Exhibit 10.1

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Request Under

Rule 24b-2 of the Securities Exchange Act of 1934

SECOND AMENDMENT TO

LABORATORY MASTER SERVICES AGREEMENT

This Second Amendment (“Second Amendment”), which shall be considered effective
as of the 1st of October, 2013 (the “Second Amendment Effective Date”), is
entered into by and between Novartis Pharmaceuticals Corporation (“Novartis”),
with an office at 59 Route 10, East Hanover, New Jersey 07936, and Foundation
Medicine, Inc. (“Institution”), with an office at 150 Second Street, Cambridge,
MA 02141, and amends the Laboratory Master Services Agreement dated November 21,
2011 (referred to herein as the “Master Agreement”) as amended by the First
Amendment to Laboratory Master Services Agreement dated May 29, 2012 (referred
to together herein as the “First Amended Master Agreement”). The First Amended
Master Agreement as amended by this Second Amendment shall be referred to herein
as the “Agreement” or the “Second Amended Master Agreement.” Capitalized terms
used in this Second Amendment and not otherwise defined herein are used with the
meanings ascribed to them in the First Amended Master Agreement.

 

1. Section 1. Section 1.A of the First Amended Master Agreement is hereby
replaced with the following:

“A. Institution hereby agrees to perform genomic testing and analysis, molecular
information, and related technology services, as set forth in any Statement of
Work issued in the sample form attached hereto as Attachment 1 (the “Services”),
after the Second Amendment Effective Date hereof, to Institution by Novartis and
accepted by Institution, with respect to laboratory samples identified therein
(the “Samples”). Institution shall not provide any Services hereunder beyond the
scope of the Statement of Work without the prior written approval of Novartis.
References to Task Orders in other provisions of this Agreement shall be deemed
to refer to the Statement of Work attached hereto as Attachment 1.”

 

2. Section 2. Section 2 of the First Amended Master Agreement is hereby replaced
with the following:

“2. TERM OF AGREEMENT

Unless sooner terminated pursuant to the terms of this Agreement, this Agreement
shall be deemed effective from as of the Second Amendment Effective Date and
shall continue in force until September 30, 2016 (the “Term”), subject to
Novartis’ right to extend the Term as described herein. Each one-year period
under this Second Amended Master Agreement shall be deemed a “Contract Year,”
and, in consideration of work performed under the Master Agreement and First
Amended Master Agreement dating back to November 21, 2011, the first Contract
Year under this Second Amended Master Agreement (beginning October 1, 2013)
shall be deemed the “Third Contract Year,” the second Contract Year under this
Second Amended Master Agreement (beginning

--------------------------------------------------------------------------------

October 1, 2014) shall be deemed the “Fourth Contract Year,” and the third
Contract Year under this Second Master Agreement (beginning October 1, 2015)
shall be deemed the “Fifth Contract Year.” Notwithstanding the foregoing,
(a) any payment obligations accrued under the First Amended Master Agreement
prior to the Second Amendment Effective Date shall be paid in full to
Institution by Novartis pursuant to the terms of the First Amended Master
Agreement; and (b) should any Statement of Work entered into during the term of
this Second Amended Master Agreement require Services to be performed beyond the
termination date of this Second Amended Master Agreement, then the terms of this
Second Amended Master Agreement shall remain in effect with respect to such
Statement of Work until the termination of the Statement of Work. Novartis shall
have the option to extend the Term for two additional years (“Sixth and Seventh
Contract Years”) by providing written notice to Institution no later than ninety
(90) days prior to the expiration of the Term. If Novartis exercises this
option, the provisions of this Second Amended Master Agreement shall remain in
full force and effect for the Sixth and Seventh Contract Years, except to the
extent the parties mutually agree to any changes to the Agreement, in which case
they shall be incorporated pursuant to an amendment hereto.”

 

3. Section 3.A. Section 3.A of the First Amended Master Agreement is hereby
replaced with the following:

“A. During the Third through Fifth Contract Years (in the period running from
October 1, 2013 through September 30, 2016), and, in the event Novartis
exercises its option to extend the Term under Section 2, in the Sixth and
Seventh Contract Years (in the period running from October 1, 2016 through
September 30, 2018), in consideration of Institution reserving capacity to
perform the genomic testing and analysis aspects of the Services (“Reserved
Capacity”) and of satisfactory performance of the Services generally, Novartis
shall pay Institution as described in detail below, […***…] beginning on the
Second Amendment Effective Date. Institution shall invoice Novartis for the
first quarterly payment due hereunder in accordance with the terms specified
below on December 9, 2013. Thereafter, Institution shall invoice Novartis on or
around (but not before) the first day of each calendar quarter during the Term
of this Agreement. Unless Novartis reasonably objects to all or a portion of any
new invoice submitted to it by Institution, Novartis shall make payments against
each invoice within sixty (60) days of its receipt.

i. Genomic Testing and Analysis of Samples.

 

  a. Reserved Capacity Fees.

x. Third through Fifth Contract Years. During each of the Third, Fourth, and
Fifth Contract Years, in consideration of Institution reserving capacity to
perform the genomic testing and analysis aspects of the Services and of
Institution’s satisfactory performance of the Services generally, Novartis shall
pay Institution a minimum of […***…] per Contract Year (“Reserved Capacity
Fee”), payable in advance of each quarter in non-refundable, non-creditable,
equal installments of […***…], based on a per Sample price of […***…] for
Institution’s solid

 

***Confidential Treatment Requested***

--------------------------------------------------------------------------------

tumor genomic testing and analysis platform (“Solid Tumor Platform”) and a per
Sample price of […***…] for Institution’s hematological malignancy genomic
testing and analysis platform (“Heme Platform”). Fees for Services performed on
Samples exceeding Reserved Capacity shall be governed by Section 3.A.i.b.
Notwithstanding the above, payments may be refunded, as appropriate, pursuant to
Section 10 of this Agreement.

y. Sixth and Seventh Contract Years. If Novartis exercises its option under
Section 2 to extend the Term for the Sixth and Seventh Contract Years (beginning
October 1st in 2016 and 2017, respectively), Novartis shall pay Institution a
per sample rate that is the lesser of the pricing shown on Attachment 4 or
Institution’s then current standard pricing, and Reserved Capacity for the Sixth
and Seventh Contract Years shall be agreed upon between the Parties. For
clarity, the amounts shown in Figure 1 for the Sixth and Seventh Contract Years
are examples only. They are not binding on Novartis. Both pricing and Reserved
Capacity for the Sixth and Seventh Contract Years reflected in Figure 1 may
change pursuant to this provision. Fees for Services performed on Samples
exceeding Reserved Capacity shall be governed by Section 3.A.i.b.

