[Novartis Corporation Letterhead]
**CONFIDENTIAL TREATMENT REQUESTED**
Chiron Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Attn: Xxxxxxx X. Xxxxx, Esq.
Senior Vice President and General Counsel
VIA FAX AND FEDERAL EXPRESS
September 30, 1999
Gentlemen:
This letter confirms the agreement between Chiron Corporation ("Chiron") on
behalf of itself and its wholly-owned subsidiary Chiron S.p.A., on the one hand,
and Novartis Corporation ("Novartis") to amend that certain Limited Liability
Company Agreement between them dated as of December 28, 1995, as amended (the
"LLC Agreement") in certain respects and to amend and to cause Chiron Funding
LLC (the "Company") to amend that certain Royalty Agreement between Chiron,
Chiron S.p.A. and the Company dated as of December 28, 1995 (the "Royalty
Agreement"). Terms not defined in this letter shall have the meaning set forth
in the LLC Agreement.
1. The parties hereby consent to the waiver and release by the Company of any
right to exercise a co-promotion option under paragraph 2.1.1(c) of the
LLC Agreement with respect to [CONFIDENTIAL TREATMENT REQUESTED]
developed and manufactured by [CONFIDENTIAL TREATMENT REQUESTED] as
licensee of Chiron patents and know how covering such vaccine (the
"[CONFIDENTIAL TREATMENT REQUESTED]" ). Accordingly, no co-promotion
right or Residual Right will arise under paragraph 4.3. or 4.4 of the LLC
Agreement with respect to [CONFIDENTIAL TREATMENT REQUESTED].
2. In lieu of any royalty or other amounts payable under Paragraph 1 of the
Royalty Agreement with respect to [CONFIDENTIAL TREATMENT REQUESTED],
Chiron shall pay and cause its Affiliates to pay to the Company (i)
[CONFIDENTIAL TREATMENT REQUESTED] of all net proceeds received by Chiron
or its Affiliates as upfront fees or running royalties from
[CONFIDENTIAL TREATMENT REQUESTED] or from any sub-licensee of
[CONFIDENTIAL TREATMENT REQUESTED] or successor licensee of Chiron or its
Affiliates in consideration of the grant of license rights under Chiron
patents or know how covering [CONFIDENTIAL TREATMENT REQUESTED] and (ii)
a Base Royalty Rate of [CONFIDENTIAL TREATMENT REQUESTED] of Net Sales by
Chiron and its Affiliates as distributors of [CONFIDENTIAL TREATMENT
REQUESTED].
3. In consideration of Novartis' consent to this letter agreement, Chiron
shall pay and cause its Affiliates to pay directly to Novartis (i)
[CONFIDENTIAL TREATMENT REQUESTED] of all net proceeds received by Chiron
or its Affiliates as upfront fees or running royalties from
[CONFIDENTIAL TREATMENT REQUESTED] or from any sub-licensee of
[CONFIDENTIAL TREATMENT REQUESTED] or successor licensee of Chiron or its
Affiliates in consideration of the grant of license under Chiron patents
or know how covering [CONFIDENTIAL TREATMENT REQUESTED] and (ii) a
royalty of [CONFIDENTIAL TREATMENT REQUESTED] of Net Sales by Chiron and
its Affiliates as distributors of [CONFIDENTIAL TREATMENT REQUESTED].
Chiron's obligations under this Paragraph 3 shall terminate upon the
exercise by Chiron of the Buyout Right under Paragraph 4.1 of the LLC
Agreement.
4. For the avoidance of doubt, amounts paid directly to Novartis under
Paragraph 3 above do not affect the calculation of the Buyout Amount under
Paragraph 4.1 of the LLC Agreement or the length of the Royalty Term under
Section 3 of the Royalty Agreement, while amounts paid to the Company
under Paragraph 2 above would affect such calculation.
5. Parties acknowledge Xxxxxx has requested and Novartis has agreed that
Novartis' obligation to purchase Units pursuant to section 2.3.2 of the
LLC Agreement is increased from not to exceed $250 million to not to
exceed $265 million. Parties further acknowledged that the effect of such
increase is to reduce to $702.5 million the Maximum Borrowing Amount as
defined in section 5.12 of that certain Investment Agreement between
Novartis and Chiron dated as of November 20, 1994 and as amended by
Paragraph E.1. of that certain FTC Agreement between Novartis and Chiron,
dated as of November 27, 1996. Further, parties confirm the terms of the
agreement of December 24, 1997.
If the foregoing accurately reflects our understanding effective as of the date
of this letter, please sign and return a copy.
Very truly yours,
NOVARTIS CORPORATION
by: /s/ XXXX XXXXXXXX
Xxxx Xxxxxxxx
Vice President and
Associate General Counsel
Agreed Chiron Corporation by:
/s/ XXXXXXX X. XXXXX
cc: Xxxxxxx Xxx, Esq., Novartis Pharma AG
