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COLLABORATIVE RESEARCH AGREEMENT This COLLABORATIVE RESEARCH AGREEMENT (“Agreement”) is entered into as ofDecember 28, 2000 by and between PFIZER INC, a Delaware corporation, having anoffice 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 ownedsubsidiary of Xenogen Corp. (“Xenogen”). RECITALS WHEREAS, Pfizer wishes to develop Assays (as defined below) to use inperforming phenotypic analysis of Transgenic Animals (as defined below) with aview toward identifying the role of interesting genes in human disease processesand toward validating gene function in research animals; and WHEREAS, Pfizer has detailed protocols for individual Assays; WHEREAS, Xenogen Cranbury has expertise in developing and conducting suchAssays and in performing phenotypic analysis of Transgenic Animals using suchAssays; and WHEREAS, Xenogen Cranbury desires to collaborate with Pfizer on thedevelopment of such Assay packages for Transgenic Animals; NOW, THEREFORE, in consideration of the promises and mutual covenantscontained herein, Xenogen Cranbury and Pfizer agree as follows: 1. DEFINITIONS. Whenever used in this Agreement, the terms defined in this Section 1shall have the meanings specified. 1.1 “Affiliate” means, with respect to Pfizer, any legal entitycontrolling, controlled by, or under common control with Pfizer; and withrespect to Xenogen Cranbury, any legal entity controlling, controlled by, orunder common control with Xenogen Cranbury; where, in all cases, “control” meansthe ownership, directly or indirectly, of fifty percent (50%) or more of thevoting capital shares or similar voting securities of the other entity. 1.2 “Area” means: (a) research to develop a battery of phenotypic andchallenge Assays on Transgenic Animals; (b) performing phenotypic analysis onTransgenic Animals using such Assays; and (c) any other activities identified inthe course of the research or development hereunder; in all cases only asspecified in the Research Plan (as defined below). 1.3 “Assay” means any of the Level I Assays, the Level II Assays, theLevel IIIP Assays, or the Level IIIXC Assays as defined below. 1.4 “Contract Period” means the period beginning on the Effective Date and ending on the date on which this Agreement terminates. 1.5 “Contract Research Service” means a research service performed for aThird Party (as defined below) for a fee or other consideration. 1.6 “Control Animal” means any mouse, other than a Transgenic Animal (asdefined below), acquired by Xenogen Cranbury under this Agreement, including,but not limited to: *** 1.7 “Effective Date” means December 28, 2000. 1.8 “Level I Assay” means any assay identified as a Level I Assay inExhibit B, as annexed hereto, or as the parties may from time to time identifyas a Level I Assay in a written amendment to the Research Plan. 1.9 “Level II Assay” means any assay identified as a Level II Assay inExhibit B, as annexed hereto, or as the parties may from time to time identifyas a Level II Assay in a written amendment to the Research Plan. 1.10 “Level III Assay” means a Level IIIP Assay or a Level IIIXC Assay(which may be collectively referred to as Level III Assays). 1.10.1 “Level IIIP Assay” means any assay incorporating PfizerTechnology and Pfizer Confidential Information (both as defined below)identified as a Level IIIP Assay in Exhibit B, as annexed hereto, or as theparties may from time to time identify as a Level IIIP Assay in a writtenamendment to the Research Plan. 1.10.2 “Level IIIXC Assay” means any assay incorporating XenogenCranbury Technology and Xenogen Cranbury Confidential Information (both asdefined below) identified as a Level IIIXC Assay in Exhibit B, as annexedhereto, or as the parties may from time to time identify as a Level IIIXC Assayin a written amendment to the Research Plan. The designation of the Level IIIXCAssay shall be at the sole discretion of Xenogen Cranbury and Level IIIXC Assaywill not be part of Program Technology. 1.11 “Period of Exclusivity” means, with respect to any Level III Assay,the period ending on the second anniversary of the termination or expiration ofthis Agreement. 1.12 “Pfizer Compound” means any Pfizer compound, any library of Pfizercompounds, and intermediates of any Pfizer compound, any impurities of anyPfizer compound, and any information regarding the chemical or biochemicalproperties of any Pfizer compound that Pfizer delivers to Xenogen Cranbury underthis Agreement. 1.13 “Pfizer Confidential Information” means (a) all Results (as defined inSection 1.19) and Program Technology, and (b) all other information about anyelement of Pfizer Technology, including, without limitation, protocols, whichPfizer discloses to Xenogen Cranbury and designates as “Confidential,” wheresuch disclosure is either in writing or within 30 days of such disclosure Pfizerprovides Xenogen Cranbury a memorandum identifying the disclosure andcharacterizing it as confidential. Notwithstanding the foregoing, “PfizerConfidential Information” shall not include any information that (i) at the timeof disclosure to Xenogen Cranbury, is already known by Xenogen Cranbury otherthan by virtue of a prior confidential disclosure to Xenogen Cranbury by Pfizer;or (ii) is or becomes disclosed in published literature, or otherwise is orbecomes generally known to the public, in each case through no fault or omissionof Xenogen Cranbury; or (iii) is obtained by Xenogen Cranbury from a third partyfree from any obligation of confidentiality to Pfizer. 