b. Fees for Samples Exceeding Reserved Capacity. In the event Novartis chooses
to seek genomic testing and analysis for Samples under this Second Amended
Master Agreement in a given Contract Year in excess of annual Reserved Capacity
(“Excess Samples”), the following pricing shall apply:

x. Tier Two Excess Samples. For the Third through Fifth Contract Years, after
the Reserved Capacity Fee has been reached, Excess Samples shall initially be
billed monthly on a per Sample basis at a per Sample rate for the Solid Tumor
Platform of […***…] and a per Sample rate for the Heme Platform of […***…] until
additional fees for Services performed of […***…] (“Tier Two Value Threshold”)
have been reached. If Novartis exercises its option under Section 2 to extend
the Term for the Sixth and Seventh Contract Years (beginning October 1st in 2016
and 2017, respectively), after the Reserved Capacity fee for the Sixth and
Seventh Contract Years (to be determined pursuant to Section 3.A.i.a.y) has been
reached, Excess Samples shall initially be billed at a rate to be agreed upon
between the Parties until additional fees for Services performed in an amount to
be agreed by the Parties (“Tier Two Year Six and Seven Value Threshold”) have
been reached. See Figure 1. For clarity, the amounts shown in Figure 1 for the
Sixth and Seventh Contract Years are examples only. They are not binding on
Novartis. Both pricing and volume for the Sixth and Seventh Contract Years
reflected in Figure 1 may change pursuant to this provision.

 

***Confidential Treatment Requested***

--------------------------------------------------------------------------------

y. Tier Three Excess Samples. For the Third through Fifth Contract Years, after
the Tier Two Value Threshold has been reached during a given Contract Year,
additional Excess Samples shall be billed monthly on a per Sample basis at a per
Sample rate for the Solid Tumor Platform of […***…] and a per Sample rate for
the Heme Platform of […***…] (“Tier Three Pricing”). If Novartis exercises its
option under Section 2 to extend the Term for the Sixth and Seventh Contract
Years (beginning October 1st in 2016 and 2017, respectively), after the Tier Two
Year Six and Seven Value Threshold (which amount is to be determined pursuant to
Section 3.A.i.b.x) has been reached, Excess Samples shall be billed at a rate to
be agreed upon between the Parties. See Figure 1. For clarity, the amounts shown
in Figure 1 for the Sixth and Seventh Contract Years are examples only. They are
not binding on Novartis. Both pricing and volume for the Sixth and Seventh
Contract Years reflected in Figure 1 may change pursuant to this provision.

Figure 1

 

     Yearly Volume
(units in
“Band” based
on solid tumor
pricing)   Solid Tumor
Platform
List Price
(See Att, 4)   Unit Count per
Sample/Price per
Sample for Solid
Tumor Platform   Unit Count per
Sample/Price per
Sample for Heme
Platform […***…]   Reserved Capacity
Fee/Tier Two
Value Threshold

Reserved Capacity

 

Years 3-5

 

Years 6/7 (Non-binding example only – Subject to change)

  

 

[…***…]

 

[…***…]

 

 

[…***…]

 

[…***…]

 

 

[…***…]

 

[…***…]

 

 

[…***…]

 

[…***…]

 

 

[…***…]

 

[…***…]

Tier 2 Pricing

 

Years 3-5

 

Years 6/7 (Non-binding example only–Subject to change)

  

 

[…***…]

 

[…***…]

 

 

[…***…]

 

[…***…]

 

 

[…***…]

 

[…***…]

 

 

[…***…]

 

[…***…]

 

 

[…***…]

 

[…***…]

Tier 3 Pricing

 

Years 3-5

 

Years 6-7 (Non-binding example only – Subject to Change)

  

 

[…***…]

 

[…***…]

 

 

[…***…]

 

[…***…]

 

 

[…***…]

 

[…***…]

 

 

[…***…]

 

[…***…]

 

 

[…***…]

 

[…***…]

 

***Confidential Treatment Requested***

--------------------------------------------------------------------------------

ii. Alliance Management and Technology Support. During each Contract Year,
Novartis shall pay Institution an Alliance Management and Technology Support
Service Fee for services to support the continued collaboration between the
Parties and ongoing enhancement to Sample management and reporting tools for
Novartis studies. The Service Fee payable by Novartis under this Section 3.A.ii
shall be […***…] per year, which shall be payable in advance of each quarter in
non-refundable, non-creditable equal installments of […***…] per quarter.
Institution bears the sole responsibility for compensation (including overtime
to hourly employees, if applicable) of Institution’s employees who provide the
services set forth in this Section 3.A.ii. Notwithstanding the above, payments
may be refunded, as appropriate, pursuant to Section 10 of the Master Agreement.

iii. Molecular Information and Analysis Services. During each Contract Year,
Novartis shall pay Institution […***…] (“Molecular Information Service Fee”),
payable in advance of each quarter in non-refundable, non-creditable equal
installments of […***…] per quarter, to develop and conduct queries of
Institution’s database of aggregated genomic alteration information on behalf of
Novartis and provide results to Novartis as more fully described in Section 4.J.
The work required of Institution to perform the molecular information services
hereunder shall not, in aggregate across all Statements of Work in any Contract
Year, exceed performance of […***…]. Institution bears the sole responsibility
for compensation (including overtime to hourly employees, if applicable) of
Institution’s employees for the services set forth in this Section 3.A.iii.
Notwithstanding the above, Novartis may, at its own discretion, discontinue
requests for services under this Section 3.A.iii by notifying Institution in
writing no less than ninety (90) days before the start of the next Contract
Year. Novartis

 

***Confidential Treatment Requested***

--------------------------------------------------------------------------------

shall not be required to pay the Molecular Information Service Fee for any
Contract Year for which it requests discontinuation of the services set forth
hereunder. Notwithstanding the above, payments may be refunded, as appropriate,
pursuant to Section 10 of the Master Agreement.”

4. Section 4. Section 4.D is amended and Section 4.J is newly added as follows:

Following the last sentence of Section 4.D of the First Amended Master
Agreement, the following sentence is added: “In addition, Novartis grants
Institution a non-exclusive, royalty-free, sublicensable to Affiliates,
worldwide, transferable (but only in connection with the sale of all or
substantially all of Institution’s business to which this Agreement relates) and
perpetual license to include the data derived from the Samples resulting from
the Services (“Results”) into Institution’s databases for use with its products
and services relating to genomic testing and analysis in the field of oncology.”

