Exhibit 10.1
5 June 2006
CO-DEVELOPMENT AND COMMERCIALIZATION AGREEMENT
BETWEEN
HUMAN GENOME SCIENCES, INC.
AND
NOVARTIS INTERNATIONAL PHARMACEUTICAL LTD.
 

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     THIS EXCLUSIVE LICENSE AGREEMENT is made effective as of the 5th day of
June 2006 (“Effective Date”) by and between Human Genome Sciences, Inc., a
Delaware corporation having its principal place of business at 14200 Shady Grove
Road, Rockville, Maryland 20850 (“HGS”), and Novartis International
Pharmaceutical Ltd., a Bermuda corporation having its principal place of
business at Hurst Holme, 12 Trott Road, Hamilton, HM 11, Bermuda (“NVS”). HGS
and NVS are each referred to individually as a “Party” and together as the
“Parties.”
RECITALS
WHEREAS, HGS has developed Albuferon (as defined below).
WHEREAS, NVS possesses certain capabilities in the development and
commercialization of pharmaceutical products and desires to apply those
capabilities to Albuferon.
WHEREAS, NVS and HGS desire to engage in a collaborative effort to develop and
commercialize Albuferon, upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
promises, terms and conditions hereafter set forth, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, HGS
and NVS hereby agree as follows:

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ARTICLE 1
DEFINITIONS
The following terms shall have the following meanings as used in this Agreement:
1.1 “AB” shall mean Aventis Behring LLC.
1.2 “AB License” shall mean the Amended and Restated License Agreement dated
September 8, 2000 between HGS and AB, as may be amended from time to time.
1.3 “AB Royalty” shall have the meaning set forth in Section 7.4.
1.4 “Accounting Standards” shall mean, with respect to HGS, US GAAP (United
States Generally Accepted Accounting Principles) and, with respect to NVS, the
IFRS (International Financial Reporting Standards), in each case, as generally
and consistently applied throughout the Party’s organization.
1.5 “Affiliate” shall mean any corporation, firm, partnership or other legal
entity, which directly or indirectly owns, is owned by or is under common
ownership with a Party to the extent of at least fifty percent (50%) of the
equity (or such lesser percentage which is the maximum allowed to be owned by a
foreign corporation in a particular jurisdiction) having the power to vote on or
direct the affairs of the entity and any person, firm, partnership, corporation
or other entity actually controlled by, controlling or under common control with
a Party.
1.6 “Albuferon” shall mean a polypeptide having an interferon-alpha molecule (or
any variants, analogs, homologs, derivatives, modifications, mutants or
fragments thereof, including species-specific modifications thereof) genetically
fused to

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recombinant human albumin (or any variants, analogs, homologs, derivatives,
modifications, mutants or fragments thereof, including species-specific
modifications thereof) as a single polypeptide chain. For the sake of clarity,
Albuferon shall include, but not be limited to, interferon alpha 2a and 2b, but
shall not include other non-interferon-alpha molecules, such as interferon-beta
or interferon-gamma.
1.7 “Albuferon Know-How” shall mean any proprietary information, data, know-how
or materials, relating to the research, development, registration, marketing,
use or sale of Albuferon, which prior to or as of the Effective Date have been
developed by or on behalf of HGS or are in HGS’ possession or control through a
license or otherwise.
1.8 “Albuferon Patent Rights” shall mean any Patent Rights related to Albuferon
which are owned or controlled by HGS or which HGS otherwise has the right to
sublicense or transfer rights thereto as of the Effective Date, including the
Patent Rights listed in Appendix A attached hereto and incorporated herein by
reference and any Patent Rights related thereto.
1.9 “Albumin Fusion Know-How” shall mean any proprietary information, data,
know-how or materials relating to human albumin based fusion technology which
prior to or as of the Effective Date are developed by or on behalf of HGS or in
HGS’ possession or control through license or otherwise. Albumin Fusion Know-How
shall include Albuferon Know-How.
1.10 “Albumin Fusion Patent Rights” shall mean any and all Patent Rights
relating to human albumin based fusion technology which are owned or controlled
by HGS or which HGS otherwise has the right to sublicense or transfer rights
thereto as of the Effective Date, including the Patent Rights listed in
Appendix B attached hereto and incorporated

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herein by reference and any Patent Rights related thereto. Albumin Fusion Patent
Rights shall include the Genentech Patent Rights.
1.11 “Alliance Manager” shall mean a senior representative having a general
understanding of pharmaceutical development and commercialization issues
appointed by each Party to act as its alliance manger under this Agreement.
1.12 “BLA” shall mean, with respect to the United States, a Biologics License
Application (or its equivalent) filed with the United States Food and Drug
Administration, or any successor entity, (“FDA”) seeking authorization to market
a Collaboration Product in the United States, and with respect to any country
outside the United States, an application submitted to the relevant Regulatory
Authorities seeking authorization to market a Collaboration Product in such
country.
1.13 “Calendar Year” shall mean each successive period of twelve (12) months
commencing on January 1 and ending on December 31, for so long as this Agreement
is in effect and “Calendar Quarter” shall mean each successive period of three
(3) months commencing on January 1, April 1, July 1 and October 1.
1.14 “cGMP” shall mean current good manufacturing practices as required by the
United States Food and Drug Administration (“FDA”) under provisions of 21 C.F.R.
parts 210 and 211 (as the same may be amended) and all applicable FDA rules,
regulations, orders and guidances, and the requirements with respect to current
good manufacturing practices prescribed by the European Community under
provisions of “The Rules Governing Medicinal Products in the European Community,
Volume 4, Good Manufacturing Practices, Annex 13, Manufacture of investigational
medicinal products, July 2003,” as each may, from time to time, be amended.

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1.15 “Collaboration Product” shall mean any product that contains Albuferon, for
all indications and in all dosage forms, delivery systems, formulations,
presentations, line extensions and package configurations thereof, the
manufacture, sale or use of which would, but for the licenses granted under this
Agreement, infringe a Valid Claim of the HGS Patent Rights or is based on,
embodies or incorporates HGS Know-How.
1.16 “Commercially Reasonable Efforts” shall mean, with respect to the research,
development, manufacture or commercialization of a Collaboration Product,
efforts and resources that would be used by a Party consistent with its normal
business practices for a similar product, with respect to such activity taking
into account, without limitation, matters such as efficacy and safety profile of
any such product, the development stage of the product, the commercial potential
of the product, the degree of technical complexity and the scientific
characteristics of the product, the competitiveness of alternative products that
are in the marketplace or under development, and the patent and other
intellectual property and proprietary position of any product. Subject to the
foregoing, Commercially Reasonable Efforts requires that: (i) each Party
promptly assigns responsibility for such obligations to specific employees who
are held accountable for progress and monitor such progress on an on-going
basis, (ii) each Party sets and consistently seeks to achieve the objectives
assigned to such Party as set forth in the Development Plan and Marketing Plan,
and (iii) each Party consistently makes and implements decisions and allocates
resources designed to meet such objectives.
1.17 “Commercialization” shall mean all activities regarding the sale,
manufacture for sale, marketing, distribution and promotion of a Collaboration
Product, and any pre-

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marketing or post-marketing studies not directed at obtaining or maintaining
Regulatory Approvals.
1.18 “Competitive Product” shall mean [***].
1.19 “Co-Promotion” shall mean those Commercialization activities undertaken by
NVS and HGS to implement the marketing plans and strategies with respect to the
Collaboration Products under a single trademark in the United States. When used
as a verb, “Co-Promote” shall mean to engage in such activities.
1.20 “Confidential Information” shall mean all technical and scientific know-how
and information, pre-clinical and clinical trial results, computer programs,
knowledge, technology, means, methods, processes, practices, formulas,
techniques, procedures, technical assistance, designs, drawings, apparatus,
written and oral representations of data, specifications, assembly procedures,
schematics and other valuable information of whatever nature and all other
scientific, clinical, regulatory, marketing, financial and commercial
information or data, whether communicated in writing, verbally or
electronically, which is provided by a Party to the other Party in connection
with this Agreement.
1.21 “Cost of Goods Sold” or “COGS” shall mean the fully allocated cost of
Manufacturing a Collaboration Product and/or Albuferon expressed on a per unit
basis, as such costs are specifically allocated to such Collaboration Product
and/or Albuferon and as computed in accordance with the Party’s Accounting
Standards as consistently applied through the Party’s organization, including
the following:
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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     (a) Materials cost, which means the price paid for raw material,
intermediates, components and finished goods which are purchased from outside
vendors, at the price invoiced by such outside vendors, as well as any freight
and duty where applicable;
     (b) Direct labor costs, which means the allocable employment cost of all
personnel engaged in the Manufacture of the Collaboration Product and/or
Albuferon including, without limitation, salary and employee benefits within the
relevant manufacturing operating unit wherein allocable employment costs shall
mean only those direct labor costs applied to the actual Manufacture thereof;
     (c) Other direct costs and factory overhead costs, which means the cost of
specific activities that are provided by support functions directly related to
manufacturing of a Collaboration Product and/or Albuferon, either on or
off-site. Overhead costs include expenses associated with quality assurance
testing, quality compliance, stability testing, batch review, equipment
maintenance costs, manufacturing utilities, waste removal, storage,
transportation, insurance for the factory, its contents or other directly
related items, factory management (including materials management) and
administrative expenses, factory facilities costs including lease and capital
costs, environmental engineering and property taxes. These expenses shall be
reasonably allocated to the Manufacture of Collaboration Product and/or
Albuferon on a pro rata basis based on the allocation methodology appropriate at
the Manufacturing site. Such expenses shall exclude costs of any unused
manufacturing capacity but may include capacity reserved for the manufacturing
of Collaboration Product and/or Albuferon as agreed upon the Parties. Overhead
shall not include general corporate activities, including, by way of

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example only, executive management, investor relations, business development,
legal affairs, human resources and finance.
     (d) Depreciation costs, which represent the annual amortization of original
purchase costs reasonably allocated to the Manufacture of Collaboration Product
on a pro rata basis based on the allocation methodology appropriate under the
Accounting Standards and applied at the Manufacturing site over the useful life
of the asset, and
     (e) the Out-of-Pocket Costs of freight and tariffs and other expenses
associated with transporting Collaboration Product and/or Albuferon from the
source of manufacture to a designated customer, inclusive of any interim points
of delivery, but excluding (i) any such costs which are separately invoiced
(including any separately itemized costs included in a single invoice) to a
customer.
     For the purposes of this Section 1.21 “Manufacture” or “Manufacturing”
shall mean all activities directly related to the manufacture of the
Collaboration Product and/or Albuferon, including, without limitation, the
planning, purchasing, manufacture, transportation, processing, compounding,
quality assurance testing, quality control, regulatory compliance, storage and
maintenance of cell banks, manufacture and testing of future cell banks, waste
disposal, sample retention, formulation, stability testing, storage, filling,
packaging, labeling, leafleting, release and dispatch and such other matters in
each case as specifically applicable to the relevant Collaboration Product
and/or Albuferon.
     For the sake of clarity, if a cost is an addition to the COGS calculation
herein, such cost shall not also be accounted for as a deduction in the Net
Sales calculation and vice versa.

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1.22 “Detail” or “Detailing” shall mean, with respect to a Collaboration
Product, the communication by a Sales Representative to a member of the Target
Audience (a) involving face-to-face contact, (b) describing in a fair and
balanced manner the Regulatory Authority-approved indicated uses and other
relevant characteristics of such Collaboration Product, (c) using the
Promotional Materials in an effort to increase the Target Audience prescribing
and/or hospital ordering preferences of a Collaboration Product for its
Regulatory Authority-approved indicated uses, and (d) made at the Target
Audience member’s office, in a hospital or other place where the Target Audience
member normally issues prescriptions where the principal objective is to place
an emphasis, either primary or secondary, on a Collaboration Product and not
simply to discuss a Collaboration Product with a member of the Target Audience.
For the avoidance of doubt, discussions at conventions, congresses and meetings
of key opinion leaders organized by a Party shall not constitute “Details” or
“Detailing”.
1.23 “Detail Cost” shall mean the specific dollar amount agreed upon by the
Parties (proposed via the JCC and approved by the JEC) for each Primary Detail
and for each Secondary Detail conducted by a Sales Representative.
1.24 “Detail Requirements” shall have the meaning set forth in Section 5.3.2.
1.25 “Development” shall mean activities relating to the development of a
Collaboration Product, including the conduct of all pre-clinical and clinical
trials and the submission of all Regulatory Applications for all Regulatory
Approvals necessary for the Commercialization of a Collaboration Product,
including any post-marketing studies directed at obtaining or maintaining
Regulatory Approvals.

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1.26 “Development Expenses” shall mean, the FTE Costs and Out-of-Pocket Costs
incurred by or on behalf of a Party or any of its Affiliates during the Term
that are specifically identifiable or reasonably allocable to the Development
activities for the Collaboration Product, which Development activities are set
forth in the approved Development Plan or are otherwise proposed by the JDC and
approved in advance by the JEC. Subject to the foregoing, Development Costs
shall include such costs in connection with the following activities:
          1.26.1 pre-clinical activity costs such as toxicology and formulation
development, test method development, stability testing, quality assurance,
quality control development and statistical analysis;
          1.26.2 clinical costs;
          1.26.3 regulatory expenses relating to the conduct of clinical trials,
wherever performed, of a Collaboration Product and the costs of preparing and
filing any Regulatory Applications necessary for any Regulatory Approvals;
          1.26.4 (i) manufacturing costs for Collaboration Product for use in
clinical trials and any pre-clinical activities in support thereof calculated on
a basis substantially equivalent to the calculation of COGS set out above,
(ii) costs for the manufacture, purchase or packaging of comparators or placebo
for use in clinical trials (with the manufacturing costs for comparators or
placebo to be determined in the same manner as manufacturing costs are
determined for any Collaboration Product) and (iii) direct costs and expenses of
disposal of drugs and other supplies used in such clinical trials and
pre-clinical activities; and

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          1.26.5 manufacturing costs for the development of the manufacturing
process for a Collaboration Product, scale-up, manufacturing process validation,
manufacturing improvements and qualification and validation of Third Party
contract manufacturers.
          1.26.6 For the avoidance of doubt, no cost or expense item included in
Development Expenses shall include any internal profit margins or similar
markups (it being understood that personnel costs determined based on the FTE
Rate will not be considered to include any internal profit margins or similar
markups).
1.27 “Development Plan” shall mean the plan designed to achieve the Development
of the Collaboration Product, including the budget for the Development Expenses
(including all FTE Costs and Out-of-Pocket Costs) by activity and the nature,
number and schedule of Development activities. The initial Development Plan for
the Collaboration Product is attached hereto as Appendix C, and may be amended
in accordance with the terms of this Agreement.
1.28 “Field” shall mean all therapeutic, diagnostic and prophylactic indications
in humans and animals.
1.29 “First Commercial Sale” shall mean, with respect to any Collaboration
Product in any single country, the first sale of such Collaboration Product by
HGS, NVS, its Affiliates, or Permitted Sublicensees to a Third Party for end use
or consumption in that country.
1.30 “First Indication” shall mean the Hepatitis C indication or another general
disease area which the JEC agrees upon.

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1.31 “FTE Costs” shall mean the direct and indirect costs of internal
scientific, medical or technical personnel (including expenses such as personnel
expense, travel expenses and infrastructure costs but for the avoidance of
doubt, not including the costs of managerial, financial, legal or business
development personnel) engaged in such efforts, which costs shall be determined
based on the FTE Rate.
1.32 “FTE Rate” shall mean a rate of [***] per annum for the time of an employee
for a full-time equivalent scientific person year (consisting of a total of
2,000 hours per annum) of work, to be pro-rated on a daily basis if necessary
(per annum amount to be divided by 250 to produce the rate per whole day
consisting of eight hours); such rate to exclude managerial activities and be
restricted to scientific work related directly to the project. For the avoidance
of doubt, such rate to include all travel expenses.
1.33 “Genentech” shall mean Genentech, Inc.
1.34 “Genentech License” shall mean that license agreement by and among Delta ,
Genentech, Inc. and Mitsubishi Chemical Corporation dated November 8, 1991, as
amended by letter agreement dated April 5, 1996, and as may be further amended
from time to time.
1.35 “Genentech Patent Rights” shall mean any Patent Rights which are owned or
controlled by HGS or which HGS otherwise has the right to sublicense or transfer
rights thereto as of the Effective Date or thereafter during the Term, including
the Patent Rights listed in Appendix B, Part 3. Genentech Patent Rights shall
also include all United States and foreign Patent Rights entitled to the
priorities of any of the Patent Rights listed in Appendix B Part 3.
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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1.36 “Genentech Royalty” shall have the meaning set forth in Section 7.5.
1.37 “HGS Arising Know-How” shall mean any proprietary improvements,
modifications, and adaptations (whether patentable or otherwise) to any part of
the HGS Collaboration Technology or any other information, data or materials
relating to Albuferon or albumin based fusion technology, which is developed by
or on behalf of HGS or is in HGS’ possession or control through a license or
otherwise during the Term of this Agreement (other than the Albumin Fusion
Know-How).
1.38 “HGS Arising Patent Rights” shall mean any Patent Rights relating to
Albuferon or albumin based fusion technology (including any Patent Rights
containing claims that cover patentable HGS Arising Know-How), which is owned or
controlled by HGS or which HGS otherwise has the right to sublicense or transfer
rights thereto during the Term of this Agreement (other than the Albuferon
Patent Rights and Albumin Fusion Patent Rights). Appendices A and B will be
updated annually, including by adding any HGS Arising Patent Rights.
1.39 “HGS Collaboration Technology” shall mean HGS Patent Rights and HGS
Know-How, but shall not include Manufacturing Technology.
1.40 “HGS Know-How” shall mean Albumin Fusion Know-How and HGS Arising Know-How.
1.41 “HGS Net Royalty Rate” shall mean the royalty rate payable by NVS to HGS
hereunder minus the amount of royalty to cover the royalty rate payable by HGS
for the AB Royalty and the Genentech Royalty.