1.14 “Pfizer Technology” means (a) Technology developed prior to theEffective Date by employees of, or consultants to, Pfizer acting alone orjointly 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), andincluding without limitation any Transgenic Animals; (b) Program Technology; or(c) Results. 1.15 “Program Technology” means Technology developed, in the course ofperforming the Research Program by employees of or consultants to Pfizer orXenogen Cranbury solely or jointly with each other, excluding Results and LevelIIIXC Assays, but including, without limitation, Level I, Level II and LevelIIIP Assays. 1.16 “Research Plan” means the written plan describing the research anddevelopment in the Area to be carried out during the Contract Period by Pfizerand Xenogen Cranbury pursuant to this Agreement. The Research Plan is attachedto and made a part of this Agreement as Exhibit A. The Research Plan may beamended from time to time by agreement of the parties. Any such amended ResearchPlan shall be appended hereto as an Exhibit. 1.17 “Research Program” is the collaborative research program in the Areaconducted by Pfizer and Xenogen Cranbury pursuant to the Research Plan. 1.18 “Results” means any data or information generated by either party inthe course of performing the Research Program, including, without limitation,any data relating to the development and use of any Assay, and any data orinformation resulting from the application of any Assay to any Transgenic Animalor Control Animal. 1.19 “Technology” means and includes all materials, technology, technicaldata and information, inventions, methods, know-how, expertise and trade secretswithin the Area. 1.20 “Third Party” means any party other than Pfizer, Xenogen, or XenogenCranbury. 1.21 “Transgenic Animal” means any genetically modified mouse supplied byPfizer to Xenogen Cranbury under this Agreement. 1.22 “Xenogen Cranbury Technology” means Technology that is or wasdeveloped by employees of, or consultants to, Xenogen Cranbury alone or jointlywith third parties prior to the Effective Date, but, in the case of consultantsor third parties, only to the extent Xenogen Cranbury has the right to grantrights to such Technology, and specifically excluding, in all cases: (i) anytechnology concerning or relating to in vivo imaging; and (ii) light-producingcells, micro-organisms or animals; and (iii) other technologies intended for usewith (i) or (ii). 1.23 “Xenogen Cranbury Confidential Information” means (a) all informationabout any element of Xenogen Cranbury Technology which Xenogen Cranburydiscloses to Pfizer and designates as “Confidential,” where such disclosure iseither in writing or within 30 days of such disclosure Xenogen Cranbury providesPfizer a memorandum identifying the disclosure and characterizing it asconfidential. Notwithstanding the foregoing, “Xenogen Cranbury ConfidentialInformation” shall not include any information that (i) at thetime of disclosure to Pfizer, is already known by Pfizer other than by virtue ofa prior confidential disclosure to Pfizer by Xenogen Cranbury; or (ii) is orbecomes disclosed in published literature, or otherwise is or becomes generallyknown 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 ofconfidentiality to Xenogen Cranbury. 2. COLLABORATIVE RESEARCH PROGRAM 2.1 Purpose. Xenogen Cranbury and Pfizer each shall conduct theirrespective responsibilities of the Research Program throughout the ContractPeriod. The objective of the Research Program is to develop specific phenotypicassays and to validate and test such assays on Transgenic Animals. 2.2 Research Plan. The initial Research Plan is described in the attachedExhibit A. As the Research Plan is modified by mutual agreement of the parties,the modified version shall be appended to Exhibit A and made part of thisAgreement. 2.3 Research Committee 2.3.1 Purpose. Pfizer and Xenogen Cranbury shall establish aResearch Committee (the “Research Committee”): (a) to review and evaluate progress under the Research Plan; (b) to prepare the Research Plan, and amendments and evaluate the need for extensions to the Agreement; (c) to propose, discuss, select and document in writing, the mutual acceptance of Assays in the Area to be included in the Research Plan; (d) to coordinate and monitor publication as provided under Section 4.7 of this Agreement, of Results (this function shall survive termination of this Agreement for five (5) years); and (e) to designate Assays as either Level I, Level II, or Level III. 2.3.2 Membership. Each of Pfizer and Xenogen Cranbury shall appoint,in its sole discretion, three members to the Research Committee. Each party mayreplace its respective Research Committee members at any time, with priorwritten notice to the other party hereto. The parties initially appoint thefollowing members: Pfizer Appointees: *** Xenogen Cranbury Appointees: *** 2.3.3 Chair. The Research Committee shall be chaired by two co-chairpersons, one appointed by Pfizer and the other appointed by XenogenCranbury. 