [ * ] shall conduct [ * ] for each [ * ]. After presentation to
the JSC of the [ * ] and results of such [ * ] for a [ * ], the JSC shall
determine whether the [ * ] is to be designated an [ * ] and pursued in
accordance with the Research Plan. All [ * ] shall be included in and shall
constitute the "Work Pool." For each [ * ] determined not to be designated an [
* ], then, promptly following such determination by the JSC, and in no event
later than the quarterly JSC meeting following the JSC meeting at which such
determination was made, [ * ] shall elect, by notifying the JSC, whether such [
* ] shall be included in the [ * ] (in which case it shall be a [ * ]) or the [
* ] (in which case it shall be an [ * ]).
(D) [ * ] [ * ] shall be reserved for possible future inclusion by the
JSC in the Work Pool. [ * ] shall have [ * ] license with respect to the [ * ]
as set forth in [ * ]. [ * ] may designate a maximum number of [ * ] equal to [
* ]. [ * ] may at any time, by notifying the JSC, elect to re-designate a [ * ]
as an [ * ], in which event it shall no longer count against the maximum number
of [ * ]. The JSC may designate a [ * ] for out-licensing, in which case it
shall continue to count as a [ * ] until such time as it is either out-licensed
or re-designated by [ * ] as an [ * ] or re-designated by the JSC to be included
in the Work Pool.
(E) [ * ] [ * ] shall be available for possible future inclusion by
the JSC in the Work Pool or by [ * ] in the [ * ] at [ * ] , subject to the
following limitation: If [ * ] [ * ] in one or more model organisms, other than
[ * ], either on its own behalf or pursuant to an agreement with a Third Party
Antibody Collaborator (as defined below) and if [ * ] identifies through such [
* ] that is also a [ * ], then [ * ] shall promptly notify the JSC in writing
that such [ * ] was identified in a screen outside the Collaboration. If such [
* ] is an [ * ], and if there is a reasonable basis to believe such [ * ] may
have potential in cancer, then no later than the quarterly JSC meeting following
the JSC meeting at which such notice was provided, the JSC may elect to include
such [ * ] in the Work Pool or [ * ] may elect to include such [ * ]. If neither
the JSC nor [ * ] so elects, then such [ * ] shall be remain in the [ * ] and
shall be deemed an [ * ] [ * ] shall have [ * ] license with respect to the [ *
] as set forth in Section 8.1(b), except that it shall have [ * ] license with
respect to any [ * ] in the [ * ] as set forth in Section 8.1(a). "Third Party
Antibody Collaborator" shall mean a Third Party providing average annual
research funding or other non-cash consideration (which shall be fair market
value on the date of transfer if known to [ * ] or, as reasonably estimated by [
* ] if unknown) of not less than [ * ] in a designated therapeutic area.
(F) [ * ] Each [ * ] shall be available for selection by the JSC for
inclusion in the Work Pool until such time as [ * ] notifies [ * ] and the JSC
in writing that either [ * ] or the Third Party Antibody Collaborator has made a
decision (as documented by written records of [ * ]) to begin work to express
and purify the protein expressed by such [ * ] for purposes of developing a [ *
]. Upon receipt of such notice, [ * ] shall have no further rights to that [ * ]
and it shall cease to be a [ * ].
4.2 HUMANIZED ANTIBODY GENERATION AND PRECLINICAL TESTING. [ * ] will
determine which Precursor Antibodies should be humanized. If [ * ] decides not
to humanize a particular Precursor Antibody, then the provisions of Section 7.1
shall apply to that Precursor Antibody and the provisions of Section 7.2, if
applicable, shall apply to its Target. [ * ] will generate Humanized Antibodies
for each Precursor Antibody selected by [ * ] and will conduct appropriate
preclinical testing, as determined by [ * ], for preparation of the IND. If [ *
] decides not to file an IND for any particular Humanized Antibody, then the
provisions of Section 7.3 shall apply to that Humanized Antibody.
4.3 CONDUCT OF RESEARCH. Each Party shall use Diligent Efforts to conduct:
(i) their respective tasks, as contemplated under the Research Plan and by the
JSC (the "Research"), and (ii) the Collaboration and the Research in good
scientific manner, and in compliance in all material respects with the
requirements of applicable laws, rules and regulations and all applicable good
laboratory practices to attempt to achieve their objectives efficiently and
expeditiously.
4.4 RECORDS. Each Party shall maintain complete and accurate records of all
work conducted by it or on its behalf under the Collaboration or pursuant to the
Research and all Information generated in connection with its efforts under the
Collaboration or pursuant to the Research. Each Party shall maintain such
records for a period of [ * ] after the later to occur of (a) the end of the
Research Term, or (b) the termination of all efforts to develop, license, market
or sell the Product to which such records pertain. Such records shall fully and
properly reflect all work done and all Information generated in the performance
of the Collaboration or the Research in sufficient detail and in good scientific
manner appropriate for patent and regulatory purposes. Each Party shall have the
right to review and copy such records of the other Party at reasonable times to
the extent necessary for such Party to conduct its research, development or
other obligations under this Agreement.
4.5 REPORTS. [ * ], each Party shall report to the JSC not less than [ * ]
and will periodically submit to the other Party and the JSC a written progress
report summarizing the Research.
4.6 SHARING OF BIOLOGICAL DATA. PDL shall provide EXEL with copies of all
Information that is Controlled by PDL and that is generated by or on behalf of
PDL in the course of the Collaboration. EXEL may use such PDL Information for [
* ]. EXEL shall not [ * ]. EXEL shall provide PDL with copies of all Information
that is Controlled by EXEL and that is generated by or on behalf of EXEL in the
course of the Collaboration. PDL may use such Information for [ * ].
4.7 RIGHT TO ENGAGE THIRD PARTIES FOR COLLABORATION EFFORTS. [ * ] shall
have the right to grant licenses and sublicenses to Third Parties of its rights
with respect to the conduct of its portion of the Collaboration, as it deems
necessary or advisable, provided that [ * ].
5. DEVELOPMENT AND MARKETING OF CO-FUNDED PRODUCTS; EXEL PRODUCTS
5.1 DEVELOPMENT DECISION. At such time as PDL has substantially
completed the IND and Development Plan for a Product, PDL shall deliver to EXEL
(i) such IND and Development Plan, and (ii) documentation of historical
Development Costs described in Section 5.2(a), and the budget for such costs, if
any, for that Product. EXEL shall have [ * ] from the date of PDL's delivery of
the IND and the Development Plan to review and comment on the IND and
Development Plan ("Opt-In Period") [ * ] and to determine whether EXEL will
elect to co-fund the development and commercialization of that Product ("Opt-In
Decision"). If EXEL decides to co-fund such Product, EXEL shall provide written
notice to PDL of its Opt-In Decision, accompanied by the payments specified in
Section 5.2(a) prior to the expiration of the Opt-In Period. Effective as of the
date of such notice, such Product shall become a "Co-Funded Product" and the
Development Plan provided to EXEL shall be deemed agreed to by EXEL unless the
Parties mutually agree in writing on a revised Development Plan. The Parties
then shall establish a Joint Development Committee to oversee the Development of
the Co-Funded Product, in accordance with Section 3.3. If EXEL does not so
notify PDL and make such payments within the Opt-In Period, then EXEL
immediately shall return all copies of the IND and Development Plan for that
Product to PDL. Thereafter, that Product shall be deemed a PDL Product, as
provided in Section 6.1.
5.2 PAYMENTS FOR CO-FUNDED PRODUCTS. EXEL shall make the following
payments for each Co-Funded Product:
(A) INITIAL PAYMENTS. [ * ] reimbursement of fifty percent (50%) of
the Development Costs incurred by PDL through the end of PDL's most recently
ended fiscal quarter prior to PDL's delivery to EXEL of the IND and Development
Plan for that Product under Section 5.1.
(B) REIMBURSEMENT OF DEVELOPMENT COSTS. Following the initial payments
under Section 5.2(a), EXEL shall reimburse PDL [ * ] for fifty percent (50%) of
the Development Costs incurred by PDL for each Co-Funded Product. All such
reimbursement payments shall be due within thirty (30) days after invoicing by
PDL.
5.3 DEVELOPMENT PLAN FOR CO-FUNDED PRODUCTS. [ * ] shall provide [ * ] for
all Co-Funded Products. [ * ] shall [ * ] of each Co-Funded Product as described
in the [ * ]. [ * ] shall have the right to [ * ]. [ * ] shall have [ * ]. The
JDC for each Co-Funded Product shall carry out its responsibilities, as
described in Section 3.3.
5.4 COMMERCIALIZATION PLAN FOR CO-FUNDED PRODUCTS. The marketing and sale
of each Co-Funded Product will be governed by its Commercialization Plan,
prepared as described in Section 3.4. PDL shall have the authority and
responsibility to implement each Commercialization Plan. The JCC for each
Co-Funded Product shall carry out its responsibilities, as described in Section
3.4.
5.5 RIGHT TO ENGAGE THIRD PARTIES FOR [ * ]. PDL may use Third Parties to
perform portions of its obligations relating to [ * ]. In any material agreement
with a Third Party relating to the Development of a Product, the Party retaining
such Third Party shall provide for terms that are consistent with the terms of
this Agreement and the Party shall remain liable for the performance of any
obligations hereunder which it delegates to Third Parties. [ * ] shall have the
right to grant licenses and sublicenses to Third Parties of its rights with
respect to Co-Funded Products as it deems necessary or advisable for the
Development and/or commercialization of Co-Funded Products. [ * ] shall [ * ].
5.6 INDS AND DRUG APPROVAL APPLICATIONS. [ * ] shall be responsible for
the preparation and filing of, and shall own all regulatory submissions relating
to, [ * ] filed in any regulatory jurisdiction. [ * ] shall keep the relevant
JDC and JCC informed regarding the schedule and process for the preparation of
Drug Approval Applications for Co-Funded Products. [ * ] shall provide a draft
copy of the initial Drug Approval Application for each Major Market (as defined
in Section 9.3), and all supplemental Drug Approval Applications for each Major
Market (e.g., for a new indication) for each Co-Funded Product to EXEL for
review, to the extent practical, prior to their submission to the appropriate
regulatory authority, provided, however, that [ * ] shall be required to
promptly review such submission and in any event shall have [ * ] to comment on
such documents, [ * ].
5.7 RECORDS. Each Party shall maintain complete and accurate records of
all research and development work conducted by it or on its behalf related to
Co-Funded Products and Pre-Opt-In Products, and all Information generated and
Development Costs incurred by it or on its behalf in connection with Development
under this Agreement with respect to Co-Funded Products and Pre-Opt-In Products.
