Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
Exhibit 10.1
COLLABORATION AND LICENSE AGREEMENT
THIS AGREEMENT, effective as of the 6th day of October, 1997 (the
"EFFECTIVE DATE") between BIOTRANSPLANT, INCORPORATED (previously
BIOTRANSPLANT, INC.), a corporation having a place of business at 3rd Avenue,
Bldg. 75, Charlestown Navy Yard, Charlestown, MA 02129, ("BTI"), and NOVARTIS
PHARMA AG, a Swiss corporation having a place of business at Xxxxxxxxxxxx 00,
XX-0000 Xxxxx, Xxxxxxxxxxx ("NOVARTIS").
WHEREAS each of the parties has substantial ongoing research and
development programs in the field of xenotransplantation;
WHEREAS the parties have determined that it is in their mutual
interests to enter into a collaborative research and development program as
soon as possible in order to accelerate the availability of
xenotransplantation products to the public;
WHEREAS the parties have therefore agreed on a collaborative
research and development program under certain terms and conditions;
NOW THEREFORE, in consideration of the faithful performance of the
covenants herein contained, the parties hereto agree as follows:
SECTION 1.
DEFINITIONS
1.1 "ADVERTISING" shall mean promotion of a CO-PROMOTION PRODUCT
through any means including, without limitation, (i) television and radio
advertisements, (ii) advertisements appearing in journals, newspapers,
magazines or other media, including direct mail, (iii) seminars and
conventions, (iv) sample drops, visual aids, three dimensional promotional
items, and other selling materials, (v) hospital formulary presentations,
(vi) presentations to state and other governmental formularies, (vii)
external market research projects and (viii) symposia and leader development
activities, (ix) marketing clinical studies (other than for drug regulatory
approvals), (x) promotional allowances granted to managed health care
accounts, (xi) sales force training.
1.2 "AFFILIATE" with respect to a PARTY shall mean any corporation
or other entity which controls, is controlled by, or is under common control
with such PARTY. A corporation or other entity shall be regarded as in
control of another corporation or entity if it owns or directly or indirectly
controls more than fifty percent (50%) of the voting stock or other ownership
interest of the other corporation or entity, or if it possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of the corporation or other entity or the power to elect or appoint
fifty percent (50%) or more of the members of the governing body of the
corporation or other entity. A corporation or entity which is under common
control with BTI as a result of a common venture capital entity is not an
AFFILIATE of BTI.
-2-
1.3 "AGREEMENT YEAR" shall mean the twelve-month period beginning on
the EFFECTIVE DATE and each subsequent twelve-month period thereafter.
1.4 "BTI BACKGROUND INVENTION" shall mean any new and useful
process, use, article of manufacture, or composition of matter applicable
within the FIELD and owned by BTI or an AFFILIATE of BTI or licensed to BTI
or an AFFILIATE of BTI as of the EFFECTIVE DATE.
1.5 "BTI BACKGROUND PATENT RIGHT" shall mean any patent or patent
application, or equivalent thereof, anywhere in the world, having one or more
claims to a BTI BACKGROUND INVENTION.
1.6 "BTI BACKGROUND TECHNOLOGY" shall mean any data, substances,
processes, materials, formulas, or information useful in the FIELD owned by
BTI or an AFFILIATE of BTI or licensed to BTI or an AFFILIATE of BTI as of
the EFFECTIVE DATE.
1.7 "BTI INVENTION" shall mean a BTI BACKGROUND INVENTION and/or a
FUNDED INVENTION.
1.8 "BTI OTHER PRODUCT" shall mean XENOGRAFT PRODUCT(S) for a HUMAN
XENOGRAFT SYSTEM in a country(ies) in which the license granted to NOVARTIS
for HUMAN XENOGRAFT SYSTEM under this Agreement has been terminated.
1.9 "BTI PATENT RIGHT" shall mean a BTI BACKGROUND PATENT RIGHT
and/or a FUNDED PATENT RIGHT.
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
1.10 "BTI TECHNOLOGY" shall mean BTI BACKGROUND TECHNOLOGY and/or
FUNDED TECHNOLOGY.
1.11 "CLINICAL STEERING COMMITTEE" shall mean the clinical committee
composed of representatives of BTI and NOVARTIS described in Section 4 hereof.
1.12 "COMPLETION OF THE RESEARCH STAGE" shall mean in the case of
each XENOGRAFT PRODUCT, the completion of work which is sufficient to enable
initiation of preclinical development of the XENOGRAFT PRODUCT for subsequent
filing of an IND application to the United States Food and Drug
Administration (or its equivalent to the appropriate regulatory agency in any
other nation in the TERRITORY).
1.13 "CO-PROMOTION AGREEMENT" shall mean the Co-Promotion Agreement
provided for in Section 6.1 of this Agreement.
1.14 "CO-PROMOTION PERCENTAGE" for each CO-PROMOTION PRODUCT shall
mean the percentage of co-promotion elected by BTI pursuant to Section 6.1.
1.15 "CO-PROMOTION PRODUCT" shall mean each and every XENOGRAFT
PRODUCT for use in a HUMAN XENOGRAFT SYSTEM which derive the xenograft from a
****************************************************************************
************************ as to which NOVARTIS has rights and which
contributes to acceptance of the xenograft.
-4-
1.16 "COPROMOTION PROFIT" with respect to a CO-PROMOTION PRODUCT
shall mean NET SALES of that CO-PROMOTION PRODUCT by NOVARTIS or its
AFFILIATE in the COPROMOTION TERRITORY less the sum of (i) COST OF GOODS
SOLD; (ii) MARKETING EXPENSES; and (iii) royalties paid to a third-party with
respect to sales of the CO-PROMOTION PRODUCT by NOVARTIS in the COPROMOTION
TERRITORY.
1.17 "COPROMOTION TERRITORY" shall mean the United States of
America and Canada.
1.18 "COST OF GOODS SOLD" shall mean the amount paid to a third
party for manufacture and supply of CO-PROMOTION PRODUCT if neither BTI nor
NOVARTIS is the supplier. Where BTI or NOVARTIS is the supplier of the
CO-PROMOTION PRODUCT, COST OF GOODS SOLD shall mean the aggregate amount of
the following costs incurred in manufacturing a CO-PROMOTION PRODUCT
(determined in a reasonable manner consistent with that PARTY's internal cost
accounting methods for other similar products and in accordance with
generally accepted accounting principles):
(i) direct labor (salaries, wages and employee benefits);
(ii) direct materials;
(iii) depreciation, repairs and maintenance and other
operating costs of production machinery utilized in the manufacture of
CO-PROMOTION PRODUCTS;
(iv) quality and in-process control;
(v) building operating costs assigned to the production
area;
-5-
(vi) production and material overhead incurred in the
manufacturing process, including:
manufacturing administration;
manufacturing personnel department;
manufacturing technology;
packaging development; material management, storage and
handling;
purchase and import area;
industrial engineering (including non-capital mandated
environmental costs); and
manufacturing and employee training.
1.19 "DEVELOPMENT COST" shall mean the aggregate amount of the
following costs incurred in preclinical development, clinical development and
regulatory approval of a DEVELOPMENT PRODUCT in which BTI has elected to
co-promote such CO-PROMOTION PRODUCT determined in a reasonable manner
consistent with NOVARTIS' internal cost accounting methods and in accordance
with generally accepted accounting principles, including but not limited to:
(i) direct labor (salaries, wages and employee benefits); (ii) materials and
supplies; (iii) depreciation, repairs and maintenance and other operating
costs of machinery and equipment utilized in preclinical and clinical
development and regulatory approval; (iv) building operating costs assigned
to the development area; (v) overhead incurred in clinical and preclinical
research and
-6-
development including administration costs, and regulatory approval costs;
and (vi) payments made to third parties or for services in connection with
preclinical and clinical development and regulatory approval.
1.20 "DEVELOPMENT PRODUCT" shall mean a CO-PROMOTION PRODUCT for the
CO-PROMOTION TERRITORY which has reached COMPLETION OF THE RESEARCH STAGE.
1.21 "FIELD" shall mean xenotransplantation wherein as part of the
xenotransplantation procedure (including pre-operative and post-operative
treatment), in order to facilitate acceptance of a xenograft, the recipient
of the xenograft is provided with bone marrow cells from the same species as
the xenograft donor.
1.22 "FUNDED INVENTION" shall mean any new and useful process, use,
article of manufacture, or composition of matter conceived or reduced to
practice in the course of FUNDED RESEARCH and which is owned by BTI or an
AFFILIATE of BTI or which is licensed to BTI or an AFFILIATE of BTI.
1.23 "FUNDED PATENT RIGHT" shall mean any patent or patent
application, or equivalent thereof, any where in the world, having one or
more claims to a FUNDED INVENTION.
1.24 "FUNDED RESEARCH" shall mean research performed by or on behalf
of BTI during the RESEARCH TERM in accordance with the FUNDED RESEARCH PLAN
and funded by NOVARTIS.
-7-
1.25 "FUNDED RESEARCH PLAN" shall mean the annual research plan
approved by each PARTY for FUNDED RESEARCH described in Section 2.3 of this
Agreement.
1.26 "FUNDED TECHNOLOGY" shall mean any data, substances, processes,
materials, formulas, or information developed in the course of FUNDED
RESEARCH and which is owned by BTI or an AFFILIATE of BTI or licensed to BTI
or an AFFILIATE of BTI.
1.27 "FUNDED XENOGRAFT PRODUCT" shall mean a XENOGRAFT PRODUCT which
is the subject of FUNDED RESEARCH.
1.28 "HUMAN XENOGRAFT SYSTEM" shall mean any product, process,
article, apparatus, substance, chemical, material or service used prior to,
during or after a human xenotransplantation procedure wherein as part of such
xenotransplantation procedure acceptance of a xenograft in a human is
facilitated by providing the human with bone marrow cells from the animal
species from which the xenograft is obtained.
1.29 "IND" shall mean an Investigational New Drug Application in the
United States or its equivalent in a MAJOR COUNTRY.
1.30 "LO-CD-2A ANTIBODY TECHNOLOGY" shall mean the antibody known as
LO-CD-2A and/or fragments, derivatives or analogs thereof; and compounds and
materials whether or not antibodies which are based on such antibody, as well
as all information, data, technology and patent rights directed thereto,
which exists as of April 1, 1993 or which may exist after April 1, 1993 and
which is owned by or licensed to BTI.
1.31 "MAJOR COUNTRY" means the United States of America, United
Kingdom, France, Italy, Germany, Japan and Canada.
-8-
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
1.32 "MARKETING EXPENSES" shall mean *********************************
*******************************************************************************
********************************************************************(determined
in a reasonable manner************* *******************************************
**** and in accordance with generally accepted accounting principles) in ******
connection with: **************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*********************************************incurred in the marketing of
CO-PROMOTION PRODUCT. It is expressly understood that marketing and market
function does not include selling or selling function.