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1.42 “HGS Patent Rights” shall mean Albumin Fusion Patent Rights, Albuferon
Patent Rights, and HGS Arising Patent Rights.
1.43 “IND” shall mean an investigational new drug application filed in the
United States with the FDA as more fully defined in 21 C.F.R. Section 312.3 for
a Collaboration Product.
1.44 “Insolvency Event” shall mean, in relation to either Party, any one of the
following: (a) that Party shall file in any court or agency pursuant to any
statute or regulation of any state or country, a petition in bankruptcy or
insolvency or for reorganization or for an arrangement or for the appointment of
a receiver or trustee of the Party or of its assets; (b) that Party is the
subject of voluntary or involuntary bankruptcy proceedings instituted on behalf
of or against such Party (except for involuntary bankruptcy proceedings which
are dismissed within sixty (60) days); (c) an administrative receiver, receiver
and manager, interim receiver, custodian, sequestrator or similar officer is
appointed in respect of that Party; (d) a notice shall have been issued to
convene a meeting for the purpose of passing a resolution to wind up that Party,
or such a resolution shall have been passed other than a resolution for the
solvent reconstruction or reorganization of that Party; or (e) a resolution
shall have been passed by that Party or that Party’s directors to make an
application for an administration order or to appoint an administrator.
1.45 “JCC” shall mean the Joint Commercial Committee.
1.46 “JDC” shall mean the Joint Development Committee.
1.47 “JEC” shall mean the Joint Executive Committee.

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1.48 “Joint Arising Know-How” shall mean any proprietary improvements,
modifications, and adaptations (whether patentable or otherwise) to any part of
the HGS Collaboration Technology or Manufacturing Technology which is developed
during the Term of this Agreement by or on behalf of HGS and NVS jointly.
1.49 “Joint Arising Patent Rights” shall mean any Patent Rights containing
claims that specifically cover patentable Joint Arising Know-How.
1.50 “Major EU Markets” shall mean the United Kingdom, France, Germany, Italy
and Spain.
1.51 “Manufacturing Technology” shall mean any proprietary information, data or
materials relating to the processes, techniques and specifications for the
manufacture of any Collaboration Product, including the preparation, synthesis,
culture, recovery, analytical assay, purification, formulation and quality
control processes, techniques and specifications, which is developed by or on
behalf of HGS or which is in HGS’ possession or control through license or
otherwise as of the Effective Date or thereafter during the Term of this
Agreement, including any improvements, modifications, and adaptations to the
same which are developed by or on behalf of HGS during the Term of this
Agreement. For purposes of clarification, the Research Materials (as defined
below) shall be considered Manufacturing Technology.
1.52 “Marketing Approval” shall mean the receipt of all Regulatory Approvals
(including pricing reimbursement approval in the relevant country or region)
required to place the Collaboration Product on the market for sale and use in
the applicable country or region.

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1.53 “Marketing Expenses” shall mean, excluding any Development Expenses, all
Out-of Pocket Costs incurred by or on behalf of a Party or any of its Affiliates
during the Term of this Agreement that are specifically identifiable or
reasonably allocable to the Commercialization of the Collaboration Product in
the United States (including the associated Detail Costs), which are set forth
in the approved Marketing Plan or are otherwise proposed by the JCC and approved
in advance by the JEC. Subject to the foregoing, Marketing Expenses shall
include such costs in connection with the following activities: marketing (pre
and post launch), advertising, sampling and promoting a Collaboration Product,
including educational expenses, medical educational activities, scientific
operations organizations, speakers’ programs and symposia, and joint marketing
and sales meetings; primary and secondary market research; Promotional
Materials; Samples; and pre-marketing or post-marketing studies not directed at
obtaining or maintaining Regulatory Approvals. For the sake of clarity,
Marketing Expenses shall not include FTE Costs incurred internally by the
Parties or any subcontracted personnel that are not approved as Out-of-Pocket
Costs by the JEC in advance. For the avoidance of doubt, no cost or expense item
included in Marketing Expenses shall include any internal profit margins or
similar markups (it being understood that personnel costs determined based on
the Detail Costs will not be considered to include any internal profit margins
or similar markups).
1.54 “Marketing Plan” shall mean for the Collaboration Product a plan and budget
of Marketing Expenses by activity, including the nature, number and schedule of
Commercialization activities, for the Co-Promotion of the Collaboration Products
in the United States as developed by the JCC and approved by the JEC.

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1.55 “NVS Arising Know-How” shall mean any proprietary improvements,
modifications, and adaptations (whether patentable or otherwise) to any part of
the HGS Collaboration Technology or Manufacturing Technology which is developed
during the Term of this Agreement and pursuant to this Agreement by or on behalf
of NVS or its Affiliates or sublicensees.
1.56 “NVS Arising Patent Rights” shall mean any Patent Rights containing claims
that cover patentable NVS Arising Know-How.
1.57 “Net Profit” shall mean Net Sales in the United States minus the Cost of
Goods and the Marketing Expenses of the Collaboration Products.
1.58 “Net Sales” with respect to any Collaboration Product shall mean the gross
amount invoiced by or on behalf of a Party, its Affiliates or sublicensees for
that Collaboration Product sold to Third Parties other than sublicensees in bona
fide, arms-length transactions, less customary deductions, determined in
accordance with the Party’s Accounting Standards as generally and consistently
applied by the Party, to the extent included in the gross invoiced sales price
of the Collaboration Product or otherwise directly paid or incurred by the
Party, or its Affiliates or sublicensees with respect to the sale of such
Collaboration, such as:
     (a) Free Goods;
     (b) Cash Discounts;
     (c) Direct to Customer Discounts;

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     (d) Credits, allowances, rebates or chargebacks given or made to a customer
for retroactive price reductions (including rebates similar to Medicaid);
     (e) Discount Card Programs;
     (f) Amounts repaid or credited by reasons of defects, rejection recalls,
returns;
     (g) Tariffs, duties, excise, sales, value-added and other taxes (other than
taxes based on income);
     (h) Delayed Ship Order Credits;
     (i) All insurance expenses included in the invoice price;
     (j) Actual amounts credited for uncollectible amounts on previously sold
products (provided in no event shall such offset be greater than one-half of one
percent of Net Sales); and
     (k) Any other reduction or specifically identifiable amounts included in
the Collaboration Product’s gross invoice that should be credited for reasons
substantially equivalent to those listed above;
     Any of the items set forth above that would otherwise be deducted from the
invoice price in the calculation of Net Sales but which are separately charged
to Third Parties shall not be deducted from the invoice price in the calculation
of Net Sales. In the case of any sale or other disposal of a Collaboration
Product between or among a Party and its Affiliates, or sublicensees, for
resale, Net Sales shall be calculated as above only on the value charged or
invoiced on the first arm’s-length sale thereafter to a Third Party. In the case

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of any sale or other disposal for value, such as barter or counter-trade, of any
Collaboration Product, or part thereof, other than in an arm’s length
transaction exclusively for money, Net Sales shall be calculated as above on the
value of the non-cash consideration received or the fair market price (if
higher) of the Collaboration Product in the country of sale or disposal.
Transfers of Samples of the Collaboration Product such as for physician samples
and indigent patient and similar programs (including registration samples) will
not be included for purposes of determining Net Sales.
In the event the Collaboration Product is sold in a finished dosage form
containing Albuferon in combination with one or more other active ingredients (a
“Combination Product”), the Net Sales of the Collaboration Product, for the
purposes of determining royalty payments, shall be determined by multiplying the
Net Sales (as defined above in this Section) of the Combination Product by the
fraction, A/(A+B) where A is the weighted (by sales volume) average sale price
in the particular country of the Collaboration Product when sold separately in
finished form and B is the weighted average sale price in that country of the
other product(s) sold separately in finished form. In the event that such
average sale price cannot be determined for both the Collaboration Product and
the other product(s) in combination, Net Sales for purposes of determining
royalty payments shall be agreed by the parties based on the relative value
contributed by each component, such agreement shall not be unreasonably
withheld.
1.59 “Non-Competition Period” shall mean, on a country-by-country basis, the
period beginning on the Effective Date and ending on the earlier of (a) [***]
after the
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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Effective Date, and (b) the expiration or termination of this Agreement with
respect to each country.
1.60 “Non-Global Development Activities” shall mean clinical studies or other
trials outside the Development Plan that are intended to produce data or
information for use to secure Marketing Approval solely in territories outside
of the United States and are not part of the global development activities or
activities used to produce data or information intended to be used for
registration purposes on a worldwide basis. An example of Non-Global Development
Activities would include in Japan ethnic sensitivity clinical trials used to
demonstrate that the Collaboration Product has substantially similar safety and
efficacy characteristics in Japan as demonstrated in the global registration
clinical trials.
1.61 “Out-of-Pocket Costs” shall mean direct project related expenses paid or
payable to Third Parties and specifically identifiable and incurred to develop
and/or commercialize the Product in the Territory (including items such as
general laboratory supplies used in the Development); such expenses to have been
recorded as income statement items in accordance with the Party’s Accounting
Standards and for the avoidance of doubt, not including pre-paid amounts (until
such amounts are used), capital expenditures or travel expenses.
1.62 “Patent Rights” means all patents, including all divisionals,
continuations, substitutions, continuations-in-part, re-examinations, reissues,
additions, renewals, extensions, registrations, and supplemental protection
certificates and the like of any of the foregoing as well as applications of any
of the foregoing.
1.63 “Permitted Sublicensee” shall mean the holder of any sublicense granted in
writing pursuant to Article 2 of this Agreement.

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1.64 “Phase I Clinical Study” shall mean a human clinical study in any country
conducted in accordance with good clinical practices (“GCPs”) in a small number
of healthy volunteers or patients designed or intended to establish an initial
safety profile, pharmacodynamics or pharmacokinetics of product, or that would
otherwise satisfy the requirements of 21 CFR §312.21(a) or any successor
regulation thereto or foreign equivalents.
1.65 “Phase IIb Clinical Study” shall mean a human clinical trial in any country
that is conducted in accordance with GCPs and is intended to evaluate the
effectiveness of a product in dose escalation for a particular indication or
indications in patients with the disease or indication under study for purposes
of identifying the appropriate dose for a Phase III Clinical Study, or that
would otherwise satisfy the requirements of 21 CFR §312.21(b) or any successor
regulation thereto or foreign equivalents.
1.66 “Phase III Clinical Study” shall mean a human clinical trial in any country
that is conducted in accordance with GCPs and the results of which could be used
as pivotal to establish safety and efficacy of a product as a basis for a
Marketing Approval application submitted to the FDA or the appropriate
Regulatory Authority of such other country, or that would otherwise satisfy the
requirements of 21 CFR §312.21(c), or any successor regulation thereto or
foreign equivalents.
1.67 “Primary Detail” shall mean a Detail for a Collaboration Product in which
such Collaboration Product receives the predominant portion of emphasis and time
(at least sixty percent (60%) of the time) during the Detail (i.e., no other
product receives more emphasis or time during the Detail).

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1.68 “Promotional Materials” shall mean all written, printed, video or graphic
advertising, promotional, educational and communication materials (other than
Collaboration Product labeling) for marketing, advertising and promotion of the
Collaboration Products for use (a) by a Sales Representative or (b) as an
advertisements, direct mail piece, or via the internet or any other manner of
delivery of information, in accordance with the terms of the applicable
Marketing Plan.
1.69 “Regulatory Application” shall mean any application or request necessary
for the development, manufacture, distribution, marketing, promotion, offer for
sale, use, import, export, sale, reimbursement or pricing of a Collaboration
Product, including but not limited to, any applications or requests for:
(i) approval of Collaboration Product, including any BLAs, and supplements and
amendments thereto; (ii) pre- and post-approval marketing authorizations
(including any applications for prerequisite manufacturing approval or
authorization related thereto); (iii) labeling approval; (iv) technical, medical
and scientific licenses; and (v) registrations or authorizations from any
national, regional, state or local regulatory agency, department, bureau,
commission, council or other governmental entity necessary for the development,
manufacture, distribution, marketing, promotion, offer for sale, use, import,
export or sale of Collaboration Product.
1.70 “Regulatory Approval” shall mean any official approvals by a Regulatory
Authority (including pricing reimbursement approvals) in a country or region
which are required for the use and/or sale of a Collaboration Product in that
country or region including applicable development, manufacture, distribution,
marketing, promotion, offer for sale, use, importation, exportation, sale,
pricing and reimbursement approvals.

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1.71 “Regulatory Authority” shall mean any applicable government regulatory
authority involved in granting Regulatory Approvals for the development,
manufacture, distribution, marketing, promotion, offer for sale, use, import,
export, sale, reimbursement or pricing of any Collaboration Product, including,
in the United States, the FDA and in the EU, the European Medicines Agency
(“EMEA”), or any successor entities.
1.72 “Research Materials” shall mean those materials set forth in Appendix D,
attached hereto and incorporated herein by reference.
1.73 “Royalty Term” shall have the meaning set forth in Section 7.3(c).
1.74 “Sales Representative” shall mean a professional pharmaceutical sales
representative engaged or employed by either Party to conduct primarily
Detailing and other promotional efforts with respect to the Collaboration
Products and who has been trained by either Party in accordance with a training
protocol to be agreed upon by the Parties.
1.75 “Samples” shall mean Collaboration Product packaged and distributed for
free to members of the Target Audience as a complimentary trial for use with
patients.
1.76 “Secondary Detail” shall mean a Detail for a Collaboration Product in which
such Collaboration Product receives the second most emphasis and time (at least
[***] percent ([***]) of the time) during the Detail (i.e., at most, only one
other product receives greater emphasis and time during the Detail).
1.77 “Target Audience” shall mean the physicians or other health care
professionals with authority to prescribe a pharmaceutical product or issue
hospital orders for a
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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pharmaceutical product, as may be amended from time to time as proposed by the
JCC and approved by the JEC.
1.78 “Term” shall have the meaning set out in Section 15.1.
1.79 “Territory” shall mean worldwide.
1.80 “Third Party” shall mean any person or entity other than HGS, NVS, their
respective Affiliates, or their employees.
1.81 “United States” shall mean the United States of America and its territories
and possessions.
1.82 “Valid Claim” shall mean a claim of an issued, unexpired patent included in
the HGS Patent Rights, which claim has not lapsed, been abandoned, been revoked
or been held to be invalid or unenforceable by a final judgment of a court or
other governmental agency or competent jurisdiction from which no appeal can be
or is taken within the time allowed for appeal and which has not been admitted
to be invalid or unenforceable through reissue, re-examination, disclaimer or
otherwise.
1.83 Interpretation. In this Agreement unless otherwise specified: (a)
“includes” and “including” shall mean includes and including without limitation;
(b) references to a Party includes its permitted assignees and/or the respective
successors in title to substantially the whole of its undertaking; (c) a statute
or statutory instrument or any of their provisions is to be construed as a
reference to that statute or statutory instrument or such provision as the same
may have been or may from time to time hereafter be amended or re-enacted;
(d) words denoting the singular shall include the plural and vice versa and
words denoting any gender shall include all genders; (e) the Appendices and

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other attachments form part of the operative provisions of this Agreement and
references to this Agreement shall, unless the context otherwise requires,
include references to the Appendices and attachments; (f) the headings in this
Agreement are for information purposes only and shall not be considered in the
interpretation of this Agreement; and (g) general words shall not be given a
restrictive interpretation by reason of their being preceded or followed by
words indicating a particular class of acts, matters or things.
ARTICLE 2
LICENSES
2.1 License Grants.
     (a) Co-Development License. Subject to the terms of this Agreement, HGS
hereby grants to NVS an exclusive (except as to HGS and its Affiliates and
sublicensees in accordance with the terms of this Agreement), sublicensable
license under the HGS Collaboration Technology to Develop Collaboration Products
for Commercialization in the Territory in the Field.
     (b) Commercialization License. Subject to the terms of this Agreement, HGS
hereby grants to NVS an exclusive (except in the United States as to HGS and its
Affiliates and sublicensees in accordance with the terms of this Agreement)
royalty-bearing and sublicensable license under the HGS Collaboration Technology
to make, have made, use, have used, sell, have sold, offer for sale, import,
have imported and otherwise Commercialize Collaboration Products in the
Territory in the Field.

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     (c) Subject to the terms of this Agreement, including HGS’ rights to
manufacture Collaboration Product in accordance with Article 11, HGS hereby
grants to NVS an exclusive, royalty-bearing license under the Manufacturing
Technology and under any Patent Rights and other intellectual property rights
which may arise that are directed thereto, to develop, have developed, use,
make, have made, have used, sell, have sold, offer for sale, import, have
imported and otherwise Commercialize the Collaboration Products in the Territory
in the Field.
2.2 License Grants for Arising Patent Rights and Know-How.
     (a) Subject to the terms of this Agreement, NVS hereby grants to HGS, an
exclusive (except as to NVS and its Affiliates and sublicensees in accordance
with the terms of this Agreement), sublicensable license under the NVS Arising
Patent Rights, NVS Arising Know-How and NVS rights in the Joint Arising Patent
Rights and Joint Arising Know-How to develop, have developed, make, have made,
use, have used, sell, have sold, offer for sale, import, have imported and
otherwise Commercialize Collaboration Products in the United States in the
Field.
     (b) Subject to the terms of this Agreement, HGS hereby grants to NVS, an
exclusive (except in the United States as to HGS and its Affiliates and
sublicensees in accordance with the terms of this Agreement), sublicensable
license under HGS’ rights in the Joint Arising Patent Rights and Joint Arising
Know-How to develop, have developed, make, have made, use, have used, sell, have
sold, offer for sale, import, have imported and otherwise Commercialize
Collaboration Products in the Territory in the Field.
     (c) NVS hereby grants to HGS a non-exclusive, sublicensable, license to use
NVS Arising Know-How and NVS Arising Patent Rights solely for use with the

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development and commercialization of albumin fusion based products, other than
Collaboration Products, in its albumin fusion portfolio and in connection with
its Albumin Fusion Know-How and Patent Rights. For the sake of clarity, this
grant shall not include any manufacturing technology, other intellectual
property owned by or developed by or on behalf of NVS outside the scope of the
work performed by or on behalf of NVS under this Agreement or which does not
solely pertain to the manufacture of albumin fusion proteins.
2.3 HGS hereby grants to NVS an exclusive license (except as to HGS and its
Affiliates and sublicensees in accordance with the terms of this Agreement) to
use the trademark AlbuferonTM in connection with the Collaboration Products in
the Territory. HGS shall be the sole owner of such trademark and shall continue
to have the right to use such trademark in connection with the Collaboration
Products in the United States. HGS shall be responsible for the filing,
prosecution and maintenance of the trademark AlbuferonTM and all Out-of-Pocket
Costs associated therewith shall be shared equally by the Parties.
2.4 Sublicensing
          2.4.1 Neither Party shall license any Third Party rights to HGS
Collaboration Technology, Manufacturing Technology, HGS Arising Patent Rights,
HGS Arising Know-how, Joint Arising Patent Rights or Joint Arising Know-How, all
in relation to any Collaboration Product, except as authorized under Article 2
or under Article 11 with respect to HGS’ rights to manufacture Collaboration
Product.
          2.4.2 NVS. NVS shall have the right to sublicense to a Third Party any
of the licenses granted under this Article 2 through written sublicense
agreements in the