Each Party shall maintain such records for a period of [ * ] after the later to
occur of (a) the end of the Research Term, or (b) the termination of all efforts
to develop, license, market or sell the Product to which such records pertain.
Such records shall fully and properly reflect all work performed and all
Information generated in sufficient detail and in good scientific manner
appropriate for patent and regulatory purposes. Each Party shall have the right
to review and copy such records of the other Party at reasonable times to the
extent necessary for such Party to conduct its research, development or other
obligations under this Agreement.
5.8 REPORTS. During the term of the Agreement, [ * ] will provide reports
at the relevant JDC and JCC meetings summarizing the recent Development and
commercialization activities relating to each Co-Funded Product. [ * ] will
provide [ * ] with summary reports for Pre-Opt-In Products through the JSC or,
after the Research Term, upon request by [ * ], but not more frequently than [ *
].
5.9 TERMINATION OF CO-FUNDING; OUT-LICENSE OF CO-FUNDED PRODUCTS.
(A) VOLUNTARY TERMINATION BY [ * ]. [ * ] shall have the right to
terminate its co-funding obligation for any Co-Funded Product effective [ * ]
after providing irrevocable, written notice to [ * ] of such election to
terminate. Upon the effective date of such termination: (i) such Product shall
be deemed a [ * ] Product, rather than a Co-Funded Product, (ii) the JDC for
such Product shall be disbanded, and (iii) [ * ] shall no longer have any rights
pursuant to Section 9.9 to receive a share of Product Profit with respect to
such Product but instead shall receive prospective milestones for events that
occur after the effective date of such termination and royalties on Net Sales of
such Product pursuant to Article 9. [ * ]
(B) COMPULSORY TERMINATION BY [ * ]. If [ * ] fails to make a payment
under Section 5.2 and such payment is not received within [ * ] after notice of
failure to pay by [ * ], then at [ * ] option, [ * ] shall be deemed to have
terminated co-funding effective [ * ] after the end of such [ * ] period. The
effect of such termination shall be as described in Section 5.9(a).
(C) VOLUNTARY TERMINATION BY [ * ]; [ * ] PRODUCTS. If [ * ] decides
to terminate the development and/or commercialization of a particular Co-Funded
Product and not to attempt to out-license such Co-Funded Product to a Third
Party, [ * ] shall have the right to terminate its obligations to develop and
commercialize that Co-Funded Product effective [ * ] after providing
irrevocable, written notice to [ * ] of such election to terminate. Within [ * ]
after receipt of such notice, [ * ] shall notify [ * ] in writing whether or not
it elects to assume sole responsibility for, and all costs and obligations of,
the continued development and commercialization of such Product. If [ * ] so
elects, then upon the effective date of [ * ] termination: (i) such Product
shall be deemed an "[ * ]" rather than a Co-Funded Product, (ii) the JDC for
such Product shall be disbanded, and (iii) promptly after [ * ] election, [ * ]
and [ * ] shall work together to transfer and assign all regulatory documents,
contracts, materials and Information to [ * ] or its designees to the extent
necessary for [ * ] to assume such responsibility. [ * ].
(D) OUT-LICENSING DECISION FOR PRODUCTS AND DIAGNOSTIC PRODUCTS. [ * ]
shall provide [ * ] with written notice of its intent to out-license some or all
of the rights for a particular Co-Funded Product and/or its related Diagnostic
Product to a Third Party (whether or not accompanied by a decision to terminate
the development and/or commercialization of a particular Co-Funded Product
and/or its Diagnostic Product). [ * ] shall have [ * ] from receipt of such
notice to notify [ * ] in writing that it wishes to exercise its right of
negotiation. If [ * ] exercises such right, the Parties shall negotiate for a
period of up to [ * ] to enter into a license agreement, the terms of which
shall include customary terms and conditions, including, without limitation,
appropriate signing and licensing fees, milestone payments and royalties. If [ *
] do not enter into a license agreement within such time, [ * ] thereafter shall
have the right to out-license such rights to a Third Party, subject to [ * ].
Upon [ * ] entering into such a license or sublicense with a Third Party, [ * ]
shall have [ * ] and [ * ] shall have [ * ]. All compensation received by the
Parties from such Third Party under such license or sublicense (including, but
not limited to, all license fees, milestone payments and royalty payments) shall
be shared as [ * ] by the Parties in accordance with [ * ], provided that all
such compensation shall be calculated after deductions for Development Costs
incurred by either Party under the agreement with the Third Party.
6. DEVELOPMENT AND MARKETING OF PDL PRODUCTS
6.1 PDL PRODUCTS. If EXEL does not elect to co-fund a Product as provided
in Article 5, such Product shall be deemed a PDL Product. PDL shall have sole
control and responsibility for the development and commercialization of PDL
Products, and EXEL shall have no further rights with respect to such PDL Product
except (a) the right to receive milestone and royalty payments as described in
Sections 9.3, 9.4 and 9.5, and (b) [ * ].
6.2 REPORTS. Upon written request by EXEL to PDL during the term of the
Agreement, but not more frequently than once per calendar year, PDL will submit
to EXEL a written progress report summarizing the status of each PDL Product.
6.3 RIGHT OF NEGOTIATION. [ * ].
7. COMMERCIALIZATION OF TARGETS AND EARLY-STAGE PRODUCTS
7.1 TARGETS AND PRECURSOR ANTIBODIES. In the event that (a) any
Targets result from the Collaboration for which Antibodies are not generated for
any reason, or (b) any Precursor Antibodies to a given Antibody Target Candidate
or Antibody Target result from the Collaboration, but PDL determines not to
select any Precursor Antibodies to that Antibody Target Candidate or Antibody
Target for humanization, then the JSC may designate such Targets and/or
Precursor Antibodies for out-licensing ("Out-Licensing Candidates"), [ * ] [ *
] shall have [ * ]. All consideration received or to be received from any such
license, including, without limitation, all license fees, milestone payments and
royalties shall be treated as [ * ].
7.2 [ * ] REVERSION TARGETS. Each Target identified by [ * ] during the
[ * ] that (a) [ * ] or (b) [ * ], shall revert to [ * ] ("Reversion Targets")
and shall not be treated as Out-Licensing Candidates pursuant to Section 7.1.
Upon a Target becoming a Reversion Target, [ * ] shall have no further rights to
that Reversion Target, it shall cease to be a Target and [ * ] licenses under
this Agreement to that Reversion Target shall terminate.
7.3 HUMANIZED ANTIBODIES NOT SELECTED BY [ * ] FOR IND. In the event that
[ * ] creates a Humanized Antibody, but decides not to proceed with an IND
filing for such Humanized Antibody, then such Humanized Antibody shall be
treated in the same manner as a [ * ] Product is treated under [ * ].
7.4 GENERAL LICENSING. Subject to Sections 5.9(d) and 6.3, [ * ] shall
have the right to enter into a license or sublicense with any Third Party for
any or all rights to any Antibody Target Candidates, Antibodies or Products [ *
], including without limitation any Out-Licensing Candidates. All consideration
received or to be received from any such license, including, without limitation,
all license fees, milestone payments and royalties shall be treated as [ * ],
except that any consideration for [ * ] shall be allocated as provided in
Sections 5.9 and 6.3. Upon [ * ] or the Parties' entering into such a license or
sublicense with a Third Party with respect to any Target, Antibody or Pre-Opt-In
Product, all rights under Article 5 shall terminate with respect to the
applicable Product licensed to the Third Party.
7.5 [ * ] REVERSION. Effective [ * ], all [ * ] shall revert to [ * ]. [ *
] shall have no further rights with respect to such [ * ].
8. LICENSES AND RELATED RIGHTS
8.1 LICENSES TO PDL.
(A) RESEARCH. Subject to the terms of this Agreement, EXEL hereby
grants PDL a non-exclusive, worldwide, non-transferable, royalty-free license
for internal use under the EXEL Patents, EXEL Know-How and EXEL's interest in
the Joint Patents to the extent necessary (i) to permit PDL to conduct its
obligations under Article 4 and (ii) to use and characterize Targets, including,
without limitation, the Overlap Targets. The license set forth above includes
the right to sublicense, subject to Sections 4.7 and 5.5.
(B) PRE-OPT-IN PRODUCTS AND PDL PRODUCTS. Subject to the terms of this
Agreement, EXEL hereby grants PDL a worldwide, exclusive license, including the
right to sublicense, under the EXEL Patents, EXEL Know-How and EXEL's interest
in the Joint Patents (i) to use the Targets [ * ] for the purpose of creating,
developing and marketing antibodies for commercial purposes, (ii) to use
Antibody Target Candidates and Antibody Targets to make, have made, use, develop
and test Antibodies, and (iii) to make, have made, use, develop, test, sell,
offer to sell, have sold and import Pre-Opt-In Products and PDL Products. Such
license shall include all human prophylactic and therapeutic indications for
Pre-Opt-In Products and PDL Products and shall be milestone and royalty-bearing
as set forth in Article 9. The exclusivity of the license set forth in 8.1(b) is
subject to EXEL's retained rights under Sections 8.2 (a) and 8.5.
(C) CO-FUNDED PRODUCTS. Subject to the terms of this Agreement, EXEL
hereby grants PDL a worldwide, co-exclusive license (with EXEL), including the
right to sublicense, under the EXEL Patents, EXEL Know-How and EXEL's interest
in the Joint Patents to make, have made, use, develop, test, sell, offer to
sell, have sold and import Co-Funded Products. Such license shall include all
human prophylactic and therapeutic indications and shall involve profit-sharing
with respect to any such Product in lieu of royalties and milestones as set
forth in Article 9.
(D) PDL DIAGNOSTIC PRODUCTS. Subject to the terms of this Agreement,
EXEL hereby grants PDL a worldwide, co-exclusive license, including the right to
sublicense, under the EXEL Patents, EXEL Know-How and EXEL's interest in the
Joint Patents to make, have made, use, develop, test, sell, offer to sell, have
sold and import PDL Diagnostic Products. At the time PDL identifies a Third
Party manufacturer for any such PDL Diagnostic Product, PDL may request the
co-exclusive license be converted to an exclusive license. [ * ].
(E) ANTIBODY INVENTIONS. Subject to the terms of this Agreement, EXEL
hereby grants PDL a worldwide, exclusive license, including the right to
sublicense, under the Antibody Patents that claim Antibody Inventions invented
solely or jointly by PDL to practice such Antibody Inventions for all purposes.
