EXHIBIT 10.24
CONFIDENTIAL
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[* * *]: CONFIDENTIAL TREATMENT REQUESTED FOR PORTIONS OF THIS EXHIBIT
COLLABORATION AGREEMENT
among
GENZYME CORPORATION,
BIOMARIN PHARMACEUTICAL, INC.
and
BIOMARIN/GENZYME LLC
Dated as of September 4, 1998
TABLE OF CONTENTS
PAGE
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ARTICLE I - DEFINITIONS............................................................................ 1
ARTICLE II - SCOPE AND STRUCTURE OF THE COLLABORATION.............................................. 7
2.1 General.................................................................................. 7
2.2 Exclusive Relationship................................................................... 8
ARTICLE III - GRANTS AND RESERVATIONS OF RIGHTS.................................................... 9
3.1 Licenses of Rights to BioMarin/Genzyme LLC............................................... 9
3.2 Sublicenses of Rights from BioMarin/Genzyme LLC to BioMarin and Genzyme.................. 10
3.3 Reservation of Rights.................................................................... 11
3.4 Assignment of Orphan Drug Designation.................................................... 11
ARTICLE IV - PROGRAM FUNDING; LLC INTEREST......................................................... 11
4.1 Program Funding Commitments.............................................................. 11
4.2 Program Funding Capital Contributions.................................................... 11
4.3 Distributions............................................................................ 12
4.4 Sale and Purchase of LLC Interest........................................................ 13
4.5 Books of Account; Audit.................................................................. 13
4.6 Enforceability of Sections 4............................................................. 13
ARTICLE V - THE DEVELOPMENT PROGRAM................................................................ 14
5.1 Conduct of the Development Program....................................................... 14
5.2 Development Information.................................................................. 16
5.3 Regulatory Approval Filings.............................................................. 16
5.4 Clinical Data............................................................................
5.5 Facilities Visit......................................................................... 17
ARTICLE VI - SALES, MARKETING AND ADMINISTRATIVE SERVICES.......................................... 17
6.1 Commercialization Plans.................................................................. 17
6.2 Exclusive Engagement; Diligence.......................................................... 18
6.3 Orders................................................................................... 18
6.4 Marketing and Distribution Expenses...................................................... 19
6.5 Responsibilities of Genzyme.............................................................. 19
6.6 Responsibilities of BioMarin/Genzyme LLC and BioMarin.................................... 20
6.7 General and Administrative Services...................................................... 20
ARTICLE VII - MANUFACTURE AND SUPPLY............................................................... 21
7.1 Process Development...................................................................... 21
7.2 Manufacture and Supply of Collaboration Product.......................................... 21
7.3 Certificates of Analysis................................................................. 22
7.4 Certificates of Manufacturing Compliance................................................. 22
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TABLE OF CONTENTS
(CONTINUED)
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7.5 Access to Facilities.................................................................... 23
ARTICLE VIII - MANAGEMENT.......................................................................... 23
8.1 Program Management Team................................................................. 23
8.2 Steering Committee...................................................................... 24
8.3 General Disagreements................................................................... 25
ARTICLE IX - INTELLECTUAL PROPERTY RIGHTS.......................................................... 26
9.1 Ownership............................................................................... 26
9.2 Filing, Prosecution and Maintenance of Patent Rights.................................... 27
9.3 Cooperation............................................................................. 28
9.4 Notification of Patent Term Restoration................................................. 28
9.5 No Other Technology Rights.............................................................. 28
9.6 Defense of Third Party Infringement Claims.............................................. 28
9.7 Enforcement............................................................................. 29
9.8 Third Party Rights...................................................................... 29
9.9 Third Party Agreements--Reports......................................................... 30
ARTICLE X - CONFIDENTIALITY........................................................................ 30
10.1 Nondisclosure Obligations............................................................... 30
10.2 Terms of this Agreement; Press Releases................................................. 31
10.3 Publications............................................................................ 31
ARTICLE XI - REPRESENTATIONS AND WARRANTIES........................................................ 32
11.1 Authorization........................................................................... 32
11.2 Intellectual Property Rights............................................................ 32
11.3 Warranties.............................................................................. 32
11.4 Disclaimer of Representations and Warranties............................................ 33
11.5 Limitation of Liability................................................................. 33
ARTICLE XII - INDEMNITY............................................................................ 33
12.1 BioMarin/Genzyme LLC Indemnity Obligations.............................................. 33
12.2 Insurance............................................................................... 34
ARTICLE XIII - TERM AND TERMINATION................................................................ 34
13.1 Term.................................................................................... 34
13.2 Termination............................................................................. 34
13.3 Effects of Termination.................................................................. 35
13.4 Inventory...............................................................................
13.5 Survival of Rights and Duties........................................................... 42
ARTICLE XIV - MISCELLANEOUS........................................................................ 43
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TABLE OF CONTENTS
(CONTINUED)
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14.1 Cooperation............................................................................ 43
14.2 Exchange Controls...................................................................... 43
14.3 Withholding Taxes...................................................................... 43
14.4 Interest on Late Payments.............................................................. 43
14.5 Force Majeure.......................................................................... 44
14.6 Assignment............................................................................. 44
14.7 Severability........................................................................... 44
14.8 Notices................................................................................ 44
14.9 Applicable Law......................................................................... 46
14.10 Arbitrate.............................................................................. 46
14.11 Injunctive Relief...................................................................... 47
14.12 Entire Agreement....................................................................... 47
14.13 Headings............................................................................... 48
14.14 Independent Contractors................................................................ 48
14.15 Waiver................................................................................. 48
14.16 Counterparts........................................................................... 48
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COLLABORATION AGREEMENT
THIS COLLABORATION AGREEMENT dated as of September 4, 1998 (the
"Agreement") is made among Genzyme Corporation, a Massachusetts corporation
having its principal place of business at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Genzyme"), BioMarin Pharmaceutical, Inc., a Delaware
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corporation having its principal place of business at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("BioMarin") and BioMarin/Genzyme LLC, a Delaware limited
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liability company having its principal place of business at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Genzyme/BioMarin LLC"). Genzyme, BioMarin and
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BioMarin/Genzyme LLC are sometimes referred to herein individually as a "Party"
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and collectively as the "Parties".
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RECITALS
A. BioMarin is developing recombinant human alpha-L-iduronidase ("Alpha-
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L- iduronidase"). Decreased levels of the Alpha-L-iduronidase enzyme result in
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individuals having mucopolysaccharidosis I ("MPS I"). BioMarin is currently
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developing Alpha-L-iduronidase for the treatment of MPS I and other Alpha-L-
iduronidase deficiencies.
B. Genzyme has expertise in developing, manufacturing and marketing
biopharmaceutical products.
C. BioMarin/Genzyme LLC has been organized by BioMarin and Genzyme as the
vehicle for a joint venture between BioMarin 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 I
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
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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 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 "BioMarin Companies" shall mean BioMarin and BioMarin Genetics, Inc.,
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a Delaware corporation and a wholly-owned subsidiary of BioMarin ("BioMarin
Genetics").
1.3 "BioMarin/Genzyme Patent Rights" shall mean the Patent Rights that
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claim Joint Inventions (as such term is defined in Section 9.1.1 hereof) that
are discovered, made or conceived during and in connection with the Program
jointly by employees or consultants of Genzyme and BioMarin to the extent that
such Patent Rights relate to or are useful for the research, development,
manufacture or commercialization of Collaboration Products for use in the Field.
1.4 "BioMarin/Genzyme Technology" shall mean all Technology discovered,
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made or conceived during and in connection with the Program jointly by employees
or consultants of Genzyme and BioMarin relating to or useful for the research,
development, manufacture or commercialization of Collaboration Products for use
in the Field.
1.5 "BioMarin Patent Rights" shall mean all Patent Rights Controlled by
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BioMarin during the term of this Agreement to the extent that such Patent Rights
relate to or are useful for the research, development, manufacture or
commercialization of Collaboration Products for use in the Field, including the
BioMarin Patent Rights listed in Schedule 1.5 hereto.
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1.6 "BioMarin Technology" shall mean all Technology Controlled by BioMarin
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during the term of this Agreement to the extent that such Technology relates to
or is useful for the research, development, manufacture or commercialization of
Collaboration Products for use in the Field.
1.7 "BLA" shall mean a Biologics License Application or similar
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application filed with the FDA after completion of human clinical trials to
obtain marketing approval for a Collaboration Product.
1.8 "Collaboration Product" shall mean any pharmaceutical compositions of
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Alpha-L-iduronidase, including without limitation any and all improvements,
derivatives, analogs, combination products, delivery systems and dosage forms
related thereto.
1.9 "Commercialization Costs" with respect to a Collaboration Product
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shall mean the variable costs and fixed costs incurred by BioMarin/Genzyme LLC
with respect to work performed by the Parties and their Affiliates and
subcontractors in connection with the performance of and in accordance with the
Commercialization Plan for such Collaboration Product, including without
limitation, sales and marketing costs related to performing market research,
post-marketing studies, advertising, producing promotional literature,
sponsoring seminars and symposia, sales training meetings and seminars,
originating sales, providing reimbursement and other patient support services
and such other expenses described in Section 6.4 hereof. For purposes of this
Section 1.9, "variable costs" shall be deemed to be the cost of labor, raw
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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 amounts paid to Third Parties under a
Third Party Agreement as a result of performance of the Commercialization Plan,
to the extent not included in Development Costs or Fully Absorbed Cost of Goods.