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Territory; provided, however, that if NVS wishes to sublicense its rights under
this Agreement in its entirety to a Third Party (a) in the Territory as a whole,
or (b) in the United States, the EU or Japan as a whole, NVS shall obtain HGS’
prior approval, which shall not be unreasonably withheld. NVS shall provide HGS
in writing with the name of any Third Party sublicensees and confirmation that
the terms of such sublicense agreement are consistent with the terms contained
herein. NVS shall remain responsible to HGS under this Agreement for the
activities undertaken by its Third Party sublicensees in connection with this
Agreement (each such Third Party to be considered a “Permitted Sublicensee”).
NVS acknowledges its obligations to AB under Section 2.1.3 of the AB License and
further acknowledges AB’s right to terminate the AB License with respect to any
sublicensee for a breach of the applicable terms of this Agreement by NVS.
          2.4.3 Development in the United States. In the United States, either
Party may sublicense (or license) to a Third Party rights with respect to
specific Development activities to be undertaken as approved in the Development
Plan.
          2.4.4 HGS. HGS shall have no right to license further any of the
know-how or Patent Rights licensed to NVS hereunder or to sublicense the
licenses granted by NVS to HGS under this Article 2 with respect to the
Commercialization or Co-Promotion of the Collaboration Products in the United
States, other than as allowed under Section 5.3.5, or as allowed under
Article 11 (with respect to manufacture of Collaboration Product), or with the
prior written consent of NVS, which shall not be unreasonably withheld. In the
event of any such license or sublicense, HGS shall provide NVS in writing with
the name of any such proposed Third Party licensee or sublicensee (referred to
as a “sublicensee”) and confirmation that the terms of such agreement are
consistent

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with the terms contained herein. HGS shall remain responsible to NVS under this
Agreement for the activities undertaken by its Third Party sublicensees in
connection with this Agreement
2.5 During the Non-Competition Period, neither Party will, directly or
indirectly, commercialize any product, other than Collaboration Product, which
comprises [***].
2.6 During the Term of this Agreement, without the prior written consent of NVS,
HGS will not, directly or indirectly, license, assign or otherwise dispose of
any of its rights in (a) the HGS Collaboration Technology (other than the
Albuferon Patent Rights), Manufacturing Technology or Collaboration Products
that affects the rights and licenses granted to NVS or (b) the Albuferon Patent
Rights to the extent that such licensed, assigned, or disposed of rights relate
to Collaboration Product. HGS will not agree to any amendment or modification to
the AB License or Genentech License that adversely affects the rights and
licenses granted to NVS without the prior written consent of NVS. Subject to the
foregoing terms of this Article 2 and the terms of this Agreement, HGS retains
the right to research, develop, manufacture and commercialize, and to grant
licenses and other rights under the HGS Collaboration Technology and
Manufacturing Technology to manufacture and commercialize products other than
Albuferon or any other Collaboration Product.
2.7 Each Party hereby covenants not to sue the other Party for any use of
intellectual property owned by such Party where such intellectual property is
used to undertake the Development or Commercialization of a Collaboration
Product under this Agreement and not specifically included in this Agreement.
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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ARTICLE 3
GOVERNANCE OF DEVELOPMENT AND COMMERCIALIZATION OF
COLLABORATION PRODUCTS
3.1 Joint Executive Committee.
          3.1.1 Members. HGS and NVS will establish a joint executive committee
(the “Joint Executive Committee” or “JEC”) made up of six (6) senior executives
(three (3) representatives to be appointed by NVS and three (3) representatives
to be appointed by HGS). The members of the JEC as of the Effective Date are set
out in Appendix E. HGS and NVS will co-chair the JEC. One JEC member from each
Party shall act as the main point of contact for the collaboration under this
Agreement and will be responsible for facilitating the flow of information and
otherwise promoting communication, coordination and collaboration within and
among the JEC, JDC and JCC and between the Parties (for NVS, this member will be
the Alliance Manager).
          3.1.2 Responsibilities. The JEC shall perform the following functions:
(a) manage and oversee the Development and Commercialization of the
Collaboration Products pursuant to the terms of this Agreement; (b) review and
approve the Development Plans and the Marketing Plans for Collaboration Products
and any material amendments to the Development Plans and Marketing Plans
(including the associated budgets); (c) at each meeting of the JEC, review a
comparison of actual Development Expenses and Marketing Expenses to the budgeted
Development Expenses and Marketing Expenses for the year-to-date, as current as
practicable to a date immediately prior to the date of the meeting; (d) review
and approve the progress of the other committees; (e) review and approve the
trademarks for use in the United States; (f) review and approve “go/no-go”
decisions and other matters referred to the JEC, including

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the continued Development of a particular Collaboration Product; (g) resolve
disputes, disagreements and deadlocks unresolved by the other committees;
(h) provide overall strategic oversight for the Collaboration Product (including
potential combination products, development strategy and positioning and key
messages for the Collaboration Product), (i) approving the pricing for the
Collaboration Product for the United States as proposed by the JCC, (j) review
publicity and publication planning; and (k) have such other responsibilities as
may be assigned to the JEC pursuant to this Agreement or as may be mutually
agreed upon by the Parties from time to time.
          3.1.3 Meetings. The JEC shall meet at least three (3) times during
every Calendar Year (at least one time per Calendar Year in person), and more
frequently as NVS and HGS deem appropriate or as required to resolve disputes,
disagreements or deadlocks in the other committees, on such dates, and at such
places and times, as such Parties shall agree; provided that the Parties shall
endeavor to have the first meeting of the JEC within thirty (30) days after the
establishment of the JEC. Meetings of the JEC that are held in person shall
alternate between offices of NVS and HGS, or such other place as such Parties
may agree. The members of the JEC also may convene or be polled or consulted
from time to time by means of telecommunications, video conferences, electronic
mail or correspondence, as deemed necessary or appropriate. Meetings of the JEC
may be held in person or by teleconference or video conference, as may be
determined by the JEC. NVS and HGS each may, on advance written notice to the
other Party, invite non-member representatives of such Party to attend meetings
of the JEC.
          3.1.4 Decision Making. All decisions of the JEC shall be made by
unanimous vote, with each Party having one vote. Reasonable efforts will be made
to

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come to a consensus decision. At least one (1) representative from each Party
shall be present to represent a quorum for voting purposes. With respect to any
dispute between the Parties, if the JEC cannot reach consensus within ten
(10) business days after the matter has been brought to the JEC’s attention,
then such issue shall be referred to the Chief Executive Officer of HGS and the
Chief Executive Officer of NVS for Commercialization issues and the NVS Head of
Development for Development issues (the “Officers”) for resolution. If the
Officers of HGS and NVS cannot agree to resolve a dispute relating to global
Development issues within thirty (30) days following its referral to the
Officers, then the Parties will proceed under the most current approved
Development Plan and either Party may refer the dispute to mediation in
accordance with Section 18.2. If the Officers of HGS and NVS cannot agree to
resolve a dispute relating to Commercialization issues in the United States
within thirty (30) days following its referral to the Officers, then the Parties
will proceed under the most current approved Marketing Plan and either Party may
refer the dispute to arbitration in accordance with Section 18.3. All decisions
with respect to commercialization outside the United States shall be made by NVS
and NVS will have final decision-making authority with respect to disputes
related to commercialization outside the United States. For all other disputes,
if the Officers of HGS and NVS cannot resolve such dispute within thirty
(30) days following its referral to the Officers, then either Party may refer
such dispute to arbitration in accordance with the terms of Article 18 herein.
3.2 Joint Development Committee.
          3.2.1 Members. Within thirty (30) days after the Effective Date, the
Parties shall establish a development committee (the “Joint Development
Committee”),

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and NVS and HGS shall designate an equal number of representatives, up to a
maximum total of twelve (12) members on such Joint Development Committee with an
equal number from each Party. HGS and NVS will co-chair the JDC. The
representation of the parties on the JDC shall consist of representatives from
the minimum following functions: Technical Development, Manufacturing, Project
Management, Regulatory, Commercial and Clinical. Each of NVS and HGS may replace
any or all of its representatives on the Joint Development Committee at any time
upon written notice to the other Party. Such representatives shall include
individuals who have the relevant Development and Commercialization experience
and expertise in pharmaceutical drug development.
          3.2.2 Responsibilities. The JDC will perform the following functions:
(a) evaluate the scientific and commercial feasibility for, and direct, any
subsequent development of Collaboration Product for any/all indications and/or
additional dosage forms in the Territory, and recommend and approve the budget
for the Development Expenses, (b) manage and oversee the preparation and
implementation of the Development Plans and (c) approve the Target Product
Profile for the Collaboration Product, which will include clinical and
commercial attributes, for each indication, (d) each year beginning with the
first full Calendar Year after the Effective Date, update and amend the initial
Development Plan for the following Calendar Year so that it can submit such
proposed Development Plans to the Joint Executive Committee by the end of
October of such year for review and approval; (e) determine whether the
Collaboration Product achieved the mutually agreed Target Product Profile;
(f) review and recommend to the Joint Executive Committee any material
amendments or modifications to the Development Plans; (g) coordinate and monitor
regulatory strategy and activities for the

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Collaboration Products in accordance with Article 10; (h) at each meeting of the
Joint Development Committee, review a comparison of actual Development Expenses
to the budgeted Development Expenses in the Development Plan for the
year-to-date, as current as practicable to a date immediately prior to the date
of the meeting; (i) review and recommend to the Joint Executive Committee
“go/no-go” decisions for the Development of Collaboration Products; and (j) have
such other responsibilities as may be assigned to the Joint Development
Committee pursuant to this Agreement or as may be mutually agreed upon by the
Parties from time to time.
          3.2.3 Meetings. The Joint Development Committee shall meet at least
once during every Calendar Quarter, and more frequently as NVS and HGS deem
appropriate or as reasonably requested by either such Party, on such dates, and
at such places and times, as such Parties shall agree; provided that the Parties
shall endeavor to have the first meeting of the Joint Development Committee
within thirty (30) days after the establishment of the Joint Development
Committee. Meetings of the Joint Development Committee in person shall alternate
between the offices of NVS and HGS, or such other place as the Parties may
agree. The JDC may also hold meetings by teleconference or video conference as
may be determined by the JDC. The members of the Joint Development Committee
also may convene or be polled or consulted from time to time by means of
telecommunications, video conferences, electronic mail or correspondence, as
deemed necessary or appropriate. NVS and HGS each may, on advance written notice
to the other Party, invite non-member representatives of such Party to attend
meetings of the Joint Development Committee.

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          3.2.4 Development Budget. The Joint Development Committee shall review
on a quarterly basis the actual Development Expenses against the budget for such
expenses in the applicable Calendar Year. If in the course of its quarterly
review of Development Expenses, the Joint Development Committee should determine
for any Collaboration Product that for any study or activity the actual amounts
incurred are likely to be higher than budgeted, the Joint Development Committee
shall review the reasons for such potential overrun and determine whether such
overrun is appropriate. If the Joint Development Committee determines that such
overrun is appropriate, the Joint Development Committee will agree on a revised
budget for such Development Expenses for such Collaboration Product for
subsequent approval by the Joint Executive Committee. If the JDC determines that
such overrun is not appropriate, the JDC will take such actions as required to
remedy the situation and the Party incurring such excess Development Expenses
shall be solely responsible for any portion of such expenses that are in excess
of the lower of (a) [***] of the approved budget for the particular study or
activity, (b) [***] of the approved budget for the particular Calendar Quarter
and (c) [***], unless otherwise mutually agreed in writing by the Parties.
          3.2.5 Decision Making. All decisions of the JDC shall be made by
unanimous vote, with each Party having one vote. Reasonable efforts will be made
to come to a consensus decision, but any matters that cannot be resolved by the
JDC will be presented to the JEC for resolution. At least one (1) representative
from each Party shall be present to represent a quorum for voting purposes.
          3.2.6 Within thirty (30) days of the Effective Date, the JDC will
establish a manufacturing subcommittee to negotiate and agree upon the Supply
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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Agreement, monitor clinical supply issues, coordinate the auditing of suppliers
and advise the JDC on other manufacturing and supply issues.
3.3 Joint Commercial Committee.
          3.3.1 Members. At a time agreed upon by the JEC, the Parties shall
form a Joint Commercial Committee (JCC) for the United States. The Parties shall
each designate up to a maximum total of eight (8) members on such JCC with an
equal number from each Party. Membership shall include representation from among
each Party’s commercial development and finance departments. The JCC shall be
co-chaired by NVS and HGS.
          3.3.2 Responsibilities. The purpose of the initial meeting shall be to
review the current status of the commercialization of Collaboration Product in
the United States, prepare the Marketing Plan, and agree on an operational
charter that shall set forth the principles and guidelines for the governance of
the JCC. Furthermore, the JCC shall (i) determine and establish, and as required
from time to time to modify, the Marketing Plan for Collaboration Product in the
United States; (ii) oversee the commercialization of Collaboration Product in
the United States including proposing the pricing for the Collaboration Product
for approval by the JEC; (iii) proposing the trademarks for the Collaboration
Product in the United States for approval by the JEC; and (iv) review ex-US
commercialization issues that will have an impact on Commercialization in the
United States in accordance with Section 5.6.2.
          3.3.3 Meetings. The first meeting of the JCC shall occur within thirty
(30) days after the formation of the JCC. Thereafter, meetings shall be held
once a Calendar Quarter. The location of such meetings shall alternate between
sites selected by

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NVS and HGS, unless otherwise agreed upon between the Parties. JCC meetings need
not necessarily be face-to-face meetings but, upon the agreement of both
Parties, can be via other methods of communication such as teleconferences
and/or videoconference. NVS and HGS each may, on advance written notice to the
other Party, invite non-member representatives of such Party to attend meetings
of the JCC.
          3.3.4 Marketing Budget. The JCC shall review on a quarterly basis the
actual Marketing Expenses against the budget for such expenses in the applicable
Calendar Year. If in the course of its quarterly review of Marketing Expenses,
the JCC should determine for any Collaboration Product that for any study or
activity the actual amounts incurred are likely to be higher than budgeted, the
JCC shall review the reasons for such potential overrun and determine whether
such overrun is appropriate. If the JCC determines that such overrun is
appropriate, the JCC will agree on a revised budget for such Marketing Expenses
for such Collaboration Product for subsequent approval by the JEC. If the JCC
determines that such overrun is not appropriate, the JCC will take such actions
as required to remedy the situation and the Party incurring such excess
Marketing Expenses shall be solely responsible for any portion of such expenses
that are in excess of the lower of (a) [***] of the approved budget for the
particular study or activity and (b) [***] of the approved budget for the
particular Calendar Quarter, unless otherwise mutually agreed in writing by the
Parties.
          3.3.5 Decision Making. All decisions of the JCC shall be made by
unanimous vote, with each Party having one vote. Reasonable efforts will be made
to come to a consensus decision, but any matters that cannot be resolved by the
JCC will be
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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presented to the JEC for resolution. At least one (1) representative from each
Party shall be present to represent a quorum for voting purposes.
3.4 Minutes of Committee Meetings. The Parties will agree upon a standard format
for the minutes of the committee meetings. Definitive minutes of all committee
meetings shall be finalized no later than thirty (30) business days after the
meeting to which the minutes pertain as follows:
          3.4.1 Distribution of Minutes. Within ten (10) business days after a
committee meeting, the secretary of such committee (which shall alternate
between a NVS and HGS member on meeting-to-meeting basis) shall prepare and
distribute to all members of such committee draft minutes of the meeting. Such
minutes shall provide a list of any issues yet to be resolved, either within
such committee or through the relevant resolution process.
          3.4.2 Review of Minutes. The Party not providing the initial draft
minutes shall have ten (10) business days after receiving such draft minutes to
collect comments thereon and provide them to the secretary of such committee
that prepared the initial draft minutes.
          3.4.3 Discussion of Comments. Upon the expiration of such second ten
(10) business day period, the Parties shall have an additional ten (10) business
days to discuss each other’s comments and finalize the minutes.
          3.4.4 Expenses. Each Party shall be responsible for all costs and
expenses for its members and other representatives to attend meetings of, and
otherwise participate on, a committee, including all travel and related costs
and expenses.