2.3.4 Meetings. The Research Committee shall meet at least quarterly,at places selected by each party in turn and on dates mutually agreed by theparties. The location of the first meeting of the Research Committee shall be atPfizer’s election. Representatives of Pfizer or Xenogen Cranbury or both, inaddition to members of the Research Committee, may attend such meetings at theinvitation of either party. Any materials to be submitted to the members of theResearch Committee shall be delivered to each member not less than five (5)business days before the meeting. 2.3.5 Minutes. The Research Committee shall keep accurate minutes ofits deliberations which record all proposed decisions and all actionsrecommended or taken. Drafts of the minutes shall be delivered to all ResearchCommittee members within five (5) business days after each meeting. The partychoosing the location for the meeting shall be responsible for the preparationand 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 andagreement. 2.3.6 Decisions. All decisions of the Research Committee shall bemade by mutual agreement except that Pfizer, in its sole discretion, shalldecide the overall direction of the Research Program. 2.3.7 Expenses. Pfizer and Xenogen Cranbury shall each bear allexpenses, including reasonable travel, related to the participation of theirdesignated members of the Research Committee, respectively. 2.4 Reports and Materials. 2.4.1 Reports. During the Contract Period, Xenogen Cranbury shallfurnish 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; (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; (c) a written report describing the detailed protocols of all assays developed under the Research Program; (d) a written report detailing Results. Such reports will be submitted at the end of Phase 1A, 1B and Phase 2 of Tracks I and II; and (e) any report containing information that Xenogen Cranbury may generate using Level II Assays for Third Parties during the Term, pursuant to Section 4.3. 2.4.2 Materials. During the Contract Period, each party shall providethe other, to the extent necessary for the receiving party to perform itsresponsibilities under the Research Plan, with Transgenic Animals, ControlAnimals, Pfizer Compounds, which are part of Pfizer Technology, Xenogen CranburyTechnology or Program Technology. Such supply of materials and Technology shallbe in accordance with the Research Plan, or as a party may otherwise reasonablyrequest from time to time and the other party agree to provide. To the extentthat the quantities of materials requested and supplied by the parties exceedthe quantities required to be provided under the Research Plan, the requestingparty shall reimburse the other for the reasonable costs of such materials.Each party shall use and store such materials in accordance with all applicablelaws and regulations, and shall exert due care in so doing. 2.5 Laboratory Facilities and Personnel. Xenogen Cranbury and Pfizer eachshall provide laboratory facilities, equipment and personnel, in each casesuitable to the need, for carrying out the Research Program. 2.6 Diligent Efforts. Pfizer and Xenogen Cranbury each shall usereasonably diligent efforts to achieve the objectives of the Research Program.Xenogen Cranbury will use reasonably diligent efforts to achieve the objectiveslisted in the Research Plan and Pfizer will use reasonably diligent efforts toassist Xenogen Cranbury in such efforts. 2.7 Key Investigators. If *** employment with Xenogen Cranbury ends forany reason and the parties are unable to agree on a successor reasonablyacceptable to Pfizer, Pfizer may terminate this Agreement pursuant to Section 8. 2.8 Delays. Any schedules or milestone dates of a party hereunder shallbe extended to: (i) account for any delays in obtaining information, ormaterials from the other party which are not caused by any fault of such party;and (ii) account for any modifications to the Research Plan which affectschedules or milestone dates. To the extent that any such delays ormodifications are projected to impose additional costs on one of the parties,both Xenogen Cranbury and Pfizer shall mutually agree on the reimbursement dueon account of such additional costs. Notwithstanding the foregoing, to theextent that the non-delaying party accrues labor and other resource costs whichremain idle with respect to the Research Program due to such delays, the non-delaying party shall be entitled to reimbursement from the other party for suchdocumented cost of such idled resources. 