OPTION, COLLABORATION AND LICENSE AGREEMENT

This Option, Collaboration and License Agreement (the “ Agreement ”) is made and entered into effective as of January 12, 2009 (the “ Effective Date ”), by and between Micromet AG , having its principal place of business at Staffelseestrasse 2, 81477 Munich, Germany (“ Micromet ”), and Bayer Schering Pharma AG , having its principal place of business at Muellerstrasse 178, 13353 Berlin, Germany   (“ Bayer ”).  Micromet and Bayer each may be referred to herein individually as a “ Party ,” or collectively as the “ Parties .”

A.            Micromet has developed a proprietary platform for discovery, research, and development of BiTE ^® antibodies, which may have applications in the treatment of cancer and other diseases.

B.            Bayer is a pharmaceutical company with experience in the development and commercialization of pharmaceutical products.

C.            Micromet desires to grant, and Bayer desires to receive an option to collaborate with Micromet on the research and parts of the development of products comprising BiTE antibodies binding to a specific target in accordance with the terms described below.

D.            Upon exercise of the option rights provided hereunder, the Parties will collaborate on the development of such products, with Bayer being responsible for the further development and commercialization of such products on a worldwide basis.

In consideration of the foregoing premises and the mutual promises and covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

When used in this Agreement, capitalized terms will have the meanings as defined below and throughout the Agreement.

1.1            “ Affiliate ” means a legal entity that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with a Party.  For purposes of this definition only, “control” and, with correlative meanings, the terms “controlled by” and “under common control with” means (a) the possession, directly or indirectly, of the power to direct the management or policies of a legal entity, whether through the ownership of voting securities or by contract relating to voting rights or corporate governance, or (b) the ownership, directly or indirectly, of more than 50% of the voting securities or other ownership interest of a legal entity.

1.3            “ Applicable Law ” means the laws, rules, and regulations, including any statutes, rules, regulations, guidelines, or other requirements that may be in effect from time to time and apply to the development, manufacture, registration, and marketing of the Product in the countries of the Territory, including any such statutes, rules, regulations, guidelines, or other requirements of the FDA or the EMEA.

1.4            “ [***] ” means any Third Party performing an activity pursuant to the [***] on the basis of a contractual arrangement with Bayer.

1.5            [***] means any Patents or Know-How generated by employees or agents of a [***] in the course of, in furtherance of, and as a direct result of such employees or agents performing an activity pursuant to the [***] that (i) are [***], (ii) [***] of [***] or [***] of [***], and (iii) [***.]

1.6            [***] has the meaning as defined in Section 7.3.1.

1.7            “ [***] Development Plan ” means the description of the development activities for the Product under the [***] from the date of the plan.

1.8            “ [ *** ] Technology ” means any Patent or Know-How (i) owned or Controlled by [***] or its Affiliates as of the Effective Date; or (ii) independently discovered or reduced to practice after the Effective Date by [***] or its Affiliates in performing activities other than the [***] or [***] conducted pursuant to this Agreement.

1.9            “ [***] ” means the development program conducted by or on behalf of [***] or any of [***] under this Agreement for the Product [***] for such Product.

1.10            “ [ *** ] ” means any Patents or Know-How that (i) [***] that perform activities pursuant to the [***] conducted under this Agreement in the course of, in furtherance of, and as a direct result of such employees, agents or independent contractors performing an activity pursuant to the [***]; (ii) [***]of [***] or [***] of [***]; and (iii) are [***] [***] [***] [***] [***] [***] [***;] provided that the foregoing will not include (a) any [***] Technology; and (b) any [***] by [***] of [***] of the [***] in the course of, in furtherance of, and as a direct result of such employees, agents or independent contractors performing an activity [***].

1.11            “ BiTE Antibody ” means any bi-specific, single-chain antibody binding via [ *** ] to T cells.

1.12            “ BLA ” means a Biologics License Application, supplemental Biologics License Application, or similar application to be filed with the FDA, and any equivalent applications in jurisdictions outside the United States of America, including a marketing approval application for submission to the EMEA.

1.13            “ Business Day ” means any day that is not a public holiday in the Federal Republic of Germany, the State of Berlin, or the State of Bavaria.

1.14            “ Change of Control ” means with respect to any entity (the “ Acquired Entity ”) (a) any sale, exchange, transfer, or issuance to or acquisition by one or more Third Parties of shares representing more than fifty percent (50%) of the aggregate ordinary voting power entitled to vote for the election of directors represented by the issued and outstanding stock of the Acquired Entity or any Affiliate that directly or indirectly controls the Acquired Entity (whether by sale or merger, but excluding the issuance of shares in financing transactions), whether such sale, exchange, transfer, issuance or acquisition is made directly or indirectly, beneficially or of record or in one transaction or a series of related transactions; (ii) a merger or consolidation under applicable law of the Acquired Entity with a Third Party in which the shareholders of the Acquired Entity or any Affiliate that directly or indirectly controls the Acquired Entity immediately prior to such merger or consolidation do not continue to hold immediately following the closing of such merger or consolidation at least fifty percent (50%) of the aggregate ordinary voting power entitled to vote for the election of directors represented by the issued and outstanding stock of the entity surviving or resulting from such consolidation; or (iii) a sale or other disposition of all or substantially all of the assets of the Acquired Entity to one (1) or more Third Parties in one transaction or a series of related transactions.

1.15            “ Collaboration Target ” means the whole or part of [***] (“[***]”) identified by the [***] entry name [***] and [***]  and all of [***].

1.16            “ Collaboration Program ” means the [***] conducted pursuant to this Agreement with respect to the Collaboration Target.

1.17            “ [***] ” means (i) any invention that is conceived, and any Know-How that is generated solely or jointly by employees, agents or independent contractors of either or both Parties in the course of, in furtherance of, and as a direct result of such employees, agents or independent contractors performing an activity pursuant to the [***], and (ii) any Patent to the extent claiming such invention or Know-How.

1.18            “ Commercialization ” means the manufacture, marketing, promotion, advertising, selling and distribution of the Product in a country after all required Marketing Approvals have been obtained in such country.  The term “ Commercialize ” has a correlative meaning.

1.19            “ Commercially Reasonable Efforts ” means the level of efforts consistent with the reasonable practices of (i) in the case of Bayer: a company in the prescription pharmaceutical industry comparable in size and operations to Bayer, or (ii) in the case of Micromet: a company in the discovery, research and development of antibodies, determined, in each case, based upon conditions then prevailing, [***] provided, however, that Commercially Reasonable Efforts requires that the Party in accordance with its standard practices [***].

1.20            “ Control ” and, with correlative meaning, the term “ Controlled ”, means, with respect to a Party and any Patent, Know-How, or other intellectual property right, the ability to grant the other Party access, a license, a sublicense or the right to use (as applicable) such Patent, Know-How, or intellectual property right as provided in this Agreement without violating the terms of any license granted by, or agreement or other arrangement with, any Third Party.

1.21            “ D2 Decision ” means the decision by Bayer whether or not to continue the development of a Product following the review of the data and information as further described in Exhibit A .

