Document:

Exhibit 10.1

Portions of this Exhibit Have Been
Omitted and Separately
Filed with the Securities and Exchange Commission with
a
Request for Confidential Treatment 

	
       

       

      IL-1 ANTIBODY TERMINATION
      AGREEMENT

      By and Between

      NOVARTIS PHARMA AG 

      NOVARTIS PHARMACEUTICALS
      CORPORATION 

      AND 

      REGENERON PHARMACEUTICALS, INC.
      

      Dated as of June 8, 2009
      

       

       

Table of
Contents 

	SECTION 1. DEFINITIONS 	    
    	2 
	SECTION 2. WAIVER, TERMINATION AND RELEASE  		7
    
	           
    	2.1 	      	      	Waiver 		7 
		2.2 			Purpose and
      Effect of this Agreement; Termination of the CLO Agreement 		7 
		2.3 			Mutual Releases 		8 
	SECTION 3. COVENANT NOT TO SUE 		9
    
		3.1 			Covenant Not to Sue 		9 
		3.2 			Rights in
      Bankruptcy 		9 
		3.3 			Covered Products 		9 
	SECTION 4. CONSIDERATION 		10
    
		4.1 			Royalty Payments 		10 
		4.2 			[*************] 	11
      
		4.3 			No Projections 		11 
	SECTION 5. REPORTS AND PAYMENT TERMS 		11
    
		5.1 			Payment Terms 		11 
		5.2 			Currency
    		12 
		5.3 			Taxes 		12 
		5.4 			Accounting
      Standards 		12 
		5.5 			Records and Audit Rights  		12 
	SECTION 6. CONFIDENTIALITY 		13
    
		6.1 			Confidential Novartis Company Information 		13 
		6.2 			Injunctive
      Relief 		14 
	SECTION 7. REPRESENTATIONS AND
      WARRANTIES  		14 
		7.1 			Due
      Organization, Valid Existence and Due Authorization 		14 
		7.2 			Disclaimers 		15 
	SECTION 8. INDEMNIFICATION 		15
    
		8.1 			Indemnity and Insurance  		15 
		8.2 			Indemnity
      Procedure 		15 
	SECTION 9. MISCELLANEOUS 		16 
		9.1 			Dispute
      Resolution 		16 
		9.2 			Governing Law 		18 
		9.3 			Waiver
		18 
		9.4 			Force Majeure 		18 
		9.5 			Notices
    		18 
		9.6 			Entire Agreement 		18 
		9.7 			Amendments 		18 
		9.8 			Headings 		18 
		9.9 			Severability 		18 
		9.10 			Registration and Filing of the Agreement 		19 
		9.11 			Assignment 		19 
		9.12 			Successors and Assigns 		19 
		9.13 			Counterparts 		19 
		9.14
    			Third-Party
      Beneficiaries 		19
    
		9.15 			Relationship of the
      Parties 		19 
		9.16
    			Limitation
      of Damages 		20
    
					 		
	EXHIBIT A – SAMPLE INVOICE 		
					 		
	EXHIBIT B – NOTICES 		

i

IL-1 ANTIBODY TERMINATION
AGREEMENT 

     THIS IL-1
ANTIBODY TERMINATION AGREEMENT (“Agreement”), made as of June 8, 2009
(the “Effective Date”), is by and between NOVARTIS PHARMA AG, a corporation
organized under the laws of Switzerland and having a principal place of business
at Lichtstrasse 35, 4056 Basel, Switzerland (“Novartis”), NOVARTIS PHARMACEUTICALS
CORPORATION of One Health Plaza, East Hanover, New Jersey (“NPC”) and REGENERON
PHARMACEUTICALS, INC., a corporation organized under the laws of New York and
having a principal place of business at 777 Old Saw Mill River Road, Tarrytown,
New York 10591 (“Regeneron”) (with each of Novartis and
Regeneron referred to herein individually as a “Party” and collectively as the
“Parties”,
and with NPC being a “Party” to this Agreement for purposes of Section 2
only).

     WHEREAS,
on March 28, 2003 the Parties and NPC (for limited provisions only) entered in
to the Collaboration, License and Option Agreement (“CLO Agreement”) whereby (i) Novartis
and Regeneron agreed to collaborate with respect to the development, manufacture
and commercialization of the Trap-1 Product (as defined in the CLO Agreement);
(ii) Novartis granted Regeneron the right to elect to share in the development
and commercialization of the IL-1 Antibody Product (as defined in the CLO
Agreement); and (iii) Regeneron granted Novartis the right to elect to share in
the development and commercialization of the Trap-2 Product (as defined in the
CLO Agreement);

     WHEREAS,
by letter dated February 27, 2004, Novartis terminated the CLO Agreement with
respect to the Trap-1 Product under Section 19.4(a) of the CLO Agreement
(“Termination
Letter”); 

     WHEREAS,
[***********************************]; 

     WHEREAS,
[**********************************];

     WHEREAS,
[***********************************]; 

     WHEREAS,
the Parties wish to enter into this Agreement for the purpose of terminating the
CLO Agreement, defining certain rights and obligations of the Parties with
respect to the IL-1 Antibody Product and other Covered Products (as defined
herein), and resolving the IL-1 Antibody Opt-In Disputes all on the terms and
conditions set forth in this Agreement;

     WHEREAS,
concurrent with their execution of this Agreement, the Parties will also enter
into an agreement relating to certain rights and obligations of the Parties with
respect to Regeneron’s development and commercialization of the Trap-2 Product
and other products targeting interleukin-1 (the “Trap-2 Termination Agreement”);
and

     WHEREAS,
the Parties intend this Agreement, together with the Trap-2 Termination
Agreement, to supersede and replace the CLO Agreement in its entirety.

     NOW,
THEREFORE, in consideration of the following mutual promises and obligations,
and for other good and valuable consideration the adequacy and sufficiency of
which are hereby acknowledged, the Parties agree as follows:

SECTION 1. 

DEFINITIONS 

     The
following capitalized terms, whether used in the singular or plural, shall have
the meanings set forth below:

     “Affiliate” shall mean, with respect to any Person, any other Person which
controls, is controlled by or is under common control with such Person. A Person
shall be deemed to control another Person if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise. For purposes of this Agreement, in no event shall
Novartis or any of its Affiliates be deemed Affiliates of Regeneron or any of
its Affiliates nor shall Regeneron or any of its Affiliates be deemed Affiliates
of Novartis or any of its Affiliates.

     “Approval” shall mean, with respect to each Covered Product, any approval
(excluding Pricing Approvals), registration, license or authorization from any
Regulatory Authority required for the manufacture, development,
commercialization, sale, storage or transport of such product in any country,
and shall include, without limitation, an approval, registration, license or
authorization granted in connection with any Registration Filing. 

     “Bioequivalent Product” shall mean, with respect to any Covered Product, a product
which has the same (or substantially similar) amino acid sequence as such
Covered Product and is authorized on the basis of a reference to a Covered
Product under either (1) Article 10.1 or (2) Article 10.4 and Part II.4 of Annex
I of Parliament and Council Directive 2001/83/EC as amended by Directive
2004/27/EC, in each case as amended from time to time, or successor legislation
in each case, and equivalent provisions of applicable law in other jurisdictions
for biosimilar, follow-on, or generic biologic products.

     “Calendar Quarter” shall mean the respective periods of three (3) consecutive calendar
months ending on March 31, June 30, September 30 and December 31. 

     “Calendar Year” shall mean a period of twelve (12) consecutive calendar
months ending on December 31. 

     “CLO Agreement” has the meaning set
forth in the recitals. 

     “Covered Product” shall mean

     [****************************************************************************].

2

     “Derivative” means: (a) any functional antibody which primarily and specifically
binds to interleukin-1 beta and has [***********************************] or (b)
any functional fragment of an antibody which specifically binds to interleukin-1
beta and has [************************************************.]

     “EMEA” shall mean the European Medicines Agency or any successor agency
thereto. 

     “Executive Officers” shall mean the Chief Executive Officer of Regeneron and the
Chief Executive Officer of Novartis, or their respective designees.

     “FDA” shall mean the United States Food and Drug Administration and any
successor agency thereto. 

     “First Commercial Sale” shall mean, with respect to a Covered Product in a country,
the first sale of such product by Novartis or one of its Affiliates or a Product
Licensee/Assignee to a Third Party (other than a Product Licensee/Assignee)
following Approval of such product in accordance with the applicable Laws of
such country on arm’s length commercial terms. Sales for clinical trial purposes
shall not constitute a First Commercial Sale. 

     “Governmental Authority” shall mean any court, agency, authority, department,
regulatory body or other instrumentality of any government or country or of any
national, federal, state, provincial, regional, county, city or other political
subdivision of any such government or any supranational organization of which
any such country is a member. 

     “IL-1 Antibody” shall mean the Novartis antibody known as ACZ885 as at the
Effective Date.

     “IL-1 Antibody Product” shall mean one or more pharmaceutical products for human
and/or animal use which include the IL-1 Antibody (whether as a protein, a
nucleic acid encoding a protein, or a cell line expressing a protein) or any
Derivative thereof, including fusions comprising any such antibody or Derivative
and any composition, formulation or device that incorporates or includes any
such antibody or Derivative as an active ingredient, alone or in combination
with one or more other active ingredients, for all indications.

     “Law” or “Laws” shall mean all laws, statutes, rules, regulations, orders, judgments,
injunctions and/or ordinances of any Governmental Authority in the applicable
country. 

     “Major Market Country” shall mean
[*****************************].  

3 

     “Net Sales” shall mean, with respect to each Covered Product, the gross invoiced
sales price of such Covered Product billed by or on behalf of Novartis or its
Affiliates or any Product Licensee/Assignee for that product to Third Parties
(other than Product Licensees/Assignees) in bona fide, arms-length transactions,
less the following deductions (to the extent included in the gross invoiced
sales price), determined in accordance with Novartis’ (or its Affiliate’s or
Product Licensee’s/Assignee’s, as the case may be) standard accounting
methods, which are in accordance with generally accepted accounting
principles as applicable in the United States (that is, US GAAP) or
International Financial Reporting Standards (IFRS), as applicable, as
consistently applied at Novartis, its Affiliates or Product Licensees/Assignees,
as the case may be:

(a) normal
and customary trade and quantity discounts actually allowed and properly taken
directly with respect to sales of such Covered Product; 

(b) free
goods; 

(c) amounts
repaid or credited by reason of defects, rejections, recalls, returns, rebates
and allowances; 

(d) chargebacks and other amounts paid on sale or dispensing of such Covered
Product; 

(e) Third
Party cash rebates and chargebacks related to sales of the finished Covered
Product, to the extent allowed; 

(f) Medicaid
rebates; 

(g) retroactive price reductions that are actually allowed or granted;

(h) tariffs,
duties, excise, sales, value-added or other taxes (other than taxes based on
income); 

(i) cash
discounts for timely payment; 

(j) delayed
ship order credits; 

(k) discounts
pursuant to indigent patient programs and patient discount programs, including,
without limitation, “Together Rx, ” “Novartis Care Program,” and coupon
discounts;

(l) insurance
expenses included as a separately billed item in the invoice amount; 

(m) [******************************************************]; and 

(n) any other
specifically identifiable costs or charges included in the gross invoiced sales
price of such Covered Product falling within categories substantially equivalent
to those listed above. 

Sales from Novartis to its Affiliates
or Product Licensees/Assignees shall be disregarded for purposes of calculating
Net Sales. Any of the items set forth above that would otherwise be deducted
from the invoice price in the calculation of Net Sales but which are separately
charged to Third Parties shall not be deducted from the invoice price in the
calculation of Net Sales.

4

Further: 

     (i) In
the case of any sale or other disposal of Covered Product between or among
Novartis and its Affiliates and Product Licensees/Assignees, for resale, Net
Sales shall be calculated as above only on the value charged or invoiced on the
first arm’s-length sale thereafter to a Third Party; 

     (ii) In
the case of any sale which is not invoiced or is delivered before invoice, Net
Sales shall be calculated at the time all revenue recognition criteria under
GAAP or IFRS, as the case may be, are met;

     (iii) In
the case of any sale or other disposal for value, such as barter or
counter-trade, of any product, or part thereof, other than in an arm’s length
transaction exclusively for money, Net Sales shall be calculated as above on the
value of the non-cash consideration received or the fair market price (if
higher) of the product in the country of sale or disposal;

     (iv) In
the event the Covered Product is sold in a finished dosage form in combination
with one or more other active ingredients (a “Combination Product”), the Net
Sales of the product, for the purposes of determining royalty payments, shall be
determined by multiplying the Net Sales (as defined above in this Section) of
the Combination Product by the fraction, A/(A+B) where A is the weighted (by
sales volume) average sale price in a particular country of the Covered Product
when sold separately in finished form and B is the weighted average sale price
in that country of the other product(s) sold separately in finished form. In the
event that such average sale price cannot be determined for both the Covered
Product and the other product(s) in combination, Net Sales for purposes of
determining royalty payments shall be agreed by the Parties based on the
relative value contributed by each component, such agreement shall not be
unreasonably withheld; and 

     (v) In
the case of deductions for bad debt, any amounts subsequently paid to Novartis,
its Affiliates or Product Licensees/Assignees for sales previously treated as
“bad debt” shall be captured as Net Sales in the ensuing quarterly royalty
calculation pursuant to Section 5. 

     “Novartis Company
Information” shall mean information or
materials provided by Novartis in the Sales & Royalty Reports (and all
information contained therein) and any audits thereof pursuant to Section 5.5.

     “Patent Application” shall mean any
application for a Patent. 

     “Patent Rights” shall mean unexpired
Patents and Patent Applications. 

