EXHIBIT 10.52.3
COLLABORATION AGREEMENT
among
GENZYME CORPORATION,
GENZYME TRANSGENICS CORPORATION
and
ATIII LLC
dated as of January 1, 1998
TABLE OF CONTENTS
ARTICLE 1. DEFINITIONS................................................ 1
1.1 "Affiliate".............................................. 1
1.2 "Behring"................................................ 2
1.3 "BLA".................................................... 2
1.4 "*"...................................................... 2
1.5 "Collaboration Product".................................. 2
1.6 "Commercialization Costs"................................ 2
1.7 "Commercialization Plan"................................. 2
1.8 "Date of Execution"...................................... 3
1.9 "Development Costs"...................................... 3
1.10 "Development Plan"....................................... 3
1.11 "Development Program".................................... 3
1.12 "Distribution Margin".................................... 3
1.13 "Distributor's Discount"................................. 4
1.14 "Effective Date"......................................... 4
1.15 "Estimated Fully Absorbed Cost of Goods"................. 4
1.16 "Estimated Net Selling Price"............................ 4
1.17 "Field".................................................. 4
1.18 "FDA".................................................... 4
1.19 "Fully Absorbed Cost of Goods"........................... 4
1.20 "GAAP"................................................... 5
1.21 "Genzyme Patent Rights".................................. 5
1.22 "Genzyme Technology"..................................... 5
1.23 "Genzyme/GTC Patent Rights".............................. 5
1.24 "Genzyme/GTC Technology.................................. 5
1.25 "GTC Licensed ATIII Patent Rights........................ 5
1.26 "GTC Patent Rights"...................................... 5
1.27 "GTC Technology"......................................... 6
1.28 "Major Market Countries"................................. 6
1.29 "Manufacturer's Profit".................................. 6
1.30 "Manufacturing Know-How"................................. 6
1.31 "Manufacturing Margin"................................... 6
1.32 "Member"................................................. 6
1.33 "Net Profit"............................................. 6
1.34 "Net Sales".............................................. 7
1.35 "New Facility"........................................... 7
1.36 "New Facility Costs"..................................... 7
1.37 "Operating Agreement".................................... 8
1.38 "Patent Rights".......................................... 8
1.39 "Percentage Interest".................................... 8
1.40 "Program"................................................ 8
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1.41 "Program Costs".......................................... 8
1.42 "Program Management Team"................................ 8
1.43 "Purchase Agreement"..................................... 8
1.44 "Regulatory Approvals"................................... 8
1.45 "Regulatory Scheme"...................................... 8
1.46 "SMIG"................................................... 8
1.47 "SMIG Territory"......................................... 8
1.48 "Specifications"......................................... 9
1.49 "Steering Committee"..................................... 9
1.50 "Technology"............................................. 9
1.51 "Territory".............................................. 9
1.52 "Third Party"............................................ 9
1.53 "Transgenic Animal"...................................... 9
1.54 "Transgenic ATIII"....................................... 9
ARTICLE 2. SCOPE AND STRUCTURE OF THE COLLABORATION .................. 9
2.1 General ................................................ 9
2.2 Exclusive Relationship.................................. 10
2.3 *....................................................... 10
2.4 SMIG Agreement.......................................... 11
ARTICLE 3. GRANTS AND RESERVATIONS OF RIGHTS ......................... 12
3.1 Licenses of Rights to ATIII LLC......................... 12
3.1.1 Grants from GTC.................................. 12
3.1.2 Grants from Genzyme.............................. 12
3.1.3 ATIII LLC Undertakings; Sublicenses.............. 13
3.1.4 Rights of ATIII LLC to Patent Rights or
Technology Developed Outside the Program......... 13
3.2 Sublicenses of Rights from ATIII LLC to GTC and
Genzyme................................................. 13
3.3 Reservation of Rights................................... 14
3.3.1 Reservation by GTC .............................. 14
3.3.2 Reservation by Genzyme........................... 14
ARTICLE 4. PROGRAM FUNDING; LLC INTEREST ............................. 14
4.1 Program Funding Commitments ............................ 14
4.1.1 1998 Funding .................................... 14
4.1.2 Funding After 1998 .............................. 14
4.1.3 New Facility Costs............................... 15
4.1.4 Adjustment to Percentage Interest and Funding
Commitment....................................... 15
4.2 Program Funding Capital Contributions .................. 15
4.2.1 Initial Capital Contributions ................... 15
4.2.2 Monthly Capital Contributions ................... 15
4.2.3 Quarterly Statements; Quarterly Reconciliation .. 15
4.3 Distributions .......................................... 16
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4.4 Sale and Purchase of LLC Interest ...................... 16
4.5 Books of Account; Audit ................................ 16
ARTICLE 5. THE DEVELOPMENT PROGRAM.................................... 17
5.1 Conduct of the Development Program ..................... 17
5.1.1 General ......................................... 17
5.1.2 Development Plan ................................ 17
5.1.3 Initial and Updated Development Plan ............ 18
5.1.4 Execution and Performance ....................... 19
5.1.5 Attendance at Regulatory Meetings ............... 19
5.2 Development Information ................................ 19
5.2.1 Reports and Information Exchange ................ 19
5.2.2 Adverse Reaction Reporting ...................... 19
5.2.3 Clinical and Regulatory Audits .................. 19
5.3 Regulatory Approval Filings ............................ 20
5.4 Facilities Visits ...................................... 20
ARTICLE 6. SALES, MARKETING AND ADMINISTRATIVE SERVICES............... 20
6.1 Commercialization Plans ................................ 20
6.1.1 General ......................................... 20
6.1.2 Initial and Updated Commercialization Plans ..... 21
6.2 Exclusive Engagement ................................... 21
6.3 Orders and Forecasting ................................. 22
6.4 Prices and Payment Terms; Costs ........................ 22
6.4.1 Prices .......................................... 22
6.4.2 Terms of Payment ................................ 22
6.4.3 Marketing and Distribution Expenses ............. 22
6.5 Responsibilities of Genzyme ............................ 22
6.6 Responsibilities of ATIII LLC and GTC .................. 24
6.7 Third Party Distributors ............................... 24
6.8 General and Administrative Services .................... 24
ARTICLE 7. MANUFACTURE AND SUPPLY..................................... 24
7.1 Process Development; Manufacturing Approvals ........... 25
7.2 Manufacture and Supply of Collaboration Products ....... 25
7.2.1 General ......................................... 25
7.2.2 Manufacturing Facilities and Capacity
Requirements..................................... 26
7.2.3 Forecasts ....................................... 26
7.3 Certificates of Analysis ............................... 26
7.4 Certificates of Manufacturing Compliance ............... 26
7.5 Access to Facilities ................................... 26
ARTICLE 8. MANAGEMENT................................................. 27
8.1 Program Management Team ................................ 27
8.1.1 General ......................................... 27
8.1.2 Development Program Functions ................... 27
8.1.3 Commercialization Functions ..................... 27
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8.1.4 Minutes ......................................... 28
8.2 Steering Committee ..................................... 28
8.2.1 General ......................................... 28
8.2.2 Functions ....................................... 28
8.2.3 Minutes ......................................... 29
8.3 General Disagreements .................................. 29
ARTICLE 9. INTELLECTUAL PROPERTY RIGHTS............................... 29
9.1 Ownership .............................................. 29
9.1.1 Ownership and Assignment of Discoveries and
Improvements..................................... 29
9.1.2 Ownership of Trademarks ......................... 30
9.1.3 Cooperation of Employees ........................ 30
9.2 Filing, Prosecution and Maintenance of Patent Rights.... 30
9.2.1 Filing, Prosecution and Maintenance ............. 30
9.2.2 Patent Filing Costs ............................. 31
9.3 Cooperation ............................................ 31
9.4 Notification of Patent Term Restoration ................ 31
9.5 No Other Technology Rights ............................. 31
9.6 Enforcement of Patent Rights; Defense of Infringement
Actions................................................. 32
9.6.1 First Right to Respond .......................... 32
9.6.2 Sharing of Litigation and Settlement Expenses.... 32
9.6.3 Second Right to Respond ......................... 32
ARTICLE 10. CONFIDENTIALITY........................................... 32
10.1 Nondisclosure Obligations .............................. 32
10.2 Terms of this Agreement; Press Releases ................ 33
10.3 Publications ........................................... 33
ARTICLE 11. REPRESENTATIONS AND WARRANTIES............................. 34
11.1 Authorization ........................................... 34
11.2 Intellectual Property Rights ............................ 34
11.3 Warranties .............................................. 34
11.3.1 Genzyme Warranties .............................. 34
11.3.2 GTC Warranties .................................. 35
11.4 Disclaimer of Representations and Warranties............. 35
11.5 Limitation of Liability ................................. 35
ARTICLE 12. INDEMNITY................................................. 35
12.1 ATIII LLC Indemnity Obligations ........................ 35
12.2 Insurance .............................................. 35
ARTICLE 13. TERM AND TERMINATION..................................... 36
13.1 Term ................................................... 36
13.2 Termination ............................................ 36
13.2.1 For Certain Material Breaches .................. 36
13.2.2 For Failure to Make a Milestone Payment ........ 36
13.2.3 For Convenience ................................ 36
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13.2.4. Upon Bankruptcy ................................ 37
13.3. Effects of Termination .................................. 37
13.3.1. For Certain Material Breaches .................. 37
13.3.2. For Failure to Make a Milestone Payment......... 38
13.3.3. For Convenience ................................ 39
13.3.4 Upon Bankruptcy ................................ 40
13.3.5. * .............................................. 41
13.4. Inventory ............................................... 41
13.5. Survival of Rights and Duties ........................... 41
ARTICLE 14. MISCELLANEOUS......................................... 42
14.1. Cooperation ............................................. 42
14.2. Exchange Controls ....................................... 42
14.3. Withholding Taxes ....................................... 42
14.4. IRS Transfer Pricing Adjustments ........................ 42
14.5. Interest on Late Payments ............................... 42
14.6. Force Majeure ........................................... 43
14.7. Assignment .............................................. 43
14.8. Severability ............................................ 43
14.9. Notices ................................................. 43
14.10. Applicable Law........................................... 45
14.11. Arbitration.............................................. 45
14.11.1. General ........................................ 45
14.11.2. Procedure ...................................... 45
14.12. Injunctive Relief ....................................... 46
14.13. Entire Agreement ........................................ 46
14.14. Headings ................................................ 46
14.15. Independent Contractors ................................. 46
14.16. Waiver .................................................. 47
14.17. Counterparts ............................................ 47
*Confidential treatment for indicated portion respectfully requested
(v)
COLLABORATION AGREEMENT
THIS COLLABORATION AGREEMENT dated as of January 1, 1998 (the
"Agreement") is made among Genzyme Corporation, a Massachusetts corporation
having its principal place of business at One Kendall Square, Cambridge,
Massachusetts 02139 ("Genzyme"), Genzyme Transgenics Corporation, a
Massachusetts corporation having its principal place of business at Five
Mountain Road, Framingham, Massachusetts 01701 ("GTC") and ATIII LLC, a
Delaware limited liability company having its principal place of business at
One Kendall Square, Cambridge, Massachusetts 02139 ("ATIII LLC"). Genzyme,
GTC and ATIII LLC are sometimes referred to herein individually as a "Party"
and collectively as the "Parties."
R E C I T A L S
A. GTC is developing recombinant human antithrombin III ("ATIII"),
produced in the milk of transgenic goats. ATIII is a principle inhibitor of
blood coagulation serine proteases, such as thrombin and Factor Xa and
certain other blood components, and assists in the maintenance of homeostatic
balance. Decreased levels of ATIII occur in individuals having a genetic or
an acquired deficiency. Acquired deficiencies can result from obstetrical or
surgical procedures, including without limitation coronary artery bypass
grafting ("CABG") procedures, and disease states, including without
limitation sepsis and septic shock, acute liver failure, disseminated
intravascular coagulation, burns, multiple trauma, organ transplantation and
hemodialysis. GTC is currently developing ATIII for the treatment of ATIII
deficiencies.
B. Genzyme has expertise in the areas of development and marketing of
bio-pharmaceutical products.
C. ATIII LLC has been organized by GTC and Genzyme as the vehicle for a
joint venture between GTC and Genzyme to develop and commercialize the
Collaboration Products (as defined herein) throughout the Territory (as
defined herein).
NOW THEREFORE, in consideration of the premises and of the covenants
herein contained, the Parties mutually agree as follows:
ARTICLE 1. DEFINITIONS
For purposes of this Agreement, the terms defined in this Article shall
have the meanings specified below. Certain other capitalized terms are
defined elsewhere in this Agreement.
1.1. "Affiliate" shall mean any corporation or other entity which
controls, is controlled by, or is under common control with a Party. A
corporation or other entity shall be regarded as in control of another
corporation or entity if it owns or directly or indirectly controls more than
fifty percent (50%) of the voting stock or other ownership interest of the
other corporation or entity, or if it possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of the
corporation or other entity or the
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power to elect or appoint more than fifty percent (50%) of the members of the
governing body of the corporation or other entity.
1.2. "Behring" shall mean Behringwerke Aktiengesellschaft, a subsidiary
of Hoechst Marion Roussel.
1.3. "BLA" shall mean a Biologics License Application filed with the FDA
after completion of human clinical trials to obtain marketing approval for a
Collaboration Product.
1.4. "*" shall mean *, a *.
1.5. "Collaboration Product" shall mean any product comprising tgATIII
together with any process developed for use in the Field by a Party
utilizing, based upon or arising out of the Genzyme Patent Rights, the GTC
Patent Rights, the GTC Licensed ATIII Patent Rights, the Genzyme/GTC Patent
Rights, the Genzyme Technology, the GTC Technology, the Genzyme/GTC
Technology or the Manufacturing Know-How owned or controlled by any Party,
including without limitation any and all improvements, combination products,
delivery systems and dosage forms related thereto.
1.6. "Commercialization Costs" with respect to a Collaboration Product
shall mean the variable costs and fixed costs incurred by ATIII LLC with
respect to work performed by the Parties and their Affiliates and
subcontractors in connection with the performance of the Commercialization
Plan for such Collaboration Product, including without limitation (a) GTC's
Fully Absorbed Cost of Goods for batches of Collaboration Product
manufactured and supplied by GTC in bulk form for use in connection with the
performance of the Commercialization Plan, (b) Genzyme's Fully Absorbed Costs
of Goods incurred in connection with the production of Collaboration Products
in finished form, including without limitation the performance of assay and
purification work, for use in connection with the performance of the
Commercialization Plan and (c) sales and marketing costs related to
performing market research, advertising, producing promotional literature,
sponsoring seminars and symposia, originating sales and providing
reimbursement and other patient support services. For purposes of this
Section 1.6, "variable costs" shall be deemed to be the cost of labor, raw
materials, supplies and other resources directly consumed in the conduct of
the Commercialization Plan and manufacture of Collaboration Product for use
in commercialization activities, as well as royalties payable to Third
Parties. For purposes of Section 1.6, "fixed costs" shall be deemed to be the
cost of facilities, utilities, insurance, equipment depreciation and other
fixed costs directly related to the conduct of the Commercialization Plan and
the manufacture of Collaboration Product for use in commercialization
activities, allocated based upon the proportion of such costs directly
attributable to support of the Commercialization Plan and the manufacture of
Collaboration Product for use in commercialization activities or by such
other method of cost allocation as may be approved by the Steering Committee.
All cost determinations made hereunder shall be made in accordance with GAAP.
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1.7. "Commercialization Plan" shall mean the comprehensive plan for the
commercialization of a Collaboration Product, as more specifically described
in Section 6.1.1 hereof.
1.8. "Date of Execution" shall mean the last date on which the Parties
executed this Agreement, as shown on the signature pages hereto.
1.9. "Development Costs" with respect to a Collaboration Product shall
mean the variable costs and fixed costs incurred by ATIII LLC with respect to
work performed by the Parties and their Affiliates and subcontractors in
connection with the conduct of the Development Plan for such Collaboration
Product, including without limitation (a) direct, out- of-pocket external
costs, including clinical grants, clinical laboratory fees, positive controls
and the cost of studies conducted and services provided by contract research
organizations and individuals, consultants, toxicology contractors, and
manufacturers necessary or useful for the purpose of obtaining Regulatory
Approvals for such Collaboration Product, (b) amounts paid to Genzyme and GTC
by ATIII LLC with respect to research and development and pre-
commercialization sales and marketing efforts as set forth in the Development
Plan for such Collaboration Product, including without limitation the efforts
of Genzyme and GTC to develop a process for the manufacture of such
Collaboration Product and the Fully Absorbed Cost of Goods for batches of
such Collaboration Product manufactured and supplied for use in preclinical
and clinical trials and pre-commercialization activities, (c) costs related
to data management, statistical designs and studies, document preparation and
other expenses associated with the clinical testing program for such
Collaboration Product and (d) costs for preparing, submitting, reviewing or
developing data or information for the purpose of submission of applications
to obtain Regulatory Approvals for such Collaboration Product. For purposes
of this Section 1.9, "variable costs" shall be deemed to be the cost of
labor, raw materials, supplies and other resources directly consumed in the
conduct of the Development Program and the manufacture of the Collaboration
Product for use in preclinical and clinical trials and pre-commercialization
activities. For purposes of this Section 1.9, "fixed costs" shall be deemed
to be the cost of facilities, utilities, insurance, facility and equipment
depreciation and other fixed costs directly related to the conduct of the
Development Program and the manufacture of the Collaboration Product for use
in preclinical and clinical trials and pre-commercialization activities,
allocated based upon the proportion of such costs directly attributable to
support of the Development Program and the manufacture of the Collaboration
Product for use in preclinical and clinical trials and pre-commercialization
activities or by such other method of cost allocation as may be approved by
the Steering Committee. All cost determinations made hereunder shall be made
in accordance with GAAP.