1.22            “ D3 Decision ” means the decision by Bayer whether or not to continue the development of a Product following the review of the data and information as further described in Exhibit A .

1.23            “ Development Expenses ” means all costs and expenses incurred by a Party in carrying out any activities to be performed pursuant to the [***] Development Plan, calculated in accordance with U.S. generally accepted accounting principles (or IFRS, if and when enacted in the U.S.) consistently applied and such Party’s cost accounting systems, provided that the cost of a Party’s FTEs performing such activities will be calculated at the FTE Rate.

1.24            “ EMEA ” means the European Medicines Agency, or any successor agency thereto.

1.25            “ Executive Officer ” means (a) in the case of [***], the [***] of [***]; and (b) in the case of [***], the [***].

1.26            “ FDA ” means the United States Food and Drug Administration, or any successor agency thereto.

1.27            “ Field ” means the treatment of diseases and conditions in humans or animals.

1.28            “ First Commercial Sale ” means the date on which Bayer or an Affiliate or a licensee of Bayer first sells commercially for use or consumption by the public, following receipt of all Marketing Approvals necessary to commence regular commercial sales, a Product to a Third Party. A sale of a Product by Bayer to an Affiliate or licensee will not constitute a First Commercial Sale.  Sales prior to receipt of all Marketing Approvals necessary to commence regular commercial sales in a particular country that are made in furtherance of obtaining Marketing Approval in such country, such as so-called “treatment IND sales,” “named patient sales” and “compassionate use sales,” will not be construed as a First Commercial Sale.

1.29            “ FTE ” means the equivalent of a total of [***] hours per year of scientific or technical work on or directly related to the execution or implementation of the [***] Development Plan, or other tasks to be performed under this Agreement, carried out by a qualified employee or consultant of a Party.  Scientific or technical work may include, but is not limited to, research, experimental laboratory work, developing manufacturing processes for the Product, conducting pre-clinical and clinical development of the Product, recording and writing up results, reviewing literature and references, holding scientific discussions, and attending conferences in the relevant field.

1.30            “ FTE Rate ” means €[***] per FTE, which amounts include, for each FTE, [***] and [***] (excluding items provided for separately under the applicable Development Plan), [***] and a [***] plus [***].

1.31            “ IND ” means any clinical trial application, including any Investigational New Drug Application filed or to be filed with the FDA, and any equivalent application in jurisdictions outside the United States of America, including Investigational Medicinal Product Dossier filed or to be filed with the EMEA.

1.32            “ Indication ” means a tumor of an organ or any discrete form or precursor condition of a tumor or treatment thereof for which a BLA may be filed.

1.33            [***] has the meaning as defined in Section 7.3.1.

1.34            “ [***] Development Plan ” means the plan and budget for the research and development of the Product during the [***], as may be amended in accordance with Section 4.3.

1.35            “[*** ] ” means the research and development program of the Product conducted [***] up to and including [***] that have been initiated prior to the [***] for the Product.

1.36            “ JPT ” has the meaning as defined in Section 3.6.1.

1.37            “ JSC ” has the meaning as defined in Section 3.1.

1.38            “ Know-How ” means (a) any scientific or technical information, results and data of any type whatsoever, in any tangible or intangible form whatsoever, that is not in the public domain or otherwise publicly known, including databases, practices, methods, techniques, specifications, formulations, formulae, knowledge, know-how, skill, experience, test data including pharmacological, medicinal chemistry, biological, chemical, biochemical, toxicological and clinical test data, analytical and quality control data, stability data, studies and procedures, and manufacturing process and development information, results and data, and (b) any biological, chemical, or physical materials that are not in the public domain or otherwise available to the public; all to the extent not claimed or disclosed in a Patent.

1.39             “License Effective Date” has the meaning as defined in Section 2.3.

1.40            “ Licensed Technology ” means the Micromet Technology and Sublicensed Technology.

1.41            “ Major Market ” means each of the [***], the [***], [***], [***], [***], [***] and [***].

1.42            “ Marketing Approval ” means with respect to a regulatory jurisdiction, any and all approvals, [***] of any federal, state or local regulatory agency, department, bureau or other governmental entity, necessary for [***], Commercialization or sale of a Product in such regulatory jurisdiction, including, where applicable, (a) [***] in such regulatory jurisdiction, (b) [***] (including any prerequisite manufacturing approval or authorization related thereto), (c) [***] approval and (d) [***] and [***].

1.43            [***] means any Third Party engaged in the research, development or Commercialization of BiTE Antibodies on the basis of a license under the Micromet Technology or any other contractual arrangement with Micromet relating to the Micromet Technology.

1.44             “[ *** ]” means any Patents or Know-How of a [***] that (i) are [***] (ii) [***] and (iii) [***].

1.45            “ [ *** ] Technology ” means (i) [***] generated solely by [ *** ] Affiliates’ employees or by a Third Party on Micromet’s behalf; and (ii) any Patent or Know-How generated by an employee or independent contractor of [***] during the [***] conducting research and development activities on BiTE Antibodies binding to the Collaboration Target, excluding the [ *** ] Patent or any Know-How comprising inventions claimed therein.

1.46            “ [ *** ] ” means any Patents or Know-How licensed or acquired by Micromet from a Third Party other than a [***] that (i) [***], and (ii) [***].

1.47            “ Micromet Product ” means any product consisting of or containing a BiTE Antibody binding to a target other than the Collaboration Target.

1.48            “ Micromet Technology ” means (i) the Patents listed on Exhibit C and any Know-How necessary or useful for the development and Commercialization of the Product in the Field, each to the extent Controlled by Micromet as of the Effective Date; and (ii) any [***] [***] and [***] with respect to which the Parties have executed an amendment to this Agreement pursuant to Section 7.4.2.

1.49             [ *** ] ” means any Patents or Know-How, other than [***], that (i) [***] (ii) [***] and (iii) [***].

1.50            “ Net Sales ” means the amount invoiced by  Bayer, its Affiliates or sublicensees for sales of the Product to unaffiliated Third Parties less the following deductions applicable to the Product determined in accordance with U.S. GAAP or IFRS and with Bayer’s, or its Affiliate’s or sublicensee’s standard methods as generally and consistently applied:

(a)            transportation charges, distribution, packing and handling charges, and insurance charges to the extent included in the invoice price;

(b)            sales and excise taxes or customs duties or any other governmental charges imposed upon the sale of the Product (other than taxes based on income), to the extent included in the invoice price;

(c)            sales performance bonuses paid to distributors, and rebates and premiums granted or allowed in connection with the sale of a Product;

(d)            allowances or credits to customers on account of governmental requirements, price differences arising in connection with sales in countries where the price is fixed in local currency, but payments are made in another currency, rejection, outdating, returns or recalls of the Product;

(e)            quantity discounts, cash discounts or chargebacks granted in connection with the sale of the Product;

(f)            provisions for retroactive price reductions;

(g)            costs of customer programs agreed upon by the Parties in writing such as cost effectiveness or patient assistance studies or programs designed to aid in patient compliance with medication schedules in connection with the sale of a Product;

(h)            [***].