     “Patents” shall mean patents and all substitutions, divisions, continuations,
continuations-in-part, reissues, reexaminations and extensions thereof and
supplemental protection certificates relating thereto, and all counterparts
thereof in any country. 

     “Person” shall mean and include an individual, partnership, joint venture,
limited liability company, a corporation, a firm, a trust, an unincorporated
organization and a government or other department or agency thereof. 

5

          “Pricing
Approval” shall mean such approval,
agreement, determination or governmental decision establishing prices for a
Covered Product that can be charged to consumers and will be reimbursed by
Governmental Authorities in countries where governmental authorities or
Regulatory Authorities of such country approve or determine pricing for
pharmaceutical products for reimbursement or otherwise. 

          “Product
Licensee/Assignee” shall mean any Third
Party that licenses, or, under Section 9.11, is assigned, rights to any
particular Covered Product (or any particular indication for any particular
Covered Product) in a particular country by Novartis or any of its Affiliates
where the licensed or assigned rights include the right to book sales of such
Covered Product in such country. For the avoidance or doubt, “Product
Licensee/Assignee” shall not include any Third Party engaged by Novartis or its
applicable Affiliate to provide particular services related to the development,
manufacture or commercialization of a Covered Product, including, without
limitation, research, development, contract manufacturing, supply, distribution,
commercialization, or co-commercialization services, unless such Third Party
also books sales of the applicable Covered Product in the applicable country.

          “Regeneron
Patents” shall mean those Patent Rights which
are owned by or licensed (with the right of sublicense) to Regeneron or any of
its Affiliates, as at the Effective Date or at any time during the Royalty Term,
which include at least one claim which would be infringed by the manufacture,
use, sale, offer for sale or import of the IL-1 Antibody or the IL-1 Antibody
Product as it exists and is manufactured, used, sold, offered for sale, or
imported from time to time. Patent Rights covering general recombinant protein
expression technology, cell culture and fermentation, protein purification and
formulation technologies shall be excluded from this definition. 

          “Regulatory
Authority” shall mean any federal, national,
multinational, state, provincial or local regulatory agency, department, bureau
or other governmental entity with authority over the marketing, pricing and/or
sale of any Covered Product in any country, including, without limitation, FDA
in the United States and EMEA in Europe.

          “Royalty Term” shall have
the meaning set forth in Section 4.1(b). 

          “Sales & Royalty
Report”
means a written report or reports showing
each of: (a) the Net Sales of each Covered Product during the reporting period
by Novartis, its Affiliates, and Product Licensees/Assignees, which information
shall be provided on a country-by-country basis in United States Dollars; and
(b) the royalties payable, in United States Dollars, which shall have accrued
hereunder with respect to such Net Sales.

          [*************************************************************].

          “Seventh Anniversary
Date” shall mean the seventh anniversary of
the Effective Date. 

          “Termination
Letter” has the meaning set forth in the
recitals. 

          “Third Party” shall mean any Person other than Novartis or Regeneron or
any Affiliate of either Party. 

6

          “Trap-1” shall have the
meaning set forth in the CLO Agreement. 

          “Trap-2” shall have the
meaning set forth in the CLO Agreement. 

          “Trap-2 Termination Agreement” has the meaning set forth in the recitals. 

          “US GAAP” shall mean generally accepted accounting principles in the
United States. 

SECTION 2. 

WAIVER, TERMINATION AND
RELEASE 

     2.1 Waiver. Regeneron hereby waives any
and all rights it may have with respect to the IL-1 Antibody, and any IL-1
Antibody Product, pursuant to the CLO Agreement or any other agreement (other
than this Agreement) between any of the Parties existing as of the Effective
Date relating to the IL-1 Antibody or any IL-1 Antibody Product.

     2.2 Purpose and Effect of this
Agreement; Termination of the CLO Agreement.

          (a) With effect from the Effective Date, this Agreement, together with the
Trap-2 Termination Agreement, is intended to supersede and replace the CLO
Agreement and to represent the whole of the Parties’ agreement with respect to
each of the products described in the definition of IL-1 Products in the CLO
Agreement. Accordingly, the Parties agree that, with effect from the Effective
Date, the CLO Agreement is hereby terminated and of no further force or effect
(other than with respect to definitions of terms defined in the CLO Agreement
which are expressly referenced in this Agreement). Any provisions of the CLO
Agreement which were intended to survive the expiration or termination of the
CLO Agreement are also hereby terminated and of no further force of effect,
other than Sections 16.1 and 16.2 of the CLO Agreement which shall remain in
full force and effect for a period of [**************] from the date
hereof.

          (b) Without limiting paragraph (a) above, the Parties acknowledge and agree
that:

          (i) Novartis has no rights, and Regeneron has no obligations, under the CLO
Agreement or any other agreement with respect to the Trap-1 or the Trap-1
Product. Without limiting the foregoing, Novartis acknowledges and agrees that
with effect from February 27, 2004 and pursuant to the terms of the Termination
Letter, Regeneron has been and shall continue to be free to research, develop,
manufacture and commercialize the Trap-1 Product in its sole discretion, alone
or with one or more Third Parties, without being subject to the provisions of
the CLO Agreement;

          (ii) With effect from the Effective Date, Regeneron shall have no rights, and
Novartis shall have no obligations, under the CLO Agreement with respect to the
IL-1 Antibody or the IL-1 Antibody Product. Without limiting the foregoing,
Regeneron acknowledges and agrees that with effect from the Effective Date,
Novartis shall be free to research, develop, manufacture and commercialize the
IL-1 Antibody and the IL-1 Antibody Product in its sole discretion, alone or
with one or more Third Parties, without being subject to the provisions of the
CLO Agreement, but subject to the payment of royalties and other obligations as
contemplated in this Agreement; and

7 

          (iii) With effect from the Effective Date, Novartis shall have no rights, and
Regeneron shall have no obligations, under the CLO Agreement with respect to the
Trap-2 Product. Without limiting the foregoing, Novartis acknowledges and agrees
that with effect from the date hereof, Regeneron shall be free to research,
develop, manufacture and commercialize the Trap-2 Product in its sole
discretion, alone or with one or more Third Parties, without being subject to
the provisions of the CLO Agreement, but subject to Novartis’ rights and
Regeneron’s obligations under the Trap-2 Termination Agreement.

          (c) Notwithstanding the survival of the provisions of Sections 16.1 and 16.2
of the CLO Agreement for a period of [*******] from the date hereof, each Party hereby
acknowledges and agrees that the other Party shall not be restricted from using
any know-how or Company Information of such Party which was disclosed to such
other Party under the CLO Agreement solely to the extent that such know-how or
Company Information has been retained (without intentional memorization) in
intangible form in the minds of those employees of the receiving Party who have
had access to such know-how and/or Company Information; provided, however, that
nothing in this paragraph shall be interpreted to grant any license to or under
any patent rights.

     2.3 Mutual
Releases.

          (a) Regeneron hereby acknowledges, for itself and for each and every one of
its (i) present or former officers, partners, directors, shareholders, agents,
and employees, and (ii) Affiliates, predecessors, successors, assigns, insurers,
parents, wholly-owned subsidiaries, related companies, divisions, attorneys,
sureties or other representatives, release, remise, and forever discharges,
unconditionally and without reserve, Novartis and NPC, and their respective
officers, partners, agents, employees, Affiliates, predecessors, successors,
assigns, insurers, or other representatives, from all claims, disputes, actions
and proceedings (and any underlying debts, liens, liabilities, costs, expenses
or losses of any type arising therefrom), known or unknown, involving any claim,
matter or event concerning or relating to the CLO Agreement solely in so far as
it relates to the IL-1 Antibody and/or the IL-1 Antibody Product, including,
without limitation any disputes which were raised, or could have been raised, in
communications between the Parties prior to the Effective Date. However, nothing
in the CLO Agreement, this Section 2.3(b), or Section 9.16 is intended to limit
or restrict any liability for fraud. 

          (b) Each of Novartis and NPC hereby acknowledges, for itself and for each and
every one of its (i) present or former officers, partners, directors,
shareholders, agents, and employees, and (ii) Affiliates, predecessors,
successors, assigns, insurers, parents, wholly-owned subsidiaries, related
companies, divisions, attorneys, sureties or other representatives, release,
remise, and forever discharges, unconditionally and without reserve, Regeneron
and its officers, partners, agents, employees, Affiliates, predecessors,
successors, assigns, insurers, or other representatives, from all claims,
disputes, actions and proceedings (and any underlying debts, liens, liabilities,
costs, expenses or losses of any type arising therefrom), known or unknown,
involving any claim, matter or event concerning or relating to the CLO Agreement
solely in so far as it relates to the Trap-1, Trap-2, Trap-1 Product, and/or
Trap-2 Product, including, without limitation any disputes which were raised, or
could have been raised, in communications between the Parties prior to the
Effective Date. However, nothing in the CLO Agreement, this Section 2.3(b), or
Section 9.16 is intended to limit or restrict any liability for
fraud.

8 

SECTION 3. 

COVENANT NOT TO
SUE 

     3.1 Covenant Not to Sue. Regeneron
unconditionally agrees, promises, and covenants that neither it nor any of its
Affiliates will enforce (or attempt to enforce) any Regeneron
Patent against Novartis, any Novartis Affiliate, any Product Licensee/Assignee
or any of their respective agents or service providers, for having made, making,
using, offering for sale, selling, or importing any Covered Product or any
component thereof. This covenant does not constitute an admission: (a) by
Novartis that the claims of any Regeneron Patent are valid, enforceable or
infringed by Novartis, any Novartis Affiliate or any Product Licensee/Assignee,
for having made, making, using, offering for sale, selling, or importing any
Covered Product or any component thereof; or (b) by Regeneron that the claims of
any Regeneron Patent are invalid, unenforceable or not infringed by Novartis,
any Novartis Affiliate or any Product Licensee/Assignee of any Covered Product,
for having made, making, using, offering for sale, selling, or importing any
Covered Product or any component thereof. For purposes of this Section 3.1, the
term “Covered Product” shall exclude any product first sold by Regeneron or any
of its Affiliates (or any of their respective licensees or assignees of such
product) anywhere in the world, or any biosimilar, follow-on or generic biologic
product thereof that is authorized on the basis of a reference to such product
under either (1) Article 10.1 or (2) Article 10.4 and Part II.4 of Annex I of
Parliament and Council Directive 2001/83/EC as amended by Directive 2004/27/EC,
in each case as amended from time to time, or successor legislation in each
case, and equivalent provisions of applicable law in other jurisdictions. For
the avoidance of doubt, this covenant shall be binding upon and shall inure to
the benefit of the parties and their respective
successors-in-interest.

     3.2 Rights in Bankruptcy. The covenants in
Section 3.1 are, and will otherwise be deemed to be, for purposes of Section
365(n) of the US Bankruptcy Code (the “Code”) and any similar laws in any
other country, licenses of rights to “intellectual property” as defined under
Section 101 of the Code. The Parties agree that Novartis will retain and may
fully exercise all of its protections, rights and elections under the Code and
any similar laws in any other country. All rights, powers and remedies of
Novartis provided for in this Section 3.2 are in addition to and not in
substitution for any and all other rights, powers and remedies now or hereafter
existing at law or in equity (including, without limitation, under the Code and
any similar laws in any other country). In the event of the bankruptcy of
Regeneron, Novartis, in addition to any rights, power and remedies expressly
provided herein, shall be entitled to exercise all other such rights and powers
and resort to all other such remedies as may now or hereafter exist at law or in
equity (including, without limitation, under the Code and any similar laws in
any other country). 

     3.3 Covered Products. Regeneron
acknowledges and agrees that the research, development, manufacture and
commercialization of any and all Covered Products shall be at Novartis’ sole
discretion and that nothing in this Agreement or otherwise will obligate
Novartis to research, develop, manufacture and commercialize any or all Covered
Products.

9 

SECTION 4. 

CONSIDERATION

     4.1 Royalty
Payments.

          (a) During the applicable Royalty Term, Novartis will make royalty payments
to Regeneron based on total worldwide Net Sales of Covered Products by Novartis,
its Affiliates, and Product Licensees/Assignees at the applicable rates set
forth below.

	  
      Aggregate Net Sales by Novartis, its Affiliates, and Product
      Licensees/Assignees of	Royalty
	  
      Covered Products in any Calendar Year	Rate
	  
      Aggregate annual Net Sales of Covered Products less than or equal
      to [**********]	4%
	  
      Aggregate annual Net Sales of Covered Products over [**********] but less than or	[**]
	  
      equal to [*********]	
	  
      Aggregate annual Net Sales of Covered Products over [**********] but less than or	[**]
	  
      equal to [*********]	
	  
      Aggregate annual Net Sales of Covered Products over [********] but less than or equal	[**]
	  
      to [*********]	
	  
      Aggregate annual Net Sales of Covered Products over [*********] but less than or	[**]
	  
      equal to US$ 1.5 billion	
	  
      Aggregate annual Net Sales of Covered Products over US$ 1.5
      billion	15%

          For
example,[**********************************]. 

          (b) Royalties will be payable during the Royalty Term, which shall commence
from First Commercial Sale and expire when Novartis (and/or its Affiliates or
Product Licensees/Assignees) ceases distribution and sale of all Covered
Products. [******************]. 

          Following the Royalty Term (but subject to Sections 4.1(d) and
4.1(e) below), on a country-by-country basis, the covenants made by Regeneron
pursuant to Section 3.1 hereunder shall continue in effect, but become fully
paid-up, royalty-free, perpetual and irrevocable with respect to such
country.