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However, Out-of-Pocket Costs that are attributable to both Parties in respect of
such meetings (e.g., meeting rooms, meeting services and related costs) will be
shared on an equal basis by the Parties.
ARTICLE 4
DEVELOPMENT OF COLLABORATION PRODUCTS
4.1 Responsibilities of the Parties. Subject to the general oversight of the
Joint Development Committee, and subject in all instances to the specific
provisions relating to regulatory matters referred to in Article 10, the Parties
shall use Commercially Reasonable Efforts to Develop the Collaboration Products
for Commercialization and to perform the Development activities assigned to it
pursuant to the Development Plan, all in accordance with the applicable
Development Plan, for a Collaboration Product. For the avoidance of doubt, NVS
will control all Non-Global Development Activities.
4.2 Development Plans. The initial Development Plan for all Development
activities for the Collaboration Product, which the Parties hereby approve, is
attached to this Agreement as Appendix C. Prior to the end of each Calendar Year
beginning with the first full Calendar Year after the Effective Date, the Joint
Development Committee shall update and amend the initial Development Plan and
prepare the Development Plan for the Collaboration Product for the following
Calendar Year so that it can submit such proposed Development Plan to the JEC by
the end of October of such year for review and approval.
          4.2.1 Criteria for Development Plans. The Development Plan for each
Collaboration Product shall contain at a minimum a list and description of
preclinical and clinical activities, timelines for the performance of studies in
support of the Development

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activities for such Collaboration Product and which Party bears responsibility
for such activities and a budget for the Development Expenses to complete such
Development activities.
          4.2.2 Implementation of Development Plans. Each Party will inform the
Joint Development Committee of ongoing implementation of the Development Plan
and consider timely recommendations for improving the Development Plan. In
connection with the preparation and implementation of the Development Plan, HGS
and NVS will make available to the Joint Development Committee any information
then in their possession pertaining to the Collaboration Products useful for
such Development activities. For Non-Global Development Activities undertaken by
NVS, the oversight of the JDC shall not include the timing and budget related to
such activities.
          4.2.3 Development Budgets. The Development budget for the Development
of the Collaboration Products shall be set forth in the Development Plan. Such
Development budget shall be sufficient to fund the agreed studies and related
activities necessary to obtain Marketing Approval for such Collaboration Product
and generate data otherwise necessary for Commercialization as agreed by the
JEC. For the avoidance of doubt, expenses for Non-Global Development Activities
will not be included in the Development Plan budget or included as Development
Expenses.
          4.2.4 Payment of Expenses; Development Expense. Subject to each
Party’s relative percentage to fund Development Expenses and Reconciliation as
provided in Article 6, each Party shall be responsible to pay for all
Development Expenses incurred in performing its obligations in connection with
any Development activities under a Development Plan. Each Party shall track such
Development Expenses, including by

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identifying Development Expenses by Collaboration Product by Indication being
Developed.
ARTICLE 5
CO-PROMOTION, DETAILING AND COMMERCIALIZATION
5.1 Marketing Plans. General. The JCC shall be responsible for preparing and
implementing a Marketing Plan for the Commercialization of each Collaboration
Product in the United States. Each Marketing Plan shall define the goals and
objectives for Commercializing the Collaboration Products in the pertinent
Calendar Year in the United States consistent with the applicable Development
Plan.
          5.1.1 Initial Marketing Plan. At a time determined by the JEC, the JCC
shall prepare the Marketing Plan for the Commercialization activities for the
Collaboration Product, which such Marketing Plan shall include the minimum
Detail Requirements and the budgeted Marketing Expenses.
          5.1.2 Updated Marketing Plan. Each year beginning with the first full
Calendar Year after the Effective Date, the JCC shall amend and update the
Marketing Plan for submission of such proposed Marketing Plan to the JEC by the
end of October of such year for review and approval.
          5.1.3 Contents of Each Marketing Plan. Each Marketing Plan shall
encompass the planned Commercialization strategy in the United States and the
corresponding budgeted Marketing Expenses for at least one (1) Calendar Years
and shall contain at a minimum, unless determined otherwise by the JEC:
(a) pricing, trademarks, publications, partnering, KOLs, market research and
strategy, including market size,

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dynamics, growth, customer segmentation, competitive analysis and Collaboration
Product positioning; (b) sales forecast for the next Calendar Year; (c) medical
education plan, advertising and promotion programs and strategies, including
sales literature, promotional premiums, media plans, symposia and speaker
programs; (d) sales plans and activity, including sales force training, and for
each Party, development of appropriate sales training materials, and strategy
and budget for Samples; (e) phase IV Studies to be conducted, which studies
shall be included in the then-current Marketing Plan; (f) identification of the
total minimum Details required to support the Collaboration Product, a firm
indication of the number of Sales Representatives and Details to be provided by
each Party in such period; (g) distribution activities; and (h) which Party
shall be responsible for such Marketing activities.
          5.1.4 Budget for Marketing Expenses. Each Marketing Plan shall set
forth the total budget for Marketing Expenses for such Collaboration Product.
Such Marketing Expense budget shall be sufficient to fund the agreed pre-launch,
launch and related activities necessary to optimize Commercialization of each
Collaboration Product. In the event that Marketing Expenses incurred by a Party
exceed the budgeted Marketing Expenses, the JCC shall attempt to address the
issue in accordance with Section 3.3.4.
5.2 Commercialization Responsibilities in the United States.
          5.2.1 Joint Responsibilities. HGS and NVS will jointly manage medical
affairs activities related to the launching and marketing of the Collaboration
Products, including medical sciences liaisons and drug information requirements.
The activities may be conducted by parallel groups in each Party with
coordination through the JCC. Any other Commercialization activities in the
United States that are not specified as the

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responsibility of HGS or NVS under this Agreement or the Marketing Plan will be
jointly conducted by the Parties with direction from the JCC.
          5.2.2 HGS Responsibilities. (a) HGS shall have the sole right and
responsibility to record and collect payment for sales of Collaboration Products
throughout the United States; and (b) HGS shall use Commercially Reasonable
Efforts to employ an appropriate management infrastructure to supervise the
Sales Representatives required to oversee HGS’ obligations to perform Detail
Requirements and marketing staff of sufficient size to establish, maintain and
implement the Marketing Plan for the Collaboration Products.
          5.2.3 NVS Responsibilities. (a) NVS will lead the pharmacovigilance
efforts with involvement from HGS; (b) NVS shall use Commercially Reasonable
Efforts to employ an appropriate management infrastructure to supervise the
Sales Representatives required to oversee NVS’ obligations to perform Detail
Requirements and marketing staff of sufficient size to establish, maintain and
implement the Marketing Plan for the Collaboration Products; and (c) NVS will be
responsible for all managed care and key account management activities
associated with Collaboration Products, subject to if NVS is not able to include
Collaboration Product in its managed care contracts, HGS shall have the right to
execute and maintain its own managed care contracts for Collaboration Product
subject to the review and approval of the JCC.
5.3 Detailing Efforts.
          5.3.1 Any Co-Promotion activities conducted by the Parties shall be
conducted in accordance with the Marketing Plan and as directed by the JCC. The
Parties shall only use promotional materials, advertising and literature
approved by the

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JCC. The Parties shall market, Detail and Co-Promote the Collaboration Products
in accordance with the terms of this Agreement and the relevant Marketing Plan.
No Party shall be required to undertake any activity under this Agreement which
it believes, in good faith, would violate any Laws.
          5.3.2 Detailing and Marketing Requirements. The JCC shall determine
the targeted number of total Details and Primary Details to be performed by each
Party during each Calendar Year and the Target Audience for such Details (the
“Detail Requirements”). Unless otherwise agreed by the JEC, each Party is
responsible for fifty percent (50%) of the Detail Requirements.
               (i) In the case where each Party is responsible for performing
approximately fifty percent (50%) of the Detail Requirements, if a Party cannot
perform its agreed percentage of the Detail Requirements, the other party will
have the right (but not the obligation) to perform the shortfall of Details. In
the event that the performing party performs more than fifty percent (50%) of
the Detail Requirements, the excess Detail Costs shall be reimbursed to the
performing party by the non-performing Party. If a Party cannot perform at least
[***] of the Detail Requirements, the other Party will have the right (but not
the obligation) to perform the shortfall of Details. In addition, the excess
Detail Costs shall be reimbursed to the performing Party by the non-performing
Party and the share of the Net Profits will be adjusted with the performing
Party receiving an additional percentage of the Net Profit equal to [***]. In
addition, if the non-performing Party does not perform at least [***]. If NVS is
the terminating Party, NVS shall have the exclusive right to commercialize the
Collaboration Products on a worldwide basis (including booking sales in the
United States) and the royalty rate
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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applicable to Net Sales of the Collaboration Products in the United States will
be equal to [***] of the Net Sales in the United States; provided, however,
[***]. For the purposes of determining the percentage of Detail Requirements
performed by each Party, a Primary Detail shall be considered one (1) Detail and
a Secondary Detail shall be considered as one-half (1/2) of a Detail. If HGS is
the terminating Party, HGS may terminate the Co-Promotion in the United States
and this Agreement shall remain in effect for the Territory outside of the
United States in accordance with its terms.
               (ii) If the JEC decides that one party will perform less than
fifty percent (50%) of the Detail Requirements, the JEC will also decide what
changes to subsection (i) above are appropriate but cannot determine that the
shortfall figure discussed in Subsection (i) above will be less than the lesser
of (a) [***] or (b) within [***] percentage points of the agreed upon Detail
Requirements to be performed by the Party.
               (iii) The right to terminate the Co-Promotion in the United
States under this Section 5.3.2 shall not limit a Party’s right to terminate
this Agreement in its entirety for a material breach under Section 15.3(a).
          5.3.3 Detailing Reports. Each Party shall keep complete and accurate
records of all Details performed by its sales force in Co-Promoting in the
United States. Within forty (40) days following the end of each Calendar
Quarter, each Party shall provide the JCC with a report setting forth, in such
detail and form as the JCC shall require (the “Internal Detailing Report”),
based upon each Party’s internal Detailing reporting system, the total number of
Details, Primary Details and Secondary Details actually performed by such Party,
segmented by physician specialty of the Target
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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Audience during the immediately preceding Calendar Quarter. The Parties will
cooperate through the JCC to establish compatible Detail reporting and tracking
mechanisms for the Co-Promotion of the Product to allow for communication of the
Detailing efforts between the Parties.
          5.3.4 Records and Audits Pertaining to Details. Not more than once per
calendar year, each Party or its internationally reputable authorized
independent public accountant or internationally reputable audit firm shall have
the right to engage the other Party’s independent public accountant, at
reasonable times and upon providing reasonable notice, to audit the Detail
records of the other Party relating to Co-Promotion of Collaboration Product
pursuant to this Agreement with respect to the twelve (12) Calendar Quarters
prior to the date of such request (provided that such data may only be audited
one time). The Party requesting the audit shall bear the cost of such audit and
shall make the results of any such examination available to the other Party.
          5.3.5 Each Party will perform the detailing through an internal sales
force. However, HGS or NVS may subcontract a sales force, the personnel of which
are trained and managed by the Party and dedicated solely to performing
Detailing efforts for such Party; provided, however, that in the case of HGS,
the purpose of subcontracting is to build an internal sales force where more
than [***] of the subcontracted sales force is intended to transition to become
employees of HGS to continue to Promote the Collaboration Product in the United
States.
5.4 Training and Standards.
          5.4.1 Training Plans. The JCC shall develop training plans for the
Collaboration Product. NVS and HGS shall, each at its own expense, comply with
the
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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training plan contained in any Marketing Plan which is otherwise consistent with
provisions of this Agreement. Each Party will be responsible for supervising,
training and maintaining its Sales Representatives as may be required to Detail
the Collaboration Products as provided herein or in the applicable Marketing
Plan, such training to include a reasonable proficiency examination relevant to
the Collaboration Products given at least annually for all Sales Representatives
who will be engaged in Detailing, at such Party’s own cost and expense. HGS
shall have the right to participate in the training programs of NVS, and NVS
shall have the right to participate in the training programs of HGS, for the
purpose of ensuring overall consistency in the training programs for the
Collaboration Products. Any costs and expenses incurred by either Party
(including internal and external costs and expenses) in training the sales force
of the other Party will be shared equally by the Parties.
          5.4.2 Assistance. The Parties shall work together to prepare any and
all training materials relating to Collaboration Products for use in connection
with the training of its Sales Representatives, including but not limited to
learning units and any other printed, audio and video training materials. The
Parties shall share the costs of the development of such training materials as
Marketing Expenses.
          5.4.3 Training of Sales Representatives. All Sales Representatives of
a Party have received, or will receive in a timely manner, appropriate training
on proper marketing and sales techniques to be used in promoting pharmaceutical
products in accordance with applicable Laws.
          5.4.4 Performance Standards. Each Party’s Sales Representatives shall
meet the performance standards established by the JCC with the minimum being the

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customary performance standards NVS uses for its sales force (“Sales Force
Performance Standards”). In the event that either Party does not meet the Sales
Force Performance Standards in any Calendar Quarter (“Non-Performing Party”),
the other Party may notify the Non-Performing Party of the failure and require
that the Non-Performing Party implement a plan to remedy such failure for the
forthcoming Calendar Quarters. If the Non-Performing Party fails to meet the
Sales Force Performance Standards for another [***] consecutive Calendar
Quarters within the four following Calendar Quarters, the other Party may
terminate the Co-Promotion in the United States. If NVS is the terminating
Party, NVS shall have the exclusive right to commercialize the Collaboration
Products on a worldwide basis (including booking sales in the United States) and
the royalty rate applicable to Net Sales of the Collaboration Products in the
United States will be equal to [***] (for annual US Net Sales of less than [***]
million), [***] (for annual US Net Sales greater than [***] million and less
than [***]) and [***] (for annual US Net Sales greater than [***]) of the Net
Sales in the United States; provided, however, [***]. The right to terminate the
Co-Promotion in the United States under this Section 5.4.4 shall not limit a
Party’s right to terminate this Agreement in its entirety for a material breach
under Section 15.3(a).
          5.4.5 Joint Marketing and Sales Meetings. The Parties shall plan and
implement periodic joint sales and marketing meeting, including a national
launch meeting, for the Collaboration Product.
5.5 Compliance
          5.5.1 Each Party shall cause its sales representatives responsible for
Detailing and Co-Promoting the Collaboration Product in the Territory to comply
with all
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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federal, state, provincial, territorial, governmental and local laws, rules and
regulations applicable to the promotion and marketing of Collaboration Product,
including, without limitation, with respect to the U.S., the Federal Food, Drug
and Cosmetics Act of 1938, as amended, and the Prescription Drug Marketing Act
of 1987, as amended (“PDMA”).
          5.5.2 Each Party warrants and represents that its Sales
Representatives responsible for Co-Promoting Collaboration Product in the United
States under this Agreement shall:
     (i) limit claims of efficacy and safety for Collaboration Product in the
relevant country of the Territory to those that are (A) consistent with the
approved promotional claims in the Marketing Plan and (B) consistent with the
FDA-approved (or relevant Regulatory Authority-approved, whichever is
applicable) prescribing information for Collaboration Product in such country;
     (ii) not add, delete or modify claims of efficacy and safety in the
Promotion of Collaboration Product under this Agreement from those claims of
efficacy and safety that are contained in the Marketing Plan and that are
consistent with the FDA-approved (or relevant Regulatory Authority-approved,
whichever is applicable) prescribing information and with applicable law;
     (iii) not make any material changes in promotional materials and literature
approved by the JCC, and
     (iv) Detail Collaboration Product under this Agreement in adherence to the
Marketing Plan and to applicable legal requirements.

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          5.5.3 Each Party shall cause, and shall maintain written procedures to
ensure that all of its Sales Representatives comply with all applicable laws,
rules and regulations relating to the storage and distribution of, and
accountability for, Samples of Collaboration Product. Any and all records,
reports or other documentation with respect to samples of Collaboration Product
for distribution in the Territory shall be maintained by each Party for as long
as required by the PDMA, but in no event less than three (3) years. Each Party
shall fully cooperate with the other in production and delivery of any such
documentation as may be requested or required by the FDA and/or any other
governmental authority.
          5.5.4 Each Party shall cause its sales representatives to act in
accordance with the highest standards of the industry and in a professional,
ethical and lawful manner and consistent with the Commercially Reasonable
Efforts used by each Party to Commercialize the Product.
          5.6 Commercialization Responsibility Outside the United States.
          5.6.1 For the avoidance of doubt, the provisions set out above under
Clauses 5.1-5.5 only apply to Commercialization of the Collaboration Product
within the United States, unless expressly stated otherwise.
          5.6.2 NVS will be responsible for and have sole control over the
commercialization of the Collaboration Product outside of the United States. NVS
will provide to the JCC an annual high-level marketing plan for the Territory
outside the United States. At each JCC meeting, NVS will provide a summary of
the status of the commercialization efforts outside the United States. The JCC
will have a standing agenda item to discuss any ex-US commercialization issues
that affect the US and vice

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versa. To the extent required, NVS will coordinate with the JCC in relevant
activities, such as with respect to the branding and product description of the
Collaboration Product and, if necessary, NVS and HGS will establish joint teams
to calibrate relevant activities. For the avoidance of doubt, NVS shall have
sole discretion over decisions relating to commercialization of the
Collaboration Product outside the US (including decisions on pricing and
reimbursement).
          5.6.3 In the event that NVS elects to have a Third Party co-promote a
Collaboration Product outside of the United States, NVS shall first inform HGS.
HGS will then be provided a reasonable opportunity to present a proposal for the
co-promotion of the Collaboration Product in the applicable country or
countries. NVS will consider such proposal in good faith, and if NVS decides, in
its sole discretion, to accept the proposal, the Parties will negotiate in good
faith a mutually acceptable addendum to this Agreement to reflect such
co-promotion activities, appropriate financial terms and other requirements.
However, NVS will not be obligated to enter into any co-promotion arrangement
with HGS outside the United States.
          5.6.4 NVS shall have the sole right and responsibility to record and
collect payment for sales of Collaboration Products outside the United States.
          5.6.5 NVS warrants and represents that its Sales Representatives
responsible for sales of Collaboration Product in the Territory outside the
United States under this Agreement shall:
     (i) limit claims of efficacy and safety for Collaboration Product in the
relevant country of the Territory to those that are consistent with the relevant

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Regulatory Authority-approved prescribing information for Collaboration Product
in such country;
     (ii) not add, delete or modify claims of efficacy and safety in the
Promotion of Collaboration Product under this Agreement from those claims of
efficacy and safety that are consistent with the relevant Regulatory
Authority-approved prescribing information and with applicable law;
     (iii) Detail Collaboration Product under this Agreement in adherence to
applicable legal requirements.
ARTICLE 6
DEVELOPMENT AND COMMERCIALIZATION PAYMENTS AND REPORTS
6.1 Costs and Expenses; Payments.
          6.1.1 Co-Development Expenses. During the Term of this Agreement, HGS
and NVS shall share equally the Development Expenses of all Development
activities under the Development Plan for the Collaboration Product in the
Territory. NVS and HGS shall each pay fifty percent (50%) of any Development
Expenses that are associated with global development activities or activities to
produce data or information intended to be used for registration purposes on a
worldwide basis, including, for example, the EU and the United States, subject
to reconciliation in Section 6.4.3. NVS will be solely responsible for
development expenses associated with Non-Global Development Activities.
Additionally, upon the first dosing of a patient in the first Phase III Clinical
Study approved in the Development Plan, NVS will pay to HGS a non-refundable,
non-creditable reimbursement for development costs incurred by HGS prior

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to the Effective Date totaling [***] within [***] days of the receipt of an
invoice from HGS.
          6.1.2 Marketing Expenses in the United States. HGS shall be
responsible and pay for fifty percent (50%) and NVS shall be responsible and pay
for fifty percent (50%) of the Marketing Expenses (including Detailing Costs)
for Commercialization of the Collaboration Products in the United States under
the Marketing Plan, regardless of where such expenses are incurred.
          6.1.3 Commercialization Funding in the Territory outside of the United
States. NVS shall be solely responsible and pay for one hundred percent (100%)
of the Marketing Expenses for Commercialization of the Collaboration Products in
the Territory outside of the United States.
          6.2 Sharing Net Profits in the United States. HGS and NVS will share
equally (50/50) in the Net Profits from sales of Collaboration Product in the
United States. For the avoidance of doubt, during the period the Parties are
co-promoting the Collaboration Products in the United States, NVS will have no
obligation to pay royalties on Net Sales of the Collaboration Products in the
United States.
          6.3 Notwithstanding anything to the contrary contained in this
Agreement, each Party shall have no obligation to make any milestone payments,
license fees/payments, or any other type of payments or fees which are not
expressly stated hereunder to the other Party under this Agreement.
6.4 Reports.
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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          6.4.1 NVS Report. Within thirty-five (35) days after the end of each
Calendar Quarter, NVS shall submit to HGS a written report (each, a “NVS
Report”) setting forth in reasonable detail the following items during such
Calendar Quarter (where such items are necessary in order to determine the
financial reconciliation or the appropriate payment to a Party):
               (i) Development Expenses incurred by NVS;
               (ii) Marketing Expenses incurred by NVS;
               (iii) COGS for the Collaboration Product (except for any COGS
separately reimbursed under a supply agreement between the Parties);
               (iv) Royalties, if any, paid by NVS to Third Parties;
               (v) Detail Costs for the Collaboration Product; and
               (vi) Net Sales of Collaboration Products.
          6.4.2 HGS Report. Within thirty-five (35) days after the end of each
Calendar Quarter, HGS shall submit to NVS a written report (each, an “HGS
Report”) setting forth in reasonable detail the following items during such
Calendar Quarter (where such items are necessary in order to determine the
financial reconciliation or the appropriate payment to a Party):
               (i) Development Expenses incurred by HGS;
               (ii) Marketing Expenses incurred by HGS;

