Document:

aveo-ex1036_8.htm

 

EXHIBIT 10.36

 

	
Certain identified information has been excluded from the exhibit because it is both (i) not material and (ii) would likely cause competitive harm to the Company, if publicly disclosed. Double asterisks denote omissions.

 

AGREEMENT

 

Agreement (the “Agreement”), dated December 18, 2018 (the “Agreement Effective Date”), by and between Novartis International Pharmaceutical Ltd. (“Novartis”) and AVEO Pharmaceuticals, Inc. (“AVEO”).  Novartis and AVEO are separately referred to as a “Party” and are collectively referred to as the “Parties”.  

 

Background

 

Novartis and AVEO were parties to a License Agreement, dated August 13, 2015 (the “License Agreement”) pursuant to which AVEO licensed to Novartis certain intellectual property rights Controlled by AVEO relating to a group of antibodies that bind to Growth Differentiation Factor 15 (“GDF15”), including an antibody referred to as AV-380 by AVEO (and NIK937 by Novartis) as well as the antibodies identified on Exhibit A to the License Agreement, together with any modified or derivative form of any such antibodies, including any fragment of, pegylated version of (whether or not including amino acid changes) and any other chemically modified versions (including associated amino acid substitutions) of such antibodies, and any fused or conjugated versions of any of the foregoing (the “Licensed Antibodies”).  On June 28, 2018, Novartis sent a notice of termination of the License Agreement to AVEO, which became effective (pursuant to the License Agreement’s terms) on August 27, 2018 (the “Date of Termination”).  AVEO has indicated that it intends to continue development of the Licensed Antibodies, and the Parties are entering into this Agreement to memorialize certain understandings between the Parties with respect to the License Agreement and Novartis’ support of the further development of the Licensed Antibodies by AVEO. 

 

The Parties agree as follows:

 

Section 1.Definitions.

 

(a)Definitions.  Unless the context otherwise requires, the terms in this Agreement with initial letters capitalized, will have the meanings set forth below, or the meaning as designated in the indicated places throughout this Agreement.  Capitalized terms not otherwise defined herein have the same meaning as in the License Agreement.  

 

 

 

“Accounting Standards” means, with respect to AVEO, US GAAP (United States Generally Accepted Accounting Principles and means, with respect to Novartis, IFRS (International Financial Reporting Standards), in each case as generally and consistently applied throughout the Party’s organization. Each Party will promptly notify the other Party in the event that it changes the Accounting Standards pursuant to which its records relating to this Agreement are maintained; provided, however, that each Party may only use internationally recognized accounting principles (e.g., IFRS, US GAAP, etc.). 

 

“Affiliate” means, with respect to a Party, any Person that controls, is controlled by, or is under common control with that Party.  For the purpose of this definition, “control” will mean, direct or indirect, ownership of 50% or more of the shares of stock entitled to vote for the election of directors, in the case of a corporation, or 50% or more of the equity interest in the case of any other type of legal entity, status as a general partner in any partnership, or any other arrangement whereby the entity or person controls or has the right to control the board of directors or equivalent governing body of a corporation or other entity, or the ability to cause the direction of the management or policies of a corporation or other entity, or otherwise has “control” over the relevant entity as set forth in applicable Accounting Standards, as amended from time to time.  In the case of entities organized under the laws of certain countries, the maximum percentage ownership permitted by law for a foreign investor may be less than 50%, and in such case such lower percentage will be substituted in the preceding sentence if such foreign investor has the power to direct the management and policies of such entity. 

 

“AVEO Indemnitees” has the meaning set forth in Section 6(b).  

 

“BLA” means a Biologics License Application in the United States for authorization to market the Product, as defined in the applicable laws and regulations and filed with the FDA.

 

“Commercialize” means to market, promote, distribute, import, export, offer to sell and/or sell Product, and “Commercialization” means commercialization activities relating to Product, including activities relating to marketing, promoting, distributing, importing, exporting, offering for sale and/or selling the Licensed Antibodies.  

 

“Control” or “Controlled” means, with respect to any Know-How, Patent Rights, other intellectual property rights, or any proprietary or trade secret information, the legal authority or right (whether by ownership, license or otherwise, other than by a license granted under this Agreement) of a Party or its Affiliates, to grant a license or a sublicense of or under such Know-How, Patent Rights, or intellectual property rights to another Person, or to otherwise disclose such proprietary or trade secret information to another Person, without breaching the terms of any agreement with a Third Party or misappropriating the proprietary or trade secret information of a Third Party.

 

“Claims” means all Third Party demands, claims, actions, proceedings and liability (whether criminal or civil, in contract, tort or otherwise) for losses, damages, reasonable legal costs and other reasonable expenses of any nature whatsoever.

 

 

 

“Develop” or “Development” means drug development activities, including, without limitation, test method development and stability testing, assay development and audit development, toxicology, formulation, quality assurance/quality control development, statistical analysis, clinical studies, packaging development, regulatory affairs, and the preparation, filing and prosecution of BLAs and MAAs.

 

“EMA” means the European Medicines Agency or any successor entity thereto. 

 

“Exclusivity Product” has the meaning set forth in Section 5(a).  

 

“FDA” means the United States Food and Drug Administration or any successor entity thereto.

 

“Field” means the treatment and prevention of diseases and other conditions in all indications in humans.  

 

“ICC” has the meaning set forth in Section 9(e).

 

“Indemnification Claim Notice” has the meaning set forth in Section 6(c)(ii).

 

“Indemnified Party” has the meaning set forth in Section 6(c)(ii). 

 

“Indemnifying Party” has the meaning set forth in Section 6(c)(ii).

 

“Information” means all Know-How and other proprietary information and data of a financial, commercial or technical nature which the disclosing Party, its Affiliates, or its or their licensors has supplied or otherwise made available to the other Party or its Affiliates, whether made available orally, in writing or in electronic form, including information comprising or relating to concepts, discoveries, inventions, data, designs or formulae in relation to this Agreement.

 

“Know-How” means all technical information, know-how and data, including inventions (whether patentable or not), discoveries, trade secrets, specifications, instructions, processes, formulae, materials, expertise and other technology applicable to compounds, formulations, compositions, products or to their manufacture, development, registration, use or commercialization or methods of assaying or testing them or processes for their manufacture, formulations containing them, compositions incorporating or comprising them and including all biological, chemical, pharmacological, biochemical, toxicological, pharmaceutical, physical and analytical, safety, quality control, manufacturing, preclinical and clinical data, instructions, processes, formulae, expertise and information, regulatory filings and copies thereof, relevant to the development, manufacture, use or commercialization of and/or which may be useful in studying, testing, development, production or formulation of products, or intermediates for the synthesis thereof. 

 

 

 

“MAA” means an application for the authorization to market the Licensed Antibodies in any country or group of countries outside the United States, as defined in the applicable laws and regulations and filed with the Regulatory Authority of a given country or group of countries. 

 

“Material” has the meaning set forth in Section 3. 

 

“Novartis Indemnitees” has the meaning set forth in Section 6(a).  

 

“Patent Rights” means all patents and patent applications, including all divisionals, continuations, substitutions, continuations-in-part, re-examinations, reissues, additions, renewals, extensions, registrations, supplemental protection certificates, utility models, design patents and the like of any of the foregoing.

 

“Person” means any individual, partnership, limited liability company, firm, corporation, association, trust, unincorporated organization or other entity. 

 

“Product” means pharmaceutical products consisting of or incorporating one or more of the Licensed Antibodies.

 

“Regulatory Authority” means any governmental authority or agency responsible for authorizing or approving the marketing and/or sale of biologic products in a jurisdiction (e.g., the FDA, EMA, the Japanese Ministry of Health, Labour and Welfare, and corresponding national or regional regulatory agencies or organizations).

 

“Third Party” means any Person other than a Party or an Affiliate of a Party.

 

(b)Interpretation.  In this agreement unless otherwise specified

 

(i)“includes” and “including” will mean respectively includes and including without limitation

 

(ii)a Party includes its permitted assignees and/or the respective successors in title to substantially the whole of its undertaking;

 

(iii)a statute or statutory instrument or any of their provisions is to be construed as a reference to that statute or statutory instrument or such provision as the same may have been or may from time to time hereafter be amended or re-enacted

 

(iv)words denoting the singular will include the plural and vice versa and words denoting any gender will include all genders

 

(v)the Exhibits and other attachments form part of the operative provision of this Agreement and references to this Agreement shall, unless the context otherwise requires, include references to the Exhibits and attachments

 

 

 

(vi)the headings in this Agreement are for information only and will not be considered in the interpretation of this Agreement

 

(v)general words will not be given a restrictive interpretation by reason of their being preceded or followed by words indicating a particular class of acts, matters or things; and

 

(vi)the terms and conditions of this Agreement are the result of negotiations between the Parties and that this Agreement will not be construed in favor of or against any Party by reason of the extent to which any Party participated in the preparation of this Agreement.

 

Section 2.Payment.

 

In consideration of the mutual releases included in this Agreement and to support AVEO’s further Development of the Licensed Antibodies, Novartis will make a one time payment of USD$2.3 million, which will be paid on or before January 2, 2019.  For the avoidance of doubt, this payment will not be subject to offset or reduction for any payments previously made by Novartis in connection with the License Agreement.  Notwithstanding Section 12.2(i) of the License Agreement, the Material will be transferred to AVEO at no charge.

 

Section 3.Supply of Material.

 

Novartis will make available for pick up by AVEO the material and associated documentation identified on Exhibit A (the “Material”) within [**] after the later of (i) the Agreement Effective Date, or (ii) the date that AVEO provides all information and data reasonably necessary to transfer the Material in compliance with applicable law and/or cGMP (to the extent applicable); provided, however, notwithstanding the foregoing, and to the extent required by cGMP and the Parties’ respective Quality Assurance functions, cGMP Material will be transferred only following the execution of a commercially reasonable Quality Agreement between the Parties (as described below).  The Material will be transferred Ex Works (Incoterms 2010) and except as provided on Exhibit A, is transferred “as is” and without representation or warranty of any kind and Novartis disclaims any implied warranties of merchantability or fitness for a particular purpose with respect to the Material; provided, however, that Novartis represents that, with respect to materials manufactured in accordance with cGMP, Novartis handled, stored and transported, and, until it is picked up by AVEO, will continue to handle, store and transport, the Material in accordance with cGMP for biological products.  The Parties will enter into a commercially reasonable Quality Agreement with respect to the cGMP Material following the execution of this Agreement.  Novartis will share with AVEO all material safety data sheets and customs value information that is reasonably available to Novartis, including without limitation Licensed Antibodies-specific information, as is reasonably necessary to permit AVEO to pick up the Material.  AVEO will be solely responsible for any re-testing associated with the Material prior to use.  Upon pick up by AVEO, Novartis will have no further obligation to replace lost or damaged material or to provide additional services with respect to such Material. 