“J. Novartis acknowledges that Institution possesses and owns genomic
information pertaining to the nature and prevalence of known and likely somatic
alterations, including base substitutions, insertions and deletions, focal
amplifications, homozygous deletions, and rearrangements contained in
Institutions proprietary database of de-identified clinical patient data
(“Molecular Information”), which may be interrogated by one or more queries of
Molecular Information performed by Institution at Novartis’s request as part of
the Services hereunder (“Database Queries”) to generate certain results
(“Database Query Results”). Institution shall exclusively own all Database Query
Results, but Institution hereby grants to Novartis and its Affiliates a
non-exclusive, royalty-free, non-sublicensable, worldwide and perpetual license
to use the Database Query Results for its internal business and development
purposes and for patent filings and regulatory submissions. For clarity, the
Database Query Results shall NOT be considered works for hire under copyright
law or any other applicable law or doctrine. Ownership of any patentable
inventions arising directly from the Database Query Results shall follow
inventorship in accordance with United States patent law. For any patentable
inventions arising directly from the Database Query Results and owned by
Institution (“Institution Database Query Inventions”), Institution grants
Novartis and its Affiliates a non-exclusive, royalty-free, sublicensable,
worldwide and perpetual license to such patentable inventions to research,
develop, make, have made, use, offer for sale, sell and import Novartis
products. Furthermore, Institution agrees to promptly notify Novartis of any
Institution Database Query Inventions and grants Novartis the option to
negotiate an exclusive license under reasonable commercial terms for any
Institution Database Query Inventions or Institution’s interest in any
inventions arising directly from the Database Query Results that are jointly
invented between Novartis and Institution. Novartis shall notify Institution of
its intent to exercise such option to negotiate within ninety (90) days after
Institution’s disclosure to Novartis of the applicable Institution Database
Query Invention. If Novartis exercises such option, the Parties shall thereafter
work in good faith to negotiate the terms of such license within a period of
ninety (90) days after exercise of such option, or within such other period of
time as is mutually agreed upon by the Parties. Prior to notifying Novartis of
an Institution Database Query Invention, during the period following
notification but prior to Novartis’s exercise of the option, and during the
ninety (90) days prescribed for license negotiations if Novartis exercises its
option, Institution shall not […***…].”

 

***Confidential Treatment Requested***

--------------------------------------------------------------------------------

5. New Section 5.A.iii. Section 5.A.iii of the First Amended Master Agreement is
added as follows:

“Notwithstanding the above, with regard to Third Party Samples, Novartis
represents that the Third Party has made a representation, warranty and covenant
with regard to the facts and obligations set forth in 5.A.i and 5.A.ii.”

6. New Section 5.F. Section 5.F of the First Amended Master Agreement is added
as follows:

“From time to time, and subject to the provisions below, a third party (“Third
Party Provider”) may, on behalf of Novartis, provide to Institution samples
(“Third Party Samples”) for services under this Agreement. Third Party Samples
for which Institution performs Services shall be counted as part of the total
number of Samples provided to Institution in the applicable Contract Year, and
Section 3.A shall apply to Third Party Samples. Institution’s obligations with
regard to Services and Samples as set forth throughout this Agreement shall
apply to Third Party Samples. Services to be performed with regard to Third
Party Samples will be specified in a Statement of Work to be completed by the
party supplying Third Party Samples. Any license and use rights granted by
Novartis to Institution under Section 4 shall not be applied as they relate to
Third Party Samples but instead such grant rights by Novartis to Institution
relating to Third Party Samples are specified below. Novartis agrees […***…]
Prior to the provision of Third Party Samples to Institution for performance of
Services under this Agreement, Novartis also agrees […***…] Prior to initiation
of Services for Third Party Samples, Novartis shall […***…] For clarity, it is
understood between Novartis and Institution that […***…]”

7. Section 7. Section 7 of the of the First Amended Master Agreement is hereby
replaced with the following:

“The Institution shall not disclose that Novartis has retained the Institution
for professional services, and neither party shall use, or authorize others to
use, the name, symbols, or marks of the other party hereto in any advertising or
publicity material, press release, or other public statement, without prior
written permission of the other Party (which consent will not be unreasonably
withheld or delayed), except to the extent such disclosure is required to be
disclosed pursuant to (a) judicial process, court order or administrative
request, or (b) applicable legal requirements or governmental regulations,
including any securities laws or regulations, or the regulations or requirements
of any stock exchange or stock listing entity. Notwithstanding the above,
Institution shall provide Novartis with prompt notice of any requirement to
disclose such information so as to permit Novartis to seek a protective order or
other appropriate remedy and will disclose only that information which
Institution’s counsel has concluded is legally required to be disclosed.”

 

***Confidential Treatment Requested***

--------------------------------------------------------------------------------

8. Section 10.A. The first sentence of Section 10.A of the First Amended Master
Agreement is hereby amended as follows:

“A. This Agreement and any Task Orders issued hereunder may be terminated by
Novartis for any reason or for no reason at all after September 30, 2016 upon
ninety (90) days written notice to Institution.”

9. Section 12. The first sentence of Section 12 of the of the First Amended
Master Agreement is hereby amended as follows:

“Institution shall not subcontract any of this Master Agreement without the
prior written approval of Novartis, except that Institution may engage
non-employee contractors to perform aspects of the Services under this Master
Agreement on Institution’s premises and under the supervision of appropriate
Institution personnel, provided such non-employee contractors are bound by
obligations applicable to Institution’s employees no less stringent than those
contained in this Master Agreement. In the event that Novartis approves the use
of non-employee contractors, Institution shall remain fully liable for the
performance of its obligations under this Master Agreement.”

10. New Section 23. A new Section 23 is hereby added as follows:

“23. Anti-Bribery

In consideration of the mutual covenants, terms and conditions set forth below,
the parties agree as follows:

A. In exercising its rights and performing its obligations under the Master
Agreement, the Institution will comply with all applicable federal, state and
local anti-corruption and anti-bribery laws, statutes, rules, regulations and
orders, applicable industry standards, and the Novartis Global Anti-Bribery
Policy, as amended from time to time, and attached hereto as Attachment 5.

B. The Institution shall train any individual who is involved with the
activities set forth in the Master Agreement on anti-corruption and anti-bribery
at its own expense using training materials provided by Novartis and the
attached Novartis Global Anti-Bribery Policy.

C. The Institution warrants that should Novartis require Institution to complete
a “Questionnaire for Third Parties”, the information provided by Institution
with such Questionnaire shall be accurate and complete. The Institution agrees
to inform Novartis promptly of any significant change to the information
provided with such Questionnaire.

D. Novartis shall have the right, at its cost, at any time upon reasonable prior
written notice, to audit the Institution’s records to ensure compliance with
this provision. Novartis may appoint a third party auditor to perform such audit
and if so, the appointed auditor will be subject to reasonable confidentiality
obligations in relation to its review of the Institution’s records. The
Institution will provide full cooperation and grant access to all relevant
documents and materials as reasonably necessary during normal business hours.

E. The Institution’s breach of any obligation or warranty set forth in this
provision shall be considered a material breach of the Master Agreement, and
Novartis shall have the right to immediately terminate the Master Agreement.”

--------------------------------------------------------------------------------

11. New Section 24. A new section 24 is added as follows:

“24. Healthcare Professionals and Healthcare Institutions

“Healthcare Professional” or “HCP” shall mean any person possessing a relevant
healthcare degree and any pharmacy & therapeutics (P&T) committee member
including but not limited to any person licensed to prescribe, administer,
dispense, or purchase prescription drugs/medicines for resale or distribution
for human and animal use.