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               (iii) COGS for the Collaboration Product including the markup
(except for any COGS separately reimbursed under a supply agreement between the
Parties);
               (iv) Royalties, if any, paid by HGS to Third Parties;
               (v) Detail Costs for the Collaboration Product; and
               (vi) Net Sales of Collaboration Product.
          6.4.3 Financial Reconciliation. Within forty-five (45) days after the
end of each Calendar Quarter, commencing with first Calendar Quarter during
which the Effective Date occurs, HGS shall, using the NVS Report and the HGS
Report, prepare a reconciliation report for the Collaboration Product (the
“Reconciliation Report”) which shall show the Development Expenses either Party
may owe the other, Marketing Expenses, Costs of Goods, Royalties and Detail
Costs and the resulting Net Profit, if any, owed by HGS to NVS or by NVS to HGS,
as the case may be. Such Reconciliation Report will be provided to the JEC for
approval. Such approval must occur within ten (10) days of receipt thereof.
After approval of the Reconciliation Report by the JEC, NVS or HGS, as the case
may be, shall invoice the other within ten (10) days of approval and such other
Party shall pay the applicable net amount within thirty (30) days of receipt of
the applicable invoice.
ARTICLE 7
UPFRONT AND MILESTONE PAYMENTS AND ROYALTIES
7.1 In partial consideration for the licenses and rights granted to NVS
hereunder, NVS shall pay to HGS a non-refundable, non-creditable, upfront
license fee of Forty-Five

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Million US Dollars ($45,000,000.00). HGS shall invoice such amount on or after
the Effective Date and such payment shall be due and payable within thirty
(30) days of NVS’ receipt of such invoice.
7.2 Milestone Payments.
     (a) First Indication Milestones. Upon the first achievement of the
following milestone events by HGS, NVS, Affiliates or its Permitted Sublicensees
under this Agreement for the First Indication only for the Collaboration Product
arising hereunder, HGS shall invoice and NVS shall pay the following one-time
milestone payments:

      Milestone Event   First Indication
(a) [***]
  U.S. $[***]
(b) [***]
  U.S. $[***]
(c) [***]
  U.S. $[***]
(d) [***]
  U.S. $[***]
(e) [***]
  U.S. $[***]
(f) [***]
  U.S. $[***]
[***]
  U.S. $[***]

     (b) Net Sales Milestones for sales of Collaboration Products. Upon the
first achievement of the following milestone events for the cumulative Net Sales
of all Collaboration Products in any Calendar Year in the Territory under this
Agreement, NVS shall pay HGS the following one-time milestone payments:

      Milestone Event   Amount
First Calendar Year in which annual Net Sales exceed [***]
  [***]
First Calendar Year in which annual Net Sales exceed [***]
  [***]
First Calendar Year in which annual Net Sales exceed [***]
  [***]
First Calendar Year in which annual Net Sales exceed [***]
  [***]
Total Net Sales Milestones
  [***]

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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     (c) If NVS achieves any of the milestone events stated above in
Section 7.2(a) and (b), NVS shall notify HGS in writing within thirty (30) days
on the achievement of any milestone event stated above. Upon achievement by HGS
or NVS of a milestone, HGS shall send NVS a written invoice for the applicable
milestone payment. The milestone payments set forth in Sections 7.2(a) and
7.2(b) shall be payable within thirty (30) days after the day on which NVS
receives HGS’ invoice therefor.
     (d) Each milestone payment in Section 7.2(a) and 7.2(b) will be made only
one time under this Agreement, regardless of how many times each such milestone
is achieved for a Collaboration Product for the First Indication.
     (e) Milestone payments payable pursuant to this Section 7.2 are not
creditable against the royalties set forth in Section 7.3.
     (f) In the event that a Collaboration Product is replaced by a back-up or
follow-up Collaboration Product in the First Indication, such back-up or
follow-up Collaboration Product will only trigger milestones which were not
achieved by the previous Collaboration Product that such back-up or follow-up
Collaboration Product has replaced. In addition, no milestone payments will be
due for the development and commercialization of Collaboration Products for
other indications.
7.3 Royalties payable by NVS in the Territory outside the United States.

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     (a) Subject always to all other applicable provisions of this Agreement, in
partial consideration for the licenses granted in Article 2, NVS shall pay to
HGS royalties on Net Sales of Collaboration Products by NVS and its Affiliates
and Permitted Sublicensees in any Calendar Year in the Territory outside the
United States (“Ex-US Net Sales”) at the following rates:

          Net Sales in Calendar Year   Royalty Rate [***]
[***]
    [***] %
[***]
    [***] %
[***]
    [***] %

     (b) Upon expiration of or any other reason for the non-applicability or
reduction of the Genentech Royalty with respect to any particular Net Sales, the
royalty rate set out above will [***]. Furthermore, upon expiration of or any
other reason for the non-applicability or reduction of the AB Royalty, with
respect to any particular Net Sales, the royalty rate set out above will [***].
     (c) Applicability of Royalty Obligations. The royalty described in
Section 7.3(a) shall be payable on Net Sales beginning with the First Commercial
Sale, on a country-by-country and product-by-product basis, until the date which
is the later of (i) [***] after the First Commercial Sale and (ii) the date upon
which there is no existing Valid Claim [***]. Following the Royalty Term on a
product-by-product and country-by-country basis, NVS’ licenses with respect to
such Collaboration Products shall
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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continue in effect, but become fully paid-up, royalty-free, transferable,
perpetual and irrevocable.
     (d) During the Royalty Term, in any country in which there is no existing
Valid Claim within the HGS Patent Rights claiming Albuferon in the country of
sale and at the time of sale, NVS shall pay a royalty in respect of the HGS
Know-How licensed hereunder equal to [***] of the HGS Net Royalty Rate set forth
in Section 7.3(a) above on the Ex-US Net Sales of such Product in such country.
The reduced royalty rate for such Net Sales shall be equal to [***] average
royalty rate on the Ex-US Net Sales. An example of this calculation is set out
in Appendix G.
7.4 AB Royalties. On behalf of both Parties, HGS shall pay to AB a royalty of
[***] of Net Sales of the Collaboration Products worldwide pursuant to and in
accordance with the AB License (“AB Royalty”) for so long as required by the
terms of the AB License. For the purposes of the AB royalty, if the
Collaboration Product is sold as a Combination Product and the Net Sales are
calculated using Combination Product Net Sales, [***]. In the United States, the
AB Royalty will be considered as a Marketing Expense in the determination of the
Net Profit and shared by the Parties. Such royalty shall only be payable as long
as required by the terms of the AB License.
7.5 Genentech Royalties. On behalf of both parties hereto, HGS shall pay to
Genentech a royalty of [***] of Net Sales of the Collaboration Products
worldwide pursuant to and in accordance with the AB and Genentech Licenses
(“Genentech Royalty”). For the purposes of the Genentech royalty, if the
Collaboration Product is sold as a Combination Product and the Net Sales are
calculated using Combination Product Net Sales, [***]. In the United States, the
Genentech Royalty will be considered as a
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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Marketing Expense in the determination of the Net Profit and shared by the
Parties. Such royalty shall only be payable as long as required by the terms of
the AB and Genentech License.
7.6 Sublicensee payments. If NVS sublicenses its rights to the Collaboration
Product in the Territory, HGS will receive the payments and royalties to which
is entitled pursuant to Articles 6 and 7 of this Agreement.
7.7 Third Party Royalties excluding the AB and Genentech Royalties. [***]. If
NVS and HGS deem it necessary to acquire a royalty-bearing license from any
Third Party in order to develop, manufacture or commercialize a Collaboration
Product, then the Parties shall [***].
7.8 Competitive Products. In the event a Competitive Product is marketed by a
Third Party in any country outside of the United States and the Net Sales of the
Collaboration Product in such country in any Calendar Year are reduced below a
level of [***] as compared with the Net Sales of such Collaboration Product in
the preceding Calendar Year in such country, then the HGS Net Royalty rates
applicable to the Collaboration Product in such country for the remainder of the
Royalty Term shall be reduced by [***] in addition to any other reductions or
deductions available to NVS. The deduction shall not apply to the portion of the
royalty that corresponds to the amount HGS owes as the AB and Genentech
Royalties where applicable pursuant to the AB and Genentech Agreements. The
reduced royalty rate shall be calculated in the same manner as the reduced
royalty contemplated by Clause 7.3(d) and Appendix G.
7.9 Beginning with the Calendar Quarter of the First Commercial Sale of the
Collaboration Product in Territory outside the United States, within forty-five
(45) days
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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after the end of each Calendar Quarter in which there are Net Sales, NVS shall
submit a written report to HGS stating the amount of Net Sales in such calendar
quarter and the amount of royalty due hereunder with respect to such Net Sales.
Such written report shall describe, unless otherwise agreed by AB and to the
extent reasonably practicable for NVS in accordance with its then-current global
reporting and accounting system, for each calendar quarter the aggregate gross
sales and Net Sales of Collaboration Products by country, including the Net
Sales in the local currency and the corresponding U.S. Dollar amount, place of
manufacture, number, description and the total royalty due.
ARTICLE 8
PAYMENTS AND AUDITS
     8.1 If a Party does not make any payments due under this Agreement at the
times that they are due, then the non-paying Party shall pay interest on each
late payment, to the extent permitted by applicable law, at a rate of [***]
percentage points [***] over the annual USD LIBOR (3 months), for the date on
which such payment becomes delinquent, calculated daily.
     8.2 All payments shall be made in U.S. dollars. With respect to amounts
invoiced or incurred in a currency other than United States Dollars, all such
amounts shall be expressed both in the currency in which the amount was invoiced
or incurred and in the United States Dollar equivalent. With respect to NVS, the
United States Dollar equivalent shall be calculated using NVS’ then-current
standard exchange rate methodology applied in its external reporting (which is
ultimately based on official rates such as Reuters and the European Central
Bank) for the conversion of foreign currency sales into United States Dollars.
With respect to HGS, the United States Dollar
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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equivalent shall be calculated using HGS’ then current standard exchange rate
methodology applied in its external reporting (which is ultimately based on
official rates such as the Wall Street Journal or Reuters) for the conversion of
foreign currency sales or other relevant charges or costs into United States
Dollars.
8.3 Each Party shall provide to the other Party an invoice for all amounts due
to it under this Agreement substantially in the form set out in Appendix F.
Unless otherwise noted, payments on such invoices shall be made within thirty
(30) days of the Party’s receipt of the applicable invoice.
8.4 Payments to each Party shall be made by electronic wire transfer of
immediately available funds to the account of the Party, as designated in
writing to the other Party.
8.5 Each Party shall be responsible for any and all taxes levied on account of
amounts it receives under this Agreement. If a Party is required by law, rule or
regulation to withhold taxes from the types of payments due to the other Party
hereunder, such Party shall (a) deduct those taxes from the amount otherwise
remittable to the other Party hereunder, (b) pay such taxes to the proper taxing
authority and (c) send evidence of the obligation together with proof of payment
to the other Party within ninety (90) days following such payment.
8.6 No part of any amount payable to NVS or HGS under this Agreement may be
reduced due to any counterclaim, set-off, adjustment or other right which a
Party might have against the other Party, any Third Party or otherwise.
8.7 Each Party shall keep complete, true and accurate records of the Net Sales
for not less than three (3) years following the end of the Calendar Quarter in
which such sales

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were made. Each Party shall make such records available to an internationally
reputable independent certified public accountant or internationally reputable
audit firm representing the auditing Party, who will not be unreasonably
rejected by the non-auditing Party, provided that such representative has
entered into a confidentiality agreement with the non-auditing Party limiting
the use of such records to verification of the accuracy of payments due
hereunder and prohibiting the disclosure of information in such records to the
auditing Party or to any Third Party for any purpose. Audits of such records
shall be conducted no more frequently than annually (and once with respect to
each period of time being audited) and upon at least thirty (30) days prior
written notice during reasonable business hours. Audits shall be limited to
results in the twelve (12) Calendar Quarters prior to audit notification. Such
accountant shall provide the non-auditing Party with a copy of any written
report prepared or given to the auditing Party in connection with such audits.
Any claims of underpayment or overpayment will be submitted to the non-auditing
Party within thirty (30) days of the final written report. All such audits shall
be conducted at the auditing Party’s cost and expenses; provided, however, that
if the audit reveals an underpayment to the auditing Party of more than [***],
the non-auditing Party shall pay for the cost and expense of the audit.
ARTICLE 9
DILIGENCE.
9.1 The parties acknowledge that lack of commercially reasonable efforts in
Development and/or Commercialization of a Collaboration Product will diminish
the value of this Agreement to both HGS and NVS. Accordingly, HGS and NVS shall
each use Commercially Reasonable Efforts to perform their respective obligations
under the Agreement.
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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9.2 Each Party shall perform, or cause to be performed, any and all of its
obligations as set forth in this Agreement, including those obligations
identified in this Article 9, in compliance in all material respects with all
applicable laws.
9.3 In addition to the other diligence requirements in this Article 9, HGS and
NVS shall each use Commercially Reasonable Efforts to obtain Marketing Approvals
as expeditiously as reasonably practicable to market at least one Collaboration
Product in the United States, Japan and in each Major EU Market, and following
such approval, to Commercialize the Collaboration Product in such country.
9.4 Each Party will use Commercially Reasonable Efforts to maximize the
commercial potential of the Collaboration Products on a global basis.
ARTICLE 10
REGULATORY MATTERS
10.1 Regulatory Filings.
          10.1.1 HGS shall be responsible for obtaining, registering and
maintaining all regulatory and/or governmental filings necessary to develop,
register and market a Collaboration Product in the United States, including the
IND and BLA. HGS shall obtain, register and maintain such Regulatory Approvals
and Applications in accordance with the Development Plan and as directed by the
JDC. NVS shall be responsible for obtaining, registering and maintaining all
regulatory and/or governmental filings necessary to develop, register and market
a Collaboration Product in the Territory outside of the United States, including
MAAs and to the extent agreed upon by the JDC clinical trial authorization
(CTAs). Notwithstanding the foregoing, NVS will be

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responsible for compiling the Common Technical Document (CTD) on a worldwide
basis with appropriate participation from HGS as determined by the JDC.
          10.1.2 Each Party shall have primary responsibility for clinical drug
development activities related to studies designated as its responsibility under
the Development Plan, and as directed by the JDC, including the submission and
maintenance of parallel investigational new drug applications and CTAs with
cross references, as necessary, to the other Party’s Regulatory Applications or
Regulatory Approvals. Each Party shall hold the database and be the lead on data
entry, statistics, quality assurance and writing on all studies designated as
its responsibility under the Development Plan. Notwithstanding the foregoing,
the Parties will agree upon using compatible database formats to allow for the
merging of each Party’s database with the other for analytical and reporting
purposes.
          10.1.3 Each Party shall promptly provide to the other Party copies of
any material documents or other correspondence received from the Regulatory
Authorities (including any minutes of material meetings or teleconferences)
pertaining to the development or commercialization of Collaboration Product in
the Territory and upon request will provide the other with full access to its
regulatory documentation relating to the Collaboration Products and will
authorize the relevant Regulatory Authority to provide such access.
          10.1.4 Each Party shall be allowed to attend and participate in
material meetings with Regulatory Authorities significant for the global
Development Plan for the Collaboration Products. The Party scheduling such
negotiations and meetings shall

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attempt to coordinate with the other Party in order to allow such other Party
the ability to attend and participate in such negotiations and meetings.
          10.1.5 Each Party shall have the right to cross-reference and use the
regulatory filings of the other Party for the purposes of obtaining, maintaining
and defending Regulatory Approvals for the Collaboration Product.
10.2 Each Party shall fulfill and discharge all obligations under applicable
governmental law, rule or regulation or otherwise, as well as procedures
ensuring timely compliance with all laws, rules and regulations as are
reasonable in accordance with accepted business practices and legal requirements
to maintain the authorization and/or ability to manufacture, finish, package,
store and label Collaboration Product in the Territory, and to import, sell, or
market Collaboration Product in the Territory, including, without limitation,
the following:
          10.2.1 The maintenance of all Regulatory Approvals necessary for the
manufacture, finishing and labeling of Collaboration Product in the Territory in
accordance with cGMP, and for the use and marketing of Collaboration Product for
all approved indications including, without limitation, maintaining such records
and filing such reports as may be required under the provisions of all
applicable laws and regulations including all advertising and promotional
literature and labeling relating to Collaboration Product.
          10.2.2 The procedures for sharing and reporting of adverse events
encountered by each Party for Collaboration Product in the Territory shall be as
set forth in a pharmacovigilance agreement agreed to between the Parties, which
shall be entered into by the Parties within [***] days of the Effective Date.
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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          10.2.3 NVS shall lead the pharmacovigilance efforts and shall create a
global safety database which shall include all serious adverse events from
clinical trials, all spontaneous adverse events and other relevant clinical
safety information relating to Collaboration Product, in accordance with
procedures set forth in the agreed pharmacovigilance agreement. Such information
shall be shared with and made readily available to HGS.
10.3 In accordance with Section 14.3, both Parties shall be permitted to publish
on its clinical trial register summaries of results of all clinical trials
conducted by either Party with respect to the Collaboration Product after the
Effective Date of this Agreement without being required to obtain the other
Party’s approval.
ARTICLE 11
SUPPLY; MANUFACTURE OF COLLABORATION PRODUCT
11.1 Manufacture and Supply of Albuferon. Subject to the terms and conditions of
this Agreement and the Supply Agreement (defined below), HGS shall be
responsible to supply, or to obtain supply, for worldwide requirements of
Albuferon to enable the Parties to fulfill their obligations to Develop and
Commercialize Collaboration Products under this Agreement.
11.2 Manufacture and Supply of Collaboration Product. NVS shall be responsible
to supply, or to obtain supply, for worldwide commercial requirements of
Collaboration Product. The Parties shall jointly be responsible, working
together through the relevant committee, for the development program and supply
of clinical materials of Collaboration Product for Development and through
development scale-up and BLA enabling activities. The Development Plan for
Collaboration Product will outline roles

