Exhibit 10.1







Exhibit 10.1


EXECUTION VERSION







CONFIDENTIAL TREATMENT REQUESTED




Redacted Portions are indicated by [****]




DEVELOPMENT AND COMMERCIALIZATION AGREEMENT




THIS DEVELOPMENT AND COMMERCIALIZATION AGREEMENT (“Agreement”) dated as of January 4,
2009 (“Effective Date”), is entered into between La Jolla Pharmaceutical Company, a
Delaware corporation having its principal place of business at 6455 Nancy Ridge Drive, San Diego,
California 92121 (“La Jolla”) and BioMarin CF Limited, an Irish corporation having its
registered place of business at 2 Earlsfort Terrace, Dublin 2, Ireland (“BioMarin CF”).



BACKGROUND




A. La Jolla is developing a formulation of abetimus sodium (as further defined below, a
“Product”) for the treatment of lupus nephritis and systemic lupus erythematosus
(“SLE”). La Jolla owns or controls certain patents, know-how and other intellectual
property relating to such Products.



B. BioMarin CF, through its Affiliates, is an established biopharmaceutical company which
focuses its experience and expertise in the development and commercialization of products for the
treatment of rare diseases.



C. BioMarin CF desires to obtain a right to participate fully in the co-development and
co-commercialization of Products in the United States, and exclusive rights in the development and
commercialization of Products in all other countries except for the countries in the Asia-Pacific
region.



D. La Jolla is willing to grant to BioMarin CF such rights on the terms and conditions set
forth in this Agreement.



E. Concurrently with this Agreement, the Parties or their respective Affiliates are entering
into a Securities Purchase Agreement under which La Jolla shall issue to an Affiliate of BioMarin
CF shares of capital stock of La Jolla, all as set forth in such Securities Purchase Agreement (as
further defined below, the “Securities Purchase Agreement”).



 


 









 





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



ARTICLE I

DEFINITIONS




1.1 “Adverse Event” or “AE” shall mean any untoward medical occurrence in a
patient or clinical investigation subject administered a pharmaceutical product and which does not
necessarily have a causal relationship with administration of a Product. AEs include, without
limitation, any unfavorable and unintended sign (including an abnormal laboratory finding),
symptom, or disease temporally associated with the use of a medicinal (investigational) product,
whether or not related to the medicinal (investigational) product.



1.2 “Affiliate” of a Party shall mean any person, corporation or other entity that,
directly or indirectly through one or more intermediaries, controls, is controlled by or is under
common control with such Party, as the case may be, for as long as such control exists. As used in
this Section 1.2, “control” shall mean: (a) to possess, directly or indirectly, the power
to affirmatively direct the management and policies of such person, corporation or other entity,
whether through ownership of voting stock or by contract relating to voting rights or corporate
governance; or (b) direct or indirect beneficial ownership of at least fifty percent (50%) (or such
lesser percentage that is the maximum allowed to be owned by a foreign corporation in a particular
jurisdiction) of the voting stock or other ownership interest in such person, corporation or other
entity. A “Controlled Affiliate” is an Affiliate that is controlled by a Party, or if such
Party is Controlled by another entity as of the Effective Date, an Affiliate that is Controlled by
the ultimate parent entity that Controls such Party as of the Effective Date.



1.3 “Annual Net Sales” shall mean total Net Sales of Products sold by BioMarin CF,
BioMarin CF’s Affiliates or Sublicensees in the Territory in a particular calendar year. For such
purposes, units of the Product shall be considered sold when the revenue from such sale is
recognized by the seller for financial reporting purposes.



1.4 “Asia-Pacific Territory” shall mean the Asia-Pacific countries listed on
Exhibit 1.4.



1.5 “ASPEN Study” shall mean the 90-14 Phase III clinical trial and the 90-18 QT study
for the Product ongoing as of the Effective Date, each as further described on Exhibit 1.5.



1.6 “BioMarin CF” shall mean BioMarin CF and its respective Affiliates performing its
obligations, exercising its rights or otherwise conducting activities hereunder, except to the
extent specifically indicated otherwise.



1.7 “BioMarin CF Know-How” shall mean all scientific, medical, technical, marketing,
regulatory, manufacturing and other information relating to the Compound and/or any Product
(including Data), which are both: (i) developed, acquired or used by BioMarin CF in the performance
of this Agreement, and (ii) needed by La Jolla to perform the Operating Plan/Budget, exercise its
rights under this Agreement or manufacture or secure Marketing Approval for the Products for sale
outside the Territory.



1.8 “Commercial Life” [****]


 


- 2 -









 





1.9 “Compound” shall mean that certain compound known as abetimus sodium, the
structure of which is set forth on Exhibit 1.9, and any other nucleic acid based molecule
that binds to or targets anti-double stranded DNA antibodies.



1.10 “Control” (including any variations such as “Controlled” and
“Controlling”), in the context of intellectual property rights of a Party, shall mean that
such Party or its Controlled Affiliate owns or possesses rights to intellectual property sufficient
to grant the applicable license under this Agreement, without violating the terms of an agreement
with a Third Party or as a result of obtaining a prior written consent from a Third Party.



1.11 “CTA” shall mean a clinical trial application (including any amendments thereto)
as provided for in Directive 2001/20/EC and the regulations promulgated thereunder for initiating
clinical trials in the European Union.



1.12 “Data” shall mean: (a) any and all research data, pharmacology data, preclinical
data, and clinical data for the Compound and/or Products; (b) all regulatory documentation,
information, filings and submissions pertaining to, or made in association with an IND, Marketing
Application, Marketing Approval or the like, for a Product; and/or (c) any other data relating to
the Compound and/or Products.



1.13 “Dosing Study” shall mean a clinical study evaluating dsDNA antibodies while
administering the Product monthly at 300mg or 900mg, with the exact study protocol to be mutually
agreed by the Parties, which may include an induction regimen of weekly dosing for up to twelve
(12) weeks and which shall include at least one arm having monthly dosing of such Product. The
Dosing Study (a) may also include measurement of proteinuria, and (b) will not be run for the
purpose of changing the label for the Product.



1.14 “EMEA” shall mean the European Medicines Evaluation Agency, or any successor
entity thereto performing similar functions.



1.15 “Existing In-License” shall mean the license agreement listed on
Exhibit 1.15 between La Jolla and the Third Party identified on such exhibit in effect as
of the Effective Date.



1.16 “FDA” shall mean the United States Food and Drug Administration, or any successor
entity thereto performing similar functions.




1.17 “Financial Appendix” shall mean Appendix A to this Agreement.



1.18 “FTE” means a full-time equivalent person year (consisting of a total of at least
1,760 hours per year) from an employee of a Party or one of its Affiliates assigned to perform
specific work, as specified in the Operating Plan/Budget.


 


- 3 -









 





1.19 “Full Participation Point” shall mean the date that BioMarin CF exercises its
full license rights pursuant to Section 2.1(b) by paying to La Jolla (subject to any reduction
provided by Section 7.18):



(a) Forty-Seven Million Five Hundred Thousand Dollars ($47,500,000), inclusive of the equity
purchase, pursuant to Section 7.2(c);



(b) Fifty-Five Million Dollars ($55,000,000), inclusive of the equity purchase, pursuant to
Section 7.3(a)(i);



(c) Fifteen Million Dollars ($15,000,000), inclusive of the equity purchase, pursuant to
Section 7.3(a)(ii)(y);



(d) Fifty-Five Million Dollars ($55,000,000), inclusive of the equity purchase, pursuant to
Section 7.4(b); or



(e) Fifty-Five Million Dollars ($55,000,000) less amounts paid under Section 7.13(a),
inclusive of the equity purchase pursuant to Section 7.13(b).



The Full Participation Point shall occur at such time as any amount set forth in this
definition is paid in full by BioMarin CF and does not depend on any further or other payment by
BioMarin CF; provided that if BioMarin CF exercises its right to pay a portion of any such payment
by purchasing shares of common stock of La Jolla pursuant to the Securities Purchase Agreement and
as contemplated by Section 7.5 and thereafter due to the default, breach of a representation or
failure of La Jolla to satisfy a condition to closing thereunder, BioMarin CF is not able to
purchase such shares, the Full Participation Point shall nonetheless be deemed to have occurred
notwithstanding that BioMarin CF has not paid to La Jolla that portion of the payment due that is
attributable to the purchase of such shares.



1.20 “IND” shall mean any Investigational New Drug Application (including any
amendments thereto) filed with the FDA pursuant to 21 C.F.R. § 312 before the commencement of
clinical trials of a Product, or any comparable filings with any Regulatory Authority in any other
jurisdiction, including any CTA.



1.21 “Interim Efficacy Analysis” shall mean individually, the First Interim Efficacy
Analysis or the Second Interim Efficacy Analysis, each as defined in this Section 1.21; and
“Interim Efficacy Analyses” shall mean the First Interim Efficacy Analysis and the Second
Interim Efficacy Analysis, collectively.



(a) “First Interim Efficacy Analysis” shall mean the receipt by La Jolla of the Data
Monitoring Board’s recommendation with respect to the continued conduct of the 90-14 portion of the
ASPEN Study based upon the interim efficacy analysis conducted when ninety-two (92) renal flare
events adjudicated as SLE-related are accrued in the ASPEN Study.



(b) “Second Interim Efficacy Analysis” shall mean the receipt by La Jolla of the Data
Monitoring Board’s recommendation with respect to the continued conduct of the 90-14 portion of the
ASPEN Study based upon the interim efficacy analysis conducted when one hundred and nine (109)
renal flare events adjudicated as SLE-related have been accrued in the ASPEN Study.


 


- 4 -









 





For the purposes of this Section 1.21, renal flare events will be deemed to be SLE-related and
to have accrued in the ASPEN Study if so determined by the Renal Events Committee.



1.22 “Joint Patent” shall mean any Patent with respect to an invention that is jointly
owned pursuant to Section 11.1(a) within or outside the Territory.



1.23 “Know-How” shall mean La Jolla Know-How or BioMarin CF Know-How, as the context
requires.



1.24 “La Jolla Know-How” shall mean all scientific, medical, technical, marketing
regulatory, manufacturing, and other information, in each case relating to the Compound and/or any
Product (including Data), that is (a) existing as of the Effective Date or that is developed,
acquired or used by La Jolla in the performance of the Operating Plan/Budget, and (b) needed by
BioMarin CF to perform the Operating Plan/Budget or exercise its rights under this Agreement.



1.25 “La Jolla Patents” shall mean (a) the Patents listed on Exhibit 1.25;
(b) any other Patents in the Territory that are related to or otherwise necessary or reasonably
useful to develop, manufacture, or commercialize a Compound and/or Product(s) in accordance with
the Operating Plan/Budget that are or were developed, acquired or used by La Jolla; (c) any Patents
based on any invention conceived or created solely by La Jolla personnel in connection with this
Agreement pursuant to Section 11.1(a); and (d) all additions, divisions, continuations,
continuations-in-part, substitutions, reissues, re-examinations, extensions, registrations, patent
term extensions, supplemental protection certificates and renewals of any of the foregoing.



1.26 “La Jolla’s Knowledge” shall mean the actual knowledge of the members of La
Jolla’s senior management team (as defined in Exhibit 1.26) after reasonable inquiry
sufficient to express an informed view concerning the matters to which such representation or
warranty relates.




1.27 “Major Market” [****].



1.28 “Marketing Approval” shall mean, with respect to each country or jurisdiction,
approval of the Marketing Application filed in such country by the Regulatory Authority in such
country or jurisdiction.



1.29 “Marketing Application” shall mean an NDA (or its equivalent) submitted to the
FDA in the United States, an MAA (or its equivalent) submitted to the EMEA in the European Union,
or a corresponding application that has been submitted to a Regulatory Authority in any other
jurisdiction.



1.30 “MAA” shall mean a Marketing Authorization Application (including any amendments
thereto) filed with the EMEA for approval to market and sell a Product within the European Union.


 


- 5 -









 





1.31 “NDA” shall mean a New Drug Application (including any supplements and amendments
thereto) filed with the FDA pursuant to 21 U.S.C. Section 353(b)(1), or any equivalent application
filed with the FDA for approval to market and sell a Product within the United States.



1.32 “Party” shall mean La Jolla or BioMarin CF individually, and “Parties”
shall mean La Jolla and BioMarin CF collectively.



1.33 “Patent(s)” shall mean any patents and patent applications, together with all
additions, divisions, continuations, continuations-in-part, substitutions, reissues,
re-examinations, extensions, registrations, patent term extensions, supplemental protection
certificates and renewals of any of the foregoing.



1.34 “Positive Dosing Study” shall mean a Dosing Study that demonstrates a reduction
in dsDNA antibodies that, in monthly dosing of the Product, is approximately equivalent to the
reduction observed in the control population in the Dosing Study receiving the Product weekly, and
need not include achievement of any endpoint pertaining to proteinuria.



1.35 “Product” shall mean any product containing the Compound, alone or in combination
with one or more other active pharmaceutical ingredients, in any dosage form or formulation.



1.36 “Product Trademarks” shall mean: (a) the trademarks owned by La Jolla and
designated by La Jolla for use with a Product within the Territory, as reflected in
Exhibit 1.36 hereto; or (b) any other trademarks mutually agreed upon by La Jolla and
BioMarin CF for use with a Product within the Territory.



1.37 “PV Procedures” shall mean the pharmacovigilance procedures to be determined by
BioMarin CF from time to time that are generally applicable to BioMarin CF’s distributors and
marketing agents and are acknowledged by La Jolla.



1.38 “Regulatory Authority” shall mean the FDA, the EMEA, or a regulatory body with
similar regulatory authority in any other jurisdiction within the Territory.



1.39 “Sales Representative” shall mean a professional pharmaceutical sales
representative engaged or employed by either Party or one of its Affiliates to conduct sales
activities and other promotional efforts with respect to a Product and the first line direct
supervisors of those individuals.




1.40 “SOP” shall mean a standard operating procedure.



1.41 “Securities Purchase Agreement” shall mean the form of securities purchase
agreement attached to this Agreement as Exhibit 1.41.



1.42 “Sublicensee” shall mean an entity to whom BioMarin CF has granted a right to
manufacture, sell, market, distribute and/or promote a Product within the Territory pursuant to
Section 2.2; and “Sublicense” shall mean an agreement or arrangement between BioMarin CF
and a Sublicensee granting such rights.


 


- 6 -









 






1.43 “Territory” shall mean worldwide, except for the Asia-Pacific Territory.



1.44 “Third Party” shall mean any person, corporation, joint venture or other entity,
other than La Jolla, BioMarin CF and their respective Affiliates.



1.45 “United States” shall mean the United States of America, including its
territories and possessions.



1.46 Additional Definitions. In addition, each of the following terms shall have the
meaning described in the corresponding section in the body of this Agreement or in the Financial
Appendix referenced below:



	 	 	 
	Term	 	Section Defined
	Agreement
	 	Introduction
	All Other Costs
	 	Exhibit 4.2E
	Asia-Pacific License
	 	2.4(a)
	Asia-Pacific Licensee
	 	2.4(b)
	Auditing Party
	 	7.17(a)
	BioMarin CF Improvements
	 	11.1(c)
	BioMarin CF Indemnitees
	 	16.2
	Capitalized Asset
	 	Financial Appendix
	Co-Chair
	 	3.3
	Collaboration Agreement
	 	Financial Appendix
	Completion Notice
	 	7.7
	Confidential Information
	 	10.1
	Contingent Right
	 	2.4(f)
	Controlled Affiliate
	 	1.2
	Cost Effective Price
	 	9.1(a)
	Data Monitoring Board
	 	7.6(a)
	Definitive Agreement
	 	2.4(c)
	Development Costs
	 	Financial Appendix
	Development Transition Period
	 	14.4(a)(i)
	Dispute
	 	17.2
	Distribution Costs
	 	Financial Appendix
	Effective Date
	 	Introduction
	Eliminated Party
	 	14.4(a)(i)
	Enforcement Action
	 	11.3(b)(i)
	Equity Election Notice
	 	7.5
	Fault of BioMarin CF
	 	16.4(b)(ii)
	Fault of La Jolla
	 	16.4(b)(i)
	Field-Based FTEs
	 	6.2(a)(i)
	First Commercial Sale
	 	Financial Appendix
	FTE Costs
	 	Financial Appendix
	Force Majeure Event
	 	18.1
	Forecast
	 	Exhibit 9.1A
	Futile Determination
	 	7.6(b)
	GAAP
	 	Financial Appendix
	GMP
	 	5.4
	Gross Sales
	 	Financial Appendix
	IFRS
	 	Financial Appendix
	Indemnitee
	 	16.3
	Indemnitor
	 	16.3
	Infringement
	 	11.3(a)
	Infringement Actions
	 	11.4
	Initial Operating Plan/Budget
	 	4.2(b)
	Initial Product
	 	4.3(a)
	Inspected Party
	 	5.3
	Interest Rate
	 	7.14(b)
	IP Management Costs
	 	Financial Appendix
	JAMS
	 	17.3(a)
	Joint Promotion Plan
	 	6.2(c)
	Joint Steering Committee or JSC
	 	3.1(a)
	JHU License
	 	Exhibit 1.15
	La Jolla Improvements
	 	11.1(c)






 


- 7 -









 





	 	 	 
	Term	 	Section Defined
	La Jolla Indemnitees
	 	16.1
	Launch-1st Year Period
	 	Exhibit 4.2E
	Liabilities
	 	16.1
	Manufacturing Costs
	 	Financial Appendix
	Manufacturing Process Development
	 	4.2(e)(ii)
	Marketing Costs
	 	Financial Appendix
	Maximum Regional Spend
	 	Exhibit 4.2E
	Multiple Product Sales
	 	Financial Appendix
	Negotiation Period
	 	2.4(c)
	New Technology
	 	11.6(c)
	Net Sales
	 	Financial Appendix
	Non-Futile Determination
	 	7.6(b)
	Objecting Party
	 	17.2
	Ongoing Trials
	 	14.4(a)(i)
	Operating Forecast
	 	4.2(a)
	Operating Plan/Budget
	 	4.2(a)
	Other Operating Expense
	 	Financial Appendix
	Other Operating Income
	 	Financial Appendix
	Out-of-Pocket Expenses
	 	Financial Appendix
	Paying Party
	 	Financial Appendix
	Phase IV Studies
	 	Exhibit 4.2E
	Prior Agreement
	 	10.6
	Producing Party
	 	9.4(a)
	Product Liability Claim
	 	16.5(a)
	Product Promotional Materials
	 	12.1
	Profit/Loss
	 	Financial Appendix
	Promotional/Sales/Marketing or PSM
	 	Exhibit 4.2E
	Proposed Territory
	 	2.4(a)
	Prosecution and Maintenance or Prosecute and Maintain
	 	11.2(c)
	Publication
	 	10.4
	Purchased Interests
	 	14.2.2(a)
	Purchase Notice
	 	14.2.2(b)
	Purchase Price
	 	14.2.2(a)
	Purchase Right
	 	14.2.2(a)
	P-Value Achievement
	 	7.6(c)
	Quarterly Measurement
	 	Exhibit 4.2E
	Q4, Q5 and Q6
	 	Exhibit 9.1A
	Recall Costs
	 	16.4(b)
	Region
	 	Exhibit 4.2E
	Remaining Party
	 	14.4(a)(i)
	Renal Events Committee
	 	7.6(d)
	Report Table
	 	Financial Appendix
	Responding Party
	 	7.17(a)
	ROT
	 	Exhibit 4.2E
	Royalty Notice
	 	6.3
	R&D/LCM
	 	Exhibit 4.2E
	Sale Price
	 	14.2.1
	Sale Right
	 	14.2.1
	Sales Costs
	 	Financial Appendix
	Sales Force Deployment Option
	 	6.2(a)
	Shared Costs
	 	Financial Appendix
	SEC
	 	Financial Appendix
	Secured Note
	 	14.2.1
	SLE
	 	Background
	Sold Interests
	 	14.2.1
	Third Party Claim
	 	16.1
	Wind-down Period
	 	14.4(a)(ii)
	Working Group
	 	3.2
	2nd Year of Sales
	 	Exhibit 4.2E
	128 Flare Topline Data
	 	7.6(e)






 


- 8 -









 





ARTICLE II

GRANT OF LICENSE





2.1 License.



(a) Subject to the terms and conditions of this Agreement, La Jolla hereby grants to BioMarin
CF a co-exclusive license during the term of this Agreement under the La Jolla Patents, Joint
Patents, and La Jolla Know-How: (i) to develop, use, offer for sale, sell, import, export, market,
distribute and promote the Compound as incorporated into any Product in the Territory in any and
all fields, including the treatment and/or prevention of any disease or health condition in humans
or animals in accordance with this Agreement; and (ii) to make or have made the Compound or any
component of the Compound anywhere in the world provided that if it is made outside of the
Territory it will only be sold in the Territory pursuant to the terms of this Agreement.