3. PAYMENTS 3.1 Research Program Funding. In consideration for its performance of theResearch Program, Pfizer will pay Xenogen Cranbury up to *** upon receipt ofinvoice from Xenogen Cranbury, payable as follows: (a) Within thirty (30) days of the execution of this Agreement, a fee of *** to be utilized for staffing, administrative and equipment acquisition costs over and above normal on going expenses; (b) Within thirty days of the execution of the Agreement, a fee of *** to be utilized for Start-UP Costs; (c) On the first business day of each calendar quarter 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; (d) On the first business day of each calendar quarter during the third year of this Agreement, a payment of *** against Xenogen Cranbury’s invoice for such calendar quarter work to be performed and costs to be incurred in such calendar quarter; (e) During the third year of this Agreement, payments aggregating up to *** in equal quarterly installments, due on the first business day of each quarter, against Pfizer’s receipt from Xenogen Cranbury during that year of quarterly reports containing Results achieved pursuant to the Request Plan, including detailed data regarding the phenotypic analysis of Transgenic Animals and Xenogen Cranbury’s invoice for such report; and (f) Up to *** against delivery by Xenogen Cranbury to Pfizer of protocols for Track I and Track II Assays, as described in the Research Plan attached hereto, as the same may be amended by the parties, of which sum *** shall be payable upon Xenogen Cranbury’s completion of Phase 1B of Track I and initiating the testing of Control Animals in Track I Assays, the protocols for which Xenogen Cranbury shall have prepared and submitted to Pfizer for its approval (such approval not to be unreasonably withheld); and the remaining *** shall be payable upon Xenogen Cranbury’s completion of Phase 1B of Track II and initiating the testing of Control Animals in Track II Assays, the protocols for which Xenogen Cranbury shall have prepared and submitted to Pfizer for its approval (such approval not to be unreasonably withheld). (g) At Pfizer’s option, it may be extend this Agreement for two successive one-year periods by providing 90 days’ prior written notice to Xenogen Cranbury. (h) If during the term of this Agreement Pfizer requests Xenogen Cranbury to perform phenotypic analysis on Transgenic Animals in addition to those Trangenic 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 inU.S. currency and shall be non-refundable. Pfizer shall make such payments insuch form and to an account as specified by Xenogen Cranbury’s invoices. 3.3 Records. Xenogen Cranbury shall keep for three (3) years from theconclusion of each calendar year complete and accurate records of its costs andexpenses incurred hereunder. The records shall conform to good accountingprinciples as applied to a similar company similarly situated. Pfizer shallhave the right, at its own expense, during the term of this Agreement and duringthe subsequent three-year period to appoint an independent certified publicaccountant reasonably acceptable to Xenogen Cranbury to inspect said records toverify the accuracy of such expenditures of efforts, pursuant to each ResearchPlan. Upon reasonable notice by Pfizer, Xenogen Cranbury shall make its recordsavailable for inspection by the independent certified public accountant duringregular business hours at the place or places where such records are customarilykept, to verify the accuracy of the expenditures of efforts. This right ofinspection shall not be exercised more than once in any calendar year and notmore than once with respect to records covering any specific period of time. AllXenogen Cranbury information concerning such expenditures of efforts, and allinformation learned in the course of any audit or inspection, shall be XenogenCranbury Confidential Information and not used or disclosed by Pfizer except tothe extent necessary for Pfizer to enforce its rights under this Agreement or tocomply with law. The failure of Pfizer to request verification of anyexpenditures of efforts before or during the three-year period shall beconsidered acceptance by Pfizer of the accuracy of such expenditures of efforts,and Xenogen Cranbury shall have no obligation to maintain any records pertainingto such report or statement beyond such three-year period. The findings of suchinspection, 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 partyshall protect from disclosure and shall not use for any purpose as contemplatedby this Agreement, any Confidential Information of the other party (XenogenCranbury Confidential Information and Pfizer Confidential Information, as thecase may be). Each party acknowledges that the Confidential Information of theother party constitutes highly valuable, proprietary information which is notpublicly available. 