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and responsibilities pertaining to Collaboration Product development and be
approved by the JDC.
11.3 Supply Agreement. The manufacture and supply of Albuferon and the
Collaboration Product to be provided by the Parties hereunder shall be subject
to a separate supply and quality agreement (“Supply Agreement”) to be negotiated
between the parties hereto within [***] of the Effective Date. Such Supply
Agreement shall include any and all standard and customary terms addressing all
aspects of the manufacturing process for Albuferon and the Collaboration Product
and the responsibilities of each Party with respect thereto, including the
establishment of a manufacturing subcommittee of the JDC (or as a standalone
committee if agreed by the Parties), audit provisions for confirming COGS and
possible COGS reduction incentives/programs. If the Parties do not agree upon
the terms of a Supply Agreement, such dispute shall be subject to the provisions
of Section 18 herein. The Supply Agreement shall also contain provisions that in
the event that an issue arises while HGS is manufacturing supplies of Albuferon
and/or NVS is manufacturing supplies of Collaboration Product which would
significantly impact the supplying Party’s ability to deliver the mutually
agreed amount of Albuferon and/or Collaboration Product to the mutually agreed
quality specifications, including issues related to capacity, safety or quality,
then the Parties must meet to consider and mutually determine via the
manufacturing sub-committee of the JDC what reasonable manufacturing
alternatives are available to the Parties, including, but not limited to,
granting the other Party the right to manufacture Albuferon or Collaboration
Product, as the case may be or, if such other Party is not capable or willing to
manufacture, to have a Third Party manufacture Albuferon or the Collaboration
Product. In the United States, all Collaboration Product
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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labels, commercial packs and promotional material in the Territory shall contain
the HGS and NVS names and logos in equal prominence to the extent legally
permissible. If requested by NVS, the Supply Agreement will also set forth the
process for establishing a second source of supply for Albuferon.
11.4 A forecast for Development and Commercialization of the Collaboration
Products shall be prepared and periodically updated by the JCC (and the JDC
during development) and coordinated with the applicable Development and
Marketing Plans for Collaboration Products through the Joint Commercial
Committee and through the Joint Executive Committee for Commercialization.
11.5 Cost of Supply.
          11.5.1 For the commercial supply of Albuferon in the United States,
HGS shall supply Albuferon to NVS (FCA, Incoterms 2000) [***], and NVS shall be
responsible for shipping, insurance and other related expenses. For the
commercial supply of Collaboration Product in the United States, NVS shall
supply such Collaboration Product [***]. For the development supply of the
Collaboration Product, each Party will supply Albuferon and the Collaboration
Product [***].
          11.5.2 For the commercial supply of Albuferon in the Territory outside
of the United States, HGS shall supply such Collaboration Product to NVS (FCA,
Incoterms 2000) [***], and NVS shall be responsible for shipping, insurance and
other related expenses. Such price shall be subject to adjustments based on
[***].
11.6 NVS acknowledges that the Research Materials represent a significant
investment on the part of HGS. NVS acknowledges that the Research Materials, if
transferred to
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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NVS hereunder, in Appendix D are transferred solely to permit NVS to
commercially manufacture Collaboration Products and agrees to retain control
thereof. For the purposes of this Section 11.6, “commercially manufacture” shall
mean the manufacture of supplies of the Collaboration Product for Phase I
Clinical Studies, Phase II Clinical Studies and Phase III Clinical Studies as
well as the manufacture of commercial supplies of the Collaboration Product for
sale in the Territory. Furthermore, NVS agrees to retain control of the Research
Materials and to transfer the Research Materials to any Third Party only for the
purposes of manufacturing Collaboration Product for NVS. NVS shall inform HGS
upon any transfer of the Research Materials to a Third Party, which notification
may be provided through the JDC, JCC or JEC. If NVS breaches this provision
relating to the transfer of the Research Materials to a Third Party and such
breach is considered a breach of the AB License by HGS, HGS shall have the
option to terminate this Agreement forthwith, notwithstanding the notice
provision in Section 15.3.
ARTICLE 12
PATENTS
12.1 Subject to the license grants in Article 2 herein, HGS owns or controls the
Albumin Fusion Know-How, Albumin Fusion Patent Rights, Albuferon Patent Rights
and Manufacturing Technology and all HGS Arising Patent Rights and HGS Arising
Know-How and NVS owns or controls the NVS Arising Patent Rights and NVS Arising
Know-How. Joint Arising Know-How and Joint Arising Patent Rights shall be
jointly owned by HGS and NVS. Subject to the licenses and other provisions of
this Agreement, each Party may use and sublicense the Joint Arising Know-how and
Joint Arising Patent Rights as it determines, without any required approvals
from or accounting to the other Party.

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12.2 NVS will prepare, file, prosecute and maintain Joint Arising Patent Rights
and NVS Arising Patent Rights. In the event that NVS intends to abandon or
decline responsibility for any or all of Joint or NVS Arising Patent Rights, NVS
shall provide reasonable prior written notice to HGS of such intention to
abandon or decline responsibility, and HGS shall have the right, at its own
expense, to file, prosecute and maintain such Joint or NVS Arising Patent
Rights.
12.3 HGS Responsibilities.
     (a) Albumin Fusion Patent Rights, Albuferon Patent Rights and HGS Arising
Patent Rights. HGS, or the Party who bears such responsibility under the AB
License, will prepare, file, prosecute and maintain all Albumin Fusion Patent
Rights, Albuferon Patent Rights and HGS Arising Patent Rights. HGS shall, in a
timely fashion, provide NVS with copies of all written correspondence with the
United States Patent and Trademark Office and all substantive communications
from foreign patent offices pertaining to the filing, prosecution and
maintenance of the Albumin Fusion Patent Rights (to the extent related to
Collaboration Product), the Albuferon Patent Rights and the HGS Arising Patent
Rights, and shall provide NVS with a timely and adequate opportunity to review
and provide written comments on such matters which shall be reasonably taken
into account by HGS or the outside counsel prosecuting such patent rights. HGS
shall keep NVS advised on a quarterly basis, through the JEC, on the status of
pending patent applications, including the grant of any Albumin Fusion Patent
Rights (to the extent related to Collaboration Product), Albuferon Patent Rights
and HGS Arising Patent Rights. NVS may identify in writing to HGS certain
countries in which NVS desires that HGS, or the party who bears such
responsibility under the AB License,

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file, prosecute and maintain certain Albumin Fusion Patent Rights (to the extent
related to Collaboration Product), Albuferon Patent Rights and/or HGS Arising
Patent Rights. In the case of the Albumin Fusion Patent Rights (to the extent
related to Collaboration Product), Albuferon Patent Rights and/or HGS Arising
Patent Rights, including those HGS Arising Patent Rights for which HGS bears
responsibility under the AB License, HGS shall thereafter file, prosecute and
maintain such Albumin Fusion Patent Rights (to the extent related to
Collaboration Product), Albuferon Patent Rights and/or HGS Arising Patent Rights
in such country or countries. If HGS decides not to file, prosecute or maintain
the Albumin Fusion Patent Rights (to the extent related to Collaboration
Product), Albuferon Patent Rights or the HGS Arising Patent Rights in such
countries identified by NVS and provided that HGS has the right to grant such
right to NVS, HGS shall notify NVS of such decision in a timely fashion, and
upon NVS request, HGS, in collaboration with NVS and using outside counsel
mutually acceptable to HGS and NVS, shall file, prosecute and maintain such
Albumin Fusion Patent Rights (to the extent related to Collaboration Product),
Albuferon Patent Rights and/or HGS Arising Patent Rights in those countries and
such Patent Rights will not be considered in determining whether any royalty is
payable by NVS to HGS (or for determining the Royalty Term) under this
Agreement; NVS shall responsible for all external costs and expenses relating to
the preparation, filing, prosecution and maintenance of such Patent Rights. HGS
shall at all times during its filing, prosecution, and maintenance of the
Albumin Fusion Patent Rights (to the extent related to Collaboration Product),
Albuferon Patent Rights and HGS Arising Patent Rights, use Commercially
Reasonable Efforts to protect the commercial value of and maintain the Albumin
Fusion Patent Rights, Albuferon Patent Rights and the HGS Arising Patent Rights.

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     (b) Manufacturing Technology. HGS shall have the right, but not the
obligation, to file, prosecute and maintain all patent rights owned or
controlled by HGS which claim the Manufacturing Technology; provided however,
HGS only has the right if AB does not have the right and responsibility under
the AB License. To the extent HGS has the right to file, prosecute and maintain
those Patent Rights owned or controlled by HGS which claim the Manufacturing
Technology, and to the extent such Patent Rights are directly related to the
manufacture of Albuferon, NVS may identify in writing to HGS certain countries
in which NVS desires that HGS file, prosecute and maintain such patent rights.
HGS shall thereafter file, prosecute and maintain such patent rights which claim
the Manufacturing Technology in such country or countries. If HGS does not file,
prosecute and maintain such patent rights in such countries identified by NVS
and provided that HGS has the right to grant such right to NVS, NVS shall have
the right to file, prosecute and maintain such patent rights in those countries.
     (c) All information, papers, and other materials provided by either Party
to the other in accordance with this Section 12 shall be subject to the
confidentiality provisions of this Agreement. The Parties shall share equally
all external costs and expenses relating to the preparation, filing, prosecution
and maintenance of the Albuferon Patent Rights relating to Collaboration
Products. Otherwise, the Party controlling the preparation, filing, prosecution
and maintenance of the Patent Rights shall be responsible for all costs related
thereto. If outside counsel costs are incurred in connection with the
preparation, filing, prosecution and maintenance of Albumin Fusion Patent
Rights, Albuferon Patent Rights and HGS Arising Patent Rights, such outside
counsel shall be mutually acceptable to both HGS and NVS. The Parties hereby
agree that Finnegan Henderson Farabow

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Garrett & Dunner LLP is acceptable as outside counsel for the purposes of this
Section 12.3.
12.4 Enforcement.
     (a) In the event that either NVS or HGS becomes aware of any infringement
of any issued patent with the Patent Rights (except with respect to the
Genentech Patent Rights) which infringement involves the HGS Collaboration
Technology and/or Manufacturing Technology to which NVS has an exclusive
license, it will notify the other Party in writing to that effect. Any such
notice shall include evidence to support an allegation of infringement by such
Third Party.
     (b) Under the AB License, AB (or its assignee) has the first right (but not
the obligation) to bring suit to abate any infringement or misappropriation of
the Albumin Fusion Patent Rights, Albuferon Patent Rights and HGS Arising Patent
Rights (to the extent such are jointly owned by HGS and AB). NVS will reasonably
cooperate with AB in preparing and presenting any such suit or action.
     (c) If AB declines to initiate a suit to abate any infringement or
misappropriation, then HGS shall have the first right (but not the obligation),
using counsel of its choice, to bring suit to abate any infringement or
misappropriation of the Albumin Fusion Patent Rights, Albuferon Patent Rights
and HGS Arising Patent Rights. HGS shall also have the first right (but not the
obligation), using counsel of its choice, to bring suit to abate any
infringement or misappropriation of the Manufacturing Technology. NVS will
reasonably cooperate with HGS in preparing and presenting any such suit or
action. In the United States, both Parties will equally share the costs and
expenses of such suit and any recovery or damages derived from such an action or
suit

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shall be deemed Net Profit. In the Territory outside of the United States, the
Party bringing the claim shall bear responsibility for all costs and expenses
and any recovery or damages derived from such an action or suit (after the
parties are reimbursed for their costs and expenses) shall be paid to NVS and
considered Net Sales for purposes of calculating the royalties due under this
Agreement.
     (d) If HGS does not initiate a suit to abate any infringement or
misappropriation in accordance with Section 12.4(c) within ninety (90) days of
acquiring the right to do so in the applicable country or countries, then NVS
may do so. HGS shall reasonably cooperate with NVS in preparing and presenting
such action or suit. In the United States, both Parties will equally share the
costs and expenses of such suit and any recovery or damages derived from such an
action or suit shall be deemed Net Profit. In the Territory outside of the
United States, the Party bringing the claim shall bear responsibility for all
costs and expenses and any recovery or damages derived from such an action or
suit (after the parties are reimbursed for their costs and expenses) shall be
paid to NVS and considered Net Sales for purposes of calculating the royalties
due under this Agreement.
     (e) NVS shall have the right (but not the obligation) to bring suit to
abate any infringement or misappropriation of the Joint Arising Patent Rights.
HGS will reasonably cooperate with NVS in preparing and presenting any such
action or suit. In the United States, both parties will equally share the costs
and expenses of such suit and any recovery or damages derived from such an
action or suit shall be deemed Net Profit. In the Territory outside of the
United States, NVS shall bear responsibility for all costs and expenses and any
recovery or damages derived from such an action or suit relating to

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the Joint Arising Patent Rights (after the parties are reimbursed for their
costs and expenses) shall be considered Net Sales for purposes of calculating
the royalties due under this Agreement.
     (f) If NVS does not initiate a suit to abate any infringement within ninety
(90) days after receiving notice thereof, HGS shall have the right, but not the
obligation, using counsel of its choice, to bring suit to abate any infringement
or misappropriation of the Joint Arising Patent Rights. NVS will reasonably
cooperate with HGS in preparing and presenting any such suit or action. In the
United States, both parties will equally share the costs and expenses of such
suit and any recovery or damages derived from such an action or suit shall be
deemed Net Profit. In the Territory outside of the United States, the Party
bringing the suit shall bear responsibility for all costs and expenses and any
recovery or damages derived from such an action or suit (after the parties are
reimbursed for their costs and expenses) shall be paid to NVS and considered Net
Sales for purposes of calculating the royalties due under this Agreement.
     (g) Neither Party may enter into any settlement without the prior consent
of the other Party, which shall not be unreasonably withheld, and may not make
any statement, which admits that any of the HGS Patent Rights is invalid or
unenforceable.
12.5 Defense. In the event of the institution of any suit, opposition, or
interference by a Third Party against HGS or NVS related to the HGS Patent
Rights, the Party being sued shall promptly notify the other Party in writing.
The Party being sued may, in its absolute discretion (subject to consent in
certain circumstances described below), choose to defend, settle, and/or respond
to, such suit at its own expense. Furthermore, if both Parties are sued, each
may, in its absolute discretion(subject to consent in certain

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circumstances described below), choose to defend, settle, and/or respond to,
such suit at its own expense. HGS and NVS shall provide reasonable assistance to
one another and reasonably cooperate in any such litigation at the other’s
request at the expense of the requesting Party, provided, however, that neither
Party may enter into any settlement without the prior consent of the other Party
if such settlement would affect the other Party’s interests in and to the
relevant Patent Rights or would impose any financial or other obligation on the
other Party. Such consent shall not be unreasonably withheld.
12.6 For the intellectual property rights licensed in the Genentech Patents
Rights, the Parties acknowledge that the Third Party licensors may control the
right to bring suit and as a result, HGS’ and NVS’ rights may be limited, and
the Third Parties may have the sole right to control such action.
12.7 Drug Price Competition and Patent Term Restoration Act. The Parties agree
to cooperate in an effort to avoid loss of any Patent Rights which may otherwise
be available to the Parties hereto under the provisions of the Drug Price
Competition and Patent Term Restoration Act of 1984 or comparable laws outside
the US, including by executing any documents as may be reasonably required. In
particular, the Parties shall cooperate with each other in obtaining patent term
restoration or supplemental protection certificates or their equivalents in any
country and region where applicable to Collaboration Products. HGS shall provide
all reasonable assistance to NVS, including permitting NVS to proceed with
applications for such in the name of HGS, if so required. The Parties shall
cooperate in determining, if applicable, which of the Patent Rights the Parties
will attempt to extend, which determination shall be made by the JEC. HGS shall
provide reasonable assistance to NVS, including by executing any required
documents

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and providing any relevant patent information to NVS, so that NVS, as Regulatory
Filing applicant, may inform the relevant Regulatory Authority.
ARTICLE 13
CONFIDENTIALITY
13.1 During the longer of the Term of this Agreement and [***] years from the
date of disclosure (except with respect to the Confidential Information included
in the Research Materials, for which the obligations will last for as long as
such Confidential Information remains proprietary), each Party shall maintain in
confidence the Confidential Information of the other Party, and shall not
disclose, use or grant the use of the Confidential Information of the other
Party except on a need-to-know basis to such Party’s Affiliates, directors,
officers and employees, such Party’s Third Party licensors of intellectual
property rights (sub)licensed hereunder, and such Party’s subcontractors,
professional consultants and collaborators, to the extent such disclosure is
reasonably necessary in connection with such Party’s activities as expressly
authorized by this Agreement. To the extent that disclosure to any person is
authorized by this Agreement, prior to disclosure, the Party shall ensure that
such person is bound by confidentiality obligations with respect to Confidential
Information at least as stringent as this Agreement. Each Party shall notify the
other Party promptly upon discovery of any unauthorized use or disclosure of the
other Party’s Confidential Information.
13.2 Notwithstanding the foregoing, the confidentiality obligations of
Section 13.1 shall not include any information that: (a) is or hereafter becomes
part of the public domain by public use, publication, general knowledge or the
like through no wrongful act, fault or negligence on the part of receiving
Party; (b) can be demonstrated by
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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documentation or other competent proof to have been in the receiving Party’s
possession prior to disclosure by the disclosing Party; (c) is subsequently
received by the receiving Party from a Third Party who is not bound by any
obligation of confidentiality with respect to said information; (d) is generally
made available to Third Parties by disclosing Party without restriction on
disclosure; or (e) is independently developed by or for the receiving Party
without reference to the disclosing Party’s Confidential Information.
13.3 The confidentiality obligations under Section 13.1 shall not apply to the
extent that a Party is required to disclose information by applicable law,
regulation or order of a governmental agency or a court of competent
jurisdiction, including disclosures required under rules promulgated by the
United States Securities and Exchange Commission; provided, however, that to the
extent practicable, such Party (a) shall provide advance written notice thereof
to the other Party and consult with the other Party prior to such disclosure
with respect thereto, and (b) shall provide the other Party with reasonable
assistance, as requested by the other Party, to object to any such disclosure or
to request confidential treatment thereof, and (c) shall take reasonable action
to avoid and/or minimize the extent of such disclosure.
13.4 In addition to disclosures allowed under Section 13.1, each Party may
disclose Confidential Information belonging to the other Party to the extent
such disclosure is necessary in the following instances: (i) filing or
prosecuting Patent Rights as permitted by this Agreement; (ii) regulatory
filings for Collaboration Products such Party has a license or right to develop
hereunder; and (iii) prosecuting or defending litigation as permitted by this
Agreement.