For purposes of this Section 1.9, "fixed costs" shall be deemed to be the cost
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of facilities, utilities, insurance, equipment depreciation and other fixed
costs directly related to the conduct of and in accordance with the
Commercialization
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Plan and the manufacture of Collaboration Product for use in commercialization
activities, allocated based upon the proportion of such costs directly
attributable to support or performance 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.
1.10 "Commercialization Plan" shall mean, with respect to a particular
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Collaboration Product, the comprehensive plan and budget for the
commercialization of such Collaboration Product, as more specifically described
in Section 6.1.1 hereof.
1.11 "Control" shall mean possession of the ability to grant a license or
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sublicense as provided for herein without violating the terms of an agreement
with a Third Party.
1.12 "Date of Execution" shall mean the last date on which the Parties
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executed this Agreement, as shown on the signature pages hereto.
1.13 "Development Costs" with respect to a Collaboration Product shall
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mean the variable costs and fixed costs incurred by BioMarin/Genzyme LLC with
respect to work performed by the Parties and their Affiliates and subcontractors
in connection with the conduct of and in accordance with 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 BioMarin by BioMarin/Genzyme 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 BioMarin to develop and document process methods and
procedures 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, (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, (e) license fees and other amounts paid to a Third Party
pursuant to a Third Party Agreement as a result of performance of the
Development Plan (excluding any fees payable pursuant to Section 15(g)(iii), but
including amounts payable pursuant to Section 15(g)(i), in each case of that
certain General Terms and Conditions Agreement dated April 1, 1997 between
BioMarin and Harbor-UCLA Research and Education Institute ("REI"), as amended
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pursuant to that certain letter agreement dated August 24, 1998 between BioMarin
and REI) and (f) costs relating to the prosecution and maintenance of Patent
Rights which claim, or disclose subject matter relevant to, the manufacture or
use of such Collaboration Product. For purposes of this Section 1.13, "variable
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costs" shall be deemed to be the cost of labor, raw materials, supplies and
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other resources directly consumed in the conduct of and in accordance with 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 1.13, "fixed costs" shall be deemed to be the cost of
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facilities, utilities, insurance, facility and
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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 the
support or performance 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.
1.14 "Development Plan" shall mean, with respect to a particular
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Collaboration Product, the comprehensive plan and budget for the development of
such Collaboration Product under the Development Program, as more specifically
described in Section 5.1.2 hereof.
1.15 "Development Program" shall mean, with respect to a particular
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Collaboration Product, the preclinical and clinical development of such
Collaboration Product including the preparation and filing of all applications
for Regulatory Approvals for such Collaboration Product. Subject to Section
7.2.3 below, the Development Program will include establishment and validation
of facilities for the preclinical, clinical and commercial manufacture and/or
preparation of Collaboration Products.
1.16 "Effective Date" shall mean September 4, 1998.
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1.17 "Field" shall mean any and all therapeutic applications of Alpha-L-
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iduronidase for MPS I and other Alpha-L-iduronidase deficiencies.
Notwithstanding the foregoing, the Field shall not include Gene Therapy for MPS
I or other Alpha-L-iduronidase deficiencies. For purposes of this Agreement,
"Gene Therapy" shall mean treatment or prevention of MPS I or other Alpha-L-
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iduronidase deficiencies by means of ex vivo or in vivo introduction (via viral
or nonviral gene transfer systems) of nucleotide sequences (including without
limitation, DNA, RNA and complementary and reverse complementary nucleotide
sequences thereto, whether coding or noncoding).
1.18 "FDA" shall mean the United States Food and Drug Administration, any
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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 units of Collaboration
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Product shall mean (a) the variable costs and fixed costs incurred by a Party
associated with the manufacture (inclusive of finishing processes including
filling, packaging, labeling and/or other preparation) quality assurance,
quality control and other testing, storage and shipping of batches of such units
of Collaboration Product or (b) if such units or portions of Collaboration
Product are not manufactured by the Parties, the amounts paid to the vendor plus
costs associated with acquisition from such vendor. For purposes of this
Section 1.19, "variable costs" shall be deemed to be the cost of labor, raw
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materials, supplies and other resources directly consumed in the manufacture,
quality assurance, quality control and other testing, storage and shipping 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,
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insurance, facility and equipment depreciation and other fixed costs directly
related to the manufacture, quality assurance, quality control and other
testing, storage and shipping of batches of
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such Collaboration Product, as well as amounts paid to Third Parties under a
Third Party Agreement as a result of the manufacture, use or sale of such units
of Collaboration Products. Fixed costs shall be allocated to such units of
Collaboration Product based upon the proportion of such costs directly
attributable to support of the manufacturing, quality assurance, quality control
and other testing, storage and shipping processes for such Collaboration
Product. If a facility is used to manufacture Collaboration Products and has the
capacity to manufacture products for other programs of either Genzyme or
BioMarin, fixed costs shall be allocated in proportion to the actual use of such
facility for the manufacture of Collaboration Products and the capacity to
manufacture products for such other programs. For the avoidance of doubt, no
idle capacity of a manufacturing facility shall be included in Fully Absorbed
Cost of Goods unless such facility is appropriately sized and dedicated solely
to the manufacture of Collaboration Products. Fully Absorbed Cost of Goods shall
exclude all costs otherwise reimbursed pursuant to this Agreement. In the event
that either BioMarin or Genzyme subcontracts with the other Party to perform any
work on its behalf in connection with the manufacturing responsibilities
assigned to BioMarin or Genzyme, respectively, pursuant to Section 7.2.1 hereof,
BioMarin and Genzyme (i) shall each directly charge BioMarin/Genzyme 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
BioMarin/Genzyme 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 the then-current United States generally accepted
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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 Patent Rights Controlled by
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Genzyme during the term of this Agreement to the extent that such Patent Rights
relate to or are 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.
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1.22 "Genzyme Technology" shall mean all Technology Controlled by Genzyme
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during the term of this Agreement to the extent such Technology relates to or is
useful for the research, development manufacture or commercialization of
Collaboration Products for use in the Field.
1.23 "Major Market Country" shall mean the United States, the United
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Kingdom, France, Germany, Italy, Japan and Spain.
1.24 "Manufacturing Party" shall have the meaning set forth in Section
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7.2.1.
1.25 "Manufacturing Know-How" shall mean all information, techniques,
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inventions, discoveries, improvements, practices, methods, knowledge, skill,
experience and other technology, whether or not patentable or copyrightable, and
any 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
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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.
1.26 "Member" shall have the meaning set forth in the Operating Agreement.
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1.27 "Net Profit" of BioMarin/Genzyme LLC for any period shall be equal
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to (a) the sum during such period of all revenues recognized and recorded by
BioMarin/Genzyme LLC during such period, including without limitation (i)
revenues from sales of all Collaboration Products sold directly by
BioMarin/Genzyme LLC and (ii) all revenues received by BioMarin/Genzyme LLC from
Third Parties as consideration for sublicensing the manufacture, use,
distribution or sale of Collaboration Products, less (b) all expenses incurred
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by BioMarin/Genzyme LLC during such period, including without limitation
expenses incurred in respect of Development Costs and Commercialization Costs
and facility and equipment depreciation costs not otherwise accounted for. All
determinations made hereunder shall be made in accordance with GAAP.
1.28 "Operating Agreement" shall mean the Operating Agreement of
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BioMarin/Genzyme LLC dated of even date herewith by and between BioMarin and
Genzyme.
1.29 "Patent Rights" shall mean any patents, patent applications,
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certificates of invention, or applications for certificates of invention,
together with any extensions, registrations, confirmations, reissues, divisions,
continuations or continuations-in-part, reexaminations or renewals thereof, that
may be sought throughout the world.
1.30 "Percentage Interest" shall have the meaning set forth in the
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Operating Agreement.
1.31 "Program" shall mean the collaboration among BioMarin/Genzyme LLC,
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BioMarin and Genzyme described in this Agreement.
1.32 "Program Costs" shall mean all Program-related costs, including
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without limitation Development Costs and Commercialization Costs, in each case
as such costs are incurred or accrued by BioMarin/Genzyme LLC on or after the
Effective Date. Notwithstanding anything herein to the contrary, it is
understood that the Parties shall apply mutually agreed upon cost allocation
methods in determining Program Costs hereunder.
1.33 "Program Management Team" shall mean the joint team composed of
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representatives of Genzyme and BioMarin described in Section 8.1.1 hereof.
1.34 "Purchase Agreement" shall mean the Purchase Agreement dated of even
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date herewith by and between BioMarin and Genzyme.
1.35 "Regulatory Approvals" shall mean all approvals from regulatory
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authorities in any country in the Territory required lawfully to manufacture and
market Collaboration Products in any such country, including without limitation
approval of 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.
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1.36 "Regulatory Scheme" shall mean the United States Public Health Service
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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.
1.37 "Specifications" with respect to a particular Collaboration Product
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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 the then-current Specifications shall
be maintained by both BioMarin and Genzyme and shall become a part of this
Agreement as if incorporated herein.
1.38 "Steering Committee" shall mean the governing body of BioMarin/Genzyme
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LLC composed of representatives of BioMarin and Genzyme appointed as described
in Section 8.2.1 hereof.
1.39 "Technology" shall mean inventions, trade secrets, copyrights, know-
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how, data and other intellectual property of any kind (including without
limitation any proprietary biological or other materials, compounds or reagents,
but not including Patent Rights).
1.40 "Territory" shall mean the world.