8.2 LICENSES TO EXEL.
(A) RESEARCH. Subject to the terms of this Agreement, PDL hereby
grants EXEL a non-exclusive, worldwide, non-transferable, royalty-free license
(without the right to sublicense) for internal use under the PDL Patents, PDL
Know-How and PDL's interest in the Joint Patents to the extent necessary (i) to
permit EXEL to conduct its obligations under the Research Plan, and (ii) [ * ].
(B) EXEL PRODUCTS. Subject to the terms of this Agreement, effective
upon a Product becoming an EXEL Product pursuant to Sections 5.9(c) or 12.2(b),
PDL hereby grants to EXEL, a worldwide, license (with the right to sublicense)
under the PDL Patents, PDL Know-How and PDL's interest in the Joint Patents to
develop, make, have made, use, sell, offer to sell, have sold and import such
EXEL Products. This license shall be subject to any licenses or sublicenses
granted by PDL in accordance with Section 5.9 prior to the license under this
Section 8.2(b) becoming effective. Such license shall include all human
prophylactic and therapeutic indications and any Diagnostic Products developed
for use in connection with such prophylactic and therapeutic indications and
shall be milestone and royalty-bearing as set forth in Section 5.9(c). Such
license shall be exclusive to the extent of PDL's interest in an Antibody Patent
covering the EXEL Product and to the extent any PDL Patent or Joint Patent
relates solely to such EXEL Product; otherwise such license shall be
non-exclusive.
(C) EXEL DIAGNOSTIC PRODUCTS. Subject to the terms of this Agreement,
effective upon a Product becoming an EXEL Product pursuant to Section 5.9(c) or
12.2(b), and to the extent PDL then has rights to a EXEL Diagnostic Product
developed for use with such EXEL Product, PDL hereby grants to EXEL, a worldwide
license (with the right to sublicense) under the PDL Patents, PDL Know-How and
PDL's interest in the Joint Patents to develop, make, have made, use, sell,
offer to sell, have sold and import such EXEL Diagnostic Product. This license
shall be subject to any licenses or sublicenses granted by PDL, in accordance
with Section 5.9, prior to the license under this Section 8.2(c) becoming
effective. Such license shall include all human diagnostic indications and shall
be milestone and royalty-bearing as set forth in Section 5.9(c). Such license
shall be consistent with the license granted pursuant to Section 8.2(b) with
respect to the EXEL Product for which the EXEL Diagnostic Product is intended to
be used.
8.3 NEGATIVE COVENANTS. Each Party hereby covenants that it will not
practice any technology licensed to it under this Agreement outside the scope of
the licenses granted herein. Specifically and without limitation, EXEL shall
not, unless expressly permitted elsewhere in this Agreement [ * ], provided that
this covenant shall not be interpreted to prevent EXEL from [ * ].
8.4 EXCLUSIVITY. EXEL shall not research, develop or commercialize
Products, except under the terms of this Agreement. Specifically and without
limitation, unless expressly permitted elsewhere in this Agreement, neither EXEL
nor its Affiliates shall: (a) [ * ]; (b) make, have made, use, sell, offer to
sell, have sold or import such [ * ]; or (c) develop, make, have made, sell,
offer to sell, have sold or import, a [ * ] until the earlier of either (i) [ *
], or (ii) if at any time [ * ] following the selection of [ * ]. [ * ].
8.5 INDEPENDENT RESEARCH. The Parties acknowledge and agree that EXEL may
use Information and materials that EXEL generates in the course of performing
its obligations under this Agreement that constitutes general know-how relating
to [ * ] for Independent Research. For clarification, EXEL may use the following
Information generated by EXEL in the course of performing its obligations under
this Agreement, for Independent Research: [ * ] EXEL shall have no rights under
this Agreement to use PDL Information or materials, or to use or operate under
any rights licensed by PDL from Third Parties, for Independent Research or for
development or commercialization of any product or for any purpose other than as
expressly provided under this Agreement.
9. COMPENSATION
9.1 LOAN. Concurrently with the execution of this Agreement, the
Parties are entering into a Note Purchase Agreement of even date herein pursuant
to which PDL will loan EXEL thirty million dollars ($30,000,000) pursuant to a
Convertible Note. The terms of such Convertible Note shall be governed
exclusively by the Note Purchase Agreement and related documents executed
pursuant thereto.
9.2 RESEARCH FUNDING. Subject to Sections 12.2 and 12.3, for the first two
(2) years of this Agreement, PDL shall make research funding and license
payments totaling four million dollars ($4,000,000) per year. This initial
Research Term shall be deemed to begin on [ * ]. Research Funding shall be
payable in equal [ * ] installments within [ * ] after the beginning of each [ *
] during the term of the Research Funding. The annual Research Funding at the
rate of four million dollars ($4,000,000) per year shall be [ * ]. If the
Research Term has been [ * ], then the research funding shall [ * ] at the rate
of [ * ] for the following [ * ]. The Research Term and Research Funding
thereafter shall be [ * ] at the rate of four million dollars ($4,000,000) per
year for the [ * ].
9.3 MILESTONE PAYMENTS. For each PDL Product, PDL shall pay EXEL the
following amounts within thirty (30) days after each PDL Product achieves the
stated milestone:
(A) [ * ] [ * ]
(B) [ * ] [ * ]
(C) Upon first filing of a BLA for the PDL Product [ * ]
(D) Upon first Regulatory Approval of the PDL Product in a Major
Indication in a Major Market [ * ]
(E) If the PDL Product has not achieved Milestone 9.3(d), upon such
PDL Product achieving sales resulting in cumulative royalty payments
from PDL to EXEL under this Agreement of at least [ * ] [ * ]
[ * ] as used in (b) above shall occur at such time as a draft final report
for the trial has been written [ * ].
Milestone payments shall be payable only once, which shall be the first
time a milestone is achieved. If a milestone for a PDL Product is skipped or
avoided by advancing to what would normally be expected to be a later
development or regulatory step, then the milestone that was expected to occur
earlier shall be deemed to have been achieved at the same time as such later
milestone is achieved, and the corresponding payment for both milestones shall
be due. For the purposes of milestone payments, all dosage forms, formulations
and constructs containing an Antibody against the same Antibody Target shall be
deemed a single Product.
"Major Indication" as used in (d) above means the following: cancers in any
of the following: [ * ]; provided, however, that the PDL Product is [ * ] in the
target cancer.
"Major Market" as used in (d) above means the United States, United
Kingdom, Germany, France, Italy or Japan.
9.4 Royalty Payments. For sales of each PDL Product for a prophylactic
or therapeutic indication by PDL, its Affiliates or sublicensees, PDL shall pay
EXEL royalties at the following rates:
Annual Net Sales of a given PDL Product Royalty Rate
--------------------------------------- ------------
[ * ]
Except as set forth in Section 9.6, the foregoing royalty rates shall not be
subject to adjustment or reduction for any reason. For the purposes of royalty
payments, all dosage forms, formulations and constructs containing the same
Antibody shall be deemed a single Product. The measure of annual Net Sales set
forth in this Section 9.4 shall be the sum of Net Sales of a particular PDL
Product in all countries for each fiscal year of PDL.
By way of example, if in a particular fiscal year, PDL sells two PDL Products,
with one PDL Product having [ * ] in annual Net Sales and the other PDL Product
having [ * ] in annual Net Sales, then PDL shall make royalty payments to EXEL
during that year totaling [ * ] with respect to the first PDL Product and [ * ]
with respect to the second PDL Product for that fiscal year, assuming no
adjustments are required pursuant to Section 9.6.
9.5 ROYALTY PAYMENT FOR PDL PRODUCT FOR A DIAGNOSTIC INDICATION. For
sales of each Diagnostic Product by PDL, its Affiliates or sublicensees, PDL
shall pay EXEL royalties at a rate equal to [ * ] of the rate that would
otherwise apply under Sections 6.3 or 9.4 after all adjustments under this
Agreement to such rates.
9.6 ROYALTY CREDITS AND ADJUSTMENTS.
(A) The milestone payments set forth in Section 9.3(b) - (d) shall be
[ * ]. In addition, the amount of [ * ] shall be creditable against royalty
payments beginning in the quarter of the [ * ] as set forth in Section 9.4 and
Section 9.5 as provided in Section 9.6(b).
(B) [ * ]. Amounts paid by PDL to Third Parties for intellectual
property applicable to products in addition to PDL Products shall be reasonably
allocated among the products covered under the applicable licenses from Third
Parties. In any event, royalty credits shall not apply to license fees and other
amounts paid under Third Party licenses prior to the Effective Date. Royalty
credits may be applied against royalties due under Section 9.4 or Section 9.5
with respect to PDL Products, provided that the royalty paid by PDL after the
application of any credit under this Section 9.6(b) shall not, as a result of
such adjustment, be less than [ * ] of the royalty rate which would otherwise
apply under Section 9.4 or Section 9.5 to such Products.
(C) [ * ].
(D) In no event shall the royalty rate under Section 9.4 for a PDL
Product be reduced pursuant to this Section 9.6 to less than [ * ].
9.7 TERM OF ROYALTIES. EXEL's right to receive royalties under Section 9.4
and Section 9.5 shall expire on a country-by-country basis upon the later of (i)
[ * ] from the First Commercial Sale of such PDL Product in such country, or
(ii) the expiration of the last to expire issued patent within the EXEL Patents
or Joint Patents in such country covering the PDL Product or the manufacture,
use or sale of such PDL Product.
9.8 ROYALTY PAYMENT REPORTS. All royalty payments under this Agreement
shall be made to EXEL or its designee quarterly within [ * ] following the end
of each calendar quarter for which royalties are due or, in the case of
royalties from the sales of sublicensees, within [ * ] following the end of the
quarter in which PDL receives the royalty report from the sublicensee. Each
royalty payment shall be accompanied by a statement stating the Net Sales, by
country, of each PDL Product sold during the relevant calendar quarter.
9.9 PROFIT SHARING FOR CO-FUNDED PRODUCTS.
(A) SHARE OF PROFITS. PDL shall be entitled to [ * ] of Product Profit
from the sale of Co-Funded Products and EXEL shall be entitled to [ * ] of such
Product Profit until such time as, and so long as, [ * ] of the cumulative
Product Profit for all Co-Funded Products equals [ * ] of the amount paid to
EXEL under Section 9.2 (i.e., [ * ]). Whenever cumulative Product Profit exceeds
such amount, each Party shall be entitled to [ * ] of the subsequent Product
Profit from the sale of Co-Funded Products. The respective shares of Product
Profit are referred to below as the "PDL Share" and the "EXEL Share." The
respective profit sharing described in this Section 9.9(a) may be adjusted for
particular Co-Funded Products pursuant to Section 3.7(b).