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ARTICLE 14
PUBLICATIONS AND PUBLICITY
14.1 No public announcement relating to this Agreement or disclosing any of the
terms of this Agreement and/or relating to the Collaboration Products, shall be
made, either directly or indirectly, by any Party without first obtaining the
approval of the JCC or JDC (as appropriate to the subject matter of the
announcement) or the other Party (including where the announcement relates to
the terms of this Agreement). The JCC, JDC or the Parties will agree upon the
nature and text of such announcement, such agreement and/or approval not to be
unreasonably withheld. The Party desiring to make any such public announcement
shall inform the JDC, JCC or other Party, as appropriate, of the proposed
announcement or disclosure at least ten (10) business days prior to public
release, and shall provide the other Party with a written copy thereof, in order
to allow such other Party to comment upon such announcement or disclosure,
subject to the provisions of the previous sentence.
14.2 Notwithstanding the foregoing, (a) NVS may make public announcements in
relation to the Collaboration Products solely in connection with its
Commercialization outside the United States as it deems appropriate so long as
such announcements are not inconsistent with the JCC approved announcements; and
(b) HGS may make public announcements that include listing Albuferon in its
portfolio of albumin fusion products.
14.3 Furthermore, if a Party desires to make any scientific publication, the
publishing Party shall inform the JDC and the other Party of the proposed
publication at least thirty (30) days before the planned submission date of such
publication, and shall provide such other Party with a written copy thereof, in
order to allow such Party to comment upon

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such publication, and shall consider in good faith the incorporation of its
comments into such publication. In the event any such publication is determined
by the parties to be relevant to its intellectual property position, the
publishing Party shall delay such publication for a period sufficient (but in no
event greater than an additional ninety (90) days) to allow the Party who bears
such responsibility hereunder to take the steps necessary to protect such
intellectual property, including the filing of any patent applications.
14.4 Other than with respect to trademarks licensed under this Agreement,
neither Party shall mention or otherwise use the name, insignia, symbol,
trademark, trade name or logotype of the other Party (or any abbreviation or
adaptation thereof) in any publication, press release, promotional material or
other form of publicity without the prior written approval of such other Party
in each instance. The restrictions imposed by this Section shall not prohibit
either Party from making any disclosure identifying the other Party that is
required by applicable law.
14.5 Notwithstanding anything to the contrary herein, neither Party may publish
or otherwise publicly disclose Confidential Information included in the Research
Materials without the prior written consent of the other Party. If a Party
wishes to publish or otherwise publicly disclose such Confidential Information,
the Party shall submit the proposed disclosure to the other Party for review
prior to submission for publication or presentation. The publishing Party shall
delete the other Party’s Confidential Information and specific references to the
Research Materials from such disclosure, if requested to do so by the other
Party. The publishing Party further agrees that such disclosure shall not

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be presented or submitted for publication until written permission is received
from the other Party, which permission shall not be unreasonably withheld.
ARTICLE 15
TERM AND TERMINATION
15.1 This Agreement will start on the Effective Date and remain in effect, on a
country-by-country and product-by-product basis, until the later of (a) the
expiration of the obligation of NVS to pay royalties in accordance with
Article 7 and (b) the date the Parties cease to Co-Promote the Collaboration
Products in the United States; unless otherwise terminated under this Article 15
(“Term”).
15.2 Termination by NVS.
     (a) NVS may terminate this Agreement and all of NVS’ obligations with
respect to Collaboration Products under this Agreement at any time for any
reason, or for no reason at all, upon [***] prior written notice to HGS.
     (b) NVS may terminate this Agreement and all of NVS’ obligations with
respect to Collaboration Products under this Agreement upon [***] prior written
notice (after discussion at the JEC) in the event that (i) NVS determines in
good faith, and upon the basis of competent scientific evidence, that there are
material safety risks associated with the Collaboration Product or (ii) the
Collaboration Product is not approved by the FDA or EMEA after the Parties have
exercised Commercially Reasonable Efforts to obtain such approval.
     (c) In the case of any termination by NVS under this Clause 15.2, NVS and
HGS will agree to a wind-down plan covering the orderly transition or
termination of
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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activities under the Development Plan and/or Marketing Plan during the relevant
termination notice period (“Wind-Down Period”). NVS will be responsible for its
share of the Development and Marketing Expenses actually incurred in connection
with the plan and non-cancelable obligations incurred during the Wind-Down
Period. The Parties agree that neither Party will initiate any new projects or
activities during the Wind-Down Period for which it will seek funding or
reimbursement from the other Party, that the total costs for the activities
undertaken during the Wind-Down Period will not exceed the amount agreed to by
the Parties under the Development Plan and/or Marketing Plan for such Wind-Down
Period and that the Parties shall use commercially reasonable efforts to
minimize the costs for the Wind-Down Period. NVS will be under no obligation to
pay any milestone payments to the extent the applicable milestones are achieved
during the Wind-Down Period. Notwithstanding the foregoing, NVS will not be
responsible for ongoing costs incurred during the Wind-Down Period if HGS agrees
to an agreement with a new collaborator for the Collaboration Product during the
Wind-Down Period.
15.3 Termination Upon Material Breach.
     (a) If either Party commits a material breach of this Agreement, the
non-breaching Party shall have the right to give written notice to the breaching
Party specifying the claimed particulars of such breach, and in the event such
material breach is not cured within [***] days after such notice, the
non-breaching Party shall have the right thereafter to terminate this Agreement
immediately by giving written notice to the breaching Party to such effect;
provided, however, that if such breach is capable of being cured but cannot be
cured within such [***] day period and the breaching Party initiates actions to
cure such breach within such period and thereafter diligently pursues such
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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actions, the breaching Party shall have such additional period as is reasonable
in the circumstances to cure such breach. Any termination by any Party under
this Clause and the effects of termination provided herein shall be without
prejudice to any damages or other legal or equitable remedies to which it may be
entitled from the other Party.
     (b) Either HGS or NVS may terminate this Agreement on written notice if an
Insolvency Event occurs in relation to the other Party. In any event when a
Party first becomes aware of the likely occurrence of any Insolvency Event in
regard to that Party, it shall promptly so notify the other Party in sufficient
time to give the other Party sufficient notice to protect its interests under
this Agreement.
15.4 Effects of Termination by HGS for NVS Breach or Termination by NVS Without
Cause. If HGS terminates this Agreement in accordance with Section 15.3 or if
NVS terminates this Agreement for convenience in accordance with Section 15.2,
then (i) all rights and licenses granted by either Party to the other hereunder
shall immediately terminate, and neither Party shall have any right to any
continued use of the Patent Rights and Know-how of the other Party; (ii) NVS,
upon request of HGS and free of charge, shall execute any document reasonably
necessary to transfer to HGS all reasonably available data, information,
results, clinical trials, regulatory documents, support documentation and
supplies developed by or on behalf of NVS under this Agreement necessary for HGS
to continue the Development or Commercialization of the Collaboration Product,
including all applications submitted to, or approvals obtained from, any
Regulatory Authority for purposes of seeking Marketing Approval for the
Collaboration Product, or for making, using or selling the Collaboration
Product, and (iii) to the extent reasonably available, any studies in progress
pursuant to the Development

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Plan shall be transferred to HGS in a manner that allows such studies to
continue uninterrupted to the extent reasonable and practical, and (iv) NVS
shall grant to HGS a non-exclusive, royalty-free, fully paid up, fully
sublicensable license to use the NVS Arising Know-How and NVS Arising Patent
Rights relating specifically and primarily to Albuferon and necessary to use,
sell, make, have made, or import Collaboration Product solely for such purpose.
NVS shall not be liable to HGS for any reason whatsoever as a consequence of any
license from NVS or HGS’ utilizing any information or documents conveyed as
provided in this Section. Upon such a termination of this Agreement, NVS shall
be entitled, during the [***] days following the termination of this Agreement,
to finish any work-in-progress and to sell any inventory of the Collaboration
Product that remains on hand as of the date of the termination, so long as NVS
pays HGS the royalties applicable to said subsequent sales in accordance with
the terms and conditions set forth in this Agreement. Except as expressly
provided in this Section, upon termination by NVS pursuant to Section 15.2, NVS
shall not incur any additional costs, expenses or liabilities of any kind under
this Agreement except for those costs, expenses or liabilities which have
matured and accrued as of the effective date of the termination.
15.5 Effects of Termination by NVS for HGS Breach. If NVS terminates this
Agreement in accordance with Section 15.3, (i) any licenses granted by NVS to
HGS shall immediately terminate and HGS shall have no right to any continued use
of any NVS intellectual property; (ii) HGS, upon request of NVS and free of
charge, shall execute any document reasonably necessary to transfer to NVS all
reasonably available data, information, results, clinical trials, regulatory
documents, support documentation and supplies necessary for NVS to continue the
Development or Commercialization of the Collaboration Product, including all
applications submitted to, or approvals obtained
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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from, any Regulatory Authority for purposes of seeking Marketing Approval for
the Collaboration Product, or for making, using or selling the Collaboration
Product, and (iii) to the extent reasonably available, any studies in progress
pursuant to the Development Plan shall be transferred to NVS in a manner that
allows such studies to continue uninterrupted to the extent reasonable and
practical; (iv) the licenses granted by HGS to NVS under the HGS Collaboration
Technology, Manufacturing Technology, HGS Arising Patent Rights and HGS Arising
Know-how will continue as exclusive, transferable, perpetual and irrevocable
licenses, in consideration of which NVS will pay HGS milestone and royalty
payments on the same terms as set forth in this Agreement; (v) the Co-Promotion
of the Product in the United States will cease and NVS will have the full
exclusive license rights (including with respect to HGS) in the full Territory
and the royalty payable by NVS and its Affiliates and sublicensees on Net Sales
of Collaboration Products in the United States shall be equal to (a) [***].
15.6 Insolvency. All rights and licenses granted under or pursuant to this
Agreement by NVS or HGS are, and shall otherwise be deemed to be, for purposes
of Section 365(n) of the U.S. Bankruptcy Code, licenses of right to
“intellectual property” as defined under Section 101 of the U.S. Bankruptcy
Code. The parties agree that the parties, as licensees of such rights under this
Agreement, shall retain and may fully exercise all of their rights and elections
under the U.S. Bankruptcy Code. The parties further agree that, in the event of
the commencement of a bankruptcy proceeding by or against either Party under the
U.S. Bankruptcy Code, the Party hereto that is not a party to such proceeding
shall be entitled to a complete duplicate of (or complete access to, as
appropriate) any such intellectual property and all embodiments of such
intellectual property, which, if not already in the non-subject Party’s
possession, shall be promptly delivered to it (a) upon
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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any such commencement of a bankruptcy proceeding upon the non-subject Party’s
written request therefor, unless the Party subject to such proceeding elects to
continue to perform all of its obligations under this Agreement or (b) if not
delivered under (a) above, following the rejection of this Agreement by or on
behalf of the Party subject to such proceeding upon written request therefor by
the non-subject Party.
15.7 Divestiture by a Party. If in connection with any proposed acquisition or
merger or inquiry of a Governmental Authority, a Party (the “Divesting Party”)
determines that in order to facilitate clearance or obtain approval from any
Governmental Authority with responsibility for enforcing antitrust or
competition laws regarding such acquisition or merger or inquiry, it would be
advisable, in the Divesting Party’s business judgment, to assign or sublicense
or otherwise transfer (any such assignment, sublicense or transfer, a
“Divestiture Transaction”) the Divesting Party’s rights and obligations under
this Agreement to any third party, the Divesting Party shall notify the other
Party (the “Non-Divesting Party”) thereof (“Notice of Divestiture”). If the
Divesting Party provides such notice in accordance with this Section, the
Non-Divesting Party shall have a period of [***] to determine whether it wishes
to negotiate an Agreement for such Collaboration Product. If the Non-Divesting
Party elects to exercise its right to negotiate, the Parties shall thereafter
have [***] to negotiate in good faith and finalize the terms of an agreement. If
the Parties are not able to finalize such agreement during such [***] period,
then the Divesting Party will be free to offer the Collaboration Product to
potential Third Party sublicensees; provided, that the Divesting Party may not
enter into an agreement with any Third Party on financial terms that, taken as a
whole, are less favorable to the Non-Divesting Party than those last offered by
the Divesting Party without first offering such terms to the Non-Divesting
Party.
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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15.8 Effects of Termination pursuant to Section 15.1. Upon expiration of this
Agreement in accordance with Section 15.1, then all rights and licenses granted
by HGS to NVS hereunder shall continue as fully-paid up, royalty-free,
perpetual, transferable, irrevocable rights.
15.9 The right of either Party to terminate this Agreement as herein above
provided shall not be affected in any way by its waiver of or failure to take
action with respect to any previous default. Any such termination shall be
without prejudice to any further rights and remedies vested in the parties. The
license rights granted herein shall survive the bankruptcy or reorganization of
either Party.
15.10 Expiration or termination of this Agreement for any reason, except as
otherwise stated under this Agreement, shall be without prejudice to:
     (a) Articles 13, 17, 18 and 19; which shall survive termination or
expiration in accordance with their respective terms; and
     (b) either Party’s obligation to make any payments due pursuant to this
Agreement which accrue prior to termination, and at the time of termination, all
such payments due shall be made in full.
ARTICLE 16
REPRESENTATIONS & WARRANTIES, COVENANTS
16.1 Each Party hereby represents and warrants that:
     (a) it is a corporation duly organized and validly existing under the law
of the state of its incorporation;

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     (b) it has the full legal right and authority to enter into and perform all
of the duties and obligations contemplated under this Agreement attributed to
such Party, and to convey the rights and licenses granted to the other Party
herein;
     (c) the execution, delivery and performance of this Agreement by it has
been duly authorized by all requisite corporate action;
     (d) it has not entered into as of the Effective Date, and shall not at any
time thereafter enter into any agreement, understanding, or other obligation or
commitment which would prevent or conflict or otherwise encumber or interfere
with the exercise of any of the rights or licenses expressly granted to the
other Party hereunder; and
     (e) Other than the notification requirements under the HSR Act , no
government authorization, consent, approval, license, exemption of or filing or
registration with any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, under any applicable
laws, rules or regulations currently in effect, is or will be necessary for, or
in connection with, the transaction contemplated by this Agreement, or for the
performance by it of its obligations under this Agreement.
16.2 HGS hereby represents and warrants to NVS that:
     (a) it is the exclusive licensee of or owns or controls all right, title
and interest in and to the Patent Rights as defined herein and listed in
Appendix A and Appendix B (as updated from time to time) and the HGS
Collaboration Technology and Manufacturing Technology for any use of
Collaboration Product and HGS has the right to grant to NVS the licenses under
(and to disclose to NVS) the HGS Collaboration

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Technology and Manufacturing Technology that it purports to grant hereunder and
has not granted any Third Party rights that would interfere or be inconsistent
with Novartis’ rights hereunder;
     (b) to its knowledge, except as set forth in Appendix A and B, the
Collaboration Technology and Manufacturing Technology are not subject to any
existing royalty or other payment obligations;
     (c) it is not aware of any other patents, know-how or other intellectual
property owned by HGS, its Affiliates, AB or Genentech, other than that which is
licensed hereunder to NVS, which are necessary or critical for the research,
development, manufacture, use and/or commercialization of Albuferon and the
Collaboration Products as contemplated hereunder;
     (d) as of the Effective Date, to its knowledge, the issued patents in the
HGS Collaboration Technology and Manufacturing Technology are valid and
enforceable and it is not aware of any action, suit, inquiry, investigation or
other proceeding threatened, pending, or ongoing brought by HGS, AB, Genentech
or by any other Third Party that challenges or threatens the validity or
enforceability of any of the HGS Collaboration Technology or Manufacturing
Technology or that alleges the use of the HGS Collaboration Technology and
Manufacturing Technology and the development, manufacture commercialization and
use of the Collaboration Products would infringe or misappropriate the
intellectual property or intellectual property rights of any Third Party (and it
has not received any notice alleging such an infringement or misappropriation).
In the event that HGS becomes aware of any such action or proceeding, it shall
immediately notify NVS in writing;

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     (e) it has filed and prosecuted the Patent Rights owned by HGS within the
HGS Collaboration Technology and Manufacturing Technology in good faith and
complied with all duties of disclosure with respect thereto and, except as set
forth in Appendices A and B, it is listed in the records of the appropriate
governmental agencies as the sole and exclusive owner of record for each such
Patent Right;
     (f) it has provided NVS with true and complete copies of all contracts,
agreements, understandings, arrangements and commitments with AB, Genentech, and
any other Third Party pertaining to any part of the HGS Collaboration Technology
and the Manufacturing Technology and the use, transfer, access to, disclosure
of, or grant of any right, title, interest or license in or to the same, solely
as it relates to Collaboration Product; and
     (g) it has obtained from all individuals who participated in any respect in
the invention or authorship of any of the HGS Collaboration Technology or
Manufacturing Technology effective assignments of all ownership rights of such
individuals in such, either pursuant to written agreement or by operation of
law.
16.3 HGS hereby covenants that at no time during the term of this Agreement
shall HGS assign, transfer, encumber or grant rights in or with respect to any
portion or all of the HGS Collaboration Technology, Manufacturing Technology,
HGS Arising Know-how or HGS Arising Patent Rights inconsistent with the grants
and other rights reserved to NVS under this Agreement, provided, however, this
covenant shall not affect the absolute right of HGS to transfer title to such
HGS Collaboration Technology, Manufacturing Technology, HGS Arising Know-How,
HGS Arising Patent Rights or its