1.10. "Development Plan" shall mean the comprehensive plan and budget
for the development of a Collaboration Product under the Development Program,
as more specifically described in Section 5.1.2 hereof.
1.11. "Development Program" shall mean the preclinical and clinical
development of Collaboration Products, including the preparation and filing
of all applications for Regulatory Approvals for each Collaboration Product.
1.12. "Distribution Margin" with respect to Net Sales of a Collaboration
Product shall mean the amount of the Distributor's Discount plus the amount
by which Genzyme's
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actual selling price exceeds the Estimated Net Selling Price for such
Collaboration Product or, if Genzyme's actual selling price is less than the
Estimated Net Selling Price for such Collaboration Product, minus the amount
of such difference. For purposes of this Section 1.12, "Genzyme's actual
selling price" shall mean Genzyme's gross invoiced sales price billed to
customers reduced to reflect any amounts incurred resulting from any rebates,
chargebacks or refunds subsequently allowed and taken.
1.13. "Distributor's Discount" shall mean the dollar amount per unit of
Collaboration Product fixed by the Steering Committee as a discount from the
Estimated Net Selling Price at which Genzyme purchases such Collaboration
Product from ATIII LLC.
1.14. "Effective Date" shall mean the January 1, 1998.
1.15. "Estimated Fully Absorbed Cost of Goods" with respect to a
Collaboration Product shall mean GTC's Fully Absorbed Cost of Goods estimated
by the Steering Committee for quantities of Collaboration Product to be
purchased by ATIII LLC pursuant to Article 7 hereof. The Estimated Fully
Absorbed Cost of Goods for a Collaboration Product shall be set forth in the
Development Plan and Commercialization Plan for such Collaboration Product.
The Steering Committee may adjust the Estimated Fully Absorbed Cost of Goods
for a Collaboration Product to the extent necessary or appropriate to reflect
changes in market conditions and actual manufacturing experience.
1.16. "Estimated Net Selling Price" with respect to a Collaboration
Product shall mean the price estimated by the Steering Committee at which
such Collaboration Product will be sold by Genzyme to Third Party customers
purchasing such Collaboration Product for resale. The Estimated Net Selling
Price shall be set forth in the Commercialization Plan for such Collaboration
Product. The Steering Committee may adjust the Estimated Net Selling Price
for a Collaboration Product to the extent necessary or appropriate to reflect
changes in market conditions and actual sales experience.
1.17. "Field" shall mean any and all indications for ATIII, including
without limitation diagnosis, treatment or prevention of hereditary and
acquired ATIII deficiencies.
1.18. "FDA" shall mean the United States Food and Drug Administration,
any successor agency, or the regulatory authority of any country other than
the United States with responsibilities comparable to those of the United
States Food and Drug Administration.
1.19. "Fully Absorbed Cost of Goods" with respect to a Collaboration
Product shall mean (a) the variable costs and fixed costs incurred by a Party
associated with the manufacture (inclusive of finishing processes) of batches
of such Collaboration Product or (b) if such Collaboration Product is not
manufactured by the Parties, the transfer price for batches of such
Collaboration Product purchased from Third Party manufacturers. For purposes
of this Section 1.19, "variable costs" shall be deemed to be the cost of
labor, raw materials, supplies and other resources directly consumed in the
manufacture of batches of such Collaboration Product. For purposes of this
Section 1.19, "fixed costs" shall be deemed to be the cost of facilities,
utilities, insurance, facility and equipment depreciation and other fixed
costs directly related to the manufacture of batches of such Collaboration
Product. Fixed costs shall be allocated to such Collaboration Product based
upon the proportion of such costs directly attributable to support of the
manufacturing process for such
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Collaboration Product. If a facility is used to manufacture Collaboration
Products and products for other programs of either Genzyme or GTC (including
without limitation products for use or sale in the SMIG Territory), fixed
costs shall be allocated in proportion to the use of such facility for the
manufacture of Collaboration Products and products for such other programs.
Fully Absorbed Cost of Goods shall exclude all costs otherwise reimbursed
pursuant to this Agreement. In the event that either GTC or Genzyme
subcontracts with the other Party to perform any work on its behalf in
connection with the manufacturing responsibilities assigned to GTC or
Genzyme, respectively, pursuant to Section 7.2.1 hereof, GTC and Genzyme (i)
shall each directly charge ATIII LLC their respective Fully Absorbed Cost of
Goods and (ii) shall not include any part of the other Party's Fully Absorbed
Cost of Goods in the amount so charged to ATIII LLC. Except as otherwise
provided in this Agreement, all cost determinations made hereunder shall be
made in accordance with GAAP.
1.20. "GAAP" shall mean United States generally accepted accounting
principles, consistently applied, except when different accounting principles
are required under the terms of the Operating Agreement, in which case the
accounting principles mandated under the Operating Agreement shall control.
1.21. "Genzyme Patent Rights" shall mean all present Patent Rights owned
or controlled by, or licensed (with the right to sublicense where possible)
to, Genzyme, to the extent that such Patent Rights cover a compound,
composition, biological or other material, product-by-process, method,
apparatus, manufacturing or other process, relating to or useful for the
research, development, manufacture or commercialization of Collaboration
Products for use in the Field, including the Genzyme Patent Rights listed in
Schedule 1.21 hereto.
1.22. "Genzyme Technology" shall mean Technology owned or controlled by,
or licensed (with the right to sublicense) to, Genzyme relating to or useful
for the research, development, manufacture or commercialization of
Collaboration Products for use in the Field.
1.23. "Genzyme/GTC Patent Rights" shall mean the Patent Rights that
claim Joint Inventions (as such term is defined in Section 9.1.1 hereof) that
are jointly discovered, made or conceived during and in connection with the
Program to the extent that such Patent Rights cover a compound, composition,
biological or other material, product-by-process, method, apparatus,
manufacturing or other process, or transgenic technology relating to or
useful for the research, development, manufacture or commercialization of
Collaboration Products for use in the Field.
1.24. "Genzyme/GTC Technology" shall mean all Technology discovered,
made or conceived during and in connection with the Program, and future
Technology owned or controlled by, or licensed (with the right to sublicense
where possible) to, either Genzyme or GTC relating to or useful for the
research, development, manufacture or commercialization of Collaboration
Products for use in the Field.
1.25. "GTC Licensed ATIII Patent Rights" shall mean all present and
future Patent Rights in the Territory sublicensed (whether exclusively or
nonexclusively) by GTC from Behring pursuant to the Agreement dated September
29, 1990 by and between Behring, SMIG
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and GTC (as the successor to Genzyme's interest therein) (the "Original ATIII
Agreement"). Schedule 1.25 hereto lists the GTC Licensed ATIII Patent Rights
as of the Date of Execution.
1.26. "GTC Patent Rights" shall mean, except as to GTC Licensed ATIII
Patent Rights, all present Patent Rights owned or controlled by, or licensed
(with the right to sublicense where possible) to, GTC, to the extent that
such Patent Rights cover a compound, composition, biological or other
material, product-by-process, method, apparatus, manufacturing or other
process, or transgenic production technology relating to or useful for the
research, development, manufacture or commercialization of Collaboration
Products for use in the Field, including the GTC Patent Rights listed in
Schedule 1.26 hereto.
1.27. "GTC Technology" shall mean all present Technology owned or
controlled by, or licensed (with the right to sublicense where possible) to,
GTC relating to or useful for the research, development, manufacture or
commercialization of Collaboration Products for use in the Field.
1.28. "Major Market Countries" shall mean *. The Steering Committee may
from time to time designate additional countries as Major Market Countries or
remove countries from the list of designated Major Market Countries with
respect to a Collaboration Product to the extent necessary to reflect changes
in market conditions. Any such additions or deletions shall be set forth in
the Commercialization Plan for such Collaboration Product.
1.29. "Manufacturer's Profit" shall mean the dollar amount in excess of
GTC's Estimated Fully Absorbed Costs of Goods Sold included in the price at
which ATIII LLC purchases quantities of Collaboration Products in bulk form
from GTC. The Manufacturer's Profit shall only be payable in connection with
the purchase of Collaboration Products ultimately intended for commercial
sale.
1.30. "Manufacturing Know-How" shall mean all information, techniques,
inventions, discoveries, improvements, practices, methods, knowledge, skill,
experience and other technology, whether or not patentable or copyrightable,
and any patent applications, patents or copyrights based thereon, relating to
or necessary or useful for the production, purification, packaging, storage
and transportation of Collaboration Products, including without limitation
specifications, acceptance criteria, manufacturing batch records, standard
operating procedures, engineering plans, installation, operation and process
qualification protocols for equipment, validation records, master files
submitted to the FDA, process validation reports, environmental monitoring
processes, test data including pharmacological, toxicological and clinical
test data, cost data and employee training materials.
1.31. "Manufacturing Margin" shall mean the price at which ATIII LLC
purchases quantities of a Collaboration Product in bulk form from GTC less
GTC's actual Fully Absorbed Cost of Goods for such quantities.
1.32. "Member" shall have the meaning set forth in the Operating
Agreement.
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1.33. "Net Profit" of ATIII LLC for any period shall be equal to (a) the
sum during such period of all revenues recognized and recorded by ATIII LLC
during such period, including without limitation (i) revenues from Net Sales
of all Collaboration Products sold directly by ATIII LLC and (ii) all
revenues received by ATIII LLC from Third Parties as consideration for
sublicensing the manufacture, use, distribution or sale of Collaboration
Products, less (b) all expenses incurred by ATIII LLC during such period,
including without limitation expenses incurred in respect of Development
Costs, New Facility Costs and Commercialization Costs and facility and
equipment depreciation costs. All determinations made hereunder shall be made
in accordance with GAAP.
1.34. "Net Sales" with respect to a Collaboration Product shall mean the
gross invoiced sales price of such Collaboration Product billed to (a)
independent Third Party customers, including without limitation distributors,
in bona fide arms-length transactions and (b) Genzyme and its Affiliates,
less, for purposes only of calculating the payments set forth in Article 13
hereof, to the extent such amounts are included in the gross invoiced sales
price, actual: (i) freight and insurance costs incurred in transporting such
Collaboration Product to such customers; (ii) quantity, cash and other trade
discounts actually allowed and taken; (iii) customs duties, surcharges and
taxes and other governmental charges incurred in connection with the
exportation or importation of such Collaboration Product in final form; (iv)
bad debt expense; (v) amounts repaid or credited by reason of rejections (due
to Collaboration Product spoilage, damage, expiration of useful life or
otherwise) or retroactive price reductions; (vi) amounts incurred resulting
from governmental mandated rebate or discount programs; and (vii) Third Party
rebates and chargebacks actually allowed and taken, including without
limitation hospital buying group chargebacks, hospital buying group/group
purchasing organization administration fees or managed care organization
rebates. The Steering Committee shall determine how any transfers of
Collaboration Products by ATIII LLC to Genzyme or its Affiliates for use as
samples shall be treated for purposes of this Section 1.34, and ATIII LLC
shall make such transfers in accordance with such determination. The amount
of Net Sales for any period shall be determined on the basis of sales
recorded in such period in accordance with GAAP.
1.35. "New Facility" shall mean any new manufacturing facility (or
portion thereof) to be constructed after the Date of Execution to be used to
manufacture (inclusive of finishing processes) Collaboration Products.
1.36. "New Facility Costs" shall mean the variable costs and fixed costs
incurred by ATIII LLC with respect to (a) the design, construction,
validation and operation of the New Facility, including without limitation
(i) costs for preparing, submitting, reviewing or developing data or
information for the purpose of submission of applications to obtain
Regulatory Approval for the New Facility and (ii) the scale-up of the
manufacturing process (inclusive of finishing processes) for Collaboration
Products to be manufactured in the New Facility, and (b) the manufacture of
Collaboration Products in the New Facility. For purposes of this Section
1.36, 'variable costs' shall be deemed to be the cost of labor, raw
materials, supplies and other resources directly consumed in the design,
construction, validation and operation of the New Facility and in the
manufacture of Collaboration Products in the New Facility. For purposes of
this Section 1.36, "fixed costs" shall be deemed to be the cost of
facilities, utilities, insurance, equipment depreciation and other fixed
costs related to the operation of the New Facility and the manufacture of
Collaboration Products in the New Facility. If the New Facility is used to
manufacture Collaboration Products and products for
7
other programs of either Genzyme or GTC (including without limitation
products for use or sale in the SMIG Territory), variable costs and fixed
costs shall be allocated in proportion to the use of the New Facility for the
manufacture of Collaboration Products and products for such other programs.
New Facility Costs shall exclude all costs otherwise reimbursed pursuant to
this Agreement. Except as otherwise provided in this Agreement, all cost
determinations made hereunder shall be made in accordance with GAAP.
1.37. "Operating Agreement" shall mean the Amended and Restated
Operating Agreement of ATIII LLC of even date herewith by and between GTC and
Genzyme.
1.38. "Patent Rights" shall mean patents, patent applications,
certificates of invention, or applications for certificates of invention,
together with any extensions, registrations, confirmations, reissues,
divisions, continuations or continuations-in-part, re-examinations or
renewals thereof.
1.39. "Percentage Interest" shall have the meaning set forth in the
Operating Agreement.
1.40. "Program" shall mean the collaboration among ATIII LLC, GTC and
Genzyme described in this Agreement.
1.41. "Program Costs" shall mean all Program-related costs, including
without limitation Development Costs, New Facility Costs and
Commercialization Costs, in each case as such costs are incurred or accrued
by ATIII LLC on or after the Effective Date.
1.42. "Program Management Team" shall mean the joint team composed of
representatives of Genzyme and GTC described in Section 8.1.1 hereof.
1.43. "Purchase Agreement" shall mean the Purchase Agreement of even
date herewith by and between GTC and Genzyme.
1.44. "Regulatory Approvals" shall mean all approvals from regulatory
authorities in any country required lawfully to market Collaboration Products
in any such country, including without limitation any BLA, any establishment
license application filed with the FDA to obtain approval of the facilities
and equipment to be used to manufacture a Collaboration Product, and any
product pricing approvals where applicable.
1.45. "Regulatory Scheme" shall mean the United States Public Health
Service Act and the regulations, interpretations and guidelines promulgated
thereunder by the FDA or the regulatory scheme applicable to the
Collaboration Products in any country other than the United States, as such
statutes, regulations, interpretations and guidelines or regulatory schemes
may be amended from time to time.
1.46. "SMIG" shall mean SMI Genzyme Limited, a Japanese corporation and
a joint venture between Genzyme and Sumitomo Metal Industries, Ltd.
1.47. "SMIG Territory" shall mean the territory in which SMIG has an
exclusive right and license with respect to ATIII pursuant to that certain
Research and Development Agreement dated September 11, 1990 by and between
SMIG and GTC (as the successor to
8
Genzyme), as amended by that certain Amendment Agreement dated March 15, 1994
by and between SMIG and GTC and that certain letter agreement dated August 4,
1994 and that certain Agreement dated as of January 31, 1997 (as amended, the
"SMIG Research Agreement"), which territory consists of: Japan, China,
Taiwan, Thailand, India, Sri Lanka, Indonesia, Philippines, Vietnam,
Singapore, Malaysia, Hong Kong, Myanmar (Burma), Pakistan, Bangladesh, South
Korea, Laos, Cambodia and their respective succession states.
1.48. "Specifications" with respect to a Collaboration Product shall
mean the written specifications for such Collaboration Product determined by
the Program Management Team and approved by the Steering Committee; provided
that such specifications shall at all times comply with the relevant
Regulatory Scheme in the country of sale and in the country of use. The
Specifications may be amended from time to time by the Program Management
Team provided that such amendments are approved by the Steering Committee or
the written agreement of the Parties, as the case may be. Copies of such
Specifications shall be maintained by both GTC and Genzyme and shall become a
part of this Agreement as if incorporated herein.
1.49. "Steering Committee" shall mean the governing body of ATIII LLC
composed of representatives of GTC and Genzyme appointed as described in
Section 8.2.1 hereof.
1.50. "Technology" shall mean inventions, trade secrets, copyrights,
know-how, data and other intellectual property of any kind (including without
limitation any proprietary biological or other materials, compounds or
reagents, and transgenic production technology but not including Patent
Rights).
1.51. "Territory" shall mean the world excluding the SMIG Territory.
1.52. "Third Party" shall mean any entity other than ATIII LLC, GTC or
Genzyme and their respective Affiliates.
1.53. "Transgenic Animal" shall mean a non-human animal, or an egg,
sperm or embryo of such animal, which bears in its germline a foreign gene
derived from another animal species.
1.54. "Transgenic ATIII", which may be abbreviated as "tgATIII", shall
mean recombinant human ATIII produced by expression of a recombinant ATIII
gene or ATIII cDNA or combination thereof in the milk of a Transgenic Animal
bearing such gene, cDNA or combination in its genome.
ARTICLE 2. SCOPE AND STRUCTURE OF THE COLLABORATION
2.1. General. GTC and Genzyme formed ATIII LLC as the vehicle for a joint
venture between GTC and Genzyme to develop and commercialize Collaboration
Products in and throughout the Territory. GTC and Genzyme are the sole initial
members of ATIII LLC and own * percent (*%) and * percent (*%) interests in
ATIII LLC, respectively. In
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accordance with the terms of the Purchase Agreement to be executed
immediately hereafter, GTC will sell and assign to Genzyme a * percent (*%)
interest in ATIII LLC and consequently GTC and Genzyme will each own a fifty
percent (50%) interest in ATIII LLC (subject to adjustment pursuant to
Section 4.1.4 hereof and pursuant to the Operating Agreement). ATIII LLC will
undertake the Development Program for each Collaboration Product, with each
of the Parties assuming responsibility for those portions of the Development
Program allocated to it under this Agreement. Upon completion of the
Development Program, GTC will manufacture bulk quantities of the
Collaboration Products on behalf of ATIII LLC, Genzyme will provide finishing
processing of the Collaboration Products for commercial sale on behalf of
ATIII LLC and Genzyme will market and sell the Collaboration Products in the
Territory as exclusive distributor for ATIII LLC *, all on the terms and
conditions set forth in this Agreement or such other terms and conditions as
the Parties may agree upon.