4.1.2 Each party shall only disclose Confidential Information of theother party to its officers, employees or agents or those of its Affiliates tothe extent necessary for such party to perform its responsibilities under thisAgreement. Each party shall take such actions, and shall cause its Affiliatesand sublicensees to take such action, to preserve the confidentiality of theother party’s Confidential Information as it would customarily take to preservethe confidentiality of its own Confidential Information. On the first to occurof the termination or expiration of this Agreement or the other party’s writtenrequest, each party will return, within sixty (60) days, all ConfidentialInformation of the other party, including all copies and extracts of documents,except for one (1) copywhich each party may keep solely to enable it to comply with its continuingobligations 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 withaccess to Program Technology, Xenogen Cranbury Technology, Pfizer Technology,Xenogen Cranbury Confidential Information, or Pfizer Confidential Informationare, and during the term of this Agreement shall continue to be, bound byagreement to maintain such information in confidence and use them only for thepurposes of this Agreement. 4.2 Use by Xenogen Cranbury of Data Relating to Level I and Level IIAssays Performed on Pfizer Control Animals. At any time, Xenogen Cranbury maydisclose to Third Parties results of Level I and Level II Assays performed onControl Animals, provided that under no circumstances shall such disclosurecontain any information relating to any Pfizer Compounds, including Resultsderived from animals tested with Pfizer Compounds. 4.3 Use By Pfizer of Data Relating to Level II Assays Performed on ControlAnimals of Third Parties. During the term of this Agreement, if XenogenCranbury uses any Level II Assays to perform Contract Research Services, it willmake available to Pfizer at no charge and in a reasonably timely manner a copyof the report containing the results of such Level II Assays (a) as such resultspertain to control animals used in such Level II Assays, (b) to the extent thatthe Third Party does not prohibit Xenogen Cranbury from providing suchinformation and (c) subject to Pfizer agreeing to use such information only forinternal research purposes. 4.4 Publicity. Except as required by law, and except for a mutuallyapproved press release to be issued upon signing of this Agreement, neitherparty may disclose the terms of this Agreement nor the research described in itwithout the written consent of the other party, which consent shall not beunreasonably withheld; provided, however, that Xenogen Cranbury may disclose theterms, or provide copies of this Agreement as necessary in the normal course ofbusiness to bankers, investors and others to obtain financing. 4.5 Disclosure Required by Law. If either party is required by law todisclose any Confidential Information of the other party, in connection with alegal or administrative proceeding, such party will promptly notify the otherparty in writing of such requirement or request. If the party whose ConfidentialInformation is the subject of such requested disclosure seeks appropriateprotective orders or other remedies to prevent or limit such disclosure, theother party will cooperate with such effort. If the party whose ConfidentialInformation is thesubject of such requested disclosure fails to obtain such remedy, or providesthe other party with a written waiver of its confidentiality obligationsregarding the Confidential Information covered by such legal requirement orrequest, then the other party may comply with such requirement or request bydisclosing only such portion of Confidential Information as its legal counseldetermines it is required to disclose. 4.6 Disclosure of Inventions. If, in the course of performing theResearch Program, any employee or consultant of either party makes any inventionwithin Program Technology, then such party shall promptly inform the other ofsuch invention. Xenogen Cranbury shall cooperate with Pfizer, at Pfizer’sexpense, to prosecute and protect any patents or other intellectual propertyrights in such invention. Such cooperation shall include without limitationidentification of all inventors and assignment by all inventors of patent orother rights to Pfizer in such invention. 4.7 Publication. Notwithstanding this Agreement’s provisions regardingconfidentiality, results obtained in the course of the Research Program may besubmitted for publication only after scientific review by the Research Committeeand subsequent approval by management of both Xenogen Cranbury and Pfizer, who’sapproval or disapproval shall be given within thirty (30) days of their receiptof manuscripts and within fourteen (14) days of their receipt of an abstract forpresentation at, or inclusion in the proceedings of a scientific meeting, or fora transcript of an oral presentation to be given at a scientific meeting. 5. INTELLECTUAL PROPERTY RIGHTS 5.1 Ownership. Xenogen Cranbury Technology shall be owned by XenogenCranbury. All Pfizer Technology and Program Technology made in connection withthe Research Program shall be owned by Pfizer. 5.2 Licenses to Pfizer. 5.2.1 Subject to the terms and conditions of this Agreement, XenogenCranbury grants to Pfizer a perpetual, worldwide, non-exclusive, royalty-freelicense to make and use, but not to sell, Xenogen Cranbury Technology (i) forPfizer to perform the Research Program, and (ii) to the extent necessary forPfizer to use the Program Technology. 