 

 

 

Section 4.Licenses and Know How Transfer.

 

(a)Novartis represents and warrants that, as of the Agreement Effective Date, neither it nor any of its Affiliates have filed any patent application or otherwise Control any Patent Rights that claim or cover the Licensed Antibodies or their use.

 

(b) Novartis and its Affiliates hereby grant to AVEO a perpetual, irrevocable, exclusive, worldwide, fully paid-up license, with the right to grant sublicenses, under all Know-How Controlled by Novartis and its Affiliates and sublicensees as of the Date of Termination, that are specifically related to the Development, manufacture and Commercialization of Products in the Field. 

 

(c)Novartis shall, no later than [**] after the Agreement Effective Date, to the extent permitted by applicable law, complete the transfer to AVEO or its designee, solely for the Development, manufacture and Commercialization of Products in the Field, all right, title, and interest in and to all finalized preclinical and clinical reports and data, and all other supporting data, including pharmacology, toxicology, chemistry and biology data, and documented technical and other information or materials Controlled by Novartis and its Affiliates and sublicensees to the extent related specifically to the Development, manufacture and Commercialization of Products in the Field.  Novartis will use commercially reasonable efforts to promptly complete any non-finalized reports, and transfer such reports in final form after completion.  Novartis may retain a single copy of all such items for its records as required by applicable law.  Novartis will not be required to transfer generalized technologies or SOPs, except to the extent they specifically relate to the Development or Commercialization of Products in the Field.

 

(d)Novartis represents and warrants that neither it nor any of its Affiliates Control any Regulatory Filings or Regulatory Approvals, or records of any interactions with Regulatory Authorities, related to Products in the Field as of the Date of Termination.

 

(e)Novartis represents and warrants that it is not a party to any license agreement relating to Licensed Antibodies in the Field (other than this Agreement).

 

(f)For a period of [**] following the Agreement Effective Date, Novartis will provide such assistance as may be reasonably necessary to transfer manufacturing documents, reports, methods, standards, protocols and materials that are used by Novartis and its Affiliates in the manufacture of the Licensed Antibodies, and cooperate with AVEO in reasonable respects to transfer to AVEO, or AVEO’s designated contract manufacturer, the manufacturing technologies (including all relevant Know-How) that are used in the manufacture of the Licensed Antibodies.  For the avoidance of doubt, the assistance set forth in this Section 4(f) is limited to interpretation or content of the Novartis Know How that is transferred to AVEO, and in no event will Novartis be required to conduct additional experiments or research in connection with its activities as described in this Section 4(f).  

 

 

 

(g)Novartis understands and agrees that the study reports, CMC reports, certificates and other materials and documentation transferred by Novartis hereunder or under the License Agreement may be used in a future IND or other submission to a Regulatory Authority, and agrees to satisfy any reasonable request for documentation or audit in connection with such regulatory submission or by such Regulatory Authority with respect to such studies, reports, certificates, documentation and materials.

 

(h)The Parties acknowledge that, in connection with the activities described in this Agreement, Novartis will not assign or transfer any agreements that it has with any Third Parties service providers or vendors relating to the Material.  At AVEO’s request, Novartis will provide a letter of authorization to any such relevant Third Parties informing such Third Parties that the Material is now owned by and in the control of AVEO and authorizing such Third Parties to perform manufacturing, stability and other services on behalf of AVEO with respect to the Material, including authorization for the use and transfer to AVEO of all relevant Know-How related to the Material, pursuant to separate agreements to be negotiated by AVEO and such Third Parties.  Following [**] after the Agreement Effective Date, AVEO will have sole responsibility for such Third Party activities.

 

Section 5.Non-competition.

 

(a)For a period of three years following the Agreement Effective Date,  neither Novartis nor any of its Affiliates will, anywhere in the world, directly or indirectly, Develop, manufacture or Commercialize any anti-GDF15 antagonist antibody or any modified or derivative form of any such antibody, including any active fragment of, pegylated version of (whether or not including amino acid changes) and any other chemically modified versions (including associated amino acid substitutions) of such antibody, and any fused or conjugated versions of any of the foregoing  (the “Exclusivity Product”) (or license or collaborate with a Third Party to do any of the foregoing) in the Field, except as necessary to perform its obligations hereunder; provided, however, that notwithstanding the foregoing, Novartis will retain the right to use the Exclusivity Product for research purposes only.

 

(b)Novartis represents that, as of the Agreement Effective Date, it and its Affiliates are not engaged and have no plans to engage in the Development or Commercialization of (a) any Exclusivity Product, or (b) any product for the treatment, prevention or prophylaxis of cachexia, decreased appetite or body weight, which binds to the GDF15 receptor and is a GDF15 antagonist.  

 

 

 

Section 6.Indemnity; Limitation of Liability.

 

(a)Indemnification by AVEO.  AVEO will indemnify and hold Novartis, its Affiliates, and their respective officers, directors and employees (“Novartis Indemnitees”) harmless from and against any Claims against them to the extent arising or resulting from actions by AVEO, its Affiliates and sublicensees, and their respective employees, agents and subcontractors, in connection with the Development, manufacture or Commercialization of the Licensed Antibodies; provided, however, that AVEO will not be obliged to so indemnify, defend and hold harmless the Novartis Indemnitees for any Claims for which Novartis has an obligation to indemnify AVEO Indemnitees pursuant to Section 6(b) or to the extent that such Claims arise from the breach, negligence or willful misconduct of Novartis or the Novartis Indemnitee.

 

(b)Indemnification by Novartis.  Novartis will indemnify and hold AVEO, its Affiliates, and their respective officers, directors and employees (“AVEO Indemnitees”) harmless from and against any Claims against them to the extent arising or resulting from the breach of any of the covenants, warranties or representations made by Novartis to AVEO under this Agreement or the License Agreement; provided, however, that Novartis will not be obliged to so indemnify, defend and hold harmless the AVEO Indemnitees for any Claims for which AVEO has an obligation to indemnify Novartis Indemnitees pursuant to Section 6(a) or to the extent that such Claims arise from the breach, negligence or willful misconduct of AVEO or the AVEO Indemnitee.

 

(c)Indemnification Procedure.

 

(i)For the avoidance of doubt, all indemnification claims in respect of a Novartis Indemnitee or AVEO Indemnitee will be made solely by Novartis or AVEO, respectively.  

 

(ii)A Party seeking indemnification hereunder (“Indemnified Party”) will notify the other Party (“Indemnifying Party”) in writing reasonably promptly after the assertion against the Indemnified Party of any Claim or fact in respect of which the Indemnified Party intends to base a claim for indemnification hereunder (“Indemnification Claim Notice”), but the failure or delay to so notify the Indemnifying Party will not relieve the Indemnifying Party of any obligation or liability that it may have to the Indemnified Party, except to the extent that the Indemnifying Party demonstrates that its ability to defend or resolve such Claim is adversely affected thereby.  The Indemnification Claim Notice will contain a description of the claim and the nature and amount of the Claim (to the extent that the nature and amount of such Claim is known at such time).  Upon the request of the Indemnifying Party, the Indemnified Party will furnish promptly to the Indemnifying Party copies of all correspondence, communications and official documents (including court documents) received or sent in respect of such Claim.  

 

 

 

(iii)Subject to the provisions of Sections 6(c)(iv) and (v) below, the Indemnifying Party will have the right, upon written notice given to the Indemnified Party within [**] after receipt of the Indemnification Claim Notice to assume the defense and handling of such Claim, at the Indemnifying Party’s sole expense, in which case the provisions of Section 6(c)(iv) below will govern.  The assumption of the defense of a Claim by the Indemnifying Party will not be construed as acknowledgement that the Indemnifying Party is liable to indemnify any indemnitee in respect of the Claim, nor will it constitute a waiver by the Indemnifying Party of any defenses it may assert against any Indemnified Party’s claim for indemnification.  In the event that it is ultimately decided that the Indemnifying Party is not obligated to indemnify or hold an Indemnitee harmless from and against the Claim, the Indemnified Party will reimburse the Indemnifying Party for any and all costs and expenses (including attorneys’ fees and costs of suit) and any losses incurred by the Indemnifying Party in its defense of the Claim.  If the Indemnifying Party does not give written notice to the Indemnified Party, within [**] after receipt of the Indemnification Claim Notice, of the Indemnifying Party’s election to assume the defense and handling of such Claim, the provisions of Section 6(c)(v) below will govern.  

 

(iv)Upon assumption of the defense of a Claim by the Indemnifying Party: (A) the Indemnifying Party will have the right to and will assume sole control and responsibility for dealing with the Claim; (B) the Indemnifying Party may, at its own cost, appoint as counsel in connection with conducting the defense and handling of such Claim any law firm or counsel reasonably selected by the Indemnifying Party; (C) the Indemnifying Party will keep the Indemnified Party informed of the status of such Claim; and (D) the Indemnifying Party will have the right to settle the Claim on any terms the Indemnifying Party chooses; provided, however, that it will not, without the prior written consent of the Indemnified Party, agree to a settlement of any Claim which could lead to liability or create any financial or other obligation on the part of the Indemnified Party for which the Indemnified Party is not entitled to indemnification hereunder or which admits any wrongdoing or responsibility for the claim on behalf of the Indemnified Party.  The Indemnified Party will cooperate with the Indemnifying Party and will be entitled to participate in, but not control, the defense of such Claim with its own counsel and at its own expense.  In particular, the Indemnified Party will furnish such records, information and testimony, provide witnesses and attend such conferences, discovery proceedings, hearings, trials and appeals as may be reasonably requested in connection therewith.  Such cooperation will include access during normal business hours by the Indemnifying Party to, and reasonable retention by the Indemnified Party of, records and information that are reasonably relevant to such Claim, and making the Indemnified Party, the Indemnitees and its and their employees and agents available on a mutually convenient basis to provide additional information and explanation of any records or information provided.  

