Master Research License And Option Agreement

EXECUTION COPY


CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.


AGREEMENT TO TERMINATE THE INTEREST OF JAPAN TOBACCO INC. IN THE
MASTER RESEARCH LICENSE AND OPTION AGREEMENT


THIS AGREEMENT TO TERMINATE THE INTEREST OF JAPAN TOBACCO INC. IN THE MASTER RESEARCH LICENSE AND OPTION AGREEMENT (this "Agreement"), effective December 31, 1999, (the "Effective Date") is made by and among ABGENIX, INC., a Delaware corporation ("ABX") and JAPAN TOBACCO INC., a Japanese corporation ("JTI"), and XENOTECH, L.P., a California limited partnership ("XT") with reference to the following facts and circumstances.


RECITALS


A. WHEREAS, Cell Genesys, Inc. ("CGI"), the predecessor company of ABX, and JT Immunotech USA Inc. ("Immunotech"), a wholly-owned indirect subsidiary of JTI, formed XT in 1991 to develop genetically modified strains of mice which can produce fully human monoclonal antibodies, and to commercialize products generated therefrom;


B. WHEREAS, CGI assigned to ABX (its wholly-owned subsidiary at such time) its interest in XT, and Immunotech merged into JT America Inc. ("JTA"), a wholly-owned subsidiary of JTI, and its interest in XT was assigned to JTA by operation of law;


C. WHEREAS, JTA has agreed to sell to ABX, and ABX has agreed to purchase, JTA's interest in XT pursuant to a Limited Partnership Interest and Stock Purchase Agreement of even date herewith, by and between ABX and JTA (the "Purchase Agreement");


D. WHEREAS, XT, JTI and CGI were parties to a Master Research License and Option Agreement dated effective as of June 28, 1996, as amended (the "MRLOA"), to govern the parties' rights with respect to the development and commercialization of Products;


E. WHEREAS, JTI is willing to terminate its rights under and interest in the MRLOA in exchange for certain consideration to be paid by ABX hereunder;


NOW THEREFORE, for and in consideration of the covenants, conditions, and undertakings hereinafter set forth, the Parties agree as follows:


1. DEFINITIONS


For purposes of this Agreement, capitalized terms set forth in this Agreement and not otherwise defined herein shall have the meaning set forth in the MRLOA.


1.1 "ANTIGEN" shall mean a [*] that (a) is defined by a [*] thereof, including any [*] thereto and (b) is identified by a [*] (as disclosed in an [*] sufficient to [*]


[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.


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1.2 "ANTIGEN INVENTION" shall mean any inventions that relate to (a) the [*] of [*] that [*] to an [*] or [*] or such [*] or [*] of such [*] such [*] and [*] that [*] such [*] (b) [*] such [*] or [*] other than those described in (a); and (c) [*] described in (a) and/or (b); in each case that are made, conceived or reduced to practice by or on behalf of [*] under the MRLOA, together with all patent applications, patents and/or know-how relating to, covering or claiming the foregoing.


1.3 "CONTROLLED" shall mean the ability to grant licenses or sublicenses with respect to a technology or material as provided in this Agreement without breaching any agreement or other arrangement with a Third Party.


1.4 "MAJORITY-OWNED AFFILIATE OF JTI" shall mean an entity of which JTI owns, directly or indirectly, more than [*] of the shares of such entity entitled to vote in the election of directors or corresponding managing authority.


1.5 "PRODUCT ANTIGEN" shall have the meaning ascribed in the applicable Product License executed pursuant to the MRLOA.


1.6 "RESEARCH PROGRAM MATERIALS AND INFORMATION" shall mean: (i) [*] (ii) [*] that [*] that [*] (iii) [*] that [*] or [*] that [*] (iv) [*] that [*] that [*] or [*] and (v) information (and all [*] thereof) regarding the [*] described in clauses (i) through (iv); in each case that are made, conceived, reduced to practice or otherwise derived from the activities conducted by the Parties pursuant to and in accordance with the MRLOA or any Product License entered into pursuant to the MRLOA.


1.7 "XENOMOUSE ANIMALS" shall mean transgenic mice which are Controlled by ABX and which contain unrearranged human immunoglobulin genes that are capable of producing human antibodies when immunized with an antigen.


2. CONSIDERATION


In consideration for JTI's agreement to relinquish its Buy-In Right with respect to certain Selected Antigens under the MRLOA, ABX shall pay to JTI Ten Million Dollars (US$10,000,000) on December 31, 1999. The payment required to be made pursuant to this Section 2 shall be without [*] if any, the [*]


[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.