5.2.2 Subject to the terms and conditions of this Agreement, XenogenCranbury grants to Pfizer a perpetual, worldwide, non-exclusive, royalty-freelicense, without the right to sublicense, to make and use, but not to sell theLevel IIIXC Assays. In addition, Pfizer may use the Level IIIXC Assays withThirdParties provided only that Pfizer shall own all and any intellectual propertyresulting from such use. 5.3 Licenses to Xenogen Cranbury 5.3.1 Subject to the terms and conditions of this Agreement, Pfizergrants to Xenogen Cranbury a worldwide, non-exclusive, royalty-free license tomake and use, but not to sell Pfizer Technology (i) for Xenogen Cranbury toperform the Research Program, and (ii) to the extent necessary for XenogenCranbury to use the Program Technology within the scope of the license grantedin 5.3.2. 5.3.2 Subject to the terms and conditions of this Agreement, Pfizergrants to Xenogen Cranbury a worldwide, perpetual, non-exclusive, royalty-freelicense, without the right to sublicense, to make, use, and sell ProgramTechnology, other than Level IIIP Assays. For the avoidance of doubt, pursuantto this Section 5.3.2 Pfizer agrees that Xenogen Cranbury may disclose to ThirdParties, any and all protocols relating to the Program Technology (other thanLevel IIIP Assays) in connection with Xenogen Cranbury’s performance of ContractResearch Services for Third Parties. 5.3.3 Subject to the terms and conditions of this Agreement, Pfizergrants to Xenogen Cranbury a perpetual worldwide, non-exclusive, royalty-freelicense, without the right to sublicense, to make, use, and sell Level IIIPAssays to perform Contract Research Services after the Period of Exclusivity.For the avoidance of doubt, pursuant to this Section 5.3.3 Pfizer agrees thatXenogen Cranbury may disclose to Third Parties, any and all protocols relatingto the Level IIIP Assays in connection with Xenogen Cranbury’s performance ofContract Research Services for Third Parties after the Period of Exclusivity. 6. ACQUISITION OF RIGHTS FROM THIRD PARTIES During the Contract Period, Xenogen Cranbury and Pfizer shall each promptlynotify each other of any appropriate opportunities to acquire in any manner fromthird parties, technology or patents or information which it proposes to use inthe course of performing the Research Program. Xenogen Cranbury and Pfizershall discuss if such rights should be acquired in connection with the ResearchProgram and, if so, whether by Xenogen Cranbury, Pfizer or both and how thecosts for such acquisition should be allocated, it being understood that nothingherein shall obligate either party to obtain such rights or, if it does acquiresuch rights, to make such rights available for use in the Research Program. 7. OTHER AGREEMENTS This Research Agreement, together with its Exhibits, sets forth the entireagreement between the parties with respect to the subject matter and supersedeall other agreements and understandings between the parties with respect tosame. 8. TERM, TERMINATION AND DISENGAGEMENT 8.1 Term. Unless sooner terminated as provided below or extended bymutual agreement of the parties, this Agreement shall expire on December 28,2003. 8.2 Events of Termination. The following events shall constitute eventsof termination (“Events of Termination”): (a) if any written representation or warranty by Xenogen Cranbury orPfizer, made in Section 9.1 shall prove to have been incorrect in any materialrespect when made; and (b) Xenogen Cranbury or Pfizer shall fail in any material respect toperform or observe any term, covenant or understanding contained in thisAgreement or in any of the other documents or instruments delivered pursuant to,or concurrently with, this Agreement, and any such failure shall remainunremedied for thirty (30) days after written notice to the failing party. Except as provided in Section 8.2(b), upon the occurrence of any Eventof Termination, the party not responsible may, by written notice to the otherparty, terminate this Agreement. 8.3 Effects of Termination. 8.3.1 Termination of this Agreement by either party pursuant toSection 8.2 will not terminate the confidentiality obligations and theexclusivity and licenses pursuant to Section 4.1, 5.2 and 5.3. 8.3.2 In the event of termination by either party pursuant to thisSection 8, neither party shall be liable to the other because of suchtermination, for compensation, reimbursement of damages on account of the lossof prospective profits, of anticipated sales or on account of expenditures,inventory, investments, leases or commitments in connection with the business orgoodwill of Xenogen Cranbury or Pfizer. 8.3.3 Notwithstanding the foregoing Section 8.3.2, termination ofthis Agreement for any reason shall not release any party hereto from anyliability which, at the time of such termination, has already accrued to theother party or which is attributable to a period prior to such termination norpreclude either party from pursuing any rights and remedies it may havehereunder or at law or in equity with respect to any breach of this Agreement,including without limitation Xenogen Cranbury’s right to receive all paymentsaccrued under Section 3. 