 

 

 

(v)If the Indemnifying Party does not give written notice to the Indemnified Party as set forth in Section 6(c)(iii) or fails to conduct the defense and handling of any Claim in good faith after having assumed such, the Indemnified Party may, at the Indemnifying Party’s expense, select counsel reasonably acceptable to the Indemnifying Party in connection with conducting the defense and handling of such Claim and defend or handle such Claim in such manner as it may deem appropriate.  In such event, the Indemnified Party will keep the Indemnifying Party timely apprised of the status of such Claim and will not settle such Claim without the prior written consent of the Indemnifying Party, which consent will not be unreasonably withheld.  If the Indemnified Party defends or handles such Claim, the Indemnifying Party will cooperate with the Indemnified Party, at the Indemnified Party’s request but at no expense to the Indemnified Party, and will be entitled to participate in the defense and handling of such Claim with its own counsel and at its own expense.  

 

(d)Mitigation of Loss.  Each Indemnified Party will take and will procure that its Affiliates take all such reasonable steps and action as are necessary or as the Indemnifying Party may reasonably require in order to mitigate any Claims (or potential losses or damages) under this Section 6.  Nothing in this Agreement will or will be deemed to relieve any Party of any common law or other duty to mitigate any losses incurred by it.

 

(e)Limitation of Liability.  NEITHER PARTY NOR ANY OF ITS AFFILIATES SHALL BE LIABLE IN CONTRACT, TORT, NEGLIGENCE BREACH OF STATUTORY DUTY OR OTHERWISE FOR ANY SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES OR FOR ANY ECONOMIC LOSS OR LOSS OF PROFITS SUFFERED BY THE OTHER PARTY, EXCEPT TO THE EXTENT ANY SUCH DAMAGES ARE REQUIRED TO BE PAID TO A THIRD PARTY AS PART OF A CLAIM FOR WHICH A PARTY PROVIDES INDEMNIFICATION UNDER THIS SECTION 6.

 

Section 7.Mutual Release; Non-disparagement.

 

(a)Release.  Each of the Parties, for itself, and on behalf of its officers, directors, employees, agents, Affiliates, and successors and assigns hereby remises, releases and forever discharges the other Party and its officers, directors, employees, agents, Affiliates, and successors and assigns from all claims, suits, actions, charges, demands, judgments, costs and executions present and future, known or unknown, both legal and equitable in any manner arising out of the License Agreement and/or the Development of the Licensed Antibodies; provided, however, that notwithstanding anything herein to the contrary, this Agreement shall not remise, release, discharge, terminate, modify, or otherwise cause to expire any obligation or remedy arising under or resulting from Section 14 of the License Agreement.  The Parties acknowledge that in executing this Agreement, they have carefully reviewed and had the opportunity to review the terms of this Agreement with counsel of their choice and are fully aware of the extent of their rights and obligations under this Agreement. The Parties further acknowledge that the language of this Agreement shall not be considered as an admission of liability, wrongdoing, or anything improper.

 

 

 

(b)Non-disparagement.  Subject to applicable law, neither the Parties nor any of their respective officers, directors, employees, agents, Affiliates, and successors and assigns, will in any way publicly disparage, call into disrepute, defame, slander or otherwise criticize the other Party or such other Party’s Affiliates officers, directors, employees, agents, Affiliates, or any of their products or services, in any manner that would damage the business or reputation of such other Party or its Affiliates, to the extent related to the License Agreement and/or the Licensed Antibodies.

 

Section 8.Confidentiality.  

 

(a)Subject to the other provisions of this Section 8, all Information disclosed by a Party or its Affiliates under this Agreement will be maintained in confidence and otherwise safeguarded by the recipient Party.  The recipient Party may only use the Information for the purposes of this Agreement and pursuant to the rights granted to the recipient Party under this Agreement.  Subject to the other provisions of this Section 8, each Party will hold as confidential such Information of the other Party or its Affiliates in the same manner and with the same protection as such recipient Party maintains its own confidential information.  Subject to the other provisions of this Section 8, a recipient Party may only disclose Information of the other Party to employees, agents, contractors, consultants and advisers of the Party and its Affiliates and sublicensees and to Third Parties to the extent reasonably necessary for the purposes of, and for those matters undertaken pursuant to, this Agreement; provided that such Persons are bound to maintain the confidentiality of the Information in a manner consistent with the confidentiality provisions of this Agreement.

 

(b)Exceptions.  The obligations under this Section 8 will not apply to any information to the extent the recipient Party can demonstrate by competent evidence that such information:

 

(i) is (at the time of disclosure) or becomes (after the time of disclosure) known to the public or part of the public domain through no breach of this Agreement by the recipient Party or its Affiliates;

 

(ii) was known to, or was otherwise in the possession of, the recipient Party or its Affiliates prior to the time of disclosure by the disclosing Party or any of its Affiliates;

 

(iii)is disclosed to the recipient Party or an Affiliate on a non-confidential basis by a Third Party who is entitled to disclose it without breaching any confidentiality obligation to the disclosing Party or any of its Affiliates; or 

 

(iv)is independently developed by or on behalf of the recipient Party or its Affiliates, as evidenced by its written records, without reference to the Information disclosed by the disclosing Party or its Affiliates under this Agreement. 

 

 

 

Specific aspects or details of Information will not be deemed to be within the public domain or in the possession of the recipient Party merely because the Information is embraced by more general information in the public domain or in the possession of the recipient Party.  Further, any combination of Information will not be considered in the public domain or in the possession of the recipient Party merely because individual elements of such Information are in the public domain or in the possession of the recipient Party unless the combination and its principles are in the public domain or in the possession of the recipient Party.

 

(c)In addition to disclosures allowed under Section 8(a) and 8(b), either Party may disclose Information belonging to the other Party or its Affiliates to the extent such disclosure is necessary in the following instances: (i) filing or prosecuting Patent Rights; (ii) in connection with Antibodies filings with a Regulatory Authority; (iii) prosecuting or defending litigation as permitted by this Agreement; (iv) complying with applicable court orders or governmental regulations; (v) fulfilling such Party’s obligations under the In-licensed AVEO Technology Agreements; or (vi) to the extent otherwise necessary or appropriate in connection with exercising the license and other rights granted to it hereunder.  

 

(d)In addition, AVEO may disclose Information of Novartis to Third Parties as may be necessary or useful in connection with the Development, manufacture or Commercialization of the AVEO Antibodies and/or Product(s) on the condition that any such Third Parties agree to be bound by confidentiality and non-use obligations no less rigorous than those contained in this Agreement.  

 

(e)In the event the recipient Party is required to disclose Information of the disclosing Party by law or in connection with bona fide legal process, such disclosure will not be a breach of this Agreement; provided that the recipient Party (i) informs the disclosing Party as soon as reasonably practicable of the required disclosure; (ii) limits the disclosure to the required purpose; and (iii) at the disclosing Party’s request and expense, assists in an attempt to object to or limit the required disclosure.

 

Section 9.Miscellaneous.

 

(a)Assignment.  Neither Party may assign its rights and obligations under this Agreement without the other Party’s prior written consent, except that either Party may (i) assign its rights and obligations under this Agreement or any part hereof to one or more of its Affiliates; or (ii) assign this Agreement in its entirety to a successor to all or substantially all of its business or assets to which this Agreement relates. Any permitted assignee will assume all obligations of its assignor under this Agreement (or related to the assigned portion in case of a partial assignment). Any attempted assignment in contravention of the foregoing will be void. Subject to the terms of this Agreement, this Agreement will be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.

 

 

 

(b)Extension to Affiliates.  Each party will have the right to extend the rights, immunities and obligations granted in this Agreement to one or more of its Affiliates.  All applicable terms and provisions of this Agreement will apply to any such Affiliate to which this Agreement has been extended to the same extent as such terms and provisions apply to the Parties hereto.  Each party will remain primarily liable for any acts or omissions of its Affiliates.

 

(c)Severability.  Should one or more of the provisions of this Agreement become void or unenforceable as a matter of law, then this Agreement will be construed as if such provision were not contained herein and the remainder of this Agreement will be in full force and effect, and the Parties will use their commercially reasonable efforts to substitute for the invalid or unenforceable provision a valid and enforceable provision which conforms as nearly as possible with the original intent of the Parties.

 

(d)Governing Law and Jurisdiction.  This Agreement will be governed by and construed under the laws of the Commonwealth of Massachusetts, USA, without giving effect to the conflicts of laws provision thereof.  The United Nations Convention on Contracts for the International Sale of Goods (1980) will not apply to the interpretation of this Agreement.

 

(e)Dispute Resolution.  Any unresolved disputes between the Parties relating to, arising out of or in any way connected with this Agreement or any term or condition hereof, or the performance by either Party of its obligations hereunder, whether before or after termination of this Agreement, will be resolved by final and binding arbitration.  Whenever a Party will decide to institute arbitration proceedings, it will give written notice to that effect to the other Party.  Arbitration will be held in Boston, Massachusetts, USA, according to the commercial rules of the International Chamber of Commerce (“ICC”).  The arbitration will be conducted by a panel of three arbitrators appointed in accordance with ICC rules; provided that each Party will within [**] after the institution of the arbitration proceedings appoint an arbitrator, and such arbitrators will together, within [**], select a third arbitrator as the chairman of the arbitration panel, each arbitrator will have significant experience in the biopharmaceutical business.  If the two initial arbitrators are unable to select a third arbitrator within such [**] period, the third arbitrator will be appointed in accordance with ICC rules.  The arbitrators will render their opinion within [**] of the final arbitration hearing.  No arbitrator (nor the panel of arbitrators) will have the power to award punitive damages under this Agreement and such award is expressly prohibited; provided, however, that the arbiter may, in its discretion, require the losing Party to pay the reasonable costs and expenses of the prevailing party in connection with such arbitration proceeding.  Decisions of the panel of arbitrators will be final and binding on the Parties.  Judgment on the award so rendered may be entered in any court of competent jurisdiction.