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1.41 "Third Party" shall mean any entity other than BioMarin/Genzyme LLC,
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BioMarin or Genzyme and their respective Affiliates.
1.42 "Third Party Agreements" shall mean collectively those agreements
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between BioMarin and a Third Party existing as of the Date of Execution as
listed on Schedule 1.42 hereto, pursuant to which BioMarin obtained rights
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applicable to the development, manufacture, sale or use of Collaboration
Products hereunder. If after the Date of Execution any of BioMarin, Genzyme
and/or BioMarin/Genzyme LLC enter into an agreement to license or acquire rights
from a Third Party with respect to subject matter to be utilized in connection
with Collaboration Products in accordance with Section 3.1.4 below, such
agreements shall also be included in the definition of Third Party Agreements
for purposes of this Agreement.
ARTICLE II
SCOPE AND STRUCTURE OF THE COLLABORATION
2.1 General. BioMarin has previously formed BioMarin/Genzyme LLC as the
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vehicle for a joint venture between BioMarin and Genzyme to develop and
commercialize Collaboration Products in and throughout the Territory. BioMarin
is the sole initial member of BioMarin/Genzyme LLC
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and, immediately following the execution and delivery of this Agreement, will
transfer and assign one percent (1%) of its interest to BioMarin Genetics, and
BioMarin Genetics will be admitted as a member of BioMarin/Genzyme LLC.
Immediately thereafter, BioMarin will sell and assign to Genzyme a fifty percent
(50%) interest in BioMarin/Genzyme LLC (subject to adjustment pursuant to
Section 4.1.4 hereof and pursuant to the Operating Agreement) pursuant to the
Purchase Agreement and Article 4 hereof and, upon execution and delivery of the
Operating Agreement, Genzyme will be admitted as a Member of BioMarin/Genzyme
LLC. BioMarin/Genzyme 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
in accordance with the Development Plan then in effect. Upon receipt of
Regulatory Approval in any country within the Territory, the Manufacturing Party
or Parties will manufacture the Collaboration Products on behalf of
BioMarin/Genzyme LLC and Genzyme will market and sell the Collaboration Products
in such country as exclusive agent for BioMarin/Genzyme LLC all on the terms and
conditions set forth in this Agreement or such other terms and conditions as the
Parties may agree upon. All services provided by or on behalf of BioMarin,
Genzyme or their respective Affiliates for BioMarin/Genzyme LLC in connection
with the Program shall be provided at cost. For avoidance of doubt, "cost" for
services provided by a Third Party on behalf of BioMarin, Genzyme or their
respective Affiliates for BioMarin/Genzyme LLC in connection with the Program
shall be the amount paid for such services plus costs associated with the
acquisition, including quality control, of such services from such Third Party.
2.2 Exclusive Relationship. Except as otherwise expressly provided herein
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during the term of this Agreement, neither BioMarin/Genzyme LLC, Genzyme nor
BioMarin, nor any of their respective Affiliates shall independently, or with or
through a Third Party, conduct research or development activities regarding, or
engage in the manufacture, marketing, sale or distribution of, Collaboration
Products 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 Sections 13.2.4 or 13.2.5 hereof shall independently, or with or through a
Third Party, conduct research regarding, or engage in the manufacture,
marketing, sale or distribution of, Collaboration Products 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(a) hereof, then the restrictions
set forth in this sentence shall not apply. Notwithstanding the foregoing,
except as provided in Section 3.1.5 nothing herein is intended to restrict
BioMarin, Genzyme or their respective Affiliates from conducting research or
development activities regarding, or engaging in the manufacture, marketing,
sale or distribution of Gene Therapy products targeted to MPS I and other Alpha-
L-iduronidase deficiencies.
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ARTICLE III
GRANTS AND RESERVATIONS OF RIGHTS
3.1 Licenses of Rights to BioMarin/Genzyme LLC.
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3.1.1 Grants from BioMarin. Except as otherwise expressly provided
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herein, BioMarin hereby grants to BioMarin/Genzyme LLC a worldwide, exclusive,
royalty-free right and license during the term of this Agreement under the
BioMarin Patent Rights, BioMarin Technology, BioMarin/Genzyme Patent Rights and
the BioMarin/Genzyme Technology and Manufacturing Know-How Controlled by
BioMarin 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. Except as otherwise expressly provided
-------------------
herein, Genzyme hereby grants to BioMarin/Genzyme LLC a worldwide, exclusive,
royalty-free right and license during the term of this Agreement under the
Genzyme Patent Rights, Genzyme Technology, BioMarin/Genzyme Patent Rights and
the BioMarin/Genzyme Technology and Manufacturing Know-How 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 BioMarin/Genzyme LLC Undertakings; Sublicenses. In
----------------------------------------------
consideration of the licenses granted under this Section 3.1, BioMarin/Genzyme
LLC hereby undertakes to pay all royalties, sublicense fees and other costs or
expenses payable to Third Parties under a Third Party Agreement associated with
the acquisition or exercise of such licenses by or on behalf of BioMarin/Genzyme
LLC for use in connection with the Program. Schedule 3.1.3 hereto lists all of
--------------
such obligations as of the Date of Execution. The licenses granted or to be
granted under Sections 3.1.1 and 3.1.2 above shall include the right to grant
and further authorize sublicenses within the scope of such licenses; provided,
however, all sublicenses granted by BioMarin/Genzyme LLC (other than those
provided in Section 3.2.1 below) shall be subject to prior approval by the
Steering Committee.
3.1.4 Rights of BioMarin/Genzyme LLC to Patent Rights or
--------------------------------------------------
Technology Developed Outside the Program. In the event that either BioMarin or
----------------------------------------
Genzyme develops, acquires or otherwise Controls 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 ("Additional Technology"), the Party Controlling such
---------------------
Additional Technology hereby grants to BioMarin/Genzyme 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 Additional Technology limited to use in the
Field and in the Territory to the extent necessary or appropriate to enable
BioMarin/Genzyme LLC to develop, make, have made, use, offer for sale, sell,
have sold, import and export Collaboration Products, in each case subject only
to BioMarin/Genzyme LLC's undertaking to pay (a) a commercially reasonable
portion of all costs incurred by BioMarin or Genzyme, as the case may be, to
acquire or develop such Additional Technology, (b) a commercially reasonable
portion of any and all development costs relating to the Additional Technology
incurred by BioMarin or Genzyme, as
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the case may be, since the date such Party acquired or developed such Additional
Technology and (c) a pro rata share of all royalties, sublicense fees and other
costs or expenses payable to Third Parties under a Third Party Agreement
associated with the acquisition or exercise of such license by or on behalf of
BioMarin/Genzyme LLC, allocated based upon the proportion of such costs
attributable to the acquisition or use of such Additional Technology by
BioMarin/Genzyme LLC; provided, however, that if BioMarin or Genzyme, as the
case may be, has more limited rights to such Additional Technology that those
described above, the license subject to BioMarin/Genzyme LLC's option hereunder
shall be consistent with the rights held by BioMarin or Genzyme, as the case may
be, with respect to such Additional Technology. Subject to BioMarin/Genzyme LLC
agreeing to pay the appropriate amounts due to a Third Party under an agreement
with a Party as a result of the acquisition of Additional Technology and/or
exercise of the rights therein by or on behalf of BioMarin/Genzyme LLC, the same
shall be a "Third Party Agreement" for purposes of this Agreement.
3.1.5 External Products. If at any time during the term of this
-----------------
Agreement either Genzyme, BioMarin or their respective Affiliates intends to
collaborate with a Third Party regarding the development and/or
commercialization of a Gene Therapy product for the treatment or prevention of
MPS I or other Alpha-L-iduronidase deficiencies (an "External Product"), such
----------------
Party (the "Proposing Party") shall provide written notice of its intent to the
---------------
Steering Committee. The Proposing Party and the Steering Committee shall
negotiate in good faith the terms and conditions upon which the Proposing Party
and BioMarin/Genzyme LLC would be willing to collaborate for such purposes. If
the Proposing Party and the Steering Committee are unable to agree upon such
terms and conditions within sixty (60) days after receipt by the Steering
Committee of the Proposing Party's notice, the Proposing Party shall have the
right to develop or commercialize such External Product with a Third Party.
3.2 Sublicenses of Rights from BioMarin/Genzyme LLC to BioMarin and
---------------------------------------------------------------
Genzyme.
-------
3.2.1 General. BioMarin/Genzyme LLC hereby grants to each of
-------
BioMarin and Genzyme a worldwide, non-exclusive, royalty-free right and
sublicense during the term of this Agreement under the Patent Rights, Technology
and Manufacturing Know-How licenses granted to BioMarin/Genzyme LLC pursuant to
Section 3.1 solely to the extent required to permit such Party to perform its
duties and obligations under this Agreement. BioMarin/Genzyme LLC also hereby
agrees to grant to each of BioMarin and Genzyme a worldwide, non-exclusive,
royalty-free right and license during the term of this Agreement under any
Additional Technology as to which BioMarin/Genzyme LLC elects to obtain a
license pursuant to Section 3.1.4 above solely to the extent required to permit
such Party to perform its duties and obligations under this Agreement.
BioMarin/Genzyme LLC also hereby grants to Genzyme a worldwide, non-exclusive,
royalty-free right and license during the term of this Agreement to use any and
all present and future trademarks Controlled by BioMarin/Genzyme LLC in
connection with the commercialization of Collaboration Products in the Territory
to the extent required to permit Genzyme to perform its duties and obligations
under this Agreement.