(b) The rights and license granted by La Jolla to BioMarin CF in Section 2.1(a) shall commence
on the Effective Date, but BioMarin CF agrees not to exercise such rights or license unless and
until BioMarin CF has effected the Full Participation Point in accordance with Sections 7.2, 7.3,
7.4 or 7.13(b) below, except that until the Full Participation Point BioMarin CF shall be able to
exercise such rights as are necessary for manufacturing of the Product and/or Compound. As used in
this Section 2.1, the term “co-exclusive” means that the rights and licenses granted: (i) under
Section 2.1(a)(i) shall be exclusive even as to La Jolla, except with respect to: (A) La Jolla’s
rights to co-develop Products in accordance with Article 4; and (B) La Jolla’s rights to
co-commercialize, but expressly excluding the right to sell, Products solely in the United States
in accordance with Article 6; and (ii) under Section 2.1(a)(ii) shall be exclusive, except with
respect to the rights of La Jolla and its contractors to manufacture, pursuant to Article 9 below,
Compounds and Products for sale by BioMarin CF pursuant to this Agreement and for La Jolla, an
Asia-Pacific Licensee and/or their respective contractors to make, the Compound or Product or any
component thereof, within or outside of the Territory for use and sale outside the Territory in
every case subject to Section 2.3.



2.2 Sublicensees. After BioMarin CF has effected the Full Participation Point in
accordance with Sections 7.2, 7.3, 7.4 or 7.13(b) below, BioMarin CF shall have the right to grant
sublicenses under Section 2.1(a) to any of its Affiliates or to any Third Party in any country of
the Territory; provided that any Sublicense to a Third Party that includes the right to
substantially all of the sale, marketing and distribution of Products in any Major Market shall be
subject to La Jolla’s prior written consent, which may be granted or withheld in La Jolla’s sole
and absolute discretion. In any event, BioMarin CF shall ensure that each of its Sublicensees is
bound by a written agreement containing provisions at least as protective of La Jolla as this
Agreement; and BioMarin CF shall remain responsible to La Jolla for all activities of its
Affiliates and Sublicensees to the same extent as if such activities had been undertaken by
BioMarin CF itself. Promptly following the execution of each Sublicense, BioMarin CF shall inform
La Jolla of the scope and territory of each Sublicense and the name and address of each
Sublicensee.


 


- 9 -









 






2.3 Unauthorized Activities; Activities Outside the Territory.



(a) BioMarin CF Rights Limited. BioMarin CF agrees that neither it, nor any of its
Affiliates, will develop, file for Marketing Approval with respect to, make, have made, use,
market, offer for sale, sell, import, export, distribute or promote a Product anywhere in the
world, except in the Territory and, within the Territory, only in accordance with this Agreement.
BioMarin CF agrees that neither it, nor any of its Affiliates, will use or otherwise exploit,
except as expressly licensed under this Agreement, any La Jolla Patents, La Jolla Know-How and/or
Product Trademarks, or their counterparts in any country. Notwithstanding whether or not La Jolla
has complied with Section 2.3(b)(i), in the event that any Product, other than Product that is
manufactured for sale by BioMarin CF pursuant to this Agreement, is sold or distributed in the
Territory other than by or through BioMarin CF or its Sublicensees, La Jolla shall pay to BioMarin
CF an amount equal to three (3) times the Net Sales value of the Product so sold or distributed
within five (5) business days of the date BioMarin CF provides evidence demonstrating such sale or
distribution in the Territory.




(b) Territorial Integrity.




(i) [****]




(ii) [****]



(iii) It is understood that nothing in this Section 2.3(b) shall be deemed to prevent La Jolla
or its designee from making the Compound and Products within or outside the Territory for supply to
BioMarin CF in accordance with Article 9 below or for use or sale in the Asia-Pacific Territory.




2.4 Asia-Pacific Matching Right.




(a) [****].




(b) [****].




(c) [****]




(d) [****].




(e) [****]


 


- 10 -









 





(f) No Implied Obligations. The only obligations of BioMarin CF and La Jolla under
this Section 2.4 are as expressly stated herein, and there are no further implied obligations
relating to the matters contemplated therein. Without limiting the foregoing, it is understood
that: (A) La Jolla is not at any time obligated to disclose the identity of a Third Party with whom
it is discussing a Third Party agreement; (B) this Section 2.4 shall not be deemed to apply to a
transaction by which a Third Party acquires substantially all of the business or assets of La
Jolla so long as such acquiror remains bound by all of the terms and conditions hereof, nor any
transaction pursuant to which La Jolla grants a license to a Third Party in the Asia-Pacific
Territory solely for the purposes of acting a contract manufacturer to supply Compound or Product
(or intermediate materials for either of the foregoing) to La Jolla; and (C) if La Jolla enters
into a transaction with a Third Party, after making an offer to BioMarin CF that complies with this
Section 2.4 (other than Section 2.4(e), which will continue to apply), that includes the grant by
La Jolla of an option or other contingent right to acquire the right to market and/or distribute
any Product in the Asia-Pacific Territory, or any portion thereof (a “Contingent Right”),
then the grant of rights by La Jolla upon a Third Party’s exercise of such Contingent Right shall
not be subject to this Section 2.4 so long as the grant of such Contingent Right was made in a
transaction entered into with the Third Party in compliance with this Section 2.4.



(g) Audit Rights. If BioMarin CF does not enter into an Asia-Pacific License with La
Jolla and La Jolla thereafter enters into an Asia-Pacific License with an Asia-Pacific Licensee,
BioMarin CF shall have the right to have an accounting firm of its designation compare the
Asia-Pacific License entered into by La Jolla to the final form of license agreement offered to
BioMarin CF to determine if La Jolla has complied with Section 2.4(b) and all payments to be
received by La Jolla through the date of such audit have been paid to La Jolla.



(h) Right to Share Information. Nothing contained in this Section 2.4 shall prohibit
La Jolla from providing to an Asia-Pacific Licensee (or a prospective Asia-Pacific Licensee) the
information permitted to be shared as specified in Section 4.3(a) (so long as La Jolla protects
such information under an appropriate non-disclosure agreement and limits its use to the Proposed
Territory as required by this Agreement).



ARTICLE III

GOVERNANCE





3.1 Joint Steering Committee.



(a) Establishment. Within thirty (30) days following the Effective Date, La Jolla and
BioMarin CF shall establish a joint steering committee (“Joint Steering Committee” or
“JSC”) to oversee, review and coordinate the activities of the Parties under this Agreement
as provided in this Section 3.1, including, the development of Products for registration, and the
marketing and distribution of Products, within the Territory, and the manufacture of the Compound
and Products for use and sale in the Territory, all subject to the provisions of this Article 3.




(b) Duties. The JSC shall:



(i) Review and approve changes to each Operating Plan/Budget in accordance with this
Agreement;



(ii) Provide a forum for the Parties to exchange information and coordinate their respective
activities with respect to matters pertaining to the development,
manufacture, and commercialization of the Products in the Territory, and matters pertaining to
the registration of Products in the Territory;


 


- 11 -









 





(iii) Coordinate the overall activities and integration of the Working Group and functional
sub-working groups and resolve matters specifically assigned to be decided by the Working Group in
this Agreement that the Working Group is unable to resolve; and



(iv) Perform such other duties as are specifically assigned to the JSC in this Agreement or
the Financial Appendix.



3.2 Establishment of Working Group. The JSC shall establish, and to the extent it
deems appropriate, delegate duties to a working group to plan and coordinate particular projects or
activities (the “Working Group”), including but not limited to: (i) plan and coordinate the
conduct of the development activities and regulatory matters for the Products within the Territory,
(ii) coordinate the manufacturing and supply of the Products for use or sale within the Territory
or as otherwise contemplated in Article 9, and (iii) coordinate the conduct of the
commercialization, marketing and promotion activities for the Products in the Territory and to plan
and coordinate any joint promotion activities in the United States, if applicable. The Working
Group and its activities shall be subject to the oversight, review and approval of, and shall
report to, the JSC. The Working Group shall be composed of an equal number of representatives from
each Party, selected by such Party, and the total number of members of the Working Group will be
determined by the JSC, but in no event shall be less than three (3) representatives from each
Party. The Working Group shall meet at such times as directed by the JSC or more frequently as
determined by the Working Group, but in no event less than once each calendar quarter. The Working
Group meetings may be conducted by telephone, video-conference or in-person as determined by the
Working Group; provided, however, that the Working Group shall meet in-person at least once each
calendar quarter and, unless otherwise agreed by the Parties, all in-person meetings of the Working
Group shall be held on an alternating basis between La Jolla’s facilities and BioMarin CF’s
facilities, in each event except as unanimously agreed by the JSC. In no event shall the authority
of the Working Group exceed that specifically delegated to it by the JSC. The Working Group may
establish subordinate committees to oversee or handle different aspects of the Working Group’s
responsibilities.


 


- 12 -









 





3.3 JSC Membership. The JSC shall be composed of an equal number of representatives
from each of BioMarin CF and La Jolla, selected by such Party. Unless the Parties otherwise agree,
the exact number of representatives for each of BioMarin CF and La Jolla shall be three (3)
representatives, with each representative at the Vice President (or its equivalent) level or above.
Each Party shall designate a co-chair for the meetings of the JSC (each, a “Co-Chair”).
The Co-Chairs shall: (i) coordinate and prepare the agenda for, and ensure the orderly conduct of,
the JSC’s meetings; and (ii) within ten (10) business days after the JSC’s meeting, prepare and
circulate the minutes of such meeting accurately reflecting the discussions and decisions of the
JSC. Such minutes from the JSC’s meeting shall not be finalized until the applicable Co-Chair from
each Party has reviewed and confirmed the accuracy of such minutes in writing. Either Party may
replace its respective Co-Chairs and other representatives at any time with prior written notice to
the other Party; provided that the criteria for composition of the JSC set forth above continues to
be satisfied
following any such replacement of a Party’s representative on the JSC. In the event the
Co-Chair of the JSC from either Party is unable to attend or participate in a particular JSC
meeting, such Party may designate a substitute Co-Chair for the meeting.



3.4 JSC Meetings. The JSC shall meet at least once each calendar quarter, or more or
less often as otherwise agreed to by the Parties. The JSC meetings may be conducted by telephone,
video-conference or in-person as agreed to by the Parties; provided, however, that the JSC shall
meet in-person at least once each calendar quarter. Unless otherwise agreed by the Parties, all
in-person meetings for the JSC shall be held on an alternating basis between La Jolla’s facilities
and BioMarin CF’s facilities. Each Party shall bear its own personnel and travel costs and
expenses relating to the JSC meetings. With the consent of the Parties (not to be unreasonably
withheld or delayed), other employee representatives of the Parties may attend the JSC meeting as
non-voting observers.



3.5 Decision-Making. Decisions of the JSC, as well as the decisions or
recommendations of the Working Group, shall be made by unanimous vote, with at least one (1)
representative from each Party participating in any vote. In the event that the Working Group or
the JSC fails to reach unanimous agreement with respect to a particular matter within its
authority, then such matter shall be resolved under the procedures set forth in Section 17.1.



3.6 Scope of Governance. Notwithstanding the creation of the JSC and the Working
Group, each Party shall retain the rights, powers and discretion granted to it under this
Agreement, and the JSC and the Working Group shall not be delegated or vested with rights, powers
or discretion unless such delegation or vesting is expressly provided in this Agreement, or the
Parties expressly so agree in writing. Neither the JSC, nor the Working Group, shall have the
power to amend or modify this Agreement, and no decision of the JSC, nor any decision or
recommendation of the Working Group, shall be in contravention of any terms and conditions of this
Agreement. It is understood and agreed that issues to be formally decided by the JSC, or to the
extent applicable, by the Working Group, are only those specific issues that are expressly provided
in this Agreement to be decided by the JSC or, to the extent applicable, the Working Group.


 


- 13 -









 





ARTICLE IV

DEVELOPMENT; OPERATING PLAN BUDGET





4.1 Overall Efforts in Development.



(a) Prior to the Full Participation Point, La Jolla shall use its best efforts to prepare for
the filing and prosecution and to maintain the NDA for the Product in the United States and the MAA
in the European Union and shall otherwise conduct all development activities with respect to
Products for the Territory in accordance with the Operating Plan/Budget, subject to the oversight
of the JSC and the Working Group; provided that La Jolla is not hereby guaranteeing that the FDA
will issue the NDA or that the EMEA will issue the MAA. Unless otherwise agreed by the Parties,
BioMarin CF will not perform any development activities under the Operating Plan/Budget other than
manufacturing related activities prior to the Full Participation Point. Prior to the Full
Participation Point, La Jolla shall use diligent efforts to implement the Operating Plan/Budget in
a prompt and expeditious manner and in a manner designed to obtain Marketing Approvals for the
existing Product in the United States and the European Union; and La Jolla shall use diligent
efforts to ensure that the Operating Plan/Budget provides at all times for adequate activities,
resources and funding to achieve such results in an expeditious and efficient manner.
Notwithstanding the foregoing prior to the Full Participation Point, such obligations shall not
require La Jolla to initiate or conduct an efficacy trial in humans other than the ASPEN Study.
The foregoing diligence obligations shall not apply if there is a Futile Determination or, if based
upon receipt of the 128 Flare Topline Data, the ASPEN Study does not result in a P-Value
Achievement. The Parties acknowledge that the up front payments to be, and such additional
payments as are described in Sections 7.2-7.4 and 7.13(b) as may be, paid by BioMarin CF are in
support of La Jolla’s conduct of the ASPEN Study and other research and development activities with
respect to the Compound and Products and accordingly, prior to the Full Participation Point, La
Jolla agrees that it shall not fund the development of any product, other than the Compound and
Products if such funding causes La Jolla’s remaining net available cash to be less than one hundred
ten percent (110%) of the amount reasonably necessary to fund the Operating Plan/Budget through
receipt of the 128 Flare Topline Data. For clarity, subject to the preceding sentence, La Jolla
may conduct research and development activities for any other programs or products.



(b) After the Full Participation Point, La Jolla and BioMarin CF shall each use diligent
efforts to implement the Operating Plan/Budget in a prompt and expeditious manner, and in a manner
designed to obtain Marketing Approvals for Products in each Major Market and for such other
countries within the Territory as may be commercially reasonable and to commercialize the Products
in such countries. The Parties shall use diligent efforts to ensure that the Operating Plan/Budget
provides at all times for adequate activities, resources and funding to achieve such results, in an
expeditious and efficient manner. Without limiting the foregoing, subject to Section 4.1(b) below,
it is understood that after the Full Participation Point, the Operating Plan/Budget will at all
times provide for both Parties to have significant roles in the development activities for Products
within the Territory. In the case of La Jolla, such role in development activities for the
Products shall included, at a minimum: (i) conducting Phase IV Studies (as defined in Exhibit 4.2E)
for the existing Product in the United States; and the allocation of La Jolla FTEs for the
performance of such Phase IV Studies; and (ii) reasonable consideration shall be given to La
Jolla’s existing expertise in developing Products and, where appropriate, as determined by the JSC,
such expertise will be utilized in the ongoing research and development and life cycle management
of Products. Neither La Jolla nor BioMarin CF shall have an obligation to use diligent efforts to
execute with respect to a Product in any country after the Commercial Life of such Product in such
country.


 


- 14 -









 





(c) ASPEN Study. Unless the Parties otherwise mutually agree, La Jolla shall be
responsible for the conduct and management of the ASPEN Study, both prior to and after the Full
Participation Point, provided that BioMarin CF will be informed of the status of the ASPEN Study on
a regular basis and will have complete access to all Data generated from the ASPEN Study at all
times. Unless expressly agreed by both La Jolla and BioMarin CF, no Operating Plan/Budget will
materially alter the conduct of the ASPEN Study as set forth in the protocol submitted to the FDA
prior to the Effective Date.



(d) Development Costs. The costs of performing all development and regulatory
activities pursuant to the Operating Plan/Budget prior to the Full Participation Point (including
the performance of the ASPEN Study up to the Full Participation Point), shall be at La Jolla’s sole
expense. After the Full Participation Point, the costs of implementing all development and
regulatory activities pursuant to the Operating Plan/Budget (including the remaining portion of the
ASPEN Study, if applicable) shall be shared equally by the Parties in accordance with Section 7.12
and the Financial Appendix, except as provided in Section 4.2(d)(ii) below.




(e) Dosing Study. [****]




4.2 Operating Plan/Budget.



(a) General. With the assistance of the Working Group, the JSC shall establish a
rolling three (3) calendar year plan and budget for (i) the cooperative development of, and
regulatory activities for, the Products, (ii) the manufacturing activities for the Products,
including without limitation process development, and (iii) the marketing, promotion and
commercialization of the Products within the Territory under this Agreement (as such plan and
budget may be amended from time to time in accordance with this Agreement, and as approved by the
JSC, the “Operating Plan/Budget”). The Operating Plan/Budget will be established in such a
way as to incorporate the business objectives described in Section 4.1(b) and 6.1(a). [****] The
Operating Plan/Budget will include sufficient funding for the Dosing Study. It is understood that
the JSC will modify and update the Operating Forecast annually in connection with the procedure for
amending and updating the Operating Plan/Budget under Sections 4.2(c) and 4.2(d) below.



(b) Initial Operating Plan/Budget. An initial Operating Plan/Budget for Products
within the Territory is attached to this Agreement as Exhibit 4.2B (“Initial Operating
Plan/Budget”). The Initial Operating Plan/Budget shall be deemed to be the Operating
Plan/Budget for all purposes of this Agreement until such Initial Operating Plan/Budget is updated
in accordance with Section 4.2(d) below.



(c) Amendments. The JSC shall review the Operating Plan/Budget on an ongoing basis,
and in no event less frequently than once each calendar year (as set forth in Section 4.2(d)
below), or more frequently as needed to take into account completion, commencement or cessation of
activities not contemplated by the then-current Operating Plan/Budget. The Working Group shall
submit to the JSC as a proposal an amendment to the Operating Plan/Budget in advance of
implementation of such amendment, including any amendment that effects a material change in the
budget or timeline in effect for the current year of such Operating Plan/Budget.


 


- 15 -









 






(d) Timing and Process for Annual Amendments.



(i) No later than [****] of each calendar year after the Effective Date commencing in 2009,
the Working Group shall present to the JSC for its review and approval its plans and budget for its
respective area to be included in the overall Operating Plan/Budget for the next three (3) calendar
years in the form described in Section 4.2(a) above. If an Operating Plan/Budget is not approved
by the JSC by [****] of a calendar year, then, until such time as an
Operating Plan/Budget is either approved by the JSC or established pursuant to the dispute
resolution procedure set forth in Section 17.1 below: (i) the preceding Operating Plan/Budget
(including the Operating Forecast for the applicable period) shall continue to govern the Parties’
activities under this Agreement, (ii) each Party shall be permitted to conduct activities allocated
to such Party in such preceding Operating Plan/Budget and incur costs consistent with such
preceding Operating Plan/Budget, which costs shall be shared equally by the Parties in accordance
with Section 7.12 below and the Financial Appendix, and (iii) in any case, without limiting the
foregoing, each Party may continue any on-going trials initiated by such Party in accordance with
such preceding Operating Plan/Budget, and the reasonable costs incurred by such Party in connection
with such trials shall continue to be shared equally by the Parties in accordance with Section 7.12
below and the Financial Appendix; in each case, as if such costs were set forth in an approved
Plan/Budget. [****]




(ii) [****]




(e) Operating Plan/Budget Content.



(i) In addition to the information described in Section 4.2(a) above, each Operating
Plan/Budget shall designate responsibility and a reasonable timeline for completion for such
activities.




(ii) The Operating Plan/Budget shall address: [****]



(iii) In addition, after receipt of the first Marketing Approval for a Product in the
Territory, the Operating Plan/Budget shall include the requirements set out in Exhibit 4.2E
hereto.