(B) DETERMINATION OF PRODUCT PROFIT. Within [ * ] after the end of
each calendar quarter following the First Commercial Sale of a Co-Funded
Product, PDL shall provide EXEL with a statement detailing (i) PDL's Net Sales
and the Product Profit incurred or received, as applicable, in the previous
calendar quarter with respect to each Co-Funded Product, (ii) the cumulative
Product Profit for all Co-Funded Products and (iii) the PDL Share and the EXEL
Share for that quarter (the "Quarterly Report"). Such statement shall be
accompanied by appropriate supporting information.
(C) PAYMENTS. If the Product Profit for such calendar quarter was
negative, then EXEL shall pay the EXEL Share to PDL within [ * ] after receipt
of the Quarterly Report. If the Product Profit for such calendar quarter was
positive, then PDL shall pay the EXEL Share to EXEL within [ * ] after sending
the Quarterly Report to EXEL.
9.10 NONREFUNDABLE PAYMENTS. Except as expressly provided in this
Agreement, all payments made by a Party to the other shall be non-refundable and
non-creditable.
9.11 PAYMENT METHOD. All payments due under this Agreement to a Party
shall be made by bank wire transfer in immediately available funds to an account
designated by the receiving Party. All payments hereunder shall be made in
United States dollars.
9.12 TAXES. Each Party shall pay any and all taxes levied on account of
all payments it receives under this Agreement. If laws or regulations require
that taxes be withheld, the Party required to withhold will (i) deduct those
taxes from the remittable payment, (ii) pay the taxes to the proper taxing
authority, and (iii) send evidence of the obligation together with proof of tax
payment to the other Party within [ * ] following that tax payment.
9.13 BLOCKED CURRENCY. In each country where the local currency is blocked
and cannot be removed from the country, royalties or profit share payments
accrued in that country shall be paid to the receiving Party in the country in
local currency by deposit in a local bank designated by the receiving Party,
unless the Parties otherwise agree.
9.14 SUBLICENSES. In the event PDL grants licenses or sublicenses to
others to sell PDL Products which are subject to royalties under Section 9.4,
such licenses or sublicenses shall include an obligation for the licensee or
sublicensee to account for and report its sales of Products on substantially the
same basis as if such sales were Net Sales by PDL, and PDL shall pay to EXEL,
with respect to such sales, royalties as if such sales of the licensee or
sublicensee were Net Sales of PDL. With respect to such sales of PDL Products by
licensees or sublicensees, PDL shall be required only to include information
regarding Net Sales reflected in reports received by PDL during the calendar
quarter in question. PDL shall use commercially reasonable efforts to cause its
sublicensees to report sales of PDL Products in a manner that will enable PDL to
report such Net Sales by licensees and sublicensees on a quarterly basis.
9.15 FOREIGN EXCHANGE. Conversion of sales recorded in local currencies to
United States dollars will be performed in a manner consistent with PDL's normal
practices used to prepare its audited financial statements for internal and
external reporting purposes, which uses a mutually agreed upon generally
accepted source of published exchange rates. It is agreed that the exchange
rates published by Citibank or the Wall Street Journal for the last banking day
of the quarter shall be acceptable exchange rates; provided that, in the case of
sales by sublicensees, the Parties will use the exchange rates provided in the
agreements between PDL and such sublicensees.
9.16 RECORDS; INSPECTION. Each Party shall keep complete and accurate
books of account and records for PDL Products, EXEL Products and Co-Funded
Products, to be made under this Agreement. Such books and records shall be kept
for at least [ * ] following the end of the calendar year to which they pertain.
Such records will be open for inspection during such three year period by
independent accountants, solely for the purpose of verifying payment statements
hereunder. Such inspections shall be made no more than once each calendar year,
at reasonable times and on reasonable notice. Inspections conducted under this
Section 9.16 shall be conducted by an independent Third Party reasonably
acceptable to both Parties. The audit shall be at the expense of the Party
requesting the audit, except in the event that the results of the audit reveal
that the audited Party underpaid the Party requesting the audit by [ * ] or more
for any period covered by the audit, in which case the audit fees, and any
unpaid amounts (plus interest) that are discovered will be paid promptly by the
audited Party, and in any event no later than [ * ] following delivery of the
audit results to the audited Party.
9.17 LATE PAYMENTS. Any overdue payments under this Agreement shall bear
interest at the rate of [ * ], or the highest rate allowed by law, whichever is
less, commencing on the date such payment is due until paid.
10. INTELLECTUAL PROPERTY
10.1 OWNERSHIP.
(A) Except as otherwise described herein and subject to the licenses
granted under this Agreement, each Party shall own the entire right, title and
interest in and to any and all of its Sole Inventions, and Patents covering such
Sole Inventions, except that all Antibody Inventions initially shall be assigned
to EXEL. The Parties intend that during patent prosecution [ * ] (such patent
applications and any patents that issue with respect to such applications being
referred to as "Antibody Patents"). At the time PDL notifies EXEL pursuant to
Section 5.1 and thus commences the Opt-In Period for a particular Product
containing a particular Antibody, EXEL shall assign to PDL the Antibody Patents
that cover that Antibody. Following such assignment to PDL, the assigned
Antibody Patents shall be treated as PDL Patents under this Agreement. (B)
Subject to Section 10.1(a) and the licenses granted under this Agreement, PDL
and EXEL shall each own an undivided one-half interest in and to any and all
Joint Inventions and Joint Patents. The Parties shall have the right to grant
licenses under such Joint Patents only to the extent provided in this Agreement.
10.2 STRATEGY; DISCLOSURE. During the Research Term, each Party shall
submit a written report to the JPC within [ * ] after the end of each quarter
describing any Sole Invention or Joint Invention or Antibody Inventions of which
it became aware during the prior quarter that it believes may be patentable. The
JPC, in consultation with the JSC, shall decide whether to file a patent
application for each such Joint Invention, as discussed in Section 10.3. The JPC
shall establish the patent strategy for all Joint Inventions, Antibody
Inventions and Inventions pertaining to Antibody Target Candidates and Antibody
Targets arising from the Collaboration, considering in good faith EXEL's
obligations to PDL and Third Parties relating to patent strategy for Targets.
10.3 PATENT PROSECUTION AND MAINTENANCE; ABANDONMENT.
(A) SOLE INVENTIONS. Each Party shall direct the filing, prosecution
and maintenance of all Patents covering its Sole Inventions, to the extent
possible consistent with the strategy established by the JPC for Joint
Inventions and consistent with the remaining provisions, as applicable, of this
Section 10.3.
(B) EXEL PRODUCT PATENTS. EXEL shall prosecute and reasonably maintain
all of the patents and applications that qualify as EXEL Patents that claim or
cover any Co-Funded Product or PDL Product or the Antibody Target of any such
Product ("EXEL Product Patents"). If EXEL decides not to continue the
prosecution or maintenance of an EXEL Product Patent in any country, it shall
promptly advise PDL thereof and, at the request of PDL, EXEL and PDL shall
negotiate in good faith to determine an appropriate course of action in the
interests of both Parties. If the Parties determine that it would be [ * ] for
PDL to assume responsibility for such prosecution or maintenance, then PDL shall
have the right but not the obligation to assume such prosecution or maintenance.
If the Parties do not determine that it would be [ * ] for PDL to assume
responsibility for such prosecution or maintenance, then, at PDL's request, EXEL
shall continue such prosecution or maintenance, provided that, [ * ].
(C) PDL PRODUCT PATENTS. PDL shall prosecute and reasonably maintain
all of the patents and applications that qualify as PDL Patents that claim or
cover any Co-Funded Product or EXEL Product or the Antibody Target of any such
Product ("PDL Product Patents"). If PDL decides not to continue the prosecution
or maintenance of a PDL Product Patent in any country, it promptly shall advise
EXEL thereof and, at the request of EXEL, PDL and EXEL shall negotiate in good
faith to determine an appropriate course of action in the interests of both
Parties. If the Parties determine that it would be [ * ] for EXEL to assume
responsibility for such prosecution or maintenance, then EXEL shall have the
right but not the obligation to assume such prosecution or maintenance. If the
Parties do not determine that it would be [ * ] for EXEL to assume
responsibility for such prosecution or maintenance, then, at EXEL's request, PDL
shall continue such prosecution or maintenance, provided that, [ * ].
(D) JOINT INVENTIONS. Each Party will use reasonable efforts to advise
the other of a Joint Invention as provided in Section 10.2 or promptly upon such
Party becoming aware of such Joint Invention. If the Invention is an Antibody
Invention, it shall be assigned as provided in Section 10.1(a) and shall be
prosecuted as provided in Section 10.3(e). As soon as one of the Parties
concludes that it wishes to file a patent application covering a Joint
Invention, it immediately shall inform the other Party thereof, consult about
the filing procedures concerning such patent application, and file such patent
applications for the Joint Inventions in such countries as the JPC determines.
For this purpose, such Party will provide the other Party with the determination
of inventors and scope of claims as early as possible. If a Party is faced with
possible loss of rights resulting from the delay necessary for such
communication, such communications may take place promptly after filing a
provisional or convention application. PDL will have the first right of election
to file patent applications for Joint Inventions in any country in the world. If
PDL declines to file any such application within [ * ] after receipt of a
written request to do so from EXEL, then EXEL may do so. Regardless of which
Party files a patent application, however, any claims covered by such
applications shall be considered as part of the Joint Patents. If the Party who
initially files a patent application covering a Joint Invention decides not to
continue the prosecution or maintenance of such patent application or patent in
general or in any particular country, it promptly shall notify the other Party
in writing in reasonably sufficient time for such other Party to assume such
prosecution and maintenance, and shall take the necessary steps and execute the
necessary documents to permit such other Party to assume such prosecution or
maintenance. The other Party shall have the right but not the obligation to
assume such prosecution or maintenance.
(E) ANTIBODY INVENTIONS. Antibody Inventions initially shall be
assigned to EXEL as provided in Section 10.1(a). Unless the Parties agree
otherwise, EXEL shall file patent applications for the Antibody Inventions in
such countries as the JPC determines. If EXEL declines to file any such
application within [ * ] after receipt of a written request to do so from PDL,
then PDL may do so. At the time that an application constituting an Antibody
Patent is filed, EXEL shall promptly notify PDL in writing in reasonably
sufficient time for PDL to assume the prosecution and maintenance of that
Antibody Patent, and shall take the necessary steps and execute the necessary
documents to permit PDL to assume such prosecution or maintenance. If PDL
subsequently decides not to continue the prosecution or maintenance of an
Antibody Patent directed to a Pre-Opt-In Product, in general or in any
particular country, it promptly shall notify EXEL in writing in reasonably
sufficient time for EXEL to assume such prosecution and maintenance, and shall
take the necessary steps and execute the necessary documents to permit EXEL to
assume such prosecution or maintenance. EXEL shall have the right but not the
obligation to assume such prosecution or maintenance.