3.2.2 Further Sublicenses. The foregoing licenses granted to
-------------------
Genzyme and BioMarin, respectively, shall include the right to grant and further
authorize sublicenses to Third Parties within the scope of such licenses.
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3.3 Reservation of Rights.
---------------------
3.3.1 Reservation by BioMarin. Notwithstanding the license grants
-----------------------
set forth in Section 3.1, BioMarin at all times reserves the rights under the
BioMarin Patent Rights, the BioMarin Technology, the BioMarin/Genzyme Patent
Rights, the BioMarin/Genzyme Technology and the Manufacturing Know-How
Controlled by BioMarin (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 (ii) products other than a Collaboration Product; 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 BioMarin/Genzyme Patent
Rights, the BioMarin/Genzyme Technology and Manufacturing Know-How 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 a Collaboration Product; and (c) to
grant licenses to Third Parties for the foregoing purposes.
3.4 Assignment of Orphan Drug Designation. Except to the extent prohibited
-------------------------------------
by the applicable Regulatory Scheme, BioMarin hereby assigns and BioMarin and
Genzyme each hereby agree to assign to BioMarin/Genzyme LLC any "Orphan Drug"
(or similar designation outside the United States) for any Collaboration Product
which BioMarin has received or which BioMarin or Genzyme may receive during the
term of this Agreement in the Territory.
ARTICLE IV
PROGRAM FUNDING; LLC INTEREST
4.1 Program Funding Commitments. Genzyme hereby undertakes to make capital
---------------------------
contributions to BioMarin/Genzyme LLC in an amount equal to fifty percent (50%)
of all Program Costs and BioMarin, on behalf of the BioMarin Companies, hereby
undertakes to make capital contributions to BioMarin/Genzyme LLC in an aggregate
amount equal to fifty percent (50%) of all Program Costs. In the event that
either BioMarin, on behalf of the BioMarin Companies, 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 BioMarin/Genzyme 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. Within five (5) working days
-----------------------------
after the Effective Date, BioMarin and Genzyme shall each make a capital
contribution to BioMarin/Genzyme LLC in
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an amount equal to one-half of the Program Costs budgeted to be incurred from
the Effective Date through and including September 30, 1998.
4.2.2 Monthly Capital Contributions. With respect to each calendar
-----------------------------
month after September 30, 1998, Genzyme and BioMarin, on behalf of the BioMarin
Companies, shall each make capital contributions to BioMarin/Genzyme 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 BioMarin/Genzyme LLC in the 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 BioMarin, on behalf of the BioMarin
Companies, pursuant to Section 4.1 above. Upon receipt of each such capital
contribution from Genzyme or BioMarin, as the case may be, BioMarin/Genzyme LLC
shall promptly pay each of the Parties an amount equal to that portion of the
budgeted Program Costs to which they are respectively entitled in accordance
with this Agreement.
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 calendar year and within fifty (50) days after the end of each calendar
year, each of BioMarin and Genzyme shall provide BioMarin/Genzyme LLC with a
detailed itemization of Program Costs actually incurred by such Party during the
previous quarter. Each of BioMarin 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
BioMarin and Genzyme, BioMarin, on behalf of the BioMarin Companies, and Genzyme
shall each make an additional capital contribution to BioMarin/Genzyme 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 ten percent
(110%) 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 BioMarin/Genzyme LLC in such quarterly
statements for actual Program Costs is less than the amount already
contributed by the Parties to the capital of BioMarin/Genzyme LLC with respect
to budgeted Program Costs for such calendar quarter, such excess shall be
credited against the next successive monthly capital contribution(s) due from
Genzyme or BioMarin hereunder.
4.3 Distributions. Distributions shall be made semi-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 BioMarin
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.
-12-
4.4 Sale and Purchase of LLC Interest. Immediately after the execution of
---------------------------------
this Agreement and the assignment by BioMarin of one percent (1%) of its
interest in BioMarin/Genzyme LLC to BioMarin Genetics, in accordance with the
terms and conditions of the Purchase Agreement, BioMarin shall sell, assign and
transfer to Genzyme, and Genzyme shall purchase from BioMarin, a fifty percent
(50%) interest in BioMarin/Genzyme LLC (subject to adjustment pursuant to
Section 4.1.4 hereof and pursuant to the Operating Agreement) for an aggregate
amount of twelve million one hundred thousand and ten dollars ($12,100,010)
payable as set forth below:
(a) Genzyme shall pay to BioMarin an amount of ten dollars ($10)
upon execution of the Purchase Agreement; and
(b) Genzyme shall pay to BioMarin an amount of twelve million
one hundred thousand dollars ($12,100,000) on the first approval by the U.S. FDA
of a BLA filed by or on behalf of BioMarin/Genzyme LLC for the use of a
Collaboration Product in the Field. For purposes of the foregoing, "approval"
shall be deemed to occur upon the U.S. FDA's issuance of an approval letter as
set forth in 21 C.F.R. (S)314.105.
Each of the aforementioned payments described in clauses (a) and (b) above shall
be made in United States dollars by certified or bank check or by wire transfer
within seven (7) days following the occurrence and confirmation of each event.
4.5 Books of Account; Audit. Genzyme shall keep and maintain proper and
-----------------------
complete books of account, and shall maintain a bank account, on behalf of
BioMarin/Genzyme LLC. In the event that either BioMarin or Genzyme reasonably
deems the Program to be material to BioMarin or Genzyme, as the case may be, for
financial accounting purposes, then, upon such Party's request, audited
financial statements of BioMarin/Genzyme LLC shall be prepared by an independent
accounting firm to be selected by the Steering Committee. Each of BioMarin and
Genzyme shall keep and maintain proper and complete records and books of account
documenting all Program Costs incurred by such Party. Each of BioMarin/Genzyme
LLC, BioMarin and Genzyme shall permit independent accountants retained by
BioMarin or Genzyme (the "Auditing Party") to have access to its records and
books for the sole purpose of determining the appropriateness of Program Costs
charged by or accrued to the Party being audited 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 expiration or 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 or accrual of ten percent (10%) 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
along with interest at the rate set forth in Section 14.4.
4.6 Enforceability of Sections 4.1 and 4.2. The agreements regarding
--------------------------------------
capital contributions set forth in Sections 4.1 and 4.2 hereof are by and
between, and for the benefit of, Genzyme and BioMarin only, and are not
enforceable by BioMarin/Genzyme LLC or any Third Party.
-13-
ARTICLE V
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 for use in the Field and to use
commercially reasonable and diligent efforts to file for and obtain Regulatory
Approvals for and bring to market Collaboration Products for use 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 use commercially reasonable and diligent efforts 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 BioMarin nor Genzyme shall be required to undertake activities in
furtherance of the Development Plan or Commercialization Plan in the absence of
funding from BioMarin/Genzyme LLC pursuant to the provisions of this Agreement.
As used in this Agreement, the phrase "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.
5.1.2 Development Plan. The Development Program shall be conducted
----------------
by the Parties for BioMarin/Genzyme LLC in accordance with the then-current
Development Plan which shall describe the proposed overall program of
development for each Collaboration Product, including preclinical studies,
toxicology, formulation, manufacturing, 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 BioMarin or their respective Affiliates, at
fully absorbed costs determined by GAAP. The respective charges to
BioMarin/Genzyme LLC for Development Costs incurred by a Party shall be invoiced
following completion of the work, and shall be payable by BioMarin/Genzyme 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 (i) a summary of estimated Development Costs expected to be
incurred by each Party hereunder in performing activities of the Development
Program assigned to such Party pursuant to Section 5.1.4 below and (ii) a
detailed budget for all development activities proposed for the applicable
period and for each Collaboration Product.
5.1.3 Initial and Updated Development Plan. The Parties have
------------------------------------
agreed to an initial budget for the development and pre-commercialization
activities of BioMarin/Genzyme LLC for the period beginning on the Effective
Date and ending on December 31, 1998. The Program Management Team shall submit
an 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. 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
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each Collaboration Product which sets forth all major development tasks
remaining to be accomplished prior to submission of filings for Regulatory
Approvals and (b) a detailed description and budget for the development and pre-
commercialization activities proposed for the forthcoming calendar year. 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 BioMarin 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 BioMarin 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 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 one hundred ten percent (110%) 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.
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
in the Territory and work with designated individuals at BioMarin and Genzyme in
the preparation of Regulatory Approval filings for the Collaboration Products
and filing the same with regulatory agencies designated by the Steering
Committee. The Parties acknowledge and agree that their current intention is
that the Development Program will focus as its first priority on completion of a
clinical development program as necessary to file a BLA for and in the United
States. It is further acknowledged and agreed, however, that when and to the
extent the Steering Committee determines that it is appropriate, complementary
development efforts will be conducted in other countries where such activities
need to be performed in such other countries for Regulatory Approval.
5.1.5 Attendance at Regulatory Meetings; Correspondence. Each
-------------------------------------------------
Party shall provide the others with prior notice of all meetings and
teleconferences between representatives of the notifying Party and regulatory
authorities regarding any Collaboration Product for use in the Territory. Except
as otherwise provided herein, the Party receiving such notice shall have the
right to have representatives participate in all such meetings and
teleconferences. Each Party shall use reasonable efforts to provide the other
Party with a reasonable opportunity to review and comment upon submissions to,
and correspondence with, any regulatory agency in the Territory with respect to
Collaboration Products prior to the filing or delivery of such submissions or
correspondence. Without limiting the foregoing, each Party shall use reasonable
efforts to confirm in writing to the other Party all communications with a
regulatory authority with respect to a Regulatory Approval (including filings
therefor) and to provide to the other Party copies of all documents sent to or
received from such regulatory authority regarding such Regulatory Approvals.