 


- 16 -









 






4.3 Exchange of Data and Know-How.



(a) By Either Party. During the term of this Agreement, each Party shall provide to
the other Party all such Party’s Know-How (i.e., in case of La Jolla, La Jolla Know-How, and in the
case of BioMarin CF, all BioMarin CF Know-How) that has not previously been provided hereunder, in
each case promptly upon request by the other Party. The Party providing such Know-How shall
provide the same in electronic form (to the extent the same exists in electronic form), and shall
provide copies as reasonably requested and/or an opportunity for the other Party or its designee to
inspect (and copy) all other materials comprising such Know-How (including for example, original
patient report forms and other original source data). The Parties will cooperate and reasonably
agree upon formats and procedures to facilitate the orderly and efficient exchange of the La Jolla
Know-How and the BioMarin CF Know-How. Except as specifically provided in this Agreement, La Jolla
may not provide, disclose or sublicense any BioMarin CF Know-How to any Third Party, and may not
use, any BioMarin CF Know-How for any purpose other than to perform its obligations and exercise
its rights under this Agreement. For avoidance of doubt, La Jolla may not provide or sublicense
any BioMarin CF Know-How to the Asia-Pacific Licensee in the Asia-Pacific Territory or use any
BioMarin CF Know-How to develop and/or commercialize the Products in the Asia-Pacific Territory;
provided, however, that the Parties agree that La Jolla shall have the
right to provide the NDA, all correspondence with the FDA relating to the NDA, the MAA and all
correspondence with the EMEA relating to the MAA, in each case relating to the Product being used
in the ASPEN Study and/or any modifications to such Product included in such NDA and/or MAA, as
approved by the FDA or EMEA, and/or any supplements to the foregoing (such Product including
modifications thereto, the “Initial Product”), any other filings with the FDA or EMEA
associated with the Initial Product, all manufacturing information, and all clinical, preclinical
and technical Data relating to the Initial Product and all pharmacovigilance and safety information
relating to the Initial Product to any Affiliate or Third Party partner for the Asia-Pacific
Territory for purposes of manufacturing, developing and commercializing the Compound and Product in
the Asia-Pacific Territory. Additionally, upon BioMarin CF’s prior written consent, which may be
granted or withheld in BioMarin CF’s sole and absolute discretion, La Jolla may disclose other
BioMarin CF Know-How or other information that would otherwise be restricted by this Agreement to
an Asia-Pacific Licensee in the Asia-Pacific Territory. Except as specifically provided in this
Agreement, BioMarin CF may not provide or disclose any La Jolla Know-How to any Third Party, and
may not use any La Jolla Know-How for any purpose other than to perform its obligations and
exercise its rights under this Agreement.



(b) Provision of Data to JSC. Upon request by the JSC, each Party shall promptly
provide the JSC with summaries in reasonable detail of all Data generated or obtained in the course
of such Party’s performance of activities under the Operating Plan/Budget.



4.4 Term of Ongoing Obligations. The Parties’ obligations under Sections 4.1, 4.3 and
6.2, La Jolla’s obligation to perform activities under the Operating Plan/Budget, and La Jolla’s
supply and manufacturing obligations under Article 9 and Section 5.3 below, any further right of La
Jolla to have FTEs included in any Operating Plan/Budget pursuant to Section 4.1(b), 6.1, 6.2 or
any other provision of this Agreement, and any right of La Jolla to manufacture or supply Product
to BioMarin CF for sale in the Territory pursuant to any provision of this Agreement, shall
terminate eighteen (18) years after the Effective Date, unless La Jolla requests to extend such
period in writing at least two (2) years prior to such date. Upon termination of such obligations,
the Working Group and the JSC will terminate. However, each Party will continue to have an
approval right with respect to matters specified to be decided by the JSC under this Agreement. In
such event, if the Parties are unable to reach agreement on a matter specified in this Agreement to
have been decided by the JSC, the matter shall be resolved as if it were a dispute of the JSC in
accordance with Article 17 below.


 


- 17 -









 





ARTICLE V

REGULATORY MATTERS





5.1 Regulatory Responsibilities. Unless otherwise agreed by the Parties:



(a) ASPEN Study and Dosing Study. La Jolla shall be responsible for filing,
prosecuting, obtaining and maintaining, in its own name, all INDs, CTAs, and other regulatory
filings with respect to the ASPEN Study and the Dosing Study.



(b) NDA Regulatory Responsibilities. La Jolla will make all necessary regulatory
filings (including by way of amendment) for, and seek to obtain, an NDA for the Product currently
under development, including filing a new NDA if agreed by the JSC or required by the FDA, in the
United States in its own name. Promptly following the Full Participation Point and within thirty
(30) days after such NDA is approved, La Jolla shall assign to BioMarin CF all of its rights, title
and interest in and to such NDA. Notwithstanding the foregoing, BioMarin CF will have a co-lead
role in connection with any negotiations with the FDA regarding labeling of the Products. Prior to
the assignment of the NDA, La Jolla shall maintain the same and shall take such actions as are
reasonably necessary to make available to BioMarin CF the benefits of such NDA to the extent
required in connection with BioMarin CF’s activities under this Agreement. After the assignment,
BioMarin CF will be responsible for any further regulatory matters involving the Products, and La
Jolla will fully support and cooperate with BioMarin CF in connection with such activities.



(c) Other Regulatory Responsibilities. From and after the Full Participation Point,
except as expressly provided in Section 5.1(a) and (b), BioMarin CF shall be responsible for
filing, obtaining and maintaining, in its own name, all other INDs, Marketing Applications,
Marketing Approvals and other regulatory filings related to the development and commercialization
of Products within the Territory, provided that La Jolla will fully support and cooperate with
BioMarin CF in connection with such activities to the extent requested by BioMarin CF. BioMarin CF
shall also obtain any export approvals required by the FDA to import or export Products to any
country within the Territory outside the United States. All such filings will be in the name of
BioMarin CF, except where otherwise required by local law.



(d) Costs. Prior to the Full Participation Point, responsibility for the costs of
preparing, filing, obtaining and maintaining regulatory filings and approvals, including INDs, the
NDA, the MAA, and other Marketing Approvals, for Products within the Territory shall be paid by La
Jolla. From and after the Full Participation Point, responsibility for the costs of filing,
obtaining and maintaining regulatory filings and approvals, including INDs, NDAs, MAAs, and other
Marketing Approvals, for Products within the Territory shall be shared equally by the Parties as
provided in Section 7.12 and the Financial Appendix.


 


- 18 -









 






5.2 Filings and Meetings with Regulatory Authorities.



(a) Regulatory Filings and Correspondence. The Party with responsibility for
regulatory matters in a Major Market country (as described in Section 5.1(a), (b) and (c) above)
shall provide the other Party’s representatives on the JSC with copies of all material regulatory
filings (including Marketing Approvals) and all minutes of any material meetings, telephone
conferences and/or discussions with the Regulatory Authority of such Major Market country, and
shall promptly notify the other Party’s representatives on the JSC with respect to any material
changes or material matters that may arise in connection with such regulatory filings, including
Marketing Approvals, of a Product within such Major Market country. Each Party will provide the
other Party with translations of such documents into English to the extent prepared or obtained for
its own use.




(b) Regulatory Interactions. [****]



(c) Role of JSC. The JSC shall approve the overall strategy and positioning of all
material meetings, submissions and filings for Products with FDA, EMEA and Regulatory Authorities
of other Major Market countries prior to their conduct, submission or filing, based upon reasonably
detailed reports and summaries of such meetings, submissions and filings presented to the JSC by
the Party with primary responsibility for such meeting, submission or filing (as described in
Sections 5.1(a), (b) and (c) above), and all such meetings, submissions and filings shall conform
with the strategy approved by the JSC. In connection with such review, such Party shall promptly
provide to the JSC such additional information regarding a proposed meeting, submission or filing
as the other Party may reasonably request.



(d) Other Regulatory Matters. Each Party will promptly provide the other Party with
copies of all material documents, information and correspondence received from a Regulatory
Authority (including a written summary of any material communications in which such other Party did
not participate) pertaining to Products within the Territory and, upon reasonable request, with
copies of any other documents, reports and communications from or to any Regulatory Authority
within the Territory relating to a Product or activities under this Agreement.




5.3 Regulatory Inspections. [****]



5.4 Audit Rights. Each Party shall have the right, during normal business hours, and
no more than once per calendar year, with more frequent audits upon agreement of the Parties (such
agreement not to be withheld unreasonably), to inspect and audit: (a) those portions of the
facilities of each Party, or any of its Affiliates, Sublicensees, subcontractors and investigator
sites used in the performance of the Operating Plan/Budget, the manufacturing of Product to be
supplied pursuant to this Agreement, and/or commercialization activities within the Territory, to
ascertain compliance with applicable laws and Marketing Approvals, including current Good
Laboratory Practices, Good Clinical Practices and Good Manufacturing Practices (“GMP”), and
conformance with the applicable specifications and quality assurance standards, provided that the
inspecting Party shall on such occasions be accompanied by a representative of the other Party (and
such other Party must reasonably cooperate in making its representative available for such
purpose); and (b) any of the other Party’s documentation or its Affiliates’, Sublicensees’,
subcontractors’ or investigators’
documentation relating to the Operating Plan/Budget, the manufacturing of Product to be
supplied pursuant to this Agreement, and/or commercialization activities within the Territory,
including, to the extent permitted by law and any applicable privacy policies, the medical records
of any patient participating in any clinical study under the Operating Plan/Budget.
Notwithstanding the foregoing, in the event that BioMarin CF’s GMP compliance group determines that
an audit is appropriate due to any issue relating to manufacturing, testing or other aspects of GMP
compliance then BioMarin CF shall have the right to require additional audits of La Jolla, its
Affiliates, Sublicensees, subcontractor and investigation sites until all such issues have been
resolved. In addition, a Party’s audit right shall be limited by bona fide Third Party agreements
or confidentiality obligations, provided, however, that each Party shall use its reasonable efforts
to: (i) obtain audit rights for the other Party under such agreements; but (ii) cannot guarantee
such other Party is granted audit rights to the same extent which a Party has audit rights in any
agreements executed after the Effective Date; and if a Party is unable to obtain such audit rights
for the other Party, then upon request it shall exercise its own rights with respect to such an
audit for the benefit of the other Party.


 


- 19 -









 






5.5 Adverse Event Management.




(a) [****]




(b) [****].




(c) [****]




(d) [****]



ARTICLE VI

COMMERCIALIZATION AND PROMOTION





6.1 Commercialization.



(a) General. From and after the Full Participation Point, La Jolla and BioMarin CF
shall each use diligent efforts to implement the commercialization activities under the Operating
Plan/Budget described below with respect to each Product in a prompt and expeditious manner, and in
a manner designed to achieve commercial success of such Products in each Major Market and for such
other countries within the Territory as may be commercially reasonable.



(b) Territorial Allocation. In the United States, the Parties will jointly
commercialize the Products as more fully described below, and in other countries of the Territory,
BioMarin CF will be exclusively responsible for commercialization of the Products; in each case in
accordance with the Operating Plan/Budget then in effect and subject to the oversight of the JSC.



(i) United States. In the United States, the Parties will be jointly responsible for
the marketing activities outlined on Exhibit 6.1B hereto, and La Jolla shall have the right
to provide fifty percent (50%) of the total number of FTEs allocated to the performance of such
activities in the Operating Plan/Budget. In addition, La Jolla will have the right to deploy Sales
Representatives detailing Products pursuant to Section 6.2 below and shall be afforded the
opportunity to have input on the other major elements relating to marketing the Product. Subject
to the foregoing, BioMarin CF shall have primary responsibility for other aspects of marketing and
commercializing Products in the United States.


 


- 20 -









 





(ii) Countries of the Territory Outside the Unites States. In countries of the
Territory outside the United States, BioMarin CF shall be exclusively responsible for performing
all activities for the marketing, promotion, distribution and other commercialization of the
Products, except as the JSC may otherwise determine is in the best interests of a Product, in
accordance with the Operating Plan/Budget and the terms of this Agreement.




(iii) Promotion of the Products. [****]



(iv) Activities Prior to Full Participation Point. Notwithstanding the foregoing,
prior to the Full Participation Point, except as the Parties may otherwise agree, La Jolla shall
conduct any commercialization activities to be conducted with respect to the Products for all or
any portion of the Territory at La Jolla’s sole expense.




6.2 La Jolla’s Sales Force Deployment Option.



(a) Exercise of Option. La Jolla shall have the right to deploy a portion of the
total number of Sales Representatives for the Products in the United States (“Sales Force
Deployment Option”) in accordance with this Section 6.2. To exercise the Sales Force
Deployment Option, La Jolla shall notify BioMarin CF in writing no later than [****] after La
Jolla’s receipt of the 128 Flare Topline Data as described in Section 7.6(e) below or earlier
completion of the efficacy portion of the ASPEN Study. La Jolla shall only have the right to
exercise the Sales Force Deployment Option once.



(i) La Jolla FTEs. If La Jolla exercises the Sales Force Deployment Option, La Jolla
shall have the right to deploy up to [****]. Following La Jolla’s exercise of the Sales Force
Deployment Option, La Jolla shall have the right and obligation to deploy toward the promotion of
the Products in the United States the number of Sales Representatives specified in its notice of
exercise. If La Jolla exercises its Sales Force Deployment Option within the time period specified
in subparagraph (a), and the JSC determines to increase the total number of Sales Representatives
that will promote Products in the United States from the number of such Sales Representatives
allocated to such activities in the Operating Plan/Budget for the initial launch, La Jolla may
increase the number of Sales Representatives that will promote the Products in the United States to
maintain the same percentage of deployment as established through the exercise of the Sales
Deployment Option by providing a notice to BioMarin CF in writing no later than thirty (30) days
after such JSC determination. In the event that the JSC determines to reduce the total number of
Sales Representatives that will promote the Products in the United States, such reduction shall be
made proportionally between BioMarin CF and La Jolla Sales Representatives. For purposes of this
Section 6.2(a)(i), [****]


 


- 21 -









 





(ii) Sales Activities. It is understood that the Sales Representatives to be deployed
by La Jolla shall be deployed in a manner to ensure geographic dispersion of, and reasonable access
to major metropolitan areas by such La Jolla Sales Representatives. Other than the personnel to be
so deployed and details to be performed by La Jolla, BioMarin CF shall be responsible for the
remaining promotional effort for the Products in the United States in accordance with the Joint
Promotion Plan established in accordance with Section 6.2(c) below.



(b) Role of the Joint Steering Committee. The JSC shall be responsible
for coordinating the joint promotional activities of the Parties within the United States in the
event La Jolla exercises the Sales Force Deployment Option.



(c) Joint Promotion Plan. After La Jolla has exercised the Sales Force Deployment
Option and promptly following request by either Party, the Working Group shall prepare an operating
plan for joint promotion of the Products in the United States (“Joint Promotion Plan”),
which shall be reviewed and approved by the JSC. The Joint Promotion Plan shall set out in
reasonable detail: (i) overall strategies with respect to promoting and marketing the Products in
the U.S.; (ii) the activities to be conducted and the responsibilities of each Party in connection
with the promotion of the Products in the U.S.; (iii) the reach, frequency, deployment and call
plan for the Sales Representatives promoting the Products in the U.S.; and (iv) a fair and
reasonable allocation between BioMarin CF and La Jolla of activities under such Joint Promotion
Plan in the U.S., consistent with Section 6.2(a) above, including a reasonable allocation of
promotion responsibilities for channels and key opinion leaders. Further, the Joint Promotion Plan
shall provide at all times for an equivalent allocation of resources between the Sales
Representatives of each of BioMarin CF and La Jolla, including with respect to marketing tools,
programs, corporate accounts and medical affairs support, and shall provide for reasonable
consistency from period to period in the responsibilities allocated to each Party. After
establishment of the initial Joint Promotion Plan, the JSC shall review the Joint Promotion Plan on
an ongoing basis and in no event less frequently than once each calendar half-year. The Working
Group may propose revisions to the then-current Joint Promotion Plan to the JSC; provided however
that that Joint Promotion Plan in effect for any year shall not be materially modified except as
approved by the JSC.



(d) Performance Standards. BioMarin CF, and to the extent La Jolla has exercised the
Sales Force Deployment Option, La Jolla will promote, market, and sell the Products in accordance
with any requirements of the Regulatory Authorities and the reasonable requirements and
instructions of the JSC and BioMarin CF, consistent with the Joint Promotion Plan, as such may be
amended from time to time. Each Party will use commercially reasonable efforts to promote,
maintain, and extend the sale of the Products in the U.S. that will reflect favorably on the other
Party’s name, the Product Trademarks, and the quality of the Products. Neither Party will make
any representations, nor give any warranty or guarantee to any Third Party in relation to the
Products other than as approved by the JSC in writing. At all times, each Party will conduct its
business in an ethical and business-like manner and in such a way as to uphold the good name and
reputation of the other Party and the Products. Each Party will ensure that all regulations and
requirements relating to the distribution, sale, and commercialization of the Products in the U.S.
are complied with, as they relate to such Party’s activities hereunder.


 


- 22 -









 





(e) BioMarin CF Practices and Procedures. After La Jolla has exercised the Sales
Force Deployment Option, La Jolla agrees to comply promptly with the reasonable policies and
directives with regard to the promotion of the Products in the United States issued by BioMarin CF
from time to time; provided that such policies and procedures are equally applicable to BioMarin CF
and its Sales Representatives and do not otherwise conflict with the terms of this Agreement.
BioMarin CF shall notify La Jolla of such policies or directives and any changes thereto in writing
a reasonable period prior to the implementation of such policies or directives, or any changes
thereto. If La Jolla exercises the Sales Force Deployment Option, La Jolla shall, as an essential
part of its commitment under this Agreement, use diligent efforts to cause its Sales
Representatives to perform such tasks or activities for the promotion of the Products in the United
States as specified in any Operating Plan/Budget.




(f) Sales Efforts; Costs.



(i) Sales Efforts of the Parties. The Joint Promotion Plan for each calendar year
shall specify the number of Sales Representatives to be deployed by each Party for such calendar
year, consistent with the parameters set forth in Section 6.2(a)(i) above.



(ii) Costs. If La Jolla exercises its Sales Force Deployment Option, then for
purposes of Section 7.12 below and the Financial Appendix, the costs of the Parties’ Sales
Representatives promoting the Products in the United States shall be determined on a modified FTE
basis, as follows: [****]




(iii) Sales Representative Compensation Weighting. [****]



(g) Timing. La Jolla and BioMarin CF shall cooperate to have the Sales
Representatives of both Parties hired and trained prior to the commencement of their joint
promotion activities. To the extent that either Party hires and trains additional Sales
Representatives for such purposes, it is understood that reimbursement of such Sales
Representatives in accordance with the Financial Appendix will commence as of such Sales
Representative’s date of hire. The timing of hiring the Sales Representatives shall be determined
by the JSC and, to the extent practical, shall be done in order to have the Sales Representatives
of each Party hired and trained prior to the launch of the first Product in the United States and
such hiring and training of Sales Representatives shall be conducted by BioMarin CF and La Jolla in
parallel (i.e., at approximately the same time prior to launch).




6.3 Right to Seek to Change Structure to Royalties on Net Sales. [****]



6.4 Booking Sales. It is understood that, during the term of this Agreement, as
between the Parties, BioMarin CF will book all sales for Product in each country of the Territory.



6.5 Commercialization Activities Outside the Territory. La Jolla shall keep the JSC
reasonably informed as to the progress of its launch and commercialization activities relating to
the Product in the Asia-Pacific Territory, to the extent La Jolla has the right to do so, including
with
respect to pricing, by way of updates to the JSC at least annually and as otherwise reasonably
requested by the JSC.


 


- 23 -









 





ARTICLE VII

PAYMENTS





7.1 Commencement Payments.




(a) Within fifteen (15) days following the Effective Date:



(i) BioMarin CF shall pay to La Jolla Seven Million Five Hundred Thousand Dollars
($7,500,000); and



(ii) BioMarin CF shall purchase Seven Million Five Hundred Thousand Dollars ($7,500,000) worth
of Series B Preferred Stock of La Jolla pursuant to the terms of the Securities Purchase Agreement
at a price per common share equivalent (based on the conversion ratio provided for in the
Certificate of Designations attached as an exhibit to the Securities Purchase Agreement) that
represents a twenty percent (20%) premium over the average closing price of the Common Stock of La
Jolla, as reported on the NASDAQ stock market, for the twenty (20) trading days ending on the day
prior to the Effective Date.




7.2 Payments in Connection with First Interim Efficacy Analysis.



(a) Upon BioMarin CF’s receipt of a Completion Notice of the occurrence of the First Interim
Efficacy Analysis and a Non-Futile Determination, BioMarin CF shall pay to La Jolla Fifteen Million
Dollars ($15,000,000) within thirty (30) days.



(b) If the Completion Notice with respect to the occurrence of the First Interim Efficacy
Analysis is accompanied by notice of a Futile Determination, then BioMarin CF shall have no further
payment obligation to La Jolla under Sections 7.2, 7.3 and 7.4 and Section 7.13 shall thereafter
apply to the continuing rights and obligations of the Parties under this Agreement.