2.2. Exclusive Relationship. During the term of this Agreement, neither
ATIII LLC, Genzyme nor GTC, nor any of their Affiliates shall independently,
or with a Third Party, conduct research or development activities regarding,
or engage in the manufacture, marketing, sale or distribution of, products
comprising tgATIII in the Field and in the Territory other than as part of
the Program; *. In addition, during the two-year period following termination
of this Agreement, neither (a) the breaching Party and its Affiliates in the
case of termination pursuant to Section 13.2.1 hereof, (b) Genzyme or its
Affiliates in the case of termination pursuant to Section 13.2.2 hereof, (c)
the terminating Party and its Affiliates in the case of termination pursuant
to Section 13.2.3 hereof or (d) the non- terminating Party and its Affiliates
in the case of termination pursuant to Section 13.2.4 hereof shall
independently, or with a Third Party, conduct research regarding, or engage
in the manufacture, marketing, sale or distribution of, products comprising
tgATIII in the Field and in the Territory; provided, however, that in the
event that this Agreement is terminated pursuant to Section 13.2.3 hereof and
the non-terminating Party does not exercise its option under Section 13.3.3
hereof, then the restrictions set forth in this sentence shall not apply.
Notwithstanding the foregoing, nothing herein is intended to restrict GTC or
Genzyme or their respective Affiliates from conducting research or
development activities regarding, or engaging in the manufacture, marketing,
sale or distribution of, products that have substantially different
biomedical pathways and are targeted to the same indications included
hereunder.
2.3. *. *, Genzyme, * recombinant human ATIII. * As soon as practicable
after the Date of Execution, Genzyme and GTC together, on behalf and in the
name of ATIII LLC, shall use their respective commercially reasonable and
diligent efforts (as such term is defined in Section 5.1.1 hereof) to *,
including without limitation, * must be approved in advance by the Steering
Committee. In the event that:
(a) (i) * or (ii) *, then *; or
(b) * and *, then *.
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2.4. SMIG Agreement. Genzyme and ATIII LLC each hereby acknowledge that
SMIG has exclusive rights to use, manufacture and sell tgATIII and products
comprising tgATIII in the SMIG Territory pursuant to the SMIG Research
Agreement. The Parties hereby agree that if any equipment, manufacturing
process and/or facility owned or leased by ATIII LLC is used for the
manufacture of products for use or sale by SMIG, (i) GTC and/or SMIG shall be
solely responsible for the costs of the manufacturing of such products, (ii)
at all times the manufacture of Collaboration Products in accordance with
Article 7 hereof shall be given priority with respect to the use of such
property and (iii) ATIII LLC shall be entitled to receive commercially
reasonable compensation for such use from GTC and/or SMIG.
The Parties acknowledge that, pursuant to Section 8.1 of the SMIG
Research Agreement, GTC will be entitled to receive and retain for its own
account milestone payments and royalty payments from SMIG with respect to
sales of tgATIII, products comprising tgATIII and Transgenic Animals and that
pursuant to Section 9.1 of the SMIG Research Agreement, SMIG will be entitled
to receive royalty payments with respect to sales of tgATIII, products
comprising tgATIII and Transgenic Animals a female of which secretes ATIII in
its milk in North and South America and in the Non Exclusive Territory (as
defined in the SMIG Research Agreement). The Parties hereby agree that such
royalties payable to SMIG shall be paid as follows: (a) *, and (b) * GTC
shall deliver to Genzyme quarterly reports setting forth (i) the aggregate
amount of all royalty and milestone payments received by GTC from SMIG after
the Date of Execution relating to tgATIII, products comprising tgATIII and
Transgenic Animals (excluding milestone payments for milestone events
achieved prior to the Date of Execution),*. The Parties
acknowledge that *. Such reports shall be subject to Genzyme's audit rights
set forth in Section 4.5 hereof. GTC shall not enter into any amendment or
modification of the SMIG Research Agreement relating to tgATIII, products
comprising tgATIII and Transgenic Animals without the prior written consent
of the Steering Committee after the Date of Execution.
ARTICLE 3. GRANTS AND RESERVATIONS OF RIGHTS
3.1. Licenses of Rights to ATIII LLC.
3.1.1. Grants from GTC.
(a) Exclusive Grant. Except as otherwise expressly provided herein, GTC
hereby grants to ATIII LLC an exclusive, irrevocable (during the term of this
Agreement), royalty-free right and sublicense, with the right to grant further
sublicenses, under the GTC Licensed ATIII Patent Rights (subject to Section 2.3
above), the Genzyme/GTC Patent Rights and the Genzyme/GTC Technology and any
associated Technology and Manufacturing Know- How owned or controlled by GTC to
develop, make, have made, use, offer for sale, sell, have sold, import and
export Collaboration Products for use in the Field and in the Territory.
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(b) Non-Exclusive Grant. Except as otherwise expressly provided
herein, GTC hereby grants to ATIII LLC a non-exclusive, irrevocable (during
the term of this Agreement), royalty-free right and license, with the right
to grant sublicenses, under the GTC Patent Rights and GTC Technology to
develop, make, have made, use, offer for sale, sell, have sold, import and
export Collaboration Products for use in the Field and in the Territory.
3.1.2. Grants from Genzyme.
(a) Exclusive Grant. Except as otherwise expressly provided herein,
Genzyme hereby grants to ATIII LLC an exclusive, irrevocable (during the term of
this Agreement), royalty-free right and sublicense, with the right to grant
further sublicenses, under the Genzyme/GTC Patent Rights and the Genzyme/GTC
Technology and any associated Technology and Manufacturing Know-How owned or
controlled by Genzyme to develop, make, have made, use, offer for sale, sell,
have sold, import and export Collaboration Products for use in the Field and in
the Territory.
(b) Non-Exclusive Grant. Except as otherwise expressly provided herein,
Genzyme hereby grants to ATIII LLC a non-exclusive, irrevocable (during the term
of this Agreement), royalty-free right and license, with the right to grant
sublicenses, under the Genzyme Patent Rights, Genzyme Technology and the
Manufacturing Know-How owned or controlled by Genzyme, to develop, make, have
made, use, offer for sale, sell, have sold, import and export Collaboration
Products for use in the Field and in the Territory.
3.1.3 ATIII LLC Undertakings; Sublicenses. In consideration of the
licenses granted under this Section 3.1, ATIII LLC hereby undertakes to pay all
royalties, sublicense fees and other costs or expenses payable to Third Parties
associated with the acquisition or use of such licenses by ATIII LLC. Schedule
3.1.3 hereto lists all of such obligations as of the Date of Execution. Except
as provided in Section 3.2 below, all sublicenses granted by ATIII LLC shall be
subject to prior approval by the Steering Committee. The Parties hereby
acknowledge that ATIII LLC may be required to *.
3.1.4. Rights of ATIII LLC to Patent Rights or Technology Developed
Outside the Program. In the event that either GTC or Genzyme develops, acquires
or otherwise comes to own or control or receives a license with respect to
Patent Rights, Technology or Manufacturing Know-How after the Date of Execution
other than in connection with the Program and such Patent Rights, Technology or
Manufacturing Know-How are useful in the Field and licensable by GTC or Genzyme,
as the case may be, the Party owning or controlling such Patent Rights,
Technology or Manufacturing Know-How shall grant to ATIII LLC an option
exercisable at the discretion of the Steering Committee to obtain an exclusive,
irrevocable (during the term of this Agreement) right and license, with the
right to grant sublicenses, to such Patent Rights, Technology or Manufacturing
Know-How limited to use in the Field and in the Territory to the extent
necessary or appropriate to enable ATIII LLC to develop, make, have made, use,
offer for sale, sell, have sold, import and export Collaboration Products, in
each case subject only to ATIII LLC's undertaking to pay (a) a commercially
reasonable portion of all costs incurred by GTC or Genzyme, as the case may be,
to acquire or develop such Patent Rights, Technology or Manufacturing Know-How,
(b) a commercially
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12
reasonable portion of any and all development costs incurred by GTC or
Genzyme, as the case may be, since the date such Party acquired or developed
such Patent Rights, Technology or Manufacturing Know-How and (c) all
royalties, sublicense fees and other costs or expenses payable to Third
Parties associated with the acquisition or use of such license by ATIII LLC;
provided, however, that if GTC or Genzyme, as the case may be, does not own
or have exclusive rights to such Patent Rights, Technology or Manufacturing
Know-How, the license subject to ATIII LLC's option hereunder shall be for
the same level of exclusivity as the rights held by GTC or Genzyme, as the
case may be, with respect to such Patent Rights, Technology or Manufacturing
Know-How.
3.2. Sublicenses of Rights from ATIII LLC to GTC and Genzyme. ATIII LLC
hereby grants to each of GTC and Genzyme a non-exclusive, irrevocable (during
the term of this Agreement), royalty-free right and sublicense under the Patent
Rights, Technology and Manufacturing Know-How licenses granted to it pursuant to
Section 3.1 solely to the extent required to permit such Party to perform its
duties under this Agreement. ATIII LLC also hereby grants Genzyme a
non-exclusive, irrevocable (during the term of this Agreement), royalty-free
right and license to use any and all present and future trademarks owned or
licensed (with the right to sublicense) to ATIII LLC in connection with the
commercialization of Collaboration Products in the Territory to the extent
required to permit Genzyme to perform its duties under this Agreement.
3.3. Reservation of Rights.
3.3.1. Reservation by GTC. Notwithstanding the license grants set forth
in Section 3.1, GTC at all times reserves the rights under the GTC Patent
Rights, the GTC Technology, the Genzyme/GTC Patent Rights, the Genzyme/GTC
Technology and the Manufacturing Know-How owned or controlled by GTC (a) to
make, have made and use Collaboration Products for research and development
purposes only, (b) to develop, make, have made, use, offer for sale, sell, have
sold, import and export (i) products outside the Field and/or outside the
Territory and (ii) products other than products comprising ATIII and (c) to
grant licenses to Third Parties for the foregoing purposes.
3.3.2. Reservation by Genzyme. Notwithstanding the license grants set
forth in Section 3.1, Genzyme at all times reserves the rights under the Genzyme
Patent Rights, the Genzyme Technology, the Genzyme/GTC Patent Rights, the
Genzyme/GTC Technology and Manufacturing Know-How owned or controlled by Genzyme
(a) to make, have made and use Collaboration Products for research and
development purposes only, (b) to develop, make, have made, use, offer for sale,
sell, have sold, import and export (i) products outside the Field and/or outside
the Territory and (ii) products other than products comprising ATIII and (c) to
grant licenses to Third Parties for the foregoing purposes.
ARTICLE 4. PROGRAM FUNDING; LLC INTEREST
4.1. Program Funding Commitments. Each of Genzyme and GTC hereby undertakes
to make capital contributions to ATIII LLC as follows:
4.1.1. 1998 Funding. For the 1998 calendar year, (a) Genzyme shall make
capital contributions to ATIII LLC sufficient to pay all Program Costs other
than New
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Facility Costs for 1998 until such time as (i) the aggregate amount of the
capital contributions paid by Genzyme for the 1997 and 1998 calendar years
(including all amounts paid by Genzyme to GTC during 1997 pursuant to Section
1.10 of the Convertible Debt Agreement) equals (ii) seventy percent (70%) of the
total Program Costs other than New Facility Costs (incurred and/or budgeted) for
the 1997 and 1998 calendar years (including without limitation all costs
incurred by GTC and Genzyme in 1997 in connection with the research, development
and manufacture of tgATIII)(the "Genzyme 1997/1998 Amount"), and (b) GTC shall
make capital contributions to ATIII LLC sufficient to pay all Program Costs
other than New Facility Costs for 1998 after such time as the Genzyme 1997/1998
Amount has been paid.
4.1.2. Funding After 1998. Beginning with the 1999 calendar year, (a)
Genzyme shall make capital contributions to ATIII LLC sufficient to pay (i)
seventy percent (70%) of all Program Costs other than New Facility Costs until
such time as the aggregate capital contributions paid by Genzyme pursuant to
this Section 4.1 (including all amounts paid by Genzyme to GTC during 1997
pursuant to Section 1.10 of the Convertible Debt Agreement) equals thirty three
million dollars ($33,000,000) (the "Genzyme 70% Funding Commitment") and (ii)
fifty percent (50%) of all Program Costs other than New Facility Costs
thereafter and (b) GTC shall make capital contributions to ATIII LLC sufficient
to pay (i) thirty percent (30%) of all Program Costs other than New Facility
Costs until the Genzyme 70% Funding Commitment has been satisfied and (ii) fifty
percent (50%) of all Program Costs other than New Facility Costs thereafter.
4.1.3. New Facility Costs Genzyme and GTC shall each also make capital
contributions to ATIII LLC sufficient to pay fifty percent (50%) of all New
Facility Costs to be incurred on or after the Effective Date.
4.1.4. Adjustment to Percentage Interest and Funding Commitment. In the
event that either GTC or Genzyme fails to make a capital contribution pursuant
to this Section 4.1 and Section 4.2 below, and the other Party does not elect to
terminate this Agreement pursuant to Section 13.2.1 hereof, then the Percentage
Interests in ATIII LLC and the future funding responsibility of the Members
shall be adjusted as provided in Section 4.1(b) of the Operating Agreement.
4.2. Program Funding Capital Contributions.
4.2.1. Initial Capital Contributions. No later than January 5, 1998,
GTC and Genzyme shall each make a capital contribution to ATIII LLC in an amount
equal to their respective capital contribution obligations pursuant to Section
4.1.1 and 4.1.3 above with respect to Program Costs budgeted to be incurred from
the Effective Date through and including January 31, 1998.
4.2.2. Monthly Capital Contributions. With respect to each calendar
month after December 1997, Genzyme and GTC shall each make capital contributions
to ATIII LLC, monthly in advance, not later than the fifteenth (15th) day of the
prior calendar month, in an aggregate amount equal to one-third of the Program
Costs budgeted to be incurred by ATIII LLC in any then-current Development Plan
or Commercialization Plan for the calendar quarter in which such calendar month
occurs, allocated between such Parties in accordance with the funding
responsibility assumed by Genzyme and GTC pursuant to Section 4.1 above. Upon
receipt of each such capital contribution from Genzyme or GTC, as the case may
be,
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ATIII LLC shall promptly pay the Parties that portion of the budgeted Program
Costs to which they are respectively entitled.
4.2.3. Quarterly Statements; Quarterly Reconciliation. Within twenty
(20) days after the end of each of the first three (3) calendar quarters of
each year and within fifty (50) days after the end of each calendar year,
each of GTC and Genzyme shall provide ATIII LLC with a detailed itemization
of its Program Costs actually incurred during the previous quarter. Each of
GTC and Genzyme shall provide the other Party with estimates of such costs
upon the reasonable request of the other Party prior to the dates such
statements are due. Within thirty (30) days following receipt of the
quarterly statement of actual Program Costs provided by each of GTC and
Genzyme, GTC and Genzyme shall each make an additional capital contribution
to ATIII LLC in the amount of any actual Program Costs shown thereon and not
yet paid for which such Party has assumed funding responsibility pursuant to
Section 4.1 above but only to the extent that such amount, together with all
prior capital contributions to date during such year, does not exceed one
hundred five percent (105%) of the total Program Costs budgeted year-to-date
through the end of the quarter to which such statement relates (except to the
extent such excess is approved by the Steering Committee pursuant to Section
5.1.3 hereof). If the aggregate amount stated to be due from ATIII LLC in
such quarterly statements for actual Program Costs is less than the amount
already contributed by the Parties to the capital of ATIII LLC with respect
to budgeted Program Costs for such calendar quarter, such excess shall be
credited pro rata against the next successive monthly capital contribution
due from Genzyme or GTC hereunder.
4.3. Distributions. Distributions shall be made annually to each Member
in amounts determined in accordance with the Operating Agreement. Amounts
available for distribution shall be calculated for each calendar quarter
after the date of the first sale of a Collaboration Product following
Regulatory Approval of such Collaboration Product and shall be reported to
each of GTC and Genzyme within ninety (90) days following the end of each
such quarter. All distributions to the Parties will be accompanied by a
report setting forth the basis for such distribution. Such reports shall be
subject to audit rights as set forth in Section 4.5 below, mutatis mutandis.
4.4. Sale and Purchase of LLC Interest. Immediately after the execution
of this Agreement and in accordance with the terms and conditions of the
Purchase Agreement, GTC shall sell, assign and transfer to Genzyme, and
Genzyme shall purchase from GTC, a * percent (*%) interest in ATIII LLC
(subject to adjustment pursuant to Section 4.1.4 hereof and pursuant to the
Operating Agreement) for an aggregate amount of * dollars ($*) payable as set
forth below:
(a) Genzyme shall pay to GTC an amount of ten dollars ($10) upon
execution of the Purchase Agreement;
(b) Genzyme shall pay to GTC an amount of * dollars ($*) after *; and
(c) Genzyme shall pay to GTC an amount of * dollars ($*) on *.
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Each of the aforementioned payments described in clauses (b) and (c) above shall
be made in United States dollars by certified or bank check or by wire transfer
within thirty (30) days following the occurrence and confirmation of each event.