-15-
5.2 Development Information.
-----------------------
5.2.1 Reports and Information Exchange. As between the Parties
--------------------------------
hereto, BioMarin/Genzyme 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 BioMarin/Genzyme LLC. Each of
BioMarin and Genzyme shall use commercially reasonable and diligent efforts to
disclose to BioMarin/Genzyme 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 BioMarin/Genzyme 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. All protocols for clinical trials to be
conducted, and all product registration plans, for Collaboration Products for
applications within the Field in the Territory shall be submitted to the Program
Management Team for review and comment by the Program Management Team prior to
filing of such protocols or registrations with any regulatory agency. Within
sixty (60) days following the end of each calendar quarter during the
Development Program, each of BioMarin and Genzyme shall provide the other
Parties with a reasonably detailed written report describing 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 BioMarin and Genzyme
--------------------------
shall notify the other Parties of any Adverse Reaction Information relating to
any Collaboration Product 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 BioMarin and Genzyme
------------------------------
shall permit BioMarin/Genzyme LLC and the other Party or the representatives of
BioMarin/Genzyme 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
BioMarin/Genzyme 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
-16-
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 BioMarin/Genzyme 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,
maintain control over the manufacturing facilities, equipment and personnel, and
engage in pharmacovigilence to the extent required by the Regulatory Scheme, (b)
such entity shall maintain compliance with applicable Regulatory Schemes, (c)
such entity shall provide manufacturing and supply services to BioMarin/Genzyme
LLC at the Fully Absorbed Cost of Goods of Collaboration Products so
manufactured and supplied, (d) the Parties shall have an irrevocable right of
access and reference to such Regulatory Approval filings, licenses and
facilities and (e) 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 Clinical Data. In all agreements with Third Parties or Affiliates
-------------
involving the development of preclinical or clinical data for a Collaboration
Product, Genzyme and BioMarin shall require that such Third Parties and
Affiliates provide BioMarin/Genzyme LLC and the other Party access to all such
data, to the extent such data is required to be obtained from such Third Parties
by the Japanese Ministry of Health and Welfare, the U.S. FDA, the Commission of
Proprietary Medicines of the European Community, the European Medicines
Evaluation Agency or other regulatory agency, in each case with respect to
Regulatory Approvals.
5.5 Facilities Visit. Representatives of BioMarin and Genzyme may visit
----------------
all manufacturing sites and the sites of any clinical trials or other
experiments being conducted by the other Party or BioMarin/Genzyme LLC in
connection with the Development Program. If requested by the other Party,
BioMarin 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.
ARTICLE VI
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 for the
overall Territory and for each Major
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Market Country, (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 with respect to
commercialization objectives to be achieved during the calendar year to which
the Collaboration Plan relates (such as minimum annual sales objectives) and (e)
a detailed manufacturing plan.
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
BioMarin 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 BioMarin 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 BioMarin
and Genzyme. While minor adjustments to the Commercialization Plan may be
proposed by either of Genzyme or BioMarin from time to time without Steering
Committee approval, significant changes in the scope or direction of the work
and any changes in funding exceeding one hundred ten percent (110%) 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. Within sixty (60) days following the end of each calendar
quarter after the filing of the first application for a Regulatory Approval,
each of BioMarin and Genzyme shall provide the other Parties with a reasonably
detailed written report describing the progress to date of all activities for
which such Party was allocated responsibility during such quarter under the
Commercialization Plan.
6.2 Exclusive Engagement; Diligence. Subject to Section 6.7 below,
-------------------------------
BioMarin/Genzyme LLC hereby engages Genzyme as its exclusive agent 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. Genzyme will not engage a Third Party to market and
sell Collaboration Products on its behalf without prior approval of the Steering
Committee.
6.3 Orders. Genzyme shall provide written notice to BioMarin/Genzyme LLC
------
of the requirements for the Collaboration Products in the Territory, setting
forth the quantity of Collaboration Products required, the Specifications
therefor and the date required. BioMarin/Genzyme LLC shall use commercially
reasonable and diligent efforts to deliver the Collaboration Products to Genzyme
for sale within the Territory, on the date set forth in the applicable
requirements notice. All freight, insurance, duties and all other charges
associated with
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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's customers.
6.4 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 BioMarin/Genzyme LLC, but only to the extent that such amounts,
together with all other Commercialization Costs to date during such calendar
year, do not exceed one hundred ten percent (110%) of the Commercialization
Costs budgeted therefor 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
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 and sale 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 conducting sales force training, all in
accordance with good business practices and industry standards.
(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) Genzyme shall have sole responsibility for responding to all
requests for medical information regarding Collaboration Products.
Notwithstanding the foregoing, BioMarin may maintain a website or other
informational resources where it may publish general medical information
relating to MPS I, so long as such website complies in all respects with
applicable laws and regulations, including without limitation regulations of the
FDA regarding "off-label" promotion of Collaboration Products.
-19-
(e) Genzyme shall comply with all laws and government
regulations applicable to the marketing and 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 BioMarin/Genzyme
LLC in accordance with Section 9.1.2 hereof.
(g) Genzyme shall maintain complete and accurate records of all
movements and transactions involving Collaboration Products by an appropriate
identifier and 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 (g) shall be subject to the other
Parties' audit rights under Section 4.5 hereof.
(h) 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 BioMarin/Genzyme LLC and BioMarin. BioMarin/
-----------------------------------------------------
Genzyme LLC shall use commercially reasonable and diligent efforts to supply
Collaboration Products to Genzyme in accordance with notices of requirements
pursuant to Section 6.3 above. Neither BioMarin/Genzyme LLC nor BioMarin shall
actively solicit for its own account sales of Collaboration Products in the
Territory. Any solicitations or requests to purchase Collaboration Products
received by BioMarin/Genzyme LLC or BioMarin from any customer or prospective
customer with its principal address or place of business located in the
Territory or who BioMarin/Genzyme LLC or BioMarin, 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 Commercialization Milestones. The Steering Committee shall establish,
----------------------------
as part of the initial Commercialization Plan, milestones for Genzyme's
marketing and sales of Collaboration Products hereunder (collectively,
"Commercialization Milestones"). The Commercialization Milestones shall
----------------------------
include, without limitation, minimum sales levels for the first three (3)
years after the first approval by the U.S. FDA of a BLA for the use of a
Collaboration Product in the Field. It is understood and agreed, however, that
such Commercialization Milestones shall be subject to (i) Regulatory Approvals
and reimbursement approvals occurring at the times anticipated by the Parties
and (ii) BioMarin, its Affiliates and Third Parties satisfying their respective
obligations hereunder (e.g., the Manufacturing Party providing an adequate
supply of Collaboration Products to Genzyme). In the event that Genzyme is
unable to meet a Commercialization Milestone for a particular Collaboration
Product in a particular territory for reasons other than those set forth in the
preceding sentence, the Steering Committee shall promptly confer and discuss how
to resolve such issue as soon as possible, including without limitation,
appointing BioMarin or a Third Party as agent to
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market and sell such Collaboration Product in such territory, all as the
Steering Committee deems appropriate under the circumstances.
6.8 General and Administrative Services. General and administrative
-----------------------------------
services required by BioMarin/Genzyme LLC shall be provided at cost by either or
both of BioMarin 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 BioMarin
and Genzyme in satisfying their respective obligations under this Agreement,
shall be considered to be Program Costs.
ARTICLE VII
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. 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 for the Territory 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, and all changes to the manufacturing process shall be subject to the
approval of the Program Management Team.
7.2 Manufacture and Supply of Collaboration Product. BioMarin/Genzyme LLC
-----------------------------------------------
shall manufacture (or, subject to Section 7.2.1, have manufactured) and supply
Collaboration Products for preclinical and clinical activities and commercial
sale in the following terms and conditions (and such other terms and conditions
established by the Steering Committee consistent with the provisions of this
Agreement):
7.2.1 General. All decisions relating to the manufacture of
-------
Collaboration Products shall be subject to the approval of, or modification by,
the Steering Committee. Without limiting the foregoing, BioMarin/Genzyme LLC
shall initially contract with BioMarin 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, and that BioMarin would so
exclusively manufacture and supply Collaboration Products until such time as the
Steering Committee otherwise deems appropriate. At such time, BioMarin/Genzyme
LLC may
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subcontract with BioMarin, Genzyme and Third Parties for the manufacture,
packaging or other finishing processes of Collaboration Products, as determined
by the Steering Committee. To the extent the Steering Committee determines that
the quantity of Collaboration Product required by the Development Program or the
Commercialization Plan is greater than the quantity which may reasonably be
manufactured by BioMarin, or if the cost per unit of Collaboration Product
exceeds commercially reasonable levels, prior to engaging a Third Party to
manufacture Collaboration Products, BioMarin/Genzyme LLC will offer Genzyme the
opportunity to manufacture and supply Collaboration Products, on terms and
conditions determined by the Steering Committee. 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 BioMarin/Genzyme LLC to manufacture Collaboration
Products (whether such entity be a Party or Third Party, each a "Manufacturing
-------------
Party"). Without limiting the foregoing, the Manufacturing Party shall agree to
-----
use commercially reasonable and diligent efforts to manufacture and supply
Collaboration Products hereunder.