 

 

 

(f)Force Majeure.  In the event that either Party is prevented from performing its obligations under this Agreement as a result of any contingency beyond its reasonable control (“Force Majeure”), including but not limited to, any actions of governmental authorities or agencies, war, hostilities between nations, civil commotions, riots, national industry strikes, lockouts, sabotage, shortages in supplies, energy shortages, fire, floods and acts of nature such as typhoons, hurricanes, earthquakes, or tsunamis, the Party so affected will not be responsible to the other Party for any delay or failure of performance of its obligations hereunder, for so long as Force Majeure prevents such performance.  In the event of Force Majeure, the Party immediately affected thereby will give prompt written notice to the other Party specifying the Force Majeure event complained of, and will use commercially reasonable efforts to resume performance of its obligations.  Notwithstanding the foregoing, if such a Force Majeure induced delay or failure of performance continues for a period of more than three consecutive months, either Party may terminate this Agreement upon written notice to the other Party.

 

(g)Waivers and Amendments.  The failure of any Party to assert a right hereunder or to insist upon compliance with any term or condition of this Agreement will not constitute a waiver of that right or excuse a similar subsequent failure to perform any such term or condition by the other Party.  No waiver will be effective unless it has been given in writing and signed by the Party giving such waiver.  No provision of this Agreement may be amended or modified other than by a written document signed by authorized representatives of each Party.

 

(h)Relationship of the Parties.  Nothing contained in this Agreement will be deemed to constitute a partnership, joint venture, or legal entity of any type between AVEO and Novartis, or to constitute one as the agent of the other.  Moreover, each Party will not construe this Agreement, or any of the transactions contemplated hereby, as a partnership for any tax purposes.  Each Party will act solely as an independent contractor, and nothing in this Agreement will be construed to give any Party the power or authority to act for, bind, or commit the other.

 

 

 

(i)Notices.  All notices, consents, waivers, and other communications under this Agreement must be in writing and will be deemed to have been duly given when: (a) delivered by hand (with written confirmation of receipt); or (b) when received by the addressee, if sent by an internationally recognized overnight delivery service (receipt requested), in each case to the appropriate addresses set forth below (or to such other addresses as a Party may designate by notice):

 

If to AVEO:

 

AVEO Pharmaceuticals, Inc.

One Broadway, 14th Floor

Cambridge, Massachusetts 02142 USA

Attn:  Chief Executive Officer

 

with a required copy to:

 

AVEO Pharmaceuticals, Inc.

One Broadway, 14th Floor

Cambridge, Massachusetts 02142 USA

Attn:  General Counsel

 

If to Novartis:

 

Novartis International Pharmaceutical Ltd

Lichtstrasse 35

CH-4056 Basel

Switzerland 

 

with a required copy to:

 

Novartis Institutes for BioMedical Research, Inc.

250 Massachusetts Avenue

Cambridge, MA 02139 USA

Attn:  General Counsel

 

(j)Further Assurances.  Novartis and AVEO will execute, acknowledge and deliver any and all such other documents and take any such other action as may be reasonably necessary to carry out the intent and purposes of this Agreement.

 

(k)Compliance with Law.  Each Party will perform its obligations under this Agreement in accordance with all applicable laws.  No Party will, or will be required to, undertake any activity under or in connection with this Agreement which violates, or which it believes, in good faith, may violate, any applicable law.

 

 

 

(l)Entire Agreement.  The provisions of this Agreement are for the sole benefit of the Parties and their successors and permitted assigns, and they will not be construed as conferring any rights to any third party (including any third party beneficiary rights).

 

(m)Entire Agreement.  This Agreement, together with its Exhibits and schedules, sets forth the entire agreement and understanding of the Parties as to the subject matter hereof and supersedes all proposals, oral or written, and all other prior communications between the Parties with respect to such subject matter, with the exception of the surviving provisions of the License Agreement, as described above in Section 6(a).

 

(n)Cumulative Remedies.  No remedy referred to in this Agreement is intended to be exclusive, but each will be cumulative and in addition to any other remedy referred to in this Agreement or otherwise available under law.  

 

[Signature Page Follows]

 

 

In witness whereof, the Parties, intending to be bound, have caused this Agreement to be executed by their duly authorized representatives.

 

	
NOVARTIS INTERNATIONAL PHARMACEUTICAL LTD.
	
 
	
AVEO PHARMACEUTICALS, INC.

	
 
	
 
	
 

	
 
	
 
	
 

	
By:
	
/s/ Sylvain Beltzung
	
 
	
By:
	
/s/ Michael P. Bailey

	
 
	
 
	
 
	
 
	
 

	
Name:
	
Sylvain Beltzung
	
 
	
Name:
	
Michael P. Bailey

	
 
	
 
	
 
	
 
	
 

	
Title:
	
Head Finance NIBR Europe
	
 
	
Title:
	
President & CEO

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
By:
	
/s/ Gerald Burg
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
Name:
	
Gerald Burg
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
Title:
	
BPA Manager NIBR Finance
	
 
	
 
	
 

 

 

 

Exhibit A

 

Drug Substance manufacturing

	
 
	
Clinical batch
	
Clinical batch

	
Batch Name
	
[**]
	
[**]

	
Date of manufacture
	
[**]
	
[**]

	
Place of manufacture
	
[**]
	
[**]

	
Batch Size
	
[**]
	
[**]

	
Batch type
	
[**]
	
[**]

	
Primary Packaging

	
Bottles
	
[**]
	
[**]

	
Composition
	
[**]
	
[**]

	
Current stock
	
[**]
	
[**]

	
Current location
	
[**]
	
[**]

 

Drug Product manufacturing

				
	
 
	
Toxicological batch
	
Clinical batch
	
Clinical batch

	
Batch Name
	
[**]
	
[**]
	
[**]

	
Date of manufacture
	
[**]
	
[**]
	
[**]

	
Place of manufacture
	
[**]
	
[**]
	
[**]

	
Theoretical Batch

Size (according CofA)
	
[**]
	
[**]
	
[**]

	
Drug Substance batch

used
	
[**]
	
[**]
	
[**]

	
Batch type
	
[**]
	
[**]
	
[**]

	
Primary Packaging

	
Vial
	
[**]

	
Stopper
	
[**]

	
Cap
	
[**]

	
Composition
	
[**]
	
[**]
	
[**]

	
Fill volume
	
[**]
	
[**]
	
[**]

	
Current stock
	
[**]
	
[**]
	
[**]

	
Current location
	
[**]
	
[**]
	
[**]

 

 

 

Novartis Reference manufacturing

		
	
 
	
[**]

	
Original DS
	
[**]

	
Date of manufacture
	
[**]

	
Place of manufacture
	
[**]

	
Batch Size
	
[**]

	
Release  and retest analysis
	
[**]

	
Primary Packaging

	
Bottles

Fill volume
	
[**]

	
Composition
	
[**]

	
Actual stock* 
	
[**]

*Quantity is subject to change and is current as of Nov 16, 2018. All available stock that is in procession of Novartis to be provided.

 

Master Cell Bank

			
	
Amount

of vials
	
Current

location
	
Comment

	
[**]
	
[**]
	
[**]

	
[**]
	
[**]
	
[**]

	
[**]
	
[**]
	
[**]

	
[**]
	
[**]
	
[**]

	
[**]
	
[**]
	
[**]Exhibit

Exhibit 10.1

[*] Certain identified information has been excluded from the exhibit because it is both (i) not material and (ii) would likely cause competitive harm to the registrant if publicly disclosed.

AMENDED AND RESTATED PATHOLOGY SERVICES AGREEMENT
THIS AMENDED AND RESTATED PATHOLOGY SERVICES AGREEMENT (“Agreement”) is made this 14th day of February, 2019 (the “Effective Date”), by and among VERACYTE, INC., a Delaware corporation (“Veracyte”), and THYROID CYTOPATHOLOGY PARTNERS, P.A., a Texas professional association (“Pathologists”). Veracyte and Pathologists are sometimes referred to in this Agreement as a “Party” or, collectively, as the “Parties.”
RECITALS
A.    Veracyte and Pathologists entered into that certain Amended and Restated Pathology Services Agreement dated October 16, 2017 (the “Original Agreement”).
B.    Veracyte and Pathologists now desire to enter into this Agreement in order to amend and restate the Original Agreement in its entirety.
C.    Veracyte is engaged in the business of developing and marketing diagnostic testing utilizing Veracyte’s proprietary molecular assays and procuring the related anatomic and cytologic pathology. Veracyte is not licensed to practice medicine, but does require the assistance of pathologists who are licensed in states in which Veracyte does business and in states in which patients who utilize Veracyte’s services reside.
D.    Pathologists is a Texas professional association which is engaged in the practice of medicine and specializes in pathology.
E.    Veracyte desires to retain the services of Pathologists to provide professional pathology services on the terms and conditions stated herein.
AGREEMENT 
THE PARTIES AGREE AS FOLLOWS:
1.    Engagement.
(a)    Scope of Engagement. Veracyte hereby grants to Pathologists the exclusive right to provide cytopathologic studies of thyroid specimens referred to Veracyte for cytology testing, except as set forth in Exhibit A (“Exceptions to Exclusivity”). Unless otherwise agreed in writing, Pathologists shall have no responsibility or liability for:
(i)    the processing of any pathology specimens or for the performance of any clinical laboratory tests by Veracyte or any third party; and

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(ii)    any services provided by third party pathologists engaged by Veracyte pursuant to Section 9(b) below.
(b)    Approved Physicians. Pathologists will provide the services through individual physicians listed on Exhibit B (“Approved Physicians”). From time to time additional
physicians may be engaged by Pathologists to furnish services under this Agreement; provided, however, that each additional physician must satisfy the professional standards and qualifications set forth in this Agreement. Veracyte shall have the sole discretion to approve any such physician in writing prior to furnishing services, provided that Pathologists are not in breach of this Agreement, then such approval may not be unreasonably withheld.
(c)    Geographic Limitation. Services will be provided in the Austin, Texas metropolitan area unless otherwise agreed.
(d)    International Arrangements. The Parties shall meet and confer in good faith to negotiate the terms and conditions pursuant to which the Services may be provided by Pathologists for samples obtained outside of the United States by Veracyte. Veracyte may engage multiple service providers to provide the Services for patients located outside of the United States.
2.    Duties and Responsibilities of Pathologists. 
(a)    Pathology Services. Pathologists shall provide physicians and other qualified professionals necessary to provide comprehensive professional cytology evaluation on thyroid specimens from patients referred to Veracyte. Pathology services include (collectively, the “Services”):
(i)    macroscopic and microscopic examinations of thyroid cytology specimens including microscopic evaluation of cell blocks prepared on fluids from thyroid FNAs;
(ii)    evaluation of thyroid FNAs;
(iii)     on occasion TCP may receive requests for consultations as well as for evaluation of non-thyroid FNAs, such as salivary glands or Lymph Nodes;
   (iv)    interpretation of immunohistochemical stains;
(v)    the reporting of these examinations and findings in accordance with Veracyte’s laboratory information system and protocols;
(vi)    CPT-4 coding in compliance with all applicable federal, state and local laws, rules and regulations (collectively, the “Laws”) with respect to the Medicare and Medicaid programs and any other Federal health care program, as defined at 42 U.S.C. Section 1320a-7b(f) (collectively, the “Federal Health Care Programs”); and
(vii) any additional services set forth on Exhibit C.