          (c) For the avoidance of doubt, royalties shall be payable only once with
respect to the same unit of Covered Product. 

          (d) Notwithstanding the foregoing, with respect to any country for which the
Royalty Term has expired pursuant to Section 4.1(b)(i) above, in the event that
the conditions reflected in Section 4.1(b)(i) cease to be satisfied following
expiration of the Royalty Term in such country [*****************], the
obligation to pay royalties under this Section 4.1 on Net Sales of Covered
Products in such country shall resume with immediate effect until the conditions
reflected in Section 4.1(b)(i) are again satisfied with respect to such country
[***********************], in which case the terms of this Section 4.1(d) shall
remain in effect.

10

          (e) Notwithstanding the foregoing, with respect to any country for which the
Royalty Term has been deemed to have expired pursuant to Section 4.1(b)(ii)
above [*******************************] the obligation to pay royalties under
this Section 4.1 on Net Sales of Covered Products in such country shall resume
with immediate effect until the conditions reflected in Section 4.1(b)(i) are
satisfied with respect to Covered Products in such country, in which case the
terms of Section 4.1(d) shall remain in effect.

     4.2 [*******************************************.] 

     4.4 No Projections. Regeneron and Novartis
acknowledge and agree that nothing in this Agreement shall be construed as
representing an estimate or projection of anticipated sales of any Covered
Product, and that the Net Sales levels set forth above or elsewhere in this
Agreement or that have otherwise been discussed by the Parties are merely
intended to define the royalty obligations to Regeneron in the event such Net
Sales levels are achieved. NEITHER REGENERON NOR NOVARTIS MAKES ANY
REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, THAT NOVARTIS, ITS
AFFILIATES OR PRODUCT LICENSEES/ASSIGNEES WILL BE ABLE TO SUCCESSFULLY DEVELOP
OR COMMERCIALIZE ANY COVERED PRODUCT OR, IF COMMERCIALIZED, THAT ANY PARTICULAR
NET SALES LEVEL OF SUCH COVERED PRODUCT WILL BE ACHIEVED.

SECTION 5. 

REPORTS AND PAYMENT
TERMS 

     5.1 Payment
Terms. 

          (a) Within [********]
days after the end of each Calendar Quarter during the Royalty Term, Novartis
will provide to Regeneron a Sales & Royalty Report. Each such Sales &
Royalty Report shall be considered Confidential Information of Novartis.
Notwithstanding the foregoing, or anything in Section 6 to the contrary,
Regeneron shall have the right to publicly disclose the total royalty amounts
received from Novartis as part of its usual and customary financial disclosure.

          (b) After receipt of such report, Regeneron shall submit an invoice to
Novartis substantially in the form of Exhibit A with respect to the royalty
amount shown therein. Novartis shall pay such royalty amount within [*********] after receipt of such
invoice.

          (c) The royalties payable for each Calendar Quarter shall be calculated as
the difference between (i) the cumulative year-to-date royalties payable to
Regeneron based on (A) cumulative Net Sales during the applicable Calendar Year
through the end of such Calendar Quarter and (B) the royalty rate from Section
4.1(a) that would be applicable to such cumulative Net Sales (as modified by
Section 4.2, if applicable), and (ii) the total royalties paid to Regeneron
hereunder for Net Sales during any prior Calendar Quarters during the applicable
Calendar Year.

11 

          (d) All payments from Novartis to Regeneron shall be made by wire transfer in
US Dollars to the credit of such bank account as may be designated by Regeneron
in this Agreement or in writing to Novartis. Any payment which falls due on a
date which is not a Business Day may be made on the next succeeding Business
Day. 

     5.2 Currency. All payments under this
Agreement shall be payable in US dollars. When conversion of Net Sales in any
foreign currency to US dollars is required to be undertaken by Novartis, the US
dollar equivalent shall be calculated using Novartis’ then-current standard
exchange rate methodology as applied in its external reporting in accordance
with International Financial Reporting Standards. 

     5.3 Taxes. Regeneron will pay any and all
taxes levied on account of any payments made to it under this Agreement. If any
taxes are required to be withheld by Novartis, Novartis will: (a) deduct such
taxes from the payment made to Regeneron; (b) timely pay the taxes to the proper
taxing authority; (c) send proof of payment to Regeneron; and (d) reasonably
assist Regeneron in its efforts to obtain a credit for such tax payment. Each
Party agrees to reasonably assist the other Party in lawfully claiming
exemptions from and/or minimizing such deductions or withholdings under double
taxation laws or similar circumstances.

     5.4 Accounting Standards. Except as
otherwise provided herein, all financial determinations with respect to this
Agreement shall be determined in accordance with United States (that is, US
GAAP) or International Financial Reporting Standards (IFRS), as applicable, as
generally and consistently applied by Novartis, its Affiliates or Product
Licensees/Assignees, as the case may be.

     5.5 Records and Audit Rights. Novartis
shall keep complete, true and accurate books and records in accordance with its
accounting standards in relation to Net Sales of Covered Products and royalties
payable hereunder for at least [*******] following the Calendar Year to which they pertain.

          (b) Regeneron shall have the right for a period of [******] after receiving any Sales & Royalty
Report to appoint an internationally-recognized independent accounting firm
(which is reasonably acceptable to Novartis in its reasonable discretion) (the
“Auditor”)
to inspect the relevant records of Novartis or its Affiliates or Product
Licensees/Assignees to verify such reports, statements, records or books of
accounts, as applicable.

          (c) Before beginning its audit, the Auditor shall execute a reasonable and
customary undertaking reasonably acceptable to Novartis pursuant to which the
Auditor shall keep confidential all information reviewed during such audit. The
Auditor shall have the right to disclose to Regeneron only its conclusions
regarding any payments owed under this Agreement, and without limiting the
foregoing, under no circumstances will the Auditor disclose to Regeneron the
prices at which any Covered Product is sold, the nature or amount of any
particular itemized deductions under the definition of “Net Sales” or any other
information of a commercially or competitively sensitive nature. 

          (d) Novartis, its Affiliates, and Product Licensees/Assignees shall make
their records available for inspection by such Auditor during regular business
hours at such place or places where such records are customarily kept, upon
receipt of reasonable advance written notice from Regeneron, solely to verify
the accuracy of the Sales & Royalty Reports. Such inspection right shall not
be exercised more than once in any Calendar Year and not more frequently than
once with respect to records covering any specific period of time. Without
limiting Section 5.5(c) above, Regeneron agrees that all information received
and all information learned in the course of any audit or inspection shall be
considered Confidential Information, except to the extent necessary to enforce
its rights under this Agreement or if disclosure is required by law, regulation
or judicial order.

12

          (e) The audit report and basis for any determination by the Auditor shall be
made available for review and comment by Novartis at the time such report is
provided to Regeneron. In the event that Novartis disputes any matters set forth
in such report, the Parties will agree a process for resolution of such dispute,
which process will protect the confidential and commercially sensitive nature of
any relevant Novartis Company Information, particularly in view of any
development, manufacture or commercialization by Regeneron of the Trap-1
Product, the Trap-2 Product or any other product which competes with any Covered
Product.

          (f) If any examination or audit of the records described above discloses an
under-payment of amounts due hereunder, then unless it disputes such finding,
Novartis shall pay the same (plus interest thereon at a rate equal to
[*****************] within [*******] days after receiving the final audit report
establishing such obligation. In the event of an overpayment of amounts due
hereunder, then Regeneron shall re-pay the same to Novartis within [*******] days after receiving the final audit
report establishing such obligation. 

          (g) Regeneron shall pay for such audits, as well as its own expenses
associated with enforcing its rights with respect to any payments hereunder,
except that in the event there is any upward adjustment in aggregate amounts
payable by Novartis for any year shown by such audit of more than [********] of the amount paid, Novartis
shall pay for such audit. 

          (h) Novartis shall include in each license or purchase agreement with Product
Licensees/Assignees a provision requiring the applicable Product
Licensee/Assignee (i) to keep and maintain records of sales made pursuant to
such agreement, and to grant access to such records by Auditor under the same conditions
and to the same extent required of Novartis under this Agreement, and (ii) to
provide sufficient Net Sales information to Novartis to allow Novartis to comply
with its reporting and payment obligations to Regeneron hereunder. 

SECTION 6. 

CONFIDENTIALITY

     6.1 Confidential Novartis Company
Information. 

          (a) Regeneron acknowledges (subject to Section 6.1(b)) that all Novartis
Company Information provided by Novartis or any of its Affiliates or Product
Licensees/Assignees pursuant to this Agreement is confidential and proprietary
to Novartis or its respective Affiliates or Product Licensees/Assignees, and
Regeneron agrees to (A) disclose such Novartis Company Information to only those
of its employees, agents or any other person under its authorization who need to
know such Novartis Company Information for purposes of this Agreement; (B)
maintain such information in confidence until the expiration of the last to
expire Royalty Term under this Agreement and for a period of ten (10) years
thereafter; and (C) use such information solely for the purpose of exercising or
enforcing its rights hereunder. Regeneron covenants that neither it nor any of
its Affiliates shall disclose any such information to any Third Party except to
its employees, agents or any other person under its authorization who need to
know such information for purposes of this Agreement; provided such employees,
agents or persons under its authorization are subject in writing to
substantially the same confidentiality obligations as Regeneron
hereunder.

13 

          (b) Notwithstanding anything provided above, the restrictions provided in
this Section 6 shall not apply to information that is (and such information
shall not be considered confidential or proprietary under this Agreement) (i)
already in the public domain as of the Effective Date by reason of prior
publication or otherwise; (ii) received by Regeneron on an unrestricted basis
from a Third Party not under an obligation of confidentiality to Novartis or any
of its Affiliates with respect to such information; (iii) information that has
become part of the public domain after the Effective Date through no act,
omission or fault of Regeneron or any of its Affiliates; or (iv) information
that is similar in nature to the purported Novartis Company Information but has
been independently created, as evidenced by written or electronic documentation.
Notwithstanding anything provided above in 6.1(a), if Regeneron or any of its
Affiliates is required by applicable Law to disclose any Novartis Company
Information to a Third Party or Governmental Authority, then, Regeneron shall be
permitted to make such disclosure, provided that if permitted by Law, Regeneron
shall promptly notify Novartis of such disclosure and reasonably cooperate with
Novartis (at Novartis’ expense) to obtain any protective order to protect the
confidentiality of the Novartis Company Information to be disclosed. 

     6.2 Injunctive Relief. Regeneron
acknowledges that damages resulting from disclosure of Novartis Company
Information not permitted under this Agreement would be an inadequate remedy and
that, notwithstanding the provisions of Section 9.1, in the event of any such
disclosure or any indication of an intent to disclose such information, Novartis
(or any of its Affiliates) shall be entitled to seek, by way of private
litigation, injunctive relief or other equitable relief in addition to any and
all remedies available at law or in equity, including the recovery of damages
and reasonable attorneys’ fees, and in any such action for equitable relief in a
court of competent jurisdiction, Regeneron hereby consents to the jurisdiction
of such for such purpose and will not assert as a defense that there is an
adequate remedy at law.

SECTION 7. 

REPRESENTATIONS AND
WARRANTIES 

     7.1 Due Organization, Valid Existence and Due Authorization. Each Party hereto represents and warrants to the other Party
as follows: (a) it is duly organized and validly existing under the Laws of its
place of incorporation; (b) it has full corporate power and authority and has
taken all corporate action necessary to enter into and perform this Agreement;
(c) the execution and performance by it of its obligations hereunder will not
constitute a breach of, or conflict with, its organizational documents nor any
other agreement or arrangement, whether written or oral, by which it or any of
its Affiliates is bound; (d) to the best of its knowledge, it has complied in
all material respects with all Laws applicable to it; (e) this Agreement is its
legal, valid and binding obligation, enforceable in accordance with the terms
and conditions hereof (subject to applicable Laws of bankruptcy and moratorium);
and (f) no broker, finder or investment banker is entitled to any brokerage,
finder’s or other fee in connection with this Agreement or the transactions
contemplated hereby based on arrangements made by it or on its
behalf.

14 

     7.2 Disclaimers. Except as expressly set
forth herein, no Party makes any express or implied representations or
warranties, statutory or otherwise, and Novartis and Regeneron each specifically
disclaim any other warranties, including any warranty of quality,
merchantability or fitness for a particular use or purpose or any warranty as to
the validity of any of the Regeneron Patents, the non-infringement of any
intellectual property rights of Third Parties, or any warranty concerning the
value, adequacy, other quality, efficiency, stability, characteristics or
usefulness of, or merchantability, or fitness for a particular purpose of, any
Covered Product. Nothing in this Agreement is or shall be construed as (a) a
warranty or representation that anything made, used, sold or otherwise disposed
of under any Regeneron Patent is or will be free from infringement of patents of
Third Parties; (b) an obligation to bring or prosecute actions or suits against
Third Parties for patent infringement; or (c) an obligation to furnish any
know-how. 

SECTION 8. 

INDEMNIFICATION 

     8.1 Indemnity and
Insurance.

          (a) Novartis shall indemnify and hold harmless Regeneron and its Affiliates
and their respective officers, directors, employees and agents (“Indemnified Parties”) from
and against all Third Party claims, demands, liabilities, damages and expenses,
including reasonable attorneys’ fees and costs (collectively “Damages”), arising out of
the development, manufacture, commercialization, marketing, distribution,
storage, sale and use of any Covered Product by Novartis or its Affiliates or
Product Licensees/Assignees (or its respective agents, contractors,
distributors, representatives or other persons or entities working on its
behalf), except to the extent that Damages arise out of the breach by Regeneron
of any of the terms of, or any of its representations or warranties under, this
Agreement. 