Sales between the Parties, or between the Parties and their Affiliates or sublicensees, for resale will be disregarded for purposes of calculating Net Sales.  The Parties recognize that (a) Bayer’s customers may include persons in the chain of commerce who enter into agreements with Bayer as to price even though title to the Product does not pass directly from Bayer to such customers and even though payment for such Product is not made by such customers directly to Bayer and (b) in such cases, chargebacks paid by Bayer to or through a third party (such as a wholesaler) can be deducted by Bayer pursuant to subsection (e) above. Any deductions above which involve a payment by Bayer will be taken as a deduction against aggregate sales for the period in which the payment or deduction is made. Any of the items set forth above that would otherwise be deducted from the invoice price in the calculation of Net Sales but which are separately charged to, and paid by, Third Parties will not be deducted from the invoice price in the calculation of Net Sales. In the case of any sale of a Product for consideration other than cash, such as barter or countertrade, Net Sales will be calculated on the fair market value of the consideration received as agreed by the Parties. If any discounts or other similar deductions are granted or allowed in connection with sales of  the Product together with other products of Bayer, its Affiliates or sublicensees, the discounts or deductions will be allocated to Products and such other products on a pro rata basis based on the respective list prices of the Product and such other products.

In the event a Product is sold in the form of a combination product containing one or more active ingredients in addition to a Product, Net Sales for such combination product will be adjusted by multiplying actual Net Sales of such combination product by the fraction A / (A+B) where A is the invoice price of the Product, if sold separately, and B is the invoice price of any other active ingredient or ingredients in the combination, if sold separately. If, on a country-by-country basis, the other active ingredient or ingredients in the combination are not sold separately in that country, Net Sales will be calculated by multiplying actual Net Sales of such combination product by the fraction A / C where A is the invoice price of the Product if sold separately, and C is the invoice price of the combination product. If, on a country-by-country basis, neither the Product nor the other active component or components of the combination product is sold separately in said country, Net Sales will be determined between the Parties in good faith.

1.51            “ Patents ” means (a) all patents and patent applications in any country or supranational jurisdiction, and (b) any provisionals, substitutions, divisions, continuations, continuations in part, reissues, renewals, registrations, confirmations, reexaminations, extensions, supplementary protection certificates and the like, of any such patents or patent applications.

1.52            “ Phase 1 Trial ” means a clinical trial of a pharmaceutical product on healthy subjects or patients with the primary purpose of determining safety, metabolism and pharmacokinetic properties and clinical pharmacology of such product, as more fully defined in 21 C.F.R. § 312.21(a), or its successor regulation, or the equivalent in any foreign country, including any clinical trial that is a combination Phase 1 Trial and Phase 2 Trial.

1.53            “ Phase 2 Trial ” means a clinical trial in human patient population to determine the safe and effective dose range in the proposed therapeutic indication, as more fully defined in 21 C.F.R. § 312.21(b), or its successor regulation, or the equivalent in any foreign country.

1.54            “ Phase 3 Trial ” means a clinical trial in human patients designed to (a) establish that a drug is safe and efficacious for its intended use; (b) define warnings, precautions and adverse reactions that are associated with the drug in the dosage range to be prescribed; and (c) support BLA Approval of such drug, as more fully defined in 21 C.F.R. § 312.21(c), or its successor regulation, or the equivalent in any foreign country.

1.55            “ Pivotal Trial ” means (a) Phase 3 Trial or (b) a Phase 2 Trial that is of appropriate size and design to establish that a pharmaceutical product is safe and effective for its intended use, to define warnings, precautions and adverse reactions that are associated with the pharmaceutical product in the dosage range to be prescribed, and to support a BLA for such pharmaceutical product or label expansion of such pharmaceutical product. For clarity, the determination of whether a Phase 2 Trial is a Pivotal Trial for purposes of this Agreement will be based upon a determination by the relevant Regulatory Authority that such trial could be sufficient, depending on its outcome, to support the filing of a BLA for such pharmaceutical product or label expansion of such pharmaceutical product.

1.56            “ Positive D2 Decision ” means a D2 Decision to continue a [***].

1.57            “ Positive D3 Decision ” means a D3 Decision to continue a [***].

1.58            “ Product ” means any product containing or comprising a BiTE Antibody binding to the Collaboration Target developed pursuant to this Agreement, including all forms, presentations, doses and formulations thereof alone or in combination with other therapeutically active ingredients; it being understood that all pharmaceutical products that contain the same BiTE Antibody will be considered the same Product.

1.59            “ Project Team Leader ” has the meaning as defined in Section 3.6.2.

1.60            [*** ] Patent ” means the patent application filed on [***] under the no. [***] on the BiTE Antibody directed against [***] and any Patents arising therefrom.

1.61            “ Regulatory Authority ” means any national (e.g., the FDA), supra-national (e.g., the European Commission, the Council of the European Union, or the European Medicines Agency), regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity in each country of the world involved in the granting of Marketing Approval for the Product.

1.62            “ Regulatory Submission ” means any submission or application made or filed with a Regulatory Authority, including any IND or BLA.

1.63            “ Sublicensed Technology ” means any Patent or Know-How Controlled by Micromet pursuant to the Agreements listed in Exhibit D-1 and Exhibit D-2 .

1.64            “ Territory ” means all countries of the world, [***].

1.65            “ Third Party ” means any entity other than Micromet, Bayer or their respective Affiliates.

1.66            “ Valid Claim ” means (a) an issued claim of an issued patent that has not (i) expired or been canceled, (ii) been declared invalid by a decision of a court or other appropriate body of competent jurisdiction, from which no appeal is or can be taken, (iii) been admitted to be invalid or unenforceable through reissue, disclaimer or otherwise, or (iv) been abandoned or disclaimed; and (b) a claim included in a pending patent application that is being actively prosecuted and that has not been (i) canceled, (ii) withdrawn from consideration, (iii) finally determined to be unallowable by the applicable governmental authority (from which no appeal is or can be taken), or (iv) abandoned or disclaimed, provided, however, that if a claim of a patent application has been pending for more than [***] years, such claim will not constitute a Valid Claim for the purposes of this Agreement unless and until a Patent issues with such claim.

2.1             Option Grant.   Micromet hereby grants Bayer an exclusive option (the “ Option ”) during the Option Period (defined below) to license the Licensed Technology for the development and Commercialization of the Product and to collaborate with Micromet regarding such development and Commercialization of such Product on the terms set forth in this Agreement.

2.2             Option Fee.   Bayer will pay to Micromet a non-refundable, non-creditable option fee of €4,500,000 in accordance with the terms of Section 9.1 within thirty (30) days after the Effective Date.

