License and Royalty Agreement (2002)Full Document 

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                          LICENSE AND ROYALTY AGREEMENT

         This LICENSE AND ROYALTY AGREEMENT is entered into as of November 4,
1998 (the "Effective Date") by and between PFIZER INC and its Affiliates
("Pfizer"), a Delaware corporation, having an office at 235 East 42nd Street,
New York, New York 10017 and MITOKOR and its Affiliates ("Mitokor"), a
California corporation, having an office at 11494 Sorrento Valley Road, San
Diego, CA 92121;

         WHEREAS, Pfizer desires to obtain an exclusive license under Mitokor's
right, title and interest in the Patent Rights so that Pfizer can manufacture,
use, sell, offer for sale and import the Licensed Products; and

         WHEREAS, Mitokor is willing to grant such license;

         Therefore, in consideration of the mutual covenants and promises set
forth in this Agreement, the parties agree as follows:

1. DEFINITIONS.

         The capitalized terms used in this Agreement and not defined elsewhere
in it shall have the meanings specified for such terms in this Section 1 and in
the Research Agreement.

      1.1 "RESEARCH AGREEMENT" means the Collaborative Research and Development
Agreement between Pfizer and Mitokor effective November 4, 1998.

      1.2 "NET SALES" means the gross amount invoiced by Pfizer, its Affiliates,



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or any sublicensee of Pfizer for sales to a third party or parties of Licensed
Products, less normal and customary trade discounts actually allowed, rebates,
returns, credits, taxes the legal incidence of which is on the purchaser and
separately shown on Pfizer's or any sublicensee of Pfizer's invoices and
transportation, insurance and postage charges, if prepaid by Pfizer or any
sublicensee of Pfizer and billed on Pfizer's or any sublicensee of Pfizer's
invoices as a separate item.

      1.3 "LICENSED PRODUCT" means any Therapeutic Product the manufacture, use,
sale, offer for sale or import would infringe any Valid Claim within the Patent
Rights in the absence of a license.

2. GRANT OF LICENSES, TERM, RIGHTS AND OBLIGATIONS.

      2.1 LICENSE GRANTED TO PFIZER UNDER THE PATENT RIGHTS.

            Mitokor hereby grants to Pfizer an exclusive, worldwide license,
including the right to grant sublicenses, to manufacture, use, sell, offer for
sale and import Licensed Products under all Mitokor's right, title and interest
in the Patent Rights.

      2.2 LICENSE GRANTED TO MITOKOR UNDER THE PATENTS AND PROGRAM TECHNOLOGY.
Section 2.1 to the contrary notwithstanding:

            2.2.1 Pfizer hereby grants to Mitokor the exclusive, perpetual,
royalty free license, including the right to grant sublicenses, to manufacture,
use, sell, offer for sale and import Diagnostic Products and products sold
exclusively for research purposes under all Pfizer's right, title and interest
in the Patent Rights and Program Technology.

      2.3 TERM OF LICENSES. The term of the grant to Pfizer set forth in Section
2.1 shall commence on the Effective Date and shall terminate on the date of the



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last to expire of the Patent Rights. The term of the grant to Mitokor set forth
in Section 2.2. shall commence on the Effective Date and shall run perpetually
except in those countries of the world in which such term is limited by law.

      2.4 PAID-UP LICENSE. Pfizer shall have a paid-up license permitting
royalty free manufacture, use ,sale, offer for sale and import of Licensed
Products in each country after the expiration of Pfizer's last obligation to pay
royalties on Net Sales of each such Licensed Product in each such country.

      2.5 PFIZER OBLIGATIONS.

            2.5.1 Pfizer shall use reasonably diligent efforts to exploit
Licensed Products commercially employing similar effort to that applied to other
products similarly situated.

            2.5.2 If Pfizer grants a sublicense pursuant to this Section 2,
Pfizer shall guarantee that any sublicensee fulfills all of Pfizer's obligations
under this Agreement; provided, however, that Pfizer shall not be relieved of
its obligations pursuant to this Agreement.

      2.6 TECHNICAL ASSISTANCE.

            Mitokor shall provide to Pfizer or any sublicensee of Pfizer, at
Pfizer's request [ * CON * ], any agreed technical assistance reasonably
necessary to enable Pfizer or such sublicensee to manufacture, use, sell, offer
for sale or import each Licensed Product and to enjoy fully all the rights
granted to Pfizer pursuant to this Agreement; provided, however, that Mitokor is
reasonably capable of providing that assistance. Pfizer shall [ * CON * ]
providing such assistance.

3. MILESTONE PAYMENTS, ROYALTIES, ACCOUNTING , RECORDS.

      3.1 PATENT RIGHTS.

            3.1.1 Pfizer shall pay Mitokor a royalty based on the Net Sales
of each Licensed Product. Such royalty shall be paid with respect to each
country of


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the world from the date of the first commercial sale (the date of the invoice
of Pfizer or any sublicensee of Pfizer with respect to such sale) of such
Licensed Product in each such country until the expiration of the last Patent
Right to expire with respect to each such country and each such Licensed
Product.

            3.1.2 If the manufacture and sale of a Licensed Product takes place
in countries where there are no Patent Rights, Pfizer will pay to Mitokor a
royalty based on the Net Sales of each Licensed Product in each such country for
[ * CON * ] ([ * CON * ]) years after the first commercial sale of such Licensed
Product in such country.

      3.2 ADJUSTMENT TO ROYALTY RATES.

            3.2.1 Pfizer shall pay Mitokor a royalty for the sale of each
Licensed Product under Section 2.1 as set forth in Section 3.1; provided,
however, that if over a calendar year the average cost of goods (determined in
the same manner as Pfizer determines its cost of goods for any similar
pharmaceutical product for financial reporting purposes in the United States,
consistently applying U.S. generally accepted accounting principles, including
royalties payable to Mitokor, but not third parties) for a Licensed Product
exceeds [ * CON * ] percent ([ * CON * ]%) of Pfizer's direct price (determined
in the same manner as Pfizer determines its direct price to customers for any
similar pharmaceutical product consistently applying generally accepted
accounting principles) for such Licensed Product for such calendar year, the
otherwise applicable royalty rate set forth below shall be reduced by
[ * CON * ] percent ([ * CON * ]%) of the excess above [ * CON * ] percent
([ * CON * ]%) of the Average Net Sales Price; provided, however, that in no
event shall the applicable royalty rates be reduced by an aggregate of more
than [ * CON * ]percent ([ * CON * ]%). Notwithstanding the foregoing, the
adjustment in this Section 3.2 shall not apply with respect to royalties paid
on Net Sales occurring prior to the end of the [ * CON * ] full calendar year
after the first


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commercial sale of the Licensed Product in the United States. As used in this
Section 3.2, the "Average Net Sales Price" shall mean the average invoice price

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