Collaborative Research Agreement With Pfizer, Inc.

CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS AGREEMENT HAVE BEEN REDACTED AND HAVE BEEN FILED SEPARATELY WITH THE COMMISSION.]


EXHIBIT 10.19


COLLABORATIVE RESEARCH AGREEMENT


This COLLABORATIVE RESEARCH AGREEMENT (" Agreement" ) is entered into as of September 30,2001 by and between PFIZER INC, a Delaware corporation, having an office at 235 East 42nd Street, New York, New York 10017 and its Affiliates (" Pfizer" ), and XENOGEN BIOSCIENCES (" Xenogen Cranbury" ), an Ohio Corporation, with an office at 5 Cedar Brook Drive, Cranbury, NJ 08512, and a wholly owned subsidiary of Xenogen Corp. (" Xenogen" ).


RECITALS

WHEREAS, Pfizer wishes to create, house, breed, and genotype Transgenic Animals to use in performing phenotypic analysis, according to the 2000 Research Agreement between Pfizer and Xenogen Cranbury; and


WHEREAS, Pfizer has targeting vectors, Southern probes, cell lines and screening strategy for developing individual Transgenic Animals;

WHEREAS, Xenogen Cranbury has expertise in creating, housing, breeding and genotyping Transgenic Animals; and

WHEREAS, Xenogen Cranbury desires to collaborate with Pfizer on the development of such Transgenic Animals;


NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein, Xenogen Cranbury and Pfizer agree as follows:

DEFINITIONS .

Whenever used in this Agreement, the terms defined in this Section 1 shall have the meanings specified.

1.1 " Affiliate" means, with respect to Pfizer, any legal entity controlling, controlled by, or under common control with Pfizer; and with respect to Xenogen Cranbury, any legal entity controlling, controlled by, or under common control with Xenogen Cranbury; where, in all cases, " control" means the ownership, directly or indirectly, of fifty percent (50%) or more of the voting capital shares or similar voting securities of the other entity.

1.2 " Area" means research and development of Transgenic Animals as specified in the Research Plan.

1.3 " Contract Period" means the period beginning on the Effective Date and ending on the date on which this Agreement terminates, pursuant to Section 8.

1.4 " Contract Research Service" means a research service performed for a Third Party for a fee or other consideration.

1.5 " DBA Cell Line" means an embryonic stem cell line derived from the [***] mouse strain that Pfizer delivers to Xenogen Cranbury under the terms of this Agreement.


1.6 " Effective Date" means October 30, 2001


1.7 " 215 Patent" means methods claimed in the U.S. Patent No. 5,789,215 entitled " Gene Targeting in Animal Cells Using Isogenic DNA Constructs" and all continuation-in-part, divisions, extensions and reissues thereof.


1.8 " PNS Patent" means methods claimed in U.S. Patent 5,464,764 entitled " Positive- Negative Selection Methods and Vectors" and all continuations, continuations-in-part, divisions, extensions and reissues thereof.

1.9 " Pfizer Materials" means any materials, including, but not limited to targeting vectors, cell lines, DBA Cell Line, Southern probes and screening strategies, that Pfizer delivers to Xenogen Cranbury under this Agreement.


1.10 " Pfizer Confidential Information" means (a) Program Technology and (b) Pfizer Technology, which Pfizer discloses to Xenogen Cranbury and designates as " Confidential," where such disclosure is either in writing or within 30 days of such disclosure Pfizer provides Xenogen Cranbury a memorandum identifying the disclosure and characterizing it as confidential. Notwithstanding the foregoing, " Pfizer Confidential Information" shall not include any information that (i) at the time of disclosure to Xenogen Cranbury, is already known by Xenogen Cranbury other than by virtue of a prior confidential disclosure to Xenogen Cranbury by Pfizer; or (ii) is or becomes disclosed in published literature, or otherwise is or becomes generally known to the public, in each case through no fault or omission of Xenogen Cranbury; or (iii) is obtained by Xenogen Cranbury from a third party free from any obligation of confidentiality to Pfizer.