2.3             Option Exercise.   Bayer may exercise the Option at any time during a period commencing on the Effective Date and ending at midnight (Central European Time) of January 5, 2010 (the “ Option Period ”) by providing Micromet with written notice (“ Option Exercise Notice ”) of Bayer’s desire to exercise the Option and making a payment to Micromet in the amount of € [ *** ] (the “ Option Exercise Fee ”). Bayer will notify Micromet, on a non-binding basis, of its intent regarding the exercise of the Option not later than ninety (90) days prior to the expiration of the Option Period.  Promptly after receipt of such declaration of intent, Micromet will provide to Bayer a schedule listing the exceptions, if any, to the representations and warranties made by Micromet in Section 15.2 or provide a written confirmation that there are none. Micromet will continuously provide updates to such schedule or confirmation whenever there is a change until one (1) Business Day after receipt of the Option Exercise Notice where Micromet will provide a final schedule or confirmation. If such final schedule or confirmation deviates from the last schedule or confirmation received from Micromet prior to dispatch of the Option Exercise Notice, Bayer may withdraw the Option Exercise Notice by providing written notice to Micromet within ten (10) Business Days from receipt of the final schedule or confirmation. Upon receipt by Micromet of the Option Exercise Notice and the Option Exercise Fee (the “ License Effective Date ”) prior to the expiration of the Option Period, Bayer will be granted the rights in this Agreement and all of the terms and conditions of this Agreement will be binding on the Parties, unless it withdraws its Option Exercise Notice in accordance with this Section 2.3.

2.4             Exclusivity.   During the Option Period, Micromet will not (i) negotiate, offer, enter into, or otherwise discuss with any Third Party any agreement granting any option or license with respect to the Licensed Technology for the Collaboration Target; or (ii) collaborate or provide services to a Third Party with respect to the Micromet Technology for the Collaboration Target or otherwise grant rights that would prevent, upon the exercise of the Option, the grant of the rights, licenses, and interests to Bayer under the terms and conditions of this Agreement.

2.5             Updates.   During the Option Period,   Micromet will provide Bayer with a quarterly update regarding its activities in respect of the BiTE Antibody binding to the Collaboration Target. Micromet will provide such update by telephone conference or a meeting, if the Parties agree, to designated representatives of Bayer. In addition, Micromet will provide a written report on the status and the results of such activities by September 30, 2009 and will thereafter, upon request of Bayer, provide Bayer the opportunity to review and discuss with Micromet any data and results generated during the Option Period.

2.6             Binding Effect.   Prior to the License Effective Date, (a) only the following Sections are legally binding on the Parties: 1, 2, 4.5.1, 4.6.1, 7.8.2, 7.8.3, 9.1, 10, 11, 12, 13.4, 15, 16 and 17, and (b) the foregoing terms (other than Section 10, 13.4, 15, 16 and 17) will terminate and be of no further force and effect upon the earlier of (i) termination of this Agreement by Bayer pursuant to Section 12.3.1 or (ii) expiration of the Option Period without exercise of the Option in accordance with Section 2.3.

3.1             Establishment of Joint Steering Committee.   Promptly after the License Effective Date, the Parties will establish a joint steering committee (the “ JSC ”) to oversee the [***].  Each Party will appoint three employees to serve as their representatives on the JSC. From time to time, on written notice to the other Party, Micromet and Bayer each may substitute any of its representatives on the JSC unable to attend a meeting or replace a representative by a new one. Each Party will designate one of its members of the JSC as the “Co-Chair.” Subject to the provisions of this Section 3, the JSC will establish its own procedural rules for its operation.

3.2             Tasks of the JSC.   The JSC will: (a) review and approve any updates or amendments to the [***] Development Plan, including, subject to Section 4.3, any changes to the budget for the [***]; (b) monitor the progress of and coordinate the activities undertaken pursuant to the [***] Development Plan; (c) decide on the achievement of scientific or technical objectives and any go/no go criteria as described in the [***] Development Plan; (d) discuss and consider which Party files and prosecutes Patents for an invention within the [***] in accordance with the provisions of Section 7.8.1; (e) resolve any issues that could not be resolved by the JPT; (f) propose and consider amendments to the terms of this Agreement, provided that any such amendment will be made by the Parties solely pursuant to Section 17.6; and (g) take such other actions as are expressly delegated to the JSC in this Agreement.  The JSC will not have any power to amend this Agreement and will have only such powers as are specifically delegated to it under this Agreement.

3.3             JSC Meetings.   The JSC will meet not less than once every calendar quarter during the first year after the License Effective Date, and not less than once every six months thereafter. Meetings may be held in person or by means of telecommunication (telephone, video, or web conferences); provided that at least two meetings during the first year after the License Effective Date and one meeting per year thereafter will be held in person. The JSC may meet more frequently by agreement of the Parties or at the reasonable request of a Party with not less than twenty (20) Business Days notice to the other.  The Co-Chairs will alternately be responsible for organizing the meetings of the JSC and for distributing the agenda of the meetings.  The Co-Chairs will include on the agenda any item within the scope of the responsibility of the JSC that is requested to be included by a Party, and will distribute the agenda to the Parties no less than one week before any meeting of the JSC.  Each Party may, with the prior approval of the other Party which will not be unreasonably withheld, invite non-voting employees, consultants or advisors (which consultants and advisors will be under an obligation of confidentiality no less stringent than the terms set forth in Section 10) to attend any meeting of the JSC.  Each Party will bear its own costs associated with holding and attending JSC meetings.

3.4             Meeting Minutes.   The Co-Chair (or its designee) responsible for the organization of the respective JSC meeting will prepare the minutes, and send it to all members of the JSC for review and approval within twenty (20) days after the meeting.  Each Party will send any objections against the accuracy or completeness of such minutes by providing written notice to the other members of the JSC within fourteen (14) days of receipt of the minutes.  In the event of any such objection that is not resolved by mutual agreement of the Parties, such minutes will be amended to reflect such unresolved dispute.

3.5           Decision Making

3.5.1            The JSC will take action on matters within its power by unanimous consent of the Parties, with each Party having a single vote, irrespective of the number of representatives actually in attendance at a meeting, or by a written resolution signed by its representatives.

3.5.2            If the JSC is unable to reach unanimous consent on a particular matter, such matter will be resolved in a second JSC meeting to be held within twenty (20) Business Days from the meeting in which the disputed matter has remained unresolved. In the event that the JSC is again unable to resolve the matter, either Party may provide written notice of such dispute to the Executive Officer of the other Party.  The Executive Officers (or their respective designees, who must be members of the Party’s senior management, but who are not members of the JSC) of each Party will meet at least once in person to discuss the dispute and use their good faith efforts to resolve the JSC dispute within thirty (30) days after submission of such dispute to such officers. If the Executive Officers (or their designees) cannot reach agreement with respect to a JSC dispute within the thirty (30) day time period, [***].

3.5.3            Notwithstanding the terms of Section 3.5.2 above, if the matter concerns a dispute regarding the interpretation of this Agreement, the performance or alleged nonperformance of a Party’s obligations under this Agreement, or any other alleged breach of this Agreement, such matter will be resolved in accordance with the terms of Section 17.4.