9. REPRESENTATIONS AND WARRANTIES; LIMITATION OF LIABILITY 9.1 Representations, Warranties and Covenants. Xenogen Cranbury andPfizer each represents and warrants as follows: 9.1.1 It is a corporation duly organized, validly existing and is ingood 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 ineach jurisdiction in which the conduct of its business or the ownership of itsproperties requires such qualification; and it has all requisite power andauthority, corporate or otherwise, to conduct its business as now beingconducted, to own, lease and operate its properties and to execute, deliver andperform this Agreement. 9.1.2 The execution, delivery and performance by it of this Agreementhave been duly authorized by all necessary corporate action and do not and willnot (a) require any consent or approval of its stockholders beyond the approvalsalready obtained, (b) violate any provision of any law, rule, regulations,order, writ, judgement, injunction, decree, determination or award presently ineffect having applicability to it or any provision of its certificate ofincorporation or by-laws or (c) result in a breach of or constitute a defaultunder any material agreement, mortgage, lease, license, permit or otherinstrument or obligation to which it is a party or by which it or its propertiesmay be bound or affected. 9.1.3 This Agreement is a legal, valid and binding obligation of itenforceable against it in accordance with its terms and conditions, except assuch enforceability may be limited by applicable bankruptcy, insolvency,moratorium, reorganization or similar laws, from time to time in effect,affecting creditor’s rights generally. 9.1.4 It is not under, and will not enter into, any obligation to anyperson, or entity, contractual or otherwise, that is conflicting or inconsistentin any respect with the terms of this Agreement or that would impede thediligent and complete fulfillment of its obligations. 9.1.5 It has the right, power and title to enter into this Agreementand grant the rights and licenses and/or sublicenses granted herein. 9.2 Disclaimer of Warranties. EXCEPT FOR THE EXPRESS WARRANTY SET FORTHABOVE IN SECTION 9.1, NEITHER XENOGEN CRANBURY NOR PFIZER MAKES ANY OTHERWARRANTIES (EXPRESS, IMPLIED, STATUTORY OR OTHERWISE) WITH RESPECT TO THEXENOGEN CRANBURY TECHNOLOGY, PFIZER TECHNOLOGY, AND PROGRAM TECHNOLOGY, ANDSPECIFICALLY DISCLAIMS ANY AND ALL IMPLIED WARRANTIES OF MERCHANTABILITY ANDFITNESS FOR A PARTICULAR PURPOSE, AND ALL WARRANTIES OF NONINFRINGEMENT OF THIRDPARTY INTELLECTUAL PROPERTY RIGHTS. 9.3 LIMITATION OF LIABILITY. IN NO EVENT SHALL EITHER PARTY BE LIABLE TOTHE OTHER OR ANY OTHER ENTITY FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL ORINDIRECT DAMAGES, UNLESS SUCH PARTY DEMONSTRATES THAT THE OTHER PARTY’S BREACHCONSTITUTED WILLFUL MISCONDUCT OR GROSS NEGLIGENCE. 9.4 Covenants. Throughout the Contract Period, Xenogen Cranbury andPfizer each shall: 9.4.1 maintain and preserve its corporate existence, rights,franchises and privileges in the jurisdiction of its incorporation, and qualifyand remain qualified as a foreign corporation in good standing in eachjurisdiction in which such qualification is from time to time necessary ordesirable in view of their business and operations or the ownership of theirproperties; and 9.4.2 comply in all material respects with the requirements of allapplicable laws, rules, regulations and orders of any government authority tothe extent necessary to conduct the Research Program, except for those laws,rules, regulations, and orders it may be contesting in good faith. 10. INDEMNIFICATION Pfizer and Xenogen Cranbury each will indemnify, defend and hold each otherharmless for any and all damages, settlements, costs, legal fees and otherexpenses incurred in connection with a claim by a third party against eitherparty based on any action or omission of the indemnifying party’s agents,employees, or officers related to its obligations under this Agreement;provided, however, that the foregoing shall not apply (i) if the claim is foundto be based upon the grossnegligence, recklessness or willful misconduct of the party seekingindemnification; or (ii) if such party fails to give the other party promptnotice of any claim it receives and such failure materially prejudices the otherparty with respect to any claim or action to which its obligation pursuant tothis Section applies. Notwithstanding the foregoing, Pfizer hereby expresslyagrees to indemnify, defend and hold harmless Xenogen Cranbury (and allofficers, directors, agents and Affiliates of Xenogen Cranbury) for any and allclaims arising from clinical trials pursued by Pfizer or its Affiliates and/orsublicensees, the exercise of rights granted to Pfizer under Section 5.2 and/orclaims arising from patent rights, Pfizer patent rights, Program Technology andPfizer Technology except for intellectual property claims with respect toXenogen Cranbury patent rights, or Xenogen Cranbury Technology. The indemnifyingparty agrees to pay, subject to the limitations set forth herein, any finaljudgement entered against the indemnified party on such issue in any such claimdefended by the indemnifying party. Each party shall cooperate with the otherduring the course of such a claim, and the indemnifying party shall keep theindemnified party(ies) reasonably informed of the progress and status of theclaim. The indemnifying party, in its sole discretion, shall choose legalcounsel, shall control the defense of such claim or action and shall have theright to settle same on such terms and conditions it deems advisable. 