1.11 " Pfizer Technology" means (a) Technology developed prior to the Effective Date by employees of, or consultants to, Pfizer acting alone or jointly with third parties (but, in the case of consultants or third parties, only to the extent Pfizer has the right to grant rights to such Technology); (b) Pfizer Materials; and (c) ' 215 Patent.

1.12 " Program Technology" means Results, Transgenic Animals and Technology developed, in the course of performing the Research Program by employees of or consultants to Pfizer or Xenogen Cranbury solely or jointly with each other, and excluding all improvements to Xenogen Cranbury Technology.

1.13 " Research Plan" means the written plan describing the research and development in the Area to be carried out during the Contract Period by Pfizer and Xenogen Cranbury pursuant to this Agreement. The Research Plan is attached to and made a part of this Agreement as Exhibit A. The Research Plan may be amended from time to time by agreement of the parties. Any such amended Research Plan shall be appended hereto as an Exhibit.

1.14 " Research Program" is the collaborative research program in the Area conducted by Pfizer and Xenogen Cranbury pursuant to the Research Plan.

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1.15 " Results" means any data or information generated by either party in the course of performing the Research Program.


1.16 " Technology" means and includes all materials, technology, technical data and information, inventions, methods, know-how, expertise and trade secrets within the Area.


1.17 " Third Party" means any party other than Pfizer, Xenogen, or Xenogen Cranbury.

1.18 " Transgenic Animal" means any genetically modified mouse developed under this Agreement, pursuant to the ' 215 Patent and/or the PNS Patent.


1.19 " Xenogen Cranbury Technology" means (a) the PNS Patent and (b) Technology that is or was developed by employees of, or consultants to, Xenogen Cranbury alone or jointly with third parties prior to the Effective Date, but, in the case of consultants or third parties, only to the extent Xenogen Cranbury has the right to grant rights to such Technology, and specifically excluding, in all cases: (i) any Technology concerning or relating to in vivo imaging; and (ii) light-producing cells, micro-organisms or animals; and (iii) other Technologies intended for use with (i) or (ii).

1.20 " Xenogen Cranbury Confidential Information" means (a) improvements to Xenogen Cranbury Technology made in connection with the Research Program; and (b) Xenogen Cranbury Technology which Xenogen Cranbury discloses to Pfizer and designates as " Confidential," where such disclosure is either in writing or within 30 days of such disclosure Xenogen Cranbury provides Pfizer a memorandum identifying the disclosure and characterizing it as confidential. Notwithstanding the foregoing, " Xenogen Cranbury Confidential Information" shall not include any information that (i) at the time of disclosure to Pfizer, is already known by Pfizer other than by virtue of a prior confidential disclosure to Pfizer by Xenogen Cranbury; or (ii) is or becomes disclosed in published literature, or otherwise is or becomes generally known to the public, in each case through no fault or omission of Pfizer; or (iii) is obtained by Pfizer from a third party free from any obligation of confidentiality to Xenogen Cranbury.

1.21 " 2000 Research Agreement" means the collaborative research agreement between Pfizer and Xenogen Cranbury dated December 28, 2000 attached to and made a part of this Agreement as Exhibit B.


2. COLLABORATIVE RESEARCH PROGRAM


2.1 Purpose . Xenogen Cranbury and Pfizer each shall conduct their respective responsibilities of the Research Program as set forth in the Research Plan throughout the Contract Period. The objective of the Research Program is to create, house, breed and genotype Transgenic Animals to use in performing phenotypic analysis, according to the 2000 Research Agreement.

2.2 Research Committee

2.2.1 Purpose . Pfizer and Xenogen Cranbury shall establish a Research Committee (the " Research Committee" ):


(a) to review and evaluate progress under the Research Plan;


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(b) to prepare amendments to the Research Plan and evaluate the need for extensions to the Agreement; and


(c) to coordinate and monitor publication of Results as provided under Section 4.7 of this Agreement, and to coordinate the exchange of information and materials that relate to the Research Program (this function shall survive termination of this Agreement for five (5) years).