3.6           Joint Project Team.

3.6.1            Promptly after the License Effective Date, the Parties will establish a joint project team (the “ JPT ”) for managing the day-to-day work within the [***], consisting of an appropriate number of representatives of each Party.  In particular, the JPT will have the following tasks: (a) developing and proposing any updates or amendments to the [***] Development Plan; (b) coordinating the activities undertaken pursuant to the [***] Development Plan, including assigning specific development tasks to the appropriate Party consistent with the terms of Section 4; (c) ensuring timely performance of the activities under the [***] Development Plan; (d) monitoring the expenses of the [***] and compliance with the budget in the [***] Development Plan; (e) making proposals on achievement of scientific or technical objectives and go/no go criteria pursuant to the [***] Development Plan; (f) making proposals on which Party files and prosecutes Patents for an invention within the [***] in accordance with the provisions of Section 7.8.1; (g) supporting each Party’s Patent filings within the [***]; and (h) preparing update reports for the Product and presenting such updates at the JSC meetings.

3.6.2            Each Party will designate one of its JPT members as the project team leader (the “ Project Team Leader ”) who will be the primary contact person for the other Party for matters relating to the development of the Product by such Party.  In order to ensure regular information of the JSC on the progress with respect to the [***], the Project Team Leaders will be permanent guests of the JSC.

3.6.3            The JPT will meet not less than once a quarter. Meetings may be held in person or by means of telecommunication (telephone, video, or web conferences).  The JPT may meet more frequently by agreement of the Parties or at the reasonable request of a Party with not less than twenty (20) Business Days notice to the other.  The Project Team Leaders will alternately be responsible for organizing the meetings of the JPT and for distributing the agenda of the meetings.  The Project Team Leaders will include on the agenda any item within the scope of the responsibility of the JPT that is requested to be included by a Party, and will distribute the agenda to the Parties no less than one week before any meeting of the JPT.  Each Party may, with the prior approval of the other Party which will not be unreasonably withheld, invite non-voting employees, consultants or advisors (which consultants and advisors will be under an obligation of confidentiality no less stringent than the terms set forth in Section 10) to attend any meeting of the JPT.  Each Party will bear its own costs associated with holding and attending JPT meetings.

3.6.4            The Project Team Leader (or his or her designee) responsible for the organization of the respective JPT meeting will prepare the minutes, and send it to all members of the JPT for review and approval within twenty (20) days after the meeting.  Each Party will send any objections against the accuracy or completeness of such minutes by providing written notice to the other members of the JPT within fourteen (14) days of receipt of the minutes.  In the event of any such objection that is not resolved by mutual agreement of the Parties, such minutes will be amended to reflect such unresolved dispute.

3.6.5            The JPT will take action by unanimous consent of the Parties, with each Party having a single vote, irrespective of the number of representatives actually in attendance at a meeting, or by a written resolution signed by the designated representatives of each Party.  If the JPT is unable to reach unanimous consent on a particular matter, such matter will be submitted to the JSC for resolution in accordance with Section 3.5.  The JPT will not have any power to amend this Agreement and will have only such powers as are specifically delegated to it under this Agreement.

3.7             [ *** ] of JSC and JPT.   The JSC and the JPT will be [***].

4.1             [***] Development Plan.   The initial [***] Development Plan is attached as   Exhibit B .  Promptly following the License Effective Date, the Parties will consider and discuss amendments to the initial [***] Development Plan to reflect the anticipated activities, budgets and timelines then applicable.  The [***] Development Plan and any amendments thereto will be designed to accomplish the filing of INDs for the Product in one or more Major Markets, will set specific objectives for carrying out development activities in the course of the [***], will include a budget for such activities, and will be reviewed and updated as necessary or appropriate by the JPT and JSC in accordance with the provisions of Section 4.3.

4.2             Allocation of Responsibilities.   As and to the extent described in the [***] Development Plan, the Parties will be responsible for the performance of the activities as follows:

4.2.1            Micromet will be responsible for research and preclinical development of the Product up to the filing of the first IND for the applicable Product, including any protein engineering, and in vitro and in vivo pharmacology and laboratory studies within the toxicology testing, except that Bayer will conduct certain preclinical studies (e.g. imaging studies) as well as the in-life phase and histopathologic evaluation of toxicology studies prior to the filing of the first IND for such Product as further detailed in the [***] Development Plan.  Unless otherwise agreed by the Parties, Micromet will generate BiTE Antibodies binding to the Collaboration Target.

4.2.2            Micromet will be responsible for the development of a production cell line, pre-formulation studies, bioanalytics and process development, and the manufacturing of research-grade material, and Bayer will be responsible for scale up, further process optimization and the manufacturing, fill & finish of Product for GLP tox testing and clinical trials.

4.2.3            The Parties will collaborate on the Phase 1 Trials of the Product conducted during the [***], with [***] holding the IND for the Product and taking the lead in the performance of Phase 1 Trials and associated regulatory activities, and [***] performing [***] and participating in the [***] of such Phase 1 Trials (including [***] and the review and assessment of [***] and participation in the discussions with the meetings with the [***] and the [***] for the various the clinical trials).

4.2.4            Bayer will be fully responsible for the further development of the Product after completion of [***]   in accordance with the [***] Development Plan, and the regulatory activities, including BLA filings.

4.3             Revisions of the [***] Development Plan.   The JPT will periodically review and propose to the JSC updates of the [***] Development Plan to reflect the progress achieved and the further development activities to be undertaken by the Parties in the development of the Product, but not less than once every year in conjunction with the Parties’ budget and program review cycle.  Notwithstanding anything in this Agreement, any of the following changes to a [***] Development Plan may be implemented only by an amendment of this Agreement executed by two duly authorized officers of Micromet and Bayer: (a) any reduction or increase of any budget set forth in such [***] Development Plan by more than [***]; (b) any reduction or increase of the aggregate amount to be spent during the [***] or in a calendar year pursuant to such [***] Development Plan by more than [***]; (c) any change to the allocation of responsibilities between the Parties set forth in Section 4.2 with respect to such [***] Development Plan; and (d) the allocation of responsibility for any tasks unassigned in the then-current [***] Development Plan. In addition, any revisions to the [***] Development Plan must be approved by the JSC in accordance with Section 3.2.

4.4             Development Expenses.   Bayer will bear its own Development Expenses and any Development Expenses incurred by Micromet that have been budgeted in the [***] Development Plan, and will pay such Development Expenses of Micromet as specified in Section 8.1; provided, however, that   Micromet will not have any obligation to perform any activities under the [***] for which it is not being reimbursed by Bayer, and provided further, that Micromet will be reimbursed for activities that have been either delayed or accelerated as required by Bayer in an amended [***] Development Plan.

4.5           Diligence in Development

4.5.1            Micromet will use Commercially Reasonable Efforts to generate a BiTE Antibody binding to the Collaboration Target, and to perform the activities assigned to it in the [***] Development Plan.  All efforts of Micromet’s Affiliates will be considered efforts of Micromet for the purpose of determining Micromet’s compliance with its obligations under this Section 4.5.1.