7.2.2 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
BioMarin/Genzyme LLC to manufacture such Collaboration Products to meet such
forecasts in a commercially reasonable and diligent manner.
7.2.3 Facilities. Notwithstanding any provision of this Agreement
----------
to the contrary, the Parties acknowledge and agree that BioMarin/Genzyme LLC
shall not bear any costs relating to the construction of manufacturing
facilities for a Collaboration Product (other than through normal depreciation
and amortization included in Fully Absorbed Cost of Goods).
7.3 Certificates of Analysis. The Manufacturing Party shall perform, or
------------------------
cause its contract manufacturer(s) to perform, quality assurance and control
tests on each lot of Collaboration Products before delivery and shall prepare,
or cause its contract manufacturer(s) to prepare and deliver, a written report
of the results of such tests (for purposes of Sections 7.3, 7.4 and 7.5, such
contract manufacturer(s) shall be included in the definition of the term
"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 or for such
longer period 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 to be prepared and delivered, and maintain for a period
of not less than five (5) years or for such longer period 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
-22-
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, and the other Parties shall have
the right to comment on any response by the Manufacturing Party to such
inspecting agency.
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. Subject to
the terms and conditions of Section 10.1 below, confidential information
disclosed to or otherwise gathered by the Party conducting such inspection
during any such inspection shall be maintained as confidential.
ARTICLE VIII
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 BioMarin 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 monthly. 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 BioMarin 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 BioMarin and Genzyme are present at such
meeting. Representatives of either BioMarin and Genzyme who are not members of
the Program Management Team may attend meetings of the Program Management Team
as agreed to by the representative members of the other Party. The
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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 BioMarin/Genzyme 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; (c) overseeing any post-
marketing studies of a Collaboration Product and (d) 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 and
shall be approved, if appropriate, at the next 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 BioMarin and three (3) representatives appointed by
Genzyme. Such representatives will be senior officers and/or managers of their
respective companies, except that ▇▇▇▇▇ ▇▇▇▇▇▇▇ may represent BioMarin on the
Steering Committee provided that he executes a Confidentiality Agreement
reasonably acceptable to Genzyme prior to the first meeting of the Steering
Committee. Genzyme and BioMarin 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
-24-
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 BioMarin and Genzyme are
present at such meeting. Representatives of either BioMarin and Genzyme who are
not members of the Steering Committee may attend meetings of the Steering
Committee as agreed to by the representative members of the other Party. Each
Party shall bear its own personnel and travel costs and expenses relating to
Steering Committee meetings, which costs and expenses shall not be included in
the Program Costs.
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 BioMarin/Genzyme LLC;
and (h) perform such other functions as appropriate to further the purposes of
this Agreement as determined by the Parties.
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 and shall be approved,
if appropriate, at the next meeting. All records of the Steering Committee
shall at all times be available to both BioMarin and Genzyme.
8.3 General Disagreements. All disagreements within the Program Management
---------------------
Team or the Steering Committee shall be subject to the following:
(a) The representatives to the Program Management Team or
Steering Committee (as the case may be) 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 Executive Officers of BioMarin 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 BioMarin and Genzyme's views and explain the basis for
such dispute.
(d) If such executives cannot resolve such disagreement
within thirty (30) days after such issue has been referred to them, then such
dispute shall be referred to arbitration as described in Section 14.10 hereof.
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ARTICLE IX
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 BioMarin or others acting on
behalf of BioMarin ("BioMarin Inventions") shall be owned by BioMarin. 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 BioMarin and Genzyme ("Joint Inventions") shall be jointly owned
----------------
by Genzyme and BioMarin. Each of BioMarin and Genzyme shall promptly disclose to
BioMarin/Genzyme 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 BioMarin Inventions, Genzyme Inventions and Joint Inventions shall be
automatically licensed to BioMarin/Genzyme LLC pursuant to Section 3.1 hereof.
Except as expressly provided in this Agreement, it is understood that neither
BioMarin nor Genzyme shall have any obligation to account to the other Party for
profits, or obtain any approval of the other to grant a license or exploit a
Joint Invention outside of the Field by reason of joint ownership of such
Invention or other intellectual property. For avoidance of doubt, in any
jurisdiction where consent of all owners of a Joint Invention is required in
order to grant a license to such Invention, BioMarin and Genzyme each grants the
other Party consent to grant a non-exclusive license to Joint Invention outside
the Field.
9.1.2 Ownership of Trademarks. The Steering Committee shall
-----------------------
select and as between the Parties hereto BioMarin/Genzyme LLC shall own all
trademarks for the sale and use of Collaboration Products in the Territory
(collectively, "Product Marks") and all goodwill therein shall inure to the
-------------
benefit of BioMarin/Genzyme LLC, and all expenses incurred by a Party with
respect thereto shall be considered Program Costs. All Product Marks shall be
registered in the name of BioMarin/Genzyme 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 Product Marks require that such
trademark(s) be registered in the name of an entity other than BioMarin/Genzyme
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 BioMarin/Genzyme LLC a worldwide, exclusive, fully-paid,
royalty-free, irrevocable right and license (with the right to grant and
authorize sublicenses) to use such Product Marks and (b) comply with the
provisions of Article 13 hereof with
-26-
respect to the ownership and/or disposition of such Product Marks in the event
this Agreement is terminated and provide the level of cooperation described in
Section 14.1 hereof in connection therewith. Each Party hereby acknowledges
agrees that at no time during of this Agreement to challenge or assist others to
challenge the Product Marks or the registration thereof or attempt to register
any trademarks, marks or trade names confusingly similar to such Product Marks.
9.1.3 Cooperation of Employees. Each of BioMarin 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 BioMarin or Genzyme, BioMarin or Genzyme, as applicable, shall have the right
to obtain licenses for all Inventions made by such non-employees on behalf of
BioMarin or Genzyme, as applicable, in accordance with the policies of said
company or institution. BioMarin 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 BioMarin and
-----------------------------------
Genzyme shall be responsible for the filing, prosecution and maintenance of all
Patent Rights within the BioMarin Patent Rights and Genzyme Patent Rights,
respectively. The Steering Committee shall designate either BioMarin or Genzyme
as the Party responsible for the filing, prosecution and maintenance of Patent
Rights within the BioMarin/Genzyme 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 BioMarin and Genzyme agrees to file and prosecute
patent applications and maintain the Patent Rights for which it is responsible
in all countries in the Territory selected by the Steering Committee. Each of
BioMarin 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 the
BioMarin Patent Rights, Genzyme Patent Rights and BioMarin/Genzyme Patent Rights
specific to the Collaboration Products in the Territory shall be deemed
Development Costs; provided, however, that if any such Patent Rights include
claims directed at subject matter other than Collaboration Products, one-half
(1/2) of the costs incurred for the filing, prosecution and maintaining of such
Patent Rights shall be deemed Development Costs. For purposes of this Section
9.2, "prosecution and maintenance" of Patent Rights shall be deemed to include,
without limitation, the conduct of interferences or oppositions, and/or requests
for re-examinations, reissues or extensions of patent terms.
-27-
9.3 Cooperation. Each of BioMarin 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 BioMarin 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 BioMarin and Genzyme
---------------------------------------
shall notify the other Party of (a) the issuance of each patent included within
the Patent Rights for which the notifying Party is responsible pursuant to
Section 9.2.1 above, 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 so responsible which it receives as
patent owner pursuant to the Drug Price Competition and Patent Term Restoration
Act of 1984, including notices pursuant to (S)(S)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 BioMarin 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 except as expressly provided in Article 3
hereof and this Article 9.
9.6 Defense of Third Party Infringement Claims. If the manufacture,
------------------------------------------
production, sale or use of any Collaboration Product pursuant to this Agreement
results in a claim, suit or proceeding (collectively, "Actions") alleging patent
-------
infringement against BioMarin or Genzyme (or their respective Affiliates), such
Party shall promptly notify the other Party hereto in writing. The Party
subject to such Action (for purposes of this Section 9.6, the "Controlling
-----------
Party") shall have the exclusive right to defend and control the defense of any
such Action using counsel of its own choice; provided, however, that if such
Action is directed to the subject of the Patent Rights of the other Party (i.e.,
the BioMarin Patent Rights or the Genzyme Patent Rights), such other Party may
participate in the defense and/or settlement thereof at its own expense with
counsel of its choice. Except as agreed in writing by Genzyme and BioMarin, the
Controlling Party shall not enter into any settlement relating to a
Collaboration Product, if such settlement admits the invalidity or
unenforceability of any Patent Rights within the BioMarin Patent Rights or the
Genzyme Patent Rights, as applicable, of the other Party. The Controlling Party
agrees to keep the other Party hereto reasonably informed of all material
developments in connection with any such Action. Any cost, liability or expense
(including amounts paid in settlement) incurred by the Controlling Party as a
result of such Action shall be included in Commercialization Costs for the
Collaboration Product(s)
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that are the subject of such Action (or, if the Action is brought prior to the
first commercial sale of such Collaboration Product(s), such amounts shall be
included in Development Costs incurred by the Controlling Party) and shall not
be subject to the limitations of Sections 1.9, 4.2, 5.1.3, 6.1.2 or 6.4 above
provided that the other Party consents to incurrence of such cost, liability or
expense, with such consent not to be unreasonably withheld.