(F) COOPERATION. At the request of the Party performing the
prosecution of any patent application under this Section 10.3, the other Party
will cooperate, in all reasonable ways, in connection with the prosecution and
maintenance of all such patent applications. Each Party shall make available to
the other Party or its respective authorized attorneys, agents or
representatives such of its employees or consultants as the other Party in its
reasonable judgment deems necessary in order to assist such other Party with the
prosecution and maintenance of such patents. Each Party shall sign or use
commercially reasonable efforts to have signed at no charge to the other Party
all legal documents necessary in connection with such prosecution and
maintenance.
(G) UPDATES ON DEVELOPMENTS. The Party performing the prosecution of
any patent application under this Section 10.3 shall advise the other Party of
any substantial action or development in the prosecution of such patent
applications and patents, in particular those involving the question of scope or
the issuance, rejection, or revocation, of an interference involving, or an
opposition to any such patent application or patent. In addition, the Party
filing a patent application on a Joint Invention shall provide the other Party
with (a) a draft of such new patent application prior to filing that
application, allowing adequate time for review and comment by the other Party if
possible; provided, however, the filing Party shall not be obligated to delay
the filing of any patent application; and (b) copies of material correspondence
from patent offices concerning patent applications covering such Joint Invention
and a reasonable opportunity to comment on any material responses, amendments or
submissions to be made to such patent offices. Notwithstanding the foregoing,
PDL (with respect to PDL Patents directed to PDL Products) and EXEL (with
respect to EXEL Patents directed to EXEL Products) shall have no obligation to
advise or confer with the other Party with respect to such Patents and shall
prosecute, maintain or abandon such Patents in their sole discretion.
(H) EXPENSES. For any Patents that relate solely to Co-Funded
Products, all costs and expenses for the filing, prosecution (including any
interferences, reissue proceedings and reexaminations) and maintenance of such
Patents shall be [ * ]. For any other Patents, all such costs and expenses shall
be [ * ].
10.4 ENFORCEMENT OF PATENT RIGHTS.
(A) ENFORCEMENT OF PDL PRODUCT PATENTS.
(I) ENFORCEMENT BY PDL. In the event either Party becomes aware
of a suspected infringement of a PDL Product Patent or the institution by a
Third Party of any proceedings for the revocation of, or to invalidate or render
unenforceable, any PDL Product Patent due to the Third Party having an antibody
product against the same target as a Co-Funded Product or an EXEL Product, such
Party shall notify the other Party promptly, and following such notification,
the Parties shall confer. PDL shall have the right, but shall not be obligated,
to bring an infringement action or to defend such proceedings at its own
expense, in its own name and entirely under its own direction and control. EXEL
will reasonably assist PDL in such actions or proceedings if so requested, and
will lend its name to such actions or proceedings if requested by PDL or
required by law [ * ]. EXEL shall have the right to participate and be
represented in any such suit by its own counsel at its own expense. No
settlement of any such action or defense which restricts the scope or affects
the enforceability of a PDL Product Patent that covers an EXEL Product may be
entered into by PDL without the prior consent of EXEL, which consent shall not
be unreasonably withheld.
(II) ENFORCEMENT BY EXEL. If PDL elects not to bring any action
for infringement or to defend any proceeding described in Section 10.4(a)(i) and
so notifies EXEL, then, subject to the rights of any Third Party licensors of
such Patent to PDL, EXEL may bring such action or defend such proceeding at its
own expense, in its own name and entirely under its own direction and control.
PDL will reasonably assist EXEL in any action or proceeding being prosecuted or
defended by EXEL, if so requested by EXEL or required by law at [ * ]. PDL shall
have the right to participate and be represented in any such suit by its own
counsel at its own expense. No settlement of any such action or defense which
restricts the scope or affects the enforceability of PDL Patents may be entered
into by EXEL without the prior consent of PDL, which consent shall not be
unreasonably withheld.
(B) ENFORCEMENT OF EXEL PRODUCT PATENTS.
(I) ENFORCEMENT BY EXEL. In the event either Party becomes aware
of a suspected infringement of an EXEL Product Patent or the institution by a
Third Party of any proceedings for the revocation of, or to invalidate or render
unenforceable, any EXEL Product Patent due to the Third Party having an antibody
product against the same target as a Co-Funded Product or a PDL Product, such
Party shall notify the other Party promptly, and following such notification,
the Parties shall confer. EXEL shall have the right, but shall not be obligated,
to bring an infringement action or to defend such proceedings at its own
expense, in its own name and entirely under its own direction and control. PDL
will reasonably assist EXEL in such actions or proceedings if so requested, and
will lend its name to such actions or proceedings if requested by EXEL or
required by law [ * ]. PDL shall have the right to participate and be
represented in any such suit by its own counsel at its own expense. No
settlement of any such action or defense which restricts the scope or affects
the enforceability of an EXEL Product Patent that covers a Co-Funded Product or
PDL Product may be entered into by EXEL without the prior consent of PDL, which
consent shall not be unreasonably withheld.
(II) ENFORCEMENT BY PDL. If EXEL elects not to bring any action
for infringement or to defend any proceeding described in Section 10.4(b)(i) and
so notifies PDL, then, subject to the rights of any Third Party licensors of
such Patent to EXEL, PDL may bring such action or defend such proceeding at its
own expense, in its own name and entirely under its own direction and control.
EXEL will reasonably assist PDL in any action or proceeding being prosecuted or
defended by PDL, if so requested by PDL or required by law [ * ]. EXEL shall
have the right to participate and be represented in any such suit by its own
counsel at its own expense. No settlement of any such action or defense which
restricts the scope or affects the enforceability of EXEL Patents may be entered
into by PDL without the prior consent of EXEL, which consent shall not be
unreasonably withheld.
(C) ENFORCEMENT OF JOINT PATENTS.
(I) ENFORCEMENT BY PDL. In the event either Party becomes aware
of a suspected infringement of a Joint Patent or the institution by a Third
Party of any proceedings for the revocation of, or to invalidate or render
unenforceable, any Joint Patent, such Party shall notify the other Party
promptly, and following such notification, the Parties shall confer. PDL shall
have the right, but shall not be obligated, to prosecute an infringement action
or to defend such proceedings at its own expense, in its own name and entirely
under its own direction and control. EXEL will reasonably assist PDL in such
actions or proceedings if so requested, and will lend its name to such actions
or proceedings if requested by PDL or required by law [ * ]. EXEL shall have the
right to participate and be represented in any such suit by its own counsel at
its own expense. No settlement of any such action or defense which restricts the
scope or affects the enforceability of a Joint Patent that covers an EXEL
Product may be entered into by PDL without the prior consent of EXEL, which
consent shall not be unreasonably withheld.
(II) ENFORCEMENT BY EXEL. If PDL elects not to bring any action
for infringement or to defend any proceeding described in Section 10.4(c)(i) and
so notifies EXEL, then EXEL may bring such action or defend such proceeding at
its own expense, in its own name and entirely under its own direction and
control. PDL will reasonably assist EXEL in any action or proceeding being
prosecuted or defended by EXEL, if so requested by EXEL or required by law [ *
]. PDL shall have the right to participate and be represented in any such suit
by its own counsel at its own expense. No settlement of any such action or
defense which restricts the scope or affects the enforceability of a Joint
Patent that covers a Co-Funded Product or PDL Product may be entered into by
EXEL without the prior consent of PDL, which consent shall not be unreasonably
withheld.
(D) GENERAL PROVISIONS RELATING TO ENFORCEMENT OF PATENTS.
(I) WITHDRAWAL. If either Party brings such an action or defends
such a proceeding under this Section 10.4 and subsequently ceases to pursue or
withdraws from such action or proceeding, it shall promptly notify the other
Party and the other Party may substitute itself for the withdrawing Party under
the terms of this Section 10.4 at its own expense.
(II) RECOVERIES. In the event either Party exercises the rights
conferred in this Section 10.4 and recovers any damages or other sums in such
action, suit or proceeding or in settlement thereof, such damages or other sums
recovered shall first be applied to all out-of-pocket costs and expenses
incurred by the Parties in connection therewith, including attorneys fees. If
such recovery is insufficient to cover all such costs and expenses of both
Parties, it shall be shared [ * ]. If after such reimbursement any funds shall
remain from such damages or other sums recovered, such funds shall be [ * ].
(E) EXCLUDED PATENTS. Certain patents as identified in Exhibits D-1
and D-2 relating to background technologies of either EXEL or PDL, shall not be
subject to the provisions of Sections 10.3 and 10.4 (a-d).
10.5 TRADEMARKS; PRODUCT PRESENTATION.
(A) CO-FUNDED PRODUCTS. PDL shall own all right title and interest in
and to all trademarks, trade names, service marks and trade dress specifically
developed for and used on or in connection with all Co-Funded Products. PDL
shall be responsible for all decisions regarding the trademarks, service marks
and trade dress used on and in connection with all Co-Funded Products. PDL and
EXEL shall each retain sole and exclusive ownership of their own respective and
independently developed and pre-existing trademarks, trade names, service marks
and trade dress, regardless of whether such trademarks, trade names, service
marks and trade dress are used on or in connection with any Co-Funded Product.
The JCC shall approve all trademarks and service marks used on or in connection
with any Co-Funded Products. Subject to applicable laws, rules and regulations,
any written or visual promotional or educational materials intended for use in
conjunction with Co-Funded Products shall refer to both Parties (where
practical) with substantially equal prominence, and all product labeling and
promotional material regarding the detailing and promoting of such Products
shall display the names and logos of PDL and EXEL (where practical) with
substantially equal prominence.
(B) PDL PRODUCTS. PDL shall own all right title and interest in and to
all trademarks, service marks and trade dress specifically developed by PDL for
and used on or in connection with all PDL Products. PDL shall be responsible for
all decisions regarding the trademarks, service marks and trade dress used on or
in connection with all PDL Products.
(C) EXEL PRODUCTS. EXEL shall own all right title and interest in and
to all trademarks, service marks and trade dress specifically developed by EXEL
for and used on or in connection with all EXEL Products. EXEL shall be
responsible for all decisions regarding the trademarks, service marks and trade
dress used on or in connection with all EXEL Products. PDL agrees to assign
promptly any trademark rights for an EXEL Product to EXEL.