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interest in Joint Arising Know-How and Joint Arising Patent Rights or to any
successor to all or substantially all of that portion of HGS’ business relating
to Albuferon.
16.4 NVS covenants that at no time during the term of this Agreement shall NVS
assign, transfer, encumber or grant rights in or with respect to Collaboration
Product inconsistent with the grants and other rights reserved to HGS under this
Agreement; provided, however, this covenant shall not affect the absolute right
of NVS to transfer title to its exclusive licensed rights under this Agreement
to any successor to all or substantially all of that portion of NVS’ business
relating to Albuferon.
16.5 Each Party hereby represents and warrants to the other Party that it is
insured for products liability and general liability, and that it has and will
maintain those coverages and other self-insured liability coverages in
accordance with standard and prudent practices in the pharmaceutical industry
for products such as the Collaboration Products.
16.6 EXCEPT AS OTHERWISE PROVIDED IN THIS ARTICLE 16, NOTHING IN THIS AGREEMENT
SHALL BE CONSTRUED AS A WARRANTY THAT ANY PATENT RIGHTS INCLUDED WITHIN THE
LICENSES GRANTED HEREUNDER IS VALID OR ENFORCEABLE OR THAT THE OTHER PARTY’S
EXERCISE OF THE LICENSED PATENT RIGHTS AND OTHER INTELLECTUAL PROPERTY DOES NOT
INFRINGE ANY PATENT RIGHTS OF THIRD PARTIES.
16.7 EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN, NEITHER PARTY MAKES ANY
REPRESENTATION NOR EXTENDS ANY WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED,
INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR

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PURPOSE, NON-INFRINGEMENT OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED.
ARTICLE 17
INDEMNIFICATION
17.1 Indemnification by NVS.
          17.1.1 NVS shall defend, indemnify and hold harmless HGS and each of
its respective directors, officers, shareholders, agents and employees
(collectively, the “HGS Indemnitees”), from and against any and all liability,
loss, damages, costs and expenses, including reasonable attorneys’ fees and
expenses (collectively, the “Costs”) resulting from any lawsuit or other legal
proceeding brought by a Third Party asserting any legal claim, demand, or
judgment (“Claims”) (i) arising out of NVS performance of specific activities,
operations or services to the extent specifically allocated to NVS hereunder; or
(ii) arising out of the handling, storage, design, manufacture, testing,
transportation, advertising, promotion, distribution, sale, use, treatment or
disposal of the Collaboration Product by or on behalf of NVS or any Third Party
granted rights by NVS, its Affiliates or its Permitted Sublicensees. NVS’
obligation to defend, indemnify and hold harmless shall include Claims, 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 provided hereunder shall not under any circumstances extend to any
Cost or Claim asserted against an HGS Indemnitee to the extent such Cost or
Claim is attributable to the negligence, willful misconduct or material breach
of this Agreement of or by HGS, its Affiliates or sublicensees or any HGS
Indemnitee. NVS shall have the exclusive right to control the defense of any
action

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which is to be indemnified in whole by NVS hereunder, including the right to
select counsel reasonably acceptable to HGS to defend HGS Indemnitees and to
settle such action; provided that, without the written consent of HGS (which
shall not be unreasonably withheld or delayed), NVS shall not agree to settle
any claim against an HGS Indemnitee to the extent such settlement would
adversely affect HGS’ rights or obligations or such settlement consists of
obligations other than the payment of money. The provisions of this section
shall survive and remain in full force and effect after any termination,
expiration or cancellation of this Agreement and NVS’ obligation hereunder shall
apply whether or not such Claims are rightfully brought.
          17.1.2 NVS shall be responsible for a percentage of all Costs
resulting from any Claims (i) arising out of the joint Development (as described
in Article 6) or joint Commercialization (as described in Article 6) of a
Collaboration Product or (ii) brought against any HGS Indemnitee alleging
infringement or misappropriation of the intellectual property rights of any
Third Party to the extent based upon or attributable to the Collaboration
Product, except, in each case, to the extent resulting from the negligence or
willful misconduct of HGS, its Affiliates or sublicensees or any HGS Indemnitee.
The amount for which NVS shall indemnify HGS pursuant to this Section shall be
equal to fifty percent (50%) of the Costs.
17.2 Indemnification by HGS.
          17.2.1 HGS shall defend, indemnify and hold harmless NVS and each of
its respective directors, officers, shareholders, agents and employees (“NVS
Indemnitees”), from and against any and all liability, loss, damages, costs and
expenses, including reasonable attorneys’ fees and expenses (collectively, the
“Costs”), resulting

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from any lawsuit or other legal proceeding brought by a Third Party asserting
any legal claim, demand, or judgment (“Claims”) (i) arising out of HGS’
performance of specific activities, operations or services to the extent
specifically allocated to HGS hereunder; or (ii) arising out of the handling,
storage, design, manufacture, testing, transportation, advertising, promotion,
distribution, sale, use, treatment or disposal of the Collaboration Product by
or on behalf of HGS or any Third Party granted rights by HGS, its Affiliates or
its Permitted Sublicensees. HGS’ obligation to defend, indemnify and hold
harmless shall include Claims, whether for money damages or equitable relief by
reason of alleged personal injury (including death) to any person or alleged
property damage; provided, however, that the indemnity provided hereunder shall
not under any circumstances extend to any Cost or Claim asserted against a NVS
Indemnitee to the extent such Cost or Claim is attributable to the negligence,
willful misconduct or material breach of this Agreement of or by NVS, its
Affiliates or sublicensees or any NVS Indemnitee. HGS shall have the exclusive
right to control the defense of any action which is to be indemnified in whole
by HGS hereunder, including the right to select counsel reasonably acceptable to
NVS to defend NVS Indemnitees and to settle such action; provided that, without
the written consent of NVS (which shall not be unreasonably withheld or
delayed), HGS shall not agree to settle any claim against a NVS Indemnitee to
the extent such settlement would adversely affect NVS’ rights or obligations or
such settlement consists of obligations other than the payment of money.
     17.2.2 HGS shall be responsible for a percentage of all Costs resulting
from any Claims (i) arising out of the joint Development (as described in
Article 6) or joint Commercialization (as described in Article 6) of a
Collaboration Product or (ii) brought against any NVS Indemnitee alleging
infringement or misappropriation of the

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intellectual property rights of any Third Party to the extent based upon or
attributable to the Collaboration Product, except, in each case, to the extent
resulting from the negligence or willful misconduct of NVS, its Affiliates or
sublicensees or any NVS Indemnitee. The amount for which HGS shall indemnify NVS
pursuant to this Section shall be equal to fifty percent (50%) of the Costs.
17.3 A Party will promptly notify the indemnifying Party of receipt of notice of
any such claim or suit and shall cooperate fully with the indemnifying Party in
the defense of all such claims or suits. Failure of an indemnified Party to
provide notice of a claim to the indemnifying Party shall affect indemnified
Party’s right to indemnification only to the extent that such failure has a
material adverse effect on the indemnifying Party’s ability to defend or the
nature or the amount of the liability. The indemnifying Party shall have the
right to assume the defense of any suit or claim related to the liability if it
has assumed responsibility for the suit or claim in writing; however, if in the
reasonable judgment of the indemnified Party, such suit or claim involves an
issue or matter which could have an adverse effect on the business operations or
assets of such indemnified Party, the indemnified Party may waive its rights to
indemnity under this Agreement and control the defense or settlement thereof,
but in no event shall any such waiver be construed as a waiver of any
indemnification rights the indemnified Party may have at law or in equity. If
the indemnifying Party defends the suit or claim, the indemnified Party may
participate in (but not control) the defense thereof at its sole cost and
expense.
17.4 Product Liability Claims. Notwithstanding anything to the foregoing, any
and all liability, loss, damages, costs and expenses, including reasonable
attorneys’ fees and expenses (“Costs”), resulting from any lawsuit or other
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Third Party asserting any Claims arising out of the death of or injury to a
Third Party caused by the use or sale of the Collaboration Products in the
Territory except where due to the negligence or willful misconduct of one of the
Parties hereto, shall be shared equally by HGS and NVS.
17.5 Mitigation of Costs. Each indemnified Party will take and will procure that
its Affiliates take all such reasonable steps and action as are necessary or as
the indemnifying Party may reasonably require in order to mitigate any Costs
included under this Section 17. Nothing in this Agreement shall or shall be
deemed to relieve any Party of any common law or other duty to mitigate any
losses incurred by it.
17.6 Special, Indirect and Other Losses. EXCEPT FOR THIRD PARTY CLAIMS
INDEMNIFIED UNDER THIS SECTION 17, NEITHER PARTY NOR ANY OF ITS AFFILIATES SHALL
BE LIABLE IN CONTRACT, TORT, NEGLIGENCE BREACH OF STATUTORY DUTY OR OTHERWISE
FOR ANY SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES OR FOR
ANY ECONOMIC LOSS OR LOSS OF PROFITS SUFFERED BY THE OTHER PARTY.
ARTICLE 18
DISPUTE RESOLUTION
18.1 All disputes between the parties arising under this Agreement shall be in
the first instance referred to the JEC and then the Officers for resolution in
accordance with Section 3.1.4.
18.2 As set out in Section 3.1.4, if the Parties cannot resolve a dispute
relating to a Development issue, HGS and NVS will identify and agree upon a
panel of external scientific experts (or other appropriate external experts for
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review the dispute. Any decisions of the panel shall not be binding on the
parties and either HGS or NVS will still have the right to submit such dispute
to arbitration, as stated below.
18.3 If the dispute is not fully resolved pursuant to Section 18.1 or
Section 18.2, the dispute may be referred by either Party for arbitration in
accordance under the guidelines of the American Arbitration Association (“AAA”)
in New York, New York under the commercial rules then in effect for AAA, except
as otherwise provided for herein. Upon request of the Arbitrator, the parties
will mutually agree upon a scientific or technical and commercial expert to
assist the Arbitrator with any technical issues.
18.4 A Party shall notify the other in writing should it intend to initiate
arbitration. The parties shall select, by mutual agreement, one arbitrator, with
an expertise in the subject matter of this Agreement, within a time period of
[***] after receipt of such notice. Should no arbitrator be chosen within such
period, then each Party shall select an arbitrator within [***] after the end of
such period and the two arbitrators will select a mutually agreeable third
arbitrator within [***]. Within [***] after the third and presiding arbitrator
has been confirmed, the Parties shall exchange all documents in their respective
possession that are relevant to the issues in dispute and not protected from
disclosure by attorney-client privilege or other immunity. Each Party shall also
be permitted to take sworn oral deposition of individuals, such depositions to
be scheduled by mutual agreement and concluded within [***] after the exchange
of documents described above. At least [***] prior to the first scheduled
hearing date, the Parties shall identify the witnesses that they intend to
present at the arbitration hearing and the documentation on which they intend to
rely. The Parties shall use their Commercially
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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Reasonable Efforts to conclude the arbitration hearings within [***] following
the confirmation of the third and presiding arbitrator and in accordance with
the timelines set out above; provided, however, that the Parties may reasonably
agree, or the arbitrators may set, different timelines (shorter or longer) based
on the nature and scope of the dispute. The arbitrators shall issue their
decision (including grounds and reasoning) in writing no later than [***]
following the conclusion of the last arbitration hearing.
18.5 Unless otherwise agreed to by the parties, the arbitrator shall make such
decisions based on the following factors in descending order of importance:
(a) consistency with the provisions of this Agreement; (b) consistency with the
intent of the parties as reflected in this Agreement; and (c) customary and
reasonable provisions included in comparable agreements.
18.6 The decision of the arbitrator will be binding upon the parties without the
right of appeal, and judgment upon the decision may be entered in any court
having jurisdiction thereof. The parties shall share equally the reasonable
documented cost of such arbitration proceeding, but not the individual cost of
the parties in participating in such proceeding.
ARTICLE 19
MISCELLANEOUS
19.1 This Agreement sets forth the complete, final and exclusive agreement and
all the covenants, promises, agreements, warranties, representations, conditions
and understandings between the parties hereto and supersedes and terminates all
prior agreements and understandings between the parties related to its subject
matter. There are no covenants, promises, agreements, warranties,
representations, conditions or
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TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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understandings, either oral or written, between the Parties other than as are
set forth herein and therein. No subsequent alteration, amendment, change or
addition to this Agreement shall be binding upon the Parties unless reduced to
writing and signed by an authorized officer of each Party.
19.2 Both parties shall be excused from the performance of their obligations
under this Agreement to the extent that such performance is prevented by force
majeure and the nonperforming Party promptly provides notice of the prevention
to the other Party. Such excuse shall be continued so long as the condition
constituting force majeure continues and the nonperforming Party takes
reasonable efforts to remove the condition. For purposes of this Agreement,
force majeure shall include conditions beyond the control of the Parties,
including without limitation, an act of God, voluntary or involuntary compliance
with any regulation, law or order of any government, war, civil commotion, labor
strike or lock-out, epidemic, failure or default of public utilities or common
carriers, destruction of production facilities or materials by fire, earthquake,
storm or like catastrophe; provided, however, the payment of invoices due and
owing prior to such force majeure event shall not be delayed by the payor
because such a force majeure event affecting the payor; provided, further, that
in the event the suspension of performance continues for [***] after the date of
the occurrence, and such failure to perform would constitute a material breach
of this Agreement in the absence of such force majeure, the other Party may
terminate this Agreement as if such failure were a material breach pursuant to
Section 15.3(a).
19.3 Any notice required or permitted to be given under this Agreement shall be
in writing, shall specifically refer to this Agreement and shall be deemed to
have been
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TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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sufficiently given for all purposes upon the date of receipt if mailed by first
class certified or registered mail, postage prepaid, express delivery service or
personally delivered or upon the date of a confirmed facsimile transfer. Unless
otherwise specified in writing, the mailing addresses of the Parties shall be as
described below.
For HGS:
Human Genome Sciences, Inc.
14200 Shady Grove Road
Rockville, MD 20850
Attn: General Counsel
With a Copy to: Chief Commercial Officer

      For NVS: Novartis International Pharmaceutical Ltd. Hurst Holme 12 Trott
Road Hamilton HM 11 Bermuda Attention: General Manager
With a copy to:
  Novartis Pharma AG
 
  Lichtstrasse 35
 
  4056 Basel, Switzerland
 
  Attn: Head, Legal Department

19.4 Whenever provision is made in this Agreement for either Party to secure the
consent or approval of the other, that consent or approval shall not
unreasonably be withheld or delayed, and whenever in this Agreement provisions
are made for one Party to object to or disapprove a matter, such objection or
disapproval shall not unreasonably be exercised.

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19.5 Neither Party may assign or transfer this Agreement or any rights or
obligations hereunder without the prior written consent of the other Party,
except that either Party may make such an assignment without the other Party’s
consent to Affiliates or to a successor to substantially all of the
pharmaceutical business of the assigning Party relating to the subject matter of
this Agreement, whether in a merger, sale of stock, sale of assets or other
transaction. Any permitted successor or assignee of rights and/or obligations
hereunder shall, in writing to the non-assigning or non-transferring Party,
expressly assume performance of such rights and/or obligations. This Agreement
shall be binding upon and inure to the benefit of the successors or permitted
assignees of the respective parties. Any assignment or attempted assignment by
either Party in violation of the tenets of this Section 19.5 shall be null and
void and of no legal effect.
19.6 Each of HGS and NVS acknowledges that obligations under this Agreement may
be performed by Affiliates of HGS and NVS. Each of HGS and NVS guarantee
performance of this Agreement by its Affiliates.
19.7 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.
19.8 Each Party agrees to execute, acknowledge and deliver such further
instruments, and to do all such other acts, as may be necessary or appropriate
in order to carry out the purposes and intent of this Agreement.
19.9 If anyone or more of the provisions of this Agreement is held to be invalid
or unenforceable, the provision shall be considered severed from this Agreement
and shall not serve to invalidate any remaining provisions hereof. The Parties
shall make a good

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faith effort to replace any invalid or unenforceable provision with a valid and
enforceable one such that the objectives contemplated by the Parties when
entering this Agreement may be realized.
19.10 This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, as if executed and fully performed within New
York, excluding any conflicts or choice of law rule or principle that might
otherwise refer construction or interpretation of this agreement to the
substantive law of another jurisdiction. Subject to Article 18,any disputes
under this Agreement shall be subject to the exclusive jurisdiction and venue of
the state courts and the Federal courts located in New York, New York, and the
parties hereby consent to the personal and exclusive jurisdiction and venue of
these courts for such purposes.
19.11 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 such
Party’s rights to the future enforcement of its rights under this Agreement,
excepting only as to an express written and signed waiver as to a particular
matter for a particular period of time.
19.12 Relationship of the Parties. Nothing contained in this Agreement shall be
deemed to constitute a partnership, joint venture, or legal entity of any type
between HGS and NVS, or to constitute one as the agent of the other. Moreover,
each Party agrees not to construe this Agreement, or any of the transactions
contemplated hereby, as a partnership for any tax purposes. Each Party shall act
solely as an independent contractor, and nothing in this Agreement shall be
construed to give any Party the power or authority to act for, bind, or commit
the other.

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19.13 No Third Party Beneficiary Rights. The provisions of this Agreement are
for the sole benefit of the Parties and their successors and permitted assigns,
and they shall not be construed as conferring any rights to any Third Party,
except as otherwise expressly provided in Clause 17 (with respect to the
Indemnitees of each Party). Except as expressly provided in Clause 17, no person
who is not a Party to this Agreement (including any employee, officer, agent,
representative or subcontractor of either Party) shall have the right to enforce
any term of this Agreement which expressly or by implication confers a benefit
on that person without the express prior agreement in writing of the Parties.
19.14 Expenses. Except as otherwise expressly provided in this Agreement, each
Party shall pay the fees and expenses of its respective lawyers and other
experts and all other expenses and costs incurred by such Party incidental to
the negotiation, preparation, execution and delivery of this Agreement.

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     IN WITNESS WHEREOF, the parties, through their authorized officers, have
executed this Agreement as of the Effective Date.

                          HUMAN GENOME SCIENCES, INC.       NOVARTIS
INTERNATIONAL                 PHARMACEUTICAL LTD.    
By:
  /s/ H. Thomas Watkins           By:        
 
                       
 
  H. Thomas Watkins                    
 
  Chief Executive Officer               /s/ Emil Block    
 
                       
 
                  (Printed Name)    
 
                       
 
                  Member of the Board of Directors    
 
                       
 
                  (Title)    
 
                       
 
              By:        
 
                       
 
                  /s/ Michael Jones    
 
                       
 
                  (Printed Name)    
 
                       
 
                  Member of the Board of Directors    
 
                       
 
                  (Title)    

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Appendix A
[***]
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.
 

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Appendix B
[***]
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.
 

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Appendix C
[***]
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.
 

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Appendix D
[***]
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.
 

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Appendix E
[***]
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.
 

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Appendix F
[***]
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.
 

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Appendix G
[***]
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.
 

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