1.33 "NET SALES" shall mean with respect to any XENOGRAFT PRODUCT or
BTI OTHER PRODUCT the invoiced sales price of such XENOGRAFT PRODUCT or BTI
OTHER PRODUCT, as the case may be, billed to independent third party
customers in bona fide arms length transactions *******************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
**************
-9-
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
************.
In the event a sale is made between a PARTY and its AFFILIATE or a
sublicensee for resale, then NET SALES for determining a payment under this
Agreement shall be the higher of (i) net sales to the AFFILIATE or
sublicensee, as the case may be, calculated in the manner of NET SALES or
(ii) the NET SALES of the AFFILIATE or sublicensee, as the case may be.
1.34 "PARTY(S)" shall mean NOVARTIS and/or BTI, as the case may be.
1.35 "PLA" shall mean a Product License Application in the United
States or its equivalent in a MAJOR COUNTRY or any equivalent application
which is used to obtain regulatory approval for marketing of a XENOGRAFT
PRODUCT in a MAJOR COUNTRY.
1.36 "PRE-MARKETING EXPENSES" shall mean the costs incurred by a
PARTY for ADVERTISING prior to commercial sale of a CO-PROMOTION PRODUCT
1.37 "RESEARCH COSTS" shall mean the aggregate amount of the
following costs incurred in research determined in a reasonable manner
consistent with BTI's
-10-
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
internal cost accounting methods and in accordance with generally accepted
accounting principles, including but not limited to: **************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
********************************************.
1.38 "RESEARCH STEERING COMMITTEE" shall mean the research committee
composed of representatives of BTI and NOVARTIS described in Section 4 hereof.
1.39 "RESEARCH TERM" shall mean unless earlier terminated the
three-year period beginning on the EFFECTIVE DATE and any extension thereof
agreed to by the parties.
1.40 "NOVARTIS COLLABORATION PATENT RIGHT" shall mean any patent or
patent application or equivalent thereof, anywhere in the world, having one
or more claims based on NOVARTIS COLLABORATION TECHNOLOGY, which is owned by
NOVARTIS or its AFFILIATES or as to which NOVARTIS or its AFFILIATES have
transferable rights.
1.41. "NOVARTIS COLLABORATION TECHNOLOGY" shall mean any data,
substances, processes, materials, formulas or information useful in the FIELD
which is developed or created by or on behalf of NOVARTIS or its AFFILIATES
or its
-11-
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
sublicensee(s) which incorporate or are based on or derived by use of BTI
TECHNOLOGY. An incidental, immaterial or insubstantial use of BTI TECHNOLOGY
by NOVARTIS or its AFFILIATES or sublicensees in the development of data,
substances, processes, materials, formulas or information shall not cause
such to become NOVARTIS COLLABORATION TECHNOLOGY.
1.42. "SELLING EXPENSES" shall mean amounts paid or incurred in
connection with:***************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
************************************.
1.43. "TERRITORY" shall mean all countries of the world.
1.44. "XENOGRAFT PRODUCT" shall mean any and all articles,
compositions, apparatuses, substances, chemicals, materials, processes,
methods or services for a HUMAN XENOGRAFT SYSTEM (i) covered by one or more
claims of a BTI PATENT ********************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
-12-
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
******************************************************. With respect to item
(v) above, the PARTIES will mutually agree as to which, if any, products of
item (v) shall be included as XENOGRAFT PRODUCT and on the terms applicable
thereto and if the PARTIES cannot reach mutual agreement, either PARTY can
submit same to binding arbitration in accordance with Appendix D.
1.45. "XENOGRAFT TECHNOLOGY" shall mean BTI TECHNOLOGY and/or
NOVARTIS COLLABORATION TECHNOLOGY.
-13-
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
SECTION 2.
FUNDED RESEARCH
2.1 Subject to the termination provisions of Section 14, NOVARTIS
shall make the following payments to support FUNDED RESEARCH:
AGREEMENT YEAR PAYMENT
-------------- -------
1 *********
2 **********
3 **********
The payment in respect of the first AGREEMENT YEAR shall be due and
payable within ten (10) days of the EFFECTIVE DATE. The payments in respect
of AGREEMENT YEARS 2 and 3 shall be due and payable by the first day of the
AGREEMENT YEAR in question.
2.2 BTI shall perform FUNDED RESEARCH in accordance with the FUNDED
RESEARCH PLAN. NOVARTIS understands and agrees that the FUNDED RESEARCH PLAN
is BTI's best estimate of the FUNDED RESEARCH to be performed and of the cost
and the timing of expenditures required for such FUNDED RESEARCH and,
therefore, BTI shall not be obligated to perform FUNDED RESEARCH beyond the
RESEARCH COSTS set forth in the FUNDED RESEARCH PLAN. The RESEARCH COSTS for
the first AGREEMENT YEAR shall not exceed *********************
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
********** and for each of the second and the third AGREEMENT YEARS shall not
exceed **************************. If in any Agreement Year, the amounts set
forth in paragraph 2.1 above exceed ***** of the actual RESEARCH COSTS of BTI
for FUNDED RESEARCH in year 1, ***** in year 2, and ***** in year 3, the
excess for such year shall be used for FUNDED RESEARCH in the following
year(s). Any excess remaining at the end of the RESEARCH TERM shall be
reimbursed promptly to NOVARTIS.
2.3 During the RESEARCH TERM, at least three months prior to the end
of an AGREEMENT YEAR, BTI shall prepare and submit to the RESEARCH STEERING
COMMITTEE a plan for research in the FIELD which is to be performed by BTI in
the next AGREEMENT YEAR with funds provided by NOVARTIS pursuant to Section
2.1. The FUNDED RESEARCH PLAN shall provide for the performance of research
in the FIELD and a total budget for such research, having RESEARCH COSTS
which are the amount funded by NOVARTIS pursuant to Section 2.1 plus the
amount to be funded by BIOTRANSPLANT for the applicable AGREEMENT YEAR. Such
RESEARCH COSTS shall include direct costs categorized in accordance with
Section 2.4 hereinafter, and a fixed sum for indirect costs, if included. The
RESEARCH PLAN as approved by the PARTYS, and the RESEARCH STEERING COMMITTEE
for an AGREEMENT YEAR shall be the FUNDED RESEARCH PLAN for the AGREEMENT
YEAR. In the event that the PARTYS do not reach agreement as to a research
plan prepared by BTI in accordance with this Section 2.3 within thirty (30)
days after submission thereof, the plan shall be
-15-
determined by binding arbitration in accordance with Appendix D. The FUNDED
RESEARCH PLAN for the first and second AGREEMENT YEARS is attached as
Appendix C. It is expressly understood that the dates in the FUNDED RESEARCH
PLAN contemplated a start date of January 1, 1997 and will be amended in a
manner consistent with the EFFECTIVE DATE.
2.4 BIOTRANSPLANT shall keep accurate records in a separate FUNDED
RESEARCH account of the budget and costs incurred in each year of FUNDED
RESEARCH, categorized according to the following line items: personnel
expenses, laboratory materials, electronic data processing expenses, travel
expenditures, depreciation, occupancy fees, third-party contract research
payments, other expenses. Such records shall also provide the basis for any
indirect cost allocation. NOVARTIS shall have the right, no more frequently
than once in respect of each AGREEMENT YEAR of FUNDED RESEARCH, to inspect
the accounts of BIOTRANSPLANT, and to the extent permitted by its agreement
with MGH and to the extent BTI sub-contracts FUNDED RESEARCH to MGH, at
pre-agreed times convenient to BIOTRANSPLANT and MGH, in order to verify and
determine the disposition of its funding pursuant to Section 2.1.
-16-
SECTION 3.
RESEARCH PRODUCT
3.1 BTI shall provide to the RESEARCH STEERING COMMITTEE quarterly
written summaries and annual detailed written reports of the FUNDED RESEARCH
and the results thereof carried out in the reporting period in question.
3.2 At least six (6) months prior to the end of the RESEARCH TERM,
the PARTYS shall review the FUNDED RESEARCH and shall discuss extension of
the RESEARCH TERM. The RESEARCH TERM shall be extended upon mutual agreement
of the PARTYS which shall include agreement as to a FUNDED RESEARCH PLAN and
the funding obligations of the PARTYS in the extended period.
SECTION 4.
MANAGEMENT OF RESEARCH AND DEVELOPMENT
4.1 A joint research committee comprised of two named
representatives of NOVARTIS and two named representatives of BTI, and a
chairman appointed by BTI, which is reasonably acceptable to NOVARTIS, with
the initial chairman being Dr. Xxxxx Xxxxx (the "RESEARCH STEERING
COMMITTEE"), shall meet at least once each calendar quarter during the
RESEARCH TERM. Such meeting shall be at times and places agreed to by the
PARTY(S). At such meetings, the RESEARCH STEERING COMMITTEE will discuss and
determine the FUNDED RESEARCH as well as preclinical development matters
relating thereto, and will provide advice with respect to XENOGRAFT PRODUCTS.
In addition, the RESEARCH STEERING COMMITTEE shall,
-17-
together with the PARTYS, approve the FUNDED RESEARCH PLAN, and shall discuss
and determine when a XENOGRAFT PRODUCT(s) has reached COMPLETION OF THE
RESEARCH STAGE. During the RESEARCH TERM each PARTY shall provide the
RESEARCH STEERING COMMITTEE with sufficient information and data with respect
to each XENOGRAFT PRODUCT to enable the RESEARCH STEERING COMMITTEE to
determine if and when a XENOGRAFT PRODUCT has reached COMPLETION OF THE
RESEARCH STAGE in the CO-PROMOTION TERRITORY. In the event that, without
considering the vote of the chairman, there is a deadlock, NOVARTIS shall
have the right to cast the deciding vote, except in the case of research
performed under the control of Xx. Xxxxx at MGH, in which case Xx. Xxxxx
shall have the right to cast the deciding vote.
4.2 A joint clinical committee comprised of two named
representatives of NOVARTIS and two named representatives of BTI, and chaired
by a fifth person designated by NOVARTIS and reasonably acceptable to BTI
(the "CLINICAL STEERING COMMITTEE") shall meet at least once each calendar
quarter (or at such less frequent intervals as the CLINICAL STEERING
COMMITTEE determines) beginning when a CO-PROMOTION PRODUCT for which
regulatory approval is to be sought in the CO-PROMOTION TERRITORY has reached
the COMPLETION OF THE RESEARCH STAGE at times and places agreed to by the
PARTY(S). At such meetings, the CLINICAL STEERING COMMITTEE shall discuss and
determine clinical and regulatory matters with respect to the CO-PROMOTION
PRODUCTS in the CO-PROMOTION TERRITORY and shall also advise the RESEARCH
STEERING COMMITTEE, with respect to proposed
-18-
clinical trials and regulatory matters relating thereto. NOVARTIS shall
provide to the members of the CLINICAL STEERING COMMITTEE written and oral
reports which shall reasonably detail and evaluate the work NOVARTIS has
performed, or intends to perform, with respect to clinical and regulatory
matters as it relates to a CO-PROMOTION PRODUCT, as requested by the CLINICAL
STEERING COMMITTEE. The CLINICAL STEERING COMMITTEE shall manage clinical,
regulatory matters with respect to CO-PROMOTION PRODUCTS in the CO-PROMOTION
TERRITORY.