“Healthcare Institution” or “HCI” shall mean any institution that provides
healthcare to patients, purchases or dispenses prescription medication, conducts
clinical research, recommends or advocates treatment options, or whose entire
members, entire shareholders, or all employees include healthcare professionals.

In consideration of the mutual covenants, terms and conditions set forth herein,
the parties agree as follows:

A. HCI/HCP shall perform the services under the Master Agreement: (i) in a
professional manner, consistent with applicable industry standards and
practices; (ii) in conformance with that level of care and skill ordinarily
exercised in similar circumstances by providers of the same or similar services;
(iii) in compliance with all applicable federal, state and local laws, statutes,
rules, regulations and orders, including, but not limited to, the applicable
requirements of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. § 301 et
seq.) and the Federal Healthcare Programs Antikickback Statute (42 U.S.C. §
1320a-7b(b)); and (iv) in compliance with all Novartis policies and procedures
communicated to HCI/HCP and applicable to the Services or to HCI/HCP. HCI/HCP
shall ensure that each person assigned to perform the Services has the
appropriate level of expertise, training, experience and, where applicable,
licenses, necessary to perform such Services. Upon Novartis’ reasonable request,
HCI/HCP shall reassign and replace any of its employees and subcontractors
assigned to perform the Services. Novartis reserves the right to deny access to
its facilities or remove from its premises, any individual who does not comply
with Novartis’ rules, regulations and policies.

B. If HCI/HCP is a United States (“US”) based healthcare professional or an
entity by or in which any US based healthcare professional receiving payments
under the Master Agreement or in connection with the Services is (1) employed;
(2) a principal; (3) an owner; or (4) a contractor, Novartis will have the right
(i) to make public on its web site information relating to the Services or the
Master Agreement, including without limitation, the relevant name, city, and
state of residence or business (as applicable), the nature of the services
performed pursuant to the Agreement, and any and all payments, reimbursements
for expenses, or other transfers of value made in other than dollar form
relating to the Master Agreement and (ii) to otherwise disclose as Novartis
determines or as may be required under applicable state or federal law or any
Corporate Integrity Agreement, such information or any other information
relating to the Master Agreement. Furthermore, if a payment or other transfer of
value is made under the Master Agreement, (1) on behalf of, at the request of,
for the benefit or use of, or under the name of a US based healthcare
professional for whom Novartis would otherwise report payments if made directly
to the US based healthcare professional; or (2) at the request

--------------------------------------------------------------------------------

of, or designated on behalf of, a US based healthcare professional, then
Novartis shall have the right to post and/or disclose the information referenced
in the preceding sentence under the name of the HCI/HCP and/or the healthcare
professional, as Novartis shall determine. Novartis shall also have the right to
disclose this information to such healthcare professional’s employer, or
affiliated hospitals or institutions.

C. If any HCI/HCP or any employee, subcontractor or agent of the HCI/HCP
involved with the performance of the Services is currently or during the term of
the Master Agreement becomes a member of a committee that sets formularies of
covered medicines (e.g., formulary committee or Pharmacy & Therapeutics
committee) or develops clinical practice guidelines or treatment protocols or
standards, HCI/HCP shall or shall ensure that such person shall comply with the
disclosure requirements of the respective committee(s) and, at a minimum, shall
follow the procedures of such committee and disclose to such committee that
(i) such person(s) provide services to Novartis and (ii) the nature of such
services, for example, services related to the current or potential marketing
and/or sales of a Novartis product; clinical research activities relating to a
Novartis product; and/or non-promotional activities relating to a therapeutic
area in which Novartis researches, develops, markets or sells pharmaceutical
products.

The obligation to disclose to such committee as contemplated above shall extend
for two (2) years beyond the termination or expiration of the Master Agreement,
or a longer period of time as required by such committee. If and to the extent
that the procedures or disclosure requirements of any committee(s) referenced
above of which such person is a member require disclosure of confidential
information of Novartis and/or work product produced under the Master Agreement
to such committee(s), HCI/HCP will notify Novartis of such procedure or
requirement reasonably in advance of making such disclosure, to the extent not
prohibited by the policies of such committee(s).

D. If HCI/HCP, or any employee, subcontractor or agent of HCI/HCP involved with
the performance of Services is or during the term of the Master Agreement
subsequently becomes, a member of, affiliated with, or an employee of an
educational or not-for-profit institution, health care institution, medical
committee, or other medical or scientific organization and is required by such
institution, committee, or organization to disclose any proposed or current
agreements for Services as contemplated herein, HCI/HCP will or will ensure that
said employee, subcontractor or agent will, make such disclosure(s) in
accordance with the policies and procedures of such institution, committee, or
organization, and will obtain prior written approval of the Master Agreement by
such institution, committee, or organization, if required. The obligation to
make the disclosures and obtain the approvals contemplated above shall extend
beyond the termination or expiration of the Master Agreement for such period of
time as required by such institution, committee, or organization. If and to the
extent that the procedures or disclosure requirements of any institution,
committee, or organization referenced above require disclosure of confidential
information of Novartis and/or work product produced under the Master Agreement
to such institution, committee, or organization, HCI/HCP will notify Novartis of
such procedure or requirement reasonably in advance of making such disclosure,
to the extent not prohibited by the policies of such institution, committee, or
organization.

--------------------------------------------------------------------------------

E. If the Services include authoring or production of articles or other
publications, HCI/HCP shall, and shall ensure that its employees, subcontractors
and agents shall (1) comply with the International Committee of Medical Journal
Editors (“ICMJE”) criteria concerning authorship and disclosure of relationships
with industry; and (2) disclose in any manuscript, journal submission, and
elsewhere as appropriate or required, any potential conflict of interest,
including any financial or personal relationships with Novartis, the names of
any individuals who have provided editorial support for any manuscripts or other
publications, and all funding sources for the study or publication.

F. Neither HCI/HCP nor any person currently employed by or under contract to
HCI/HCP now or in the future in connection with any work to be performed for or
on behalf of Novartis, including without limitation, any Services performed
under the Master Agreement (i) has been convicted of an offense related to any
Federal or State healthcare program, including (but not limited to) those within
the scope of 42 U.S.C. § 1320a-7(a); (ii) has been excluded, suspended or is
otherwise ineligible for Federal or State healthcare program participation,
including (but not limited to) persons identified on the General Services
Administration’s List of Parties Excluded from Federal Programs or the HHS/OIG
List of Excluded Individuals/Entities; (iii) has been debarred from or under any
Federal or State healthcare program (including, but not limited to debarment
under Section 306 of the Federal Food, Drug and Cosmetic Act (21 USC 335a); or
(iv) is on any of the FDA Clinical Investigator enforcement lists, including,
but not limited to, the (1) Disqualified/Totally Restricted List, (2) Restricted
List and (3) Adequate Assurances List. HCI/HCP further agrees that if, at any
time after execution of this Amendment, HCI/HCP becomes aware that it has or any
person who participated, or is participating, in the performance of any Service
or any other work for Novartis has become or is in the process of being charged,
convicted, debarred, excluded, proposed to be excluded, suspended or otherwise
rendered ineligible or is on an enforcement list, HCI/HCP will immediately
notify Novartis in writing at: Novartis Pharmaceuticals Corporation, Attn:
Ethics and Compliance, 59 Route 10, East Hanover, NJ 07936-1080.”