          (b) Novartis shall maintain (and shall cause all Affiliates and Product
Licensees/Assignees to maintain), or self-insure for, product liability
insurance to cover liabilities related to the development, manufacture,
commercialization, marketing, distribution, sale and use of Covered Products at
a commercially reasonable level. 

     8.2 Indemnity
Procedure. 

          (a) Regeneron shall notify Novartis within twenty (20) days of becoming aware
of any claim of claims asserted or threatened against Regeneron which could give
rise to a right of indemnification under this Agreement; provided, however, that
the failure to give such notice shall not relieve Novartis of its indemnity
obligation hereunder except to the extent that such failure materially
prejudices its rights hereunder. 

          (b) If Novartis has acknowledged in writing to Regeneron its responsibility
for defending such claim, Novartis shall have the right to defend, at its sole
cost and expense, such claim by all appropriate proceedings, which proceedings
shall be prosecuted diligently by Novartis to a final conclusion or settled at
Novartis’ discretion; provided, however, that Novartis may not enter into any
compromise or settlement unless (i) such compromise or settlement includes as an
unconditional term thereof, the giving by each claimant or plaintiff to
Regeneron and the other Indemnified Parties of a release from all liability in
respect of such claim; and (ii) Regeneron consents to such compromise or
settlement, which consent shall not be withheld or delayed unless such
compromise or settlement involves (A) any admission of legal wrongdoing by
Regeneron or any other Indemnified Party, (B) any payment by Regeneron or any
other Indemnified Party that is not indemnified hereunder or (C) the imposition
of any equitable relieve against Regeneron or any other Indemnified
Party.

15

          (c) Regeneron may participate in, but not control, any defense or settlement
of any claim controlled by Novartis pursuant to this Section 8.2 and shall bear
its own costs and expenses with respect to such participation; provided,
however, that Novartis shall bear such costs and expenses if counsel for
Novartis shall have reasonably determined that such counsel may not properly
represent both Novartis and the Indemnified Parties. 

SECTION 9. 

MISCELLANEOUS 

     9.1 Dispute
Resolution.

          (a) Subject to Sections 6.2 and 9.1(h), the Parties agree that no dispute,
controversy or claim arising out of or in connection with this Agreement or the
Parties’ activities hereunder (“Dispute”) shall be resolved other than
pursuant to this Section 9.1, and the Parties further agree that, subject to
Section 6.2, in no event shall any such dispute, controversy or claim be the
subject of private litigation between the Parties. 

          (b) The Parties agree that, subject to Section 6.2, they shall use
commercially reasonable efforts, to resolve any Dispute by good faith
negotiation and discussion. In the event that the Parties are unable to resolve
any such Dispute within fifteen (15) days after formal notice from one Party to
the other referencing this Section 9.1, either Party may submit the Dispute to
the Executive Officers for resolution. In the event the Executive Officers are
unable to resolve any such Dispute within thirty (30) days after such Dispute is
submitted to them for resolution, the Parties shall be free to resort to
arbitration pursuant to the remainder of this Section 9.1.

          (c) In the event that the Parties are unable to resolve any Dispute through
the procedures described in Section 9.1(b) above, the Dispute shall, at the
request of either Party and subject to Sections 6.2 and 9.1(h), be finally
settled by arbitration in accordance with the Rules of International Arbitration
(the “Rules”) of the International Chamber of Commerce as presently in force.

          (d) The arbitration panel shall consist of three (3) arbitrators, each of
whom must have legal or business experience in pharmaceutical licensing matters.
The arbitrators are to be selected as follows: Novartis shall nominate one such
qualified arbitrator, without limitation as to nationality; Regeneron shall
nominate one such qualified arbitrator, without limitation as to nationality;
and the two arbitrators so nominated shall nominate a third such qualified
arbitrator, who shall be the presiding arbitrator, in each case subject to
confirmation by the International Court of Arbitration of the International
Chamber of Commerce in Paris, France (the “ICC
Court”). In the event either Novartis or
Regeneron shall have failed to nominate a qualified arbitrator as provided above
within fifteen (15) Business Days after the other Party shall have nominated its
arbitrator, or the two arbitrators so nominated shall fail to agree on a third
arbitrator as provided above within fifteen (15) days after the appointment of
the second arbitrator, the second arbitrator and/or the presiding arbitrator, as
the case may be, shall be appointed by the ICC Court.

16

          (e) The place of arbitration shall be New York, New York, and the language of
the arbitration shall be English.

          (f) Except as otherwise provided in this Agreement, the arbitration procedure
set forth in this Section 9.1 shall be the sole and exclusive means of settling
or resolving any Dispute. 

          (g) Discovery shall be conducted in accordance with the Rules of Arbitration
of the International Chamber of Commerce, subject to all applicable privileges
and immunities, and shall be limited to: (i) the production of documents
available in the ordinary course of business in accordance with the producing
Party’s standard document retention policies within specified relevant
categories from no more than ten (10) individual representatives of the
producing Party who have been identified by the other Party in its document
request; (ii) two (2) depositions per side; and (iii) ten (10) interrogatories
per side. At least twenty (20) days prior to the first scheduled hearing date,
the Parties shall identify the witnesses that they intend to present at the
arbitration hearing and the documentation on which they intend to rely. The
Parties shall use their commercially reasonable efforts to conclude the
arbitration hearings within six (6) months following the confirmation of the
third and presiding arbitrator. The arbitrators shall issue their decision
(including grounds and reasoning) in writing no later than sixty (60) days
following the conclusion of the last arbitration hearing. 

          (h) By agreeing to arbitration, the Parties do not intend to deprive any
court of competent jurisdiction of its jurisdiction to issue a pre-arbitral
injunction or order for specific performance, pre-arbitral attachment or other
order in aid of arbitration proceedings, and the Parties hereby consent to the
jurisdiction of any such court for such purposes. Without prejudice to such
provisional remedies as may be available under the jurisdiction of a national
court, the arbitral tribunal shall have full authority to grant provisional
remedies or to order the Parties to request that a court modify or vacate any
temporary or preliminary relief issued by a such court, and to award damages for
the failure of any party to respect the arbitral tribunal’s orders to that
effect. The award of the arbitrators shall be final and binding on the Parties
and may be presented by either of the Parties for enforcement in any court of
competent jurisdiction, and the Parties hereby consent to the jurisdiction of
such court solely for purposes of enforcement of this arbitration agreement and
any order or award entered in an arbitration pursuant hereto.

          (i) The fees of the arbitrators and the other costs of such arbitration,
excluding attorneys’ fees which each Party shall bear, shall be borne and paid
as the arbitrators determine.

17 

     9.2 Governing Law. This Agreement shall be
governed by and construed in accordance with the Laws of the State of New York,
without regard to conflict of laws principles. 

     9.3 Waiver. Waiver by a Party of a breach
hereunder by the other Party shall not be construed as a waiver of any
succeeding breach of the same or any other provision. No delay or omission by a
Party in exercising or availing itself of any right, power or privilege
hereunder shall preclude the later exercise of any such right, power or
privilege by such Party. No waiver shall be effective unless made in writing
with specific reference to the relevant provision(s) of this Agreement and
signed by a duly authorized representative of the Party granting the waiver.

     9.4 Force Majeure. Neither Party shall be
responsible to the other for any failure or delay in performing any of its
obligations under this Agreement, or for other nonperformance hereunder, if such
delay or nonperformance is caused by strike, stoppage of labor, lockout or other
labor trouble, fire, flood, earthquake, accident, war, act of terrorism, act of
God or of the government of any country or of any local government, or by cause
unavoidable or beyond the control of any Party hereto. In such event, the Party
affected will use commercially reasonable efforts to resume performance of its
obligations. 

     9.5 Notices. All notices, instructions and
other communications hereunder or in connection herewith shall be in writing,
shall be sent to the address of the relevant Party set forth on Exhibit B
attached hereto and shall be either (a) delivered personally, (b) sent by
registered or certified mail, return receipt requested, postage prepaid, (c)
sent via a reputable nationwide overnight courier service, or (d) sent by
facsimile transmission, with a confirmation copy to be sent by registered or
certified mail, return receipt requested, postage prepaid. Any such notice,
instruction or communication shall be deemed to have been delivered upon receipt
if delivered by hand, three (3) Business Days after it is sent by registered or
certified mail, return receipt requested, postage prepaid, one (1) Business Day
after it is sent via a reputable nationwide overnight courier service, or when
transmitted with electronic confirmation of receipt, if transmitted by facsimile
(if such transmission is on a Business Day; or otherwise, on the next Business
Day following such transmission). Either Party may change its address by giving
notice to the other Party in the manner provided above. 

     9.6 Entire Agreement. This Agreement
(including Exhibits), together with the Trap-2 Termination Agreement, contains
the complete understanding of the Parties with respect to the subject matter
hereof and supersedes all prior understandings and writings relating to the
subject matter hereof.

     9.7 Amendments. No provision in this
Agreement shall be supplemented, deleted or amended except in a writing executed
by Novartis and Regeneron. 

     9.8 Headings. Headings in this Agreement
are for convenience of reference only and shall not be considered in construing
this Agreement. 

     9.9 Severability. If, under applicable
Laws, any provision hereof is invalid or unenforceable, or otherwise directly or
indirectly affects the validity of any other material provision(s) of this
Agreement (“Severed Clause”), then, it is mutually agreed that this Agreement shall
endure except for the Severed Clause. The Parties shall consult and use their
best efforts to agree upon a valid and enforceable provision which shall be a
reasonable substitute for such Severed Clause in light of the intent of this
Agreement.

18 

     9.10 Registration and Filing of the Agreement. To the extent, if any, that a Party concludes in good faith that it is
required to file or register this Agreement or a notification or summary
thereof, or to include a description of this Agreement in any filing with any
Governmental Authority in accordance with applicable Laws, such Party may do so.
The other Party shall promptly cooperate in such filing or notification and
shall promptly execute all documents reasonably required in connection
therewith. In such situation, the Party making such filing or registration (and
the other Party if permitted under applicable Law) will request confidential
treatment of sensitive provisions of this Agreement, except to the extent the
Party making such request determines in good faith that such confidential
treatment is not reasonably likely to be granted under applicable Law. The
Parties shall promptly inform each other as to the activities or inquiries of
any such Governmental Authority relating to this Agreement, and shall promptly
cooperate to respond to any request for further information
therefrom. 

     9.11 Assignment. Except as otherwise
expressly provided herein, neither this Agreement nor any of the rights or
obligations hereunder may be assigned by either Party without the prior written
consent of the other Party (which consent shall not be unreasonably withheld),
except in each case to (a) an Affiliate of the assigning Party that has and will
continue to have the financial resources to meet its obligations hereunder or
(b) any Third Party who acquires all or substantially all of the business or
assets of the assigning Party to which this Agreement relates (whether by
merger, sale or assets or otherwise) or (c) in the case of Novartis only, on a
Covered Product-by-Covered Product and country-by-country basis, to any other
Third Party who acquires all of Novartis’ (or its applicable Affiliates’)
interests in the applicable Covered Product in the applicable country, and in
each case so long as such Affiliate or Third Party agrees in writing to be bound
by the terms of this Agreement. For the avoidance of doubt, in the case of an
assignment of this Agreement by Novartis to a Third Party under Section 9.11(c),
Novartis and its Affiliates shall continue to be bound by the terms of this
Agreement for all Covered Products that are not so acquired by a Third Party.
Any attempted assignment in violation hereof shall be void.

     9.12 Successors and Assigns. This Agreement
shall be binding upon and inure to the benefit of the Parties hereto and their
respective successors-in-interest and permitted assigns. 

     9.13 Counterparts. This Agreement may be
executed in counterparts, each of which shall be deemed an original but which
together shall constitute one and the same instrument. 

     9.14 Third-Party Beneficiaries. None of the
provisions of this Agreement shall be for the benefit of or enforceable by any
Third Party including, without limitation, any creditor of any Party hereto. No
Third Party shall obtain any right under any provision of this Agreement or
shall by reason of any such provision make any claim in respect of any debt,
liability or obligation (or otherwise) against any Party
hereto. 

     9.15 Relationship of the Parties. Each
Party shall bear its own costs incurred in the performance of its obligations
hereunder without charge or expense to the other except as expressly provided in
this Agreement.

19 

     9.16 Limitation of Damages. IN NO EVENT
SHALL REGENERON OR NOVARTIS BE LIABLE FOR SPECIAL, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT LIMITATION, LOSS OF PROFITS) SUFFERED
BY THE OTHER PARTY, EXCEPT AS SET FORTH IN SECTION 2.3 OR TO THE EXTENT ANY SUCH
DAMAGES ARE PAID TO A THIRD PARTY AS PART OF A THIRD-PARTY CLAIM COVERED BY THE
INDEMNIFICATION PROVISIONS OF SECTION 8.

[Signature page follows] 

20 

     IN
WITNESS WHEREOF, Novartis and Regeneron have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written. 

		NOVARTIS PHARMA AG  
				  
				  
		By :	 	/s/ Anthony Horning  	 
				Name:
      Anthony H. Horning  
				Title:
      Head, Global Alliance Management  
				  
		By 		/s/ Barbara Levi Mager 
	 
				Name:
      Barbara Levi Mager  
				Title:
      Head Legal, EGM, GEM & Row, General  
				Medicine & Oncology  
				  
		REGENERON PHARMACEUTICALS, INC.  
				  