4.3 Decisions of each of the RESEARCH STEERING COMMITTEE and the
CLINICAL STEERING COMMITTEE shall be decided by a majority vote and shall
require the presence of at least one representative of each PARTY. The PARTYS
agree to use their best efforts to cause their respective representatives to
attend such meetings.
4.4 During the RESEARCH TERM, BTI and NOVARTIS shall each appoint a
primary contact person to coordinate matters between BTI and NOVARTIS with
respect to FUNDED RESEARCH and with respect to development under Section 5.
Each PARTY shall notify the other within thirty (30) days of the date of this
Agreement of the appointment of its contact person and shall notify the other
PARTY as early as practical before changing this appointment, which it shall
be free to do at any time.
4.5 To the extent not prohibited by confidentiality obligations to
third parties, representatives of NOVARTIS may, upon reasonable notice and at
times reasonably acceptable to BTI, visit the facilities where FUNDED
RESEARCH is being conducted by BTI and consult informally with BTI during
such visits and by telephone with respect to XENOGRAFT PRODUCT.
-19-
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
SECTION 5.
DEVELOPMENT PRODUCT
5.1 With respect to each DEVELOPMENT PRODUCT in the CO-PROMOTION
TERRITORY, the CLINICAL STEERING COMMITTEE shall determine the work to be
performed by NOVARTIS for preclinical, clinical development and regulatory
approval thereof.
5.2 With respect to each DEVELOPMENT PRODUCT in the CO-PROMOTION
TERRITORY, NOVARTIS shall promptly submit to the CLINICAL STEERING COMMITTEE
a plan(s) for the preclinical, clinical development and/or regulatory filings
for such DEVELOPMENT PRODUCT, as the case may be, which shall be updated as
required and at least once an AGREEMENT YEAR ninety (90) days prior to the
end of an AGREEMENT YEAR, which plan shall include a budget for the
applicable AGREEMENT YEAR. The committee shall consider such plan, and
updates thereof and such plan and updates as approved by such steering
committee shall be the DEVELOPMENT PLAN for such DEVELOPMENT PRODUCT.
5.3 NOVARTIS shall develop and secure regulatory approval for each
DEVELOPMENT PRODUCT in the CO-PROMOTION TERRITORY in accordance with the
DEVELOPMENT PLAN therefor. Subject to reimbursement of a portion thereof by
BTI if BTI elects to copromote as set forth herein, NOVARTIS shall
pay************* ********** of the DEVELOPMENT COST for each DEVELOPMENT
PRODUCT both inside and outside the CO-PROMOTION TERRITORY.
-20-
5.4 The clinical development and regulatory filings of a DEVELOPMENT
PRODUCT in the CO-PROMOTION TERRITORY shall be managed by NOVARTIS and
regularly assessed and reviewed by the CLINICAL STEERING COMMITTEE.
5.5 To the extent not prohibited by confidentiality obligations to a
third party, NOVARTIS shall provide to the members of the CLINICAL STEERING
COMMITTEE written and oral reports which shall reasonably detail and evaluate
development work relating to a DEVELOPMENT PRODUCT performed by or for
NOVARTIS. Such written reports shall be sent to each member of the CLINICAL
STEERING COMMITTEE as required by the CLINICAL STEERING COMMITTEE but no less
than at three (3) month intervals.
5.6 For each DEVELOPMENT PRODUCT, within sixty (60) days after the
end of each calendar year, NOVARTIS shall provide to BTI details as to the
DEVELOPMENT COSTS incurred for the calendar year for the CO-PROMOTION
TERRITORY.
SECTION 6.
CO-PROMOTION
6.1 BTI shall have the right to co-promote each CO-PROMOTION PRODUCT
with NOVARTIS in the CO-PROMOTION TERRITORY in accordance with a copromotion
agreement which includes the terms attached hereto as Appendix B. If BTI
wishes to copromote a CO-PROMOTION PRODUCT in accordance with this
subsection, BTI shall advise NOVARTIS of its intention to do so no later than
ten (10) business days after NOVARTIS provides BTI with written notice that
NOVARTIS filed a Product
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
License Application or New Drug Application to the United States Food and
Drug Administration (or the equivalent thereof in Canada) for a CO-PROMOTION
PRODUCT. The PARTYS shall promptly initiate discussions with respect to the
terms and conditions of the CO-PROMOTION AGREEMENT, in addition to those
specified in Appendix B which have been agreed to by the parties, and shall
mutually agree to the CO-PROMOTION AGREEMENT. The election shall include the
percentage which BTI elects to co-promote which percentage shall not exceed
*********************. In the event that the PARTYS do not reach an agreement
within ninety (90) days after BTI elects to co-promote, the PARTYS shall
submit to binding arbitration in accordance with Appendix D, the terms of the
Agreement as to which agreement has not been reached.
6.2 With respect to each CO-PROMOTION PRODUCT in each country as to
which BTI exercises its right to co-promote in order to retain such
co-promotion rights, BTI shall ************************************************
************** of the DEVELOPMENT COSTS and ***********************************
********************** of the PRE-MARKETING EXPENSES spent for such
CO-PROMOTION PRODUCT with respect to such country up to the time of the filing
of the PLA and in each case together with accrued interest at the rate of six
percent (6%) compounded annually, which shall be due and payable on the later
of (i) thirty (30) days after BTI receives from NOVARTIS a written invoice
therefor including details as to the DEVELOPMENT COSTS and PRE-MARKETING
EXPENSES for each year and an appropriate allocation thereof as in the
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
next sentence or (ii) ninety (90) days after written notification to BTI of
the filing of a PLA or its equivalent or NDA or its equivalent in such
country. In the event that DEVELOPMENT COSTS and PRE-MARKETING EXPENSES
incurred with respect to a CO-PROMOTION PRODUCT are attributable to work
which is useful in developing such CO-PROMOTION PRODUCT for countries other
than the country(ies) in which BTI elects to co-promote, then for the purpose
of determining the amount thereof which BTI is to ********** under this
Agreement and the Co-Promotion Agreement, such DEVELOPMENT COSTS and
PRE-MARKETING EXPENSES shall be fairly allocated between the country in which
BTI elects to co-promote and such other countries. If the parties do not, in
good faith, reach agreement on the DEVELOPMENT COSTS and PRE-MARKETING
EXPENSES, including such allocation, either can submit same to arbitration in
accordance with Appendix D except that in such arbitration the arbitrators
shall have the right to determine as the DEVELOPMENT COST and PRE-MARKETING
EXPENSES the position of either PARTY or an amount therebetween. In the event
a PARTY elects to submit the dispute to arbitration, **********************the
amount which is not in dispute within the time set forth in this Section 6.2,
and as to the amount in dispute BTI can elect to pay or not to pay such amount
to NOVARTIS. If BTI pays the amount in dispute, and in the arbitration it is
determined that a lesser amount was payable by BTI, NOVARTIS shall reimburse
the excess together with interest at the rate of six percent (6%) compounded
annually, ***********************************************.
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
If BTI does not pay the amount in dispute and in the arbitration it is
determined that an amount greater than the amount paid by ********** should
have been paid, **************** ********************************* the
greater amount determined in the arbitration with interest at the rate of six
percent (6%) compounded annually, *********************************************
************* or (ii) not pay such greater amount in which case the
CO-PROMOTION PERCENTAGE shall be the CO-PROMOTION PERCENTAGE elected by BTI
multiplied by a fraction, the numerator of which is the DEVELOPMENT COSTS and
PRE-MARKETING EXPENSES paid by BTI which was not in dispute, and the
denominator of which is the DEVELOPMENT COSTS and PRE-MARKETING EXPENSES
determined in such arbitration.
SECTION 7.
SUPPLY
7.1 NOVARTIS understands that BTI is a party to an agreement with
Xxxxxxx River Laboratories with respect to the supply of certain organs and
NOVARTIS acknowledges receipt of a copy of such agreement. The supply and use
of organs under this Agreement is subject to the terms and conditions of such
agreement with Xxxxxxx River Laboratories. All organs required by NOVARTIS
under such agreement shall be supplied to NOVARTIS at the price provided in
such agreement.
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
7.2 If requested by NOVARTIS, BTI shall use reasonable efforts to
amend such Supply Agreement to obtain commercial terms acceptable to both
PARTIES.
7.3 Subject to Section 7.1, NOVARTIS shall have the right to choose
suppliers of XENOGRAFT PRODUCT to which NOVARTIS is licensed and BTI shall
not be required to supply without BTI's consent.
SECTION 8.
ADDITIONAL PAYMENTS AND PAYMENT CONDITIONS
8.1 In addition to all other payments provided for under this
Agreement, in consideration for the BTI BACKGROUND TECHNOLOGY which resulted
from research previously performed by BTI and which is being made available
pursuant to the terms and conditions of this Agreement, NOVARTIS agrees to
make the following payments:
AGREEMENT YEAR PAYMENT
-------------- -------
1 **********
2 ***********
3 ***********
The payment for the first AGREEMENT YEAR shall be due and payable within ten
(10) days after the EFFECTIVE DATE. The remaining payments are due and
payable on the first day of the applicable AGREEMENT YEAR.
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
8.2 NOVARTIS shall pay to BTI the following:
(i) ********** dollars upon the first filing of **** for a
XENOGRAFT PRODUCT in a MAJOR COUNTRY which involves ***************************
*******************************************************************************
*****************************************;
(ii) *********** dollars upon the first filing of ***** for
a XENOGRAFT PRODUCT in a MAJOR COUNTRY which involves *************************
*******************************************************************************
*******************************************;
(iii) ********** dollars upon the first approval of *******
for a XENOGRAFT PRODUCT in a MAJOR COUNTRY which involves *********************
*******************************************************************************
*****************************************.
The above stated amounts shall be due and payable fifteen
(15) days after the specified event has occurred.
For the purposes of this Section 8.2, the filing of an IND
or PLA or approval of a PLA with respect to a XENOGRAFT PRODUCT in a MAJOR
COUNTRY in Europe shall be deemed to have occurred if such IND or PLA, as the
case may be, is filed in a country of Europe which is not a MAJOR COUNTRY and
such filing is sufficient for obtaining approval in a MAJOR COUNTRY of Europe.
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8.3 NOVARTIS shall pay to BTI the Research Milestones of
Appendix E.