12. New Section 25. A new Section 25 is hereby added as follows:

“25. Spend Information. During the term of this Agreement, Institution shall
retain and provide to Novartis certain spend information reasonably requested by
Novartis to enable Novartis to comply with federal and/or state law requirements
and meet other Novartis information needs (e.g., aggregate spend). Novartis
shall request only that information reasonably necessary to fulfill its
obligations and will request such information in a common or easily accessible
format (e.g., by Excel file). Such spend information shall be provided or
transmitted to Novartis on a calendar monthly basis no later than the fifteenth
(15th) business day of each month. After the fifteenth (15th) business day,
Institution shall have another five (5) business days to correct any errors or
omissions to the Spend Report identified by Novartis.”

13. Press Release. Upon execution of this Second Amendment, Institution shall
issue a press release in a form mutually agreed to by the Parties in writing
announcing the full collaboration established by the Second Amended Master
Agreement. Institution shall provide Novartis a press release in draft form five
(5) business days prior to its publication in order to provide Novartis
sufficient time to review and comment.

--------------------------------------------------------------------------------

14. Entire Agreement. Except as provided herein, the First Amended Master
Agreement shall remain in full force and effect without amendment or
modification and is hereby ratified. The First Amended Master Agreement, as
amended by this Second Amendment, supersedes any prior understandings or written
or oral agreements between the parties respecting the subject matter hereof and
contains the entire understanding of the parties with respect thereto. This
Second Amendment shall not have any force or effect until executed by all
parties. The headings of this Second Amendment are for informational purposes
only and shall not be used to interpret this Second Amendment.

15. Counterparts. This Second Amendment may be executed in multiple
counterparts, each of which shall be deemed to be an original and all of which
taken together shall constitute one agreement. This Second Amendment may also be
executed by facsimile counterparts.

[Remainder of this page intentionally left blank. Signature page follows.]

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be
executed as of the date of last signature below. All other terms and conditions
of the Master Agreement, as amended, remain in effect.

NOVARTIS PHARMACEUTICALS CORPORATION

 

By:  

/s/ Teresa Jose

Name:   Teresa Jose Title:   CFO Oncology Date:   1/6/14

FOUNDATION MEDICINE, INC.

 

By:  

/s/ Michael J. Pellini

Name:   Michael J. Pellini Title:   President & CEO Date:   12/17/13

--------------------------------------------------------------------------------

Attachment 1

Statement of Work Template

 

LOGO [g654407img1.jpg]   Foundation Medicine Statement of Work

Doc. ID Number:

RES-RSP-13-XXX

 

Partner Trial:

XXX

 

Effective Date:

<DATE>

 

Page:

1 of 11

A STUDY TO USE THE FOUNDATION MEDICINE COMPREHENSIVE GENOMIC PROFILING ASSAY TO
ANALYZE <INSERT ADDITIONAL STUDY INFORMATION HERE or STUDY TITLE FROM PROTOCOL>

 

Partner Trial:   <Partner Trial Name> Partner Name:   Novartis FM Research Study
Number:   RES-RSP-XX-XXX Primary Protocol/Project-specific Sponsor Contact:  
<Primary Sponsor Contact> Alliance Management:  

 

Confidential Proprietary Property of Foundation Medicine, Inc.      1   

--------------------------------------------------------------------------------

LOGO [g654407img1.jpg]   Foundation Medicine Statement of Work

Doc. ID Number:

RES-RSP-13-XXX

 

Partner Trial:

XXX

 

Effective Date:

<DATE>

 

Page:

2 of 11

 

A STUDY TO USE THE FOUNDATION MEDICINE COMPREHENSIVE GENOMIC PROFILING ASSAY

TO ANALYZE <INSERT ADDITIONAL STUDY INFORMATION HERE>

I. APPROVAL SIGNATURES

Signature of Agreement for Protocol

I have read this protocol and agree to the Statement of Work as outlined herein:

 

 

    

 

<Insert Partner Project Lead/Signatory Information

here>

     Date

 

    

 

Vincent A. Miller, M.D.      Date Chief Medical Officer      Foundation
Medicine, Inc.     

CONFIDENTIALITY

The information contained in this document is the confidential and proprietary
information of Foundation

Medicine. Except as may be required by Federal, State, or local laws or
regulations, this document may not be

disclosed to others without written permission of Foundation Medicine.

 

Confidential Proprietary Property of Foundation Medicine, Inc.      2   

--------------------------------------------------------------------------------

LOGO [g654407img1.jpg]   Foundation Medicine Statement of Work

Doc. ID Number:

RES-RSP-13-XXX

 

Partner Trial:

XXX

 

Effective Date:

<DATE>

 

Page:

3 of 11

 

II. DOCUMENT HISTORY

 

Version

 

Date

 

Replaces

 

Description of Change

1.0

    N/A   Initial Draft

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Confidential Proprietary Property of Foundation Medicine, Inc.      3   

--------------------------------------------------------------------------------

LOGO [g654407img1.jpg]   Foundation Medicine Statement of Work

Doc. ID Number:

RES-RSP-13-XXX

 

Partner Trial:

XXX

 

Effective Date:

<DATE>

 

Page:

4 of 11

 

Table of Contents

 

I.

  

 

APPROVAL SIGNATURES

     2   

II.

  

 

DOCUMENT HISTORY

     3   

III.

  

 

SUMMARY OF STUDY

     5         1.      

BACKGROUND:

     5         2.      

OBJECTIVES:

     5   

IV.

  

 

STUDY DETAILS

     5         3.      

STUDY TIMEFRAMES

     5         4.      

SAMPLE SUMMARY

     6         5.      

SAMPLE REQUIREMENTS

     6         6.      

SAMPLE PROCESSING CONTINGENCY PLANS

     7         7.      

ASSAY REQUIRED

     8         8.      

REMAINING TISSUE INSTRUCTIONS

     8   

V.

  

 

DELIVERABLES

     9         9.      

DATA/RESULTS REPORTING:

     9         10.      

SAMPLE TRACKING:

     10   

VI.

  

 

NOVARTIS PROJECT-SPECIFIC CONTACT INFORMATION

     10   

VII.