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(b)    Equipment. Pathologists shall provide microscopes and computers required to perform the Services. Veracyte shall provide or bear all other facilities and equipment costs, including the cost of telecommunications, software for report generation and any additional hardware, software or computer system infrastructure required by Veracyte or needed to meet Veracyte’s standards.
(c)    Consultation. Pathologists shall consult with Veracyte’s laboratory director, if any, as clinically appropriate and in accordance with applicable licensing, accreditation and certification standards and requirements.
(d)    Business Promotion. Pathologists shall assist Veracyte, at Veracyte’s expense (which expenses shall be approved in advance by Veracyte), with promotion of the business as mutually agreed upon by the Parties. Pathologists shall also participate in Veracyte’s branding and marketing programs as necessary to establish a unity of purpose in providing high quality technical and professional services to Veracyte’s clients, all in compliance with the Laws applicable to the provision of clinical laboratory and pathology services under this Agreement. All marketing and promotion activities (which shall not include Pathologists’ physician recruiting activities) shall be conducted solely at the direction of, as approved by, and in consultation with Veracyte. Veracyte shall have sole right and authority to approve the content and placement of any and all marketing and promotional materials relating to the Services provided under this Agreement.
(e)    Compliance Program. Pathologists shall participate in and abide by Veracyte’s compliance program, policies and procedures, as established or adopted from time to time.
(f)    Designation of Agent. Tom Traweek, M.D. shall serve as Pathologists’ sole and exclusive agent for purposes of communicating with Veracyte concerning the rights of Pathologists pursuant to this Agreement. Pathologists shall be bound by all actions and agreements made by this agent. Pathologists may designate, from time to time, a new agent, pursuant to written notice to Veracyte.
(g)    Physician Compensation Arrangements. Pathologists represents and warrants to Veracyte that the compensation paid or to be paid by Pathologists to any physician is and will at all times be fair market value for services and items actually provided by such physician, not taking into account the value or volume of referrals or other business generated by such physician for Veracyte. Pathologists further represent and warrant to Veracyte that Pathologists has and will at all times maintain a written agreement with each physician receiving compensation from Pathologists.
3.    Qualifications of Approved Physicians. 
(a)    Licenses and Certifications. Pathologists shall ensure that each Approved Physician: (i) has and maintains an unrestricted license to practice medicine in one or more of the Covered States as set forth herein, (ii) is and remains board certified in pathology by the applicable medical specialty board approved by the American Board of Medical Specialties, (iii) is and remains 

3

a participating provider in all Federal Health Care Programs, (iv) participates in continuing education as necessary to maintain licensure, professional competence and skills commensurate with the standards of the medical community, and (v) meets all other licensing, credentialing and certification standards as mutually defined and agreed to during the term of this Agreement.
(b)    Covered States. Veracyte may provide specimens from the fifty United States (the “Covered States”).
(c)    Notification of Issues. Pathologists shall notify Veracyte in writing within two (2) business days after Pathologists becomes aware of any one or more of the following events:

(i)    Any Approved Physician becomes the subject of any suit, action or other legal proceeding arising out of Pathologists’ professional services;
(ii)    Any Approved Physician is required to pay damages or any other amount in any malpractice action by way of judgment or settlement;
(iii) Any Approved Physician becomes the subject of any disciplinary proceeding or action before any state’s medical board or similar agency responsible for professional standards or behavior;
(iv) Any Approved Physician becomes permanently incapacitated or disabled from practicing medicine;
(v)    Any act of nature or any other event occurs which has a material adverse effect on any Approved Physician’s ability to perform the Services;
(vi) Any Approved Physician is charged with or convicted of a felony, a misdemeanor involving fraud, dishonesty, or moral turpitude, or any crime relevant to the practice of medicine; or
(vii) Any Approved Physician is debarred, suspended, excluded or otherwise ineligible to participate in any federal or state health care program.
(d)    Mandatory Removal. Pathologists shall immediately remove any Approved Physician from furnishing Services under this Agreement who:
(i)    has his or her state license to practice medicine or board certification denied, suspended, restricted, terminated, revoked or relinquished for any reason, whether voluntarily or involuntarily, temporarily or permanently, regardless of the availability of civil or administrative hearing rights or judicial review with respect thereto;
(ii)    is debarred, suspended, excluded or otherwise ineligible to participate in any Federal Health Care Program; or

4

(iii)    fails to be covered by the professional liability insurance required to be maintained under this Agreement.
(e)    Removal Upon Request. Upon written request by Veracyte, Pathologists shall immediately remove any Approved Physician from furnishing Services under this Agreement who:
(i)    engages in conduct that, in Veracyte’s good faith determination, jeopardizes or damages the reputation of Veracyte;
(ii)    fails to satisfy any of the standards and qualifications set forth in this Agreement;

(iii) fails to comply with any other material terms or conditions of this Agreement after being given written notice of that failure and a reasonable opportunity to comply;
(iv) within a twelve (12) month period, has two (2) or more medical malpractice claims filed against him or her; or
(v)    is charged with or convicted of a felony, a misdemeanor involving fraud, dishonesty, or moral turpitude, or any crime relevant to the practice of medicine.
4.    Duties and Responsibilities of Veracyte. 
(a)    Laboratory. Veracyte shall be responsible for its cytology and molecular lab, its functions, quality and licensure.
 (b)    Slide Storage. Veracyte shall maintain and store all slides.
(c)    Shipping. Veracyte shall ship specimens to Pathologists and pay for cost of return shipping to Veracyte for storage and reporting.
(d)    Clinical Information. Veracyte shall provide all clinical information accompanying any specimens and a manifest of shipment contents.
(e)    Software. Veracyte shall be responsible for dictation and reporting software. Veracyte shall also provide any billing or networking or other software needed.
(f)    Managed Care Contracting. Except as otherwise provided in Section 9, below, Veracyte shall be responsible for all managed care contracting.
(g)    Payment. Veracyte shall pay Pathologists in a timely manner as provided in the Agreement.
5.    Practice of Medicine. Pathologists and Veracyte acknowledge that Veracyte is

5

neither authorized nor qualified to engage in any activity which may be construed or deemed to constitute the practice of medicine. Accordingly, Veracyte shall not engage in the practice of medicine nor seek to provide the Services to be provided by Pathologists under this Agreement through its own physician employees or contractors. To the extent that any act or service required of, or reserved to, Veracyte in this Agreement is construed or deemed to constitute the practice of medicine, the performance of such act or service by Veracyte shall be deemed waived or unenforceable, unless this Agreement can be amended to comply with the law, in which case the Parties shall make such amendment.
6.    Term. This Agreement shall become effective on the Effective Date, and shall
continue until October 31, 2022 (the “Expiration Date”), unless terminated earlier as provided herein. The Agreement shall automatically renew for successive one (1) year terms unless either Party gives written notice of its intention not to renew this Agreement at least twelve (12) months prior to the end of the then current term.

7.    Termination.
(a)    Termination by Pathologists. Pathologists shall have the right to terminate this Agreement immediately upon the occurrence of the following:
(i)    The insolvency of Veracyte;
(ii)    The suspension, revocation, termination or other restriction on Veracyte’s laboratory license;
(iii) Failure of Veracyte to pay any undisputed amounts due hereunder within sixty (60) days after the receipt of written notice; or
(iv) Breach of the Agreement by Veracyte and its failure to cure such breach within sixty (60) days after the delivery of written notice thereof.
(b)    Termination by Veracyte. Veracyte shall have the right to terminate this Agreement immediately upon the occurrence of any of the following:
(i)    The insolvency of Pathologists;
(ii)    The suspension or termination of Pathologists from any Federal Health Care Program;
(iii) Breach of the agreement by Pathologists and its failure to cure such breach within sixty (60) days after the delivery of written notice thereof; or
(iv)    There is a “Substantial Change” in Pathologists, which Substantial Change has not received written approval, or subsequent ratification by Veracyte, whose approval or ratification shall not be unreasonably withheld. For purposes of this section, 

6

“Substantial Change” means the turnover ratio for Approved Physicians exceeds thirty percent (30%) in any two-year period, whether due to retirement, withdrawal, termination, suspension or otherwise.
8.    Compensation, Billing and Collection. 
(a)    Right to Bill. Except as otherwise provided in Section 9 below:
(i)    Veracyte shall have the sole and exclusive right to bill and collect for any and all Services rendered by Pathologists pursuant to this Agreement and shall have the sole and exclusive right, title and interest in and to accounts receivable with respect to such pathology services.
(ii)    Pathologists shall seek and obtain compensation for the performance of the Services only from Veracyte. Pathologists shall not bill, assess or charge any fee, assessment or charge of any type against any patient or any other person or entity for Services rendered by Pathologists pursuant to this Agreement. Pathologists shall promptly deliver to Veracyte any and all compensation, in whatever form, that is received by Pathologists for Services rendered by Pathologists pursuant to this Agreement.
(b)    Pathologists’ Fee. Veracyte shall pay Pathologists for each specimen according to the fee schedule attached hereto as Exhibit E. Pathologists shall be paid within sixty (60) days after the end of the calendar month in which Pathologists complete the Services. Veracyte may bill patients and/or their third party payors, and payment to Pathologists is not contingent upon Veracyte’s receipt of payment.
(c)    Assignment of Claims. Pathologists hereby assigns (or reassigns, as the case may be) to Veracyte all claims, demands and rights of Pathologists for payment for any and all Services rendered by Pathologists pursuant to this Agreement. Pathologists shall take such action and execute such documents as may be reasonably necessary or appropriate to effectuate the assignment (or reassignment, as the case may be) to Veracyte of all claims, demands and rights of Pathologists for payment for any and all Services rendered by Pathologists pursuant to this Agreement.
(d)    Expense Reimbursements. 
(i)    Veracyte shall reimburse Pathologists for all reasonable and necessary business expenses incurred by Pathologists in connection with the performance of the Services, including shipping, postage, transcription fees, external consults performed at Veracyte’s request, etc.; provided that: (l) Pathologists have obtained prior written approval of Veracyte to incur expenses greater than Five Hundred Dollars ($500), (2) the expenses are directly related to the performance of the Services under this Agreement, (3) the expenses meet the requirements for reimbursement under Veracyte policies, and (4) Pathologists submit receipts to Veracyte within sixty (60) days of incurring the expenses. Receipts submitted to Veracyte after sixty (60) days may or may not be paid at the sole discretion of Veracyte.