11. CONFIDENTIALITY
11.1 NONDISCLOSURE OF CONFIDENTIAL INFORMATION. All written and oral
Information disclosed by one Party to the other Party pursuant to this Agreement
and characterized as confidential to the receiving Party shall be "Confidential
Information." The Parties agree that during the term of this Agreement, and for
a period of [ * ] after this Agreement expires or terminates, a Party receiving
Confidential Information of the other Party will (i) maintain in confidence such
Confidential Information to the same extent such Party maintains its own
proprietary information of similar kind and value (but at a minimum each Party
shall use commercially reasonable efforts), (ii) not disclose such Confidential
Information to any Third Party without prior written consent of the other Party,
and (iii) not use such Confidential Information for any purpose except those
permitted by this Agreement.
11.2 EXCEPTIONS. The obligations in Section 11.1 shall not apply with
respect to any portion of the Confidential Information that the receiving Party
can show by competent written proof:
(A) Is publicly disclosed by the disclosing Party, either before or
after it is disclosed to the receiving Party hereunder; or
(B) Was known to the receiving Party, without obligation to keep it
confidential, prior to disclosure by the disclosing Party; or
(C) Is subsequently disclosed to the receiving Party by a Third Party
lawfully in possession thereof and without obligation to keep it confidential;
or
(D) Has been published by a Third Party; or
(E) Has been independently developed by the receiving Party without
the aid, application or use of Confidential Information.
11.3 AUTHORIZED DISCLOSURE. A Party may disclose the Confidential
Information belonging to the other Party to the extent such disclosure is
reasonably necessary in any of the following instances:
(A) Filing or prosecuting Patents relating to Sole Inventions, Joint
Inventions or Products;
(B) Regulatory filings relating to Products;
(C) Prosecuting or defending litigation;
(D) Complying with applicable governmental regulations; or
(E) Disclosure, in connection with the performance of this Agreement,
to Affiliates, sublicensees, prospective licensees, research collaborators,
employees, consultants, or agents, each of whom prior to disclosure must be
bound by similar obligations of confidentiality and non-use at least equivalent
in scope to those set forth in this Article 11.
The Parties acknowledge that the terms of this Agreement shall be treated
as Confidential Information of both Parties. Such terms may be disclosed by a
Party to investment bankers, investors, prospective business partners (including
potential acquirers or acquisition targets) and potential investors, each of
whom prior to disclosure must be bound by similar obligations of confidentiality
and non-use at least equivalent in scope to those set forth in this Article 11.
In addition, if required, a copy of this Agreement may be filed by either Party
with the Securities and Exchange Commission. In connection with any such
filing, the filing Party shall endeavor to obtain confidential treatment of
economic and trade secret information and shall consult with the other Party
prior to such filing with respect to determining for which information
confidential treatment should be sought.
11.4 PUBLICITY. The Parties agree that the public announcement of the
execution of this Agreement shall be substantially in the form of the press
release attached as Exhibit C. Any other news release relating to this Agreement
or to the performance hereunder, shall first be reviewed and approved by both
Parties; provided, however, that any disclosure which is required by law as
advised by the disclosing Party's counsel may be made without the prior consent
of the other Party, although the other Party shall be given prompt notice of any
such legally required disclosure and to the extent practicable shall provide the
other Party an opportunity to comment on the proposed disclosure.
11.5 PUBLICATIONS. Neither Party shall publish or present the results of
studies carried out under this Agreement without the opportunity for prior
review by the other Party. Subject to Section 11.3, each Party agrees to provide
the other Party the opportunity to review any proposed abstracts, manuscripts or
presentations (including verbal presentations) which relate to any Target,
Antibody or Product (excluding any Product that has become a PDL Product) at
least [ * ] prior to its intended submission for publication and agrees, upon
request, not to submit any such abstract or manuscript for publication until the
other Party is given a reasonable period of time to secure patent protection for
any material in such publication which it believes to be patentable. Both
Parties understand that a reasonable commercial strategy may require delay of
publication of information for filing of patent applications. The Parties agree
to review and consider delay of publication and filing of patent applications
under certain circumstances. The JSC and JPC will review such requests and
recommend subsequent action. Neither Party shall have the right to publish or
present Confidential Information of the other Party that is subject to Section
11.1. Nothing contained in this Section 11.5 shall prohibit the inclusion of
information necessary for a patent application, except for Confidential
Information of the nonfiling Party, provided the nonfiling Party is given a
reasonable opportunity to review the information to be included prior to
submission of such patent application. Any disputes between the Parties
regarding delaying a publication or presentation to permit the filing of a
patent application shall be referred to the JSC or, for a Co-Funded Product, the
relevant JDC.
12. TERM AND TERMINATION
12.1 TERM. This Agreement shall become effective on the Effective Date and
shall remain in effect until the expiration of the last royalty or profit
sharing payment obligation with respect to any Product, as provided in this
Agreement.
12.2 TERMINATION FOR MATERIAL BREACH.
(A) ENTIRE AGREEMENT. If either Party breaches any material agreement,
condition or covenant of this Agreement, the Note Purchase Agreement or the
Note, or makes any materially false report to the other Party, the Party not in
breach may terminate this Agreement at its option on [ * ] written notice,
subject to the remaining provisions of this Section 12.2; provided however, that
any breach that relates only to a particular Product(s) or only to the
activities under the Collaboration shall be governed by Section 12.2(b) instead
of this Section 12.2(a).
(B) PARTICULAR PRODUCTS OR COLLABORATION. In the case of a breach that
relates only to a particular Product(s) or only to the activities under the
Collaboration, the non-breaching Party, at its option on [ * ] written notice
and subject to the remaining provisions of this Section 12.2, may terminate this
Agreement as to the particular Product(s) to which such breach relates,
(provided, however, that after such time as the breaching Party has first filed
for Regulatory Approval of a Product, the non-breaching Party may terminate the
breaching Party's rights to such Product only in those countries to which such
breach relates) or in the case of a breach relating only to the activities under
the Collaboration, the non-breaching Party may terminate the Collaboration under
this Agreement, but this Agreement shall continue in full force and effect with
respect to all Products. In the event of a breach by PDL with respect to a
particular Co-Funded Product, then EXEL, as an alternative to terminating the
Agreement as to such Product as provided above, may instead, on providing [ * ]
written notice to PDL, elect to terminate PDL's rights to such Co-Funded Product
on the same terms as if PDL had voluntarily terminated its rights to such
Co-Funded Product under Section 5.9(c).
(C) RIGHT TO CURE. In any notice of breach under this Section 12.2,
the non-breaching Party shall identify the actions or conduct that such Party
considers to be a material breach and specify conduct or actions that the
notifying Party would consider to be an acceptable cure of such breach. No
termination of this Agreement or the Collaboration or of rights relating to a
particular Product or country pursuant to Section 12.2(a) or (b) shall become
effective unless such breach shall not have been remedied, or steps initiated to
remedy the same to the non-breaching Party's reasonable satisfaction, within [ *
] after written notice thereof to the breaching Party, or, in case the breach is
a failure to make any payment when due, within [ * ] after such notice.
(D) DISPUTES. If a Party gives notice of termination under this
Section 12.2 and the other Party disputes whether such notice was proper, then
the issue of whether this Agreement has been terminated shall be resolved in
accordance with Section 15.1. If, as a result of such dispute resolution process
it is determined that the notice of termination was proper, then such
termination shall be deemed to have been effective on the effective date of the
notice of termination. If as a result of such dispute resolution process it is
determined that the notice of termination was improper, then no termination
shall have occurred and this Agreement shall have remained in effect.
12.3 TERMINATION OR EXPIRATION OF RESEARCH FUNDING/COLLABORATION. PDL and
EXEL shall have their respective rights to terminate Research Funding as
described in Section 9.2, which shall have the effect of terminating the
Research Term. Upon such termination or upon expiration of the Research Term,
the Collaboration under this Agreement shall terminate, but all other rights and
obligations under this Agreement shall continue. If either Party terminates the
Collaboration pursuant to Section 12.2, any Research Funding paid by PDL for any
time period beyond the effective date of such termination shall be immediately
refunded by EXEL to PDL. The termination or expiration of the Collaboration
shall not affect any rights of PDL to any Targets, Antibodies or Products
resulting from the Collaboration prior to its termination or expiration.
12.4 EFFECT OF TERMINATION OF ENTIRE AGREEMENT OR RIGHTS TO PARTICULAR
PRODUCT. Upon termination of this Agreement in its entirety pursuant to Section
12.2(a), all licenses granted to the breaching Party under this Agreement shall
terminate and the breaching Party shall return to the non-breaching Party all
materials and Information delivered under this Agreement by the non-breaching
Party to the breaching Party, except as provided in Section 12.5. Upon
termination of this Agreement pursuant to Section 12.2(b) with respect to a
particular Product, all licenses granted to the breaching Party under this
Agreement with respect to that Product (for the countries in which such rights
are being terminated) shall terminate and, if such termination is for all
countries, the breaching Party shall return to the non-breaching Party all
materials and Information delivered under this Agreement by the non-breaching
Party to the breaching Party relating to that Product, except as provided in
Section 12.5.
12.5 INVENTORY. Upon termination of this Agreement in its entirety or with
respect to a particular Product for which Regulatory Approval has been obtained,
the breaching Party shall have all rights necessary to sell within [ * ] of such
termination any such Product in its or its Affiliates' or sublicensee's
inventory on the date of such termination, which have not previously been sold
("Inventory"); provided, however that the breaching Party shall pay the
royalties due on such Inventory and provide related reports in the amounts and
manner provided for in Article 9.
12.6 SURVIVAL.
(A) In the event of termination of this Agreement for any reason other
than material breach pursuant to Section 12.2, in addition to those Sections
which by their terms survive, the following provisions of this Agreement shall
also survive: Articles 1, 5, 6, 7, 8 10, 11, 12, and 15 and Sections 9.3 - 9.17,
14.1 and 14.2.
(B) In the event of termination of this Agreement pursuant to Section
12.2, the provisions of this Agreement referenced in Section 12.6(b) shall
survive, provided, however, that any licenses granted under this Agreement in
favor of the breaching Party shall terminate. In such case, the non-breaching
Party shall continue to hold the licenses granted hereunder, subject to the
royalties set forth herein.
(C) In any event, termination of this Agreement shall not relieve the
Parties of any liability or obligation which accrued hereunder prior to the
effective date of such termination, nor preclude either Party from pursuing all
rights and remedies it may have hereunder or at law or in equity with respect to
any breach of this Agreement, nor prejudice either Party's right to obtain
performance of any obligation.