2.2.2 Membership . Each of Pfizer and Xenogen Cranbury shall appoint, in its sole discretion, three (3) members to the Research Committee. Each party may replace its respective Research Committee members at any time, with prior written notice to the other party hereto. The parties initially appoint the following members:


Pfizer Appointees:

Andrew Reaume

Rosalba Sacca Kelly Longo

Xenogen Cranbury Appointees:

David Grass

Satbir Kaur (third member to be identified)


2.2.3 Chair . The Research Committee shall be chaired by two co-chairpersons, one appointed by Pfizer and the other appointed by Xenogen Cranbury.

2.2.4 Meetings . The Research Committee shall meet at least quarterly, at places selected by each party in turn, and on dates mutually agreed by the parties. The location of the first meeting of the Research Committee shall be at Pfizer' s election. Representatives of Pfizer or Xenogen Cranbury or both, in addition to members of the Research Committee, may attend such meetings at the invitation of either party. Any materials to be submitted to the members of the Research Committee shall be delivered to each member not less than five (5) business days before the meeting.

2.2.5 Minutes . The Research Committee shall keep accurate minutes of its deliberations which record all proposed decisions and all actions recommended or taken. Drafts of the minutes shall be delivered to all Research Committee members within five (5) business days after each meeting. The party choosing the location for the meeting shall be responsible for the preparation and circulation of the draft minutes. Draft minutes shall be edited by the co-chairpersons and shall be issued in final form only with their approval and agreement.


2.2.6 Decisions . All decisions of the Research Committee shall be made by mutual agreement except that Pfizer, in its sole discretion, shall decide the overall direction of the Research Program.


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2.2.7 Expenses . Pfizer and Xenogen Cranbury shall each bear all expenses, including reasonable travel, related to the participation of their respective designated members of the Research Committee.

2.3 Reports and Materials .

2.3.1 Reports . During the Contract Period, Xenogen Cranbury shall furnish to the Research Committee:

(a) summary written reports within fifteen (15) days after the end of each three-month period commencing on the Effective Date, describing the progress under the Research Plan; and

(b) a comprehensive written report within thirty (30) days after the end of the Contract Period, describing in detail the work accomplished by it under the Research Plan during the Contract Period and discussing and evaluating the results of such work.

2.3.2 Materials . During the Contract Period, each party shall provide the other, to the extent necessary for the receiving party to perform its responsibilities under the Research Plan, with Pfizer Materials, which is part of Pfizer Technology, Xenogen Cranbury Technology or Program Technology; provided, however that Xenogen Cranbury shall, upon request, deliver to Pfizer samples of any material made pursuant to the Research Plan. Such supply of Pfizer Materials and Technology shall be in accordance with the Research Plan, or as a party may otherwise reasonably request from time to time and the other party agrees to provide. To the extent that the quantities of materials requested and supplied by the parties exceed the quantities required to be provided under the Research Plan, the requesting party shall reimburse the other for the reasonable costs of such materials. Each party shall use and store such materials in accordance with all applicable laws and regulations, shall exert due care in so doing, and shall return unused portions to the appropriate party.

2.4 Laboratory Facilities and Personnel . Xenogen Cranbury and Pfizer each shall provide laboratory facilities, equipment and personnel, in each case suitable to the need, for carrying out the Research Program.

2.5 Diligent Efforts . Pfizer and Xenogen Cranbury each shall use reasonably diligent efforts to achieve the objectives of the Research Program.


2.6 Key Investigators . If Drs. Satbir Kaur' s and David Grass' s collective employment with Xenogen Cranbury ends for any reason and the parties are unable to agree on a successor reasonably acceptable to Pfizer, Pfizer may terminate this Agreement pursuant to Section 8.

2.7 Delays . Any schedule(s) of a party hereunder shall be extended up to an additional three (3) months to: (i) account for any delays in obtaining information, or materials from the other party which are not caused by any fault of such non-delaying party; and (ii) account for modifications to the Research Plan which affect the schedule(s); provided that in no case may this Section 2.7 extend the term of this Agreement beyond June 30, 2004.