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3. TERMINATION OF JTI'S RIGHTS UNDER THE MRLOA.


3.1 JTI's rights under and interest in the MRLOA are hereby terminated effective as of the Effective Date, including without limitation (a) its rights under Section 3.1 thereof, (b) its rights to select certain Antigens for development of antibody products binding thereto, and (c) its rights to maintain and use a colony of XenoMouse Animals as provided in the MRLOA. JTI's obligations under Articles 12 (excluding Section 12.2(a)) and 14 of the MRLOA shall survive termination of JTI's interest in the MRLOA pursuant to this Agreement solely with respect to activities conducted by JTI pursuant to the MRLOA prior to the Effective Date. The termination of JTI's rights under and interest in the MRLOA shall not affect JTI's rights under any Product License entered into between JTI and XT prior to the Effective Date, or the rights of ABX and XT under the MRLOA, which shall survive termination of JTI's interest in the MRLOA.


3.2 ABX and XT hereby release and discharge JTI from, and hereby waive and relinquish, all disputes, claims, controversies, demands, rights, obligations, liabilities, actions and causes of action of every kind and nature arising out of activities conducted by ABX and XT pursuant to the MRLOA after the Effective Date. The Parties intend that the MRLOA shall continue in full force and effect as between ABX and XT, and that JTI's rights under the MRLOA shall revert to XT.


4. LICENSE GRANT.


4.1 LICENSE UNDER ANTIGEN INVENTIONS. Subject to the terms and conditions of this Agreement, JTI hereby grants to ABX a non-exclusive, fully paid-up, royalty-free, perpetual, worldwide, sublicensable license to use Antigen Inventions, except that such license shall not include a license to use the Antigen Inventions relating to the [*] during the period in which the relevant Product License for each such Product Antigen is in effect. In no event shall JTI be obligated to disclose or provide to ABX any Research Program Materials and Information relating to any Antigen Invention, notwithstanding the foregoing license.


4.2 NON-EXCLUSIVE LICENSE WITH RESPECT TO XENOMOUSE ANIMALS. Subject to the terms and conditions of this Agreement, JTI hereby grants to ABX a non-exclusive, fully paid-up, royalty-free, perpetual, sublicensable, worldwide license under all intellectual property rights Controlled by JTI as of the Effective Date that cover the creation, development, use, manufacture, importation, offer for sale and sale of XenoMouse Animals.


4.3 NON-EXCLUSIVE LICENSE UNDER PRODUCT ANTIGEN INVENTIONS ARISING UNDER THE MRLOA. JTI hereby grants to ABX a non-exclusive, fully paid-up, royalty-free, perpetual, sublicenseable, worldwide license under all intellectual property rights Controlled by JTI covering Antigen Inventions arising out of JTI's activities under the MRLOA with respect to any Product Antigen (as defined in the MRLOA) for which either (a) JTI's option under the MRLOA expires or terminates prior to JTI and XT entering into a Product License therefor, or (b) JTI and XT have entered into a Product License, and such Product License has terminated or expired (but not while such Product License is in effect). In no event shall JTI be obligated to disclose or


[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.


3.


provide to ABX any Research Program Materials and Information relating to any such Product Antigen or related Antigen Invention, notwithstanding the foregoing license.


4.4 NON-EXCLUSIVE LICENSE RELATING TO PROJECT TECHNOLOGY AND JT INDEPENDENT INVENTIONS. JTI hereby grants to ABX a non-exclusive (even as to JTI), worldwide, royalty-free, perpetual, sublicensable license under all intellectual property rights in and to any inventions made by JTI in the course of practicing any Project Technology, and all intellectual property rights in and to any JT Independent Technology Controlled by JTI for all uses within the Field or the Expanded Field. In no event shall JTI be obligated to disclose or provide to ABX any materials created by JTI using the Project Technology or that are within the JT Independent Technology, including without limitation any transgenic animals, notwithstanding the foregoing license. The capitalized terms in this Section 4.4 not defined in this Agreement shall have the meanings given to them in the Amended and Restated Field License between ABX, JTA and XT of even date herewith or the Amended Expanded Field License between ABX and JTA of even date herewith.


4.5 SUBLICENSE UNDER THE [*] JTI hereby grants to XT a non-exclusive, worldwide, royalty-free, perpetual license under the [*] Such ...