7

(ii)    Veracyte shall reimburse Pathologists for reasonable and necessary expenses incurred by Pathologists in connection with all sales and marketing activities to promote or represent Veracyte; provided that such sales and marketing activities and expenses are approved in advance by Veracyte.
(iii)    Pathologists shall assume all financial responsibility for the costs incurred for licensing all Approved Physicians, including, without limitation, any patient compensation fund contribution requirements required by any applicable state law.
9.    Third Party Payor Arrangements. 
(a)    Cooperation. Pathologists shall reasonably cooperate with Veracyte at Veracyte’s expense in the billing and collection of fees with respect to Services rendered by Pathologists pursuant this Agreement. Without limiting the generality of the foregoing, Pathologists shall reasonably cooperate with Veracyte: (i) in providing information to permit Veracyte to complete such claim forms with respect to Services rendered by Pathologists pursuant to this Agreement as may be required by insurance carriers, health care service plans, governmental agencies, or other third party payors; and (ii) in all reasonable respects necessary to facilitate Veracyte’s entry into or maintenance of any third party payor arrangements for the provision of services under Federal Health Care Programs or any other public or private health care programs, including insurance programs, self-funded employer health programs, health care service plans and preferred provider organizations.

(b)    Enrollment as provider. If Veracyte is not permitted to participate in any third-party payor arrangement that includes the Services, Veracyte may request Pathologists to:
(i)    Enroll as a provider, separate from Veracyte, in any third party payor arrangement designated by Veracyte, with respect to services provided pursuant to this Agreement;
(ii)    Enter into an express contractual agreement with said third party payor, or with any intermediate organization, including any independent practice association, as required to effect Pathologists’ enrollment as a provider; and/or
(iii)     Enter into an express contractual agreement with Veracyte regarding global billing, capitation or other payment arrangements that cover Veracyte services and pathology services, as necessary to implement the third party payor arrangement.
Notwithstanding any other provision in this Agreement, upon Pathologists’ failure for any reason to take any of the steps above within ten (10) business days after receipt of a written request, Veracyte may engage an additional service provider to provide the Services for patients covered by the third-party payor in question.
10.    Insurance.

8

(a)    Insurance. Pathologists shall at its own expense maintain professional errors and omissions insurance with policy limits of at least One Million Dollars ($1,000,000) per claim and Three Million Dollars ($3,000,000) annual aggregate for each Approved Physician. Veracyte shall at its own expense maintain professional malpractice insurance for its laboratory operations with policy limits of at least Three Million Dollars ($3,000,000).
(b)    Waiver of Subrogation. Whenever (a) any loss, cost, damage or expense resulting from professional malpractice is incurred by either Party and (b) such Party is then covered (or is required under this Agreement to be covered) in whole or in part by insurance with respect to such loss, cost, damage or expense, then the Party so insured hereby releases the other Party from any liability it may have on account of such loss, cost, damage or expense to the extent of any amount recovered by reason of such insurance, and waives any right of subrogation which might otherwise exist on account thereof, provided that such release of liability and waiver of the right to subrogation shall not be operative in any case where the effect thereof is to invalidate such insurance coverage or increase the cost thereof. The Parties shall use their respective best efforts to obtain such a release and waiver of subrogation from their respective insurance carriers and shall obtain any special endorsements, if required by their insurer, to evidence compliance with the aforementioned waiver. The releases granted herein shall include releases of claims caused by negligence.
11.    Indemnity.
(a)    Indemnity by Pathologists. Pathologists shall indemnify and defend Veracyte from and against any claims arising out of (i) the breach of this Agreement by Pathologists, and/or (ii) from Pathologists’ professional errors or omissions.

(b)    Indemnity by Veracyte. Veracyte shall indemnify and defend Pathologists against any claims arising out of (i) the breach of this Agreement by Veracyte, (ii) the preparation of any pathology specimens by Veracyte, and/or (iii) the operation of the cytology or molecular laboratories, and/or (iv) the wrongful disclosure of any patient protected health information by Veracyte or as a result of any defects in any software or computer system provided or maintained by Veracyte.
12.    Cooperation between the Parties. 
(a)    General Duty to Cooperate. The Parties: (1) shall interact professionally, positively and respectfully with each other and with all of their respective employees and contractors; (2) shall not in any way intentionally disparage or otherwise communicate to third parties negative facts, statements or opinions regarding the other and their respective Board members, partners, employees or business; and (3) shall at all times perform the Services in a manner that is in the best interests of Veracyte and in the best interests and safety of patients. Pathologists agree to reasonably cooperate with Veracyte in: any pending or future government or payor investigation; any litigation, arbitration or other dispute resolution involving Veracyte; and any internal investigation Veracyte may conduct. Veracyte shall reimburse Pathologists for all expenses reasonably incurred by 

9

Pathologists in compliance with this Section 12(a), except that Veracyte shall not pay Pathologists for Pathologists’ expenses in any dispute resolution where Pathologists are a co-defendant in an action brought by a third party.
(b)    Claim Resolution. The Parties recognize that, during the term of this Agreement and for a period thereafter, certain risk management issues, legal issues, claims or actions may arise that involve or could potentially involve the Parties and their respective employees and agents. The Parties further recognize the importance of cooperating with each other in good faith when such issues, claims or actions arise, to the extent such cooperation does not violate any applicable laws, cause the breach of any duties created by any policies of insurance or programs of self-insurance, or otherwise compromise the confidentiality of communications or information regarding the issues, claims or actions. As such, the Parties hereby agree to cooperate in good faith, using their best efforts, to address such risk management and claims handling issues in a manner that strongly encourages full cooperation between the Parties.
13.    Noncompetition/Nonsolicitation.
(a)    Noncompetition. During the term of this Agreement, Pathologists shall not, without first obtaining the prior written consent of Veracyte, provide cytopathologic studies of thyroid specimens. Pathologists shall ensure that each of the physicians that are providing the Services under this Agreement shall not provide a service that is similar to the Services to any third party.
(b)    Nonsolicitation of Employees. Each Party agrees that during the term of the Agreement and for two (2) years after the termination for any reason, it will not solicit the employment of any employee or contractor of the other Party. Furthermore, Veracyte may not directly or indirectly employ, engage or use the services of any physician who Veracyte required that Pathologists remove from providing Services hereunder. Notwithstanding the foregoing, if Pathologists fail to provide the Services under this Agreement, Veracyte may deliver notice to Pathologists describing such failure and if Pathologists do not cure such failure within thirty (30)

days after receipt of such notice, Veracyte shall have the right to enter into agreements directly with the physicians that have provided the Services under this Agreement.
14.    Confidentiality.
(a)    Confidential Information. Each Party recognizes and acknowledges that, by virtue of entering into this Agreement and performing their respective obligations hereunder, each Party may have access to certain information of the other Party that is confidential and constitutes proprietary, valuable, special and unique property of the other Party. The Parties agree that they shall not at any time, either during or subsequent to the term of this Agreement, disclose to others, use, copy or permit to be copied, without the express prior written consent of the other Party whose confidential information is so disclosed 

10

or used, except pursuant to the performance of such Party’s duties thereunder, any confidential or proprietary information of the other Party, including, but not limited to, information which concerns clients and their respective patients, costs, or methods of operation or marketing, and which is not otherwise available to the public.
(b)    Disclosure of Terms of this Agreement. Except for disclosure to a Party’s legal counsel, accountants or financial advisors, neither Party shall disclose the terms of this Agreement to any person who is not a party or signatory, unless disclosure thereof is required by law or otherwise authorized by this Agreement or consented to in writing by the other Party.
(c)    Patient Information. Pathologists shall not disclose to any third party, except where permitted or required by law or where such disclosure is expressly approved by Veracyte in writing, any patient or medical record information regarding patients of Veracyte, and Pathologists shall comply with all federal and state laws and regulations regarding the confidentiality of such information. Pathologists acknowledge and agree that it shall be deemed to constitute a “business associate” of Veracyte as such term is defined in the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information, Technology for Economic and Clinical Health Act of 2009 (collectively, “HIPAA”). Accordingly, Pathologists shall comply with all applicable provisions of HIPAA and the regulations and rules promulgated thereto, including, without limitation, executing and delivering to Veracyte a business associate agreement in the form as attached as Exhibit G hereto.
(d)    Survival. The provisions of this Section 14 shall survive expiration or other termination of this Agreement, regardless of the cause of such termination.
15.    Miscellaneous Provisions. 
(a)    Independent Contractor. In performance of all work, duties and obligations under this Agreement, Pathologists are at all times acting and performing as independent contractors practicing the profession of medicine. Veracyte shall have no control or direction over the methods by which Pathologists perform the work and functions required by this Agreement. Pathologists have sole responsibility for the recruitment, retention and compensation of physicians providing Services under this agreement.
(b)    Tradename. To the extent that Pathologists adopt a legal name, tradename and/or servicemark that is derivative of “Veracyte,” use of such derivative shall be subject to Veracyte’s prior written approval and subject to a revocable license granted by Veracyte, which license shall be revoked and terminate upon termination or expiration of this Agreement.
(c)    Governing Law. This Agreement will be governed by the laws of the State of Texas.