4.5. Books of Account; Audit. ATIII LLC shall keep and maintain proper and
complete books of account. GTC shall initially keep and maintain such books on
behalf of ATIII LLC for the 1998 calendar year. No later than October 31st of
each year, the Steering Committee shall select either Genzyme or GTC to keep and
maintain such books on behalf of ATIII LLC for the subsequent calendar year
(beginning as of January 1st of such year). In the event that either GTC or
Genzyme reasonably deems the Program to be material to GTC or Genzyme, as the
case may be, for financial accounting purposes, then, upon such Party's request,
audited financial statements of ATIII LLC shall be prepared by an independent
accounting firm to be selected by the Steering Committee. Each of GTC and
Genzyme shall keep and maintain proper and complete records and books of account
documenting all Program Costs incurred by it. Each of ATIII LLC, GTC and Genzyme
shall permit independent accountants retained by the other Parties to have
access to its records and books for the sole purpose of determining the
appropriateness of Program Costs charged by the non- auditing Party hereunder.
Such examination shall be conducted during regular business hours and upon
reasonable notice, at the auditing Party's own expense and no more than once in
each calendar year during the term of this Agreement and once during the three
(3) calendar years following the termination hereof. If such examination reveals
that such Program Costs have been misstated, any adjustment shall be promptly
refunded or paid, as appropriate. The auditing Party shall pay the fees and
expenses of the accountant engaged to perform the audit, unless such audit
reveals an overcharge of five percent (5%) or more for the period examined, in
which case the Party who received such overpayment shall pay all reasonable
costs and expenses incurred by the auditing Party in the course of making such
determination, including the fees and expenses of the accountant.
ARTICLE 5. THE DEVELOPMENT PROGRAM
5.1. Conduct of the Development Program.
5.1.1. General. The Parties each agree to collaborate diligently in the
development of Collaboration Products in the Field and to use commercially
reasonable and diligent efforts to develop, obtain Regulatory Approvals for and
bring to market Collaboration Products in the Field and in the Territory as soon
as practicable, all in accordance with the Development Plan and the
Commercialization Plan for such Collaboration Products. The Parties agree to
execute and substantially perform and to cooperate with each other in carrying
out the Development Plan and the Commercialization Plan for each Collaboration
Product. Neither GTC nor Genzyme shall be required to undertake activities in
furtherance of the Development Plan or Commercialization Plan in the absence of
funding from ATIII LLC pursuant to the provisions of this Agreement. As used in
this Agreement, the term "commercially reasonable and diligent efforts" will
mean that level of effort which, consistent with the exercise of prudent
scientific and business judgment, is applied by the Party in question to its
other therapeutic products at a similar stage of development and with similar
commercial potential.
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5.1.2. Development Plan. The Development Program shall be conducted
by the Parties for ATIII LLC under a Development Plan which shall describe
the proposed overall program of development for each Collaboration Product,
including preclinical studies, toxicology, formulation, clinical trials and
regulatory plans and other key elements necessary to obtain Regulatory
Approvals for such Collaboration Product. Pursuant to the Development Plan,
development work may be subcontracted to Genzyme and GTC, at fully absorbed
costs determined by accepted accounting principals. The respective charges to
ATIII LLC shall be invoiced following completion of the work, and shall be
payable by ATIII LLC within a commercially reasonable time thereafter (but in
no event later than forty-five (45) days of the date of invoice therefor).
The Development Plan shall include a summary of estimated Development Costs
expected during the development process through obtaining such Regulatory
Approvals and a detailed description of and budget for all development
activities proposed for each calendar year for each Collaboration Product.
Until the initial Commercialization Plan is submitted in accordance with
Section 6.1.2 below, the Development Plan shall also include a summary of
estimated New Facility Costs expected during the period through obtaining
Regulatory Approval for the New Facility and a detailed description of and
budget for all activities related to the design, construction, validation and
operation of the New Facility proposed for the calendar year to which the
Development Plan relates.
5.1.3. Initial and Updated Development Plan. A preliminary initial
Development Plan for the period beginning on the Effective Date and ending on
December 31, 1998 has been prepared by GTC. The Program Management Team shall
submit a definitive initial Development Plan for the period beginning on the
Effective Date and ending on December 31, 1998 to the Steering Committee for
review and approval not later than thirty (30) days after the Effective Date.
Upon such approval, the definitive initial Development Plan shall be signed
by an authorized representative of each of Genzyme and GTC. The Development
Plan shall be updated annually by the Program Management Team and submitted
to the Steering Committee for review and approval not later than sixty (60)
days prior to January 1 of each year during the Development Program. Each
such updated Development Plan shall include (a) an overall development plan
for each Collaboration Product which sets forth all major development tasks
remaining to be accomplished prior to submission of filings for Regulatory
Approvals, (b) a detailed description and budget for the development and
pre-commercialization activities proposed for the forthcoming calendar year
and (c) until the initial Commercialization Plan is submitted in accordance
with Section 6.1.2 below, (i) an overall plan which sets forth all major
tasks remaining to be accomplished prior to submission of filings for
Regulatory Approval of the New Facility and (ii) a detailed description of
and budget for all activities related to the construction, validation and
operation of the New Facility proposed for the calendar year to which the
Development Plan relates, in each case including estimated time lines to
accomplish such major tasks or detailed activities. The Project Management
Team shall be primarily responsible for preparing the annual updates to the
Development Plan and, in connection with the preparation of such updates,
shall consult with Genzyme and GTC regarding the identification, timing and
execution of and budget for the major tasks and detailed activities required
to perform the updated Development Plan. Each such updated Development Plan
approved by the Steering Committee shall be signed by an authorized
representative of each of GTC and Genzyme. The members of the Program
Management Team shall actively consult with one another throughout the term
of the Development Plan so as to adjust the specific work performed under the
Development Plan to conform to evolving developments in technology and the
results of the development work
17
performed. While minor adjustments to the Development Plan may be made from time
to time upon approval of the Program Management Team, significant changes in the
scope or direction of the work and any changes in funding exceeding * percent
(*%) of the total amount budgeted in any calendar year for the Development
Program must be approved by the Steering Committee, in the absence of which
approval the most recently approved Development Plan shall remain in effect. GTC
and Genzyme shall each submit reports to the Program Management Team no later
than the tenth (10th) business day of each calendar month stating such Party's
estimate of the amount by which Development Costs incurred by such Party during
the preceding calendar month exceeded the amount budgeted for the work
undertaken by such Party for such month, if any.
5.1.4. Execution and Performance. The Development Program shall
allocate among the Parties responsibility for each of the activities described
therein. The Parties shall use commercially reasonable and diligent efforts to
conduct the activities described in the Development Plan. The Development Plan
shall be supervised by the Program Management Team. The Program Management Team
will coordinate preclinical and clinical testing of the Collaboration Products
and work with designated individuals at GTC and Genzyme in the preparation of
Regulatory Approval filings for the Collaboration Products and for the New
Facility.
5.1.5. Attendance at Regulatory Meetings. Each Party shall provide the
others with prior notice of all meetings between representatives of the
notifying Party and regulatory authorities regarding any Collaboration Product.
Except as otherwise provided herein, the Party receiving such notice shall have
the right to have representatives present at all such meetings.
5.2. Development Information.
5.2.1. Reports and Information Exchange. ATIII LLC shall own all
clinical trial data accumulated from all clinical trials of Collaboration
Products conducted as part of the Program or otherwise funded or partially
funded by ATIII LLC. Each of GTC and Genzyme shall use commercially reasonable
and diligent efforts to disclose to ATIII LLC and to the other Party all
material information relating to any Collaboration Product promptly after it is
learned or its materiality is appreciated. The Party performing or supervising
clinical trials of Collaboration Products in accordance with the Development
Plan shall, on behalf and in the name of ATIII LLC, maintain the database of
clinical trial data accumulated from all clinical trials of Collaboration
Products and of adverse reaction information for all such Collaboration
Products. Each Party shall also keep the Program Management Team informed as to
its progress in the Development Plan. Within sixty (60) days following the end
of each calendar quarter during the Development Program, each of GTC and Genzyme
shall provide the other Parties with a reasonably detailed written report which
shall describe the progress to date of all activities for which such Party was
allocated responsibility during such quarter under the Development Plan.
5.2.2. Adverse Reaction Reporting. Each of GTC and Genzyme shall notify
the other Parties of any adverse reaction information relating to any
Collaboration Product
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*Confidential treatment for indicated portion respectfully requested
18
within twenty-four (24) hours of the receipt of such information and as
necessary for compliance with regulatory requirements. "Adverse reaction
information" includes without limitation information relating to any experience
that (a) suggests a significant hazard, contraindication, side effect or
precaution, (b) is fatal or life threatening, (c) is permanently disabling, (d)
requires or prolongs inpatient hospitalization, (e) involves a congenital
anomaly, cancer or overdose or (f) is one not identified in nature, specificity,
severity or frequency in the current investigator brochure or the United States
labeling for the Collaboration Product.
5.2.3. Clinical and Regulatory Audits. Each of GTC and Genzyme shall
permit ATIII LLC and the other Party or the representatives of ATIII LLC or the
other Party to have access during regular business hours and upon reasonable
advance notice, at the auditing Party's own expense and no more than once in
each calendar year during the term of this Agreement, to the non-auditing
Party's records and facilities relating to the Development Program for the
purpose of monitoring compliance with Good Clinical Practice and other
applicable requirements of the Regulatory Scheme.
5.3. Regulatory Approval Filings. Regulatory Approval filings in the
Territory for the Collaboration Products and for the facilities used to
manufacture such Collaboration Products shall be filed in the name of ATIII LLC
or, if required with respect to filings to be made with governmental authorities
or deemed to be in the best interest of the Parties by the Steering Committee,
in the name of such other entity as may be agreed upon by the Steering Committee
(such as filings with European regulatory authorities). Prior to submission to
the FDA, the Parties, through the Program Management Team, shall consult,
cooperate in preparing and mutually agree on the content and scope of the
Regulatory Approval filings. In the event that Regulatory Approvals are required
to be filed in the name of an entity other than ATIII LLC, the Steering
Committee shall ensure that a duly authorized officer of such entity agrees in
writing that (a) such entity shall hold the licenses issued in respect of such
Regulatory Approval filings and maintain control over the manufacturing
facilities and equipment to the extent required by the Regulatory Scheme, (b)
such entity shall provide manufacturing and supply services to ATIII LLC (i) at
the Fully Absorbed Cost of Goods of Collaboration Products so manufactured and
supplied and (ii) in accordance with the terms and conditions set forth in
Article 7 hereof, and shall reimburse ATIII LLC for any New Facility Costs
incurred in connection with the use of such facilities for the manufacture and
supply of such Collaboration Products, (c) the Parties shall have an irrevocable
right of access and reference to such Regulatory Approval filings, licenses and
facilities and (d) such entity agrees to comply with the provisions of Article
13 hereof with respect to the ownership and/or disposition of such Regulatory
Approvals in the event this Agreement is terminated and to provide the level of
cooperation described in Section 14.1 hereof in connection therewith.
5.4. Facilities Visits. Representatives of GTC and Genzyme may visit all
manufacturing sites and the sites of any clinical trials or other experiments
being conducted by the other Party or ATIII LLC in connection with the
Development Program. If requested by the other Party, GTC and Genzyme shall
cause appropriate individuals working on the Development Program to be available
for meetings at the location of the facilities where such individuals are
employed at times reasonably convenient to the Party responding to such request.
19
ARTICLE 6. SALES, MARKETING AND ADMINISTRATIVE SERVICES
6.1. Commercialization Plans.
6.1.1. General. The commercialization of each Collaboration Product
shall be governed by a Commercialization Plan which shall describe the overall
plan for commercializing such Collaboration Product, including without
limitation (a) a comprehensive marketing, sales, pricing, manufacturing,
distribution and licensing strategy for such Collaboration Product in all
applicable countries, including the identification of any Third Parties engaged
or to be engaged in connection with such activities and the arrangements with
them that have been or are proposed to be agreed upon (including policies and
procedures for adjustments, rebates, bundling and the like), (b) estimated
launch date, market and sales forecasts, in numbers of patients and local
currency, and competitive analysis for such Collaboration Product, (c) a
detailed budget for the Commercialization Costs to be incurred in connection
with performing such Commercialization Plan, (d) reasonable due diligence
obligations to be met by Genzyme and any Third Party distributor selected by the
Steering Committee pursuant to Section 6.7 below with respect to
commercialization objectives to be achieved during the calendar year to which
the Collaboration Plan relates (such as minimum annual sales objectives), (e) a
detailed manufacturing plan, including (i) if Regulatory Approval for the New
Facility has not been obtained, an overall plan which sets forth all major tasks
remaining to be accomplished prior to submission of filings for Regulatory
Approval of the New Facility and (ii) a detailed description of and budget for
all activities related to the design, construction, validation and operation of
and the manufacture of Collaboration Products in the New Facility proposed for
the calendar year to which the Commercialization Plan relates and (f) a list of
the Major Market Countries for such Collaboration Product if the Steering
Committee has changed such list pursuant to Section 1.28 hereof.
6.1.2. Initial and Updated Commercialization Plans. No later than
immediately prior to the completion of the submission of all Regulatory Approval
filings for a Collaboration Product in any given country, Genzyme shall develop
and submit to the Steering Committee for review and approval an initial
Commercialization Plan in accordance with its customary standard for a product
of comparable market potential, taking into consideration factors such as market
conditions, regulatory factors, competition and the costs and profits of such
Collaboration Product. Genzyme shall be primarily responsible for developing
each Commercialization Plan and, in connection therewith, shall consult with GTC
and any Third Party distributor selected by the Steering Committee pursuant to
Section 6.7 below regarding the identification, timing and execution of and
budget for the major commercialization tasks required to perform the
Commercialization Plan. Each Commercialization Plan shall be updated annually by
Genzyme, in consultation with GTC and any Third Party distributor selected by
the Steering Committee pursuant to Section 6.7 below as herein provided, and
shall be submitted to the Steering Committee for approval not later than sixty
(60) days prior to January 1 of each year. Each Commercialization Plan approved
by the Steering Committee shall be signed by an authorized representative of
each of GTC and Genzyme. While minor adjustments to the Commercialization Plan
may be made from time to time without Steering Committee approval, significant
changes in the scope or
20
direction of the work and any changes in funding exceeding * percent (*%) of the
total amount budgeted in any calendar year for the Commercialization Plan must
be approved by the Steering Committee, and in the absence of such approval, the
provisions of the most recently approved Commercialization Plan shall remain in
effect.
6.2. Exclusive Engagement. ATIII LLC hereby engages Genzyme on a exclusive
basis (except * as provided in Section 6.7 below) to market and sell
Collaboration Products within the Territory for use within the Field. Genzyme
hereby accepts such engagement and agrees (by itself or through its Affiliates)
to use commercially reasonable and diligent efforts to establish each
Collaboration Product in the markets, fulfill market demand and meet the
marketing and distribution goals set forth in the Commercialization Plan for
such Collaboration Product. The Parties acknowledge that * with respect to the
distribution and sale of products in the Territory * and that *.
6.3. Orders and Forecasting. Genzyme shall purchase the Collaboration
Products exclusively from ATIII LLC. Genzyme shall place orders for the
Collaboration Products with ATIII LLC on a purchase order setting forth the
quantity of Collaboration Products ordered, any specifications therefor and the
date required. ATIII LLC, on the date set forth in the applicable purchase
order, shall sell the Collaboration Products to Genzyme for resale within the
Territory. All freight, insurance, duties and all other charges associated with
shipment of the Collaboration Products shall be considered Commercialization
Costs for such Collaboration Products only to the extent such costs are not
charged to Genzyme' customers.
6.4. Prices and Payment Terms; Costs.
6.4.1. Prices. Genzyme shall purchase Collaboration Products from ATIII
LLC at the Estimated Net Selling Price for such Collaboration Products less the
Distributor's Discount. The Distributor's Discount is intended by the Parties to
compensate Genzyme for acting as distributor for the Collaboration Products.
6.4.2. Terms of Payment. Unless otherwise agreed by the Parties in
writing, payment by Genzyme to ATIII LLC for Collaboration Products shall be due
within sixty (60) days of the date of invoice therefor.
6.4.3. Marketing and Distribution Expenses. Genzyme's ordinary expenses
incurred in the course of performing its marketing and distribution obligations
hereunder shall constitute Commercialization Costs and, as such, shall be
reimbursed by ATIII LLC, but only to the extent that such amounts, together with
all other Commercialization Costs to date during such calendar year, do not
exceed * percent (*%) of the Commercialization Costs budgeted in the
Commercialization Plan then in effect for such calendar year (except to the
extent such excess is approved by the Steering Committee pursuant to Section
6.1.2 above). Ordinary marketing and distribution expenses include, but are not
limited to, recruitment costs and salaries and associated expenses for sales and
marketing personnel and support staff, advertising and promotion costs,
transportation expenses including insurance (but only to the extent not charged
to customers and only such proportion of all such costs directly attributable to
support of the Commercialization Plan), duties and taxes, bad debt expense, and
costs
- ------------
*Confidential treatment for indicated portion respectfully requested
21
associated with cash and other trade discounts and allowances and other
marketing concessions to customers actually allowed and taken.
6.5. Responsibilities of Genzyme. Genzyme shall be solely responsible for
all aspects of the marketing of the Collaboration Products in accordance with
the strategy, policies and procedures established in the Commercialization Plan,
including without limitation the responsibilities described in this Section 6.5.
(a) Genzyme shall be primarily responsible for the implementation of
each Commercialization Plan, including without limitation setting all terms of
sale, including establishing pricing policies, credit terms and cash discounts
and allowances, formulating marketing plans, providing patient information,
providing customer support services, providing reimbursement counseling services
and sales force training.
(b) Genzyme shall employ sufficiently trained and experienced
individuals in numbers adequate to carry out its responsibilities under this
Article 6. Sales and support personnel shall be familiar with the Collaboration
Products and with competitive products and shall respond promptly to customer
requests for support.
(c) Genzyme shall provide instructions and appropriate training to
customers in the proper use and handling of the Collaboration Products and shall
monitor performance of the Collaboration Products.