  

 

FOUNDATION MEDICINE CONTACT INFORMATION

     11   

 

Confidential Proprietary Property of Foundation Medicine, Inc.      4   

--------------------------------------------------------------------------------

LOGO [g654407img1.jpg]   Foundation Medicine Statement of Work

Doc. ID Number:

RES-RSP-13-XXX

 

Partner Trial:

XXX

 

Effective Date:

<DATE>

 

Page:

5 of 11

 

III. SUMMARY OF STUDY

 

  1. BACKGROUND:

<Please provide a short background paragraph on study here><Short background
paragraph on disease studied, if relevant.>

The samples used for this study come from COMPANY NAME protocol number XXXXXXX,
a <TRIAL DESCRIBED HERE>.

The purpose of this study is to use the Foundation Medicine comprehensive
genomic assay to profile tumor specimens on a selection of tumors from the <XXXX
study/research project.>

 

  2. OBJECTIVES:

Primary Objective:

 

  •   To utilize FMI’s comprehensive cancer genome profiling assay to
retrospectively analyze <DETAILS HERE.>

 

IV. STUDY DETAILS

 

  3. STUDY TIMEFRAMES

 

Projected Initial samples shipment date    Frequency of shipments (i.e. monthly,
quarterly, etc.)    Projected Final sample shipment date    Other relevant dates
(i.e. planned database lock, etc.

 

 

Confidential Proprietary Property of Foundation Medicine, Inc.      5   

--------------------------------------------------------------------------------

LOGO [g654407img1.jpg]   Foundation Medicine Statement of Work

Doc. ID Number:

RES-RSP-13-XXX

 

Partner Trial:

XXX

 

Effective Date:

<DATE>

 

Page:

6 of 11

 

  4. SAMPLE SUMMARY

 

Type of Study

Examples: Clinical - retrospective, Clinical - prospective, research samples
only

 

Total number of samples expected

Example: 50 samples total, 25 tumor and 25 normal (blood)

 

Description of Samples & Tumor Types

Examples: All samples are from HCC xenograft models; All samples are various
solid tumor types from clinical trial participants

 

Sample Format(s)

Examples: FFPE Tumor Blocks, Tumor Tissue slides, Extracted DNA

 

Where will samples be shipped from?

Example: All samples will be shipped from ABC central laboratory (if coming from
multiple locations, please name all)

 

Does Foundation Medicine have permission to exhaust samples? (please specify by
sample type)

Example: Slides may be exhausted, but must contact sponsor for permission before
exhausting FFPE blocks

 

 

  5. SAMPLE REQUIREMENTS

 

  •   Generally, at least 40 microns of tissue cut from FFPE specimens and
mounted as unstained slides, plus an additional unstained slide for H&E, are
required. (4 x 10 micron slides, or 8 x 5 micron slides, plus an additional 1 x
4 micron slide for H&E staining) Reference SOW appendices for more information
on other tissue types and their general requirements.

 

  •   If less than 40 microns of tissue is available, Foundation can pre-review
the H&E images to determine the tumor content of >20%. The sample may be
utilized for Foundation’s validated small sample extraction protocol in the CLIA
lab.

 

  •   A hard copy of the Sample Manifest must accompany all packages samples
received at FMI. Each sample will be physically checked against the Sample
Manifest before accessioning of the samples can begin.

 

  •   Tissue samples will be identified with a Foundation Medicine assigned
code.

 

  •   Electronic Study Manifest (Refer to Appendix VIII for detailed
information)

 

Confidential Proprietary Property of Foundation Medicine, Inc.      6   

--------------------------------------------------------------------------------

LOGO [g654407img1.jpg]   Foundation Medicine Statement of Work

Doc. ID Number:

RES-RSP-13-XXX

 

Partner Trial:

XXX

 

Effective Date:

<DATE>

 

Page:

7 of 11

 

  •   Electronic Sample and Study Manifests must also be sent to FMI. These
include:

 

  •   An electronic version of each Sample Manifest associated with a package

 

  •   An electronic cumulative study manifest containing information associated
with each sample

 

  6. SAMPLE PROCESSING CONTINGENCY PLANS

Quality control checks are critical to every step of the FMI assay. These steps
are:

 

  1. Reconciliation. Each physical sample is manually checked against the sample
identifier on the Sample Manifest. Additionally, each slide is manually checked
to see that the shape and size of the sample matches that of the other slides
associated with the same sample identifier. For cases where a sample cannot be
reconciled, the Sponsor Contact will be contacted to make a decision regarding
whether or not to proceed with that sample.

 

  2. Pathology Review. An H&E slide is prepared and reviewed for a) assessment
of percentage tumor, b) gross pathology to assess whether the tissue type
matches the Study Manifest. For cases with a tumor fraction <20%, specimens will
be held until the Sponsor Contact is contacted. Similarly, if a tissue
discrepancy is noted, the specimen will be held until the Sponsor Contact is
contacted and can advise.

 

  3. DNA extraction. The majority of samples that pass pathology review are able
to have DNA isolated. A small percentage of samples yield <50 ng of DNA, which
is currently the minimum amount of DNA needed for the FMI assay. If this occurs,
the Sponsor Contact is contacted to decide if additional sample is available,
and, in consultation with FMI decide whether to attempt to continue the assay.

 

  4. Sequencing. The vast majority of samples with an adequate amount of good
quality DNA perform well in the FMI assay. If underperformance is noted, the
Sponsor Contact will be notified to discuss steps forward.

 

Confidential Proprietary Property of Foundation Medicine, Inc.      7   

--------------------------------------------------------------------------------

LOGO [g654407img1.jpg]   Foundation Medicine Statement of Work

Doc. ID Number:

RES-RSP-13-XXX

 

Partner Trial:

XXX

 

Effective Date:

<DATE>

 

Page:

8 of 11

 

  7. ASSAY REQUIRED

 

Assay Name

  

Selection (place “X” in only one box)

T5a

  

Heme assay

  

Refer to the SOW appendices for the list of genes in each assay.

 

  8. REMAINING TISSUE INSTRUCTIONS

If remaining tissue is to be returned, the following table must be completed
including destination, address, and recipient contact info, timelines, shipping
conditions (e.g. ambient, cold pack, frozen), labeling, and manifest
requirements (electronic and hard copies)

FM should notify partner contact when a shipment is scheduled with tracking
numbers and expected delivery dates. Return shipments should only be scheduled
on a Monday, Tuesday, or Wednesday, unless partner explicitly requests
otherwise.

 

Tissue Type (blocks,

slides, DNA, etc.)

 

Instructions (ship to

central lab, destroy

samples, etc.)

 

Shipment information (if

applicable)

 

Shipment timing

requirements

Example: Remaining blocks  

Example:

 

Return to central laboratory, email electronic manifest to <EMAIL1, EMAIL2>
prior to shipment

 

Example:

 

Attention: Sample Return Unit

 

XXXX Street, City, State, Country

 

Phone:

 

Email:

 

Example:

 

Ship remaining tissue quarterly

Example: Remaining slides       Example: Remaining DNA extract       <add/delete
rows as required>      

 

Confidential Proprietary Property of Foundation Medicine, Inc.      8   

--------------------------------------------------------------------------------

LOGO [g654407img1.jpg]   Foundation Medicine Statement of Work

Doc. ID Number:

RES-RSP-13-XXX

 

Partner Trial:

XXX

 

Effective Date:

<DATE>

 

Page:

9 of 11

 

If remaining tissue is to be destroyed, FM must receive a written request with a
listing of exactly which samples are to be destroyed. FM will provide
documentation of destruction upon completion of the process.