11

(d)    Assignment. No assignment of this Agreement or the rights and obligation hereunder shall be valid without the specific written consent of both Parties hereto. This is not a third party beneficiary agreement. Notwithstanding the foregoing, the Parties agree that either Party may assign this Agreement without such consent (a) to any entity which is controlled by or under common control with that Party, or (b) in connection with the transfer or sale of all or substantially all of its business or assets related to this Agreement, or in the event of its merger, consolidation, change in control or other similar transaction.
(e)    Notices. All notices, requests, demands and any other communications required or permitted hereunder shall be in writing and shall be deemed to have been duly delivered in person or if sent by registered or certified first class United States mail, postage prepaid, or via electronic mail, to:
If to Veracyte:
Veracyte, Inc.
6000 Shoreline Court, Suite 300  
South San Francisco, CA 94080  
Attention: Bonnie Anderson  
email: bonnie@veracyte.com  
copy email: keith@veracyte.com 
with copy to:
Fenwick & West LLP
555 California St., 12th Floor  
San Francisco, CA 94104  
Attention: Doug Cogen
email: dcogen@fenwick.com 
If to Pathologists:
Thyroid Cytopathology Partners, P.A.
12357 A Riata Trace Parkway  
Building 5, Ste 100
Austin, Texas 78727
Attention: Tom Traweek, M.D.  
email: tom@thyroidcytopath.com 
with copy to:

Rivas Goldstein, LLP

12

7035 Bee Cave Road, Suite 200
Austin, Texas 78746
Attention: Dana Thompson
email: dana@rivasgoldstein.com 

Any of the undersigned may from time to time change said addresses by written notice to the other Party as provided in this Agreement.
(f)    Entire Agreement. This Agreement contains the complete, full and exclusive understanding of the Parties with respect to the subject matter hereof and supersedes any and all other agreements between the Parties with respect to this subject matter, including the Original Agreement provided that all rights and obligations that accrued under the Original Agreement prior to the Effective Date shall continue in accordance with the terms of the Original Agreement.
(g)    Headings. All headings are for convenience only and shall not be construed to modify the substance of this Agreement.
(h)    Amendments. Any amendments, additions or supplements to this Agreement shall be effective and binding on the Parties only if in writing and signed by each Party to this Agreement.
(i)    Severability. If any provision of this Agreement is found to be invalid or unenforceable, such provision shall be deemed stricken from this Agreement and the remainder of this Agreement shall remain in full force and effect. The Parties shall negotiate in good faith to amend the Agreement to replace any provision found to be invalid or unenforceable with a valid and enforceable provision which, as nearly as possible, accomplishes the original objectives of the Parties.
(j)    Waivers. One or more waivers by either Party of a breach of this Agreement by the other Party shall not be construed as a waiver of further breaches of this Agreement.
(k)    Inurement. This Agreement shall be binding upon and shall inure to the benefit of each of the Parties hereto, their heirs, estates, spouses, executors, administrators, partners, successors and assigns.
(l)    Multiple Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and each alone and all together shall constitute one and the same instrument.
(m)    Arbitration.
(i)    Any controversy or claim arising out of or relating to this Agreement shall be settled by binding arbitration in accordance with the applicable rules 

13

of the American Arbitration Association or a successor organization (the “Arbitration Company”), or such other rules as may be agreed upon by the Parties, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof, subject to the following terms, conditions, and exceptions:
(ii)    There shall be one (1) arbitrator agreed to by the Parties from the Arbitration Company or, if the Parties cannot agree on one arbitrator, there shall be three (3) arbitrators whose selection shall be made in accordance with the procedures then existing for the selection of such arbitrators by the Arbitration Company.
(iii) The venue of any arbitration shall be Travis County, Texas, and the arbitration shall be conducted in accordance with the laws of the State of Texas.
(iv) Notwithstanding any provision of Texas law or the applicable rules of the Arbitration Company to the contrary, each Party shall have all of the rights of discovery pertaining to civil litigation as provided in Texas law. Unless the Parties otherwise agree in writing, any arbitration hereunder shall be conducted in accordance with the rules of evidence existing in the State of Texas at the time of the arbitration.
(v)    Each of the Parties will share equally in the costs and expenses of 
 
arbitration unless the arbitrators find that the position of the non-prevailing Party in such arbitration was without substantial justification, in which event the arbitrators may assess all or an unequal portion of such costs and expenses together with reasonable attorneys’ fees against the non-prevailing Party, as the arbitrators deem equitable.
[signature page follows]

14

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed as of the day and year first written above.
PATHOLOGISTS    VERACYTE, INC.
THYROID CYTOPATHOLOGY  
PARTNERS, P.A.
By: /s/ Tom Traweek     By: /s/ Bonnie Anderson     
Its: CEO     Its: Chief Executive Officer

15

EXHIBIT A

EXCEPTIONS TO EXCLUSIVITY

NONE

A-1

EXHIBIT B

APPROVED PHYSICIANS

Dr. Tom Traweek Dr. Cherry Starling Dr. Kelly Gilliland Dr. Laura Been
Dr. Robert Domingo Dr. Michelle Horton Dr. Lorna Ogden Dr. Cindi Snowden Dr. Sharenda Williams Dr. Karen Nauschuetz

B-1

EXHIBIT C

ADDITIONAL PATHOLOGY SERVICES

NONE

C-1

EXHIBIT D [RESERVED]

D-1

EXHIBIT E

                   FEE SCHEDULE
Period    Price per Nodule
February 1, 2019 – September 30, 2019    $[*]
October 1, 2019 – October 31, 2022    $[*]

E-1

.
EXHIBIT F
RESERVED

F-1

EXHIBIT G
BUSINESS ASSOCIATE AGREEMENT
This Business Associate Agreement (the “Agreement”) is made by and among VERACYTE, INC., a California corporation (herein referred to as “Covered Entity”) and THYROID CYTOPATHOLOGY PARTNERS, P.A., a Texas professional association (hereinafter referred to as “Business Associate”). Covered Entity and Business Associate shall be collectively referred to herein as the “Parties”.
WHEREAS, Covered Entity is entering into a business relationship with Business Associate that is memorialized in that certain Amended and Restated Pathology Services Agreement (the “Underlying Agreement”) entered into as of even date herewith pursuant to which Business Associate may be considered a “business associate” of Covered Entity as defined in the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) including all pertinent regulations (45 CFR Parts 160 and 64) issued by the U.S. Department of Health and Human Services as either have been amended by Subtitle D of the Health Information Technology for Economic and Clinical Health Act (the “HITECH Act”), as Title XIII of Division A and Title IV of Division B of the American Recovery and Reinvestment Act of 2009 (Pub. L. 111-5);
WHEREAS, the nature of the prospective contractual relationship between Covered Entity and Business Associate may involve the exchange of Protected Health Information (“PHI”) as that term is defined under HIPAA; and
For good and lawful consideration as set forth in the Underlying Agreement, Covered Entity and Business Associate enter into this agreement for the purpose of ensuring compliance with the requirements of HIPAA, its implementing regulations, the HITECH Act and relevant State law.
NOW THEREFORE, the premises having been considered and with acknowledgment of the mutual promises and of other good and valuable consideration herein contained, the Parties, intending to be legally bound, hereby agree as follows:
DEFINITIONS.
Individual. “Individual” shall have the same meaning as the term “individual” in 45 CFR §164.501 and shall include a person who qualifies as a personal representative in accordance with 45 CFR §164.502(g).
Breach. “Breach” shall have the same meaning as the term “breach” in § 13400 of the HITECH Act and shall include the unauthorized acquisition, access, use, or disclosure of PHI that compromises the security or privacy of such information.
Designated Record Set. “Designated Record Set” shall have the same meaning as the term “designated record set” in 45 CFR §164.501.

G-1

Privacy Rule. “Privacy Rule” shall mean the Standards for Privacy of Individually Identifiable Health Information at 45 CFR Part 160 and Part 164, Subparts A and E, as amended
by the HITECH Act and as may otherwise be amended from time to time.

Protected Health Information. “Protected Health Information” or “PHI” shall have the same meaning as the term “protected health information” in 45 CFR §164.501, limited to the information created or received by Business Associate from or on behalf of Covered Entity.
Required by Law. “Required by Law” shall have the same meaning as the term “required by law” in 45 CFR §164.501.
Secretary. “Secretary” shall mean the Secretary of the U.S. Department of Health and Human Services or his or her designee.
Security Rule. The “Security Rule” shall mean the regulations found at 45 CFR Parts 160 and 164, Subpart C, as may be amended from time to time.
Unsecured Protected Health Information. “Unsecured Protected Health Information” or “Unsecured PHI” shall mean PHI that is not secured through the use of a technology or methodology specified by the Secretary in guidance or as otherwise defined in the §13402(h) of the HITECH Act.
USE OR DISCLOSURE OF PHI BY BUSINESS ASSOCIATE.
Except as otherwise limited in this Agreement, Business Associate may use or disclose Protected Health Information to perform functions, activities, or services for, or on behalf of, Covered Entity as specified in the Underlying Agreement, provided that such use or disclosure would not violate the Privacy Rule.
Business Associate shall only use and disclose PHI if such use or disclosure complies with each applicable requirement of 45 CFR §164.504(e).
DUTIES OF BUSINESS ASSOCIATE RELATIVE TO PHI.
Business Associate shall not use or disclose PHI other than as permitted or required by this Agreement or as Required by Law.
Business Associate shall be directly responsible for full compliance with the relevant requirements of the Privacy Rule to the same extent as Covered Entity.
Business Associate shall comply with the provisions of the Security Rule directing the implementation of administrative, physical and technical safeguards for electronic-PHI (“e-PHI”) and the development and enforcement of related policies, procedures, and documentation standards (including but not limited to designation of a security official).