4.5.2            Bayer will use Commercially Reasonable Efforts to perform the activities assigned to it in the [***] Development Plan, to perform the [***] Development Plan, and to develop and obtain Marketing Approval for the Product in the Major Markets. All efforts of Bayer’s Affiliates, contractors or sublicensees will be considered efforts of Bayer for the purpose of determining Bayer’s compliance with its obligations under this Section 4.5.2. If Bayer fails to utilize such diligence and if such failure constitutes a material breach of this Agreement, Micromet may terminate the Agreement in accordance with and under the conditions specified in Section 12.2. [***].

4.6           Records; Reports.

4.6.1             Micromet Records.   All activities performed by or on behalf of Micromet during the Option Period and under the [***] Development Plan will be completely and accurately recorded in written records, in sufficient detail and in good scientific manner appropriate for patent and regulatory purposes. Such records will be retained by Micromet for at least [***] after the termination of this Agreement or for such longer period as may be required by any Applicable Law.

4.6.2             Bayer Records.   All activities performed by or on behalf of Bayer in the course of the Collaboration Program (including all Regulatory Submissions and activities and records related to Bayer’s regulatory activities) will be completely and accurately recorded in written records, in sufficient detail and in good scientific manner appropriate for patent and regulatory purposes. Such records will be retained by Bayer for at least [***] after the termination of this Agreement or for such longer period as may be required by any Applicable Law.

4.6.3             Inspection of Records. Each Party will have the right, during normal business hours and upon reasonable notice, to inspect and copy any such records, except that a Party may provide copies with redactions of any information that either is not licensed to the other Party or does not relate to the development, manufacture or Commercialization of the Product.

4.6.4             Reports on [ *** ].   Each Party will provide the JPT with regular oral or written reports detailing its development activities under the [***] Development Plan and the results of such activities.

4.6.5             [***] Development Plan; Reports on [ *** ].   Prior to the [***], Bayer will create and submit to Micromet a copy of the initial [***]Development Plan for the [***], which plan may be revised by Bayer from time- to-time. Bayer will report to Micromet on the [***] (including a [***] and one or more representatives of [***]  The [***] will provide Micromet in advance of [***] with a copy of the then-current [***] Development Plan. Representatives of other relevant Bayer functions may participate in the [***] In addition, Bayer will provide to Micromet on [***] written progress reports with a summary of past activities in the performance of the [***] and an updated [***] Development Plan not later than [***] following the end of the [***].

4.7             Subcontracting.   Each Party may perform any of its obligations under the Joint Development Plan through service providers such as e.g. contract research organizations, consultants or universities with the other Party’s prior written consent which will not be unreasonably withheld. The Party using a service provider will remain responsible to the other Party for the work performed by the service provider. Each Party will ensure that such service providers are bound in writing by obligations of confidentiality and non-use regarding Confidential Information that are substantially the same as those undertaken by the Parties pursuant to Section 10 hereof, that the agreement with such service providers contains customary terms providing for the assignment to such Party (sufficient for a Party to grant to the other Party the rights provided herein but subject to normal and customary retained rights of university or government collaborators) of all results developed in the course of performing the services for such Party and that any publication of such results will be subject to the other Party’s prior written consent.

4.8             Third Party Agreements .  The JPT will monitor and discuss during the JPT meetings the technologies, materials, and processes used in or required for the development or Commercialization of the Product. If either Party identifies any such technology, material, or process that is not yet licensed by either Party, then the Project Team Leader of such Party will bring the matter to the attention of the JPT at the next JPT meeting, or, if the JPT does no longer exist, of the other Party as soon as reasonably practicable. The Party who will be responsible for payments to the Third Party in accordance with Section 8.4 will have the first right to negotiate and enter into an agreement with respect to such technology, material or process, subject to the terms and conditions of this Agreement (including, without limitation, the allocation of costs described in Section 8.4). If the respective Party [***] or if it fails to [***] within [***] following the notice described above, then the other Party will have the right to [***] in its discretion, [***] with respect to such technology, material or process, subject to the terms and conditions of this Agreement. In any case, the Party negotiating such Third Party agreement will use reasonable efforts to secure a license that is sublicensable to the other Party for the Product on the same terms and conditions applicable to the negotiating Party.

4.9             Follow-up Program. If the first Product candidate fails and development of such Product is discontinued before [***], a new [***] for a replacement Product candidate (a “ Replacement Product ”) will be started at Bayer’s request, which request will be made in writing within [ *** ] after Bayer has decided to discontinue the development of the first Product candidate, or Bayer will terminate this Agreement  by giving [ *** ] written notice to Micromet within such period. Promptly following the receipt of such request, the Parties will: (a) [ *** ], if they have been [ *** ] pursuant to Section [ *** ]; (b) prepare a [***] Development Plan; and (c) conduct the development and Commercialization of the Replacement Product in accordance with the provisions of this Agreement.

5.1             Commercial Manufacturing.   Except as expressly otherwise provided in the [***] Development Plan, Bayer will be responsible for all commercial manufacturing activities related to the Product, including without limitation, process development and scale-up, further process optimization and the manufacturing, fill & finish of Product for GLP toxicology testing, clinical trials and commercial sale.

5.2             Commercialization.   Subject to Section 5.5, Bayer will be solely responsible for the Commercialization of the Product in the Territory during the Term.

5.3             Diligence in Commercialization.   Bayer’s diligence obligation during Commercialization will be [***] to [***] in the Major Markets after having received Marketing Approval for such countries; provided, however, where Bayer is marketing the Product through a Third Party or sublicensee, such Third Party or sublicensee will be obliged to [***] to Commercialize the Product in the Major Markets. If Bayer fails to comply with its obligation under this Section 5.3 and if such failure constitutes a material breach of this Agreement, Micromet may terminate the Agreement in accordance with and under the conditions specified in Section 12.2. [***]

5.4             Branding, Trademarks, Trade Dress, and Logos.   Bayer will solely own, and will be solely responsible for selecting, the trademark used to identify any Product that will be Commercialized in the Territory pursuant to this Agreement.  Bayer will oversee the filing, prosecution and maintenance of all trademark registrations for the Product in the Territory, and Bayer will be responsible for the payment of any and all costs relating to such filing, prosecution, and maintenance.  Bayer will have sole responsibility for, and will be sole owner of, all trade dress, logos, slogans, and designs used on and in connection with any Product that will be Commercialized in the Territory pursuant to this Agreement.

5.5             Right of First Negotiation for [ *** ].   If [***] desires to [***] a Product through one or more Third Parties in any country, it will notify [***] and will offer to [***] a right to [***] in such country.  If [***] does not notify [***] of its interest in [***] within [***] from receipt of [***] notice or if the Parties have not [***], or such longer period as the Parties may agree, [***] will be free to [***].