(c) If the Completion Notice with respect to the occurrence of the First Interim Efficacy
Analysis is accompanied by a notice of a P-Value Achievement, subject to Section 7.18, BioMarin CF
shall have thirty (30) days to pay to La Jolla Forty-Seven Million Five Hundred Thousand Dollars
($47,500,000), Seven Million Five Hundred Thousand Dollars ($7,500,000) of which may be paid at
BioMarin CF’s election in the form of an equity investment in La Jolla in accordance with
Section 7.5.


 


- 24 -









 






7.3 Payments in Connection with Second Interim Efficacy Analysis.



(a) If BioMarin CF maintained its right to effect the Full Participation Point after the
occurrence of the First Interim Efficacy Analysis by paying to La Jolla Fifteen Million Dollars
($15,000,000) in accordance with Section 7.2(a) of this Agreement, then within thirty (30) days of
BioMarin CF’s receipt of a Completion Notice of the occurrence of the Second Interim Efficacy
Analysis and:



(i) a P-Value Achievement, subject to Section 7.18, BioMarin CF shall pay to La Jolla
Fifty-Five Million Dollars ($55,000,000), up to Ten Million Dollars ($10,000,000) of which may be
paid at BioMarin CF’s election in the form of an equity investment in La Jolla in accordance with
Section 7.5; or



(ii) a Non-Futile Determination, subject to Section 7.18, BioMarin CF may (x) maintain its
right to effect the Full Participation Point by paying to La Jolla Twenty-Two Million Five Hundred
Thousand Dollars ($22,500,000), up to Five Million Dollars ($5,000,000) of which may be paid at
BioMarin CF’s election in the form of any equity investment in La Jolla in accordance with Section
7.5, or (y) effect the Full Participation Point by paying to La Jolla Fifteen Million Dollars
($15,000,000), up to Five Million Dollars ($5,000,000) of which may be paid at BioMarin CF’s
election in the form of an equity investment in La Jolla in accordance with Section 7.5.



(b) If the Completion Notice with respect to the occurrence of the Second Interim Efficacy
Analysis is accompanied by a Futile Determination, then BioMarin CF shall have no further payment
obligation to La Jolla under Sections 7.3 and 7.4 and Section 7.13 shall thereafter apply to the
continuing rights and obligations of the Parties under this Agreement.




7.4 Payment in Connection with 128 Flare Topline Data.



(a) If BioMarin CF effected the Full Participation Point after the occurrence of the Second
Interim Efficacy Analysis in accordance with Section 7.3(b)(ii)(y) of this Agreement, then within
thirty (30) days of BioMarin CF’s receipt of the Completion Notice relating to La Jolla’s receipt
of the 128 Flare Topline Data and a P-Value Achievement, BioMarin CF shall pay to La Jolla Thirty
Million Dollars ($30,000,000).



(b) If BioMarin CF maintained its right to effect the Full Participation Point after the
occurrence of both the First Interim Efficacy Analysis in accordance with Section 7.2(a) and the
Second Interim Efficacy Analysis in accordance with Section 7.3(a)(ii)(x) of this Agreement, then
within thirty (30) days of BioMarin CF’s receipt of the Completion Notice relating to La Jolla’s
receipt of the 128 Flare Topline Data and a P-Value Achievement, subject to Section 7.18, BioMarin
CF shall pay to La Jolla Fifty-Five Million Dollars ($55,000,000), up to Fifteen Million Dollars
($15,000,000) of which may be paid at BioMarin CF’s election in the form of an equity investment in
La Jolla in accordance with Section 7.5.



(c) If the Completion Notice provided to BioMarin CF with respect to the 128 Flare Topline
Data indicates that the P-Value Achievement has not occurred, then BioMarin CF shall have no
further payment obligation to La Jolla under Section 7.4 and Section 7.13 shall thereafter apply to
the continuing rights and obligations of the Parties under this Agreement.


 


- 25 -









 





7.5 Partial Payments in Equity. To the extent that BioMarin CF elects to make a
portion of any payments due to La Jolla in the form of an equity purchase as permitted under
Sections 7.2, 7.3, or 7.4, then such equity investment shall be made pursuant to the terms of the
Securities Purchase Agreement at a price per common share equivalent (based on the conversion ratio
provided for in the Certificate of Designations attached as an exhibit to the Securities Purchase
Agreement) equal to one hundred ten percent (110%) of the average closing price of the Common Stock
of La Jolla, as reported on the NASDAQ stock market or such other reporting service as the stock is
then quoted if not then quoted on NASDAQ (and if not then traded at the value determined by an
investment bank selected consistent with the provisions of Section 14.3), for the ten (10) trading
days commencing five (5) trading days immediately prior to the date La Jolla has publicly announced
the event that triggered such payment (i.e., the P-Value Achievement, or in the case of such
payment where there is no P-Value Achievement, La Jolla’s first public announcement of the results
of the Second Interim Efficacy Analysis or the first public announcement of the approval of an NDA
for the Product under Section 7.13). To effect the election to make such payments in the form of
equity, BioMarin CF shall so notify La Jolla in writing within fifteen (15) days after receiving
the Completion Notice that triggered such payment, specifying the amount of the payment relating to
the Full Participation Point that BioMarin CF so elects to make in the form of such equity purchase
(“Equity Election Notice”). All equity purchases pursuant to this Section 7.5 shall be
subject to the provisions of Section 7.18.




7.6 Certain Terms. For purposes of the payments under this Section 7:



(a) “Data Monitoring Board” shall mean the expert advisory group appointed for the
90-14 portion of the ASPEN Study in accordance with the charter for such advisory group and which
is charged with the responsibility, among other matters, of reviewing the results of the Interim
Efficacy Analyses and making a recommendation in accordance with the protocol for the ASPEN Study
based on the safety profile and the outcome of each Interim Efficacy Analysis as to whether La
Jolla should continue to conduct the 90-14 portion of the ASPEN Study.



(b) “Non-Futile Determination” shall mean a recommendation by the Data Monitoring
Board following the First Interim Efficacy Analysis or the Second Interim Efficacy Analysis, as
applicable, as to the continuation of the 90-14 portion of the ASPEN Study other than (i) a
recommendation that such continuation “may be futile” (as specified in Paragraph 7.1.2 of the
Interim Analysis Plan for the 90-14 portion of the ASPEN Study), or (ii) P-Value Achievement has
occurred; and “Futile Determination” shall mean a recommendation by the Data Monitoring
Board following the First Interim Efficacy Analysis or the Second Interim Efficacy Analysis, as
applicable, that the 90-14 portion of the ASPEN Study no longer has meaningful potential to meet
its primary end point with statistical significance.



(c) “P-Value Achievement” shall mean: (A) in the case of the First Interim Efficacy
Analysis or the Second Interim Efficacy Analysis, as applicable, the nominal p-value of the primary
end point is less than 0.001; and (B) in the case of the analysis performed following La Jolla’s
receipt of the 128 Flare Topline Data, the nominal p-value of the primary end point is less than
0.05.


 


- 26 -









 





(d) “Renal Events Committee” shall mean the committee of independent experts appointed
for the 90-14 portion of the ASPEN Study in accordance with the charter for such committee and
which shall provide an expert assessment of the renal flare data obtained as a result of the
conduct of the 90-14 portion of the ASPEN Study and a determination as to whether such renal flares
are attributable to SLE prior to the data from the 90-14 portion of the ASPEN Study being
unblinded.



(e) “128 Flare Topline Data” shall mean summarized data tables for the first one
hundred twenty eight (128) events of renal flare adjudicated to be SLE-related accrued in the 90-14
portion of the ASPEN Study calculating the time-to-renal flare for patients in the placebo and the
combined active treatment groups in the 90-14 portion of the ASPEN Study, respectively, together
with the results of the sensitivity analysis performed pursuant to Section 4.3 of the Statistical
Analysis Plan for the 90-14 portion of the ASPEN Study and summaries of adverse events observed in
such patients through the date of such 128th renal flare.



7.7 Notice by La Jolla. La Jolla shall promptly notify BioMarin CF in writing
following the occurrence of each of the following events: (i) the First Efficacy Analysis; (ii) the
Second Efficacy Analysis; (iii) Non-Futile Determination; (iv) Futile Determination; (v) a P-Value
Achievement; (vi) La Jolla’s receipt of the 128 Flare Topline Data; and (vii) receipt of
recommendation from the Data Mentoring Board to terminate any portion of the 90-14 portion of the
ASPEN Study for any reason. A “Completion Notice” shall be any such notice issued by La
Jolla under this Section 7.7 notifying BioMarin CF of the occurrence of one or more of the events
described in paragraphs (i) through (vii).




7.8 Termination.



(a) BioMarin CF shall have the right to terminate this Agreement at any time and for any
reason upon thirty (30) days written notice to La Jolla under this Section 7.8(a) prior to the date
BioMarin CF effects the Full Participation Point pursuant to this Article 7. In the event that
BioMarin CF so terminates this Agreement under this Section 7.8(a), BioMarin CF shall not be
obligated to make any further payments under Sections 7.2, 7.3, 7.4, 7.9 or 7.10 that become due or
otherwise are to be paid after the date of such notice of termination. For example, if BioMarin CF
provides a notice of termination under this Section 7.8(a) after receipt of a Completion Notice
from La Jolla of a P-Value Achievement at the Second Interim Efficacy Analysis, but prior to the
date on which the corresponding payment in respect of the Full Participation Point becomes due
(i.e., thirty (30) days after such notice from La Jolla), then this Agreement shall terminate and
such payment in respect of the Full Participation Point shall not be due. Notwithstanding the
foregoing or Section 13.3 below, BioMarin CF shall not have the right to terminate this Agreement
prior making a payment to La Jolla pursuant to Section 7.2, unless Sections 7.2(b) or 7.2(c) apply.



(b) If the ASPEN Study terminates or is abandoned by La Jolla for any reason and at such time
of termination or abandonment neither a P-Value Achievement has occurred nor the 128 Flare Topline
Data has been received by La Jolla, then (i) La Jolla shall promptly notify BioMarin CF of such
results, (ii) no further payment shall be due from BioMarin CF to La Jolla under Sections 7.2, 7.3
and 7.4 and (iii) Section 7.13 shall thereafter apply to the continuing rights
and obligations of the Parties under this Agreement; provided that if the ASPEN Study has
terminated or been abandoned and at such time a Party is in breach of its obligations hereunder,
the applicability of Section 7.13 shall not affect the rights and claims of one Party against the
other under this Agreement relating to such breach. Any such notice provided by La Jolla to
BioMarin CF under this Section 7.8(b) shall be deemed to be a Completion Notice for the purposes of
Sections 7.13 and 13.4 below.


 


- 27 -









 




(c) Any termination of this Agreement under this Section 7.8 shall be deemed a termination
under Section 13.3, for the purposes of Article 14 below.



7.9 Regulatory Milestones. On and after the Full Participation Point, BioMarin CF
shall pay to La Jolla the milestone payments set out below following the first achievement of the
corresponding regulatory milestone set out below in accordance with the payment provisions of this
Article 7:



	 	 	 	 	 
	 	 	One Time Milestone	 
	Regulatory Milestone	 	Payment Amount	 
	 
	1. First receipt of an approval of
an NDA for the Product in the ASPEN
Study:
	 	 	 	 
	 
	a. if by such receipt La
Jolla has completed a
Positive Dosing Study
	 	$	45,000,000	 
	 
	b. if by such receipt La
Jolla has not completed a
Positive Dosing Study
	 	$	30,000,000	 
	 
	c. only in the circumstance
that the P-Value Achievement
occurs at the First Interim
Efficacy Analysis or the
Second Interim Efficacy
Analysis and the Dosing Study
is not complete at the time
of approval of the NDA, if
within one (1) year of such
approval La Jolla completes a
Positive Dosing Study
	 	$	15,000,000	 
	 
	2. First receipt of an approval of
an MAA (or Marketing Approval in all
of the Major Markets other than the
United States)
	 	$	10,000,000	 






 


- 28 -









 




7.10 Net Sales Milestones. In addition, BioMarin CF shall pay to La Jolla the
milestone payments set out below following the first achievement of the corresponding milestone set
out below, in accordance with the payment provisions in this Article 7:



	 	 	 	 	 
	 	 	One Time Milestone	 
	Net Sales Milestone	 	Payment Amount	 
	 
	1. First time that Annual Net Sales
of Products within the Territory
equal or exceed Two Hundred Fifty
Million Dollars ($250,000,000)
	 	$	13,500,000	 
	 
	2. First time that Annual Net Sales
of Products within the Territory
equal or exceed Five Hundred Million
Dollars ($500,000,000)
	 	$	25,000,000	 
	 
	3. First time that Annual Net Sales
of Products within the Territory
equal or exceed Seven Hundred Fifty
Million Dollars ($750,000,000)
	 	$	37,500,000	 
	 
	4. First time that Annual Net Sales
of Products within the Territory
equal or exceed One Billion Dollars
($1,000,000,000)
	 	$	50,000,000	 






7.11 Milestone Reporting and Payments. BioMarin CF shall notify La Jolla in writing
within thirty (30) days after the achievement of each milestone set out in Section 7.9 or 7.10, and
each such notice shall be accompanied by the appropriate milestone payment. Any milestone payable
by BioMarin CF pursuant to Section 7.9 or Section 7.10 shall be made no more than once with respect
to the achievement of each milestone set out in Section 7.9 or Section 7.10, as applicable, and in
no event shall the aggregate amount to be paid by BioMarin CF under: (a) Section 7.9 exceed
Fifty-Five Million Dollars ($55,000,000); and (b) Section 7.10 exceed One Hundred Twenty-Six
Million Dollars ($126,000,000).



7.12 Cost-Profit Sharing. On and from the Full Participation Point, except as
otherwise provided in this Agreement or the Financial Appendix, BioMarin CF and La Jolla shall
share equally: (a) Shared Costs related to the development and commercialization of Products within
the Territory, and the manufacture of Products for use and sale, within the Territory; and (b) the
Profit/Loss from sales of Products within the Territory; in each case as and to the extent set
forth in the Financial Appendix. For such purposes, if the Full Participation Point is triggered
by a P-Value Achievement, then such sharing of costs shall commence as of the date BioMarin CF
received the Completion Notice for such P-Value Achievement. Prior to the Full Participation
Point, La Jolla shall be responsible for all costs that it incurs in accordance with the Operating
Plan/Budget. Additional terms related to determining Shared Costs and Profit/Loss, and to financial
planning, accounting policies and procedures to be followed with respect to Products within the
Territory are set forth in the Financial Appendix.


 


- 29 -









 





7.13 Futile Determination or Failed P-Value Achievement.




(a) Adverse Outcome. [****]




(b) Rights Relating to Approval of the NDA without P-Value Achievement. [****]




7.14 Other Payment Terms.



(a) Payments Non-Refundable. For the avoidance of doubt, it is understood that the
payments in Sections 7.1-7.4, 7.9 and 7.10 above shall not be refundable and shall not be
creditable against future milestone payments or other payments by BioMarin CF to La Jolla under
this Agreement, nor shall any such payments be taken into account in calculating the Parties’
sharing of costs and Profit/Loss pursuant to Section 7.12 and the Financial Appendix.



(b) Payment Method. All payments between the Parties under this Agreement (including
the payments due under this Article 7 and the payments under the Financial Appendix) shall be made
by bank wire transfer in immediately available funds to an account designated by the Party to which
such payments are due. Any payments or portions thereof due under this Agreement that are not paid
by the date such payments are due under this Agreement shall bear interest at a rate equal to:
(i) the prime rate as reported by The Wall Street Journal (U.S. Western Edition), plus two percent
(2%) per year; or (ii) if lower, the maximum rate permitted by law (the “Interest Rate”);
calculated on the number of days such payment is delinquent, compounded annually and computed on
the basis of a three hundred sixty five (365) day year. This Section 7.14(b) shall in no way limit
any other remedies available to the Parties.



(c) Currency Conversion. Unless otherwise expressly stated in this Agreement, all
dollars amounts in this Agreement are stated, and all payments under this Agreement shall be made,
in United States Dollars. For any amounts invoiced or incurred in a currency other than United
States Dollars, the amounts shall be expressed in the currency in which such sale was originally
made, or in which such cost was incurred, together with the United States Dollar equivalent,
calculated using the average exchange rate for the conversion of the applicable foreign currency
into United States Dollars, quoted for current transactions for both buying and selling United
States Dollars, as reported in The Wall Street Journal (U.S. Western Edition) (or any other
publication as agreed to be the Parties) for all business days in the month in which transaction
occurred.



7.15 Withholding Taxes. Any withholding or other taxes that either Party is required
by law to withhold or pay on behalf of the other Party, with respect to any payments to such other
Party under this Agreement, shall be deducted as required by law from such payment and shall be
paid to the proper taxing authorities; provided that the withholding Party shall furnish to the
other Party proper evidence of the taxes so paid. The Parties will exercise their reasonable
efforts to ensure that any withholding taxes imposed are reduced as far as possible under the
provisions of any applicable tax treaty, and shall cooperate in filing any forms required for such
reduction. Notwithstanding the foregoing, BioMarin CF shall not make any deductions from any
payments due La Jolla for any
withholding taxes (and shall indemnify La Jolla against any such taxes) caused by the fact
that BioMarin CF is not incorporated in, or a resident of, the United States.


 


- 30 -









 





7.16 Books and Records. Each Party shall keep, and shall require its Affiliates, and
Sublicensees to keep, complete, true and accurate books of account and records reasonably
sufficient to determine and establish the amounts payable pursuant to this Agreement. Such books
and records shall also document all costs and expenses incurred or paid and, if applicable to a
Party, its Affiliates or Sublicensees, Gross Sales and Annual Net Sales of Products received in
connection with this Agreement and the Financial Appendix, including such other information as
reasonably necessary to verify the reports to be provided under the Financial Appendix. All such
books and records shall be maintained until the later to occur of: (a) three (3) years following
the relevant calendar year to which such records pertain; or (b) the expiration of the period
required by applicable laws and regulations.




7.17 Audit Rights.



(a) Request. Upon the prior written notice of no less than [****] to a Party (the
“Auditing Party”) and not more than once each calendar year, the other Party (the
“Responding Party”) shall permit the Auditing Party, accompanied by an independent
certified public accounting firm of nationally recognized standing, selected by the Auditing Party
and reasonably acceptable to the Responding Party, to have access during normal business hours to
the records of the Responding Party and its Affiliates as may be reasonably necessary to verify the
accuracy of the financial reports and calculations made under this Article 7 and the Financial
Appendix for any and all quarters [****]. Each Party shall require its Affiliates, and BioMarin CF
shall use its reasonable efforts to obtain in its agreements with its Sublicensees, audit rights
for the other Party, at least to the same extent as such Party has such rights in such agreements.
To the extent that BioMarin CF does not have the right to grant to the other Party the right to
audit its Sublicensees’ books and records hereunder, BioMarin CF shall obtain for itself such
rights and, at the request of La Jolla, shall exercise such audit rights with respect to such
Sublicensees and provide the results of such audit for inspection by La Jolla pursuant to this
Section 7.17.



(b) Discrepancies. If, as a result of such audit, it is established that additional
amounts were owed by the Responding Party for the audited period, such Party shall pay such
additional amounts within [****] after the date such discrepancy is established. In the event of
a dispute as to whether there is a discrepancy, the matter shall be resolved under and utilizing
the dispute resolution provisions of Sections 17.2 and 17.3. The fees charged by such accounting
firm shall be paid by the Auditing Party; provided, however, that if the audit establishes that the
aggregate amounts payable by the Responding Party for the period covered by the audit are more than
[****] of the aggregate amounts actually paid for such period, then the Responding Party shall pay
the reasonable fees and expenses charged by such accounting firm.



7.18 Restriction on Certain Equity Investments. [****]


 


- 31 -









 







ARTICLE VIII

CERTAIN COVENANTS




8.1 General Communications. Each Party shall keep the other Party fully and promptly
informed as to its progress and activities relating to the development, commercialization,
marketing and promotion of the Products within the Territory, including with respect to regulatory
matters and meetings with Regulatory Authorities, by way of updates to the JSC at their meetings
and as otherwise specified in this Agreement, or as reasonably requested by the other Party
including providing the other Party promptly with all clinical and regulatory information, filings
made prior to the Effective Date and all financial information and data related to its performance
under the Agreement to the extent necessary for each Party, on a timely basis, to prepare its
internal and external financial reports.



8.2 Conduct of Activities. Each Party shall conduct those activities allocated to
such Party under the Operating Plan/Budget in compliance in all material respects with all
applicable laws, rules and regulations and in accordance with good scientific and clinical
practices, applicable under the laws and regulations of the country in which such activities are
conducted.