The amounts set forth in Appendix E shall be due and
payable on the later of fifteen (15) days after the event specified in
Appendix E is achieved or fifteen (15) days after BTI provides NOVARTIS
written notice that the specified event has been achieved, together with
sufficient information to allow NOVARTIS to confirm that the specified event
has been achieved. If NOVARTIS does not agree that the specified event has
been achieved, then NOVARTIS shall notify BTI in writing prior to the payment
date specifying the reasons for such disagreement, and if the PARTIES can not
reach agreement within thirty (30) days after such written notice by
NOVARTIS, then either PARTY may submit the issue to binding arbitration
pursuant to Appendix D.
SECTION 9.
LICENSES AND RIGHTS AND COVENANTS
9.1 NOVARTIS grants to BTI a sole and exclusive royalty bearing
license in the TERRITORY under NOVARTIS COLLABORATION PATENT RIGHTS and
NOVARTIS COLLABORATION TECHNOLOGY to make, have made, use and sell BTI OTHER
PRODUCT, including the right to grant sublicenses with respect to BTI OTHER
PRODUCT, all limited to the FIELD.
9.2 BTI grants to NOVARTIS a sole and exclusive royalty bearing
license in the TERRITORY under BTI PATENT RIGHTS and BTI TECHNOLOGY to make,
have made, use and sell XENOGRAFT PRODUCT for use in HUMAN XENOGRAFT SYSTEMS,
all limited to the FIELD. The license includes the right to grant
sublicenses, except that no
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sublicense will be granted with respect to a CO-PROMOTION PRODUCT in the
CO-PROMOTION TERRITORY without the written consent of BTI, which consent
shall not be unreasonably withheld. If a sublicense is granted, such
sublicense shall require the sublicensee to be bound to NOVARTIS under the
terms and conditions of this Agreement (other than the payment provisions),
with BTI being made a third-party beneficiary thereof.
9.3 NOVARTIS agrees that NOVARTIS and its AFFILIATES and
sublicensees will use XENOGRAFT TECHNOLOGY only for development, making,
using and selling of XENOGRAFT PRODUCT as to which NOVARTIS retains a license
under this Agreement and only in those countries in which NOVARTIS retains a
license under this Agreement.
9.4 The parties understand and agree that NOVARTIS has no rights in
and to LO-CD-2A ANTIBODY TECHNOLOGY except if sold in combination with a
XENOGRAFT PRODUCT which does not incorporate LO-CD-2A ANTIBODY TECHNOLOGY.
The parties likewise understand and agree that BTI has no rights in and to
NOVARTIS drugs, including, but not limited to, Cyclosporin A and other
NOVARTIS immunosuppressant drugs or cytokines (whether originally developed
by or licensed to NOVARTIS) except if sold in combination with a XENOGRAFT
PRODUCT which is not such a drug.
9.5 To the extent that any property is licensed from a third party
under an agreement with a third party ("Third Party Agreement"), subject to
the warranties and representations of Section 21 the PARTIES understand and
agree as follows:
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(a) The rights granted under this Agreement with respect to
such property are subject to the terms, limitations, restrictions and
obligations of the Third Party Agreement.
(b) The PARTYS will comply with the terms, obligations,
limitations and restrictions of the Third Party Agreements.
9.6 BTI shall promptly transfer to NOVARTIS, if so requested by
NOVARTIS and at the expense of NOVARTIS, all BTI TECHNOLOGY licensed to
NOVARTIS under this Agreement and reasonably required by NOVARTIS for the
development, manufacture, use or sale of a XENOGRAFT PRODUCT licensed to
NOVARTIS under this Agreement. If so requested by NOVARTIS and at the cost of
NOVARTIS, representatives of BTI shall visit NOVARTIS or its AFFILIATES or
sublicensees in order to assist in the transfer and implementation of such
BTI TECHNOLOGY.
9.7 NOVARTIS shall promptly transfer to BTI, if so requested by
BTI and at the expense of BTI, all NOVARTIS COLLABORATION TECHNOLOGY licensed
to BTI under this Agreement and reasonably required by BTI for the
development, manufacture, use or sale of a BTI OTHER PRODUCT licensed to BTI
under this Agreement. If so requested by BTI and at the cost of BTI,
representatives of NOVARTIS shall visit BTI or its AFFILIATES or of
sub-licensees in order to assist in the transfer and implementation of such
NOVARTIS COLLABORATION TECHNOLOGY.
9.8 BTI agrees that BTI and its AFFILIATES will use NOVARTIS
COLLABORATION TECHNOLOGY only for (i) development, making, using and selling
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
of BTI OTHER PRODUCT as to which BTI retains a license under this Agreement
and only in those countries in which BTI retains a license under this
Agreement and/or (ii) FUNDED RESEARCH.
9.9 (a) In the event that during the RESEARCH TERM BTI decides
to enter into negotiations with a third party with respect to BTI technology
directed to ********** ********* for use in xenotransplantation, then BTI
shall notify NOVARTIS in writing thereof. BTI shall provide NOVARTIS with all
information available to BTI with respect to such technology. If NOVARTIS
desires to obtain such rights, then NOVARTIS shall promptly notify BTI in
writing thereof. If NOVARTIS fails to notify BTI of its interest in obtaining
such rights within thirty (30) days of receiving such written notice from BTI
or if BTI and NOVARTIS fail to enter into an agreement within ninety (90)
days after BTI receives written notice from NOVARTIS of its interest in such
rights, then BTI shall be free to grant such rights to a third party under
terms and conditions which are within the sole discretion of BTI. Such ninety
(90) day period shall be extended as required for as long as both PARTIES
desire to negotiate an agreement in good faith.
(b) Notwithstanding anything else herein to the contrary,
it is expressly understood and agreed that no rights or licenses are granted
to NOVARTIS with respect to information, materials, inventions, patents or
patent applications of BTI or its AFFILIATES involving genetically modified
animals and/or the creation, manufacture or use thereof, other than those
granted pursuant to Section 9.9(a) of this Agreement.
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SECTION 10.
DEVELOPMENT EFFORTS
10.1 (a) NOVARTIS at its cost and expense will use all
reasonable efforts in each country of the TERRITORY (i) to complete as
expeditiously as possible and in good faith any necessary research and
development of a HUMAN XENOGRAFT SYSTEM as might be required to obtain a
saleable HUMAN XENOGRAFT SYSTEM (ii) to obtain as expediently as possible the
regulatory approval which is required to market and sell a HUMAN XENOGRAFT
SYSTEM; and (iii) to develop in good faith the market for a HUMAN XENOGRAFT
SYSTEM and (iv) to market and to sell and to continue to market and sell in
good faith a HUMAN XENOGRAFT SYSTEM.
(b) In the event that at any time NOVARTIS does not have a
significant interest in developing, marketing and selling and/or in
continuing, developing, marketing and selling a HUMAN XENOGRAFT SYSTEM
licensed hereunder in any nation(s) of the TERRITORY, NOVARTIS shall promptly
advise BTI of such fact.
(c) NOVARTIS shall provide written reports to BTI on June
30th and December 31st of each year concerning the efforts being made in
accordance with this Section 10.1 and NOVARTIS shall provide BTI with any
additional information reasonably requested by BTI in this respect, all to
the extent not prohibited by confidentiality obligations to any third party.
(d) In the event that NOVARTIS fails to meet any of its
obligations under this Section 10.1 with respect to a HUMAN XENOGRAFT SYSTEM
in a MAJOR
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COUNTRY, or NOVARTIS notifies BTI that NOVARTIS does not have a significant
interest in continuing to develop a HUMAN XENOGRAFT SYSTEM in a MAJOR
COUNTRY, BTI shall have the right and option to terminate the rights and
licenses granted to NOVARTIS under this Agreement with respect to a HUMAN
XENOGRAFT SYSTEM in such country(ies) by sixty (60) days' prior written
notice and such rights and licenses shall be terminated after such sixty (60)
days unless such failure is cured prior thereto or in the event such failure
cannot be cured within such sixty (60) day period, NOVARTIS has initiated
steps to cure such failure within such sixty (60) day period and in good
faith continues to work toward curing such failure as expeditiously as
possible and such failure is in fact cured within six (6) months after such
notice.
(e) In the event that (i) NOVARTIS fails to meet any of its
obligations under this Section 10.1 with respect to a HUMAN XENOGRAFT SYSTEM
in a MAJOR COUNTRY, or (ii) its right are terminated with respect to such a
XENOGRAFT PRODUCT in a MAJOR COUNTRY, or (iii) NOVARTIS notifies BTI that
NOVARTIS does not have a significant interest in continuing to develop such a
HUMAN XENOGRAFT SYSTEM in a country other than a MAJOR COUNTRY, then BTI
shall also have the right and option to terminate the rights and licenses
granted to NOVARTIS under this Agreement with respect to a HUMAN XENOGRAFT
SYSTEM in each country other than a MAJOR COUNTRY for which NOVARTIS has not
met its obligations under this Section 10.1 by sixty (60) days' prior written
notice and such rights and licenses shall be terminated after such sixty (60)
days unless such failure is cured prior thereto or in the event such failure
cannot be cured within such sixty (60) day period, NOVARTIS has
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
initiated steps to cure such failure within such sixty (60) day period and in
good faith continues to work toward curing such failure as expeditiously as
possible and such failure is in fact cured within six (6) months after such
notice.
(f) BTI acknowledges and agrees that BTI shall not have the right to
market or sell or to grant a third party the right to market and sell BTI
OTHER PRODUCT in a country if such sale in such country would adversely
affect marketing and selling of HUMAN XENOGRAFT SYSTEM in a country where
NOVARTIS retains rights to a HUMAN XENOGRAFT SYSTEM.
10.2 In the event that there is a CO-PROMOTION AGREEMENT, such
CO-PROMOTION AGREEMENT shall require diligent efforts on the part of both
parties and a remedy for failure to carry out such diligence efforts.
SECTION 11.
ROYALTIES
11.1(a) NOVARTIS shall pay BTI royalties on the NET SALES of
XENOGRAFT PRODUCTS sold or distributed by NOVARTIS or its AFFILIATES or its
permitted sublicensees, as follows:
(i) ********** of NET SALES of XENOGRAFT PRODUCT for use in
a HUMAN XENOGRAFT SYSTEM where the xenograft is obtained from *****************
*******************************************************************************
****
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
*******************************************************************************
*******************************************************************************
**********************;
(ii) ********** of NET SALES of XENOGRAFT PRODUCT for use in
a HUMAN XENOGRAFT SYSTEM where the xenograft is obtained from *****************
*******************************************************************************
****************************************************************************.
(iii) ****************** of NET SALES of XENOGRAFT PRODUCTS
other than those covered by Section 11.1(a)(i) or 11.1(a)(ii).