9.7 Enforcement of Patent Rights.
----------------------------
9.7.1 Enforcement. Subject to the provisions of this Section 9.7,
-----------
in the event that BioMarin or Genzyme reasonably believes that any BioMarin
Patent Rights, BioMarin Technology, Genzyme Patent Rights, Genzyme Technology,
BioMarin/Genzyme Patent Rights or BioMarin/Genzyme Technology necessary for the
manufacture, use or sale of a Collaboration Product in the Field is infringed or
misappropriated by a Third Party or is subject to a declaratory judgment action
arising from such infringement in a country, in each case with respect to the
manufacture, sale or use of a product potentially competitive with a
Collaboration Product within the Field, Genzyme or BioMarin (respectively) shall
promptly notify the other Party hereto. Promptly after such notice the Parties
shall meet to discuss the course of action to be taken with respect to an
Enforcement Action (as defined below) with respect to such infringement or
misappropriation, including the control thereof and sharing of costs and
expenses related thereto, for the purposes of entering into a litigation
agreement setting forth the same ("Litigation Agreement"). If the Parties do
--------------------
not enter such Litigation Agreement, the Party whose Patent Rights or Technology
is so allegedly infringed or misappropriated, or is subject to such declaratory
judgment action, (for purposes of this Section 9.7, the "Owner") shall have the
-----
initial right (but not the obligation) to enforce the intellectual property
rights within such Patent Rights or Technology, or defend any declaratory
judgment action with respect thereto (for purposes of this Section 9.7, an
"Enforcement Action"); provided that the Owner agrees to indemnify the other
------------------
Party for any and all liabilities and expenses (including, without limitation,
reasonable attorneys' fees and other expenses of litigation) incurred by such
other Party as a result of such Enforcement Action.
9.7.2 Information. Absent a Litigation Agreement, the Party
-----------
initiating or defending any such Enforcement Action shall keep the other Party
hereto reasonably informed of the progress of any such Enforcement Action, and
such other Party shall have the right to participate with counsel of its own
choice at its own expense.
9.7.3 Enforcement Costs; Recoveries. Unless otherwise agreed, the
-----------------------------
Party initiating an Enforcement Action shall, at the option of such Party, have
the right to either: (i) assume responsibility for all costs and expenses of
such Enforcement Action, in which case all amounts recovered in the Enforcement
Action (including without limitation amounts resulting from a settlement
thereof) shall be retained by such Party; or (ii) include such costs and
expenses within the Development Costs or Commercialization Costs, as applicable,
in which case all amounts recovered in the Enforcement Action, after reimbursing
the Party initiating the Action for any costs and expenses not previously so
offset, shall be shared by BioMarin and Genzyme in accordance with their
respective Percentage Interests.
9.8 Third Party Rights. The foregoing provisions of this Article 9 shall
------------------
be subject to and limited by any agreements pursuant to which BioMarin and
Genzyme, as the case may be, acquired
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any particular BioMarin Patent Rights, BioMarin Technology or Genzyme Patent
Rights or Genzyme Technology.
9.9 Third Party Agreements--Reports. To the extent that a Party is
-------------------------------
obligated to provide reports to a Third Party pursuant to a Third Party
Agreement as a result of or reporting on the status of activities of the other
Party hereunder, the other Party hereto shall reasonably assist the reporting
Party by providing information in its possession or control and in sufficient
detail to complete and submit such reports as required.
ARTICLE X
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, and BioMarin shall cause BioMarin Genetics to,
maintain in confidence and use only for purposes specifically authorized under
this Agreement any information furnished to it by the other Party hereto
pursuant to this Agreement which if disclosed in tangible form is marked
"Confidential" or with other similar designation to indicate its confidential or
proprietary nature or if disclosed orally or by inspection is indicated orally
to be confidential or proprietary by the Party disclosing such information at
the time of such disclosure and is confirmed in writing as confidential or
proprietary by the disclosing Party (describing in reasonable detail the
information to be treated as confidential) within a reasonable time after such
disclosure (collectively, "Information").
-----------
To the extent it is reasonably necessary or appropriate to fulfill its
obligations or exercise its rights under this Agreement, a Party may disclose
Information of the other Party it is otherwise obligated under this Section 10.1
not to disclose to its Affiliates, permitted 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 substantially the same extent as
such Party is required to keep such Information confidential; and a Party or its
permitted 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 or to
file and maintain Regulatory Approvals 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 disclosing 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 disclosing 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 required to
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be disclosed by the receiving Party to comply with applicable laws or
regulations, or with a court or administrative order, provided that the
receiving Party notifies the disclosing Party in writing prior to any such
disclosure and agrees to use reasonable efforts to secure confidential treatment
thereof prior to its disclosure (whether by protective order or otherwise).
10.2 Terms of this Agreement; Press Releases. The Parties agree to seek
---------------------------------------
confidential treatment for any 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, BioMarin
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 its advisors and 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 press
releases related to the Program shall be issued jointly by BioMarin 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. Notwithstanding
the foregoing, the Parties shall agree upon a press release to announce the
execution of this Agreement, together with a corresponding Question & Answer
outline for use in responding to inquiries about the Agreement; thereafter,
BioMarin and Genzyme may each disclose to Third Parties the information
contained in such press release and Question & Answer outline without the need
for further approval by the other.
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.
With respect to publications or disclosures by investigators or other Third
Parties, such publications and disclosures shall be subject to review by the
Reviewing Party under this Section 10.3 only to the extent that the submitting
Party has the right to do so.
10.3.1 Patents. 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.
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10.3.2 Other. 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 XI
REPRESENTATIONS AND WARRANTIES
11.1 Authorization. Each Party warrants and represents to the other
-------------
Parties that (a) 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 has been duly
executed and delivered and 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 and will not make any commitments to others in conflict with or in
derogation of such rights or this Agreement.
11.2 Intellectual Property Rights.
----------------------------
11.2.1 BioMarin hereby represents and warrants that, as of the Date
of Execution, (a) it possesses an exclusive right, title and interest in or to,
the BioMarin Patent Rights and the BioMarin Technology, (b) the BioMarin Patent
Rights and the BioMarin 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.
11.2.2 BioMarin 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, if
any, 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
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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 BioMarin Warranties. BioMarin warrants that the
-------------------
Collaboration Products delivered by BioMarin 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 BIOMARIN, GENZYME OR
BIOMARIN/GENZYME 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.
11.5 Limitation of Liability. IT IS AGREED BY THE PARTIES THAT NO PARTY
-----------------------
SHALL BE LIABLE TO ANOTHER PARTY FOR ANY SPECIAL, CONSEQUENTIAL, EXEMPLARY OR
INCIDENTAL DAMAGES (INCLUDING LOST OR ANTICIPATED REVENUES OR PROFITS RELATING
TO THE SAME), ARISING FROM ANY CLAIM RELATING TO THIS AGREEMENT, WHETHER SUCH
CLAIM IS BASED ON CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, EVEN IF AN
AUTHORIZED REPRESENTATIVE OF SUCH PARTY IS ADVISED OF THE POSSIBILITY OR
LIKELIHOOD OF SAME. 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 XII
INDEMNITY
12.1 BioMarin/Genzyme LLC Indemnity Obligations. The Operating Agreement
------------------------------------------
shall provide that BioMarin/Genzyme 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 BioMarin/Genzyme LLC, (b) the act
for which indemnification is sought did not constitute gross negligence or
willful 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.
-33-
12.2 Insurance. BioMarin/Genzyme LLC shall maintain clinical trial and
---------
product liability insurance with respect to development, manufacture and sales
of Collaboration Products in an amount reasonably believed by Genzyme and
BioMarin to be adequate and customary for the development, manufacture and sale
of novel therapeutic products. Genzyme and BioMarin shall be named as
additional insureds on any such policy. Genzyme and BioMarin shall each
maintain similar clinical trial and product liability insurance coverage in
amounts reasonably determined by the Steering Committee from time to time.
ARTICLE XIII
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 either BioMarin or
-----------------------------
Genzyme (a) fails to use commercially reasonable and diligent efforts to perform
any material duty imposed upon such Party under this Agreement or a Development
Plan or Commercialization Plan or (b) fails to make two (2) or more capital
contributions in accordance with Section 4.2 hereof, and 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) 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 of the Operating Agreement
or (ii) terminate this Agreement with the consequences set forth in Section
13.3.1 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 the Section 4.4 Payment. In the event
-------------------------------------------
that Genzyme fails to make the payment pursuant to Section 4.4(b) hereof and
such failure is not cured within ten (10) days of written notice thereof from
BioMarin, BioMarin 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 13.3.2 below.
13.2.3 For Convenience. Either BioMarin or Genzyme may elect to
---------------
terminate this Agreement for any reason at any time after the earlier of (i)
such time as BioMarin/Genzyme LLC has received U.S. FDA approval for the BLA for
the first Collaboration Product or (ii) December 31, 2000 if BioMarin/Genzyme
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
-34-
(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). For purposes of the foregoing, "approval" shall be
deemed to occur upon the U.S. FDA's issuance of an approval letter as set forth
in 21 C.F.R. (S)314.105. If either Party terminates this Agreement pursuant to
clause (ii) above, the Development Plan in effect and the Parties' respective
obligations with respect to capital contributions as of the date notice of
termination is given shall be extended until the effective date of such
termination.
13.2.4 Upon Change of Control. Either BioMarin or Genzyme may
----------------------
terminate this Agreement in the event that the other Party is a party to a
transaction involving (a) a merger or consolidation in which such Party is not
the surviving entity or (b) the sale of all or substantially all of the assets
of such Party to a Third Party. Termination of this Agreement pursuant to this
Section 13.2.4 shall be effective as of the effective date of such transaction.