ARTICLE IX

MANUFACTURING





9.1 Manufacturing.



(a) The Product will be manufactured in accordance with the Operating Plan/Budget adopted by
the JSC. The JSC will, to the extent possible, in adopting each Operating Plan/Budget, direct that
La Jolla’s existing facility as currently configured and with such improvements as are contemplated
in the Initial Operating Plan/Budget be used to produce bulk Product on and subject to the terms
described in Section 9.1(b). The JSC’s obligations under this Article 9 are subject to La Jolla’s
facility maintaining all regulatory approvals and licenses necessary to manufacture the Products
(including without limitation all manufacturing specifications) required by the FDA and the EMEA
and for such facility to manufacture the Product at a Cost Effective Price, as defined below. If
BioMarin CF does not obtain from La Jolla the right to sell Product in the Asia-Pacific Territory
and La Jolla is not then producing any bulk Compound, then, at La Jolla’s request, BioMarin CF and
La Jolla will negotiate a supply agreement for sale of Product meeting the specifications approved
by either the EMEA or FDA (with such changes as are reasonably agreed, provided that La Jolla or
the Asia-Pacific Licensee will be responsible for all costs associated with such changes) to La
Jolla for the Asia-Pacific Territory on terms and conditions that are commercially reasonable and
consistent with terms prevailing between suppliers and distributors in the industry; provided that
the pricing terms will be subject to Section 9.3. For purposes of this Article 9, [****]




(b) [****]



9.2 Funding for La Jolla Facility. [****]


 


- 32 -









 





9.3 Cooperation. BioMarin CF shall cooperate fully with La Jolla to enable La Jolla
to purchase raw materials, Compound and/or Product, for the Asia-Pacific Territory, directly from
BioMarin CF’s vendors on the same terms (including pricing) as BioMarin CF. In addition, to the
extent that BioMarin CF produces such items itself or La Jolla is unable to obtain such items
directly from BioMarin CF’s vendors on the same terms as BioMarin CF, then BioMarin CF shall supply
such items to La Jolla, in accordance with such procedures and specifications as are applicable to
La Jolla’s supply to BioMarin CF under Section 9.1 above on a reciprocal basis (and to the extent
such procedures or specifications are not applicable, on reasonable and customary terms).




(a) Materials Produced by Third Party Contractors. [****]



(b) Materials Produced by BioMarin CF. To the extent BioMarin CF manufactures such
raw materials, Compound or Product itself, and supplies the same to La Jolla under this
Section 9.3, then La Jolla shall reimburse BioMarin CF the Manufacturing Cost of such items.




9.4 Shortage of Supply. [****]



(a) Procedures. If at any time La Jolla or BioMarin CF (the “Producing
Party”) becomes unable to supply the quantities of Compound or Product that such Producing
Party is committed to supply hereunder, it shall immediately notify the other Party in writing. In
such event, the JSC shall immediately convene to address the problem, including locating
alternative suppliers and facilities to increase production and identifying other actions necessary
to resolve the problem. Based on such interactions, the JSC shall reasonably establish appropriate
measures to remedy the shortage and the Parties shall promptly implement such measures. In any
event, both Parties agree to respond with the level of speed and diligence commensurate with the
severity of the problem.




(b) Allocation. [****].



9.5 BioMarin CF Manufacturing. In the event that BioMarin CF manufactures the
Compound, Product, any intermediate or raw material, such manufacturing shall be at a Cost
Effective Price.




9.6 Restrictions on Manufacturing Locations. [****]


 


- 33 -









 





ARTICLE X

CONFIDENTIALITY




10.1 Confidential Information. Except as expressly provided in this Agreement or
otherwise agreed in writing, the Parties agree that the receiving Party shall keep confidential and
shall not publish or otherwise disclose or use for any purpose any information and other
confidential and proprietary materials furnished to it or its respective agents or representatives
by the other Party or its respective agents or representatives hereto pursuant to this Agreement
(collectively, “Confidential Information”). Notwithstanding the foregoing, the obligations
of non-use and non-
disclosure set forth in this Article 10 shall not apply to the extent that the receiving Party
can establish that any Confidential Information:



(a) was already known to the receiving Party, other than under an obligation of
confidentiality remaining in effect, at the time of disclosure, as evidenced by written records
kept in the ordinary course of business of the receiving Party;



(b) was generally available to the public or otherwise part of the public domain at the time
of its disclosure to the receiving Party;



(c) became generally available to the public or otherwise part of the public domain after its
disclosure and other than through any act or omission of the receiving Party in breach of this
Agreement;



(d) was subsequently lawfully disclosed to the receiving Party by a Third Party, who had no
obligation to the disclosing Party not to disclose such information to others; or



(e) was independently developed by the receiving Party prior to its disclosure by the
disclosing Party and without use of or reference to any Confidential Information disclosed by the
disclosing Party, as evidenced by written records kept in the ordinary course of business of the
receiving Party.



10.2 Permitted Disclosures. Notwithstanding the provisions of Section 10.1 above and
subject to Sections 10.3 and 10.4 below, each Party may use and disclose the other Party’s
Confidential Information as follows: (a) under appropriate confidentiality obligations
substantially equivalent to those in this Agreement, to its Affiliates, licensees, permitted
Sublicensees, contractors and any other Third Parties to the extent such use and/or disclosure is
necessary or reasonably useful to perform its obligations or to exercise the rights granted to it,
or reserved by it, under this Agreement (including to grant licenses or permitted Sublicenses
hereunder, and in the case of La Jolla, to develop, manufacture and commercialize Products for use
in the Asia-Pacific Territory); or (b) to the extent such disclosure is reasonably necessary in
filing or prosecuting intellectual property applications, complying with the terms of licenses from
Third Parties, prosecuting or defending litigation, complying with applicable governmental laws or
regulations, obtaining Marketing Approval, conducting clinical trials hereunder with respect to a
Product, or submitting information to tax or other governmental authorities. If a Party is
required by law or regulations (including securities laws, regulations or guidances) to make any
such disclosure of the other Party’s Confidential Information, to the extent it may legally do so,
it will give reasonable advance notice to the other Party of such disclosure requirement and, save
to the extent inappropriate in the case of patent applications or otherwise, will use its good
faith efforts to secure confidential treatment of such Confidential Information prior to its
disclosure (whether through protective orders or otherwise). For any other disclosures of the
other Party’s Confidential Information, including to Affiliates, licensees, permitted Sublicensees,
contractors and other Third Parties, a Party shall ensure that the recipient thereof is bound by a
written confidentiality agreement as materially protective of such Confidential Information as this
Article 10.


 


- 34 -









 





10.3 Confidential Terms. Each Party agrees not to disclose to any Third Party the
terms of this Agreement without the prior written consent of the other Party hereto, except each
Party may disclose the terms of this Agreement: (a) to advisors (including financial advisors,
attorneys and accountants), actual or potential acquisition partners or private investors, and
others on a need to know basis, in each case under appropriate confidentiality provisions
substantially equivalent to those in this Agreement; or (b) to the extent necessary to comply with
applicable laws and court orders (including securities laws, regulations or guidances); provided
that in the case of paragraph (b), the disclosing Party shall promptly notify the other Party and
(other than in the case where such disclosure is necessary, in the reasonable opinion of the
disclosing Party’s legal counsel, to comply with securities laws, regulations or guidances) allow
the other Party a reasonable opportunity to oppose with the body initiating the process and, to the
extent allowable by law, to seek limitations on the portion of the Agreement that is required to be
disclosed.



10.4 Publication of Product Information. Prior to the first Marketing Approval for
the first Product in the Territory, before publishing, publicly presenting and/or submitting for
written or oral publication a manuscript, abstract or the like that includes Data or other
information generated under this Agreement relating to the Compound or a Product that has not
previously published pursuant to this Section 10.4 (each, a “Publication”), the Party
proposing such Publication shall provide the other Party a copy thereof for its review for at least
thirty (30) days or such shorter period as is reasonably practicable (unless such Party is required
by law to publish such information sooner). Such Party shall consider in good faith any comments
provided by the other Party during such period. After such first Marketing Approval, the JSC will
develop procedures for reviewing and approving Publications, which procedures shall be consistent
with the foregoing and shall permit any public disclosure as is required by law. The contribution
of each Party shall be noted in all Publications by acknowledgment or co-authorship, whichever is
appropriate.




10.5 Press Releases and Announcements.



(a) Initial Release. On the Effective Date or, if mutually agreed, promptly after the
Effective Date, the Parties shall issue a joint press release to announce the execution of this
Agreement and the relationship of the Parties. Such press release will include a description of
the aggregate financial terms of the Agreement.



(b) Further Publicity. The Parties acknowledge the importance of supporting each
other’s efforts to publicly disclose results and significant developments regarding the Products
within the Territory and other activities in connection with this Agreement in the Territory that
may include information that is not otherwise permitted to be disclosed under this Article 10, and
that may be beyond what is required by law. The JSC shall develop a plan for the coordination,
review and sign off by each Party of public disclosure of information relating to the Product. Each
Party shall adhere to such disclosure plan, provided that each Party shall be free to make such
public disclosures as it deems necessary to comply with all applicable law, rules and regulations.



(c) Certain Events. In the event this Agreement terminates under Section 13.3 or
7.8, neither Party shall make any disparaging comments about the other Party but shall otherwise be
free to make such statements as such Party believes appropriate or necessary.


 


- 35 -









 





10.6 Prior Non-Disclosure Agreements. Upon execution of this Agreement, the terms of
this Article 10 shall supersede any prior non-disclosure, secrecy or confidentiality agreement
between the Parties, including that certain nondisclosure agreement between the Parties dated
January 15, 2008 (the “Prior Agreement”). Any information disclosed under such prior
agreements shall be deemed disclosed under this Agreement.



ARTICLE XI

INTELLECTUAL PROPERTY





11.1 Inventions and Other Intellectual Property.



(a) General Principles. Title to all inventions and other intellectual property
conceived or created solely by BioMarin CF personnel in connection with this Agreement (and all
intellectual property rights therein) shall be owned by BioMarin CF. Title to all inventions and
other intellectual property conceived or created solely by La Jolla personnel in connection with
this Agreement (and all intellectual property rights therein) shall be owned by La Jolla. Title to
all inventions and other intellectual property conceived or created jointly by personnel of La
Jolla and BioMarin CF in connection with this Agreement (and all intellectual property rights
therein) shall be jointly owned by La Jolla and BioMarin CF.



(b) Joint Ownership. Except as expressly provided in this Agreement, it is understood
that neither Party shall have any obligation to obtain any approval of, nor pay a share of the
proceeds to, the other Party to practice, enforce, license, assign or otherwise exploit inventions
or intellectual property owned jointly by the Parties, and each Party hereby waives any right it
may have under the laws of any jurisdiction to require such approval or accounting. Each Party
agrees to cooperate with the other Party, as reasonably requested, and to take such actions as may
be required to give effect to this Section 11.1(b) in a particular country within or outside the
Territory.



(c) Grant-Back License. BioMarin CF hereby grants to La Jolla a non-exclusive,
non-transferable (except pursuant to Section 18.8 below), royalty-free, limited license (without
the right to sublicense except in connection with an Asia-Pacific License, which shall be subject
to Section 4.3) to use any BioMarin CF Improvements solely to: (i) make and have made and import
the Products for BioMarin CF as authorized by the JSC or for use and sale outside the Territory,
(ii) to use any BioMarin CF Improvements for development purposes as provided in Article 4 or in
connection with an Asia-Pacific License, and sell or offer for sale the Products as provided in
Article 6 during the term of this Agreement within the Territory or (iii) to develop, use, sell,
offer for sale and otherwise commercialize the Compound or Products in the Asia-Pacific Territory;
provided that, as applied to the Asia-Pacific Territory, such right to sublicense to an
Asia-Pacific Licensee shall only apply to BioMarin CF Improvements relating to the Initial Product.
As used herein, “BioMarin CF Improvements” means any inventions or intellectual property
(including Data and know-how) (and all intellectual property rights) that is: (a) owned, licensed
to, or acquired by, BioMarin CF and, as directed by the JSC or BioMarin CF, is applied to the
development, use, manufacture and/or commercialization of any Compound or any Product under this
Agreement, including but not limited to, (i) a modification or derivative of the Compound, or an
intermediate thereof, or (ii) a method of synthesis or manufacture of the Compound, or any
biologically active materials, or an intermediate
or by-product used or created in such synthesis or manufacture, or (b) made solely by BioMarin
CF using Confidential Information of La Jolla; and any Patent claiming or disclosing such an
invention or intellectual property. As used herein, “La Jolla Improvements” means any
inventions or intellectual property (including Data and know-how) (and all intellectual property
rights) made solely by or under authority of, or is acquired by, La Jolla using Confidential
Information of BioMarin CF, and any Patent claiming or disclosing such an invention or intellectual
property. To the extent any La Jolla Improvements do not fall within the definition of La Jolla
Know-How or La Jolla Patents, La Jolla hereby grants to BioMarin CF a license to La Jolla
Improvements commensurate in scope as provided in Section 2.1.


 


- 36 -









 






11.2 Prosecution and Maintenance of Patents.



(a) Control of Prosecution Prior to Full Participation. As between the Parties and
prior to the Full Participation Point, La Jolla shall control the Prosecution and Maintenance of
all La Jolla Patents in the Territory and all Joint Patents (both within and outside the Territory)
in consultation with BioMarin CF using counsel selected by La Jolla and reasonably acceptable to
BioMarin CF. La Jolla agrees to: (i) keep BioMarin CF fully informed with respect to the status of
Prosecution and Maintenance of such La Jolla Patents and Joint Patents; and (ii) consult in good
faith with BioMarin CF regarding the Prosecution and Maintenance of such La Jolla Patents and Joint
Patents, including providing copies of all material communications to and from the patent offices,
including without limitation, office actions, responses to office actions, notices of allowance,
and notices of issuance, and providing BioMarin CF a reasonable opportunity to review and comment
on any responses to office actions and claim amendments prior to filing. If La Jolla determines
not to file any Patent, or to abandon any Patent, that is: (A) within the La Jolla Patents in any
country of the Territory; or (B) within the Joint Patents in any country within or outside the
Territory, as applicable; then La Jolla shall provide BioMarin CF with written notice of such
decision at least sixty (60) days (or if a shorter period is afforded to La Jolla to make such
decision, as soon as possible) prior to the deadline for filing any such Patent or the date on
which such abandonment would become effective, as applicable. In such event, BioMarin CF shall
have the right, at its option and cost, to control the Prosecution and Maintenance of such La Jolla
Patent or such Joint Patent, as applicable, and keep La Jolla reasonably informed of BioMarin CF’s
activities with respect to such Prosecution and Maintenance.



(b) Control of Prosecution After Full Participation. On and after the Full
Participation Point, BioMarin CF shall control the Prosecution and Maintenance of all La Jolla
Patents in the Territory and all Joint Patents (both within and outside the Territory) in
consultation with La Jolla, including matters then existing that arose prior to the Full
Participation Point, using counsel selected by BioMarin CF and reasonably acceptable to La Jolla.
BioMarin CF agrees to: (i) keep La Jolla fully informed with respect to the Prosecution and
Maintenance of such La Jolla Patents and Joint Patents; and (ii) consult in good faith with La
Jolla regarding the Prosecution and Maintenance of such La Jolla Patents and Joint Patents,
including providing copies of all material communications to and from the patent offices, including
without limitation, office actions, responses to office actions, notices of allowance, and notices
of issuance, and providing La Jolla a reasonable opportunity to review and comment on any responses
to office actions and claim
amendments prior to filing. If BioMarin CF determines not to file any Patent, or to abandon
any Patent, that is: (A) within the La Jolla Patents in any country of the Territory; or (B) within
the Joint Patents in any country within or outside the Territory, as applicable; then BioMarin CF
shall provide La Jolla with written notice of such decision at least sixty (60) days (or if a
shorter period is afforded to BioMarin CF to make such decision, as soon as possible) prior to the
deadline for filing any such Patent or the date on which such abandonment would become effective,
as applicable. In such event, La Jolla shall have the right, at its option and cost, to control
the Prosecution and Maintenance of such La Jolla Patent or such Joint Patent, as applicable, and
keep BioMarin CF reasonably informed of La Jolla’s activities with respect to such Prosecution and
Maintenance.


 


- 37 -









 





(c) Scope of Activities. For the purposes of this Section 11.2, “Prosecution and
Maintenance” (including variations such as “Prosecute and Maintain”) shall mean, with
respect to a Patent, the preparing, filing, prosecuting and maintenance of such Patent, as well as
continuations, divisionals, continuations-in-part, re-examinations, reissues and requests for
Patent term extensions and the like with respect to such Patent, together with the conduct of
interferences, the defense of oppositions and other similar proceedings with respect to a Patent.
Notwithstanding Sections 11.2(a) and (b) above, BioMarin CF shall not have the right to conduct or
control the Prosecution and Maintenance of La Jolla Patents if such Patents (or the claims thereof)
are not directed or related to the Compound, a Product and/or in each case the manufacture or use
thereof.



(d) Cooperation. Each Party shall cooperate with the other Party in connection with
all activities relating to the Prosecution and Maintenance of the La Jolla Patents and Joint
Patents undertaken by such other Party pursuant to this Section 11.2, including: (i) making
available in a timely manner any documents or information such other Party reasonably requests to
facilitate such other Party’s Prosecution and Maintenance of the La Jolla Patents and/or Joint
Patents, as applicable, pursuant to this Section 11.2; and (ii) if and as appropriate, signing (or
causing to have signed) all documents relating to the prosecution and maintenance of any La Jolla
Patents and/or Joint Patents by such other Party; and (iii) signing any power of attorney required
to enable the other Party to Prosecute and Maintain the La Jolla Patents and Joint Patents as
described above in Section 11.2(a) or 11.2(b), as applicable. Each Party shall also promptly
provide to the other Party all information reasonably requested by such other Party with regard to
such Party’s activities pursuant to this Section 11.2. Each Party shall hold all information
disclosed to it by the other Party under this Section as Confidential Information of the other
Party.



(e) Prosecution and Maintenance Costs. Costs incurred in connection with the
Prosecution and Maintenance activities undertaken by a Party pursuant to this Section 11.2 shall:
(i) be borne exclusively by La Jolla if incurred prior to the Full Participation Point; and (ii) be
taken into account as set forth in the Financial Appendix when calculating Other Operating Expense,
if incurred on or after the Full Participation Point. Notwithstanding the foregoing, any FTE Costs
or Out-of-Pocket Expenses attributable to the transition of Prosecution and Maintenance of the La
Jolla Patents to BioMarin CF’s counsel after the Full Participation Point shall be borne
exclusively by BioMarin CF and shall not be Shared Costs.


 


- 38 -









 






11.3 Enforcement.



(a) Notice. If either Party becomes aware of any actual or threatened infringement of
any La Jolla Patent in the Territory, or Joint Patent, by the manufacture, use, development or
commercialization in the Territory of a product containing a Compound (each, an
“Infringement”), that Party shall promptly notify the JSC and the other Party in writing.




(b) Enforcement Actions.



(i) Except as otherwise agreed, prior to the Full Participation Point, La Jolla shall have the
first right (but not the obligation) to bring and control any action or proceeding with respect to
the Infringement of any La Jolla Patent in the Territory and/or Joint Patent, or to defend any
declaratory judgment action with respect thereto (for the purposes of this Section 11.3, an
“Enforcement Action”). La Jolla agrees not to settle any Enforcement Action, or make any
admissions or assert any position in such Enforcement Action, in a manner that would adversely
affect BioMarin CF’s rights or interests, including with respect to BioMarin CF’s rights and
interests in the Compound and/or Products within the Territory, or in the La Jolla Patent within
the Territory, and/or the Joint Patent, without the prior written consent of BioMarin CF, which
shall not be unreasonably withheld or delayed.



(ii) After the Full Participation Point, BioMarin CF shall have the first right (but not the
obligation) to bring and control any Enforcement Action. BioMarin CF agrees not to settle any
Enforcement Action, or make any admissions or assert any position in such Enforcement Action, in a
manner that would adversely affect the rights or interests of La Jolla in the Compound and/or a
Product, or the validity, enforceability or scope of any La Jolla Patent within the Territory,
without the prior written consent of La Jolla, which shall not be unreasonably withheld or delayed.
The out-of-pocket costs incurred by the Parties in pursuing an Enforcement Action in accordance
with this Section 11.3 shall be shared as Other Operating Expense pursuant to the Financial
Appendix, if incurred on or after the Full Participation Point.



(c) Cooperation. The Party initiating or defending any Enforcement Action pursuant to
this Section 11.3 shall keep the other Party reasonably informed of the progress and status of any
such Enforcement Action. The Parties shall assist one another and cooperate in any such
Enforcement Action at the other’s reasonable request (including joining as a party plaintiff to the
extent necessary or so requested by the other Party).