6.1             Regulatory Submissions; Inspections .  Bayer will be responsible for the preparation, filing, prosecution and maintenance of any Regulatory Submissions for the Product.  Bayer will promptly notify Micromet in writing and, to the extent reasonably possible, in advance of any meeting with or inspection by any Regulatory Authority relating to the Product.  Micromet will assist Bayer, as may be reasonably necessary, in the preparation of Regulatory Submissions and inspections by Regulatory Authorities, including providing necessary documents or other materials required by Applicable Law, and will, if requested by a Regulatory Authority, grant access to its personnel and facilities to representatives of Bayer and the Regulatory Authority, all at Bayer’s expense. With [***], Micromet may [***] with and [***] by [***] as [***].

6.2             INDs; Regulatory Approvals; Adverse Drug Experiences.   [***] will be responsible for obtaining and maintaining any [***] and [***] and other [***] for the Commercialization of the Product in the Territory, including communicating and preparing and filing all reports (including adverse drug experience reports) with the applicable regulatory authorities, provided that [***] will provide [***] with a reasonable opportunity to provide comments to such portions of filings where data generated by [***] are presented to the Regulatory Authorities. To the extent either Party receives any information regarding relevant safety information related to the use of the Product, such Party will promptly provide the other Party with such information as is required under Applicable Laws.  Prior to the enrolment of the first patient in a study related to a Product, the Parties will agree on a standard operating procedures implementing the requirements under Applicable Law for safety information exchange, which procedures, as may be amended from time to time upon mutual agreement of the Parties, will be incorporated in this Agreement by reference.

6.3             Communications with Regulatory Authorities.   [*** ] will be solely responsible for any communications with the regulatory authorities occurring or required in connection with obtaining or maintaining any [ *** ] and [ *** ] for the Product. [ *** ] will provide [ *** ] with [***]  relating to the Product, [***].

7.1           License and Sublicense Grants by Micromet.

7.1.1               Micromet Technology and [***].   Subject to the terms and conditions set forth in this Agreement, Micromet grants to Bayer an exclusive,  royalty-bearing license, under the Micromet Technology (except for any Sublicensed Technology), the [***] and Micromet’s interest in the [***], to perform any activities assigned to Bayer in the [***] Development Plan and to develop, have developed, make, have made, use, have used, offer for sale, have offered for sale, sell, have sold, import and have imported Product in the Field in the Territory.

7.1.2               Sublicensed Technology.   Subject to the terms and conditions set forth in this Agreement, Micromet grants to Bayer an exclusive, royalty-bearing sublicense, under the Sublicensed Technology, to perform any activities assigned to Bayer in the [***] Development Plan and to develop, have developed, make, have made, use, have used, offer for sale, have offered for sale, sell, have sold, import and have imported Product in the Field in the Territory. Bayer acknowledges and agrees that the rights, licenses and sublicenses granted by Micromet to Bayer in this Agreement are subject to this Agreement and [ *** ] Bayer covenants not to take or fail to take any action that violates [ *** ].

7.2           License Grants by Bayer.

7.2.1               Bayer Technology.   Subject to the terms and conditions set forth in this Agreement, Bayer grants to Micromet a non-exclusive, royalty-free license, under any applicable Patents or Know-How Controlled by Bayer during the [***] of the [***] (including the [***] and Bayer’s interest in the [***]) , for the sole purpose of conducting those development responsibilities assigned to Micromet under the [***] Development Plan.  Such license will be sublicensable solely to subcontractors approved by Bayer, such approval not be unreasonably withheld.

7.2.2               [ *** ] Technology.   Subject to the terms and conditions set forth in this Agreement, Bayer grants to Micromet a worldwide, sole (i.e. exclusive except as to Bayer and its Affiliates) royalty-free license under the [***] Technology to develop, have developed, make, have made, use, have used, offer for sale, have offered for sale, sell, have sold, import and have imported Micromet Products in the Field.  Sections [***], [***] and [***] will apply to the license to Micromet mutatis mutandis .

7.2.3               [ *** ].   Subject to the terms and conditions set forth in this Agreement, Bayer grants to Micromet an exclusive, worldwide, royalty-free license under [***] in the [***] to develop, have developed, make, have made, use, have used, offer for sale, have offered for sale, sell, have sold, import and have imported Micromet Products in the Field. Sections [***], [***] and [***] will apply to the license to Micromet mutatis mutandis .

7.2.4               [ *** ].   Micromet will have the right to [***], under the license granted under Section 7.2.2 and Section 7.2.3 only to [***] and only to those [***] that [***] the [***] of [***] to [***] pursuant to this Agreement.

7.3             [ *** ].

7.3.1               Ownership. Micromet will own all right, title and interest in and to any [***] Technology. Bayer will own all right, title and interest in and to any [***] generated solely by Bayer’s or Bayer’s Affiliates’ employees or by a Third Party on Bayer’s behalf (the [***]”). Any [***] generated [***] by employees of [***] or their respective Affiliates will be [***] by the Parties [***]”).

7.3.2               Disclosure of [ ***] .   Each Party will disclose to the other Party the development, making, conception or reduction to practice of any [***] within [***], and will ensure that such [***] is disclosed to it by its Affiliates and contractors as necessary for such Party to comply with its own obligations under this Section 7.3.2. The Parties will make such disclosure to the [***] or the [***] in the course of the performance of the [***]. If such [***] within [***] Technology or [***] Technology, the owner thereof pursuant to Section 7.3.1 above may withhold the disclosure to the other Party until after the filing of a patent application claiming such invention.

7.4             [ ***]

7.4.1              Bayer will have the right to request from time to time the disclosure of [***], any [***] and any [***]. Upon receipt of such request, Micromet undertakes to use reasonable efforts to provide Bayer a summary of such [***], [***], and [***] in such detail as is reasonably required for Bayer to determine its interest in [***] a [***] thereunder pursuant to this Section 7.4.  If Bayer desires to use or apply any [***] or [***] within the [***], [***], or [***] in the development or Commercialization of a Product, Bayer will notify Micromet thereof in writing, and the Parties will meet to discuss the extent to which such [***], [***], or [***] would be necessary for the development or Commercialization of the Product.  If Bayer determines that such [***], [***] or [***] would be necessary for the development or Commercialization of the Product and [***], then Bayer will provide Micromet with written notice of such determination, and the Parties will [***] the [***] for [***] such [***], [***] or [***] in the licenses granted to [***] under this Agreement (it being understood that Bayer will be responsible for [***] on account of any [***] or [***] to the extent arising from Bayer’s practice of [***] to such [***] except as provided in Section 7.12.2 or Section 8.4.2). If the Parties fail to [***], the procedure described in Section [***] will apply.

7.4.2              Upon execution of a [***] identifying the [***], [***], or [***] and reflecting the [***] by the [***] or established pursuant to Section 17.4.3(a), such [***] [***] and [***] will be deemed [***] and [***] under this Agreement; provided, however, that [***] or [***] to Third Parties, if such Third Parties are [***] that do not [***] of [***] to Micromet pursuant to this Agreement; and provided further, that [***] under this Agreement to [***] and [***] will be subject to any terms and conditions of [***] under which Micromet receives [***] to such [***] and [***].