11. NOTICES All notices shall be in writing mailed via certified mail, return receiptrequested, courier, or facsimile transmission addressed as follow, or to suchother address as may be designated from time to time: If to Pfizer: Pfizer Global Research & Development Eastern Point Road Groton, CT 06340 Attention: President of Strategic Operations - PGRD-Groton copy to: Assistant General Counsel – PGRD – Groton If to Xenogen Cranbury: Xenogen Biosciences 5 Cedar Brook Drive Cranbury, NJ 08512 with a copy to: Xenogen Corporation 860 Atlantic Avenue Alameda, CA 94501 Attn: General Counsel Notices shall be deemed given as of the date received at the above specifiedaddress. 12. GOVERNING LAW This Agreement shall be governed by and construed in accordance with thelaws of the State of New Jersey, without reference to its conflict of lawsrules. The U.N. Convention for the Sale of Goods shall not apply. The exclusivevenue of any dispute arising out of or in connection with the performance orbreach of this Agreement shall be the New Jersey state courts located inMiddlesex County, New Jersey or the U.S. district court for the District of NewJersey. 13. MISCELLANEOUS 13.1 Binding Effect. This Agreement shall be binding upon and inure to thebenefit of the parties and their respective legal representatives, successorsand permitted assigns. 13.2 Headings. Paragraph headings are inserted for convenience ofreference only and do not form a part of this Agreement. 13.3 Counterparts. This Agreement may be executed simultaneously in two ormore counterparts, each of which shall be deemed an original. Signatures may betransmitted via facsimile, thereby constituting the valid signature and deliveryof this Agreement. 13.4 Amendment, Waiver. This Agreement may be amended, modified,superseded or cancelled, and any of the terms may be waived, only by a writteninstrument executed by each party or, in the case of waiver, by the party orparties waiving compliance. The delay or failure of any party at any time ortimes to require performance of any provisions shall in no manner affect therights at a later time to enforce the same. No waiver by any party of anycondition or of the breach of any term contained in this Agreement, whether byconduct, or otherwise, in any one or more instances, shall be deemed to be, orconsidered as, a further or continuing waiver of any such condition or of thebreach of such term or any other term of this Agreement. 13.5 No Third Party Beneficiaries. No third party including any employeeof any party to this Agreement shall have or acquire any rights by reason ofthis Agreement. Nothing contained in this Agreement shall be deemed to constitute theparties partners with each other or any third party. 13.6 Assignment and Successors. This Agreement may not be assigned byeither party, except that each party may assign this Agreement and the rightsand interests of such party, in whole or in part, to any of its Affiliates, anypurchaser of all or substantially all of its assets related to the subjectmatter of this Agreement, or to any successor corporation resulting from anymerger or consolidation of such party with or into such corporations. 13.7 Force Majeure. Neither Pfizer nor Xenogen Cranbury shall lose anyrights hereunder or be liable to the other for damages or losses (except forpayment obligations) on account of failure of performance by the defaultingparty if the failure is occasioned by war, strike, fire, Act of God, earthquake,flood, lockout, embargo, governmental acts or orders or restrictions, failure ofsuppliers, or any other reason where failure to perform is beyond the reasonablecontrol, and not caused by the negligence, intentional conduct or misconduct, ofthe nonperforming party and the nonperforming party has exerted all reasonableefforts to avoid or remedy such force majeure; provided, however, that in noevent shall a party be required to settle any labor dispute or disturbance. 13.8 Severability. If any provision of this Agreement is or becomesinvalid or is ruled invalid by any court of competent jurisdiction or is deemedunenforceable, it is the intention of the parties that the remainder of theAgreement shall not be affected so long as the essential benefits of thisAgreement remain enforceable and obtainable. *** CONFIDENTIAL TREATMENT REQUESTED IN WITNESS WHEREOF, the parties have caused this Agreement to be executedby their duly authorized representatives. PFIZER INC By:/s/ George M. Milne, Jr. Name: George M. Milne, Jr. Title: Senior Vice President XENOGEN BIOSCIENCES By: /s/ Pamela Reilly Contag Name: Pamela Reilly Contag Title: President

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