				  
		By 		/s/ Murray Goldberg  	 
				Name:
      Murray Goldberg  
				Title:
      Senior Vice President, Finance &  
				Administration and Chief Financial Officer 
  

For the purposes of Section 2 only:

	 	NOVARTIS PHARMACEUTICALS CORPORATION  
				  
	 	 		  
		By 	 	/s/ Siddharth Kaul  	 
				Name:
      Siddharth Kaul  
				Title:
      Vice President & CFO  

21

EXHIBIT A 
SAMPLE
INVOICE

	Sender's
      Logo 	 

	 	INVOICE DATE: 
	Street 	__ _______	20__ 
	Town,
      Country 	 	 
	Phone and Fax
      Nr. 	INVOICE No.: XXXX 

	Bill
      To: 	For: 
	Novartis Pharma
      AG. 	Product X
      Royalties 1st Quarter 20__ 
	[address to be inserted] 	 

	And via fax to
      no. +[to be inserted] 	
	   DESCRIPTION [Please specify
      the event for which the invoice is due] 	AMOUNT
      (USD)
	Product X royalties
      January – March 20__ calculated based on Novartis 	 
	provided sales &
      royalty report (see attached worksheet) 	US$ 000'000.00
	 	
	 	
	 	
	Novartis Contract
      Code 	
	 	
	Please remit by
      wire transfer within [*******] to: 	
	                     
      Receiving Bank - ...... 	
	                     
      Swift Code - ...... 	
	                     
      ABA Number - ...... 	
	                     
      Credit Account - ...... 	
	                     
      Beneficiary - ...... 	
		
	TOTAL 	000'000,00 

If you have any questions concerning
this invoice, contact ............ 
or e-mail to
...... 
VAT -Reg.
No. Xxxxxxxxxx (if applicable) 

EXHIBIT B
NOTICES 

	
      (a) If to Novartis:

      Novartis Pharma AG 
P.O. Box 
CH - 4002 Basel 
Switzerland
      
Attn: Head, Business Development and
      Licensing 
Fax: [**********] 

      with a copy to: 

      Novartis Pharma AG 
P.O. Box 
CH - 4002 Basel 
Switzerland
      
Attn: Head, Legal Department 
Fax:
      [************] 

      (b) If to Regeneron: 

      Regeneron Pharmaceuticals, Inc. 
777 Old Saw Mill River Road
      
Tarrytown, New York 10591 
U.S.A.
Attention: President 
Copy: General CounselExhibit 10.2 

Portions of this Exhibit Have Been
Omitted and Separately 
Filed with the Securities and Exchange Commission
with a 
Request for Confidential Treatment 

 

 

	 
       

      TRAP -2 TERMINATION AGREEMENT
      

      By and Between 

      NOVARTIS PHARMA AG 

      NOVARTIS PHARMACEUTICALS
      CORPORATION 

      AND 

      REGENERON PHARMACEUTICALS, INC.
      

      Dated as of June 8, 2009
      

       

       

Table of
Contents 

	SECTION 1. DEFINITIONS  	  	2  
	SECTION 2. WAIVER AND TERMINATION  	  	7  
	        2.1  	      	Waiver  	  	7  
	        2.2  		Purpose and Effect of this Agreement; Termination of the CLO
      Agreement  	7 
    
	SECTION 3. COVENANT NOT TO SUE  	  	8  
	        3.1  		Covenant Not to
      Sue  	  	8 
    
	        3.2  		Rights in Bankruptcy  	  	8  
	        3.3  		Covered
      Products  	  	8 
    
	SECTION 4. CONSIDERATION  	  	9  
	        4.1  		Royalty
      Payments  	  	9 
    
	        4.2  		[*************]  	10  
	        4.3  		No
      Projections  	  	10 
    
	SECTION 5. REPORTS AND PAYMENT TERMS 
	 	10  
	        5.1  		Payment
      Terms  	  	10 
    
	        5.2  		Currency  	  	11  
	        5.3 
    		Taxes  	  	11 
    
	        5.4  		Accounting Standards  	  	11  
	        5.5  		Records and
      Audit Rights  	  	11 
    
	SECTION 6. CONFIDENTIALITY  	  	12  
	        6.1  		Confidential
      Regeneron Company Information  	  	12 
    
	        6.2  		Injunctive Relief  	  	13  
	SECTION 7. REPRESENTATIONS AND WARRANTIES  	  	13  
	        7.1  		Due Organization, Valid Existence and Due
      Authorization  	13  
	        7.2  		Disclaimers  	  	14 
    
	SECTION 8. INDEMNIFICATION  	  	14  
	        8.1  		Indemnity and
      Insurance  	  	14 
    
	        8.2  		Indemnity Procedure  	  	14  
	SECTION 9. MISCELLANEOUS  	  	15  
	        9.1  	 	Dispute Resolution  	  	15  
	        9.2  		Governing
      Law  	  	17 
    
	        9.3  		Waiver  	  	17  
	        9.4  		Force
      Majeure  	  	17 
    
	        9.5  		Notices  	  	17  
	        9.6  		Entire
      Agreement  	  	17 
    
	        9.7  		Amendments  	  	17  
	        9.8  		Headings  	  	17 
    
	        9.9  		Severability  	  	17  
	        9.10  		Registration and
      Filing of the Agreement  	  	18 
    
	        9.11  		Assignment  	  	18  
	        9.12  		Successors and
      Assigns  	  	18 
    
	        9.13  		Counterparts  	  	18  
	        9.14  		Third-Party
      Beneficiaries  	  	18 
    
	        9.15 
    		Relationship of the Parties  		18  
	        9.16 
    		Limitation of
      Damages  		19 
    

EXHIBIT A – SAMPLE INVOICE

EXHIBIT B – NOTICES 

i

TRAP -2 TERMINATION
AGREEMENT 

          THIS
TRAP-2 TERMINATION AGREEMENT (“Agreement”), made as of June
8, 2009 (the “Effective Date”), is by and between
NOVARTIS PHARMA AG, a corporation organized under the laws of Switzerland and
having a principal place of business at Lichtstrasse 35, 4056 Basel, Switzerland
(“Novartis”), NOVARTIS PHARMACEUTICALS CORPORATION of One Health Plaza, East
Hanover, New Jersey (“NPC”) and REGENERON PHARMACEUTICALS, INC., a corporation
organized under the laws of New York and having a principal place of business at
777 Old Saw Mill River Road, Tarrytown, New York 10591 (“Regeneron”) (with each of Novartis and Regeneron referred to herein individually
as a “Party” and collectively as the “Parties”, and with NPC being a
“Party” to
this Agreement for purposes of Section 2 only).

          WHEREAS, on March 28, 2003 the Parties and NPC (for limited
provisions only) entered in to the Collaboration, License and Option Agreement
(“CLO Agreement”) whereby (i) Novartis and Regeneron agreed to collaborate with respect
to the development, manufacture and commercialization of the Trap-1 Product (as
defined in the CLO Agreement); (ii) Novartis granted Regeneron the right to
elect to share in the development and commercialization of the IL-1 Antibody
Product (as defined in the CLO Agreement); and (iii) Regeneron granted Novartis
the right to elect to share in the development and commercialization of the
Trap-2 Product (as defined in the CLO Agreement); 

          WHEREAS, by letter dated February 27, 2004, Novartis
terminated the CLO Agreement with respect to the Trap-1 Product under Section
19.4(a) of the CLO Agreement (“Termination Letter”);

          WHEREAS, the Parties wish to enter into this Agreement for the
purpose of defining certain rights and obligations of the Parties with respect
to the Trap-2 Product and other Covered Products (as defined herein) on the
terms and conditions set forth in this Agreement following the termination of
the CLO Agreement pursuant to the IL-1 Antibody Termination Agreement (as
defined herein);

          WHEREAS, concurrent with their execution of this Agreement,
the Parties will also enter into an agreement terminating the CLO Agreement and
relating to certain rights and obligations of the Parties with respect to
Novartis’ development and commercialization of the IL-1 Antibody Product (as
defined in the CLO Agreement) and other products targeting interleukin-1 (the
“IL-1 Antibody Termination
Agreement”); and 

          WHEREAS, the Parties intend this Agreement, together with the
IL-1 Antibody Termination Agreement, to supersede and replace the CLO Agreement
in its entirety. 

          NOW, THEREFORE, in consideration of the following mutual
promises and obligations, and for other good and valuable consideration the
adequacy and sufficiency of which are hereby acknowledged, the Parties agree as
follows:

SECTION 1. 

DEFINITIONS 

          The following capitalized terms, whether used in the singular
or plural, shall have the meanings set forth below:

          “Affiliate” shall mean, with respect to any Person, any other Person
which controls, is controlled by or is under common control with such Person. A
Person shall be deemed to control another Person if such Person possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise. For purposes of this Agreement, in no
event shall Novartis or any of its Affiliates be deemed Affiliates of Regeneron
or any of its Affiliates nor shall Regeneron or any of its Affiliates be deemed
Affiliates of Novartis or any of its Affiliates. 

          “Approval” shall mean, with respect to each Covered Product, any
approval (excluding Pricing Approvals), registration, license or authorization
from any Regulatory Authority required for the manufacture, development,
commercialization, sale, storage or transport of such product in any country,
and shall include, without limitation, an approval, registration, license or
authorization granted in connection with any Registration Filing. 

          “Bioequivalent
Product” shall mean, with respect to any
Covered Product, a product which has the same (or substantially similar) amino
acid sequence as such Covered Product and is authorized on the basis of a
reference to a Covered Product under either (1) Article 10.1 or (2) Article 10.4
and Part II.4 of Annex I of Parliament and Council Directive 2001/83/EC as
amended by Directive 2004/27/EC, in each case as amended from time to time, or
successor legislation in each case, and equivalent provisions of applicable law
in other jurisdictions for biosimilar, follow-on, or generic biologic products.

          “Calendar
Quarter”
shall
mean the respective periods of three (3)
consecutive calendar months ending on March 31, June 30, September 30 and
December 31. 

          “Calendar
Year” shall mean a period of twelve (12)
consecutive calendar months ending on December 31. 

          “CLO Agreement” has the
meaning set forth in the recitals. 

          “Covered Product” shall mean
[********************************]. 

          “Derivative” means: (a) any functional protein which primarily and
specifically binds to interleukin-1 and has [*****************************] or
(b) any functional fragment of a protein which specifically binds to
interleukin-1 and has [*********************].

          “EMEA” shall mean the European Medicines Agency or any successor
agency thereto. 

2 

          “Executive
Officers” shall mean the Chief Executive
Officer of Regeneron and the Chief Executive Officer of Novartis, or their
respective designees.

          “FDA” shall mean the United States Food and Drug Administration
and any successor agency thereto. 

          “First Commercial
Sale” shall mean, with respect to a Covered
Product in a country, the first sale of such product by Regeneron or one of its
Affiliates or a Product Licensee/Assignee to a Third Party (other than a Product
Licensee/Assignee) following Approval of such product in accordance with the
applicable Laws of such country on arm’s length commercial terms. Sales for
clinical trial purposes shall not constitute a First Commercial Sale.

          “Governmental
Authority” shall mean any court, agency,
authority, department, regulatory body or other instrumentality of any
government or country or of any national, federal, state, provincial, regional,
county, city or other political subdivision of any such government or any
supranational organization of which any such country is a member. 

          “IL-1 Antibody Termination
Agreement” has the meaning set forth in the
recitals. 

          “Law” or “Laws” shall mean all laws, statutes, rules, regulations, orders,
judgments, injunctions and/or ordinances of any Governmental Authority in the
applicable country. 

          “Major Market Country” shall
mean [*************************]. 

          “Net Sales” shall mean, with respect to each Covered Product, the gross
invoiced sales price of such Covered Product billed by or on behalf of Regeneron
or its Affiliates or any Product Licensee/Assignee for that product to Third
Parties (other than Product Licensees/Assignees) in bona fide, arms-length
transactions, less the following deductions (to the extent included in the gross
invoiced sales price), determined in accordance with Regeneron’s (or its
Affiliate’s or Product Licensee’s/Assignee’s, as the case may be) standard
accounting methods, which are in accordance with generally accepted accounting
principles as applicable in the United States (that is, US GAAP) or
International Financial Reporting Standards (IFRS), as applicable, as
consistently applied at Regeneron, its Affiliates or Product
Licensees/Assignees, as the case may be:

(a) normal
and customary trade and quantity discounts actually allowed and properly taken
directly with respect to sales of such Covered Product; 

(b) free
goods; 

(c) amounts
repaid or credited by reason of defects, rejections, recalls, returns, rebates
and allowances; 

(d) chargebacks and other amounts paid on sale or dispensing of such Covered
Product; 

3 

(e)
Third Party cash rebates and chargebacks related
to sales of the finished Covered Product, to the extent allowed; 

(f)
Medicaid rebates; 

(g)
retroactive price reductions that are actually
allowed or granted; 

(h)
tariffs, duties, excise, sales, value-added or
other taxes (other than taxes based on income); 

(i)
cash discounts for timely payment; 

(j)
delayed ship order credits; 

(k)
discounts pursuant to indigent patient programs
and patient discount programs, including, without limitation, “Together Rx, ”
and coupon discounts;

(l)
insurance expenses included as a separately
billed item in the invoice amount; 

(m)
[******************************************]; and

(n)
any other specifically identifiable costs or
charges included in the gross invoiced sales price of such Covered Product
falling within categories substantially equivalent to those listed
above.

Sales from Regeneron to its Affiliates
or Product Licensees/Assignees shall be disregarded for purposes of calculating
Net Sales. Any of the items set forth above that would otherwise be deducted
from the invoice price in the calculation of Net Sales but which are separately
charged to Third Parties shall not be deducted from the invoice price in the
calculation of Net Sales.