(b) With respect to any year in which BTI is co-promoting a
CO-PROMOTION PRODUCT in a country of the CO-PROMOTION TERRITORY, NOVARTIS
shall not be required to pay any royalty to BTI with respect to such
CO-PROMOTION PRODUCT in such country in such year.
(c) In addition to the royalties owed to BTI under Section
11.1(a)(i) and 11.1(a)(ii), if royalties are owed by BTI to a third party as
a result of a license granted to NOVARTIS hereunder and NOVARTIS has been
advised of and has agreed to such obligation, NOVARTIS shall pay royalties
owed to third parties by BTI with respect to such XENOGRAFT PRODUCTS.
NOVARTIS acknowledges that it has been advised of and agrees to third party
royalty obligations with respect to the agreements of Appendix
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F. It is expressly understood that no license is conveyed to third-party
rights under this Agreement unless NOVARTIS agrees to pay the royalty
obligations therefor.
(d) Subject to Section 11.1(e), BTI shall pay royalties owed to
third parties by BTI with respect to XENOGRAFT PRODUCTS for which royalties
are due to BTI pursuant to Section 11.1(a)(iii).
(e) NOVARTIS shall pay royalties owed to third parties by BTI with
respect to CO-PROMOTION PRODUCT which is being co-promoted by BTI.
(f) It is expressly understood that payments owed to Xxxxxxx River
for mini-swine or organs thereof are not royalties for the purposes of this
Agreement.
(g) NOVARTIS agrees that it will not artificially discount the price
of XENOGRAFT PRODUCTS for the purpose of promoting sales or increasing the
price of products which are not XENOGRAFT PRODUCTS.
(h) In the event that XENOGRAFT PRODUCTS are sold in combination
with products which are not XENOGRAFT PRODUCTS, for the purpose of
calculating royalties due on XENOGRAFT PRODUCTS, the PARTIES shall mutually
agree to an allocation of the NET SALES of the combination between XENOGRAFT
PRODUCTS and products which are not XENOGRAFT PRODUCTS. If the PARTIES do not
mutually agree, either PARTY may submit the issue to binding arbitration in
accordance with Appendix D.
11.2 NOVARTIS' obligation to pay royalties under Section 11.1 shall
continue on a country-for-country basis and XENOGRAFT PRODUCT by XENOGRAFT
PRODUCT basis beginning on the EFFECTIVE DATE of this Agreement and ending ten
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(10) years after the first commercial sale of each XENOGRAFT PRODUCT in a
country as part of a plan to make XENOGRAFT PRODUCT available in the country
which, in the United States, at the minimum, will require that the XENOGRAFT
PRODUCT be available on both the East and West coasts, provided, however,
that if the manufacture, use or sale of XENOGRAFT PRODUCT is covered by a
granted BTI PATENT RIGHT and/or NOVARTIS COLLABORATION PATENT RIGHT after the
expiration of such period, then the obligation to pay royalties thereon shall
continue until such XENOGRAFT PRODUCT is no longer covered by such granted
BTI PATENT RIGHT and/or NOVARTIS COLLABORATION PATENT RIGHT.
11.3 NOVARTIS shall keep, and shall cause each of its AFFILIATES and
sublicensees to keep, full and accurate books of account containing all
particulars that may be necessary for the purpose of calculating all
royalties payable to BTI. Such books of account shall be kept at their
principal places of business and, with all necessary supporting data, shall,
during normal business hours be open for inspection by an independent
certified accountant reasonably acceptable to NOVARTIS upon reasonable notice
and no more than once a calendar year for the sole purpose of verifying and
auditing royalty statements or compliance with this Agreement. Such
accountant shall report to BTI only as to the accuracy of the royalty
calculation and as to the amount of any under- or over-payment. BTI shall be
responsible for the costs of any such verification and audit, except that
NOVARTIS shall be responsible for the costs of any such audit in the event
that as a result of such verification and/or audit royalties due
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and payable to BTI are determined in any calendar quarter to exceed by five
percent (5%) those actually paid by NOVARTIS.
11.4 With quarterly payments, NOVARTIS shall deliver to BTI a
full and accurate accounting to include at least the following information:
(a) Quantity of each XENOGRAFT PRODUCT subject to royalty
sold (by country) by NOVARTIS and its AFFILIATES and sub-licensees;
(b) Total receipts for each XENOGRAFT PRODUCT subject to
royalty (by country);
(c) An accounting for amounts deductible, if any, against
total overall receipts in calculating total overall NET SALES; and
(d) Total royalties payable to BTI.
NOVARTIS shall provide any other information reasonably requested by
BTI to determine the calculation and amount of royalties.
11.5 In each year the amount of royalty due shall be calculated
quarterly as of March 31, June 30, September 30 and December 31 and shall be
paid quarterly within the thirty (30) days next following such date, every
such payment shall be supported by the accounting prescribed in Section 11.4
and shall be made in United States currency. Whenever for the purpose of
calculating royalties conversion from any foreign currency shall be required,
all amounts will first be calculated in the currency of sale and then
converted into Swiss Francs using as rates of exchange NOVARTIS exchange
rates which are established by NOVARTIS in the ordinary course of business
monthly on the basis of an average of rates during each month from external
unaffiliated banks which will
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
then be converted into United States Dollars, using as the rate of exchange
the average exchange rate at a major Swiss bank on the last business day of
the calendar quarter to which the payment relates.
11.6 Any tax required to be withheld by NOVARTIS under the laws of
any foreign country for the account of BTI, shall be promptly paid by
NOVARTIS for and on behalf of BTI to the appropriate governmental authority,
and NOVARTIS shall furnish BTI with proof of payment of such tax. Any such
tax actually paid on BTI's behalf shall be deducted from royalty payments due
BTI.
11.7 Subject to Section 14.6(b), BTI shall pay NOVARTIS a royalty
based on the NET SALES of BTI OTHER PRODUCTS sold, or distributed by BTI, its
AFFILIATES or its sublicensees, provided that such BTI OTHER PRODUCT
incorporates NOVARTIS COLLABORATION TECHNOLOGY and/or is covered by a granted
NOVARTIS COLLABORATION PATENT RIGHT which royalty shall be *********** of NET
SALES until NOVARTIS is reimbursed for its DEVELOPMENT COSTS and payments
made under Section 2.1(a), in each case as allocated to such BTI OTHER
PRODUCT, and thereafter ********** of NET SALES. NOVARTIS shall be
responsible for royalties that NOVARTIS owes to third parties in respect of
such sales.
11.8 BTI's obligation to pay royalties under Section 11.7 shall
continue on a country-for-country basis and BTI OTHER PRODUCT by BTI OTHER
PRODUCT basis beginning on the EFFECTIVE DATE of this Agreement and ending on
ten (10) years
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after the first commercial sale of each BTI OTHER PRODUCT in a country as
part of a plan to make BTI OTHER PRODUCT available in the country which, in
the United States, at the minimum, will require that the BTI OTHER PRODUCT be
available on both the East and West coasts, provided however, that if at the
end of such period the manufacture, use or sale of BTI OTHER PRODUCT is
covered by a granted NOVARTIS COLLABORATION PATENT RIGHT at the end of such
period, then the obligation to pay royalties shall continue until such BTI
OTHER PRODUCT is no longer covered by a granted NOVARTIS COLLABORATION PATENT
RIGHT.
11.9 BTI shall keep, and shall cause each of its AFFILIATES and
sublicensees to keep, full and accurate books of account containing all
particulars that may be necessary for the purpose of calculating all
royalties payable to NOVARTIS. Such books of account shall be kept at their
principal places of business and, with all necessary supporting data shall,
during normal business hours be open for inspection by an independent
certified accountant reasonably acceptable to BTI upon reasonable notice and
no more than once a calendar year for the sole purpose of verifying and
auditing royalty statements or compliance with this Agreement. Such
accountant shall report to NOVARTIS only as to the accuracy of the royalty
calculation and as to the amount of any under-or over-payment. NOVARTIS shall
be responsible for the costs of any such verification and audit, except that
BTI shall be responsible for the costs of any such audit in the event that as
a result of such verification and/or audit royalties due and payable to
NOVARTIS are determined in any calendar quarter to exceed by five percent
(5%) those actually paid by BTI.
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11.10 With quarterly payments, BTI shall deliver to NOVARTIS a
full and accurate accounting to include at least the following information:
(a) Quantity of each BTI OTHER PRODUCT subject to royalty
sold (by country) by BTI and its AFFILIATES;
(b) Total receipts for each BTI OTHER PRODUCT subject to
royalty (by country);
(c) An accounting for amounts deductible, if any, against
total overall receipts in calculating total overall NET SALES; and
(d) Total royalties payable to NOVARTIS.
BTI shall provide any other information reasonably requested by
NOVARTIS to determine the calculation of royalties.
11.11 In each year the amount of royalty due to NOVARTIS shall be
calculated quarterly as of March 31, June 30, September 30 and December 31
and shall be paid quarterly within the thirty (30) days next following such
date, every such payment shall be supported by the accounting prescribed in
Section 11.10 and shall be made in Swiss currency. Whenever for the purpose
of calculating royalties conversion from any foreign currency shall be
required, such conversion shall be at the rate of exchange thereafter
published in the Wall Street Journal for the business day closest to the
applicable March 31, June 30, September 30, or December 31, as the case may
be.
11.12 Any tax required to be withheld by BTI under the laws of
any foreign country for the account of NOVARTIS, shall be promptly paid by
BTI for and on behalf of NOVARTIS to the appropriate governmental authority,
and BTI shall furnish
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NOVARTIS with proof of payment of such tax. Any such tax actually paid on
NOVARTIS's behalf shall be deducted from royalty payments due NOVARTIS.
11.13 In the event that NOVARTIS or BTI is prohibited in any country
by applicable law from paying royalties for any portion of the term required
by Section 11.2 or 11.8, as the case may be, then NOVARTIS or BTI as the case
may be, shall not be obligated to pay such royalty for such portion provided
that the party receiving the royalty is notified in writing and that NOVARTIS
and BTI shall negotiate an amendment so that the PARTY who is to receive such
royalty receives essentially the same economic benefit as if the royalty was
paid for the full term. If the PARTIES do not reach agreement within ninety
(90) days after such notification, either PARTY may submit the issue to
binding arbitration in accordance with Appendix D.
SECTION 12.
PATENTS
12.1 BTI shall own any inventions and patents based thereon made by
BTI employees.
12.2 NOVARTIS shall own the inventions and patents based thereon
made by NOVARTIS employees.
12.3 BTI and NOVARTIS shall jointly own any inventions and patents
based thereon jointly made by employee(s) of BTI and employee(s) of NOVARTIS.
12.4 BTI shall effect filing, prosecution and maintenance of patent
applications and patents which are BTI PATENT RIGHTS at BTI's cost and
expense with patent counsel selected by BTI and shall keep NOVARTIS advised
with respect thereto.