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3. PAYMENTS

3.1 Research Program Funding . In consideration for its performance of the Research Program, Pfizer will pay Xenogen Cranbury a total of [***] upon receipt of invoices from Xenogen Cranbury, payable as follows:


(a) Within thirty (30) days of the execution of this Agreement, a fee of [***];


(b) On the first business day of each calendar quarter, starting January 1, 2002, during the first and second years of this Agreement, a payment of [***] against Xenogen Cranbury' s invoice for such calendar quarter for work to be performed and costs to be incurred in such calendar quarter;


(c) At Pfizer' s option, it may renew this Agreement for two successive one-year periods by providing ninety (90) days prior written notice to Xenogen Cranbury;

(d) If during the term of this Agreement Pfizer requests Xenogen Cranbury to deliver Transgenic Animals in addition to those Transgenic Animals identified in the Research Plan, Xenogen Cranbury will perform such services, allocating its capacity to perform such services for Pfizer on a priority basis, to the extent it is reasonably able to do so, consistent with Xenogen Cranbury' s existing and anticipated contractual commitments. Such services shall be priced at the same rate as reflected in the Research Plan.

3.2 Payment . All payments by Pfizer under this Agreement shall be paid in U.S. currency and shall be non-refundable. Pfizer shall make such payments in such form and to an account as specified by Xenogen Cranbury' s invoices.


3.3 Records . Xenogen Cranbury shall keep for three (3) years from the conclusion of each calendar year complete and accurate records of its costs and expenses incurred hereunder. The records shall conform to good accounting principles as applied to a similar company similarly situated. Pfizer shall have the right, at its own expense, during the term of this Agreement and during the subsequent three-year period to appoint an independent certified public accountant reasonably acceptable to Xenogen Cranbury to inspect said records to verify the accuracy of such expenditures of efforts, pursuant to each Research Plan. Upon reasonable written notice by Pfizer, Xenogen Cranbury shall make its records available for inspection by the independent certified public accountant during regular business hours at the place or places where such records are customarily kept, to verify the accuracy of the expenditures of efforts. This right of inspection shall not be exercised more than once in any calendar year and not more than once with respect to records covering any specific period of time. All Xenogen Cranbury information concerning such expenditures of efforts, and all information learned in the course of any audit or inspection, shall be Xenogen Cranbury Confidential Information and not used or disclosed by Pfizer except to the extent necessary for Pfizer to enforce its rights under this Agreement or to comply with law. The failure of Pfizer to request verification of any expenditures of efforts before or during the three-year period

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shall be considered acceptance by Pfizer of the accuracy of such expenditures of efforts, and Xenogen Cranbury shall have no obligation to maintain any records pertaining to such report or statement beyond such three-year period. The findings of such inspection, if any, shall be binding on the parties.

4. TREATMENT OF CONFIDENTIAL INFORMATION

4.1 Confidentiality

4.1.1 Except as expressly provided herein, the parties agree that, for the term of this Agreement and for five (5) years thereafter, each party shall protect from disclosure and shall not use for any purpose except as contemplated by this Agreement, any Confidential Information of the other party (Xenogen Cranbury Confidential Information and Pfizer Confidential Information, as the case may be).


4.1.2 Each party shall only disclose Confidential Information of the other party to its officers, employees or agents or those of its Affiliates to the extent necessary for such party to perform its responsibilities under this Agreement. Each party shall take such actions, and shall cause its Affiliates and sublicensees to take such action, to preserve the confidentiality of the other party' s Confidential Information as it would customarily take to preserve the confidentiality of its own Confidential Information. On the first to occur of the termination or expiration of this Agreement or the other party' s written request, each party will return, within sixty (60) days, all Confidential Information of the other party, including all copies and extracts of documents, except for one (1) copy which each party may keep solely to enable it to comply with its continuing obligations under this Agreement.