Further: 

          (i) In the case of any sale or other disposal of Covered
Product between or among Regeneron and its Affiliates and Product
Licensees/Assignees, for resale, Net Sales shall be calculated as above only on
the value charged or invoiced on the first arm’s-length sale thereafter to a
Third Party; 

          (ii) In the case of any sale which is not invoiced or is
delivered before invoice, Net Sales shall be calculated at the time all revenue
recognition criteria under GAAP or IFRS, as the case may be, are met;

          (iii) In the case of any sale or other disposal for value,
such as barter or counter-trade, of any product, or part thereof, other than in
an arm’s length transaction exclusively for money, Net Sales shall be calculated
as above on the value of the non-cash consideration received or the fair market
price (if higher) of the product in the country of sale or disposal;

4

          (iv) In the event the Covered Product is sold in a finished
dosage form in combination with one or more other active ingredients (a
“Combination Product”), the Net Sales of the product, for the purposes of
determining royalty payments, shall be determined by multiplying the Net Sales
(as defined above in this Section) of the Combination Product by the fraction,
A/(A+B) where A is the weighted (by sales volume) average sale price in a
particular country of the Covered Product when sold separately in finished form
and B is the weighted average sale price in that country of the other product(s)
sold separately in finished form. In the event that such average sale price
cannot be determined for both the Covered Product and the other product(s) in
combination, Net Sales for purposes of determining royalty payments shall be
agreed by the Parties based on the relative value contributed by each component,
such agreement shall not be unreasonably withheld; and 

          (v) In the case of deductions for bad debt, any amounts
subsequently paid to Regeneron, its Affiliates or Product Licensees/Assignees
for sales previously treated as “bad debt” shall be captured as Net Sales in the
ensuing quarterly royalty calculation pursuant to Section 5. 

          “Novartis
Patents” shall mean those Patent Rights which
are owned by or licensed (with the right of sublicense) to Novartis or any of
its Affiliates, as at the Effective Date or at any time during the Royalty Term,
which include at least one claim which would be infringed by the manufacture,
use, sale, offer for sale or import of the Trap-1, Trap-1 Product, Trap-2 or the
Trap-2 Product as it exists and is manufactured, used, sold, offered for sale,
or imported from time to time. Patent Rights covering general recombinant
protein expression technology, cell culture and fermentation, protein
purification and formulation technologies shall be excluded from this
definition. 

          “Patent Application” shall
mean any application for a Patent. 

          “Patent Rights” shall mean
unexpired Patents and Patent Applications. 

          “Patents” shall mean patents and all substitutions, divisions,
continuations, continuations-in-part, reissues, reexaminations and extensions
thereof and supplemental protection certificates relating thereto, and all
counterparts thereof in any country. 

          “Person” shall mean and include an individual, partnership, joint
venture, limited liability company, a corporation, a firm, a trust, an
unincorporated organization and a government or other department or agency
thereof. 

          “Pricing
Approval” shall mean such approval,
agreement, determination or governmental decision establishing prices for a
Covered Product that can be charged to consumers and will be reimbursed by
Governmental Authorities in countries where governmental authorities or
Regulatory Authorities of such country approve or determine pricing for
pharmaceutical products for reimbursement or otherwise. 

          “Product Licensee/Assignee”
shall mean any Third Party that licenses, or, under Section 9.11, is assigned,
rights to any particular Covered Product (or any particular indication for any
particular Covered Product) in a particular country by Regeneron or any of its
Affiliates where the licensed or assigned rights include the right to book sales
of such Covered Product in such country. For the avoidance or doubt, “Product
Licensee/Assignee” shall not include any Third Party engaged by Regeneron or its
applicable Affiliate to provide particular services related to the development,
manufacture or commercialization of a Covered Product, including, without
limitation, research, development, contract manufacturing, supply, distribution,
commercialization, or co-commercialization services, unless such Third Party
also books sales of the applicable Covered Product in the applicable
country.

5

          “Regeneron Company
Information” shall mean information or
materials provided by Regeneron in the Sales & Royalty Reports (and all
information contained therein) and any audits thereof pursuant to Section 5.5.

          “Regulatory
Authority” shall mean any federal, national,
multinational, state, provincial or local regulatory agency, department, bureau
or other governmental entity with authority over the marketing, pricing and/or
sale of any Covered Product in any country, including, without limitation, FDA
in the United States and EMEA in Europe.

          “Royalty Term” shall have
the meaning set forth in Section 4.1(b).

          “Sales & Royalty
Report”
means a written report or reports showing
each of: (a) the Net Sales of each Covered Product during the reporting period
by Regeneron, its Affiliates, and Product Licensees/Assignees, which information
shall be provided on a country-by-country basis in United States Dollars; and
(b) the royalties payable, in United States Dollars, which shall have accrued
hereunder with respect to such Net Sales.

          [*************************************].

          “Seventh Anniversary
Date” shall mean the seventh anniversary of
the Effective Date. 

          “Termination
Letter” has the meaning set forth in the
recitals. 

          “Third Party” shall mean any Person other than Novartis or Regeneron or
any Affiliate of either Party. 

          “Trap-1” shall have the
meaning set forth in the CLO Agreement. 

          “Trap-1
Product” shall have the meaning set
forth in the CLO Agreement. 

          “Trap-2” shall have the
meaning set forth in the CLO Agreement.

          “Trap-2
Product” shall mean one or more
pharmaceutical products for human and/or animal use which include the Trap-2
(whether as a protein, a nucleic acid encoding a protein, or a cell line
expressing a protein) or any Derivative thereof, including fusions comprising
any such antibody or Derivative and any composition, formulation or device that
incorporates or includes any such antibody or Derivative as an active
ingredient, alone or in combination with one or more other active ingredients,
for all indications.

          “US GAAP” shall mean generally accepted accounting principles in the
United States. 

6

SECTION 2.

WAIVER AND
TERMINATION

     2.1 Waiver. Novartis hereby
waives any and all rights it may have with respect to the Trap-2, and any Trap-2
Product, pursuant to the CLO Agreement or any other agreement (other than this
Agreement) between any of the Parties existing as of the Effective Date relating
to the Trap-2 or any Trap-2 Product.

     2.2 Purpose and Effect of this Agreement; Termination of the CLO
Agreement. With effect from the Effective
Date, this Agreement, together with the Trap-2 Agreement, is intended to
supersede and replace the CLO Agreement and to represent the whole of the
Parties’ agreement with respect to each of the products described in the
definition of IL-1 Products in the CLO Agreement. Accordingly, the Parties
confirm that, pursuant to the IL-1 Antibody Termination Agreement, the Parties
agree that, with effect from the Effective Date, the CLO Agreement is terminated
and of no further force or effect (other than as set forth in the IL-1 Antibody
Termination Agreement and other than with respect to definitions of terms
defined in the CLO Agreement which are expressly referenced in this Agreement).

7

SECTION 3.

COVENANT NOT TO
SUE

     3.1 Covenant Not to Sue.
Novartis unconditionally agrees, promises, and covenants that neither it nor any
of its Affiliates will enforce (or attempt to enforce) any Novartis
Patent against Regeneron, any Regeneron Affiliate, any Product Licensee/Assignee
or any of their respective agents or service providers, for having made, making,
using, offering for sale, selling, or importing any Covered Product or Trap-1
Product or any component thereof. This covenant does not constitute an
admission: (a) by Regeneron that the claims of any Novartis Patent are valid,
enforceable or infringed by Regeneron, any Regeneron Affiliate, or any Product
Licensee/Assignee, for having made, making, using, offering for sale, selling,
or importing any Covered Product, Trap-1 Product or any component thereof; or
(b) by Novartis that the claims of any Novartis Patent are invalid,
unenforceable or not infringed by Regeneron, any Regeneron Affiliate or any
Product Licensee/Assignee of any Covered Product or Trap-1 Product, for having
made, making, using, offering for sale, selling, or importing any Covered
Product, Trap-1 Product or any component thereof. For purposes of this Section
3.1, the term “Covered Product” shall exclude any product first sold by Novartis
or any of its Affiliates (or any of their respective licensees or assignees of
such product) anywhere in the world, or any biosimilar, follow-on or generic
biologic product thereof that is authorized on the basis of a reference to such
product under either (1) Article 10.1 or (2) Article 10.4 and Part II.4 of Annex
I of Parliament and Council Directive 2001/83/EC as amended by Directive
2004/27/EC, in each case as amended from time to time, or successor legislation
in each case, and equivalent provisions of applicable law in other
jurisdictions. For the avoidance of doubt, this covenant shall be binding upon
and shall inure to the benefit of the parties and their respective
successors-in-interest.

     3.2 Rights in Bankruptcy. The
covenants in Section 3.1 are, and will otherwise be deemed to be, for purposes
of Section 365(n) of the US Bankruptcy Code (the “Code”) and any similar laws in any
other country, licenses of rights to “intellectual property” as defined under
Section 101 of the Code. The Parties agree that Regeneron will retain and may
fully exercise all of its protections, rights and elections under the Code and
any similar laws in any other country. All rights, powers and remedies of
Regeneron provided for in this Section 3.2 are in addition to and not in
substitution for any and all other rights, powers and remedies now or hereafter
existing at law or in equity (including, without limitation, under the Code and
any similar laws in any other country). In the event of the bankruptcy of
Novartis, Regeneron, in addition to any rights, power and remedies expressly
provided herein, shall be entitled to exercise all other such rights and powers
and resort to all other such remedies as may now or hereafter exist at law or in
equity (including, without limitation, under the Code and any similar laws in
any other country). 

     3.3 Covered
Products.

          Novartis acknowledges and agrees that the research,
development, manufacture and commercialization of any and all Covered Products
shall be at Regeneron’s sole discretion and that nothing in this Agreement or
otherwise will obligate Regeneron to research, develop, manufacture and
commercialize any or all Covered Products.

8

SECTION 4.

CONSIDERATION

     4.1 Royalty
Payments.

          (a) During the applicable Royalty Term, Regeneron will make
royalty payments to Novartis based on total worldwide Net Sales of Covered
Products by Regeneron, its Affiliates, and Product Licensees/Assignees at the
applicable rates set forth below.

	   Aggregate
      Net Sales by Regeneron, its Affiliates and Product Licensees/Assignees
      of
   Covered Products in any Calendar Year	Royalty
Rate
	
        
      Aggregate annual Net Sales of Covered Products less than or equal to
      [********] 
	
      4%

	
        
      Aggregate annual Net Sales of Covered Products over [********] but
      less than or equal to [********]
	
      [**]

	
        
      Aggregate annual Net Sales of Covered Products over [********] but
      less than or equal to [*********]
	
      [**]

	
        
      Aggregate annual Net Sales of Covered Products over [*******] but
      less than or equal to [*******]
	
      [**]

	
        
      Aggregate annual Net Sales of Covered Products over [*******] but
      less than or equal to US$ 1.5 billion
	
      [**]

	
        
      Aggregate annual Net Sales of Covered Products over US$ 1.5
      billion
	
      15%

          For
example, [***************************]. 

          (b) Royalties will be payable during the Royalty Term, which shall
commence from First Commercial Sale and expire when Regeneron (and/or its
Affiliates or Product Licensees/Assignees) ceases distribution and sale of all
Covered Products. [*******************] 

          Following the Royalty Term (but subject to Sections 4.1(d) and
4.1(e) below), on a country-by-country basis, the covenants made by Novartis
pursuant to Section 3.1 hereunder shall continue in effect, but become fully
paid-up, royalty-free, perpetual and irrevocable with respect to such
country.

          (c) For the avoidance of doubt, royalties shall be payable only
once with respect to the same unit of Covered Product. 

          (d) Notwithstanding the foregoing, with respect to any country for
which the Royalty Term has expired pursuant to Section 4.1(b)(i) above, in the
event that the conditions reflected in Section 4.1(b)(i) cease to be satisfied
following expiration of the Royalty Term in such
country,[**********************], the obligation to pay royalties under this
Section 4.1 on Net Sales of Covered Products in such country shall resume with
immediate effect until the conditions reflected in Section 4.1(b)(i) are again
satisfied with respect to such country [********************************], in
which case the terms of this Section 4.1(d) shall remain in effect.

9

          (e) Notwithstanding the foregoing, with respect to any country for
which the Royalty Term has been deemed to have expired pursuant to Section
4.1(b)(ii) above, [***************************************] the obligation to
pay royalties under this Section 4.1 on Net Sales of Covered Products in such
country shall resume with immediate effect until the conditions reflected in
Section 4.1(b)(i) are satisfied with respect to Covered Products in such
country, in which case the terms of Section 4.1(d) shall remain in
effect.

     4.2 [***************************].

     4.3 No Projections. Novartis
and Regeneron acknowledge and agree that nothing in this Agreement shall be
construed as representing an estimate or projection of anticipated sales of any
Covered Product, and that the Net Sales levels set forth above or elsewhere in
this Agreement or that have otherwise been discussed by the Parties are merely
intended to define the royalty obligations to Novartis in the event such Net
Sales levels are achieved. NEITHER NOVARTIS NOR REGENERON MAKES ANY
REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, THAT REGENERON, ITS
AFFILIATES OR PRODUCT LICENSEES/ASSIGNEES WILL BE ABLE TO SUCCESSFULLY DEVELOP
OR COMMERCIALIZE ANY COVERED PRODUCT OR, IF COMMERCIALIZED, THAT ANY PARTICULAR
NET SALES LEVEL OF SUCH COVERED PRODUCT WILL BE ACHIEVED.

SECTION 5.