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NOVARTIS shall have the option to request that BTI shall effect filing,
prosecution, or maintenance of BTI PATENT RIGHTS in any additional country
and BTI shall do so at the cost and expense of NOVARTIS. With respect to
patents and patent applications which are jointly owned by BTI and NOVARTIS,
such patents and patent applications shall be filed, prosecuted and
maintained by BTI at the cost and expense of BTI in the United States and by
NOVARTIS at the cost and expense of NOVARTIS outside of the United States.
12.5 NOVARTIS shall effect filing, prosecution and maintenance of
patent applications and patents which are NOVARTIS COLLABORATION PATENT
RIGHTS at NOVARTIS's cost and expense with patent counsel selected by
NOVARTIS and shall keep BTI advised with respect thereto.
12.6 To the extent not prohibited by confidentiality obligations to
a third-party, the PARTYS shall keep each other advised with respect to BTI
PATENT RIGHTS and NOVARTIS COLLABORATION PATENT RIGHTS.
SECTION 13.
LICENSE OPTION
13.1 BTI grants to NOVARTIS an option to obtain a license under
FUNDED PATENT RIGHTS owned by BTI which results from FUNDED TECHNOLOGY owned
by BTI with respect to any product or process outside the field of
Xenotransplantation in accordance with a LICENSE AGREEMENT to be negotiated
by the PARTYS which includes the terms and conditions of attached hereto
Appendix A. With respect to each such FUNDED PATENT RIGHT, NOVARTIS shall
exercise the option by written notice
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to BTI within six (6) months of receipt from BTI of a copy of the first
filing of such FUNDED PATENT RIGHT, together with details of FUNDED
TECHNOLOGY relating thereto, including available research results and
substance samples, if available. The failure to provide such written notice
of the exercise of such option to BTI within such six (6) month period shall
result in termination of the option, and the termination of any and all
rights which NOVARTIS may have with respect to such FUNDED PATENT RIGHT, and
corresponding FUNDED TECHNOLOGY for product or process outside the field of
xenotransplantation.
13.2 The option granted under this Section 13 does not include the
right to obtain a license under any FUNDED RESEARCH PATENT RIGHT or FUNDED
RESEARCH TECHNOLOGY with respect to products or processes outside the field
of Xenotransplantation which products or processes are as of the EFFECTIVE
DATE being researched and/or developed by or on behalf of BTI, including but
not limited to the LO-CD-2A ANTIBODY TECHNOLOGY.
SECTION 14.
TERM AND TERMINATION
14.1 Except as otherwise specifically provided herein and unless
sooner terminated pursuant to Section 14.2 or 14.3 of this Agreement, this
Agreement shall remain in full force and effect until NOVARTIS and BTI have
fully paid the royalties due hereunder for the full royalty term hereunder.
As of such time that a party has paid
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royalties for the full royalty term under this Agreement for a XENOGRAFT
PRODUCT or BTI OTHER PRODUCT, as the case may be, such party shall have a
fully paid up non-exclusive license for such XENOGRAFT PRODUCT or BTI OTHER
PRODUCT.
14.2 (a) If either PARTY materially breaches this Agreement or
the CO-PROMOTION AGREEMENT, the other party may terminate this Agreement by
written notice to the breaching party specifying the breach and this
Agreement shall be terminated thirty (30) business days after such written
notice if the material breach is a material payment breach and sixty (60)
business days thereafter for material breaches other than a payment breach,
unless prior to the expiration of such period such breach is cured. In the
event that a material breach other than a payment breach cannot be cured
within such sixty (60) day period and a PARTY has initiated steps to cure
such breach within such sixty (60) day period and notified the other PARTY in
writing thereof within such sixty (60) day period and in good faith continues
to work toward curing such breach as expeditiously as possible than this
agreement shall not be terminated if such breach is in fact cured within six
(6) months after such notice.
(b) In the event that this Agreement is terminated by BTI
under Section 14.2(a), the amounts which have not yet been paid by NOVARTIS
under Sections 2.1 and 8.1 shall be immediately due and payable to BTI.
14.3 This Agreement shall be subject to immediate termination by
a PARTY upon service of written notice to the other PARTY in the event that
(i) the other PARTY shall become insolvent or shall make an assignment for
the benefit of creditors or that proceedings in voluntary or involuntary
bankruptcy shall be instituted on behalf of or
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against such PARTY, or a receiver or trustee of such PARTY'S property shall
be appointed.
14.4 (a) The obligations of Sections 9.3, 9.4, 14.1, 14.2, 14.3,
14.4, 14.5, 14.6, 16, 17, 19.2 and 20.3 and any other provision which by its
nature is intended to survive, shall survive any termination of this
Agreement.
(b) If this Agreement is terminated under Section 14.2 by
BTI, Sections 9.1, 9.7, 11.7, 11.8, 11.9, 11.10, 11.11, 11.12, 11.13 and 15.4
shall also survive termination.
(c) If this Agreement is terminated by NOVARTIS under
Section 14.6, Sections 9.1, 9.7, 14.6(b) and 15.4 shall also survive
termination.
14.5. In the event that NOVARTIS' rights and licenses with
respect to a HUMAN XENOGRAFT SYSTEM are terminated in the entirety or with
respect to a country, then for the purposes of this Agreement, XENOGRAFT
PRODUCTS shall be BTI OTHER PRODUCT in all countries, or in such
country(ies), respectively.
14.5 (a) Within its sole discretion, NOVARTIS shall have the
right to terminate this Agreement effective at the end of the last day of the
second AGREEMENT YEAR by providing written notice to BTI at least six (6)
months prior to the end of the second AGREEMENT YEAR.
(b) In the event that this AGREEMENT is terminated under
Section 14.6(a), then no royalties shall be due or payable to NOVARTIS under
Section 11.7.
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SECTION 15.
INFRINGEMENT
15.1 (a) If a third party makes, uses or sells a product for use in
a HUMAN XENOGRAFT SYSTEM which competes with XENOGRAFT PRODUCT licensed to
NOVARTIS hereunder and such third party product infringes any of the BTI
PATENT RIGHTS under which NOVARTIS is licensed, NOVARTIS shall have the right
and option but not the obligation to bring an action for infringement, at its
sole expense, against such third party in the name of BTI and/or in the name
of NOVARTIS, and to join BTI as a party plaintiff if required. NOVARTIS shall
promptly notify BTI of any such infringement and shall keep BTI informed as
to the prosecution of any action for such infringement and shall not
institute any infringement action without providing BTI with thirty (30) days
prior written notice. No settlement, consent judgment or other voluntary
final disposition of the suit may be entered into without the consent of BTI,
which consent shall not unreasonably be withheld.
Any recovery of damages by NOVARTIS for any such suit shall be
applied first in satisfaction of expenses and legal fees of NOVARTIS relating
to the suit. The balance remaining from any such recovery shall be divided
between NOVARTIS and BTI, such that BTI receives the lesser of 30% of such
recovery or the royalty BTI would have received under this Agreement if such
sales had been made by NOVARTIS.
15.2 In the event that NOVARTIS elects not to pursue an action for
infringement pursuant to Section 15.1, or does not do so within sixty (60)
days after written notice by BTI that an unlicensed third party is an
infringer of a BTI PATENT RIGHT licensed
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to NOVARTIS, BTI shall have the right and option, but not the obligation at
its cost and expense to initiate infringement litigation and to retain any
recovered damages.
15.3 In any infringement suit either party may institute to enforce
the BTI PATENT RIGHTS pursuant to this Agreement, the other party hereto
shall, at the request of the party initiating such suit, cooperate in all
respects and, to the extent possible, have its employees testify when
requested and make available relevant records, papers, information, samples,
specimens, and the like. All reasonable out-of-pocket costs of the other
party incurred in connection with rendering such cooperation shall be paid by
the requesting party.
15.4 (a) If a third party makes, uses or sells a product for use in
the FIELD which competes with BTI OTHER PRODUCT licensed to BTI and such
third party product infringes any of the NOVARTIS PATENT RIGHTS and/or
NOVARTIS COLLABORATION PATENT RIGHTS under which BTI is licensed, with prior
written notice to NOVARTIS, and if NOVARTIS does not institute action within
sixty (60) days, BTI shall have the right and option but not the obligation
to bring an action for infringement, at its sole expense, against such third
party in the name of NOVARTIS and/or in the name of BTI, and to join NOVARTIS
as a party plaintiff if required. BTI shall promptly notify NOVARTIS of any
such infringement and shall keep NOVARTIS informed as to the prosecution of
any action for such infringement and shall not institute any infringement
action without providing NOVARTIS with thirty (30) days prior written notice.
No settlement, consent judgment or other voluntary final disposition of
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
the suit may be entered into without the consent of NOVARTIS, which consent
shall not unreasonably be withheld.
Any recovery of damages by BTI or NOVARTIS for any such suit shall
be applied first in satisfaction of expenses and legal fees paid by the party
bringing the suit relating to the suit and the balance remaining from any
such recovery shall be divided between BTI and NOVARTIS, such that NOVARTIS,
receives the lesser of the royalty NOVARTIS would have received under this
Agreement if such sales had been made by BTI or ***** ********** of such
remaining amount.
15.5 In any infringement suit either party may institute to enforce
patents pursuant to this Agreement, the other party hereto shall, at the
request of the party initiating such suit, cooperate in all respects and, to
the extent possible, have its employees testify when requested and make
available relevant records, papers, information, samples, specimens, and the
like. All reasonable out-of-pocket costs of the other party incurred in
connection with rendering such cooperation shall be paid by the requesting
party. In addition, such party shall keep the other party advised of any such
litigation.
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SECTION 16.
INDEMNIFICATION
16.1 NOVARTIS shall defend, indemnify and hold harmless BTI,
AFFILIATES of BTI, licensors of BTI, and their respective directors,
officers, shareholders, agents and employees, from and against any and all
liability, loss, damages and expenses (including attorneys' fees) as the
result of claims, demands, costs or judgments which may be made or instituted
against any of them arising out of the manufacture, possession, distribution,
use, testing, sale or other disposition of XENOGRAFT PRODUCT by or through
NOVARTIS or its AFFILIATES or sublicensees. NOVARTIS' obligation to defend,
indemnify and hold harmless shall include claims, demands, costs or
judgments, whether for money damages or equitable relief by reason of alleged
personal injury (including death) to any person or alleged property damage,
provided, however, the indemnity shall not extend to any claims against an
indemnified party which result from the gross negligence or willful
misconduct of such indemnified party. NOVARTIS shall have the exclusive right
to control the defense of any action which is to be indemnified in whole by
NOVARTIS hereunder, including the right to select counsel acceptable to BTI
to defend BTI, and to settle any claim, provided that, without the written
consent of BTI (which shall not be unreasonably withheld or delayed),
NOVARTIS shall not agree to settle any claim against BTI to the extent such
claim has a material adverse effect on BTI. The provisions of this paragraph
shall survive and remain in full force and effect after any termination,
expiration or cancellation of this Agreement and
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NOVARTIS' obligation hereunder shall apply whether or not such claims are
rightfully brought.