(d) Recoveries. Any recovery obtained by a Party as a result of any Enforcement
Action pursuant to this Section 11.3, by settlement or otherwise, shall be included as Other
Operating Income for purposes of determining Profit/Loss under Section 7.12 above and the Financial
Appendix.


 


- 39 -









 





11.4 Third Party Infringement Claims. If the production, sale, offer for sale, or use
of the Compound or Product pursuant to this Agreement results in a claim, suit or proceeding
alleging patent infringement against La Jolla or BioMarin CF (or their respective Affiliates,
licensees or Sublicensees) (collectively, “Infringement Actions”), such Party shall
promptly notify the other
Party hereto in writing, and the Parties shall promptly confer to consider the claim or
assertion and the appropriate course of action. Unless the Parties otherwise agree in writing,
each Party shall have the right to defend itself against a suit that names such Party as a
defendant; provided, however, that the other Party may participate in the defense and/or settlement
thereof at its own expense with counsel of its choice. The Party who is subject to the
Infringement Action agrees not to settle such Infringement Action, or make any admissions or assert
any position in such Infringement Action, in a manner that would adversely affect the manufacture,
use or sale of the Compound or Products within the Territory, or that admits the infringement or
validity of any Third Party Patent, without the approval of the other Party, such approval not to
be unreasonably withheld. In any event, each Party shall reasonably assist the other Party and
cooperate in connection with any litigation in which such Party is not that named as a defendant,
at the defending Party’s request and expense. Further, the Party that is subject to the
Infringement Action agrees to keep the other Party hereto reasonably informed of all material
developments in connection with any such Infringement Action. The out-of-pocket costs incurred by
the Parties in defending an Infringement Action (other than any expenses incurred by the Party who
has elected to participate in the defense and/or settlement thereof at its own expense with counsel
of its choice as provided above) shall in accordance with this Section 11.4 shall be shared as
Other Operating Expense pursuant to the Financial Appendix.



11.5 Patent Marking. BioMarin CF agrees to mark, and have its Affiliates and
Sublicensees mark, all patented Products or packaging thereof sold or distributed in the Territory
pursuant to this Agreement in accordance with the applicable patent statutes or regulations in the
country or countries of manufacture or sale thereof.




11.6 Third Party Technologies.



(a) Existing Third Party Technology. With respect to the Prosecution and Maintenance,
and enforcement, of La Jolla Patents licensed by La Jolla from a Third Party, except as provided in
Exhibit 11.6, La Jolla shall cooperate with BioMarin CF to Prosecute and Maintain, and to
enforce, such La Jolla Patents in the Territory in the same manner as set forth in Sections 11.2
and 11.3 above. As between La Jolla and BioMarin CF, any recoveries from enforcement of such La
Jolla Patents licensed from a Third Party (including any amounts that La Jolla receives from the
Third Party licensor as a result of such enforcement) shall be shared in accordance with
Section 11.3(d), after deducting from such recoveries any amounts owed to the Third Party licensor
for such enforcement; provided that any Enforcement Actions initiated by the Third Party licensor
shall be deemed initiated by La Jolla for purposes of Section 11.3(d), and the costs and expenses
incurred by La Jolla in such Enforcement Action shall include the costs and expenses reimbursed or
required to be reimbursed by La Jolla to the Third Party licensor in such Enforcement Action.



(b) Provisions of Existing In-License. It is understood that the Existing In-License
may require that particular provisions be incorporated into a sublicense granted thereunder. The
text of any such provisions in the Existing In-License is set out on Exhibit 11.6 attached
hereto and shall be deemed incorporated by reference into this Agreement. BioMarin CF agrees to be
bound by the provisions set out on Exhibit 11.6 to the extent applicable to BioMarin CF in
its capacity as a sublicensee under the Existing In-License. In addition, BioMarin CF, in its
capacity as
a sublicensee under the Existing In-License, agrees to comply with the obligations applicable
to sublicensees under such agreement, as set forth on Exhibit 11.6.



(c) New Technology. [****]


 


- 40 -









 








ARTICLE XII

TRADEMARKS




12.1 Display. BioMarin CF shall be responsible, in consultation with La Jolla, for the
development of all packaging materials, labels and promotional materials relating to Products
(“Product Promotional Materials”) for use in the Territory. All Product Promotional
Materials for use in the Territory shall display the Product Trademarks and no other
product-specific trademarks or branding. The trade marks of BioMarin CF, trade dress, style of
packaging and the like with respect to each Product within the Territory may be determined by
BioMarin CF in a manner that is consistent with BioMarin CF’s standard trade dress and style. To
the extent permissible by law and, if necessary, as approved by an applicable Regulatory Authority,
BioMarin CF shall also include La Jolla’s trademark and/or tradename on the label, primary
packaging and package inserts for each Product and all promotional materials for the Product in
equal size and prominence, as nearly as allowed by applicable regulations in the relevant
jurisdiction.



12.2 Title. As between the Parties, La Jolla shall own, and is hereby assigned, all
right, title and interest in and to the Product Trademarks, and all good will arising out of the
use of the Product Trademarks shall inure to the benefit of La Jolla. Subject to the foregoing,
BioMarin CF shall own all right, title and interest in and to the copyright of all Product
Promotional Materials.



12.3 Grant of License. Subject to the terms and conditions of this Agreement, La
Jolla hereby grants to BioMarin CF a co-exclusive license to use the Product Trademarks in the
United States, and an exclusive license to use the Product Trademarks in each other country of the
Territory, for the packaging, marketing, distributing, sale and promotion of the Products in
accordance with this Agreement. The rights and license granted by La Jolla to BioMarin CF in this
Section 12.3 and in Section 12.4 below shall commence on the Effective Date, but BioMarin CF agrees
not to exercise such rights or license prior to the Full Participation Point.



12.4 Registration of Trade Marks. Subject to Section 12.3 above, BioMarin CF shall
file, register and maintain, for the term of this Agreement appropriate registrations for the
Product Trademarks, as mutually agreed by La Jolla and BioMarin CF, in each country of the
Territory in which Products are or will be sold. Such registrations for the Product Trademarks
shall be obtained by BioMarin CF in La Jolla’s name.



12.5 Certain Covenants. BioMarin CF agrees that neither it, nor any of its
Affiliates, shall at any time during the term of this Agreement: (a) challenge the Product
Trademarks or the registration thereof in any country; or (b) register, or attempt to register, any
trademarks or trade names that are confusingly similar to the Product Trademarks; or (c) use any
Product Trademark in connection with any product other than a Product for use within the Territory;
nor shall BioMarin CF or any of its Affiliates authorize or assist any Third Party to do any of the
foregoing.


 


- 41 -









 





12.6 Recordation of Licenses. In those countries where a trademark license may be
recorded, La Jolla will provide to BioMarin CF, on BioMarin CF’s written request, a separate
trademark license for the Product Trademarks and BioMarin CF will arrange for the recordation of
such trade mark license with the appropriate governmental agency, promptly following receipt of
such license from La Jolla. BioMarin CF shall cooperate in the preparation and execution of such
documents.



12.7 Approval of Packaging and Promotional Materials. To the extent required by law
to protect and preserve La Jolla’s rights in a Product Trademark or La Jolla’s trade name, then as
reasonably requested by La Jolla, BioMarin CF shall submit representative Product Promotional
Materials, packaging and samples of Product displaying the Product Trademarks and/or La Jolla’s
trade name to La Jolla for La Jolla’s review and approval, prior to the first use of such Product
Promotional Materials, packaging or Product and prior to any subsequent change or addition to such
Product Promotional Materials, packaging or Product. If La Jolla has not responded within three
(3) business days after the submission of such promotional materials, packaging or Product, La
Jolla’s approval will be deemed to have been received.



12.8 Enforcement. La Jolla and BioMarin CF shall reasonably cooperate with each other
to protect Product Trademarks in the Territory. The Parties shall cooperate reasonably and in good
faith to determine whether and to what extent to institute and prosecute or defend any actions or
proceedings involving or affecting Product Trademarks in the Territory, and all settlements
relating thereto are subject to the mutual agreement of the Parties (such agreement not to be
unreasonably withheld by either Party). The Parties shall reasonably cooperate in any action taken
to enforce or defend their rights in Product Trademarks in the Territory, including taking
appropriate appeals.



12.9 Termination of Trade Mark License. BioMarin CF’s right to use the Product
Trademarks and the La Jolla trade name shall terminate in each country of the Territory in which
BioMarin CF’s rights to distribute the Products are terminated or expire. BioMarin CF shall take
all such steps as La Jolla may reasonably request to give effect to the termination of the license
to the Product Trademarks and La Jolla trade name in such country and to record any documents that
may be required to evidence the termination of such license.



12.10 Trademark Costs. Costs incurred in connection with the filing, prosecuting and
maintaining and enforcing the Product Trademarks in the Territory, and the recordation of Product
Trademark licenses for use with Products within the Territory shall be taken into account as set
forth in the Financial Appendix when calculating Other Operating Expense, if incurred on or after
the Full Participation Point.



ARTICLE XIII

TERM AND TERMINATION




13.1 Term. This Agreement shall commence on the Effective Date, and unless terminated
earlier as provided in Section 7.8, or this Article 13, shall continue in full force and effect
until there is no further Net Sales of any Product and no further development activities with
respect to any
Product within the Territory and thereafter until disposition, redeployment or shutdown of all
operations and assets related to the Products.


 


- 42 -









 





13.2 Breach. Either Party to this Agreement may terminate this Agreement in the event
(a) the other Party shall have materially breached or defaulted in the performance of any of its
material obligations under this Agreement, and such default shall have continued for [****] after
written notice thereof was provided to the breaching Party by the non-breaching Party (provided
that if such breach is not reasonably curable within [****], but a cure is possible, then for such
longer period as necessary so long as the defaulting Party is diligently and in good faith working
on a cure [****] or (b)(x) the other Party (i) applies for or consents to the appointment of a
receiver, trustee, liquidator or custodian of itself or of all or a substantial part of its
property; (ii) becomes unable, or admits in writing its inability, to pay its debts generally as
they mature; (iii) makes a general assignment for the benefit of its or any of its creditors; (iv)
is dissolved or liquidated in full or in part; (v) commences a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or consents to any such
relief or to the appointment of or taking possession of its property by any official in an
involuntary case or other proceeding commenced against it; or (iv) takes any action for the purpose
of effecting any of the foregoing; or (y) proceedings for the appointment of a receiver, trustee,
liquidator or custodian of the other Party or of all or a substantial part of the property thereof,
or an involuntary case or other proceedings seeking liquidation, reorganization or other relief
with respect to the other Party or the debts thereof under any bankruptcy, insolvency or other
similar law now or hereafter in effect, shall be commenced and an order for relief entered or such
proceeding shall not be dismissed or discharged within sixty (60) calendar days of commencement.
In the case of clause (a), any such termination shall become effective upon written notice by the
non-breaching Party to the breaching Party issued after the expiration of the applicable cure
period unless the breaching Party has cured any such breach or default prior to the expiration of
such cure period. In the case of clause (b) any such termination shall become effective
immediately. A material breach or default in the performance of any of a Party’s material
obligations under the Securities Purchase Agreement shall be deemed to be a material breach or
default under this Agreement.



13.3 Convenience. BioMarin CF may terminate this Agreement in its entirety for any
reason upon [****] prior written notice to La Jolla and upon exercise of its rights hereunder no
further payment shall be due to La Jolla under Article 7 subsequent to the exercise of such right.




13.4 Election Not to Pay Under Sections 7.2, 7.3, 7.4 and 7.13. [****]



ARTICLE XIV

EFFECT OF TERMINATION




14.1 Accrued Obligations. The expiration or termination of this Agreement for any
reason shall not release either Party from any liability that, at the time of such expiration or
termination, has already accrued to the other Party or that is attributable to a period prior to
such expiration or termination, nor will any termination of this Agreement preclude either Party
from pursuing all
rights and remedies it may have under this Agreement, or at law or in equity, with respect to
breach of this Agreement.


 


- 43 -









 





14.2 Right of Sale/Right of Purchase.



14.2.1 Right of Sale. [****]



14.2.2 Right of Purchase.




(a) [****]




(b) [****]




(c) [****]




(d) [****]




(e) [****]




(f) [****]



14.3 Procedure. The Purchase Price under Section 14.2.2(b) and (c) above shall be
determined by the mutual agreement of BioMarin CF and La Jolla. In determining the Purchase Price
of the Purchased Interests, the Parties shall take into account the present value of all milestone
payments remaining to be paid and the likelihood of such payments being made to La Jolla. [****]



14.4 Termination under Sections 13.2 or 13.3. If this Agreement is terminated
pursuant to Section 13.2 and the terminating Party does not exercise its right of purchase pursuant
to Section 14.2.2, then such termination will be treated as a termination of this Agreement on
expiration of term in accordance with Section 14.5. If this Agreement is terminated pursuant to
(x) Section 13.2 and the terminating Party triggers its right of purchase pursuant to
Section 14.2.2, or in the case of Section 14.2.1, BioMarin CF triggers its Sale Right pursuant to
Section 14.2.1, or (y) Section 13.3, then such termination will be subject to the following terms:




(a) Wind-down Period.



(i) Development. If, on the date of notice of such termination, the breaching Party
in the case of a termination under Section 13.2 and BioMarin CF in the case of a termination under
Section 13.3 (the “Eliminated Party”) or any of its Affiliates was conducting any ongoing
clinical trials of a Product in the Territory (“Ongoing Trials”), then, to the extent and
as requested by the other Party (the “Remaining Party”), the Eliminated Party shall
promptly transition to the Remaining Party or its designee such Ongoing Clinical Trials or portions
thereof or continue such trials for a period requested by the Remaining Party [****]
(“Development Transition Period”). The Development Costs that the Eliminated Party
reasonably incurs during the remaining term of this Agreement in performing such Ongoing Trials
shall be shared equally by the Parties in accordance with Section 7.12 and the Financial Appendix.


 


- 44 -









 





(ii) Commercialization. With respect to Products being commercialized within the
Territory at the time of such termination, to avoid a disruption in the supply of such Products to
patients, the Eliminated Party, its Affiliates and its Sublicensees may cease all promotion of such
Product as of the effective date such termination, but shall continue to sell and distribute each
such Product in each country of the Territory for which Marketing Approval for such Product has
been obtained, in accordance with the terms and conditions of this Agreement, for a period
requested by the Remaining Party not to exceed [****] (the “Wind-down Period”); provided
that the Eliminated Party, its Affiliates and its Sublicensees shall cease such activities, or any
portion thereof, in a given country upon [****] by the Remaining Party requesting that such
activities (or portion thereof) be ceased. Notwithstanding any other provision of this Agreement,
during the Wind-down Period, the Eliminated Party’s and its Affiliates’ and Sublicensees’ rights
with respect to the Compound and Products within the Territory shall be non-exclusive and, without
limiting the foregoing, the Remaining Party shall have the right to engage one or more other
distributor(s) and/or licensee(s) of any Product in all or part of the Territory. During the
Wind-down Period, the Parties’ sharing of Profit/Loss shall continue with respect to any Product
sold or disposed by the Eliminated Party, its Affiliates or Sublicensees in the Territory. Within
[****] after the expiration of the Wind-down Period, the Eliminated Party shall notify the
Remaining Party of any quantity of Products remaining in the Eliminated Party’s inventory and the
Remaining Party shall have the option, upon notice to the Eliminated Party, to repurchase any such
quantities of Product from the Eliminated Party at a price equal to the transfer price paid by the
Eliminated Party for such Product.




(iii) Manufacturing. [****]



(b) Assignment of Regulatory Filings and Marketing Approvals. At the Remaining
Party’s option, which shall be exercised by written notice to the Eliminated Party, the Eliminated
Party shall assign or cause to be assigned to the Remaining Party or its designee (or, to the
extent not so assignable, the Eliminated Party shall take all reasonable actions to make available
to the Remaining Party or its designee the benefits of) all regulatory filings and registrations
(including INDs, MAAs and Marketing Approvals) for all Products within the Territory, including any
such regulatory filings and registrations made or owned by the Eliminated Party’s Affiliates and/or
Sublicensees. In each case, unless otherwise required by any applicable law or regulation, the
foregoing assignment (or availability) shall be made within [****].



(c) Data and Know-How Disclosure. Within [****], the Eliminated Party shall provide
to the Remaining Party all Data and the Eliminated Party Know-How pertaining to all Products in the
Territory. Such disclosure shall be in electronic form reasonably usable by the Remaining Party
and, if reasonably necessary in connection with the Remaining Party’s (or its designee’s) further
development, manufacture and/or commercialization of Products, shall include original hardcopies or
duplicate copies thereof, as required. The Remaining Party shall have the right to use and
disclose all Data and Know-How of the Eliminated Party following termination of this Agreement as
provided in Section 14.4(e) below.


 


- 45 -









 





(d) Transition. The Eliminated Party shall use diligent efforts to cooperate with the
Remaining Party and/or its designee to effect a smooth and orderly transition in the development,
sale and ongoing marketing, promotion and commercialization of the Products in the Territory
during the Wind-down Period, including making its personnel and other resources reasonably
available to the Remaining Party. If the Eliminated Party has entered into contracts with
contractors or vendors that are necessary or useful for the Remaining Party to take over
responsibility with respect to the Products in the Territory, then the Eliminated Party shall, to
the extent possible and requested in writing by the Remaining Party, assign all of the relevant
Third Party agreements to the Remaining Party, or otherwise cooperate to make such arrangements
available to the Remaining Party or its designee for purposes of the Products. Without limiting
the foregoing, the Eliminated Party shall use diligent efforts to conduct in an expeditious manner
any activities to be conducted under this Section 14.4.




(e) Licenses. [****]



(f) Sublicensees. Any contracts with Sublicensees of a Product within the Territory
engaged by the Eliminated Party other than the Eliminated Party’s Affiliates shall be assigned to
the Remaining Party to the extent the Eliminated Party has the right to do so and the Remaining
Party so requests. In the event such assignment is not requested by the Remaining Party, or the
Eliminated Party does not have the right to do so, then the rights of such Sublicensees shall
terminate upon termination of the Eliminated Party’s rights with respect to the Territory. The
Eliminated Party shall ensure that its Affiliates and such Sublicensees (if not assigned to the
Remaining Party pursuant to this Section 14.4(f) shall transition all Products back to the
Remaining Party in the manner set forth in this Section 14.4 as if such Affiliate or Sublicensee
were named herein.



(g) Return of Materials. Within [****] upon request by the Remaining Party, the
Eliminated Party shall either return to the Remaining Party or destroy all Confidential Information
of the Remaining Party that is in the Eliminated Party’s possession and shall provide the Remaining
Party with written confirmation of such destruction or return, as applicable. Effective upon the
end of the Wind-down Period, the Eliminated Party shall cease to use all trademarks and trade names
of the Remaining Party (including the Product Trademarks) in the Territory, and, except as provided
in Section 14.6 below, all rights granted to the Eliminated Party hereunder with respect to the
Compound and Products in the Territory shall terminate. In addition, all Data generated by or
under authority of the Eliminated Party hereunder during the term of the Agreement shall, to the
extent it specifically pertains to the Compound or the Product, be deemed Confidential Information
of the Remaining Party and not Confidential Information of the Eliminated Party (and will not be
subject to the exclusion under Section 10.1(a) and (e) above).




14.5 Expiration of Term. [****]


 


- 46 -









 





14.6 Surviving Sections and Articles. Articles 1, 13, 14, 15 (but only to the extent
necessary for a Party to enforce its rights as of the date of termination of this Agreement), 16
(but only to the extent necessary to cover sales of Products and the performance of each Party’s
obligations under this Agreement up to and including the date of termination of this Agreement) and
18 and Sections 10.1, 10.2, 10.3, 10.5(c), 10.6, 11.1 and, only to the extent of matters existing
as of or occurring prior to the date of termination of this Agreement, 11.4 and 11.6, shall survive
the
termination of this Agreement for any reason and all other Articles and Sections shall expire
and be of no further force and effect as of the date of termination of this Agreement except that
Sections 7.14(b), 7.14(c), 7.15, 7.16, 7.17 and 7.18 shall survive for as long as necessary solely
for the purpose of settlement of accounts relating to periods prior to the date of the termination
of this Agreement, and provided further that upon an expiration of this Agreement pursuant to
Sections 13.1 and 14.5, Section 12.3 will survive on a non-exclusive basis and Section 12.9 will
not thereafter apply to BioMarin CF. Notwithstanding the foregoing, Sections 11.2 and 11.3 shall
survive as contemplated in Section 14.4. In addition, during the Wind-down Period, a Party’s
rights under Section 4.3(a), 5.3 and 5.4 shall survive to the extent such Party has surviving
rights under this Agreement to commercialize Products and Compounds in the Territory and to use
Know-How of the other Party; except that any sublicenses granted by La Jolla to an Asia-Pacific
Licensee prior to the date of termination of this Agreement in accordance with Section 4.3(a) under
the BioMarin CF Know-How or Patents claiming BioMarin CF Improvements shall also survive and
continue in effect. Except as otherwise provided in this Article 14, all rights and obligations of
the Parties under this Agreement shall terminate upon the expiration or termination of this
Agreement for any reason. In the event that this Agreement expires or is terminated under Article
13 above, the Securities Purchase Agreement shall survive in accordance with its terms. In
addition, all obligations of one Party to another at the time of expiration under any
representation, warranty, covenant or agreement or in respect of any breach thereof or default
thereunder shall remain in full force and effect without waiver thereof by a Party hereunder to
enforce its rights in respect thereof.