(d) Prior to sale, Genzyme shall store, maintain and handle
Collaboration Products in accordance with the requirements of the Regulatory
Scheme and the normal and customary commercial practice with respect to
regulated medical products.
(e) Genzyme shall comply with all laws and government regulations
applicable to the sale of Collaboration Products within the Territory.
(f) The Collaboration Products shall be sold under trademarks selected
by the Steering Committee and owned by or licensed to ATIII LLC in accordance
with Section 9.1.2 hereof.
(g) Genzyme shall not (i) establish any branch, sales offices,
warehouses or other facilities outside the Territory with respect to the
Collaboration Products, (ii) adopt a policy of actively selling Collaboration
Products outside the Territory nor undertake the active sale or promotion of
sales of Collaboration Products outside the Territory or (iii) seek customers or
solicit orders from a prospective customer with its principal address or place
of business located outside the Territory. Without ATIII LLC's prior consent,
Genzyme may not deliver or tender, or cause to be delivered or tendered,
Collaboration Products outside of the Territory. Genzyme shall not sell
Collaboration Products to a customer if Genzyme knows that such customer intends
to remove those Collaboration Products from the Territory. If Genzyme receives
an order from a prospective customer located outside of the Territory or who
Genzyme knows intends to remove the Collaboration Products from the Territory,
Genzyme shall immediately refer that customer to GTC.
(h) Genzyme shall maintain complete and accurate records of all
movements and transactions involving Collaboration Products by unit, by batch
number and
22
by customer so that all such movements and transactions can be traced quickly
and effectively. Upon written request, Genzyme will provide copies of such
records to the other Parties, with access to facilities used by Genzyme in
performing its duties under this Article 6 during normal business hours and upon
reasonable advance notice for the purpose of inspecting such facilities for
compliance with the terms of this Agreement. The records maintained by Genzyme
pursuant to this clause (h) shall be subject to the other Parties' audit rights
under Section 4.5 hereof.
(i) Within forty-five (45) days after the end of each calendar quarter,
Genzyme will report to ATIII LLC the actual prices at which all sales of
Collaboration Products were made to its customers during the preceding calendar
quarter, future prospects for the Collaboration Products and related issues.
Genzyme shall report promptly to the Steering Committee in writing the
occurrence of each material incident of Collaboration Product performance
required to be reported to regulatory authorities, including without limitation
adverse reaction information in accordance with Section 5.2.2 hereof.
6.6. Responsibilities of ATIII LLC and GTC. ATIII LLC shall supply
Collaboration Products to Genzyme in accordance with purchase orders placed
pursuant to Section 6.3 above. Neither ATIII LLC nor GTC shall actively solicit
for its own account sales of Collaboration Products in the Territory. Any
solicitations or requests to purchase Collaboration Products received by ATIII
LLC or GTC from any customer or prospective customer with its principal address
or place of business located in the Territory or who ATIII LLC or GTC, as the
case may be, knows intends to use the Collaboration Products in the Territory or
ship such Collaboration Products into the Territory shall be immediately
referred to Genzyme.
6.7. Third Party Distributors. In the event that Genzyme fails to use
commercially reasonable and diligent efforts to establish a Collaboration
Product in a country identified in the Commercialization Plan for such
Collaboration Product, or to fulfill market demand or meet the marketing and
distribution goals for such country as set forth in the Commercialization Plan
for such Collaboration Product, and such failure to perform is not cured within
ninety (90) days of written notice thereof from GTC, then (a) GTC may elect to
cause Genzyme's rights under Section 6.2 hereof to market and sell such
Collaboration Product in such country to terminate and (b) the Steering
Committee shall promptly select a Third Party to be engaged by ATIII LLC to
market and sell such Collaboration Product in such country; provided, however,
that in the event that any such country is a Major Market Country, any election
made by GTC pursuant to clause (a) hereof shall be in lieu of any right to
terminate this Agreement that may arise under Section 13.2.1 (c) hereof with
respect to such failure to perform; provided further that any such termination
of Genzyme's rights under Section 6.2 hereof shall be on a country-by-country
basis and Genzyme's rights and obligations under Section 6.2 hereof with respect
to other Collaboration Products in such country and with respect to the rest of
the Territory shall remain in full force and effect. Any such Third Party
distributor selected by the Steering Committee pursuant to clause (b) above
shall be required to execute a written agreement with ATIII LLC pursuant to
which such Third Party shall agree to (i) use commercially reasonable and
diligent efforts to comply with the strategy, policies and procedures set forth
in each Commercialization Plan for such country, including without limitation
the responsibilities described in Section 6.5 above (with references therein to
Genzyme being deemed to refer to such Third Party and references therein to the
Territory being deemed to refer to the applicable country for purposes of this
23
clause (i)) and (ii) reasonably cooperate with Genzyme in the preparation of
each Commercialization Plan or update thereto for such Collaboration Product.
6.8. General and Administrative Services. General and administrative
services required by ATIII LLC shall be provided at cost by either or both of
GTC and Genzyme as determined by the Steering Committee. All such costs, in
addition to general and administrative costs payable to Third Parties (such as
accountants) and general and administrative costs incurred by GTC and Genzyme in
satisfying their respective obligations under this Agreement, shall be
considered to be Program Costs.
ARTICLE 7. MANUFACTURE AND SUPPLY
Subject to the terms and conditions of this Agreement, Collaboration
Products shall be manufactured and supplied for preclinical and clinical testing
and for commercial sale upon the following terms and conditions:
7.1. Process Development; Manufacturing Approvals. The Parties will use
commercially reasonable and diligent efforts to develop a process for the
manufacture of each Collaboration Product and to scale up that process to a
scale sufficient to manufacture and supply (a) the anticipated demand for
preclinical studies and clinical trials of such Collaboration Product in
accordance with the projections set forth in the Development Plan and (b) the
anticipated market demand for such Collaboration Product at the time Regulatory
Approval is obtained for such Collaboration Product in accordance with the
projections set forth in the Commercialization Plan for such Collaboration
Product. The development of the process for the manufacture of Collaboration
Products as well as the scale up of such process and all material issues
incident to the development of the ability to produce Collaboration Products for
commercial purposes in sufficient quantity and in a timely manner will be within
the purview of the Program Management Team. The Parties will use commercially
reasonable and diligent efforts, and will cause any approved Third Party
supplier, to make filings necessary to obtain approval of any license
application for the New Facility which may be required as part of any Regulatory
Approval for the first Collaboration Product.
7.2. Manufacture and Supply of Collaboration Products. ATIII LLC shall
manufacture and supply Collaboration Products for preclinical and clinical
activities and commercial sale on the following terms and conditions:
7.2.1. General. ATIII LLC shall use commercially reasonable and
diligent efforts to manufacture and supply Collaboration Products (a) for
preclinical studies and clinical trials in quantities and within a time period
sufficient to conduct the activities set forth in the Development Plan and (b)
to meet market demand for Collaboration Products ordered in accordance with the
terms hereof. ATIII LLC may subcontract with GTC, Genzyme and Third Parties for
the manufacture or packaging of Collaboration Products, as determined by the
Steering Committee. In this regard, it is agreed that ATIII LLC will subcontract
with GTC for the manufacture and supply of Collaboration Products (i) in
clinical trial grade for preclinical and clinical trials, for which GTC shall be
entitled to charge ATIII LLC an amount equal to GTC's Fully Absorbed Cost of
Goods for such Collaboration Products, and (ii) in bulk form (i.e., generate raw
milk containing tg ATIII) ("bulk manufacturing") for use in connection with
commercialization activities, for which GTC shall
24
be entitled to charge to ATIII LLC an amount equal to GTC's Fully Absorbed Cost
of Goods for such Collaboration Products plus, with respect to Collaboration
Products intended for commercial sale only, the Manufacturer's Profit. GTC
agrees to use commercially reasonable and diligent efforts in performing such
work. It is further agreed that the work required to produce the Collaboration
Products in clinical trial grade for preclinical and clinical trials and in
finished form, including without limitation performance of assays and
purification and packaging ("finish processing"), will be subcontracted to
Genzyme, for which Genzyme shall be entitled to charge to ATIII LLC its Fully
Absorbed Costs of Goods for such Collaboration Products. Genzyme agrees to use
commercially reasonable and diligent efforts in performing such work.
Notwithstanding the foregoing provisions of this Section 7.2.1, to the extent
required by the Regulatory Scheme, any entity selected by the Steering Committee
pursuant to Section 5.3 above may be engaged by ATIII LLC to manufacture
Collaboration Products. The respective charges to ATIII LLC shall be invoiced
following completion of the work, and shall be payable by ATIII LLC within a
commercially reasonable time thereafter (but in no event later than forty-five
(45) days of the date of invoice therefor). *
7.2.2. Manufacturing Facilities and Capacity Requirements. Supplies of
the Collaboration Product for preclinical and clinical trials and
commercialization activities will be manufactured in the facilities currently
being used for the manufacture of the Collaboration Products as of the Date of
Execution. The Parties acknowledge that in the event that the Steering Committee
determines that it is necessary or advisable to use a New Facility for the
manufacture of the Collaboration Products, the capital costs therefor shall be
borne by GTC and Genzyme pursuant to Sections 1.36, 1.41 and 4.1.3 hereof. The
Steering Committee shall approve the design and capacity requirements for the
New Facility.
7.2.3. Forecasts. The Program Management Team shall establish a
procedure for providing forecasts of customer orders for Collaboration Products
pursuant to Section 6.3 above, updating such forecasts and ordering
Collaboration Product, in each case within time periods sufficient to enable
ATIII LLC to manufacture such Collaboration Products to meet such forecasts in a
commercially reasonable and diligent manner.
7.3. Certificates of Analysis. ATIII LLC, Genzyme or GTC, as appropriate,
shall perform, or cause its contract manufacturer(s) to perform, quality
assurance and control tests on each lot of Collaboration Products bulk
manufactured or finish processed pursuant to this Agreement before delivery and
shall prepare, or cause its contract manufacturer(s) to prepare and deliver, a
written report of the results of such tests (the Party manufacturing a lot of
Collaboration Product is referred to in this Article 7 as the "Manufacturing
Party"). Each test report shall set forth for each lot delivered the items
tested, specifications and results in a certificate of analysis containing the
types of information which shall have been approved by the Program Management
Team or required by the FDA or other applicable regulatory authority. The
Manufacturing Party shall maintain such certificates for a period of not less
than five (5) years from the date of manufacture and for so long as required
under applicable requirements of the FDA or other applicable regulatory
authority.
7.4. Certificates of Manufacturing Compliance. The Manufacturing Party
shall prepare, or cause its contract manufacturer(s) to prepare and deliver, and
maintain for a period
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*Confidential treatment for indicated portion respectfully requested
25
of not less than five (5) years and for so long as required under applicable
requirements of the FDA or other applicable regulatory authority for each lot of
Collaboration Products manufactured a certificate of manufacturing compliance
containing the types of information which shall have been approved by the
Program Management Team or required by the FDA or other applicable regulatory
authority, which certificate will certify that the lot of Collaboration Products
was manufactured in accordance with the Specifications and the Good
Manufacturing Practices of the FDA or other applicable regulatory authority as
the same may be amended from time to time. The Manufacturing Party shall advise
the other Parties immediately if an authorized agent of the FDA or other
regulatory authority visits any of the Manufacturing Party's manufacturing
facilities, or the facilities where the Collaboration Products are being
manufactured, for an inspection with respect to the Collaboration Products. The
Manufacturing Party shall furnish to the other Parties the report by such agency
of such visit, to the extent that such report relates to Collaboration Products,
within ten (10) business days of the Manufacturing Party's receipt of such
report.
7.5. Access to Facilities. Each Party shall have the right to inspect those
portions of the manufacturing, finish processing or storage facilities of the
Manufacturing Party where Collaboration Products are being manufactured,
finished or stored, or any subcontractor who is manufacturing, finishing or
storing Collaboration Products for the Manufacturing Party, at any time during
regular business hours and upon reasonable advance notice to ascertain
compliance with the Good Manufacturing Practices of the FDA or other applicable
regulatory authority, as the same may be amended from time to time. Any
confidential information disclosed to or otherwise gathered by the Party
conducting such inspection during any such inspection shall be deemed
"Information" as defined in Section 10.1 below.
ARTICLE 8. MANAGEMENT
8.1. Program Management Team.
8.1.1. General. The Parties have established a Program Management Team
to oversee and control development of Collaboration Products and to prepare for
and oversee the launch of Collaboration Products. The Program Management Team is
and shall continue to be composed of four (4) representatives appointed by GTC
and four (4) representatives appointed by Genzyme. Such representatives will
include individuals with expertise and responsibilities in such areas as
preclinical development, clinical development, manufacturing, regulatory
affairs, marketing, sales management and reimbursement. The Program Management
Team shall meet as needed but not less than bi-weekly. The Program Management
Team shall appoint one of its members to act as Secretary. Such meetings shall
be at times and places or in such form (e.g., telephone or video conference) as
the members of the Program Management Team shall agree. A Party may change one
or more of its representatives to the Program Management Team at any time.
Members of the Program Management Team may be represented at any meeting by
another member of the Program Management Team or by a deputy. Any approval,
determination or other action agreed to by a majority of the members of the
Program Management Team appointed by each of GTC and Genzyme or their deputies
present at the relevant Team meeting shall be the approval, determination or
other action of the Program Management Team, provided at least two (2)
representatives of each of GTC and Genzyme are present at such meeting.
Representatives of either GTC and Genzyme who are not members of the Program
Management Team may
26
attend meetings of the Program Management Team as agreed to by the
representative members of the other Party. The Program Management Team may
designate project leaders to the extent it deems it necessary or advisable.
8.1.2. Development Program Functions. During the term of the
Development Program, the Program Management Team shall coordinate, expedite and
control the development of Collaboration Products to obtain Regulatory
Approvals. The Program Management Team will (a) develop and recommend to the
Steering Committee Development Plans (including annual development budgets), (b)
facilitate the flow of information with respect to development work being
conducted for each Collaboration Product throughout the Territory and (c)
discuss and cooperate regarding the conduct of such development work.
8.1.3. Commercialization Functions. Following submission of filings for
Regulatory Approvals for the first Collaboration Product, the Program Management
Team shall function as the operational staff of ATIII LLC and the functions of
the Program Management Team shall be expanded to include: (a) monitoring the
commercialization of Collaboration Products pursuant to the Commercialization
Plan, including oversight of planning, annual budgeting, manufacturing,
marketing, sales and distribution, and licensing of Collaboration Products; (b)
monitoring actual expenses incurred in the manufacture, marketing, sale and
distribution of Collaboration Products; and (c) facilitating cooperation
regarding the commercialization and marketing activities of the Parties.
8.1.4. Minutes. The Program Management Team shall keep accurate minutes
of its deliberations which shall record all proposed decisions and all actions
recommended or taken. The Secretary shall be responsible for the preparation of
draft minutes. Draft minutes shall be sent to all members of the Program
Management Team within five (5) working days after each meeting. All records of
the Program Management Team shall at all times be available to all of the
Parties.
8.2. Steering Committee.
8.2.1. General. The Parties have established a Steering Committee to
oversee and manage the collaboration contemplated by this Agreement. The
Steering Committee is and shall continue to be composed of three (3)
representatives appointed by GTC and three (3) representatives appointed by
Genzyme. Such representatives will be senior officers and/or managers of their
respective companies. Genzyme and GTC shall each designate one (1) of their
respective representatives on the Steering Committee to act as Co-Chairman. The
Steering Committee shall appoint one (1) of its members to act as Secretary. The
Steering Committee will meet as needed but not less than once each calendar
quarter. Such meetings shall be at times and places or in such form (e.g.,
telephone or video conference) as the members of the Steering Committee shall
agree. A Party may change one or more of its representatives to the Steering
Committee at any time. Members of the Steering Committee may be represented at
any meeting by another member of the Steering Committee or by a deputy. Any
approval, determination or other action agreed to by unanimous consent of the
members of the Steering Committee or their deputies present at the relevant
Steering Committee meeting shall be the approval, determination or other action
of the Steering Committee, provided at least two (2) representatives of each of
GTC and Genzyme are present at such meeting. Representatives of either GTC and
Genzyme who are not members
27
of the Steering Committee may attend meetings of the Steering Committee as
agreed to by the representative members of the other Party.
8.2.2. Functions. The Steering Committee shall perform the following
functions: (a) determine the overall strategy for the Program in the manner
contemplated by this Agreement; (b) coordinate the activities of the Parties
hereunder; (c) settle disputes or disagreements that are unresolved by the
Program Management Team; (d) approve any agreements with Third Parties regarding
a Collaboration Product or which involve the grant of any rights related to the
development, manufacture or marketing of a Collaboration Product; (e) review and
approve each Development Plan, including each significant change and annual
update thereto, submitted to it pursuant to Section 5.1.3 hereof; (f) review and
approve each Commercialization Plan, including each significant change and
annual update thereto, submitted to it for approval pursuant to Section 6.1.2
hereof; (g) serve as the governing body of ATIII LLC; (h) set the Distributor's
Discount, the Estimated Fully Absorbed Cost of Goods, the Estimated Net Selling
Price and the Manufacturer's Profit for each Collaboration Product; (i) add or
remove countries from the list of Major Market Countries for each Collaboration
Product pursuant to Section 1.28 hereof; (j) select any Third Party distributor
to be engaged by ATIII LLC pursuant to Section 6.7 above; and (k) perform such
other functions as appropriate to further the purposes of this Agreement as
determined by the Parties. The Steering Committee shall use its best efforts to
ensure that the relative cumulative amounts of Distribution Margin and the
Manufacturing Margin for each Collaboration Product are proportionate to the
relative Percentage Interests of Genzyme and GTC. In the event that (I) the
relative amounts of the Distribution Margin and the Manufacturing Margin for a
Collaboration Product are disproportionate to the relative Percentage Interests
of Genzyme and GTC with respect to any two (2) consecutive calendar quarters or
(II) Genzyme and GTC's Percentage Interests are adjusted pursuant to Section
4.1.4 hereof, the Steering Committee shall promptly adjust the Distributor's
Discount and/or the Manufacturer's Profit, as appropriate, to comply with the
preceding sentence.