4.1.3 Each party represents and covenants that all of its employees, and any consultants of such party participating in the Research Program with access to Program Technology, Xenogen Cranbury Technology, Pfizer Technology, Xenogen Cranbury Confidential Information, or Pfizer Confidential Information are, and during the term of this Agreement shall continue to be, bound by agreement to maintain such information in confidence and use them only for the purposes of this Agreement.

4.2 Publicity . Except as required by law, and except for a mutually approved press release to be issued upon signing of this Agreement, neither party may disclose the terms of this Agreement nor the research described in it without the written consent of the other party, which consent shall not be unreasonably withheld; provided, however, that Xenogen Cranbury may disclose the terms, or provide copies of this Agreement to existing or potential investors or acquirers or merger partners, or to professional advisors (e.g., attorneys, accountants and prospective investment bankers) involved in such activities, for the limited purpose of evaluating such investment or transaction and under appropriate conditions of confidentiality.

4.3 Disclosure Required by Law . If either party is required by law to disclose any Confidential Information of the other party, in connection with a legal or administrative proceeding, such party will promptly notify the other party in writing of such requirement or request. If the party whose Confidential Information is the subject of such requested disclosure seeks appropriate


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protective orders or other remedies to prevent or limit such disclosure, the other party will cooperate with such effort. If the party whose Confidential Information is the subject of such requested disclosure fails to obtain such remedy, or provides the other party with a written waiver of its confidentiality obligations regarding the Confidential Information covered by such legal requirement or request, then the other party may comply with such requirement or request by disclosing only such portion of Confidential Information as its legal counsel determines it is required to disclose.

4.4 Disclosure of Inventions . If, in the course of performing the Research Program, any employee or consultant of either party makes any invention, then such party shall promptly inform the other of such invention. Xenogen Cranbury shall cooperate with Pfizer, at Pfizer' s expense, to prosecute and protect any patents or other intellectual property rights in such invention. Such cooperation shall include without limitation identification of all inventors and assignment by all inventors of patent or other rights to Pfizer in such invention.

4.5 Publication . Notwithstanding this Agreement' s provisions regarding confidentiality, results obtained in the course of the Research Program may be submitted for publication only after scientific review by the Research Committee and subsequent approval by management of both Xenogen Cranbury and Pfizer, who' s approval or disapproval shall be given within thirty (30) days of their receipt of manuscripts and within fourteen (14) days of their receipt of an abstract for presentation at, or inclusion in the proceedings of a scientific meeting, or for a transcript of an oral presentation to be given at a scientific meeting.


5. INTELLECTUAL PROPERTY RIGHTS


5.1 Ownership . Xenogen Cranbury Technology and all improvements relating thereto made in connection with the Research Program shall be owned by Xenogen Cranbury. All Pfizer Technology and Program Technology and all improvements relating thereto made in connection with the Research Program shall be owned by Pfizer.


5.2 Licenses to Pfizer . Subject to the terms and conditions of this Agreement, Xenogen Cranbury grants to Pfizer a perpetual, worldwide, non-exclusive, non-transferable, royalty-free license to use, but not to sell, Xenogen Cranbury Technology (i) for Pfizer to perform the Research Program, and (ii) to the extent necessary for Pfizer to use the Program Technology and Results.

5.3 Licenses to Xenogen Cranbury .

5.3.1 Subject to the terms and conditions of this Agreement, Pfizer grants to Xenogen Cranbury a worldwide, non-exclusive, non-sublicensable, royalty-free license to make and use, but not to sell, Pfizer Technology for Xenogen Cranbury to perform Research Program.

5.3.2 Subject to the terms and conditions of the ' 215 Patent, Pfizer hereby grants to Xenogen Cranbury a sublicense to the '" 215 Patent" to make Transgenic Animals, solely in connection with the Research Program, using methods and/or compositions claimed in the ' 215 Patent. [***].

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The terms of this Section 5.3 notwithstanding, Xenogen Cranbury will not have right to make, use or sell Pfizer Materials or Transgenic Animals outside the Research Program.