ARTICLE XV

REPRESENTATIONS, WARRANTIES AND COVENANTS




15.1 General Representations. Each Party hereby represents and warrants to the other
Party that, as of the Effective Date:



(a) Duly Organized. Such Party is a corporation duly organized, validly existing and
is in good standing under the laws of the jurisdiction of its incorporation, is qualified to do
business and is in good standing as a foreign corporation in each jurisdiction in which the conduct
of its business or the ownership of its properties requires such qualification and failure to have
such would prevent such Party from performing its obligations under this Agreement.



(b) Due Execution; Binding Agreement. This Agreement is a legal and valid obligation
binding upon such Party and enforceable in accordance with its terms. The execution, delivery and
performance of this Agreement by such Party have been duly authorized by all necessary corporate
action and do not and will not: (i) require any consent or approval of its stockholders; (ii) to
such Party’s knowledge, violate any law, rule, regulation, order, writ, judgment, decree,
determination or award of any court, governmental body or administrative or other agency having
jurisdiction over such Party; nor (iii) conflict with, or constitute a default under, any
agreement, instrument or understanding, oral or written, to which such Party is a party or by which
it is bound.


 


- 47 -









 





(c) Authorizations. Such Party has obtained all necessary consents, approvals and
authorizations of all Regulatory Authorities, other governmental authorities and other persons or
entities required to be obtained by such Party in order to enter into this Agreement and to
otherwise perform such Party’s obligations under this Agreement.



(d) No Other Affiliates. As of the Effective Date, such Party does not have any
Affiliates that are not Controlled Affiliates.



15.2 Representations and Warranties of La Jolla. La Jolla represents, warrants and
covenants to BioMarin CF that, as of the Effective Date:



(a) it exclusively owns all right title, and interest in or otherwise has full rights and
authority to grant the rights and licenses under the La Jolla Patents and the La Jolla Know-How;
except as described in Exhibit 15.2;



(b) it has not previously granted, and will not grant during the term of this Agreement, any
right, security interest, option, lien, license, or encumbrance of any nature under the La Jolla
Patents and/or La Jolla Know-How, or any portion thereof, that conflicts with the rights and
licenses granted to BioMarin CF under this Agreement;



(c) to La Jolla’s Knowledge, there are no actual, pending, alleged or threatened actions,
suits, claims, interference or governmental investigations in the Territory involving the Compound,
Products, the La Jolla Patents or the La Jolla Know-How by or against La Jolla. In particular, to
La Jolla’s Knowledge, (i) there is no pending or threatened litigation involving any claims based
on product liability or infringement or misappropriation of any intellectual property rights of any
Third Party in relation to the Compound or Products, and (ii) there is no pending or threatened
reexamination, opposition, or interference proceeding involving any La Jolla Patent or any other
pending or threatened proceeding or action challenging the validity or enforceability of any La
Jolla Patent. In addition, La Jolla has not received notice of and has not filed any suit, claim,
action or proceeding related to any of the foregoing matters;



(d) to La Jolla’s Knowledge, developing, using, making, selling, offering for sale, importing,
or exporting the Compound or a Product, BioMarin CF’s exercise of the rights licensed hereunder, or
BioMarin CF’s performance of the activities contemplated herein shall not infringe, directly or
indirectly, any patent or other intellectual property right of a Third Party under the laws of any
country within the Territory;



(e) to La Jolla’s Knowledge, there is no actual, pending, alleged or threatened infringement
by a Third Party of any of the La Jolla Patents or misappropriation by a Third Party of any of the
La Jolla Know-How; and




(f) to La Jolla’s Knowledge, none of the issued La Jolla Patents are invalid or unenforceable;



(g) except as described in Exhibit 15.2, all La Jolla Patents have been filed,
prosecuted, and maintained at the respective patent offices in accordance with applicable laws and
regulations;


 


- 48 -









 





(h) Exhibit 1.25 includes all pending patent applications and issued patents owned by
or licensed to La Jolla that claim or relate to the development, manufacture and/or
commercialization of the Compound and/or the Products;



(i) except as set forth on Exhibit 1.25, the Existing In-License is the only agreement
entered into before the Effective Date between La Jolla and a Third Party under which La Jolla is
granted a license under or is assigned any of such Third Party’s intellectual property rights that
are used in or relate to the development, manufacture, and/or commercialization of the Compound
and/or the Products by BioMarin CF in accordance with this Agreement and prior to the Effective
Date La Jolla has secured the consent of the Existing In-License licensor to the transactions
contemplated by this Agreement in the form attached hereto as Exhibit 15.2I;



(j) as of the Effective Date, the Existing In-License is in full force and effect in
accordance with its terms, and La Jolla is not in breach of the Existing In-License and has not
received any notice from the licensor that La Jolla is in breach of the Existing In-License;



(k) La Jolla has provided BioMarin CF a true, correct, and complete copy of the Existing
In-License; and



(l) La Jolla does not have any knowledge that any of BioMarin CF’s representations, warranties
and covenants set forth in Section 15.1 above and Section 15.3 below are inaccurate.



15.3 Representations and Warranties of BioMarin CF. BioMarin CF represents, warrants
and covenants to La Jolla that, as of the Effective Date:




(a) it has the full right and authority to grant the rights and licenses granted herein;



(b) it has not previously granted, and will not grant during the term of this Agreement,
rights under any Patents owned by BioMarin CF and/or BioMarin CF Know-How, or any portion thereof,
that conflict with the rights and licenses granted to La Jolla under this Agreement;



(c) neither BioMarin CF nor its Affiliates have initiated any human clinical trials or other
development activities with respect to, and are not commercializing, any products specifically
directed to the treatment of lupus, and are not engaged in contract negotiations with respect to
in-licensing or acquiring any specific product directed to the treatment of lupus; and



(d) neither BioMarin CF nor any of its Affiliates owns or Controls: (i) any Patents containing
claims covering the Compound or a Product, nor (ii) Patents or other intellectual property that are
necessary for the development or commercialization of the Compound or Products; and



(e) BioMarin CF does not have any knowledge that any of La Jolla’s representations and
warranties set forth in Sections 15.1 and 15.2 above are inaccurate.


 


- 49 -









 





15.4 DISCLAIMER. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER
PARTY MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTIES OF ANY KIND EITHER EXPRESS OR IMPLIED,
INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NONINFRINGEMENT OR VALIDITY OF ANY PATENTS ISSUED OR PENDING.



ARTICLE XVI

INDEMNIFICATION




16.1 Indemnification of La Jolla. BioMarin CF shall indemnify and hold harmless each
of La Jolla, its Affiliates and the directors, officers, stockholders and employees of such
entities and the successors and assigns of any of the foregoing (the “La Jolla
Indemnitees”), from and against any and all liabilities, damages, penalties, fines, costs,
expenses (including, reasonable attorneys’ fees and other expenses of litigation)
(“Liabilities”) from any claims, actions, suits or proceedings brought by a Third Party (a
“Third Party Claim”) incurred by any La Jolla Indemnitee, arising from, or occurring as a
result of: (a) any material breach of any representations, warranties or covenants by BioMarin CF
in Article 15 above; (b) any Products Liability Claim (subject to and shared in accordance with the
mechanism set forth in Section 16.5 below); or (c) the gross negligence or willful misconduct of a
BioMarin CF Indemnitee; except to the extent such Third Party Claims fall within the scope of La
Jolla’s indemnification obligations set forth in Section 16.2 below.



16.2 Indemnification of BioMarin CF. La Jolla shall indemnify and hold harmless each
of BioMarin CF, its Affiliates and Sublicensees and the directors, officers and employees of
BioMarin CF, its Affiliates and Sublicensees and the successors and assigns of any of the foregoing
(the “BioMarin CF Indemnitees”), from and against any and all Liabilities from any Third
Party Claims incurred by any BioMarin CF Indemnitee, arising from, or occurring as a result of:
(a) any material breach of any representations, warranties or covenants by La Jolla in Article 15
above; (b) any Products Liability Claim (subject to and shared in accordance with the mechanism set
forth in Section 16.5 below); or (c) the gross negligence or intentional misconduct of a La Jolla
Indemnitee; except to the extent such Third Party Claims fall within the scope of BioMarin CF’s
indemnification obligations set forth in Section 16.1 above.



16.3 Procedure. Except with respect to Product Liability Claims subject to
Section 16.5 below, a Party that intends to claim indemnification under this Article 16 (the
“Indemnitee”) shall promptly notify the other Party (the “Indemnitor”) in writing
of any Third Party Claim, in respect of which the Indemnitee intends to claim such indemnification,
and the Indemnitor shall have sole control of the defense and/or settlement thereof. The indemnity
arrangement in this Section 16.3 shall not apply to amounts paid in settlement of any action with
respect to a Third Party Claim, if such settlement is effected without the consent of the
Indemnitor, which consent shall not be withheld or delayed unreasonably. The failure to deliver
written notice to the Indemnitor within a reasonable time after the commencement of any action with
respect to a Third Party Claim, if prejudicial to its ability to defend such action, shall relieve
such Indemnitor of any liability to the Indemnitee under this Section 16.3, but the omission to so
deliver written notice to the Indemnitor shall not relieve the Indemnitor of any liability that it
may have to any Indemnitee otherwise than
under this Section 16.3. The Indemnitee under this Section 16.3 shall cooperate fully with
the Indemnitor and its legal representatives in the investigation of any action with respect to a
Third Party Claim covered by this indemnification.


 


- 50 -









 






16.4 Recalls.



(a) Voluntary and Mandatory Recalls; Decision-Making. To the extent that: (a) any
Regulatory Authority in the Territory issues a directive or order that a Product be recalled or
withdrawn in any country within the Territory; (b) a court of competent jurisdiction orders a
recall or withdrawal of a Product in any country within the Territory, or (c) the JSC determines
that the Product should be recalled or withdrawn voluntarily in any country within the Territory,
the Parties shall recall or withdraw a Product as set forth in this Section 16.4. As between the
Parties, BioMarin CF shall implement and coordinate all activities that the JSC determines are
reasonably necessary in connection with such recall or withdrawal of the Product within the
Territory, including making all contact with relevant Regulatory Authorities; provided, however,
that BioMarin CF shall not take any material action with respect to any such recall without first
consulting in good faith with La Jolla and obtaining approval of the JSC, to the extent
practicable, and BioMarin CF shall consider in good faith any comments of La Jolla in connection
with any aspect of the management of any such recall. In any event, BioMarin CF shall undertake
all activities in connection with such recall or withdrawal of a Product within the Territory in
accordance with any procedures or instructions of the JSC and, in any event, in a manner designed
to minimize any harm to the marketability of the Products and the reputation of each Party. La
Jolla shall have the right to participate, upon its request, in any statements relating to such
action to the extent feasible in the circumstances, and the Parties shall keep each other informed
with respect to the status thereof. At a Party’s request, the other Party shall provide reasonable
assistance in conducting such recall, market withdrawal or other corrective actions, including,
providing all pertinent records that such Party may reasonably request to assist in effecting such
action. For clarity, all matters relating to a withdrawal or recall of a Product in the
Asia-Pacific Territory shall be determined, controlled and coordinated by La Jolla.



(b) Costs of Recall. All Out-Of-Pocket Expenses and FTE Costs (each as defined in the
Financial Appendix) incurred by a Party for the execution of any recall or withdrawal of the
Product (“Recall Costs”) pursuant to Section 16.4(a) above shall be included in the
calculation of Profit/Loss pursuant to the Financial Appendix; except to the extent that [****]:




(i) [****];




(ii) [****].




16.5 Products Liability Claims.



(a) Each Party shall notify the other Party as promptly as practicable if any Third Party
Claim is commenced or threatened against such Party alleging product liability, product defect,
design, packaging or labeling defect, failure to warn, or any similar action relating to the use or
safety of a Product in the Territory (“Product Liability Claim”).


 


- 51 -









 





(b) Each Party shall cooperate with the other Party in connection with any such Product
Liability Claim that is commenced or threatened against the other Party. If a Product Liability
Claim is asserted against both Parties, each Party will have the right to designate counsel to
defend itself in the Product Liability Claim. If a Product Liability Claim is brought against one
Party but not the other Party, the named Party shall control the defense and/or settlement thereof
at its own expense with counsel of its choice, subject to this Section 16.5. In such case, the
other Party may participate in the defense and/or settlement thereof to the extent related to
Products in the Territory at its own expense with counsel of its choice. In any event, the Party
that is subject to the Product Liability Claim to the extent related to Products in the Territory
(if not asserted against both Parties) agrees to keep the other Party hereto reasonably informed of
all material developments in connection with any such Product Liability Claim.



(c) Neither Party shall settle any Product Liability Claim, or make any admissions or assert
any position in such Product Liability Claim, in a manner that would adversely affect a Product or
the manufacture, use or sale thereof without the prior written consent of the other Party, which
shall not be withheld unreasonably.




(d) To the extent a Product Liability Claim is caused by: [****].



16.6 WAIVER OF CERTAIN CLAIMS. THE PARTIES AGREE THAT IN ENFORCING ANY RIGHT TO
INDEMNITY UNDER THIS AGREEMENT OR IN MAKING ANY CLAIM FOR BREACH OF THIS AGREEMENT, A PARTY SHALL
HAVE NO RIGHT OR CLAIM FOR SPECIAL, INCIDENTAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES AND ALL
SUCH SPECIAL, INCIDENTAL, INDIRECT, CONSEQUENTIAL AND PUNITIVE DAMAGES ARE HEREBY WAIVED; PROVIDED
HOWEVER THAT NOTHING IN THIS SECTION 16.6 SHALL BE DEEMED TO LIMIT THE INDEMNIFICATION OBLIGATIONS
OF EITHER PARTY UNDER THIS ARTICLE 16 TO THE EXTENT A THIRD PARTY RECOVERS ANY SPECIAL, INCIDENTAL,
INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES FROM AN INDEMNITEE.



ARTICLE XVII

DISPUTE RESOLUTION





17.1 Determination by CEOS.[****]



17.2 Arbitration Proceedings. Notwithstanding anything to the contrary contained in
Section 17.1, if a dispute (the “Dispute”) exists with respect to the approval under
Section 4.2 of an Operating Plan/Budget, or any material amendment thereto, and such dispute is
submitted to dispute resolution as contemplated by Section 17.1, then if the Chief Executive
officer of one Party makes a determination to approve an Operating Plan/Budget over the objection
of the Chief Executive Officer of the other Party (the “Objecting Party”) as permitted by
Section 17.1, within seven (7) calendar days of such decision the Objecting Party may demand that
such Operating Plan/Budget be submitted to arbitration as contemplated by Section 17.3 [****] or
(iii) the settlement of a dispute under Section 7.17 shall also be deemed to be a Dispute and shall
be resolved by arbitration in accordance with Section 17.3 below.


 


- 52 -









 






17.3 Conduct of Arbitration.



(a) General Provisions. The arbitration contemplated by Section 17.2 shall be
conducted by the Judicial Arbitration and Mediation Services, Inc. (or its successor entity)
(“JAMS”) under its Streamlined Arbitration Rules and Procedures, as modified by this
Section 17.3. The arbitration shall be conducted in the English language, by a single arbitrator.
If the Parties are unable to agree on an arbitrator, the arbitrator shall be selected in accordance
with the JAMS rules, or if the JAMS rules do not provide for such selection, by the chief executive
of JAMS. At his or her election, the arbitrator may engage an independent expert with experience
in the subject matter of the Dispute to advise the arbitrator, but final decision making authority
shall remain in the arbitrator. Each Party shall provide the arbitrator and the other Party with a
written report setting forth its position with respect to the substance of the Dispute and may
submit a revised report and position to the arbitrator within five (5) business days of receiving
the other Party’s report. If so requested by the arbitrator, each Party shall make oral
submissions to the arbitrator based on such Party’s written report delivered pursuant to
Section 17.3 (provided that the other Party shall have the right to be present during any such oral
submissions) and each Party shall comply with any other procedures requested by the arbitrator.



(b) Decision of Arbitrator. In the case of a Dispute as to an Operating Plan/Budget
or any modification thereof, after reviewing the written submissions and hearing any oral
submissions of the Parties, the arbitrator shall determine whether the Operating Plan/Budget that
is the subject of the Dispute is materially unfair to the Objecting Party based upon the criteria
set forth in Section 17.2. In any case, the Parties agree that the decision of the arbitrator
shall be the sole, exclusive and binding remedy between them regarding any Dispute presented to the
arbitrator. The arbitration proceedings and the decision of the arbitrator shall be deemed
Confidential Information of both Parties under Article 10 above.



(c) Location; Costs. Unless otherwise mutually agreed upon by the Parties, the
arbitration proceedings shall be conducted in San Francisco, California. The Parties agree that
they shall share equally the cost of the arbitration filing and hearing fees, the cost of the
independent expert retained by the arbitrator and the cost of the arbitrator and administrative
fees of JAMS. Each Party shall bear its own costs and attorney’ and witnesses’ fees and associated
costs and expenses.



(d) Timetable for Completion in Thirty (30) Days. In any arbitration under this
Section 17.3, the Parties and the arbitrator shall use all reasonable efforts to resolve such
Dispute within thirty (30) days after the section of the arbitrator, or as soon thereafter as is
reasonably practicable.


 


- 53 -









 





ARTICLE XVIII

GENERAL PROVISIONS




18.1 Force Majeure. If the performance of any part of this Agreement by either Party
is prevented, restricted, interfered with or delayed by an occurrence beyond the reasonable control
of the affected Party, including, fire, flood, embargo, power shortage or failure, acts of war,
insurrection, riot, terrorism, strike, lockout or other labor disturbance or acts of God (a
“Force 
Majeure Event”), the Party so affected shall, upon giving written notice to the other
Party, be excused from such performance to the extent of such prevention, restriction, interference
or delay; provided that the affected Party shall use its reasonable efforts to avoid or remove such
causes of non-performance and shall continue performance with the utmost dispatch whenever such
causes are removed. Neither Party shall be entitled to rely on a Force Majeure Event to relieve it
from an obligation to pay money (including any interest for delayed payment) which would otherwise
be due and payable under this Agreement.



18.2 Governing Law; Venue. This Agreement, and all questions regarding their
respective validity or interpretation, or the breach or performance of this Agreement, shall be
governed by, and construed and enforced in accordance with, the laws of the State of California,
without reference to conflict of law principles. Except for Disputes expressly provided to be
determined pursuant to Section 17.2 and 17.3 above, any dispute as to the performance, enforcement,
termination, validity or interpretation of this Agreement shall be brought only in a federal court
of competent jurisdiction (or a state court if no federal court has jurisdiction) located in
Northern District of California and the Parties hereby submit to the exclusive jurisdiction and
venue of such courts.



18.3 Waiver of Breach. Except as otherwise expressly provided in this Agreement, as
applicable, any term of this Agreement may be waived only by a written instrument executed by a
duly authorized representative of the Party waiving compliance. The delay or failure of either
Party at any time to require performance of any provision of this Agreement shall in no manner
affect such Party’s rights at a later time to enforce the same. No waiver by either Party of any
condition or term in any one or more instances shall be construed as a further or continuing waiver
of such condition or term or of another condition or term.



18.4 Modification. No amendment or modification of any provision of this Agreement
shall be effective unless in writing signed by a duly authorized representative of each Party. No
provision of this Agreement shall be varied, contradicted or explained by any oral agreement,
course of dealing or performance or any other matter not set forth in an agreement in writing and
signed by a duly authorized representative of each Party.



18.5 Severability. In the event any provision of this Agreement should be held
invalid, illegal or unenforceable in any jurisdiction, the Parties shall negotiate in good faith a
valid, legal and enforceable substitute provision that most nearly reflects the original intent of
the Parties and all other provisions of this Agreement shall remain in full force and effect in
such jurisdiction. Such invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of such provision in any other jurisdiction. [****]



18.6 Entire Agreement. This Agreement (including Financial Appendix and the Exhibits
attached hereto) and the Securities Purchase Agreement constitute the entire understanding between
the Parties as of the Effective Date with respect to the subject matter hereof and supersede all
prior or contemporaneous agreements, understandings or representations, either written or oral,
between La Jolla and BioMarin CF with respect to such subject matter, including the Prior
Agreement.