13. REPRESENTATIONS AND COVENANTS
13.1 MUTUAL AUTHORITY. EXEL and PDL each represents and warrants to the
other that (a) it has the authority and right to enter into and perform this
Agreement and (b) its execution, delivery and performance of this Agreement will
not conflict in any material fashion with the terms of any other agreement to
which it is or becomes a party or by which it is or becomes bound.
13.2 REPRESENTATIONS BY EXEL.
(A) EXEL [ * ].
(B) To its knowledge, EXEL, as of the Effective Date, owns or has a
valid license to use all technology it anticipates using in the Collaboration.
13.3 RIGHTS IN TECHNOLOGY. During the term of this Agreement, each Party
will use Diligent Efforts not to diminish the rights under its Patents or Joint
Patents granted to each other herein, including without limitation by not
committing or permitting any acts or omissions which would cause the breach of
any agreements between itself and Third Parties which provide for intellectual
property rights applicable to the development, manufacture, use or sale of
Products. Each Party agrees to provide promptly the other Party with notice of
any such alleged breach. As of the Effective Date, each Party is in compliance
in all material respects with any aforementioned agreements with Third Parties.
13.4 PERFORMANCE BY AFFILIATES. The Parties recognize that each may
perform some or all of its obligations under this Agreement through Affiliates,
provided, however, that each Party shall remain responsible and be guarantor of
the performance by its Affiliates and shall cause its Affiliates to comply with
the provisions of this Agreement in connection with such performance.
14. INDEMNIFICATION AND LIMITATION OF LIABILITY
14.1 INDEMNIFICATION.
(A) PDL PRODUCTS. PDL hereby agrees to defend and hold harmless EXEL
and its agents and employees from and against any and all suits, claims,
actions, demands, liabilities, expenses and/or loss, including reasonable legal
expenses and reasonable attorneys' fees ("Losses") resulting directly or
indirectly from the manufacture, use, testing, handling, storage, sale or other
disposition of PDL Products by PDL or its Affiliates, agents or sublicensees
except to the extent such Losses result from the negligence or wrongdoing of
EXEL.
(B) EXEL PRODUCTS. EXEL hereby agrees to defend and hold harmless PDL
and its agents and employees from and against any and all Losses resulting
directly or indirectly from the manufacture, use, testing, handling, storage,
sale or other disposition of EXEL Products by EXEL or its Affiliates, agents or
sublicensees except to the extent such Losses result from the negligence or
wrongdoing of PDL.
(C) GENERAL INDEMNIFICATION PROVISIONS. In the event that a Party is
seeking indemnification under this Section 14.1, it shall inform the other Party
of a claim as soon as reasonably practicable after it receives notice of the
claim, shall permit the other Party to assume direction and control of the
defense of the claim (including the right to settle the claim solely for
monetary consideration), and shall cooperate as requested by the other Party (at
the expense of the other Party) in the defense of the claim.
(D) CO-FUNDED PRODUCTS. In the event of any Losses to either Party
resulting directly or indirectly from the manufacture, use, testing, handling,
storage, sale or other disposition of Co-Funded Products by either Party or
their Affiliates, agents or sublicensees, such [ * ] or if no Regulatory
Approval has occurred for the Co-Funded Product, then such [ * ] for that
Co-Funded Product.
14.2 LIMITATION OF LIABILITY. EXCEPT AS SPECIFICALLY PROVIDED IN SECTION
14.1, IN NO EVENT SHALL EITHER PARTY, ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS
OR AFFILIATES BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL,
SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES, WHETHER BASED UPON A CLAIM OR
ACTION OF CONTRACT, WARRANTY, NEGLIGENCE, STRICT LIABILITY OR OTHER TORT, OR
OTHERWISE, ARISING OUT OF THIS AGREEMENT. For clarification, the foregoing
sentence shall not be interpreted to limit or to expand the express rights
specifically granted in the sections of this Agreement.
14.3 PRODUCT LIABILITY INSURANCE. Any Party developing a Product shall
carry product liability insurance of not less than [ * ]. Such product liability
insurance shall be in effect not later than the first administration of a
Product in humans. Notwithstanding the foregoing, a Party may self-insure for
product liability claims if the Party then has current assets of at least [ * ].
15. MISCELLANEOUS
15.1 DISPUTE RESOLUTION. In the event of any controversy or claim arising
out of, relating to or in connection with any provision of this Agreement, other
than a dispute addressed in Sections 3.7 or 15.3, the Parties shall try to
settle their differences amicably between themselves first, by referring the
disputed matter to an appropriate Vice President (or higher level officer) of
each Party and, if not resolved by such officers, by referring the disputed
matter to the respective Chief Executive Officers of each Party. Either Party
may initiate such informal dispute resolution by sending written notice of the
dispute to the other Party, and, within twenty (20) days after such notice, such
representatives of the Parties shall meet for attempted resolution by good faith
negotiations. If such personnel are unable to resolve such dispute within thirty
(30) days of their first meeting of such negotiations, either Party may seek to
have such dispute resolved in any United States federal court of competent
jurisdiction and appropriate venue. The Parties hereby consent to jurisdiction
in the United States federal courts. If, notwithstanding such consent, United
States federal courts would not have proper jurisdiction over a dispute, then
such dispute may be submitted to any state court in the United States with
proper jurisdiction and venue. The Parties agree that, except as provided in
Section 15.3, any dispute under this Agreement shall be submitted exclusively to
a state or federal court in the United States.
15.2 GOVERNING LAW. Resolution of all disputes arising out of or related to
this Agreement or the performance, enforcement, breach or termination of this
Agreement and any remedies relating thereto, shall be governed by and construed
under the substantive laws of the State of California, as applied to agreements
executed and performed entirely in the State of California by residents of the
State of California, without regard to conflicts of law rules.
15.3 PATENTS AND TRADEMARKS. Any dispute, controversy or claim relating to
the scope, validity, enforceability or infringement of any Patent rights
covering the manufacture, use or sale of any Product or of any trademark rights
related to any Product shall be submitted to a court of competent jurisdiction
in the territory in which such Patent or trademark rights were granted or arose.
15.4 ENTIRE AGREEMENT; AMENDMENT. This Agreement sets forth the complete,
final and exclusive agreement and all the covenants, promises, agreements,
warranties, representations, conditions and understandings between the Parties
hereto and supersedes and terminates all prior agreements and understandings
between the Parties. There are no covenants, promises, agreements, warranties,
representations, conditions or understandings, either oral or written, between
the Parties other than as are set forth herein and therein. No subsequent
alteration, amendment, change or addition to this Agreement shall be binding
upon the Parties unless reduced to writing and signed by an authorized officer
of each Party.
15.5 EXPORT CONTROL. This Agreement is made subject to any restrictions
concerning the export of products or technical information from the United
States or other countries which may be imposed upon or related to EXEL or PDL
from time to time. Each Party agrees that it will not export, directly or
indirectly, any technical information acquired from the other Party under this
Agreement or any products using such technical information to a location or in a
manner that at the time of export requires an export license or other
governmental approval, without first obtaining the written consent to do so from
the appropriate agency or other governmental entity.
15.6 BANKRUPTCY.
(A) All rights and licenses granted under or pursuant to this
Agreement, including amendments hereto, by each Party to the other Party are,
for all purposes of Section 365(n) of Title 11 of the United States Code ("Title
11"), licenses of rights to intellectual property as defined in Title 11. Each
Party agrees during the term of this Agreement to create and maintain current
copies or, if not amenable to copying, detailed descriptions or other
appropriate embodiments, to the extent feasible, of all such intellectual
property. If a case is commenced by or against either Party (the "Bankrupt
Party") under Title 11, then, unless and until this Agreement is rejected as
provided in Title 11, the Bankrupt Party (in any capacity, including
debtor-in-possession) and its successors and assigns (including, without
limitation, a Title 11 Trustee) shall, at the election of the Bankrupt Party
made within sixty (60) days after the commencement of the case (or, if no such
election is made, immediately upon the request of the non-Bankrupt Party) either
(i) perform all of the obligations provided in this Agreement to be performed by
the Bankrupt Party including, where applicable and without limitation, providing
to the non-Bankrupt Party portions of such intellectual property (including
embodiments thereof) held by the Bankrupt Party and such successors and assigns
or otherwise available to them or (ii) provide to the non-Bankrupt Party all
such intellectual property (including all embodiments thereof) held by the
Bankrupt Party and such successors and assigns or otherwise available to them.
(B) If a Title 11 case is commenced by or against the Bankrupt Party
and this Agreement is rejected as provided in Title 11 and the non-Bankrupt
Party elects to retain its rights hereunder as provided in Title 11, then the
Bankrupt Party (in any capacity, including debtor-in-possession) and its
successors and assigns (including, without limitations, a Title 11 Trustee)
shall provide to the non-Bankrupt Party all such intellectual property
(including all embodiments thereof) held by the Bankrupt Party and such
successors and assigns or otherwise available to them immediately upon the
non-Bankrupt Party's written request therefor. Whenever the Bankrupt Party or
any of its successors or assigns provides to the non-Bankrupt Party any of the
intellectual property licensed hereunder (or any embodiment thereof) pursuant to
this Section 15.6, the non-Bankrupt Party shall have the right to perform the
obligations of the Bankrupt Party hereunder with respect to such intellectual
property, but neither such provision nor such performance by the non-Bankrupt
Party shall release the Bankrupt Party from any such obligation or liability for
failing to perform it.
(C) All rights, powers and remedies of the non-Bankrupt Party provided
herein are in addition to and not in substitution for any and all other rights,
powers and remedies now or hereafter existing at law or in equity (including,
without limitation, Title 11) in the event of the commencement of a Title 11
case by or against the Bankrupt Party. The non-Bankrupt Party, in addition to
the rights, power and remedies expressly provided herein, shall be entitled to
exercise all other such rights and powers and resort to all other such remedies
as may now or hereafter exist at law or in equity (including, without
limitation, under Title 11) in such event. The Parties agree that they intend
the foregoing non-Bankrupt Party rights to extend to the maximum extent
permitted by law and any provisions of applicable contracts with Third Parties,
including without limitation for purposes of Title 11, (i) the right of access
to any intellectual property (including all embodiments thereof) of the Bankrupt
Party or any Third Party with whom the Bankrupt Party contracts to perform an
obligation of the Bankrupt Party under this Agreement, and, in the case of the
Third Party, which is necessary for the development, registration and
manufacture of Products, and (ii) the right to contract directly with any Third
Party described in Section 15.6(c)(i) to complete the contracted work. Any
intellectual property provided pursuant to the provisions of this Section 15.6
shall be subject to the licenses set forth in this Agreement and the payment
obligations of this Agreement, which shall be deemed to be royalties for
purposes of Title 11.