8.2.3. Minutes. The Steering Committee shall keep accurate minutes of
its deliberations which shall record all proposed decisions and all actions
recommended or taken. The Secretary shall be responsible for the preparation of
draft minutes. Draft minutes shall be sent to all members of the Steering
Committee within ten (10) working days after each meeting. All records of the
Steering Committee shall at all times be available to both GTC and Genzyme.
8.3. General Disagreements. All disagreements within the Program Management
Team and the Steering Committee shall be subject to the following:
(a) The representatives to the Program Management Team or
Steering Committee will negotiate in good faith for a period of not
less than thirty (30) days to attempt to resolve the dispute. In the
case of the Program Management Team, any unresolved dispute shall be
referred to the Steering Committee for good faith negotiations for an
additional period of not less than thirty (30) days to attempt to
resolve the dispute.
(b) In the event that the dispute is not resolved after the
period specified in clause (a), the representatives shall promptly
present the disagreement to the Chief
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Executive Officers of GTC and Genzyme or a designee of such Chief
Executive Officer reasonably acceptable to the other Party.
(c) Such executives shall meet or discuss in a telephone or
video conference each of GTC and Genzyme's views and explain the basis
for such dispute.
(d) If such executives cannot resolve such disagreement within
sixty (60) days after such issue has been referred to them, then such
dispute shall be referred to arbitration as described in Section 14.11
hereof.
ARTICLE 9. INTELLECTUAL PROPERTY RIGHTS
9.1. Ownership. The Parties acknowledge that the ownership rights set forth
herein (a) shall not be affected by the participation in the discovery or
development of an Invention (as defined below) by the Program Management Team or
the Steering Committee in the course of discharging their duties hereunder and
(b) are subject to the license grants set forth in Article 3 above.
9.1.1. Ownership and Assignment of Discoveries and Improvements. All
right, title and interest in all writings, inventions, discoveries, improvements
and other technology, whether or not patentable or copyrightable, and any patent
applications, patents or copyrights based thereon (collectively, the
"Inventions") that are discovered, made or conceived during and in connection
with the Program solely by employees of GTC or others acting on behalf of GTC
("GTC Inventions") shall be owned by GTC. All right, title and interest in all
Inventions that are discovered, made or conceived during and in connection with
the Program solely by employees of Genzyme or others acting on behalf of Genzyme
("Genzyme Inventions") shall be owned by Genzyme. All right, title and interest
in all Inventions that are discovered, made or conceived during and in
connection with the Program jointly by employees of GTC and Genzyme ("Joint
Inventions") shall be jointly owned by Genzyme and GTC. Each of GTC and Genzyme
shall promptly disclose to ATIII LLC and the other Party the making, conception
or reduction to practice of Inventions by employees or others acting on behalf
of such Party. All GTC Inventions, Genzyme Inventions and Joint Inventions shall
be automatically licensed to ATIII LLC pursuant to Section 3.1 hereof.
9.1.2. Ownership of Trademarks. The Steering Committee shall select and
ATIII LLC shall own all trademarks for the sale and use of Collaboration
Products in the Territory, and all expenses thereof shall be considered Program
Costs. All such trademarks shall be registered in the name of ATIII LLC if and
when registered. In the event that the applicable laws and regulations of any
country in which the Steering Committee elects to register any such trademark
require that such trademark be registered in the name of an entity other than
ATIII LLC, or if the Steering Committee determines that it is in the best
interests of the parties, then the Steering Committee shall select such entity
and ensure that a duly authorized officer of such entity agrees in writing that
such entity shall (a) grant ATIII LLC an exclusive, fully-paid, royalty-free,
irrevocable (during the term of this Agreement) right and license (with the
right to grant sublicenses) to use such trademark in the Territory and (b)
comply with the provisions of Article 13 hereof with respect to the ownership
and/or disposition of such trademark in the event this Agreement is terminated
and provide the level of cooperation described in Section 14.1 hereof in
connection therewith.
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9.1.3. Cooperation of Employees. Each of GTC and Genzyme represents and
agrees that all employees or others acting on its behalf in performing its
obligations under this Agreement shall be obligated under a binding written
agreement to assign to such Party, or as such Party shall direct, all Inventions
made or conceived by such employee or other person. In the case of non-employees
working for other companies or institutions on behalf of GTC or Genzyme, GTC or
Genzyme, as applicable, shall have the right to obtain licenses for all
Inventions made by such non-employees on behalf of GTC or Genzyme, as
applicable, in accordance with the policies of said company or institution. GTC
and Genzyme agree to undertake to enforce such agreements (including, where
appropriate, by legal action) considering, among other things, the commercial
value of such Inventions.
9.2. Filing, Prosecution and Maintenance of Patent Rights.
9.2.1. Filing, Prosecution and Maintenance. Each of GTC and Genzyme
shall be responsible for the filing, prosecution and maintenance of all patent
applications and patents which make up its Patent Rights. The Steering Committee
shall designate either GTC or Genzyme as the Party responsible for the filing,
prosecution and maintenance of all patent applications and patents which make up
the Genzyme/GTC Patent Rights. For so long as any of the license grants set
forth in Article 3 hereof remain in effect and upon request of the other Party,
each of GTC and Genzyme agrees to file and prosecute patent applications and
maintain the patents covering the Patent Rights for which it is responsible in
all countries in the Territory selected by the Steering Committee. Each of GTC
and Genzyme shall consult with and keep the other fully informed of important
issues relating to the preparation and filing (if time permits), prosecution and
maintenance of such patent applications and patents, and shall furnish to the
other Party copies of documents relevant to such preparation, filing,
prosecution or maintenance in sufficient time prior to filing such document or
making any payment due thereunder to allow for review and comment by the other
Party and, to the extent possible in the reasonable exercise of its discretion,
the filing Party shall incorporate all such comments.
9.2.2. Patent Filing Costs. All costs associated with filing,
prosecuting and maintaining patent applications and patents covering each of
GTC and Genzyme's Patent Rights and the Genzyme/GTC Patent Rights specific to
the Field in the Territory shall be deemed Development Costs; provided,
however, that if the claims of any such Patent Rights include claims outside
the Field, each of ATIII LLC and the Party filing, prosecuting and
maintaining such patents and patent applications shall bear one-half (1/2) of
such costs itself and the other half of such costs shall be deemed
Development Costs.
9.3. Cooperation. Each of GTC and Genzyme shall make available to the other
Party (or to the other Party's authorized attorneys, agents or representatives)
its employees, agents or consultants to the extent necessary or appropriate to
enable the appropriate Party to file, prosecute and maintain patent applications
and resulting patents with respect to inventions owned by a Party and for
periods of time sufficient for such Party to obtain the assistance it needs from
such personnel. Where appropriate, each of GTC and Genzyme shall sign or cause
to have signed all documents relating to said patent applications or patents at
no charge to the other Party.
9.4. Notification of Patent Term Restoration. Each of GTC and Genzyme shall
notify the other Party of (a) the issuance of each United States patent included
within the
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Patent Rights for which the notifying Party is responsible, giving the date
of issue and patent number for each such patent, and (b) each notice
pertaining to any patent included within the Patent Rights for which the
notifying Party is responsible which it receives as patent owner pursuant to
the Drug Price Competition and Patent Term Restoration Act of 1984, including
notices pursuant to Sections 101 and 103 of such Act from persons who have
filed an abbreviated NDA. Such notices shall be given promptly, but in any
event within ten (10) business days after receipt of each such notice
pursuant to such Act. Each of GTC and Genzyme shall notify the other Party of
each filing for patent term restoration under such Act, any allegations of
failure to show due diligence and all awards of patent term restoration
(extensions) with respect to the Patent Rights for which the notifying Party
is responsible.
9.5. No Other Technology Rights. Except as otherwise expressly provided in
this Agreement, under no circumstances shall a Party hereto, as a result of this
Agreement, obtain any ownership interest in or other right to the Patent Rights,
Technology or Manufacturing Know-How of the other Party, including items owned,
controlled or developed by the other Party, or transferred by the other Party to
said Party at any time pursuant to this Agreement. It is understood and agreed
that this Agreement does not grant either Party any license or other right in
the Patent Rights of the other Party for uses other than as specified in Article
3 hereof and this Article 9.
9.6. Enforcement of Patent Rights; Defense of Infringement Actions. GTC and
Genzyme shall each promptly notify the other in writing of any alleged or
threatened infringement of any patents or patent applications for which it is
responsible pursuant to Section 9.2 above or if either Party, or any of their
respective Affiliates, shall be individually named as a defendant in a legal
proceeding by a Third Party for infringement of a patent because of the
manufacture, use or sale of a Collaboration Product or because of attempts to
invalidate Patent Rights.
9.6.1. First Right to Respond. Each of GTC and Genzyme shall have the
first right to respond to or defend (in consultation with the Steering
Committee) against such challenge or infringement of the Patent Rights for which
it is responsible pursuant to Section 9.2 above or charge of infringement. In
the event such Party elects to so respond or defend, the other Party will
cooperate with the responding Party's legal counsel, join in such suits as may
be brought by the responding Party to enforce its Patent Rights, and be
available at the responding Party's reasonable request to be an expert witness
or otherwise to assist in such proceedings.
9.6.2. Sharing of Litigation and Settlement Expenses. The costs
incurred (a) in responding to or defending against a challenge to or
infringement of a Party's Patent Rights specific to the Field or a charge that
the manufacture, use or sale of Collaboration Products infringe upon the Patent
Rights of Third Parties, (b) in settling any such actions, which may not be done
without the prior written consent of the Steering Committee, and (c) as damages
paid as a result of such actions shall be deemed Program Costs.
9.6.3. Second Right to Respond. If a Party does not exercise its right
to respond to or defend against challenges or infringements of its Patent Rights
as provided in Section 9.6.1 above within sixty (60) days of becoming aware of
or being notified of such challenges or infringements, then the other Party
shall have the option to do so at its sole cost; provided that in such case all
amounts so recovered from such Third Party shall be
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retained by the Party undertaking such response or defense and the Party so
responding shall have no further obligations to the other Party with respect to
the response or defense thereof.
ARTICLE 10. CONFIDENTIALITY
10.1. Nondisclosure Obligations. Except as otherwise provided in this
Article 10, during the term of this Agreement and for a period of five (5) years
thereafter, the Parties shall maintain in confidence and use only for purposes
specifically authorized under this Agreement (a) confidential information and
data resulting from or related to the development of Collaboration Products and
(b) all information and data not described in clause (a) but supplied by the
other Party under this Agreement and marked or identified as "Confidential".
For purposes of this Article 10, information and data described in clause
(a) or (b) of the preceding paragraph shall be referred to as "Information." To
the extent it is reasonably necessary or appropriate to fulfil its obligations
or exercise its rights under this Agreement, a Party may disclose Information it
is otherwise obligated under this Section not to disclose to its Affiliates,
sublicensees, consultants, outside contractors and clinical investigators, on a
need-to-know basis and on the condition that such entities or persons agree to
keep the Information confidential for the same time periods and to the same
extent as such Party is required to keep the Information confidential; and a
Party or its sublicensees may disclose such Information to government or other
regulatory authorities to the extent that such disclosure is reasonably
necessary to obtain patents or authorizations to conduct clinical trials with
and to market commercially Collaboration Products. The obligation not to
disclose Information shall not apply to any part of such Information that: (i)
is or becomes patented, published or otherwise becomes publicly known other than
by acts of the Party obligated not to disclose such Information or its
Affiliates or sublicensees in contravention of this Agreement; (ii) can be shown
by written documents to have been disclosed to the receiving Party or its
Affiliates or sublicensees by a Third Party, provided that such Information was
not obtained by such Third Party directly or indirectly from the other Party
under this Agreement; (iii) prior to disclosure under this Agreement, was
already in the possession of the receiving Party or its Affiliates or
sublicensees, provided that such Information was not obtained directly or
indirectly from the other Party under this Agreement; (iv) can be shown by
written documents to have been independently developed by the receiving Party or
its Affiliates without breach of any of the provisions of this Agreement; or (v)
is disclosed by the receiving Party pursuant to a subpoena lawfully issued by a
court or governmental agency, provided that the receiving Party notifies the
other Party immediately upon receipt of any such subpoena.
10.2. Terms of this Agreement; Press Releases. The Parties further agree to
seek confidential treatment for the filing of this Agreement with the Securities
and Exchange Commission and shall agree upon the content of the request for
confidential treatment made by each Party in respect of such filing. Except as
permitted by the foregoing provisions or as otherwise required by law, GTC and
Genzyme each agree not to disclose any terms or conditions of this Agreement to
any Third Party without the prior consent of the other Party; provided that each
Party shall be entitled to disclose the terms of this Agreement without such
consent to potential investors or other financing sources on the condition that
such entities or persons agree to keep such terms confidential for the same time
periods and to the same extent as such Party is required to keep such terms
confidential. The Parties agree that all
32
press releases related to the Program shall be issued jointly by GTC and Genzyme
and that the Party preparing any such press release shall provide the other
Party with a draft thereof reasonably in advance of disclosure so as to permit
the other Party to review and comment on such press release.
10.3. Publications. Each Party recognizes the mutual interest in obtaining
valid patent protection. Consequently, any Party, its employees or consultants
wishing to make a publication (including any oral disclosure made without
obligation of confidentiality) relating to work performed by such Party as part
of the Program (the "Publishing Party") shall transmit to the other Party (the
"Reviewing Party") a copy of the proposed written publication at least
forty-five (45) days prior to submission for publication, or an abstract of such
oral disclosure at least fifteen (15) days prior to submission of the abstract
or the oral disclosure, whichever is earlier. The Reviewing Party shall have the
right to (a) request a delay in publication or presentation in order to protect
patentable information, (b) propose modifications to the publication for patent
reasons or (c) request that the information be maintained as a trade secret.
If the Reviewing Party requests a delay as described in clause (a) above,
the Publishing Party shall delay submission or presentation of the publication
for a period of ninety (90) days to enable patent applications protecting each
Party's rights in such information to be filed. Upon the expiration of
forty-five (45) days, in the case of proposed written disclosures, or fifteen
(15) days, in the case of an abstract of proposed oral disclosures, from
transmission of such proposed disclosures to the Reviewing Party, the Publishing
Party shall be free to proceed with the written publication or the oral
presentation, respectively, unless the Reviewing Party has requested the delay
described above.
To the extent possible in the reasonable exercise of its discretion, the
Publishing Party shall incorporate all modifications proposed under clause (b)
above. If a trade secret that is the subject of a request made under clause (c)
above cannot be otherwise protected without unreasonable expense to the
Reviewing Party, such information shall be omitted from the publication.
ARTICLE 11. REPRESENTATIONS AND WARRANTIES
11.1. Authorization. Each Party warrants and represents to the other that
(a) subject to Section 2.3 above, it has the legal right and power to enter into
this Agreement, to extend the rights and licenses granted to the other in this
Agreement, and to perform fully its obligations hereunder, (b) this Agreement is
a valid and binding agreement of such Party, enforceable in accordance with its
terms, (c) such Party has obtained all necessary approvals to the transactions
contemplated hereby and (d) such Party has not made nor will it make any
commitments to others in conflict with or in derogation of such rights or this
Agreement.
11.2. Intellectual Property Rights.
33
11.2.1. GTC hereby represents and warrants that, * and as of the Date
of Execution, (a) it possesses an exclusive right, title and interest in or, in
the case of GTC Licensed ATIII Patent Rights, an exclusive license (subject to
certain exceptions set forth in the license covering such Patent Rights) to, the
GTC Patent Rights, the GTC Licensed ATIII Patent Rights and the GTC Technology,
(b) that the GTC Patent Rights and the GTC Technology are free and clear of any
lien or other encumbrance and (c) that it has the right to (i) enter into the
obligations set forth in this Agreement and (ii) grant the rights and licenses
set forth in Article 3 hereof.
11.2.2. GTC hereby represents and warrants that it is not aware of any
issued patent that would be infringed by the manufacture and sale of
Collaboration Products as contemplated by this Agreement.
11.2.3. Genzyme hereby represents and warrants that as of the Date of
Execution (a) it possesses an exclusive right, title and interest in the Genzyme
Patent Rights and the Genzyme Technology, (b) the Genzyme Patent Rights and the
Genzyme Technology are free and clear of any lien or other encumbrance and (c)
it has the right to (i) enter into the obligations set forth in this Agreement
and (ii) grant the rights and licenses set forth in Article 3 hereof.
11.3. Warranties.
11.3.1. Genzyme Warranties. Genzyme warrants that (i) the Collaboration
Products delivered by Genzyme pursuant to Section 7.2 hereof will conform in all
material respects to the Specifications, the conditions of any applicable
Regulatory Approvals regarding the manufacturing process and any applicable
requirements of the Regulatory Scheme regarding the manufacturing process and
(ii) the Collaboration Products sold pursuant to Section 6.2 hereof will be
marketed and sold in all material respects in accordance with the conditions of
any applicable Regulatory Approvals and any applicable labeling claims.
11.3.2. GTC Warranties. GTC warrants that the Collaboration Products
delivered by GTC pursuant to Section 7.2 hereof will conform in all material
respects to the Specifications, the conditions of any applicable Regulatory
Approvals regarding the manufacturing process and any applicable requirements of
the Regulatory Scheme regarding the manufacturing process.