6. ACQUISITION OF RIGHTS FROM THIRD PARTIES


During the Contract Period, Xenogen Cranbury and Pfizer shall each promptly notify each other of any appropriate opportunities to acquire in any manner from Third Parties, technology or patents or information which it proposes to use in the course of performing the Research Program. Xenogen Cranbury and Pfizer shall discuss if such rights should be acquired in connection with the Research Program and, if so, whether by Xenogen Cranbury, Pfizer or both and how the costs for such acquisition should be allocated, it being understood that nothing herein shall obligate either party to obtain such rights or, if it does acquire such rights, to make such rights available for use in the Research Program.

7. OTHER AGREEMENTS

This Research Agreement, together with all Exhibits, and the 2000 Research Agreement sets forth the entire agreement between the parties with respect to the subject matter and supersede all other agreements and understandings between the parties with respect to same.

8. TERM, TERMINATION AND DISENGAGEMENT

8.1 Term . Unless sooner terminated as provided in this Article 8 or extended by mutual agreement of the parties, this Agreement shall expire on March 31, 2004; provided that, pursuant to Section 2.7, either party may extend the term to no later than June 30, 2004.

8.2 Events of Termination The following events shall constitute events of termination (" Events of Termination" )


(a) if any written representation or warranty by Xenogen Cranbury or Pfizer, made in Section 9.1 shall prove to have been incorrect in any material respect when made; and


(b) Xenogen Cranbury or Pfizer shall fail in any material respect to perform or observe any term, covenant or understanding contained in this Agreement or in any of the other documents or instruments delivered pursuant to, or concurrently with, this Agreement, and any such failure shall remain unremedied for thirty (30) days after written notice to the failing party.


Except as provided in Section 8.2(b), upon the occurrence of any Event of Termination, the party not responsible may, by written notice to the other party, terminate this Agreement.

8.3 Effects of Termination .

8.3.1 Termination of this Agreement by either party pursuant to Section 8.2 will not terminate the confidentiality obligations and the exclusivity and licenses pursuant to Section 4.1, 5.2 and 5.3.


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8.3.2 In the event of termination by either party pursuant to this Section 8, neither party shall be liable to the other because of such termination, for compensation, reimbursement of damages on account of the loss of prospective profits, of anticipated sales or on account of expenditures, inventory, investments, leases or commitments in connection with the business or goodwill of Xenogen Cranbury or Pfizer.

8.3.3 Notwithstanding the foregoing Section 8.3.2, termination of this Agreement for any reason shall not release any party hereto from any liability which, at the time of such termination, has already accrued to the other party or which is attributable to a period prior to such termination nor preclude either party from pursuing any rights and remedies it may have hereunder or at law or in equity with respect to any breach of this Agreement, including without limitation Xenogen Cranbury' s right to receive all payments accrued under Section 3.


9. REPRESENTATIONS AND WARRANTIES; LIMITATION OF LIABILITY


9.1 Representations, Warranties and Covenants . Xenogen Cranbury and Pfizer each represents and warrants as follows:


9.1.1 It is a corporation duly organized, validly existing and is in good standing under the laws of the States of Ohio and Delaware, respectively, is qualified to do business and is in good standing as a foreign corporation in each jurisdiction in which the conduct of its business or the ownership of its properties requires such qualification; and it has all requisite power and authority, corporate or otherwise, to conduct its business as now being conducted, to own, lease and operate its properties and to execute, deliver and perform this Agreement.


9.1.2 The execution, delivery and performance by it of this Agreement have been duly authorized by all necessary corporate action and do not and will not (a) require any consent or approval of its stockholders beyond the approvals already obtained, (b) violate any provision of any law, rule, regulations, order, writ, judgement, injunction, decree, determination or award presently in effect having applicability to it or any provision of its certificate of incorporation or by-laws or (c) result in a breach of or constitute a default under any material agreement, mortgage, lease, license, permit or other instrument or obligation to which it is a party or by which it or its properties may be bound or affected.

9.1.3 This Agreement is a legal, valid and binding obligation of it enforceable against it in accordance with its terms and conditions, except as such enforceability ...