15.7 FORCE MAJEURE. Both Parties shall be excused from the performance of
their obligations under this Agreement to the extent that such performance is
prevented by force majeure and the nonperforming Party promptly provides notice
of the prevention to the other Party. Such excuse shall be continued so long as
the condition constituting force majeure continues and the nonperforming Party
takes reasonable efforts to remove the condition. For purposes of this
Agreement, force majeure shall include conditions beyond the control of the
Parties, including without limitation, an act of God, voluntary or involuntary
compliance with any regulation, law or order of any government, war, civil
commotion, labor strike or lock-out, epidemic, failure or default of public
utilities or common carriers, destruction of production facilities or materials
by fire, earthquake, storm or like catastrophe; provided, however, the payment
of invoices due and owing hereunder shall not be delayed by the payer because of
a force majeure affecting the payer.
15.8 NOTICES. Any notice required or permitted to be given under this
Agreement shall be in writing, shall specifically refer to this Agreement and
shall be deemed to have been sufficiently given for all purposes if sent by
express delivery service or personally delivered, or by facsimile or electronic
mail and confirmed by first class mail. Unless otherwise specified in writing,
the mailing addresses of the Parties shall be as described below.
For EXEL: Exelixis, Inc.
170 Harbor Way
P.O. Box 511
South San Francisco, CA 94083-0511
Attention: Chief Executive Officer
With a copy to: Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306-2155
Attention: Robert L. Jones, Esq.
For PDL: Protein Design Labs, Inc.
34801 Campus Drive
Fremont, CA 94555-3606
Attention: Chief Executive Officer
With a copy to: Protein Design Labs, Inc.
34801 Campus Drive
Fremont, CA 94555-3606
Attention: General Counsel
15.9 CONSENTS NOT UNREASONABLY WITHHELD OR DELAYED. Whenever provision is
made in this Agreement for either Party to secure the consent or approval of the
other, that consent or approval shall not unreasonably be withheld or delayed,
and whenever in this Agreement provisions are made for one Party to object to or
disapprove a matter, such objection or disapproval shall not unreasonably be
exercised.
15.10 UNITED STATES DOLLARS. References in this Agreement to "Dollars" or
"$" shall mean the legal tender of the United States.
15.11 NO STRICT CONSTRUCTION. This Agreement has been prepared jointly and
shall not be strictly construed against either Party.
15.12 ASSIGNMENT. Neither Party may assign or transfer this Agreement or
any rights or obligations hereunder without the prior written consent of the
other, except a Party may make such an assignment without the other Party's
consent to an Affiliate or to a successor to substantially all of the business
of such Party, whether in a merger, sale of stock, sale of assets or other
transaction. Any permitted successor or assignee of rights and/or obligations
hereunder shall, in writing to the other Party, expressly assume performance of
such rights and/or obligations. Any permitted assignment shall be binding on the
successors of the assigning Party. Any assignment or attempted assignment by
either Party in violation of the terms of this Section 15.12 shall be null and
void and of no legal effect.
15.13 ELECTRONIC DATA INTERCHANGE. If both Parties elect to facilitate
business activities hereunder by electronically sending and receiving data in
agreed formats (also referred to as Electronic Data Interchange or "EDI") in
substitution for conventional paper-based documents, the terms and conditions of
this Agreement shall apply to such EDI activities.
15.14 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
15.15 FURTHER ACTIONS. Each Party agrees to execute, acknowledge and
deliver such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.
15.16 SEVERABILITY. If any one or more of the provisions of this Agreement
is held to be invalid or unenforceable by any court of competent jurisdiction
from which no appeal can be or is taken, the provision shall be considered
severed from this Agreement and shall not serve to invalidate any remaining
provisions hereof. The Parties shall make a good faith effort to replace any
invalid or unenforceable provision with a valid and enforceable one such that
the objectives contemplated by the Parties when entering this Agreement may be
realized.
15.17 AMBIGUITIES. Ambiguities, if any, in this Agreement shall not be
construed against any Party, irrespective of which Party may be deemed to have
authored the ambiguous provision.
15.18 HEADINGS. The headings for each article and section in this Agreement
have been inserted for convenience of reference only and are not intended to
limit or expand on the meaning of the language contained in the particular
article or section.
15.19 NO WAIVER. Any delay in enforcing a Party's rights under this
Agreement or any waiver as to a particular default or other matter shall not
constitute a waiver of such Party's rights to the future enforcement of its
rights under this Agreement, excepting only as to an express written and signed
waiver as to a particular matter for a particular period of time.
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.
PROTEIN DESIGN LABS, INC. EXELIXIS, INC.
By: /s/ Laurence Jay Korn By: /s/ George Scangos
------------------------ --------------------
Laurence Jay Korn George A. Scangos
Chairperson and Chief Chief Executive Officer
Executive Officer
[ * ] = 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.
LIST OF EXHIBITS
Exhibit A - Research Plan
Exhibit B - Product Profit Calculation
Exhibit C - Form of Press Release
Exhibit D-1 - EXEL Background Patents
Exhibit D-2 - PDL Background Patents
D-2.
A-1.
EXHIBIT A
RESEARCH PLAN
[ * ]
A1
EXHIBIT A1
Entrypoints for Genetic Screens -
Proposed or Initiated in Oncology Program
[ * ]
EXHIBIT B
PRODUCT PROFIT CALCULATION
[ * ]
EXHIBIT C
For Immediate Release
-----------------------
Contacts: Robert L. Kirkman, M.D. Glen Y. Sato
Vice President, Business Development Chief Financial Officer
and Corporate Communications Exelixis, Inc.
Protein Design Labs, Inc. (650) 837-7565
(510) 574-1419, rkirkman@pdl.com gsato@exelixis.com
PROTEIN DESIGN LABS AND EXELIXIS ANNOUNCE
ONCOLOGY ANTIBODY DRUG DISCOVERY COLLABORATION
FREMONT and SOUTH SAN FRANCISCO, CA - May 22, 2001 - Protein Design Labs,
Inc. (Nasdaq: PDLI) (PDL) and Exelixis, Inc. (Nasdaq: EXEL) (Exelixis) announced
today a collaboration to discover and develop humanized antibodies for the
diagnosis, prevention and treatment of cancer. The collaboration will utilize
Exelixis' model organism genetics technology for the identification of new
cancer drug targets, and PDL's antibody and clinical development expertise to
create and develop new antibody drug candidates. PDL will provide Exelixis with
$4.0 million in annual research funding for two or more years, and has purchased
a $30.0 million note convertible after the first year of the collaboration into
shares of Exelixis common stock.
George A. Scangos, Ph.D., President and Chief Executive Officer of
Exelixis, said, "We're pleased to be working with PDL, a leader in the
development of humanized antibodies, and are already in a position to deliver
our first targets under this collaboration. PDL is committed to a high-quality
pipeline of anti-cancer antibody products, and I am pleased that PDL has
recognized the value in our oncology target portfolio. The direct cash value to
Exelixis is substantial, and there is considerably more value in the
co-development rights that Exelixis has in this program, and in the resources
that PDL will bring to the collaboration. This relationship is consistent with
Exelixis' strategy of moving towards the market and capturing increasing value
from the results of our research, and is a strong complement to our internal
efforts directed towards finding small molecule therapeutics for cancer."
Laurence Jay Korn, Ph.D., Chief Executive Officer and Chairperson of
Protein Design Labs, said, "PDL has seven antibodies in clinical development,
including Zamyl (anti-CD33) and Remitogen (anti-HLA-DR) for potential cancer
indications, and Nuvion (anti-CD3) for the treatment of graft versus host
disease. This collaboration provides PDL with an opportunity to expand our
pipeline of oncology drugs with new antibodies that specifically block the
initiation or progression of cancer, using the model organism genetic approach
of Exelixis to identify novel targets. The Exelixis technology is designed to
provide information about the function of a target at an early stage, which mav
be quite valuable, as we believe antibodies for cancer are likely to work best
when they interfere with a function necessary for cell growth or proliferation,
or when they induce apoptosis."
Under the terms of the collaborative agreement, PDL will receive an
exclusive, worldwide license to develop antibodies against certain targets
identified by Exelixis that are involved in cell growth, apoptosis (cell death)
and proliferation. This approach may provide potential targets for developing
novel humanized antibodies for the treatment of cancer using PDL's proprietary
SMART antibody technology. Exelixis will have the right to co-fund and
co-develop antibodies resulting from the collaboration. For antibody products
developed by PDL that Exelixis elects not to co-develop, Exelixis will be
entitled to specified milestone payments and royalty payments on any product
sales.
Protein Design Labs, Inc. is a leader in the development of humanized
antibodies to prevent or treat various disease conditions. PDL currently has
antibodies under development for autoimmune and inflammatory conditions, asthma
and cancer. PDL holds fundamental patents in the U.S., Europe and Japan for its
antibody humanization technology. Further information is available at
www.pdl.com.
Exelixis, Inc. is a leading life sciences biotechnology company focused on
product development through its expertise in comparative genomics and model
system genetics. These technologies provide a rapid, efficient and
cost-effective way to move from DNA sequence data to knowledge about the
function of genes and the proteins that they encode. Exelixis' technology is
broadly applicable to all life science industries including pharmaceutical,
diagnostic, agricultural biotechnology and animal health. Exelixis has
partnerships with Aventis, Bayer, Pharmacia, Bristol-Myers Squibb and Dow
AgroSciences and is building its internal development program in the area of
oncology. For more information, please visit Exelixis' web site at
www.exelixis.com.
This press release contains certain forward-looking statements that involve
risks and uncertainties that may affect our business, as more fully discussed in
the "Risk Factors" section of our filings with the U.S. Securities and Exchange
Commission. These risks and uncertainties include, but are not limited to, our
ability successfully to collaborate and identify novel targets and develop
potential products from the collaboration. Exelixis and PDL direct the reader to
our respective SEC filings, including our respective Annual Reports on Form 10-K
for the year ended December 31, 2000. The information in this press release is
current as of its release date. Neither party assumes responsibility to update
the information.
Exelixis and the Exelixis logo are registered U.S. trademarks of Exelixis, Inc.
Protein Design Labs, the PDL logo and SMART are registered U.S. trademarks and
Zamyl, Remitogen and Nuvion are U.S. trademarks of Protein Design Labs, Inc.
EXHIBIT D-1
THIRD PARTY TECHNOLOGY
[ * ]
EXHIBIT D-2
PDL EXCLUDED PATENTS
[ * ]
[ * ] = 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.