11.4. Disclaimer of Representations and Warranties. EXCEPT AS OTHERWISE
EXPRESSLY SET FORTH IN THIS AGREEMENT, NONE OF GTC, GENZYME OR ATIII LLC MAKES
ANY REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY, FITNESS FOR
A PARTICULAR PURPOSE, AND THE NON-INFRINGEMENT OF ANY THIRD-PARTY PATENTS OR
PROPRIETARY RIGHTS. ALL UNIFORM COMMERCIAL CODE WARRANTIES ARE EXPRESSLY
DISCLAIMED BY THE PARTIES.
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11.5. Limitation of Liability. It is agreed by the Parties that no Party
shall have a right to or shall claim special, indirect or consequential damages,
including lost profits, for breach of this Agreement. Remedies shall be limited
to claims for amounts due hereunder or as otherwise provided in this Agreement,
including claims for indemnification as provided in Section 12.1 hereof.
ARTICLE 12. INDEMNITY
12.1. ATIII LLC Indemnity Obligations. The Operating Agreement shall
provide that ATIII LLC shall indemnify each of the Members and its Affiliates,
employees and agents (each an "Indemnified Person") for any act performed by
such Indemnified Person within the scope of the authority conferred upon such
Indemnified Person under this Agreement; provided that it shall be a condition
to such indemnity that (a) the Indemnified Person seeking indemnification acted
in good faith and in a manner reasonably believed to be in, or not opposed to,
the best interests of ATIII LLC, (b) the act for which indemnification is sought
did not constitute gross negligence or wilful misconduct by such Indemnified
Person and (c) payment and indemnification of any matter disposed of by a
compromise payment by such Indemnified Person, pursuant to consent decree or
otherwise, shall have been approved by the Members, which approval shall not be
unreasonably withheld or delayed, or by a court of competent jurisdiction.
12.2. Insurance. ATIII LLC shall maintain product liability insurance with
respect to development, manufacture and sales of Collaboration Products in an
amount reasonably believed by Genzyme and GTC to be adequate and customary for
the development, manufacture and sale of novel therapeutic products. Genzyme and
GTC shall be named as additional insureds on any such policy.
ARTICLE 13. TERM AND TERMINATION
13.1. Term. The term of this Agreement shall be perpetual unless terminated
pursuant to Section 13.2 below.
13.2. Termination. This Agreement may be terminated in the following
circumstances:
13.2.1. For Certain Material Breaches. If (a) either GTC or Genzyme
fails to use commercially reasonable and diligent efforts to perform any
material duty imposed upon such Party under this Agreement or a Development
Plan, (b) either GTC or Genzyme fails to make * or more capital contributions in
accordance with Article 4 hereof, or (c) Genzyme fails to use commercially
reasonable and diligent efforts to commercialize any Collaboration Product in
any Major Market Country in accordance with the Commercialization Plan for such
Collaboration Product or meet any of the material due diligence requirements set
forth in any Commercialization Plan and, in any case described in
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clauses (a) - (c), such failure to perform is not cured within ninety (90) days
of written notice thereof from the non-breaching Party, the non-breaching Party
may elect, in its sole discretion, to (i) enforce the terms of this Agreement
and seek any and all remedies available to it at law and in equity, (ii) in the
case of clause (b) above, waive the terms of Article 4 hereof with respect to
any one or more required capital contributions and cause the respective
Percentage Interests and future funding responsibilities of the Parties to be
adjusted in accordance with Section 4.1.4 hereof, (iii) in the case of clause
(c) above, cause ATIII LLC to engage a Third Party distributor for such country
in accordance with Section 6.7 hereof or (iv) terminate this Agreement with the
consequences set forth in Section 13.3 below. Such 90-day period shall be
extended to one hundred eighty (180) days if the breaching Party has engaged in
good faith efforts to remedy such default within such 90-day period and
indicated in writing to the non-breaching Party prior to the expiration of such
90-day period that it believes that it will be able to remedy the default within
such 180-day period, but such extension shall apply only so long as the
breaching Party is engaging in good faith efforts to remedy such default.
13.2.2. For Failure to Make a Milestone Payment. In the event that
Genzyme fails to make a milestone payment pursuant to Section 4.4 hereof and
such failure is not cured within sixty (60) days of written notice thereof from
GTC, GTC may elect, in its sole discretion, to either (a) enforce the terms of
this Agreement and seek any and all remedies available to it at law and in
equity or (b) terminate this Agreement with the consequences set forth in
Section 13.3 below.
13.2.3. For Convenience. Either GTC or Genzyme may elect to terminate
this Agreement for any reason at any time after the earlier of (i) such time as
ATIII LLC has received U.S. FDA approval for the BLA for the first Collaboration
Product or (ii) * if ATIII LLC has not received U.S. FDA approval of the BLA for
the first Collaboration Product on or before such date upon one (1) year prior
written notice to the other Party (during which one-year period the obligations
of the Parties, including without limitation obligations with respect to capital
contributions, shall continue in full force and effect).
13.2.4. Upon Bankruptcy. Either GTC or Genzyme may terminate this
Agreement with the consequences set forth in Section 13.3 below upon the
bankruptcy, insolvency, dissolution or winding-up of the other Party, except in
the case of a petition in bankruptcy filed involuntarily against a Party, if
such petition is dismissed within sixty (60) days of the date of its filing.
13.3. Effects of Termination.
13.3.1. For Certain Material Breaches. In addition to the rights and
duties set forth in Sections 13.4 and 13.5 below, GTC and Genzyme shall have the
following rights and duties upon termination of this Agreement pursuant to
Section 13.2.1(iv) above:
(a) the non-breaching Party shall obtain from the breaching Party the
irrevocable right and license, with the right to grant sublicenses, under the
breaching Party's Patent Rights, Technology and Manufacturing Know-How to
develop, make, have made, use,
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offer for sale, sell, have sold, import and export Collaboration Products in the
Field and in the Territory, and the breaching Party shall execute such documents
and take all action as may be necessary or desirable to affect the foregoing;
provided; that such license shall be for the same level of exclusivity as the
rights granted with respect thereto under Section 3.1 hereof; provided further
that any license granted hereunder shall be subject to the obligation of the
non-breaching Party to use commercially reasonable and diligent efforts to
develop and market Collaboration Products pursuant to such license;
(b) the breaching Party shall assign and transfer all of its interest
in ATIII LLC to the non-breaching Party, and the non-breaching Party may
dissolve ATIII LLC in its sole discretion;
(c) (i) all licenses granted pursuant to Article 3 shall be revoked,
(ii) if ATIII LLC is dissolved, any applicable Regulatory Approvals (other
than any Regulatory Approvals filed in the name of an entity other than ATIII
LLC pursuant to Section 5.3 hereof) and clinical data owned or licensed by
ATIII LLC and any trademarks owned or licensed by ATIII LLC (other than any
trademarks registered in the name of an entity other than ATIII LLC pursuant
to Section 9.1.2 hereof) shall be assigned or licensed to the non-breaching
Party and (iii) any Regulatory Approvals filed and any trademarks registered
in the name of an entity other than ATIII LLC shall be (A) exclusively
licensed to ATIII LLC, the non-breaching Party or any Third Party or
Affiliate designated by such Party until such time as ATIII LLC, the
non-breaching Party or its designee is qualified to hold such Regulatory
Approvals or trademarks under the applicable provisions of the Regulatory
Scheme and (B) transferred or assigned to ATIII LLC, the non-breaching Party
or its designee, as appropriate, as soon as practicable thereafter;
(d) the non-breaching Party shall become obligated to pay the breaching
Party an amount equal to * plus interest thereon at the Base Rate of interest
declared from time to time by The First National Bank of Boston in Boston,
Massachusetts from the date of termination to the date payment is made (the
"Breach Buyout Amount"), payable as follows:
(1) if the non-breaching Party elects to sell or otherwise
dispose of all or any portion of its or its Affiliates' right, title
and interest in the Collaboration Products, then the non-breaching
Party shall, upon any such sale or other disposition, pay the breaching
Party an amount equal to *;
(2) for as long as the non-breaching Party has not sold or
otherwise disposed of all or a portion of its right, title and interest
in the Collaboration Products which is equal to or greater than the
breaching Party's Percentage Interest as of the date of termination,
the non-breaching Party shall pay the breaching Party * which * shall
equal (i) *, (ii) * as described in the preceding paragraph; and
(3) on * the date of termination, the non- breaching Party
shall pay the breaching Party the difference between the aggregate
amounts paid pursuant to clauses (1) and (2) above and the Breach
Buyout Amount;
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provided, that the aggregate amount of all payments made under clauses (1), (2)
and (3) shall not exceed the Breach Buyout Amount; and
(e) if Genzyme has not paid all of the payments described in Section
4.4 hereof on or before the date of termination, termination of this Agreement
shall not relieve Genzyme of its obligations to pay any such unpaid amount at
such time as it becomes due and payable in accordance with the schedule set
forth in Section 4.4 hereof.
13.3.2. For Failure to Make a Milestone Payment. In addition to the
rights and duties set forth in Sections 13.4 and 13.5 below, GTC shall have the
following rights and duties upon termination of this Agreement pursuant to
Section 13.2.2(b) above:
(a) GTC shall obtain from Genzyme the irrevocable right and license,
with the right to grant sublicenses, under the Genzyme's Patent Rights,
Technology and Manufacturing Know-How to develop, make, have made, use, offer
for sale, sell, have sold, import and export Collaboration Products in the Field
and in the Territory, and Genzyme shall execute such documents and take all
action as may be necessary or desirable to affect the foregoing; provided, that
such license shall be for the same level of exclusivity as the rights granted
with respect thereto under Section 3.1; provided further that any license
granted hereunder shall be subject to the obligation of GTC to use commercially
reasonable and diligent efforts to develop and market Collaboration Products
pursuant to such license;
(b) Genzyme shall assign and transfer all of its interest in ATIII LLC
to GTC, and GTC may dissolve ATIII LLC in its sole discretion;
(c) (i) all licenses granted pursuant to Article 3 shall be revoked,
(ii) if ATIII LLC is dissolved, any applicable Regulatory Approvals (other than
any Regulatory Approvals filed in the name of an entity other than ATIII LLC
pursuant to Section 5.3 hereof) and clinical data owned or licensed by ATIII LLC
and any trademarks owned or licensed by ATIII LLC (other than any trademarks
registered in the name of an entity other than ATIII LLC pursuant to Section
9.1.2 hereof) shall be assigned or licensed to GTC and (iii) any Regulatory
Approvals filed and any trademarks registered in the name of an entity other
than ATIII LLC shall be (A) exclusively licensed to ATIII LLC, GTC or any Third
Party or Affiliate designated by GTC until such time as ATIII LLC, GTC or its
designee is qualified to hold such Regulatory Approvals or trademarks under the
applicable provisions of the Regulatory Scheme and (B) transferred or assigned
to ATIII LLC, GTC or its designee, as appropriate, as soon as practicable
thereafter; and
(d) GTC shall become obligated to pay Genzyme an amount equal to * plus
interest thereon at the Base Rate of interest declared from time to time by The
First National Bank of Boston in Boston, Massachusetts from the date of
termination to the date payment is made (the "Milestone Breach Buyout Amount"),
payable on the terms and conditions and in accordance with the schedule of
payments set forth in Section 13.3.1(d), mutatis mutandis.
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38
13.3.3. For Convenience. In addition to the rights and duties set forth
in Sections 13.4 and 13.5 below, GTC and Genzyme shall have the following rights
and duties upon termination of this Agreement pursuant to Section 13.2.3 above:
(a) the non-terminating Party shall have an option exercisable upon
written notice to the terminating Party within the one-year period provided in
Section 13.2.3 hereof to obtain from the terminating Party the irrevocable right
and license, with the right to grant sublicenses, under the terminating Party's
Patent Rights, Technology and Manufacturing Know-How to develop, make, have
made, use, offer for sale, sell, have sold, import and export Collaboration
Products in the Field and in the Territory, and the terminating Party shall
execute such documents and take all action as may be necessary or desirable to
affect the foregoing; provided, that such license shall be for the same level of
exclusivity as the rights granted with respect thereto under Section 3.1;
provided further that any license granted hereunder shall be subject to the
obligation of the non-terminating Party to use commercially reasonable and
diligent efforts to develop and market Collaboration Products pursuant to such
license;
(b) upon exercise of its license option provided in paragraph (a) of
this Section 13.3.3, the terminating Party shall assign and transfer all of its
interest in ATIII LLC to the non-terminating Party, and the non-terminating
Party may dissolve ATIII LLC in its sole discretion;
(c) upon exercise of its license option provided in paragraph (a) of
this Section 13.3.3, (i) all licenses granted pursuant to Article 3 shall be
revoked, (ii) if ATIII LLC is dissolved, any applicable Regulatory Approvals
(other than any Regulatory Approvals filed in the name of an entity other
than ATIII LLC pursuant to Section 5.3 hereof) and clinical data owned or
licensed by ATIII LLC and any trademarks owned or licensed by ATIII LLC
(other than any trademarks registered in the name of an entity other than
ATIII LLC pursuant to Section 9.1.2 hereof) shall be assigned to the
non-terminating Party and (iii) any Regulatory Approvals filed and any
trademarks registered in the name of an entity other than ATIII LLC shall be
(A) exclusively licensed to ATIII LLC, the non-terminating Party or any Third
Party or Affiliate designated by such Party until such time as ATIII LLC, the
non-terminating Party or its designee is qualified to hold such Regulatory
Approvals or trademarks under the applicable provisions of the Regulatory
Scheme and (B) transferred or assigned to ATIII LLC, the non-terminating
Party or its designee, as appropriate, as soon as practicable thereafter;
(d) upon the exercise of its license option provided in paragraph (a)
of this Section 13.3.3, the non-terminating Party shall become obligated to pay
to the terminating Party an amount equal to *plus interest thereon at the Base
Rate of interest declared from time to time by The First National Bank of Boston
in Boston, Massachusetts from the date of termination to the date payment is
made (the "Convenience Buyout Amount"), payable on the terms and conditions and
in accordance with the schedule of payments set forth in Section 13.3.1(d),
mutatis mutandis;
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*Confidential treatment for indicated portion respectfully requested
39
(e) if the license option provided in paragraph (a) of this Section
13.3.3 is not exercised, then all right, title and interest in the Collaboration
Products shall be sold to the highest bidder within * from the date of
termination and the proceeds shall be allocated between the Members in
proportion to their Percentage Interests in ATIII LLC as of the date of
termination and ATIII LLC shall be dissolved; and
(f) if Genzyme has not paid all of the payments described in Section
4.4 hereof on or before the date of termination, termination of this Agreement
shall not relieve Genzyme of its obligations to pay any such unpaid amount at
such time as it becomes due and payable in accordance with the schedule set
forth in Section 4.4 hereof.
13.3.4. Upon Bankruptcy. In addition to the rights and duties set forth
in Sections 13.4 and 13.5 below, GTC and Genzyme shall have the following rights
and duties upon termination of this Agreement pursuant to Section 13.2.4 above:
(a) the terminating Party shall obtain from the non-terminating Party
the irrevocable right and license, with the right to grant sublicenses, under
the non-terminating Party's Patent Rights, Technology and Manufacturing Know-How
to develop, make, have made, use, offer for sale, sell, have sold, import and
export Collaboration Products in the Field and in the Territory, and the
non-terminating Party shall execute such documents and take all action as may be
necessary or desirable to affect the foregoing; provided, that such license
shall be for the same level of exclusivity as the rights granted with respect
thereto under Section 3.1 hereof; provided further that any license granted
hereunder shall be subject to the obligation of the terminating Party to use
commercially reasonable and diligent efforts to develop and market Collaboration
Products pursuant to such license;
(b) the non-terminating Party shall assign and transfer all of its
interest in ATIII LLC to the terminating Party, and the terminating Party may
dissolve ATIII LLC in its sole discretion;
(c) (i) all licenses granted to Article 3 shall be revoked, (ii) if
ATIII LLC is dissolved, any applicable Regulatory Approvals (other than any
Regulatory Approvals filed in the name of an entity other than ATIII LLC
pursuant to Section 5.3 hereof) and clinical data owned or licensed by ATIII LLC
and any trademarks owned or licensed by ATIII LLC (other than any trademarks
registered in the name of an entity other than ATIII LLC pursuant to Section
9.1.2 hereof) shall be assigned or licensed to the terminating Party and (iii)
any Regulatory Approvals filed and any trademarks registered in the name of an
entity other than ATIII LLC shall be (A) exclusively licensed to ATIII LLC the
terminating Party or any Third Party or Affiliate designated by such Party until
such time as ATIII LLC, the terminating Party or its designee is qualified to
hold such Regulatory Approvals or trademarks under the applicable provisions of
the Regulatory Scheme and (B) transferred or assigned to ATIII LLC, the
terminating Party or its designee, as appropriate, as soon as practicable
thereafter;
(d) the terminating Party shall become obligated to pay to the
non-terminating Party an amount equal to * plus interest thereon at the Base
Rate of interest declared from time to time by The First National Bank of
Boston in Boston, Massachusetts
- ------------------------
*Confidential treatment for indicated portion respectfully requested
40
from the date of termination to the date payment is made (the "Bankruptcy Buyout
Amount"), payable on the terms and conditions and in accordance with the
schedule of payments set forth in Section 13.3.1(d), mutatis mutandis; and
(e) if Genzyme has not paid all of the payments described in Section
4.4 hereof on or before the date of termination, termination of this Agreement
shall not relieve Genzyme of its obligations to pay any such unpaid amount at
such time as it becomes due and payable in accordance with the schedule set
forth in Section 4.4 hereof.
13.3.5. *. For purposes of this Section 13.3, the * shall be *,
determined as of the date of termination, which determination shall be made by
the mutual agreement of GTC and Genzyme. In the event that GTC and Genzyme are
unable to agree upon * within * of the date of termination, the * shall be
determined * by mutual agreement of GTC and Genzyme, and the costs and expenses
incurred in connection with * shall be shared equally by GTC and Genzyme.