16.2 BTI shall defend, indemnify and hold harmless NOVARTIS,
AFFILIATES of NOVARTIS, licensors of NOVARTIS, and their respective
directors, officers, shareholders, agents and employees, from and against any
and all liability, loss, damages and expenses (including attorneys' fees) as
the result of claims, demands, costs or judgments which may be made or
instituted against any of them arising out of the manufacture, possession,
distribution, use, testing, sale or other disposition of BTI OTHER PRODUCT by
or through BTI or its AFFILIATES or sublicensees. BTI's obligation to defend,
indemnify and hold harmless shall include claims, demands, costs or
judgments, whether for money damages or equitable relief by reason of alleged
personal injury (including death) to any person or alleged property damage,
provided, however, the indemnity shall not extend to any claims against an
indemnified party which result from the gross negligence or willful
misconduct of such indemnified party BTI shall have the exclusive right to
control the defense of any action which is to be indemnified in whole by BTI
hereunder, including the right to select counsel acceptable to NOVARTIS to
defend NOVARTIS, and to settle any claim, provided that, without the written
consent of NOVARTIS (which shall not be unreasonably withheld or delayed),
BTI shall not agree to settle any claim against NOVARTIS to the extent such
claim has a material adverse effect on NOVARTIS. The provisions of this
paragraph shall survive and remain in full force and effect after any
termination, expiration or cancellation of
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this Agreement and BTI's obligation hereunder shall apply whether or not such
claims are rightfully brought.
16.3 A person or entity that intends to claim indemnification under
this Article 16 (the "Indemnitee") shall promptly notify the other PARTY (the
"Indemnitor") of any loss, claim, damage, liability or action in respect of
which the Indemnitee intends to claim such indemnification, and the
Indemnitor, after it determines that indemnification is required of it, shall
assume the defense thereof with counsel mutually satisfactory to the PARTYS;
provided, however, that an Indemnitee shall have the right to retain its own
counsel, with the fees and expenses to be paid by the Indemnitor if
Indemnitor does not assume the defense; or, if representation of such
Indemnitee by the counsel retained by the Indemnitor would be inappropriate
due to actual or potential differing interests between such Indemnitee and
any other PARTY represented by such counsel in such proceedings. The
indemnity agreement in this Article 16 shall not apply to amounts paid in
settlement of any loss, claim, damage, liability or action if such settlement
is effected without the consent of the Indemnitor, which consent shall not be
withheld unreasonably. The failure to deliver notice to the Indemnitor within
a reasonable time after the commencement of any such action, if prejudicial
to its ability to defend such action, shall relieve such Indemnitor of any
liability to the Indemnitee under this Article 16, but the omission so to
deliver notice to the Indemnitor will not relieve it of any liability that it
may have to any Indemnitee otherwise than under this Article 16. The
Indemnitee under this Article 16, its employees and agents, shall cooperate
fully with the Indemnitor and its legal representatives in the investigations
of
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any action, claim or liability covered by this indemnification. In the event
that each PARTY claims indemnity from the other and one PARTY is finally held
liable to indemnify the other, the Indemnitor shall additionally be liable to
pay the reasonable legal costs and attorneys' fees incurred by the Indemnitee
in establishing its claim for indemnity.
SECTION 17.
CONFIDENTIALITY
17.1 (a) Disclosure or delivery of confidential and proprietary
information or material by any PARTY to the other PARTY may be made in
writing, or orally. Such confidential information or material provided by one
PARTY to the other PARTY will be safeguarded by the recipient and will not be
disclosed to third parties and will be made available only to the receiving
PARTY's or its AFFILIATES employees or agents (including attorneys) who need
to know such information or have such material for purposes permitted under
this Agreement and who have obligations of confidentiality and non-use
similar to those of this Agreement. Each PARTY shall hold as confidential
such confidential information and material in the same manner and with the
same protection as such party maintains for its own confidential information
and materials and agrees to use such confidential information and materials
only for the purpose of this Agreement and as permitted by this Agreement. A
PARTY may disclose Confidential Information of another to a third party for
the purposes contemplated by
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this Agreement, provided that the third party agrees to maintain the
confidentiality thereof in a manner consistent with the confidentiality
provisions of this Agreement.
(b) The mutual obligations of confidentiality under this
Section will not apply to any information to the extent that such information:
(i) is or hereafter becomes part of the public domain through
no action of the recipient of the information which constitutes a
default under this Agreement;
(ii) was already known to the recipient as evidenced by prior
written documents in its possession which were not furnished by the
other party;
(iii) is disclosed to the recipient by a third party who is
not in default of any confidentiality obligation to the disclosing
PARTY hereunder;
(iv) is disclosed to obtain a regulatory approval for
DEVELOPMENT PRODUCT in the TERRITORY, provided that the disclosing
PARTY takes all reasonable steps to restrict and maintain the
confidentiality of the disclosure;
(v) is required by law or bona fide legal process to be
disclosed, provided that the disclosing PARTY takes all reasonable
steps to restrict and maintain confidentiality of such disclosure and
provides reasonable notice to the non-disclosing PARTY; or
(vi) is approved for release by the PARTYS.
17.2 BTI and NOVARTIS each agrees not to disclose any terms or
conditions of this Agreement to any third party without the prior consent of
the other PARTY, except as required by applicable law, rule or regulation; or
in connection with a financing or offering statement or memorandum, or to a
potential sublicensee, assignee or transferee
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of the business of a party to which this Agreement relates; or to a licensor
of a PARTY for the purpose of granting a sublicense to the other PARTY. In
the event of a disclosure required under this Section, the disclosing PARTY
shall nonetheless provide the non-disclosing PARTY with notice of such
disclosure prior to disclosure, and will, to the extent reasonably possible,
provide the non-disclosing PARTY with an opportunity to correct same. A PARTY
shall not be required to provide the other PARTY with a disclosure which has
been previously provided to a PARTY.
NOVARTIS and BTI shall have the right to advise third parties as to
whether or not this Agreement covers any contemplated work or collaboration
with such third party.
17.3 To the extent that NOVARTIS COLLABORATION TECHNOLOGY or BTI
TECHNOLOGY is subject to an obligation of confidentiality to a third party,
NOVARTIS and BTI, as the case may be, shall use reasonable best efforts to
obtain the right to disclose same to the other PARTY under an obligation of
confidentiality in furtherance of and for the purposes of this Agreement.
17.4 NOVARTIS agrees that, with respect to any miniswine which are
provided to NOVARTIS for research or development under this Agreement by or
on behalf of BTI as well as all progeny, modifications thereto, genetic
variants thereof and transgenic swine produced therefrom by or on behalf of
NOVARTIS and/or AFFILIATES of NOVARTIS and or any of their sublicensees shall
be owned by BTI, and NOVARTIS shall not transfer same to a third party
without the consent of BTI and then only if such third party enters into a
separate agreement with BTI acknowledging BTI's rights therein,
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unless otherwise agreed to by BTI. NOVARTIS further acknowledges and
understands that all such swine are subject to the terms, conditions and
obligations of BTI to Xxxxxxx River Laboratories under the Supply Agreement
with Xxxxxxx River Laboratories.
SECTION 18.
FORCE MAJEURE
18.1 Neither party shall be held liable or responsible to the other
party nor be deemed to have defaulted under or breached this Agreement for
failure or delay in fulfilling or performing any term of this Agreement
(other than a payment provision) when such failure or delay is caused by or
results from causes beyond the reasonable control of the affected party
including but not limited to fire, floods, embargoes, war, acts of war
(whether war be declared or not), insurrections, riots, civil commotions,
strikes, lockouts or other labor disturbances, acts of God or acts, omissions
or delays in acting by any governmental authority or the other party.
SECTION 19.
ASSIGNMENT AND NOVARTIS AFFILIATES
19.1 This Agreement may not be assigned or otherwise transferred by
either PARTY without the consent of the other PARTY;provided, however, that
either PARTY may, without such consent, assign this Agreement and its rights
and obligations hereunder to its AFFILIATES or in connection with the
transfer or sale of all or substantially all of its business to which this
Agreement relates, or in the event of its
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merger or consolidation or change in control or similar transaction. Any
purported assignment in violation of the preceding sentences shall be void.
Any permitted assignee shall assume all obligations of its assignor under
this Agreement.
19.2 NOVARTIS warrants that its AFFILIATES, including, but not
limited to, its United States AFFILIATE will comply with the terms,
obligations and conditions imposed on NOVARTIS under this Agreement as if
they were signatories to this Agreement.
19.3 BTI warrants that its AFFILIATES will comply with the terms,
obligations and conditions imposed on BTI under this Agreement as if they
were signatories to this Agreement.
SECTION 20.
GENERAL PROVISIONS
20.1 The relationship between BTI and NOVARTIS is that of
independent contractors. BTI and NOVARTIS are not joint venturers, partners,
principal and agent, master and servant, employer or employee, and have no
relationship other than as independent contracting parties. BTI shall have no
power to bind or obligate NOVARTIS in any manner.
20.2 This Agreement, including the Appendices, and any CO-PROMOTION
AGREEMENT and the Amended and Restated Collaboration Agreement between the
PARTIES effective as of September 7, 1995 set forth the entire agreement and
understanding between the PARTIES with respect to the subject matter thereof
and
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supersedes all prior agreements in this respect. There shall be no amendments
or modifications to this Agreement, except by a written document which is
signed by both parties.
20.3 This Agreement shall be construed and enforced in accordance
with the laws of New York without reference to its choice of law principles.
20.4 The headings in this Agreement have been inserted for the
convenience of reference only and are not intended to limit or expand on the
meaning of the language contained in the particular article or section.
20.5 Any delay in enforcing a party's rights under this Agreement or
any waiver as to a particular default or other matter shall not constitute a
waiver of a party's right to the future enforcement of its rights under this
Agreement, excepting only as to an expressed written and signed waiver as to
a particular matter for a particular period of time.
20.6 Notices. Any notices given pursuant to this Agreement shall be
in writing and shall be deemed received upon the earlier of (i) when received
at the address set forth below (including telefax or personal delivery), or
(ii) three (3) business days after mailed by certified or registered mail in
the United States or Swiss mails, postage prepaid and properly addressed,
with return receipt requested. Notices shall be delivered to the respective
parties as indicated:
To BTI: Bio Transplant, Inc.
3rd Avenue, Bldg. 00
Xxxxxxxxxxx Xxxx Xxxx
Xxxxxxxxxxx, XX 00000
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To NOVARTIS: Novartis Pharma Xx.