REPORTS AND PAYMENT
TERMS

     5.1 Payment
Terms. 

          (a) Within [*******] after the end of each Calendar Quarter during
the Royalty Term, Regeneron will provide to Novartis a Sales & Royalty
Report. Each such Sales & Royalty Report shall be considered Confidential
Information of Regeneron. Notwithstanding the foregoing, or anything in Section
6 to the contrary, Novartis shall have the right to publicly disclose the total
royalty amounts received from Regeneron as part of its usual and customary
financial disclosure. 

          (b) After receipt of such report, Novartis shall submit an invoice
to Regeneron substantially in the form of Exhibit A with respect to the royalty
amount shown therein. Regeneron shall pay such royalty amount within [*********]
days after receipt of such invoice.

          (c) The royalties payable for each Calendar Quarter shall be
calculated as the difference between (i) the cumulative year-to-date royalties
payable to Novartis based on (A) cumulative Net Sales during the applicable
Calendar Year through the end of such Calendar Quarter and (B) the royalty rate
from Section 4.1(a) (as modified by Section 4.2, if applicable) that would be
applicable to such cumulative Net Sales, and (ii) the total royalties paid to
Novartis hereunder for Net Sales during any prior Calendar Quarters during the
applicable Calendar Year.

          (d) All payments from Regeneron to Novartis shall be made by wire
transfer in US Dollars to the credit of such bank account as may be designated
by Novartis in this Agreement or in writing to Regeneron. Any payment which
falls due on a date which is not a Business Day may be made on the next
succeeding Business Day.

10

     5.2 Currency. All payments
under this Agreement shall be payable in US dollars. When conversion of Net
Sales in any foreign currency to US dollars is required to be undertaken by
Regeneron, the US dollar equivalent shall be calculated using Regeneron’s
then-current standard exchange rate methodology as applied in its external
reporting in accordance with US GAAP. 

     5.3 Taxes. Novartis will pay
any and all taxes levied on account of any payments made to it under this
Agreement. If any taxes are required to be withheld by Regeneron, Regeneron
will: (a) deduct such taxes from the payment made to Novartis; (b) timely pay
the taxes to the proper taxing authority; (c) send proof of payment to Novartis;
and (d) reasonably assist Novartis in its efforts to obtain a credit for such
tax payment. Each Party agrees to reasonably assist the other Party in lawfully
claiming exemptions from and/or minimizing such deductions or withholdings under
double taxation laws or similar circumstances.

     5.4 Accounting Standards.
Except as otherwise provided herein, all financial determinations with respect
to this Agreement shall be determined in accordance with United States (that is,
US GAAP) or International Financial Reporting Standards (IFRS), as applicable,
as generally and consistently applied by Regeneron, its Affiliates or Product
Licensees/Assignees, as the case may be.

     5.5 Records and Audit Rights.
Regeneron shall keep complete, true and accurate books and records in accordance
with its accounting standards in relation to Net Sales of Covered Products and
royalties payable hereunder for at least [*******] following the Calendar Year
to which they pertain.

          (b) Novartis shall have the right for a period of [*********]
after receiving any Sales & Royalty Report to appoint an
internationally-recognized independent accounting firm (which is reasonably
acceptable to Regeneron in its reasonable discretion) (the “Auditor”) to inspect the
relevant records of Regeneron or its Affiliates or Product Licensees/Assignees
to verify such reports, statements, records or books of accounts, as
applicable.

          (c) Before beginning its audit, the Auditor shall execute a
reasonable and customary undertaking reasonably acceptable to Regeneron pursuant
to which the Auditor shall keep confidential all information reviewed during
such audit. The Auditor shall have the right to disclose to Novartis only its
conclusions regarding any payments owed under this Agreement, and without
limiting the foregoing, under no circumstances will the Auditor disclose to
Novartis the prices at which any Covered Product is sold, the nature or amount
of any particular itemized deductions under the definition of “Net Sales” or any
other information of a commercially or competitively sensitive nature.

          (d) Regeneron, its Affiliates, and Product Licensees/Assignees
shall make their records available for inspection by such Auditor during regular
business hours at such place or places where such records are customarily kept,
upon receipt of reasonable advance written notice from Novartis, solely to
verify the accuracy of the Sales & Royalty Reports. Such inspection right
shall not be exercised more than once in any Calendar Year and not more
frequently than once with respect to records covering any specific period of
time. Without limiting Section 5.5(c) above, Novartis agrees that all
information received and all information learned in the course of any audit or
inspection shall be considered Confidential Information, except to the extent
necessary to enforce its rights under this Agreement or if disclosure is
required by law, regulation or judicial order.

11

          (e) The audit report and basis for any determination by the
Auditor shall be made available for review and comment by Regeneron at the time
such report is provided to Novartis. In the event that Regeneron disputes any
matters set forth in such report, the Parties will agree a process for
resolution of such dispute, which process will protect the confidential and
commercially sensitive nature of any relevant Regeneron Company Information,
particularly in view of any development, manufacture or commercialization by
Novartis of the IL-1 Antibody Product or any other product which competes with
any Covered Product.

          (f) If any examination or audit of the records described above
discloses an under-payment of amounts due hereunder, then unless it disputes
such finding, Regeneron shall pay the same (plus interest thereon at a rate
equal to [**************] within [*******] after receiving the final audit
report establishing such obligation. In the event of an over-payment of amounts
due hereunder, then Novartis shall re-pay the same to Regeneron within [*******]
after receiving the final audit report establishing such obligation. 

          (g) Novartis shall pay for such audits, as well as its own
expenses associated with enforcing its rights with respect to any payments
hereunder, except that in the event there is any upward adjustment in aggregate
amounts payable by Regeneron for any year shown by such audit of more than
[*********] of the amount paid, Regeneron shall pay for such audit. 

          (h) Regeneron shall include in each license or purchase agreement
with Product Licensees/Assignees a provision requiring the applicable Product
Licensee/Assignee (i) to keep and maintain records of sales made pursuant to
such agreement, and to grant access to such records by Auditor under the same conditions
and to the same extent required of Regeneron under this Agreement, and (ii) to
provide sufficient Net Sales information to Regeneron to allow Regeneron to
comply with its reporting and payment obligations to Novartis hereunder.

SECTION 6.

CONFIDENTIALITY

     6.1 Confidential Regeneron
Company Information. 

          (a) Novartis acknowledges (subject to Section 6.1(b)) that all
Regeneron Company Information provided by Regeneron or any of its Affiliates or
Product Licensees/Assignees pursuant to this Agreement is confidential and
proprietary to Regeneron or its respective Affiliates or Product
Licensees/Assignees, and Novartis agrees to (A) disclose such Regeneron Company
Information to only those of its employees, agents or any other person under its
authorization who need to know such Regeneron Company Information for purposes
of this Agreement; (B) maintain such information in confidence until the
expiration of the last to expire Royalty Term under this Agreement and for a
period of ten (10) years thereafter; and (C) use such information solely for the
purpose of exercising or enforcing its rights hereunder. Novartis covenants that
neither it nor any of its Affiliates shall disclose any such information to any
Third Party except to its employees, agents or any other person under its
authorization who need to know such information for purposes of this Agreement;
provided such employees, agents or persons under its authorization are subject
in writing to substantially the same confidentiality obligations as Novartis
hereunder.

12

          (b) Notwithstanding anything provided above, the restrictions
provided in this Section 6 shall not apply to information that is (and such
information shall not be considered confidential or proprietary under this
Agreement) (i) already in the public domain as of the Effective Date by reason
of prior publication or otherwise; (ii) received by Novartis on an unrestricted
basis from a Third Party not under an obligation of confidentiality to Regeneron
or any of its Affiliates with respect to such information; (iii) information
that has become part of the public domain after the Effective Date through no
act, omission or fault of Novartis or any of its Affiliates; or (iv) information
that is similar in nature to the purported Regeneron Company Information but has
been independently created, as evidenced by written or electronic documentation.
Notwithstanding anything provided above in 6.1(a), if Novartis or any of its
Affiliates is required by applicable Law to disclose any Regeneron Company
Information to a Third Party or Governmental Authority, then, Novartis shall be
permitted to make such disclosure, provided that if permitted by Law, Novartis
shall promptly notify Regeneron of such disclosure and reasonably cooperate with
Regeneron (at Regeneron’s expense) to obtain any protective order to protect the
confidentiality of the Regeneron Company Information to be disclosed.

     6.2 Injunctive Relief. Novartis
acknowledges that damages resulting from disclosure of Regeneron Company
Information not permitted under this Agreement would be an inadequate remedy and
that, notwithstanding the provisions of Section 9.1, in the event of any such
disclosure or any indication of an intent to disclose such information,
Regeneron (or any of its Affiliates) shall be entitled to seek, by way of
private litigation, injunctive relief or other equitable relief in addition to
any and all remedies available at law or in equity, including the recovery of
damages and reasonable attorneys’ fees, and in any such action for equitable
relief in a court of competent jurisdiction, Novartis hereby consents to the
jurisdiction of such for such purpose and will not assert as a defense that
there is an adequate remedy at law.

SECTION 7.

REPRESENTATIONS AND
WARRANTIES

     7.1 Due Organization, Valid Existence and Due
Authorization. Each Party hereto represents
and warrants to the other Party as follows: (a) it is duly organized and validly
existing under the Laws of its place of incorporation; (b) it has full corporate
power and authority and has taken all corporate action necessary to enter into
and perform this Agreement; (c) the execution and performance by it of its
obligations hereunder will not constitute a breach of, or conflict with, its
organizational documents nor any other agreement or arrangement, whether written
or oral, by which it or any of its Affiliates is bound; (d) to the best of its
knowledge, it has complied in all material respects with all Laws applicable to
it; (e) this Agreement is its legal, valid and binding obligation, enforceable
in accordance with the terms and conditions hereof (subject to applicable Laws
of bankruptcy and moratorium); and (f) no broker, finder or investment banker is
entitled to any brokerage, finder’s or other fee in connection with this
Agreement or the transactions contemplated hereby based on arrangements made by
it or on its behalf.

13

     7.2 Disclaimers. Except as
expressly set forth herein, no Party makes any express or implied
representations or warranties, statutory or otherwise, and Novartis and
Regeneron each specifically disclaim any other warranties, including any
warranty of quality, merchantability or fitness for a particular use or purpose
or any warranty as to the validity of any of the Novartis Patents, the
non-infringement of any intellectual property rights of Third Parties, or any
warranty concerning the value, adequacy, other quality, efficiency, stability,
characteristics or usefulness of, or merchantability, or fitness for a
particular purpose of, any Covered Product. Nothing in this Agreement is or
shall be construed as (a) a warranty or representation that anything made, used,
sold or otherwise disposed of under any Novartis Patent is or will be free from
infringement of patents of Third Parties; (b) an obligation to bring or
prosecute actions or suits against Third Parties for patent infringement; or (c)
an obligation to furnish any know-how. 

SECTION 8.

INDEMNIFICATION

     8.1 Indemnity and
Insurance.

          (a) Regeneron shall indemnify and hold harmless Novartis and its
Affiliates and their respective officers, directors, employees and agents
(“Indemnified Parties”) from and against all Third Party claims, demands,
liabilities, damages and expenses, including reasonable attorneys’ fees and
costs (collectively “Damages”), arising out of the development, manufacture,
commercialization, marketing, distribution, storage, sale and use of any Covered
Product by Regeneron or its Affiliates or Product Licensees/Assignees (or its
respective agents, contractors, distributors, representatives or other persons
or entities working on its behalf), except to the extent that Damages arise out
of the breach by Novartis of any of the terms of, or any of its representations
or warranties under, this Agreement. 

          (b) Regeneron shall maintain (and shall cause all Affiliates and
Product Licensees/Assignees to maintain), or self-insure for, product liability
insurance to cover liabilities related to the development, manufacture,
commercialization, marketing, distribution, sale and use of Covered Products at
a commercially reasonable level. 

     8.2 Indemnity
Procedure. 

          (a) Novartis shall notify Regeneron within twenty (20) days of
becoming aware of any claim of claims asserted or threatened against Novartis
which could give rise to a right of indemnification under this Agreement;
provided, however, that the failure to give such notice shall not relieve
Regeneron of its indemnity obligation hereunder except to the extent that such
failure materially prejudices its rights hereunder. 

          (b) If Regeneron has acknowledged in writing to Novartis its
responsibility for defending such claim, Regeneron shall have the right to
defend, at its sole cost and expense, such claim by all appropriate proceedings,
which proceedings shall be prosecuted diligently by Regeneron to a final
conclusion or settled at Regeneron’s discretion; provided, however, that
Regeneron may not enter into any compromise or settlement unless (i) such
compromise or settlement includes as an unconditional term thereof, the giving
by each claimant or plaintiff to Novartis and the other Indemnified Parties of a
release from all liability in respect of such claim; and (ii) Novartis consents
to such compromise or settlement, which consent shall not be withheld or delayed
unless such compromise or settlement involves (A) any admission of legal
wrongdoing by Novartis or any other Indemnified Party, (B) any payment by
Novartis or any other Indemnified Party that is not indemnified hereunder or (C)
the imposition of any equitable relieve against Novartis or any other
Indemnified Party.

14

          (c) Novartis may participate in, but not control, any defense or
settlement of any claim controlled by Regeneron pursuant to this Section 8.2 and
shall bear its own costs and expenses with respect to such participation;
provided, however, that Regeneron shall bear such costs and expenses if counsel
for Regeneron shall have reasonably determined that such counsel may not
properly represent both Regeneron and the Indemnified Parties. 

SECTION 9.

MISCELLANEOUS

     9.1 Dispute
Resolution.

          (a) Subject to Sections 6.2 and 9.1(h), the Parties agree that no
dispute, controversy or claim arising out of or in connection with this
Agreement or the Parties’ activities hereunder (“Dispute”) shall be resolved other than
pursuant to this Section 9.1, and the Parties further agree that, subject to
Section 6.2, in no event shall any such dispute, controversy or claim be the
subject of private litigation between the Parties. 