 

V. DELIVERABLES

The success of this work will be facilitated by timely sample receipt and
associated data transfer and regular communication between the relevant
scientific and operational contacts at Foundation and Novartis. IF RELEVANT: NGS
data from this study is required at PARTNER by XX date. The achievability of
this date is dependent upon receiving samples and sample information in a timely
manner (by XXXX, 2013 at the latest).

 

  9. DATA/RESULTS REPORTING:

All data types/formats in the table below will provide information regarding:

 

  •   Base substitutions

 

  •   Small insertions and deletions

 

  •   Copy number alterations

 

  •   Select rearrangements

 

Data Type/Format

 

Delivery Method

 

Frequency/Timing

CLIA certified PDF reports for Investigators (only applicable for clinical trial
samples)   <SELECT AS APPLICABLE: Novartis team via WDCSII system, or directly
to sites via Foundation Medicine’s Web Portal delivery system>   Example:
rolling, within 42 days of sample receipt at Foundation Medicine Data transfer
per Data Transfer Specifications (DTS)*  

WDCSII, format specified in DTS

Specify NOVDD or ADVANCE

  Example: Data transfer every two months during study, and ad-hoc as needed Xml
file format data   Example: Emailed to Novartis Bioinformatics team   Example:
Within 60 days of sample receipt at FM Excel results summary (research samples
only – not for clinical samples)   Example: Emailed to CTT   Example: Sent upon
request

 

* Foundation Medicine will be responsible for responding to data-transfer
reconciliation trackers during data reconciliation processes throughout the
trial.

 

Confidential Proprietary Property of Foundation Medicine, Inc.      9   

--------------------------------------------------------------------------------

LOGO [g654407img1.jpg]   Foundation Medicine Statement of Work

Doc. ID Number:

RES-RSP-13-XXX

 

Partner Trial:

XXX

 

Effective Date:

<DATE>

 

Page:

10 of 11

 

  10. SAMPLE TRACKING:

Foundation Medicine will provide tracking and sample progress reports either in
a centralized tracking sheet delivered to Novartis, the BioTrack sample
annotation file, or a web-based tracking platform maintained by Foundation
Medicine.

 

VI. NOVARTIS PROJECT-SPECIFIC CONTACT INFORMATION

Add or remove contact information as needed

 

< Contact #1>

 

< Contact #2>

  < Contact #3>

 

Confidential Proprietary Property of Foundation Medicine, Inc.      10   

--------------------------------------------------------------------------------

LOGO [g654407img1.jpg]   Foundation Medicine Statement of Work

Doc. ID Number:

RES-RSP-13-XXX

 

Partner Trial:

XXX

 

Effective Date:

<DATE>

 

Page:

11 of 11

 

VII. FOUNDATION MEDICINE CONTACT INFORMATION

 

     

 

Confidential Proprietary Property of Foundation Medicine, Inc.      11   

--------------------------------------------------------------------------------

Attachment 4

 

Per Sample Pricing by Volume

Sample Band

 

Solid Tumor Platform

 

Heme Platform

[…***…]

 

 

[…***…]

 

 

[…***…]

 

[…***…]   […***…]   […***…] […***…]   […***…]   […***…] […***…]   […***…]  
[…***…] […***…]   […***…]   […***…] […***…]   […***…]   […***…]

 

***Confidential Treatment Requested***

--------------------------------------------------------------------------------

Attachment 5

Anti-Bribery Policy

Novartis Global Policy

--------------------------------------------------------------------------------

1.    Introduction 1.1    Purpose    Our Code of Conduct states that we do not
bribe anyone. This Policy sets forth the respective principles and rules and how
they must be implemented. 1.2    Scope and Applicability    This Policy applies
to all directors, officers, and employees (‘Associates’) of Novartis AG and its
affiliates (‘Novartis’).    This Policy addresses a variety of contexts in which
bribery issues may arise. Other aspects of business ethics and corruption,
including conflicts of interest and insider trading, are regulated separately.
   This Policy contains Novartis’ global standards and it is aligned with
applicable laws and industry codes. In some countries, local laws and
regulations may be more stringent than the principles set out in this Policy.
Where this is the case, the more stringent rules apply.    This Policy enters
into force as of March 1, 2012, and must be implemented by all Novartis
affiliates (taking into account local legal considerations). It replaces
Corporate Citizenship Guideline # 3: Business Ethics – Bribes, Gifts and
Entertainment (‘CC3’).

--------------------------------------------------------------------------------

2.    Principles and Rules 2.1    Basic Rules Definitions   

Bribery means giving, offering, or receiving an improper benefit with the
intention of influencing the behavior of someone to obtain or retain a
commercial advantage.

 

Bribery can take a variety of forms – offering or giving money or anything else
of value. In fact, even common business practices or social activities – such as
the provision of gifts and hospitality – can constitute bribes in some
circumstances.

Principles and Rules    Associates must not bribe and they must not use
intermediaries, such as agents, consultants, advisers, distributors or any other
business partners to commit acts of bribery.    Novartis does not distinguish
between public officials and private persons so far as bribery is concerned:
bribery is not tolerated, regardless of the status of the recipient.    Always
ask yourself before offering or giving money or anything else of value to any
person if what you are considering to do could be viewed as having an
illegitimate purpose. If the answer is yes, you must not proceed. References   
If you are in any doubt, consult a legal or compliance representative before
proceeding.    With regard to interactions with third parties, consult the
Novartis guidelines relating to the management of third parties. 2.2    Gifts,
Hospitality, and Entertainment Definitions    Gifts are benefits of any kind
given to someone as a sign of appreciation or friendship without expectation of
receiving anything in return. They include ‘courtesy gifts’, which are small
gifts given at culturally recognized occasions (e.g. weddings, funerals) or
special times of the year (e.g. Christmas, New Year).    Hospitality generally
includes refreshments, meals, and accommodation. Entertainment    generally
includes attendance at plays, concerts, and sports events. Principles and Rules
   Gifts, hospitality, and entertainment must be modest, reasonable and
infrequent so far as any individual recipient is concerned.    Gifts,
hospitality, and entertainment must never be offered or provided with the intent
of causing the recipient to do something favoring Novartis or to refrain from
doing something disadvantaging Novartis.    Cash and gifts that are cash
equivalent (e.g. shopping coupons) must never be given. Do not    provide
entertainment to any participant to Novartis business meetings, congresses or
comparable events, unless the entertainment is an appropriate and incidental
part of such events. Do not pay for any side or extended trips.    Do not pay
for the entertainment, hospitality, travel costs of anyone who accompanies an
invitee to a Novartis business meeting, congress, or comparable event.