 


- 54 -









 





18.7 Notices. Unless otherwise agreed by the Parties or specified in this Agreement,
all communications between the Parties relating to, and all written documentation to be prepared
and provided under, this Agreement shall be in the English language. Any notice required or
permitted under this Agreement shall be in writing in the English language and shall be sufficient
if: (a) delivered personally; (b) sent by registered or certified mail (return receipt requested
and postage prepaid); (c) sent by express courier service providing evidence of receipt, postage
pre-paid where applicable; or (d) sent by facsimile (receipt verified and a copy promptly sent by
another permissible method of providing notice described in paragraphs (b), (c) or (d) above), to
the following addresses of each Party or such other address for a Party as may be specified by like
notice:



	 	 	 
	To La Jolla:

	 	With a copy to:
	 

	 	 
	 
	 	 
	La Jolla Pharmaceutical Company

	 	Wilson, Sonsini, Goodrich & Rosati
	6455 Nancy Ridge Drive

	 	650 Page Mill Road
	San Diego, CA 92121

	 	Palo Alto, CA 94304
	Telephone: (858) 452-6600

	 	Telephone: (650) 493-9300
	Facsimile: (858) 626-2851

	 	Facsimile: (650) 493-6811
	Attention: Chief Executive Officer

	 	Attention: Kenneth A. Clark
	 
	 	 
	 

	 	Goodwin Procter, LLP
	 

	 	53 State Street
	 

	 	Boston, MA 02109
	 

	 	Fax: (617) 523-1231
	 

	 	Attention: Mitchell Bloom and Ryan A. Murr
	 
	 	 
	To BioMarin CF:

	 	With a copy to:
	 

	 	 
	 
	 	 
	BioMarin CF Limited

	 	BioMarin Pharmaceutical Inc.
	Dominion House

	 	105 Digital Drive
	60 Montrose Avenue

	 	Novato, CA 94949
	Nassau, New Providence, The Bahamas

	 	Telephone: (415) 506-6307
	Telephone: (415) 506-6307

	 	Facsimile: (415) 506-6425
	Facsimile: (415) 382-7889

	 	Attention: General Counsel
	Attention: Managing Director
	 	 






Any notice required or permitted to be given concerning this Agreement shall be effective upon
receipt by the Party to whom it is addressed or within seven (7) days of dispatch whichever is
earlier.


 


- 55 -









 





18.8 Assignment. Except as otherwise expressly provided herein, either Party may
assign, license or otherwise transfer this Agreement, or any of its rights or obligations
hereunder, to an Affiliate or to any Third Party without the written consent of the other Party
hereto; provided that (a) the assigning Party provides notice of such assignment to the other
Party; (b) the Affiliate or Third Party to whom this Agreement, or any of the assigning party’s
rights or obligations are
assigned has sufficient financial resources at the time of such assignment to allow such
Affiliate or Third Party to perform the assigning Party’s obligations under this Agreement (or the
portion thereof being assigned) as fully and expeditiously as the assigning Party; and (c) the
entity to whom this Agreement, or any such rights or obligations are assigned, assumes in writing
this Agreement, or such rights and obligations being assigned; which writing shall be in the form
of a novation that relieves the assigning Party of all of its rights, obligations and liabilities
under this Agreement (or the portion of this Agreement being assigned), effective on and from the
date of such assignment. In the event of any such assignment by a Party, the other Party agrees to
cooperate with the assigning Party and to take such actions as may be required (including executing
any documents) to give effect to the foregoing. Notwithstanding the foregoing, with respect to any
assignment or other transfer of this Agreement (or any part thereof) to an Affiliate, if the
non-assigning Party reasonably believes such assignment or other transfer could result in material
adverse tax consequences to the non-assigning Party, such assignment or other transfer shall not be
made without the non-assigning Party’s consent (which shall not be unreasonably withheld). If an
Affiliate of a Party books sales of Products in any country of the Territory, or receives any cash
payments derived from Products in the Territory, then such Affiliate shall agree in writing to be
bound by the terms and conditions of this Agreement as applicable to such Affiliate. Subject to
the foregoing, this Agreement shall inure to the benefit of each Party, its successors and
permitted assigns. Any assignment of this Agreement in contravention of this Section 18.8 shall be
null and void.



18.9 No Partnership or Joint Venture. The Parties are and shall at all times be
independent contractors. In performing under this Agreement, neither Party is an agent, employee,
employer, joint venturer, or partner. Nothing in this Agreement is intended, or shall be deemed,
to establish a joint venture, partnership or other fiduciary relationship between La Jolla and
BioMarin CF. Neither Party to this Agreement shall have any express or implied right or authority
to assume or create any obligations on behalf of, or in the name of, the other Party, or to bind
the other Party to any contract, agreement or undertaking with any Third Party.



18.10 Interpretation. The captions to the several Articles and Sections of this
Agreement are not a part of this Agreement, but are included for convenience of reference and shall
not affect its meaning or interpretation. In this Agreement: (a) the word “including” shall be
deemed to be followed by the phrase “without limitation” or like expression; (b) the singular shall
include the plural and vice versa; and (c) masculine, feminine and neuter pronouns and expressions
shall be interchangeable. Each accounting term used herein that is not specifically defined herein
shall have the meaning given to it under U.S. Generally Accepted Accounting Principles, or other
generally accepted cost accounting principles in the United States, but only to the extent
consistent with its usage and the other definitions in this Agreement.


 


- 56 -









 





18.11 Export Laws. Notwithstanding anything to the contrary contained herein, all
obligations of La Jolla and BioMarin CF are subject to prior compliance with the export regulations
of the United States, the European Union or any other relevant country and such other laws and
regulations in effect in the United States, the European Union or any other relevant country as may
be applicable, and to obtaining all necessary approvals required by the applicable agencies of the
governments of the United States, the countries within the European Union and any other relevant
countries. La Jolla and BioMarin CF shall cooperate with each other and shall provide
assistance to the other as reasonably necessary to obtain any required approvals.



18.12 Counterparts; Facsimile Signatures. This Agreement may be executed in
counterparts, each of which shall be deemed an original, and all of which together shall constitute
one and the same instrument. Signatures provided by facsimile transmission shall be deemed to be
original signatures.



[Remainder of page intentionally left blank; signature page follows.]



 


- 57 -









 





IN WITNESS WHEREOF, the Parties have caused this Development and Commercialization Agreement
to be executed as of the date first set forth above.



	 	 	 	 	 	 	 	 	 	 	 	 	 
	LA JOLLA PHARMACEUTICAL COMPANY	 	 	 	BIOMARIN CF LIMITED
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ Deirdre Y. Gillespie	 	 	 	By:	 	/s/ G. Eric Davis
	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Deirdre Y. Gillespie, M.D.
	 	 	 	 	 	Name:
	 	G. Eric Davis
	 

	 	Title:
	 	President and Chief Executive Officer
	 	 	 	 	 	Title:
	 	Managing Director






 


 









 





Exhibit List




Exhibit 1.4 — Asia-Pacific Territory




Exhibit 1.5 — ASPEN Study




Exhibit 1.9 — Compound




Exhibit 1.15 — Existing In-License




Exhibit 1.25 — La Jolla Patents




Exhibit 1.26 — La Jolla Senior Management Team




Exhibit 1.36 — Product Trademarks




Exhibit 1.41 — Securities Purchase Agreement




Exhibit 4.2B — Initial Development Plan/Budget




Exhibit 4.2E — Operating Plan/Budget Requirements




Exhibit 6.1B — Joint US Marketing Activities




Exhibit 9.1A — Manufacturing




Exhibit 11.6 — Existing Third Party Technology and Existing In-Licenses Provisions




Exhibit 15.2 — Exceptions to La Jolla’s Representations and Warranties




Exhibit 15.2I — Form of Consent of Existing In-License Licensor




Appendix List




Appendix A — Financial Appendix





 


 









 







Exhibit 1.4




Asia-Pacific Territory




Territories of East Asia, Southeast Asia, South Asia, and Oceania as follows:



East Asia: Mainland China, Hong Kong, Japan, Macau, Mongolia, North Korea, South Korea, Taiwan




Southeast Asia: Brunei, Cambodia, East Timor, Indonesia, Laos, Malaysia, Myanmar, Philippines,
Singapore, Thailand, Vietnam



South Asia: Bangladesh, British Indian Ocean Territory, Bhutan, India, Maldives, Nepal, Pakistan,
Sri Lanka, Afghanistan



Oceania: New Zealand, Australia, Papua New Guinea, and neighboring islands in the Pacific Ocean,
Melanesia, Micronesia, Polynesia




 


 









 







Exhibit 1.5




ASPEN Study




Protocol LJP 394-90-14: A Randomized, Double-Blind, Placebo-Controlled, Three-Arm, Parallel-Group,
Multicenter, Multinational Safety and Efficacy Trial of 300 mg, and 900 mg of Abetimus Sodium In
Systemic Lupus Erythematosus (SLE) Patients with a History of Renal Disease



Protocol LJP 394-90-18: A Double-Blind Randomized Cross-Over Trial to define the ECG effects of
ABETIMUS using a Clinical and a Supratherapeutic Single Dose compared to Placebo and Moxifloxacin
(a Positive Control) in Healthy Men and Women: A Thorough ECG ICH E14 Trial


 


 









 





Exhibit 1.9




Compound










 


 









 







Exhibit 1.15 




Existing In-License




Exclusive License Agreement between The Johns Hopkins University and La Jolla (JHU Ref: DM-2179),
dated November 25, 2002, as amended (the “JHU License”)


 


 









 





Exhibit 1.25 




La Jolla Patents




ISSUED
PATENTS

AS OF DECEMBER 8, 2008




Patent No.




US 5,606,047




US 5,633,395




US 7,115,581




US 7,351,855




US 5,276,013




US 5,552,391




PT 100691




CA 2073846




IE 82814




EP 5239781




JP 3836888




EP 6427982




JP 2899111




AU 686911




AU 677710



 





	 	 	 
	1	 	Validated in AT, BE, DK, FR, DE, GR, IT, LU, MC, NL,
PT, ES, SE, CH and GB.

	 
	2	 	Validated in AT, BE, CH, DE, DK, ES, FR, GB, GR, IE,
IT, LU, NL, PT and SE. IT patent status being confirmed. See Exhibit 15.2
below.




 


 









 









ISSUED PATENTS

AS OF DECEMBER 8, 2008




Patent No.




CN 941939936




FI 1173223




KR 361933




NO 319084




AU 703715




JP 3188243




HK 1014240




HK 1014369




JP 3488435




CN ZL2004100621268




US 5,786,512




US 5,726,329




US 5,874,552




US 7,081,242




EP 04382594




IE 82012




CA 2034197




PT 96503




AU 640730



 





	 	 	 
	3	 	Patent abandoned for failure to pay annuity. Petition
to reinstate in preparation. See Exhibit 15.2 below.

	 
	4	 	Validated in AT, BE, CH, DE, DK, FR, GB, GR, IT, LU,
NL, ES and SE.




 


 









 









ISSUED PATENTS

AS OF DECEMBER 8, 2008




Patent No.




FI 107514




NO 303940




Licensed Patents




US 6,022,544




US 6,375,951




US 6,340,460




US 5,126,131




US 7,083,959




PENDING PATENT APPLICATIONS

AS OF DECEMBER 8, 2008




Patent Application No.




US 12/100,356




CA 2171434




EP 070049655




HK 071088550




US 11/081,309




CA 2,391,944




MX PA/a/2002/005236




NO 2002-2441




EP 009922527



 


 









 





PENDING PATENT APPLICATIONS

AS OF DECEMBER 8, 2008




Patent Application No.




US 10/219,238




US 12/263,239




CA 2355348




US 10/748,541




US 11/562,174




US 10/814,555




US 11/565,467




US 11/373,699



 


 









 





Exhibit 1.26




La Jolla’s Senior Management Team




[****]




 


 









 







Exhibit 1.36




Product Trademarks




	 	 	 
	Mark/Serial Number/Registration Number	 	Country
	RIQUENT

Serial No: 78/102,996

Reg. No: 2,787,557

	 	United States
	 
	RIQUENT

Serial No: 78/947,249

Reg. No: 3,318,222

	 	United States
	 
	RIQUENT

Serial No: 1144359

Reg. No: TMA624679

	 	Canada
	 
	RIQUENT

Serial No: 002675601

Reg. No: 002675601

	 	Europe *
	 
	RIQUENT

Serial No: IR954406

Reg. No: IR954406

	 	International (designating Europe)*








	 	 	 
	*	 	European Community Trademark Countries: Austria, Benelux (Belgium, The Netherlands &
Luxembourg), Bulgaria, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Portugal,
Romania, Spain, Sweden, United Kingdom, Cyprus, The Czech Republic, Estonia, Hungary, Latvia,
Lithuania, Malta, Poland, Slovakia, and Slovenia.






 


 









 







Exhibit 1.41




Securities Purchase Agreement




(See attached.)




 


 









 







Exhibit 4.2B 




Initial Development Plan/Budget




For
purposes of this Exhibit 4.2B, “Lightning” shall mean La Jolla and “Bordeaux” shall mean BioMarin CF.




[****]




 


 









 







Exhibit 4.2E




Operating Plan/Budget Requirements




[****]


 


 









 





Exhibit 6.1B




Joint US Marketing Activities




[****]


 


 









 





Exhibit 9.1A




Manufacturing




[****]


 


 









 





Exhibit 11.6




Existing In-License Provisions




Pursuant to Section 2.2 of the Existing In-License (as defined in Section 1.15), BioMarin CF agrees
to be bound by, and comply with, Section 5.2 of the Existing In-License, the text of which is
included below and incorporated herein by reference, to the extent applicable to BioMarin CF in its
capacity as a sublicensee thereunder. In addition, BioMarin CF, in its capacity as a sublicensee
under the Existing In-License, specifically agrees to comply with the following provisions of the
Existing In-License: (a) the confidentiality obligations under Sections 8.1 and 8.2, with respect
to any confidential information of JHU disclosed to BioMarin CF; and (b) the patent acknowledgment
obligations under Section 5.4 to mark all patented Products (as defined in the Existing In-License)
in a manner conforming to the patent laws and practices of applicable countries. Further, pursuant
to Section 9.4 of the Existing In-License, BioMarin CF, in its capacity as a sublicensee under the
Existing In-License, shall become a direct licensee of JHU upon the termination of the Existing
In-License.



BioMarin CF acknowledges and agrees that, pursuant to Article 4 of the Existing In-License: (i) JHU
has the right to Prosecute and Maintain all La Jolla Patents covered by the Existing In-License;
and La Jolla’s (and BioMarin CF’s) only rights with respect to the Prosecution and Maintenance of
such Patents are to receive the information described in Section 4.1 of the Existing In-License;
and (ii) the rights of BioMarin CF to enforce the La Jolla Patents covered by the Existing
In-License shall be subject to the provisions of Sections 4.2, 4.3 and 4.4 of the Existing
In-License.



Provisions extracted from Existing In-License




Capitalized terms in the following provisions of the Existing In-License shall have the meaning set
forth in the Existing In-License.


 


 









 





“5.2 Records. Company shall make and retain, for a period of three (3) years following the period
of each report required by Paragraph 5.1, true and accurate record, files and books of account
containing all the data reasonably required for the full computation and verification of sales and
other information required in Paragraph 5.1. Such books and records shall be in accordance with
generally accepted accounting principles consistently applied. Company shall permit the inspection
of such records, files and books of account by JHU or its independent agents reasonably acceptable
to Company during regular business hours upon ten (10) business days’ written notice to Company.
Such inspection shall not be made more than once each calendar year. JHU or such agents shall be
under a confidentiality obligation to Company to disclose to JHU only (i) the accuracy of NET SALES
and NET SERVICE REVENUES reported and the basis for royalty payments made to JHU under this
Agreement, and (ii) the difference, if any, such reported and paid amounts vary from amounts
determined as a result of the examination. A copy of any report prepared by such independent
accounting firm shall
be delivered to Company. All costs of such inspection and copying shall be paid by JHU, provided
that if any such inspection shall reveal that an error has been made in the amount equal to ten
percent (10%) or more of such payment, such costs shall be borne by Company. Company shall include
in any agreement with its AFFILIATED COMPANIES or its SUBLICENSEE which permits such party to make,
use or sell the LICENSED PRODUCT or provide LICENSED SERVICE, a provision requiring such party to
retain records of sales of LICENSED PRODUCT and records of LICENSED SERVICE and other information
as required in Paragraph 5.1 and permit JHU and its independent agents reasonably acceptable to
Company’s AFFILIATED COMPANIES or SUBLICENSEE to inspect such records as required by the
Paragraph.”


 


 









 





Exhibit 15.2 




Exceptions to La Jolla’s Representations and Warranties




1. La Jolla was informed by its outside annuity provider that the Italian Patent based on EP
642798 lapsed due to non-payment of a European patent post-granting fee. La Jolla’s European and
Italian counsel have informed La Jolla’s patent counsel that all fees appear to have been paid and
have produced an official receipt of payment for the 15th annuity that was due by
December 30, 2007 or by June 30, 2008 with a fine. Furthermore, Eponline (an electronic service
associated with the European Patent Office) indicates that the Italian Patent based on EP 642798
has lapsed, which La Jolla believes is incorrect or reflects that the Italian Patent Office has not
updated the listing. La Jolla’s patent counsel has instructed the European and Italian patent
counsel to forward the receipt of payment of annuity to the Italian Patent Office, confirm with the
Italian Patent Office that the patent is active and in good standing and to request that the
Italian Patent Office correct their status data for this patent and communicate the same to the EPO
register.



2. Finish patent No. 117322 was inadvertently abandoned for failure to pay a post-grant
annuity. La Jolla’s patent counsel has been informed that it is possible under Finnish law to
reinstate a lapsed patent if certain criteria are met. La Jolla’s patent counsel is working with
Finnish patent counsel to prepare a petition to reinstate the lapsed patent.




 


 









 







Exhibit 15.2I 




Form of Consent of Existing In-License Licensor




(See attached.)




 


 









 







[LJP LETTERHEAD]




December 20, 2008




VIA EMAIL AND FEDERAL EXPRESS




Andrea Doering, Ph.D., MBA

Portfolio Director

Johns Hopkins Technology Transfer

100 N Charles Street, 5th Floor

Baltimore MD 21201




	 	 	 
	Re:

	 	Exclusive License Agreement between The Johns Hopkins
University (“JHU”) and La Jolla Pharmaceutical Company
(“LJP”) effective as of November 25, 2002, as amended
(“License Agreement”)






Dear Andrea:



As we have recently discussed, LJP is proposing to enter into a collaboration agreement with
respect to LJP’s product known as RIQUENT® with BioMarin Pharmaceutical Inc. or one of its
affiliates (“BioMarin”), being the party identified as BORDEAUX in the documents that I provided to
by email dated October 30, 2008. The final terms of the transaction between LJP and BioMarin are
as outlined in the Development and Commercialization Agreement and the Securities Purchase
Agreement that I provided to you by email dated December 20, 2008.



JHU’s consent may be required in connection with the transaction between LJP and BioMarin, and
LJP hereby requests such consent. In particular, LJP requests JHU’s approval for: (a) the grant of
a sublicense by LJP to BioMarin under LJP’s rights under the PATENT RIGHTS, pursuant to Section 2.2
of the License Agreement; and (b) the assignment by LJP to BioMarin, pursuant to Section 10.8 of
the License Agreement, of all of LJP’s rights and obligations under the License Agreement if LJP
determines that such an assignment to BioMarin is appropriate and so long as BioMarin retains
rights to LJP’s product known as RIQUENT® at the time of such assignment.



Please confirm JHU’s approval and consent to the transaction between LJP and BioMarin,
including the specific items noted above, by signing, or arranging for another appropriate
authorized representative of JHU to sign, the attached copy of this letter. I would appreciate if
you would return one (1) original executed copy of this letter to me at the address indicated above
at your earliest convenience.



JHU’s execution of this letter will also confirm JHU’s agreement to treat the documents
provided to you on October 30, 2008 and December 20, 2008, as well as the contents of this letter,
as confidential information of LJP and subject to the terms of Article 8 of the License Agreement.




We greatly appreciate all your assistance with this matter.




Yours sincerely,




Niv Caviar

EVP, Chief Business and Financial Officer


 


 









 





CONSENTED AND AGREED BY THE JOHNS HOPKINS UNIVERSITY




	 	 	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Date:	 	 	 	 
	 

	 	 	 	 

	 	 






 


 









 





Appendix A 




Financial Appendix




[****]