7.5            [***]; [***].  Micromet will have the right to request from time to time the disclosure of [***] and [***].  Upon receipt of such request, Bayer undertakes to use reasonable efforts to provide Micromet a summary of such [***] and [***] in such detail as is reasonably required for Micromet to determine its interest in [***] pursuant to this Section 7.5. If Micromet desires to use or apply any [***] or [***] within the [***] or [***] in the development or Commercialization of a Micromet Product, Micromet will notify Bayer thereof in writing, and the Parties will meet to discuss the extent to which such [***] or [***] would be necessary for the development or Commercialization of a Micromet Product.  If Micromet determines that such [***] or [***] would be necessary for the development or Commercialization of a Micromet Product and [***], then Micromet will provide Bayer with written notice of such determination, and the Parties will [***] for the development and Commercialization of [***] (it being understood that Micromet will be responsible for all payments due to a Third Party on account of any [***] to any [***] to the extent arising from Micromet’s practice of [***]; provided, however, that such [***] will only be [***] by [***] to [***] and only to those [***] that [***] of [***] to [***] pursuant to this Agreement; provided further, that the license granted under this Agreement to [***] will be subject to any terms and conditions of the [***] under [***]; and provided further that Sections [***] and [***] of this Agreement shall apply [***] mutatis mutandis . If the Parties fail to [***] of Micromet’s notice, the procedure described in Section [***] will apply.

7.6             [***] by Bayer.   Subject to the terms and conditions of this Agreement, [***], Bayer will have the right [***] to a Third Party the [***] through [***]; provided, however, that (a) Bayer may not [***],  on a country-by-country basis in all or a portion of Europe or the United States other than for purposes of [***] after [***], (b) Bayer will [***] for the performance of Bayer’s obligations under this Agreement (either directly by Bayer or by [***]), and (c) Bayer provides to Micromet a [***] of such [***] that the [***], and [***] of this Agreement. For clarity, the Parties agree and acknowledge that [***] will be deemed to be the [***] for purposes of this Agreement if such Third Party has [***] and that Section 7.6 (a) shall not [***]

7.7             Reservation of Rights .   Bayer hereby covenants and agrees not to use or practice any Licensed Technology, nor cause or authorize any Affiliate or Third Party to use or practice any Licensed Technology, other than as expressly permitted in this Agreement.  Except for the rights specifically granted in this Agreement, Micromet reserves all rights to the Licensed Technology and reserves the right to utilize or allow Third Parties to utilize the Licensed Technology consistent with the terms of this Agreement.  In addition, Micromet reserves all rights in the Licensed Technology to the extent necessary for it to conduct those development responsibilities assigned to it under the [***] Development Plan.  No implied licenses are granted under this Agreement.

7.8           Filing, Prosecution and Maintenance of Patents.

7.8.1        [***]. Micromet will have the first right to file, prosecute, defend and maintain at its costs and in its name any Patents claiming inventions or discoveries that are [***] .  Bayer will have the first right to file, prosecute, defend and maintain at its costs and in its name any Patents claiming inventions or discoveries that are [***] Technology .   With regard to inventions or discoveries within the [***], the Parties will discuss on a case-to-case basis who will file, prosecute, defend and maintain Patents claiming such inventions or discoveries, based on the Parties’ understanding that Micromet will bear such responsibility with respect to Patents within [***]  more [***] to the [***] and that Bayer will bear such responsibility with respect to Patents within [***] more [ ***] to the [***].   Any such filing, prosecution and maintenance will be made [***] , but at the [***] costs.  The filing Party will reasonably inform the other Party and consult with the other Party and, to the extent possible, will undertake the filing, prosecution and defense of any Patents within [***] in a way that will not be detrimental to the prosecution, issuance and validity of Patents that are part of [***], or the development or Commercialization of the Product.  If the filing Party does not want to continue the prosecution of a patent application in the [***], it will inform the other Party thereof in writing with sufficient advance notice to reasonably enable the other Party to assume the filing or prosecution of such Patent at its cost. If the other Party decides to assume the filing or prosecution of such Patent, the filing Party will assign such Patent to the other Party.

7.8.2        [***] Patent.   Micromet will have the right to file, prosecute, defend and maintain at its costs the [***] Patents.  Micromet will reasonably inform Bayer and consult with Bayer and will undertake the filing, prosecution and defense of such Patents in a way that will not be detrimental to the prosecution, issuance and validity of Patents that are part of [***] or the [***] or [*** ].  If Micromet does not want to continue the prosecution of any such Patent, it will inform Bayer thereof in writing with sufficient advance notice to reasonably enable Bayer to assume the filing or prosecution of such Patent at its cost. If Bayer decides to assume the filing or prosecution of such Patent, Micromet will assign such Patent to Bayer.  Notwithstanding the generality of the foregoing, Micromet will provide to Bayer [***] of the [***] Patent by providing to Bayer all draft filings in advance of submission to the relevant patent authorities so that Bayer can comment, provide input and demand changes to such documents.  Micromet will implement such proposed changes, unless those changes would, in Micromet’s reasonable belief, [***] or [***].   In any event, Micromet will not abandon any claims or will not limit any claims specific to the [***] without Bayer’s prior written consent.  Micromet will file and maintain such Patents at its costs in the countries specified in Exhibit H   and advance notice regarding the timing of filings in such countries.  If Bayer wishes any such Patents to be filed and maintained in additional countries, it will notify Micromet accordingly and Micromet will file such Patents in such countries at Bayer’s cost.

7.8.3        Micromet Licensed Patents .  Except as provided in Section 7.8.2, Micromet will file, prosecute, defend and maintain at its costs and in its name any Patents within the Micromet Technology.  Micromet will provide Bayer with an annual oral report summarizing the status of patent applications, office actions (including restriction requirements) and substantive correspondence with the applicable patent office for such Patents and made during such annual year.

7.8.4        Cooperation. Each Party will keep the other Party reasonably informed of progress with regard to its filing, prosecution and maintenance of the Patents pursuant to this Section 7.8, and will consider in good faith the requests and suggestions of the other Party with respect to the foregoing.  Each Party will provide the other Party with quarterly reports summarizing (or providing copies as reasonably requested) of patent applications, office actions (including restriction requirements) and substantive correspondence with the applicable patent office for such Patents and made during such preceding calendar quarter.   Further, each Party will cooperate with the other Party, execute all lawful papers and instruments and make all rightful oaths and declarations as may be necessary in the preparation, prosecution and maintenance of all patents and other filings referred to in this Section 7.8.

7.9             Enforcement of Patents .

7.9.1        Notice.   If either Party learns that a Third Party is infringing or allegedly infringing any Patent within the Licensed Technology or the [***] to the extent related to a Product, it will promptly notify the other Party thereof including available evidence of infringement.  The Parties will cooperate and use reasonable efforts to stop such alleged infringement without litigation.

7.9.2        Enforcement Actions.

(a)            The Party owning a Patent within the Licensed Technology or the [***] will have the first right (but not the obligation) to take the appropr