G-2

In the event of an unauthorized use or disclosure of PHI or a Breach of Unsecured PHI, Business Associate shall mitigate, to the extent practicable, any harmful effects of said disclosure that are known to it.
Business Associate agrees to ensure that any agent, including a subcontractor, to whom it provides Protected Health Information received from, or created or received by Business Associate on behalf of Covered Entity, agrees to the same restrictions and conditions that apply through this Agreement to Business Associate with respect to such information.
To the extent applicable, Business Associate shall provide access to Protected Health Information in a Designated Record Set at reasonable times, at the request of Covered Entity or, as directed by Covered Entity, to an Individual in order to meet the requirements under 45 CFR §164.524.
Business Associate will, upon receipt of written notice from Covered Entity, promptly amend or permit Covered Entity access to amend any portion of Covered Entity’s PHI so that Covered Entity may meet its amendment obligations under 45 CFR §164.526.
Business Associate shall, upon request with reasonable notice, provide Covered Entity access to its premises for a review and demonstration of its internal practices and procedures for safeguarding PHI.
Business Associate agrees to document such disclosures of PHI and information related to such disclosures as would be required for a Covered Entity to respond to a request by an Individual for an accounting of disclosures of PHI in accordance with 45 C.F.R. §164.528. Should an Individual make a request to Covered Entity for an accounting of disclosures of his or her PHI pursuant to 45 C.F.R. §164.528, Business Associate agrees to promptly provide Covered Entity with information in a format and manner sufficient to respond to the Individual’s request.
Business Associate shall, upon request with reasonable notice, provide Covered Entity with an accounting of uses and disclosures of PHI provided to it by Covered Entity.
Business Associate shall make its internal practices, books, records, and any other material requested by the Secretary relating to the use, disclosure, and safeguarding of PHI received from Covered Entity available to the Secretary for the purpose of determining compliance with the Privacy Rule. The aforementioned information shall be made available to the Secretary in the manner and place as designated by the Secretary or the Secretary’s duly appointed delegate. Under this Agreement, Business Associate shall comply and cooperate with any request for documents or other information from the Secretary directed to Covered Entity that seeks documents or other information held by Business Associate.
Business Associate may use Protected Health Information to report violations of law to appropriate Federal and State authorities, consistent with 42 C.F.R. §164.502(j)(1).

G-3

Except as otherwise limited in this Agreement, Business Associate may disclose PHI for the proper management and administration of Business Associate, provided that disclosures are Required by Law, or Business Associate obtains reasonable assurances from the person to whom the information is disclosed that it will remain confidential and used or further disclosed only as Required by Law or for the purpose for which it was disclosed to the person, and the person notifies Business Associate of any instances of which it is aware in which the confidentiality of the information has been breached.

REPORTING.
A.    Privacy Breach. Business Associate will report to Covered Entity any use or disclosure of Covered Entity’s PHI that is not permitted by this Agreement or the Underlying Agreement. In addition, Business Associate will report to Covered Entity, following discovery and without reasonable delay, but in no event later than ten (10) days following discovery, any suspected or actual “Breach” of “Unsecured Protected Health Information” as these terms are defined by the HITECH Act and any implementing regulations. Business Associate shall cooperate with Covered Entity in investigating the potential or actual breach and in meeting Covered Entity’s obligations under the HITECH Act and any other state or federal privacy or security breach notification laws. Any such report shall contain at a minimum the information set forth on Attachment A attached hereto and incorporated by reference. Since time is of the essence under the HITECH Act, in addition to providing the report in accordance with the notice provisions contained in Section XI below, a copy of the report shall be faxed to the Privacy Officer at (615)695-8426 or to such other person as Covered Entity shall request in writing of Business Associate.
TERM AND TERMINATION.
Term. The Term of this Agreement shall be effective as of the date the Underlying Agreement is effective, and shall terminate when all of the Protected Health Information provided by Covered Entity to Business Associate, or created or received by Business Associate on behalf of Covered Entity, is destroyed or returned to Covered Entity, or, if it is infeasible to return or destroy Protected Health Information, protections are extended to such information, in accordance with the termination provisions in this Section V.
A.    Termination for Cause. Upon Covered Entity’s knowledge of a material breach by Business Associate, Covered Entity shall:
Provide a reasonable opportunity for Business Associate to cure the breach or end the violation and, if Business Associate does not cure the breach or end the violation within the reasonable time specified by Covered Entity, terminate this Agreement;
Immediately terminate this Agreement if Business Associate has breached a material term of this Agreement and cure is not possible; or

G-4

If neither termination nor cure is feasible, report the violation to the Secretary. Effect of Termination. 
Except as provided in paragraph C(2) of this section, upon termination of this Agreement, for any reason, Business Associate shall return or destroy (at Covered Entity’s sole discretion) all Protected Health Information received from Covered Entity, or created or received by Business Associate on behalf of Covered Entity. This provision shall apply to Protected Health Information that is in the possession of subcontractors or agents of Business Associate. Business Associate shall not retain any copies of the Protected Health Information. Any information that is in electronic format shall be provided to Covered Entity at no additional charge. The format to be provided should be one that is commonly used for export (i.e., comma delimited, text file, Word, Excel or Access database) that is agreeable to Covered Entity.
In the event that Business Associate determines that returning or destroying the Protected Health Information is infeasible, Business Associate shall provide to Covered Entity written notification of the conditions that make return or destruction infeasible. After written notification that return or destruction of Protected Health Information is infeasible, Business Associate shall extend the protections of this Agreement to such Protected Health Information and limit further uses and disclosures of such Protected Health Information to those purposes that make the return or destruction infeasible, for so long as Business Associate maintains such Protected Health Information.
Should Business Associate make a disclosure of PHI in violation of this Agreement, Covered Entity shall have the right to immediately terminate any contract, other than this Agreement, then in force between the Parties, including the Underlying Agreement.
REMEDIES IN EVENT OF BREACH AND INDEMNIFICATION. Business Associate hereby recognizes that irreparable harm may result to Covered Entity, and to the business of Covered Entity, in the event of breach by Business Associate of any of the covenants and assurances contained in this Agreement. As such, in the event of breach of any of the covenants and assurances contained in Sections II, III or IV above, Covered Entity shall be entitled to enjoin and restrain Business Associate from any continued violation of Sections II, III or IV. Furthermore, Business Associate will indemnify, defend and hold harmless Covered Entity, its officers, directors, employees, agents, and assigns, from and against any and all losses, liabilities, damages, costs, and expenses (including reasonable attorneys’ fees) arising out of or related to the Business Associate’s breach of its obligations under this Agreement.
MODIFICATION. This Agreement may only be modified through a writing signed by the Parties. The Parties agree to take such action as is necessary to amend this Agreement from time to time as is necessary for Covered Entity to comply with the requirements of the Privacy Rule and HIPAA.

G-5

INTERPRETATION OF THIS CONTRACT IN RELATION TO OTHER CONTRACTS BETWEEN THE PARTIES. Should there be any conflict between the language of this contract and any other contract entered into between the Parties (either previous or subsequent to the date of this Agreement), the language and provisions of this Agreement shall control and prevail unless the Parties specifically refer in a subsequent written agreement to this Agreement by its title and date and specifically state that the provisions of the later written agreement shall control over this Agreement.
COMPLIANCE WITH STATE LAW. If the HIPAA Privacy or Security Rules and the law of the State in which Covered Entity is located conflict regarding the degree of protection provided for protected health information, Business Associate shall comply with the more restrictive protection requirement.
MISCELLANEOUS.
Ambiguity. Any ambiguity in this Agreement shall be resolved to permit Covered Entity

G-6

to comply with the Privacy Rule.
Notice to Covered Entity. Any notice required under this Agreement to be given Covered Entity shall be made in writing to:
Veracyte, Inc.
6000 Shoreline Court, Suite 300  
South San Francisco, CA 94080  
Attention: Bonnie Anderson
with copy to:
Fenwick & West LLP  
555 California St., 12th Floor  
San Francisco, CA 94104  
Attention: Doug Cogen
Notice to Business Associate. Any notice required under this Agreement to be given Business Associate shall be made in writing to:
Thyroid Cytopathology Partners, P.A.
12357 A Riata Trace Parkway
Building 5, Ste 100
Austin, Texas 78727
Attention: Tom Traweek, M.D.
with copy to:
Rivas Goldstein, LLP
7035 Bee Cave Road, Suite 200
Austin, Texas 78746
Attention: Dana Thompson
IN WITNESS WHEREOF and acknowledging acceptance and agreement of the foregoing, the Parties affix their signatures hereto.
COVERED ENTITY:    BUSINESS ASSOCIATE:
By: /s/ Bonnie Anderson    By: /s/ Tom Traweek      
Name: Bonnie Anderson    Name:  Tom Traweek
Title:    Chairman & CEO                Title:    CEO            

G-7

ATTACHMENT A 
FORM OF NOTIFICATION TO COVERED ENTITY OF
BREACH OF UNSECURED PHI 
This notification is made pursuant to the Business Associate Agreement between VERACYTE, INC., a California corporation (“Covered Entity”), and THYROID CYTOPATHOLOGY PARTNERS, P.A., a Texas professional association (“Business Associate”).
Business Associate hereby notifies Covered Entity that there has been an actual or potential breach of unsecured (unencrypted) protected health information (PHI) that Business Associate has used or has had access to under the terms of the Business Associate Agreement.
Description of the breach:     
Date of the breach:    Date breach discovered:     
Number of individuals affected by the breach:     
 
Indicate type of breach:
□    Theft
□    Loss
□    Improper Disposal
□    Unauthorized Access
□    Hacking/IT Incident

□    Other:     
□    Unknown
Location of Breached Information:
□    Laptop
□    Desktop Computer
□    Email
□    Portable Media/Device
□     EMR
□     Paper
□    Other:
A description of the types of unsecured PHI that were involved in the breach (Demographic - full or partial name, Social Security number, date of birth, home address, account number, or disability code; Financial - billing information, credit card # or check/bank account number; Clinical - any mention of diagnosis, procedure, treatment provided, or ICD-9-CM or CPT-codes; Other):

What safeguards were in place prior to the breach: (Circle all that apply) Firewalls, packet filtering, secure browser, strong authentication, encrypted wireless, physical security (explain), logic access control, anti-virus software (list product name), intrusion detection, biometrics, etc.:

Description of what Business Associate is doing to investigate the breach, to mitigate losses, and
to protect against any further breaches:     
Contact information to ask questions or learn additional information:

Name:     
Title:    
Address:     
Email Address:                                        
Phone Number:

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