This excerpt taken from the XOMA 10-Q filed Aug 8, 2005.
14.1 Term. The term of this Agreement shall commence as of the Date of this Agreement and shall remain in full force and effect until the expiration of the last cost or profit sharing, or royalty payment obligation of the Parties pursuant to the terms of this Agreement. The Parties acknowledge that the Initial Agreement governed the Collaboration during that portion of the Exclusivity Period from the Effective Date through the Date of this Agreement.
14.2 Material Breach.
(a) Notice. If either Party materially breaches this Agreement, the other Party, at its option, may provide written notice to the Party in breach describing in reasonable detail the nature of the material breach.
(b) Cure. In the event that a Party receives written notice from the other Party describing a material breach, such Party shall have an opportunity to cure such material breach during a period of not less than [*] in the case of any breach other than a payment breach, and [*] in the case of any payment breach, such period beginning on the date of receipt of such written notice.
(c) Buy-Out Right.
(i) Upon a final determination that (x) a material breach occurred, (y) such material breach was not cured and (z) such material breach has caused or is reasonably likely to cause a material adverse effect on the business or prospects of the Collaboration, the non-breaching Party, at its option and in its sole discretion, may exercise a right to buy-out the entire interest held by the other Party in the Collaboration at fair market value (FMV) by providing written notice thereof to the breaching Party within [*] of such final determination.
(ii) For purposes of this Section 14.2(c), FMV shall be determined as follows:
(A) If the Parties, in good faith, cannot determine FMV within [*] after the notification of the non-breaching Partys exercise of its right to buy the entire interest in the Collaboration held by the breaching Party, each Party shall
designate a reputable investment banking or appraisal firm of its choice (which in the case of an investment bank shall not be the regular banker of the Party) (the Appraiser), who will be asked to provide its best, single number estimate of the FMV, using a common set of assumptions provided by the Parties, or if the Parties cannot agree, by the Appraisers. Each Party shall use its best efforts to cause its designated Appraiser to provide the evaluation within [*].
(B) If one valuation exceeds the other by [*] percent ([*]%) or less, the FMV shall be the average of the two valuations. If one evaluation exceeds the other by more than [*] percent ([*]%), the Parties (or, if the Parties cannot agree, the Appraisers) shall designate a third Appraiser to prepare a valuation without access to the earlier valuations. Each Party shall use its best efforts to enable the third Appraiser to provide the evaluation within [*]. If the third valuation falls between the prior two valuations, the three valuations shall be averaged to determine the FMV. If the third valuation falls outside the range of the prior two valuations, the valuation closest to the median of the three valuations shall be the FMV. Each Party shall bear the costs and expenses of its own Appraiser as well as [*] percent ([*]%) of the costs and expenses of the third Appraiser, if necessary.
(iii) The non-breaching Party shall pay to the breaching Party the FMV of the breaching Partys interest in the Collaboration in cash within [*] after the date of the determination of such FMV. If the non-breaching Party does not make such payment within such [*], such right hereunder shall expire unexercised.
(iv) For commercial Collaboration Products, upon a final determination that a material breach occurred and that such material breach was not cured, the breaching Party shall retain its profit interest in each and every such Collaboration Product pursuant to Section 6.2, subject in the case of XOMA to adjustment in accordance with Section 6.3 for achievement of each and every event prior to the date of the final determination that a material breach occurred and that such material breach was not cured, together with rights applicable to such Collaboration Products pursuant to Article X, but shall have no other rights under the terms of this Agreement.
14.3 Opt-Out Royalty Term. The royalty obligations under Sections 3.9(e)(i) and 3.9(e)(ii) shall terminate with respect to each Opt-Out Product with respect to an Opt-Out Target on the later of (i) the expiration date of the last to expire of any issued Collaboration Patent Rights or Patent Rights of the Opt-Out Party that includes at least one Valid Claim covering the sale of such Opt-Out Product on a country-by-country basis or (ii) [*] years after first commercial sale of such Opt-Out Product on a country by country basis; provided, however, in any event, royalty obligations under Sections 3.9(e)(i) and 3.9(e)(ii) shall be reduced by [*]%, on a country-by-country basis, with respect to each Opt-Out Product with respect to an Opt-Out Target in the event clause (i) is satisfied with respect to such country.
14.4 Bankruptcy. Either Party may, in addition to any other remedies available to it by law or in equity, terminate this Agreement, in whole or in part as the terminating Party may determine, by written notice to the other Party in the event the other Party shall have become bankrupt, or shall have made an assignment for the benefit of its creditors or there shall
have been appointed a trustee or receiver of the other Party or for all or a substantial part of its property or any case or proceeding shall have been commenced or other action taken by or against the other Party in bankruptcy or seeking reorganization, liquidation, dissolution, winding-up, arrangement, composition or readjustment of its debts or any other relief under any bankruptcy, insolvency, reorganization or other similar act or law of any jurisdiction now or hereafter in effect and any such event shall have continued for [*] undismissed, unbonded and undischarged. All rights and licenses granted under this Agreement by one Party to the other Party are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the Bankruptcy Code, licenses of rights to intellectual property as defined under Section 101(56) of the Bankruptcy Code. The Parties agree that the licensing Party under this Agreement shall retain and may fully exercise all of its rights and elections under the Bankruptcy Code in the event of a bankruptcy by the other Party. The Parties further agree that in the event of the commencement of a bankruptcy proceeding by or against one Party under the Bankruptcy Code, the other Party shall be entitled to complete access to any such intellectual property pertaining to the rights granted in the licenses hereunder of the Party by or against whom a bankruptcy proceeding has been commenced and all embodiments of such intellectual property.
14.5 Survival. The rights and obligations of the Parties pursuant to Articles I, XI, XIII, and XV, Sections 7.1, 9.5, 12.1, 12.7 and 14.5, and, for a period not to exceed six months after the Exclusivity Period, Sections 9.1, 9.2 and 9.3, shall survive and continue beyond expiration or earlier termination of this Agreement. In addition, in the event of expiration of this Agreement, but not earlier termination, the rights and obligations of the Parties under the licenses granted pursuant to Article VIII with respect to Know-How shall survive and continue beyond expiration of this Agreement as non-exclusive licenses.