Xxxxxxxxxxxx 00
Xx-0000
Xxxxx, Xxxxxxxxxxx
Attn: Legal Department
Telecopy No. 00-00-000-0000
20.7 If any provision(s) of this Agreement are or become invalid,
are ruled illegal by any court of competent jurisdiction or are deemed
unenforceable under then current applicable law from time to time in effect
during the term hereof, it is the intention of the parties that the remainder
of this Agreement shall not be affected thereby provided that a party's
rights under this Agreement are not materially affected. It is further the
intention of the parties that in lieu of each such provision which is
invalid, illegal, or unenforceable, there be substituted or added as part of
this Agreement a provision which shall be as similar as possible in economic
and business objectives as intended by the parties to such invalid, illegal
or unenforceable provision, but shall be valid, legal and enforceable. In the
event a party's rights are materially affected as a result of a change in
this Agreement under this Section, such party may terminate this Agreement.
20.8 The parties agree throughout the duration of this Agreement to
notify each other immediately of any information concerning any serious or
unexpected side effect, injury, toxicity or sensitivity reaction or any
unexpected incidence and the severity thereof associated with the uses,
studies, field trials, investigations, tests and marketing of XENOGRAFT
PRODUCT. The parties further agree to immediately notify each other of any
information received regarding any threatened or pending action which may
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affect the safety or efficacy claims of XENOGRAFT PRODUCT or the continued
marketing of XENOGRAFT PRODUCT.
20.9 This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
SECTION 21. - WARRANTIES
21.1 The PARTYS warrant and represent to each other that each has
the full right and authority to enter into this Agreement, that each is not
aware of any impediment which would inhibit its ability to perform the terms
and conditions imposed on it by this Agreement, and that there are no and
will be no outstanding agreements, licenses, assignments or encumbrances
inconsistent with the provisions of and the rights and licenses granted under
this Agreement, or which are inconsistent with or would prevent a PARTY from
performing all of its obligations under this Agreement.
SECTION 22. - EXCEPTION FROM COLLABORATION
22.1 The PARTYS agree that notwithstanding anything else to the
contrary in the Agreement, either party shall have the right to enter into a
non-exclusive agreement or non-exclusive relationship with a third party by
which that party provides to a third party for use in the FIELD: bone (not
including cartilage or bone marrow). Any net income received therefrom shall
be divided equally by the PARTYS and shall be payable within sixty (60) days
after the end of a calendar quarter.
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IN WITNESS WHEREOF, the parties intending to be bound have set their
hands and seals, effective as of the date first written above.
BIO TRANSPLANT INCORPORATED NOVARTIS PHARMA AG
By: /s/ Xxxxxx Xxxxxxxx By: /s/ Xxxxx Xxxxxx
------------------------- --------------------
TITLE: President Title: Authorized Signatory
---------------------- --------------------
Date: October 6, 1997 Date: 9/30/97
---------------------- --------------------
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Confidential Materials omitted and filed separately with
the Securities and Exchange Commission. Asterisks denote omissions.
APPENDIX A
LICENSE AGREEMENT-MAIN TERMS
1. License to NOVARTIS to be exclusive, worldwide and with the right to
grant sub-licenses to affiliates and third-parties with NOVARTIS
remaining responsible for the royalty and other obligations to BTI
under the Agreement in the event of such sub-licensing.
2. License to be subject to reasonable efforts with regard to development,
regulatory approval and marketing with termination rights on a
country-by-country basis in the event of lack of reasonable diligence
in major countries.
3. In the case where the licenses product is a pharmaceutical (therapeutic
or prophylactic), a royalty of ***** on net sales shall be in countries
where the pharmaceutical is covered by the licensed patent rights for
the term of the patents. In other countries, there shall be a reduced
royalty as negotiated by the parties payable on net sales for a period
of ten years from the date of first sale in each such country taking
into account all relevant factors.
4. In the case where the licensed product is a pharmaceutical, NOVARTIS
shall also make the following benchmark payments to BTI:
on the first filing of PLA, NDA or equivalent in a major country:
**********
on first sale of licensed product in a major country:
**********
5. In the case of licensed technology other than a pharmaceutical, the
parties will negotiate in good faith the royalty benchmark payments and
other terms of the license but in no case shall the royalty rate and
benchmark payments (if any) exceed those specified above in paragraphs
3 and 4.
6. In lieu of a royalty in a country in North America, BTI shall have the
right to copromote, receiving ********** of net proceeds and performing
********** of the selling effort (with BTI also being reimbursed for
its selling expenses).
7. Upon expiration of the obligation to pay royalties under the license
agreement the licenses granted shall become fully paid-up,
non-terminable, non-exclusive licenses.
8. All other terms to be negotiated in good faith taking into account all
relevant factors.
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
APPENDIX B
CO-PROMOTION CONCEPT
At the time that BTI elects to co-promote a CO-PROMOTION PRODUCT in the
CO-PROMOTION TERRITORY, the PARTYS will agree on a joint marketing model for
such CO-PROMOTION PRODUCT which will be driven by the premises that
a. BTI shall receive the CO-PROMOTION PERCENTAGE of the
CO-PROMOTION PROFIT so long as the CO-PROMOTION AGREEMENT is
in effect;
b. the CO-PROMOTION PRODUCT will be sold under the trademark of
NOVARTIS who will also distribute and book sales;
c. BTI will perform the CO-PROMOTION PERCENTAGE of the
co-promotion selling effort and NOVARTIS shall perform the
remainder, each at its expense;
d. exposure will apply to both PARTYS during the course of the
marketing effort corresponding to the share of co-promotion
effort.
2. A PARTY's share of "CO-PROMOTION PROFIT" shall be ********************
********** in any year where such PARTY's actual co-promotion effort in
such year is not equal to at least ***** of its budgeted co-promotion
effort for the year. Such ********** will be in direct proportion to
the ********** in such PARTY's efforts as compared to its budgeted
co-promotion effort.
3. After PLA submission BTI will pay **********of the CO-PROMOTION
PERCENTAGE of the sum of PREMARKETING EXPENSES and DEVELOPMENT COSTS on
an ongoing basis, and NOVARTIS shall pay the remainder.
4. The marketing of CO-PROMOTION PRODUCT in the CO-PROMOTION TERRITORY
will be managed by NOVARTIS and reviewed by a marketing committee
similar in make-up to and voting in the same manner as the CLINICAL
STEERING COMMITTEE.
5. The Agreement shall include appropriate diligence efforts for both
parties.
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
6. NOVARTIS shall pay all royalties to third parties on CO-PROMOTION
PRODUCT which BTI co-promotes.
7. BTI shall not be required to pay any MARKETING EXPENSES except those
which NOVARTIS shall reimburse.
8. EACH PARTY shall be responsible for its own SELLING EXPENSES even in
the event that that PARTY'S share of the CO-PROMOTION PROFIT is less
than its SELLING EXPENSES.
9. In the event that CO-PROMOTION PROFIT is negative,********************
************************************************************.
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APPENDIX C
FUNDED RESEARCH PLAN
Intentionally omitted
-64-
APPENDIX D
ARBITRATION PROVISION
In the event the Parties are unable to reach agreement with respect
to any matter which is to be subject to arbitration in accordance with the
Collaboration Agreement, as applicable, such will be determined through
binding arbitration in Boston, Massachusetts in accordance with the
Commercial Rules of Arbitration of the American Arbitration Association.
The arbitration panel shall be comprised of three (3) arbitrators.
Each Party shall be entitled to appoint one arbitrator. The Parties shall
appoint their respective arbitrators within thirty (30) days after submission
for arbitration. If either Party shall fail to make timely appointment of its
arbitrator, the arbitration shall be heard and decided by the sole arbitrator
duly appointed by the other Party. Where both Parties have timely appointed
their respective arbitrators, the two arbitrators so appointed shall agree on
the appointment of the third arbitrator from the list of arbitrators
maintained by the American Arbitration Association. If the Parties' appointed
arbitrators shall fail to agree. within thirty (30) days from the date both
Parties' arbitrators have been appointed, on the identity of the third
arbitrator, then such arbitrator shall be appointed by the appropriate
administrative body of the American Arbitration Association.
Within ten (10) days of appointment of the full arbitration panel,
the Parties shall exchange their final proposed positions with respect to the
matters to be arbitrated, which shall approximate as closely as possible the
closest positions of the parties
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previously taken in the negotiations. Within thirty (30) days of appointment
of the arbitration Panel, each Party shall submit to the arbitrators a copy
of the proposed position which it previously delivered to the other Party,
together with a brief or other written memorandum supporting the merits of
its proposed position. The arbitration panel shall promptly convene a
hearing, at which time each Party shall have one (1) hour to argue in support
of its proposed position. The Parties will not call any witnesses in support
of their arguments.
The arbitration panel shall select either of the Party's proposed
position on the issue as the binding final decision to be embodied as an
agreement between the Parties. In making their selection, the arbitrators
shall not modify the terms or conditions of either Party's proposed position;
nor will the arbitrators combine provisions from both proposed position. In
making their selection, the arbitrators shall consider the terms and
conditions of this Agreement, the relative merits of the proposed position
and the written and oral arguments of the Parties. In the event the
arbitrators seek the guidance of the law of any jurisdiction, the law of the
State of New York shall govern.
The arbitrators shall make their decision known to the Parties as
quickly as possible by delivering written notice of their decision to both
Parties. Such written notice need not justify their decision. The Parties
will execute any and all papers necessary to obligate the parties to the
position selected by the arbitration Panel within five (5) days of receipt of
notice of such selection. The decision of the arbitrators shall be final and
binding on the Parties, and specific performance may be ordered by any court
of competent jurisdiction.
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The Parties will bear their own costs in preparing for the
arbitration. The costs of the arbitrators will be equally divided between the
Parties.
Notwithstanding anything to the contrary, prior to initiating
arbitration, the issues shall be submitted to the Chief Executive Officer of
each of the Parties in an attempt to resolve the issues by good faith,
mediation or negotiations by such Chief Executive Officers. If the issues
have not been resolved within sixty (60) days after submission to the Chief
Executive Officers, then either party may initiate arbitration as set forth
herein.
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
APPENDIX E
RESEARCH MILESTONES
********** Achieve *************************************
******************************************************* and demonstrate ******
******************************************************************************
******************************************************************************
***********.
********** Eliminate *******************************
*******************************************************************************
***********.
********** Achieve *********************************
***********************************************************************.
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APPENDIX F
THIRD PARTY AGREEMENTS.
Title and Date of Agreement
1. Research and License Agreement between BTI and The General Hospital
Corporation, dated January 1, 1991.
2. Agreement between BTI and Catholic University of Louvain Experimental
Immunology Unit dated January 1, 1993.
3. Agreement between BTI and Alberta Research Council, dated December 23,
1992.
4. Supply Agreement between the Company and Alberta Research Council dated
December 24, 1992.
5. Development and Supply Agreement between BTI and Activated Cell
Therapy, dated August 22, 1996.
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