          (b) The Parties agree that, subject to Section 6.2, they shall use
commercially reasonable efforts, to resolve any Dispute by good faith
negotiation and discussion. In the event that the Parties are unable to resolve
any such Dispute within fifteen (15) days after formal notice from one Party to
the other referencing this Section 9.1, either Party may submit the Dispute to
the Executive Officers for resolution. In the event the Executive Officers are
unable to resolve any such Dispute within thirty (30) days after such Dispute is
submitted to them for resolution, the Parties shall be free to resort to
arbitration pursuant to the remainder of this Section 9.1.

          (c) In the event that the Parties are unable to resolve any
Dispute through the procedures described in Section 9.1(b) above, the Dispute
shall, at the request of either Party and subject to Sections 6.2 and 9.1(h), be
finally settled by arbitration in accordance with the Rules of International
Arbitration (the “Rules”) of the International Chamber of Commerce as presently in
force. 

          (d) The arbitration panel shall consist of three (3) arbitrators,
each of whom must have legal or business experience in pharmaceutical licensing
matters. The arbitrators are to be selected as follows: Regeneron shall nominate
one such qualified arbitrator, without limitation as to nationality; Novartis
shall nominate one such qualified arbitrator, without limitation as to
nationality; and the two arbitrators so nominated shall nominate a third such
qualified arbitrator, who shall be the presiding arbitrator, in each case
subject to confirmation by the International Court of Arbitration of the
International Chamber of Commerce in Paris, France (the “ICC Court”). In the event
either Regeneron or Novartis shall have failed to nominate a qualified
arbitrator as provided above within fifteen (15) Business Days after the other
Party shall have nominated its arbitrator, or the two arbitrators so nominated
shall fail to agree on a third arbitrator as provided above within fifteen (15)
days after the appointment of the second arbitrator, the second arbitrator
and/or the presiding arbitrator, as the case may be, shall be appointed by the
ICC Court. 

15

          (e) The place of arbitration shall be New York, New York, and the language of
the arbitration shall be English.

          (f) Except as otherwise provided in this Agreement, the arbitration procedure
set forth in this Section 9.1 shall be the sole and exclusive means of settling
or resolving any Dispute. 

          (g) Discovery shall be conducted in accordance with the Rules of Arbitration
of the International Chamber of Commerce, subject to all applicable privileges
and immunities, and shall be limited to: (i) the production of documents
available in the ordinary course of business in accordance with the producing
Party’s standard document retention policies within specified relevant
categories from no more than ten (10) individual representatives of the
producing Party who have been identified by the other Party in its document
request; (ii) two (2) depositions per side; and (iii) ten (10) interrogatories
per side. At least twenty (20) days prior to the first scheduled hearing date,
the Parties shall identify the witnesses that they intend to present at the
arbitration hearing and the documentation on which they intend to rely. The
Parties shall use their commercially reasonable efforts to conclude the
arbitration hearings within six (6) months following the confirmation of the
third and presiding arbitrator. The arbitrators shall issue their decision
(including grounds and reasoning) in writing no later than sixty (60) days
following the conclusion of the last arbitration hearing. 

          (h) By agreeing to arbitration, the Parties do not intend to deprive any
court of competent jurisdiction of its jurisdiction to issue a pre-arbitral
injunction or order for specific performance, pre-arbitral attachment or other
order in aid of arbitration proceedings, and the Parties hereby consent to the
jurisdiction of any such court for such purposes. Without prejudice to such
provisional remedies as may be available under the jurisdiction of a national
court, the arbitral tribunal shall have full authority to grant provisional
remedies or to order the Parties to request that a court modify or vacate any
temporary or preliminary relief issued by a such court, and to award damages for
the failure of any party to respect the arbitral tribunal’s orders to that
effect. The award of the arbitrators shall be final and binding on the Parties
and may be presented by either of the Parties for enforcement in any court of
competent jurisdiction, and the Parties hereby consent to the jurisdiction of
such court solely for purposes of enforcement of this arbitration agreement and
any order or award entered in an arbitration pursuant hereto.

          (i) The fees of the arbitrators and the other costs of such arbitration,
excluding attorneys’ fees which each Party shall bear, shall be borne and paid
as the arbitrators determine. 

16

     9.2 Governing Law. This Agreement shall be
governed by and construed in accordance with the Laws of the State of New York,
without regard to conflict of laws principles. 

     9.3 Waiver. Waiver by a Party of a breach
hereunder by the other Party shall not be construed as a waiver of any
succeeding breach of the same or any other provision. No delay or omission by a
Party in exercising or availing itself of any right, power or privilege
hereunder shall preclude the later exercise of any such right, power or
privilege by such Party. No waiver shall be effective unless made in writing
with specific reference to the relevant provision(s) of this Agreement and
signed by a duly authorized representative of the Party granting the waiver.

     9.4 Force Majeure. Neither Party shall be
responsible to the other for any failure or delay in performing any of its
obligations under this Agreement, or for other nonperformance hereunder, if such
delay or nonperformance is caused by strike, stoppage of labor, lockout or other
labor trouble, fire, flood, earthquake, accident, war, act of terrorism, act of
God or of the government of any country or of any local government, or by cause
unavoidable or beyond the control of any Party hereto. In such event, the Party
affected will use commercially reasonable efforts to resume performance of its
obligations. 

     9.5 Notices. All notices, instructions and
other communications hereunder or in connection herewith shall be in writing,
shall be sent to the address of the relevant Party set forth on Exhibit B
attached hereto and shall be either (a) delivered personally, (b) sent by
registered or certified mail, return receipt requested, postage prepaid, (c)
sent via a reputable nationwide overnight courier service, or (d) sent by
facsimile transmission, with a confirmation copy to be sent by registered or
certified mail, return receipt requested, postage prepaid. Any such notice,
instruction or communication shall be deemed to have been delivered upon receipt
if delivered by hand, three (3) Business Days after it is sent by registered or
certified mail, return receipt requested, postage prepaid, one (1) Business Day
after it is sent via a reputable nationwide overnight courier service, or when
transmitted with electronic confirmation of receipt, if transmitted by facsimile
(if such transmission is on a Business Day; or otherwise, on the next Business
Day following such transmission). Either Party may change its address by giving
notice to the other Party in the manner provided above. 

     9.6 Entire Agreement. This Agreement
(including Exhibits), together with the IL-1 Antibody Termination Agreement,
contains the complete understanding of the Parties with respect to the subject
matter hereof and supersedes all prior understandings and writings relating to
the subject matter hereof.

     9.7 Amendments. No provision in this
Agreement shall be supplemented, deleted or amended except in a writing executed
by Novartis and Regeneron. 

     9.8 Headings. Headings in this Agreement
are for convenience of reference only and shall not be considered in construing
this Agreement. 

     9.9 Severability. If, under applicable
Laws, any provision hereof is invalid or unenforceable, or otherwise directly or
indirectly affects the validity of any other material provision(s) of this
Agreement (“Severed Clause”), then, it is mutually agreed that this Agreement shall
endure except for the Severed Clause. The Parties shall consult and use their
best efforts to agree upon a valid and enforceable provision which shall be a
reasonable substitute for such Severed Clause in light of the intent of this
Agreement.

17 

     9.10 Registration and Filing of the Agreement. To the extent, if any, that a Party concludes in good faith that it is
required to file or register this Agreement or a notification or summary
thereof, or to include a description of this Agreement in any filing with any
Governmental Authority in accordance with applicable Laws, such Party may do so.
The other Party shall promptly cooperate in such filing or notification and
shall promptly execute all documents reasonably required in connection
therewith. In such situation, the Party making such filing or registration (and
the other Party if permitted under applicable Law) will request confidential
treatment of sensitive provisions of this Agreement, except to the extent the
Party making such request determines in good faith that such confidential
treatment is not reasonably likely to be granted under applicable Law. The
Parties shall promptly inform each other as to the activities or inquiries of
any such Governmental Authority relating to this Agreement, and shall promptly
cooperate to respond to any request for further information
therefrom. 

     9.11 Assignment. Except as otherwise
expressly provided herein, neither this Agreement nor any of the rights or
obligations hereunder may be assigned by either Party without the prior written
consent of the other Party (which consent shall not be unreasonably withheld),
except in each case to (a) an Affiliate of the assigning Party that has and will
continue to have the financial resources to meet its obligations hereunder or
(b) any Third Party who acquires all or substantially all of the business or
assets of the assigning Party to which this Agreement relates (whether by
merger, sale or assets or otherwise) or (c) in the case of Regeneron only, on a
Covered Product-by-Covered Product and country-by-country basis, to any other
Third Party who acquires all of Regeneron’s (or its applicable Affiliates’)
interests in the applicable Covered Product in the applicable country, and in
each case so long as such Affiliate or Third Party agrees in writing to be bound
by the terms of this Agreement. For the avoidance of doubt, in the case of an
assignment of this Agreement by Regeneron to a Third Party under Section
9.11(c), Regeneron and its Affiliates shall continue to be bound by the terms of
this Agreement for all Covered Products that are not so acquired by a Third
Party. Any attempted assignment in violation hereof shall be void.

     9.12 Successors and Assigns. This Agreement
shall be binding upon and inure to the benefit of the Parties hereto and their
respective successors-in-interest and permitted assigns. 

     9.13 Counterparts. This Agreement may be
executed in counterparts, each of which shall be deemed an original but which
together shall constitute one and the same instrument. 

     9.14 Third-Party Beneficiaries. None of the
provisions of this Agreement shall be for the benefit of or enforceable by any
Third Party including, without limitation, any creditor of any Party hereto. No
Third Party shall obtain any right under any provision of this Agreement or
shall by reason of any such provision make any claim in respect of any debt,
liability or obligation (or otherwise) against any Party
hereto. 

     9.15 Relationship of the Parties. Each
Party shall bear its own costs incurred in the performance of its obligations
hereunder without charge or expense to the other except as expressly provided in
this Agreement.

18 

     9.16 Limitation of Damages. IN NO EVENT
SHALL REGENERON OR NOVARTIS BE LIABLE FOR SPECIAL, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT LIMITATION, LOSS OF PROFITS) SUFFERED
BY THE OTHER PARTY, EXCEPT TO THE EXTENT ANY SUCH DAMAGES ARE PAID TO A THIRD
PARTY AS PART OF A THIRD-PARTY CLAIM COVERED BY THE INDEMNIFICATION PROVISIONS
OF SECTION 8.

[Signature page follows.]  

19 

     IN
WITNESS WHEREOF, Novartis and Regeneron have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written. 

	NOVARTIS PHARMA
      AG 
		 
		 
	By 
      	/s/ Anthony Horning  	  	 
		Name:
      Anthony H. Horning  
		Title:
      Head, Global Alliance Management  
		   
	By 
      	/s/ Baraba Levi Mager  	  	 
		Name:
      Barbara Levi Mager  
		Title:
      Head Legal, EGM, GEM & Row, General  
		Medicine & Oncology  
	 	  
	REGENERON PHARMACEUTICALS, INC.  
		  
		  
	By 
      	/s/ Murray Goldberg  	  	 
		Name:
      Murray Goldberg  
		Title:
      Senior Vice President, Finance &  
		Administration, Chief Financial Officer 

For the purposes of Section 2 only:

	NOVARTIS PHARMACEUTICALS
      CORPORATION 
		 
	 	 
	By  	/s/
      Siddharth Kaul 	 	 
		Name: Siddharth Kaul 
		Title: Vice President & CFO
      

20 

EXHIBIT A 
SAMPLE INVOICE

SAMPLE INVOICE 

	Sender's
      Logo  	  INVOICE  
	   	INVOICE
      DATE:  
	Street  	__ ________
      20__  
	Town,
      Country  	 
	Phone and Fax
      Nr.  	INVOICE No.:
      XXXX 

	Bill
      To:  	For:  
	Regeneron
      Pharmaceuticals, Inc.  	Product X
      Royalties 1st Quarter 20__  
	[address to be inserted]  	  

 

	 
      And via fax to no. +[to be
      inserted]  
	   DESCRIPTION
      [Please specify the event for
      which the invoice is due] 	AMOUNT
      (USD) 
	  Product X royalties January –
      March 20__ calculated based on  	 
	  Regeneron provided sales &
      royalty report (see attached worksheet)  	US$ 000'000.00
       
	   	  
	   	  
	   	   
	   	  
	  Please remit by wire
      transfer within [******] to:  	  
	          Receiving Bank - ......  	 
	          Swift Code - ......  	 
	          ABA Number - ......  	 
	          Credit Account - ......  	  
	          Beneficiary - ......  	  
	  	  
	  TOTAL
        	000'000,00  

If you have any questions concerning
this invoice, contact ............ 
or e-mail to ...... 
VAT -Reg. No. Xxxxxxxxxx (if applicable)

EXHIBIT B
NOTICES 

	
      (a) If to Novartis:

      Novartis Pharma AG 
P.O. Box 
CH - 4002 Basel 
Switzerland
      
Attn: Head, Business Development and
      Licensing 
Fax: [*************] 

      with a copy to: 

      Novartis Pharma AG 
P.O. Box 
CH - 4002 Basel 
Switzerland
      
Attn: Head, Legal Department 
Fax:
      [************] 

      (b) If to Regeneron: 

      Regeneron Pharmaceuticals, Inc. 
777 Old Saw Mill River Road
      
Tarrytown, New York 10591 
U.S.A.
Attention: President 
Copy: General Counsel

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