--------------------------------------------------------------------------------

   Before giving a gift or providing hospitality or entertainment to anyone,
consider whether the reputation of Novartis, yourself, or the recipient is
likely to be damaged if news of the gift, hospitality, or entertainment appeared
on the front page of a newspaper. If this would embarrass either Novartis or the
recipient, do not proceed. References    Principles & practices for
professionals or equivalent document of each Novartis Division (e.g., NP4) 2.3
   Grants and Donations Definitions    Grants and donations are benefits given
by Novartis in the form of money or in-kind contributions (e.g. the supply of a
Novartis product for free or at a reduced price). They can also involve both a
monetary payment and an in-kind contribution.    Novartis provides grants and
makes donations for a variety of legitimate purposes, including funding research
or measures to improve health care systems and supporting charitable projects.
   The main difference between grants and donations is that grants are given for
a specific purpose, e.g. research or education, while donations address
humanitarian needs, including emergency and natural disaster situations (e.g.
earthquake, tsunami). Principles and Rules    Grants and donations can only be
given if Novartis does not receive, and is not perceived to receive, any
tangible consideration in return. For instance, grants or donations must not be
given to obtain a marketing authorization or any other approval, or to directly
increase the sales of a Novartis product in return (e.g. to request the grant
recipient or some other person to order or prescribe a Novartis product).   
Requests for grants or donations must be handled with special caution, in
particular, those requests received from individuals who are able to affect the
sales of Novartis or may benefit personally, if the request is granted.
References    Principles & practices for professionals or equivalent document of
each Novartis Division (e.g., NP4).    For donations, the authorization limits
defined in the Management Authorization Levels (‘MAL’).

--------------------------------------------------------------------------------

2.4    Special Rules Relating to Public Officials Definitions    The term
‘public official’ has been extensively interpreted by regulators to include
employees and officers of government departments, employees and officers of
companies owned or partially owned by a government, officers and employees of
international organizations, such as the United Nations, politicians, candidates
of political parties etc.    Most medical and scientific personnel qualify as
public officials, when they work at a government-owned hospital, clinic,
university or other similar facility. In some countries, doctors, pharmacists,
investigators of clinical trials, and nurses are public officials. Principles
and Rules    Novartis does not distinguish between public officials and
employees of private sector organizations so far as bribery is concerned,
however, it is important to recognize that public officials are often subject to
rules and restrictions that do not apply to persons who operate in the private
sector.    Any relationship with public officials must be in strict compliance
with the rules and regulations to which they are subject (i.e. any applicable
rules or regulations in the particular country relating to public officials or
that have been imposed by their employer) and any benefit conveyed to a public
official must be fully transparent, properly documented, and accounted for.
References    2.5    Political Contributions Definitions    Political
contributions are monetary or non-monetary (e.g. resources, facilities)
contributions to support political parties, politicians or political
initiatives. Principles and Rules    Generally, Novartis does not make political
contributions. However, since public policy issues impact Novartis’ business,
its employees, and the communities in which Novartis operates, in certain cases
it may be appropriate to use its resources to make political contributions. For
instance, Novartis may seek to support candidates, committees, or other
organizations that are committed to economic development, recognize the
importance of healthcare innovation, and improve patient access to therapies.   
Political contributions must never be made with the expectation of a direct or
immediate return for Novartis.    Political contributions must be:   

•    Compliant with applicable laws, regulations, and industry codes;

  

•    Covered by a separate budget position, approved in the ordinary budget
process; and

  

•    Approved in advance by the relevant Novartis Country President.

References   

--------------------------------------------------------------------------------

2.6    Facilitation Payments Definitions    Facilitation payments are payments
to public officials to expedite the performance of duties of a non-discretionary
nature. These payments are intended to influence only the timing of the public
officials’ actions (e.g. payments to expedite visa issue or clearing goods
through customs), but not their outcome. Principles and Rules    Novartis
prohibits facilitation payments. This applies irrespective of whether or not
local law permits facilitation payments. References    2.7    Third Parties
Definitions    A Third Party is any person, including a legal entity, with whom
Novartis interacts and that is not a Novartis company or Associate. Principles
and Rules    Novartis must only engage with Third Parties if there is a
legitimate need for the services or the goods that they provide; if the services
and goods are priced at no more than market value; if there is a written
contract; and if the receipt of such services or goods is documented.   
Engagement of Third Parties – including healthcare professionals – must never be
used to create an incentive or reward for prescribing Novartis products or to
secure any improper business advantage for Novartis. References    Novartis
guidelines relating to the management of third parties. 2.8    Books and
Records/Internal Controls Definitions    Books and records include accounts,
invoices, correspondence, papers, CDs, tapes, memoranda and any other document
or transcribed information of any type. Principles and Rules    Novartis must
prepare and maintain books and records that accurately and in reasonable detail
document the source of the revenues and the use that has been made of Novartis
assets.    ‘Off-the-books’ accounts and false or deceptive entries in the
Novartis books and records are strictly prohibited. All financial transactions
must be documented, regularly reviewed and properly accounted for in the books
and records of the relevant Novartis entity.    All relevant financial controls
and approval procedures must be followed.    The retention and archive of
Novartis records must be consistent with Novartis’ standards, tax, and other
applicable laws and regulations. References    Management Authorization Levels
(‘MAL’); Novartis Financial Controls Manual (‘NFCM’); Novartis Accounting Manual
(‘NAM’).

--------------------------------------------------------------------------------

3.

   Implementation

3.1

   Training    Associates must familiarize themselves with this Policy and
participate in anti-bribery training sessions that will be periodically held.

3.2

   Reporting Potential Misconduct/Non-Retaliation    Any Associate who learns of
a potential violation of applicable laws or this Policy is required to report
his or her suspicion promptly in accordance with the section of the Novartis
Code of Conduct entitled ‘How to report potential misconduct.’    Anyone who
reports a possible violation of applicable laws or this Policy will be protected
from retaliation in any form.

3.3

   Breach of this Policy    Breaches of this Policy will not be tolerated and
can lead to disciplinary and other actions up to and including termination of
employment.

3.4

   Exceptions    The Divisional Compliance Committees may grant exceptions to
this Policy. For all activities not relating to a Divisional business,
exceptions may be granted by the Group General Counsel together with the Head of
Group Country Management and External Affairs. No exceptions can be granted from
compliance with applicable laws and regulations.

3.5

   Entry into Force and Implementation    It is the responsibility of every
Novartis manager to implement this Policy within his or her area of functional
responsibility, lead by example, and provide guidance to the Associates
reporting to him or her. Novartis managers must also seek to structure
incentives and conduct performance assessments accordingly.    The owner of this
Anti-Bribery Policy is Group Integrity & Compliance.