13.4. Inventory. Upon the termination of this Agreement, if Genzyme does
not obtain a license pursuant to Section 13.3 hereof, GTC shall have the option
to repurchase Genzyme's inventory of Collaboration Products acquired by Genzyme
pursuant to Article 6 hereof. Within ten (10) days after such termination, GTC
shall elect in writing to either (a) permit Genzyme to sell off its remaining
inventory of Collaboration Products, provided that Genzyme shall comply with all
of the terms and conditions of this Agreement restricting such selling
activities as in effect immediately prior to such termination, or (b) repurchase
Genzyme's inventory of Collaboration Products. If GTC fails to make such an
election, Genzyme shall be permitted to sell-off its remaining inventory of
Collaboration Products in accordance with clause (a) of this Section 13.4. Any
repurchase of Genzyme's inventory of Collaboration Products shall be at the
price * to be reasonably determined by the Parties in good faith.
13.5. Survival of Rights and Duties. No termination of this Agreement shall
eliminate any rights or duties of the Parties accrued prior to such termination.
The provisions of Articles 1, 10 and 12 and Sections 2.2, 2.3, 2.4 (the second
paragraph thereof only), 3.3, 4.3, 4.5, 9.1.1, 9.1.3, 9.3, 9.5, 13.3, 13.4,
13.5, 14.1, 14.3, 14.4, 14.5, 14.9, 14.10, 14.11 and 14.12 hereof shall survive
any termination of this Agreement.
ARTICLE 14. MISCELLANEOUS
14.1. Cooperation. If either GTC or Genzyme (the "Assuming Party") shall
assume the Program rights from the other Party (the "Responsible Party") in
accordance with the provisions of Article 13 hereof, the Responsible Party shall
promptly provide to the Assuming Party (or any Third Party or Affiliate
designated by the Assuming Party) all Technology, Manufacturing Know-How and
access to regulatory filings sufficient to allow the Assuming Party to perform
the duties assumed. The Responsible Party shall further use its best efforts to
provide all assistance required by the Assuming Party with respect to such
transfer so as to permit the Assuming Party to begin to perform such duties as
soon as possible to minimize
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*Confidential treatment for indicated portion respectfully requested
41
any disruption in the continuity of supply or marketing of Collaboration
Products. In addition, if upon the date this Agreement is terminated
Collaboration Products are being manufactured in facilities owned or leased by
the Responsible Party (including facilities subleased by ATIII LLC from the
Responsible Party), the Responsible Party agrees to lease such facilities to the
Assuming Party on commercially reasonable terms for a period of up to
twenty-four (24) months.
14.2. Exchange Controls. All payments due hereunder shall be paid in United
States dollars. If at any time legal restrictions prevent the prompt remittance
of part or all payments with respect to any country in which Collaboration
Products are sold, payment shall be made through such lawful means or methods as
the Parties may determine in good faith.
14.3. Withholding Taxes. If applicable laws or regulations require that
taxes be withheld from payments made hereunder, the Party paying such taxes will
(a) deduct such taxes, (b) timely pay such taxes to the proper authority and (c)
send written evidence of payment to the Party from whom such taxes were withheld
within sixty (60) days after payment. Each Party will assist the other Party or
Parties in claiming tax refunds, deductions or credits at such other Party's
request and will cooperate to minimize the withholding tax, if available, under
various treaties applicable to any payment made hereunder.
14.4. IRS Transfer Pricing Adjustments. In the event that the Internal
Revenue Service or any local or state tax authority determines that amounts paid
to GTC or Genzyme by any Party for services performed in connection with the
Program are insufficient and adjusts the revenue reported by Genzyme or GTC
accordingly, then (i) in the case of any payment made by ATIII LLC to Genzyme or
GTC, the amount of the corresponding tax deduction available to ATIII LLC shall
be allocated to Genzyme or GTC, as the case may be, and (ii) in the case of any
payment by GTC or Genzyme to the other, the Party who made such payment shall
promptly pay Genzyme or GTC, as the case may be, an amount equal to the taxes
payable on the additional revenue attributed to such Party plus any interest
expense thereon, which amount shall be grossed-up for taxes payable on the
amount of such payment.
14.5. Interest on Late Payments. Any payments to be made hereunder that are
not paid on or before the date such payments are due under this Agreement shall
bear interest, to the extent permitted by applicable law, at the Base Rate of
interest declared from time to time by The First National Bank of Boston in
Boston, Massachusetts, calculated on the number of days payment is delinquent.
14.6. Force Majeure. Neither Party shall be held liable or responsible to
the other Party nor be deemed to have defaulted under or breached this Agreement
for failure or delay in fulfilling or performing any term of this Agreement when
such failure or delay is caused by or results from causes beyond the reasonable
control of the affected Party, including without limitation to contamination or
diseases affecting the herd of Transgenic Animals from which tgATIII is
produced, fire, floods, embargoes, war, acts of war (whether war is declared or
not), insurrections, riots, civil commotions, strikes, lockouts or other labor
disturbances, acts of God or acts, omissions or delays in acting by any
governmental authority or the other Party; provided, however, that the Party so
affected shall use commercially reasonable and diligent efforts to avoid or
remove such causes of non-performance, and shall continue performance hereunder
with reasonable dispatch wherever such causes are removed. Each Party shall
provide the other Parties with prompt written notice of any delay or failure to
42
perform that occurs by reason of force majeure. The Parties shall mutually seek
a resolution of the delay or the failure to perform in good faith.
14.7. Assignment. This Agreement may not be assigned or otherwise
transferred by any Party without the consent of the other Parties; provided,
however, that either GTC or Genzyme may, without such consent, assign its rights
and obligations under this Agreement (a) in connection with a corporate
reorganization, to any member of an affiliated group, all or substantially all
of the equity interest of which is owned and controlled by such Party or its
direct or indirect parent corporation or (b) in connection with a merger,
consolidation or sale of substantially all of such Party's assets to an
unrelated Third Party; provided, however, that such Party's rights and
obligations under this Agreement shall be assumed by its successor in interest
in any such transaction and shall not be transferred separate from all or
substantially all of its other business assets, including without limitation
those business assets that are the subject of this Agreement. Any permitted
assignee shall assume all obligations of its assignor under this Agreement. Any
purported assignment in violation of this Section 14.7 shall be void.
14.8. Severability. Each Party hereby agrees that it does not intend to
violate any public policy, statutory or common laws, rules, regulations, treaty
or decision of any government agency or executive body thereof of any country or
community or association of countries. Should one or more provisions of this
Agreement be or become invalid, the Parties hereto shall substitute, by mutual
consent, valid provisions for such invalid provisions which valid provisions in
their economic effect are sufficiently similar to the invalid provisions that it
can be reasonably assumed that the Parties would have entered into this
Agreement with such valid provisions. In case such valid provisions cannot be
agreed upon, the invalidity of one or several provisions of this Agreement shall
not affect the validity of this Agreement as a whole, unless the invalid
provisions are of such essential importance to this Agreement that it is to be
reasonably assumed that the Parties would not have entered into this Agreement
without the invalid provisions.
14.9. Notices. Any consent, notice or report required or permitted to be
given or made under this Agreement by one of the Parties hereto to the other
shall be in writing, delivered personally or by facsimile (and promptly
confirmed by personal delivery or courier), by a next business day delivery
service of a nationally recognized overnight courier service or by courier,
postage prepaid (where applicable), addressed to such other Party at its address
indicated below, or to such other address as the addressee shall have last
furnished in writing to the addressor in accordance with this Section 14.9 and
shall be effective upon receipt by the addressee.
If to GTC: Genzyme Transgenics Corporation
Five Mountain Road
Framingham, Massachusetts 01701
Attention: President
Facsimile: (508) 370-3797
43
with a copy to: Genzyme Transgenics Corporation
Five Mountain Road
Framingham, Massachusetts 01701
Attention: General Counsel
Facsimile: (508) 370-3797
If to Genzyme: Genzyme Corporation
One Kendall Square
Cambridge, Massachusetts 02139
Attention: President
Facsimile: (617) 374-7423
with a copy to: Genzyme Corporation
One Kendall Square
Cambridge, Massachusetts 02139
Attention: Chief Legal Officer
Facsimile: (617) 252-7553
If to ATIII ATIII LLC
LLC (if c/o Genzyme Corporation
such notice is One Kendall Square
sent by GTC): Cambridge, Massachusetts 02139
Attention: President
Facsimile: (617) 374-7423
with a copy to: Genzyme Corporation
One Kendall Square
Cambridge, Massachusetts 02139
Attention: Chief Legal Officer
Facsimile: (617) 252-7553
If to ATIII ATIII LLC
LLC (if Genzyme Transgenics Corporation
such notice is sent Five Mountain Road
by Genzyme): Framingham, Massachusetts 01701
Attention: President
Facsimile: (508) 370-3797
with a copy to: Genzyme Transgenics Corporation
Five Mountain Road
Framingham, Massachusetts 01701
Attention: General Counsel
Facsimile: (508) 370-3797
14.10. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts without regard to
any choice of law principle that would dictate the application of the laws of
another jurisdiction.
44
14.11. Arbitration. Any disputes arising 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 (a "Dispute"),
which has not resolved in accordance with the provisions of Section 8.3 hereof,
shall be finally resolved by binding arbitration as herein provided.
14.11.1. General. Except as otherwise provided in this Section 14.11,
any arbitration hereunder shall be conducted under the commercial rules of the
American Arbitration Association. Each such arbitration shall be conducted in
the English language by a panel of three (3) arbitrators (the "Arbitration
Panel"). Each of GTC and Genzyme shall appoint one (1) arbitrator to the
Arbitration Panel and the third arbitrator shall be appointed by the two (2)
arbitrators appointed by GTC and Genzyme. The Arbitration Panel shall be
convened upon delivery of the Notice of Arbitration (as herein defined). Any
such arbitration shall be held in Boston, Massachusetts. The Arbitration Panel
shall have the authority to grant specific performance, and to allocate between
the Parties the costs of arbitration in such equitable manner as it shall
determine. Judgment upon the award so rendered may be entered in any court
having jurisdiction or application may be made to such court for judicial
acceptance of any award and an order of enforcement, as the case may be.
14.11.2. Procedure.
(a) Whenever a Party (the "Claimant") shall decide to institute
arbitration proceedings, it shall give written notice to that effect (the
"Notice of Arbitration") to the other Party (the "Respondent"). The Notice of
Arbitration shall set forth in detail the nature of the Dispute, the facts upon
which the Claimant relies and the issues to be arbitrated (collectively, the
"Arbitration Issues"). Within fifteen (15) days of its receipt of the Notice of
Arbitration, the Respondent shall send the Claimant and the Arbitration Panel a
written Response (the "Response"). The Response shall set forth in detail the
facts upon which the Respondent relies. In addition, the Response shall contain
all counterclaims which the Respondent may have against the Claimant which are
within the Arbitration Issues, whether or not such claims have previously been
identified. If the Response sets forth a counterclaim, the Claimant may, within
fifteen (15) days of the receipt of the Response, deliver to the Respondent and
the Arbitration Panel a rejoinder answering such counterclaim.
(b) Within fifteen (15) days after the later of (i) the expiration of
the period provided in Section 14.11.2(a) above for the Claimant to deliver a
rejoinder or (ii) the completion of any discovery proceedings authorized by the
Arbitration Panel: (A) the Claimant shall send to the Arbitration Panel a
proposed resolution of the Arbitration Issues and a proposed resolution of any
counterclaims set forth in the Response, including without limitation the amount
of monetary damages, if any, or other relief sought (the "Claimant's Proposal");
and (B) the Respondent shall send to the Arbitration Panel a proposed resolution
of the Arbitration Issues, a proposed resolution of any counterclaims set forth
in the Response and a proposed resolution of any rejoinder submitted by the
Claimant, including without limitation the amount of monetary damages, if any,
or other relief sought (the "Respondent's Proposal"). Once both the Claimant's
Proposal and the Respondent's Proposal have been submitted, the Arbitration
Panel shall deliver to each Party a copy of the other Party's proposal.
45
(c) The Arbitration Panel shall issue an opinion with respect to any
Dispute, which opinion shall explicitly accept either the Claimant's Proposal or
the Respondent's Proposal in its entirety (the "Final Decision"). The
Arbitration Panel shall not have the authority to reach a Final Decision that
provides remedies or requires payments other than those set forth in the
Claimant's Proposal or the Respondent's Proposal. The concurrence of two (2)
arbitrators shall be sufficient for the entry of a Final Decision. The
arbitrators shall issue a Final Decision within one (1) month from the later of
(i) the last day for submission of proposals under Section 14.11.2(b) above or
(ii) the date of the final hearing on any Dispute held by the Arbitration Panel.
A Final Decision shall be binding on both Parties.
14.12. Injunctive Relief. The Parties hereby acknowledge that a breach
of their respective obligations under Article 10 hereof may cause irreparable
harm and that the remedy or remedies at law for any such breach may be
inadequate. The Parties hereby agree that, in the event of any such breach,
in addition to all other available remedies hereunder, the non-breaching
Party or Parties shall have the right to obtain equitable relief to enforce
Article 10 hereof.
14.13. Entire Agreement. This Agreement and the Operating Agreement contain
the entire understanding of the Parties with respect to the subject matter
hereof. All express or implied agreements and understandings, either oral or
written, heretofore made are expressly merged in and made a part of this
Agreement. This Agreement supersedes the Convertible Debt Agreement. It is
understood that the Amended and Restated Convertible Debt Agreement dated as of
September 4, 1997 by and between GTC and Genzyme shall remain in full force and
effect. This Agreement may be amended, or any term hereof modified, only by a
written instrument duly executed by both Parties hereto. Each of the Parties
hereby acknowledges that this Agreement and the Operating Agreement are both the
result of mutual negotiation and therefore any ambiguity in their respective
terms shall not be construed against the drafting Party.
14.14. Headings. The captions to the several Articles and Sections hereof
are not a part of this Agreement, but are merely guides or labels to assist in
locating and reading the several Articles and Sections hereof.
14.15. Independent Contractors. It is expressly agreed that GTC and Genzyme
shall be independent contractors and that, except as Members of ATIII LLC, the
relationship between the two Parties shall not constitute a partnership, joint
venture or agency. Neither GTC nor Genzyme shall have the authority to make any
statements, representations or commitments of any kind, or to take any action,
which shall be binding on the other, without the prior consent of the other
Party to do so.
14.16. Waiver. Except as expressly provided herein, the waiver by either
Party hereto of any right hereunder or of any failure to perform or any breach
by the other Party shall not be deemed a waiver of any other right hereunder or
of any other failure to perform or breach by said other Party, whether of a
similar nature or otherwise, nor shall any singular or partial exercise of such
right preclude any further exercise thereof or the exercise of any other such
right.
46
14.17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
GENZYME CORPORATION
By: /s/ Peter Wirth
---------------------------------------------
Title: Executive Vice President
--------------------------------------------
Date: December 29, 1997
--------------------------------------------
GENZYME TRANSGENICS CORPORATION
By: /s/ John B. Green
----------------------------------------------
Title: Vice President and Chief Financial Officer
--------------------------------------------
Date: December 29, 1997
----------------------------------------------
ATIII LLC
By: GENZYME CORPORATION
By: /s/ Peter Wirth
---------------------------------------------
Title: Executive Vice President
---------------------------------------------
Date: December 29, 1997
---------------------------------------------
By: GENZYME TRANSGENICS CORPORATION
By: /s/ John B. Green
---------------------------------------------
Title: Vice President and Chief Financial Officer
---------------------------------------------
Date: December 29, 1997
---------------------------------------------
48
Schedule 1.21
Genzyme Patent Rights
Title Country
----- -------
1. * *
2. "Protein Purification" U.S. Patent 5,179,199
Australia 79930/87
Canada 549,607
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Schedule 1.25
GTC Licensed ATIII Patent Rights
--------------------------------
1. *
2. U.S. Patent Nos. 4,517,294 and 4,632,981;
3. *
related applications worldwide (excluding the SMIG Territory).
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50
Schedule 1.26
GTC Patent Rights
- --------------------------------------------------------------------------------
Title of Patent Application Serial No. Territory
or Patent Number
- --------------------------------------------------------------------------------
1. Transgenic Animals Secreting * *
Desired Proteins in Milk
Patent No. 0264166 Europe
* *
- --------------------------------------------------------------------------------
2. * * *
- --------------------------------------------------------------------------------
3. * * *
- --------------------------------------------------------------------------------
4. Expression of Protein in Milk Patent No, 4,873,316 U.S.
(licensed from Biogen)
Patent No. 347,431 Europe
- --------------------------------------------------------------------------------
5. DNA Sequences to Target Patent No. 5,304,489 U.S.
Proteins to the Mammary
Gland for Efficient Secretion Patent No. 5,565,362 U.S.
(Licensed from Pharming)
* *
- --------------------------------------------------------------------------------
6. * * *
- --------------------------------------------------------------------------------
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51
Schedule 3.1.3
Third Party Royalties and Fees
1. Patent Sublicense Agreement dated February 1, 1990 by and between DNX,
Inc. ("Chrysalis") and GTC (as successor to Genzyme).
2. Agreement dated September 29, 1990 by and among GTC (as successor to
Genzyme), SMIG and Centeon (as successor to Behring).
3. License Agreement dated December 26, 1990 by and between Pharming B.V.
(as successor to Biogen, Inc.) and GTC (as successor to Genzyme).
4. Cooperation Agreement dated September 6, 1988 by and between Tufts
University School of Veterinary Medicine and GTC (as successor to
Genzyme, the successor to Integrated Genetics, Inc.) as amended through
and including September 6, 1997.
52