13.2.5 Upon Bankruptcy. Either BioMarin or Genzyme may terminate
---------------
this Agreement with the consequences set forth in Section 13.3.5 below, if (A)
the other Party fails to meet any material obligation hereunder and: (i) applies
for or consent to the appointment of a receiver, trustee, liquidation or
custodian of itself or of all or a substantial part of its property, (ii)
becomes unable, or admit in writing its inability, to pay its debts generally as
they mature, (iii) makes a general assignment for the benefit of its or any of
its creditors, (iv) is dissolved or liquidated in full or in part (v) commences
a voluntary case or other proceeding seeking liquidation, reorganization or
other relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or consent to any
such relief or to the appointment of or taking possession of its property by any
official in an involuntary case or other proceeding commenced against it, or
(vi) takes any action for the purpose of effecting any of the foregoing; or (B)
proceedings for the appointment of a receiver, trustee, liquidator or custodian
of the other Party or of all or a substantial part of the property thereof, or
an involuntary case or other proceedings seeking liquidation, reorganization or
other relief with respect to the other Party or the debts thereof under any
bankruptcy, insolvency or other similar law now or hereafter in effect shall be
commenced and an order for relief entered or such proceeding shall not be
dismissed or discharged within sixty (60) calendar days of commencement.
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, BioMarin Genetics shall have
the following rights and BioMarin and Genzyme shall have the following rights
and duties upon termination of this Agreement pursuant to Section 13.2.1 above:
(a) the non-breaching Party shall have an irrevocable right
and license, with the right to grant and authorize sublicenses, under the
breaching Party's Patent Rights, Technology (i.e., the BioMarin Patent Rights
and BioMarin Technology or the Genzyme Patent Rights and Genzyme Technology, as
appropriate) and Manufacturing Know-How Controlled by the breaching Party 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
breaching Party shall execute such documents and take all action as may be
necessary or desirable to effect the foregoing; provided, that
-35-
such license shall be for the same level of exclusivity as the rights granted
with respect thereto under Section 3.1 hereof immediately prior to such
termination; 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 BioMarin/Genzyme LLC to the non-breaching Party, and the non-
breaching Party may dissolve BioMarin/Genzyme LLC in its sole discretion;
provided that in the event that BioMarin is the breaching Party, it shall also
cause BioMarin Genetics to assign and transfer all of its interest in
BioMarin/Genzyme LLC to Genzyme.
(c) (i) all licenses granted pursuant to Article 3 shall be
revoked, (ii) if BioMarin/Genzyme LLC is dissolved, any applicable Regulatory
Approvals (other than any Regulatory Approvals filed in the name of an entity
other than BioMarin/Genzyme LLC pursuant to Section 5.3 hereof), "Orphan Drug"
designations and clinical data owned or licensed by BioMarin/Genzyme LLC and any
trademarks owned or licensed by BioMarin/Genzyme LLC (other than any trademarks
registered in the name of an entity other than BioMarin/Genzyme LLC pursuant to
Section 9.1.2 hereof) shall be assigned or exclusively licensed to the non-
breaching Party and (iii) any Regulatory Approvals filed and any trademarks
registered in the name of an entity other than BioMarin/Genzyme LLC shall be (A)
exclusively licensed to BioMarin/Genzyme LLC, the non-breaching Party or any
Third Party or Affiliate designated by the non-breaching Party until such time
as BioMarin/Genzyme 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 BioMarin/Genzyme 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 (i) ninety percent (90%) of the Fair
Value (as defined in Section 13.3.6 below) of the breaching Party's interest
in the Collaboration Products as of the date of termination, plus (ii) the non-
----
terminating Party's Percentage Interest of the net asset value of
BioMarin/Genzyme LLC as of the date of termination after deduction of net
assets included in the Fair Value of Collaboration Products, plus (iii)
----
interest thereon at the Base Rate of interest declared from time to time by
BankBoston, N.A. 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 seventy-five percent (75%) of the net proceeds of such sale or other
disposition when such payments are actually paid;
(2) for as long as the non-breaching Party
(together, in the case of BioMarin with BioMarin Genetics) has not sold or
otherwise disposed of all or a portion of its (together in the case of BioMarin,
with BioMarin Genetics) right, title and interest in the Collaboration Products
which is equal to or greater than the breaching Party's (together in the case of
-36-
BioMarin, with BioMarin Genetics) Percentage Interest as of the date of
termination, the non-breaching Party shall pay the breaching Party (and, in the
event that BioMarin is the breaching Party, BioMarin Genetics) a percentage of
Net Profits, which percentage shall equal (i) the breaching Party's (and, in the
event that BioMarin is the breaching Party, BioMarin Genetics) Percentage
Interest as of the date of termination minus (ii) a percentage equal to the
portion of the right, title and interest in the Collaboration Products sold or
otherwise disposed of by the non-breaching Party (and in the event that
BioMarin is the nonbreaching Party, BioMarin Genetics) as described in the
preceding paragraph; and
(3) on the fourth anniversary of the date of
termination, the non-breaching Party shall pay the breaching Party (and, in
the event that BioMarin is the breaching Party, BioMarin Genetics) the
difference between the aggregate amounts paid pursuant to clauses (1) and (2)
above and the Breach Buyout Amount; 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 the Section 4.4 Payment. In addition to
-------------------------------------------
the rights and duties set forth in Sections 13.4 and 13.5 below, BioMarin shall
have the following rights and duties upon termination of this Agreement pursuant
to Section 13.2.2(b) above:
(a) BioMarin shall have an irrevocable right and license,
with the right to grant and authorize sublicenses, under the Genzyme Patent
Rights, Genzyme Technology and Manufacturing Know-How Controlled by Genzyme 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 BioMarin 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 BioMarin/Genzyme LLC to BioMarin, and BioMarin may dissolve BioMarin/Genzyme
LLC in its sole discretion;
(c) (i) all licenses granted pursuant to Article 3 shall be
revoked, (ii) if BioMarin/Genzyme LLC is dissolved, any applicable Regulatory
Approvals (other than any Regulatory Approvals filed in the name of an entity
other than BioMarin/Genzyme LLC pursuant to Section 5.3 hereof), "Orphan Drug"
designations and clinical data owned or licensed by BioMarin/Genzyme LLC and any
trademarks owned or licensed by BioMarin/Genzyme LLC (other than any trademarks
registered in the name of an entity other than BioMarin/Genzyme LLC pursuant to
Section 9.1.2 hereof) shall be assigned or exclusively licensed to BioMarin and
(iii) any Regulatory Approvals filed and any trademarks registered in the name
of an entity other than BioMarin/Genzyme LLC shall be (A) exclusively licensed
to BioMarin/Genzyme LLC, BioMarin or
-37-
any Third Party or Affiliate designated by BioMarin until such time as
BioMarin/Genzyme LLC, BioMarin 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 BioMarin/Genzyme LLC,
BioMarin or its designee, as appropriate, as soon as practicable thereafter; and
(d) BioMarin shall become obligated to pay Genzyme an
amount equal to (i) the aggregate amount of Genzyme's capital contributions to
BioMarin/Genzyme LLC minus two million dollars ($2,000,000) plus (ii)
----
interest thereon at the Base Rate of interest declared from time to time by
BankBoston, N.A. 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.
13.3.3 For Convenience. In addition to the rights and duties set
---------------
forth in Sections 13.4 and 13.5 below, BioMarin Genetics shall have the
following rights and BioMarin 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 and authorize
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 BioMarin/Genzyme LLC to the non-terminating
Party, and the non-terminating Party may dissolve BioMarin/Genzyme 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 BioMarin/Genzyme LLC is dissolved, any
applicable Regulatory Approvals (other than any Regulatory Approvals filed in
the name of an entity other than BioMarin/Genzyme LLC pursuant to Section 5.3
hereof), "Orphan Drug" designations and clinical data owned or licensed by
BioMarin/Genzyme LLC and any trademarks owned or licensed by BioMarin/Genzyme
LLC (other than any trademarks registered in the name of an entity other than
BioMarin/Genzyme 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 BioMarin/Genzyme LLC
shall be (A) exclusively licensed to BioMarin/Genzyme LLC, the non-terminating-
Party or any Third Party or Affiliate designated by such Party until such time
as BioMarin/Genzyme LLC, the non-terminating Party or its designee is qualified
to hold such
-38-
Regulatory Approvals or trademarks under the applicable provisions of the
Regulatory Scheme and (B) transferred or assigned to BioMarin/Genzyme 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 (i) one hundred
percent (100%) of the Fair Value (as defined in Section 13.3.6 below) of the
terminating Party's interest in the Collaboration Products as of the date of
termination (or, in the event that BioMarin is the non-terminating Party,
Genzyme shall pay the BioMarin Companies an amount equal to one hundred
percent (100%) of the Fair Value of the BioMarin Companies' aggregate interest
in the Collaboration Products as of the date of termination) plus (ii) the
----
non-terminating Party's Percentage Interest of the net asset value of
BioMarin/Genzyme LLC as of the date of termination after deduction of net
assets included in the Fair Value of Collaboration Products, plus (iii)
----
interest thereon at the Base Rate of interest declared from time to time by
BankBoston, N.A. 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; and
(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 eighteen (18)
months from the date of termination and the proceeds shall be allocated between
the Members in proportion to their Percentage Interests in BioMarin/Genzyme LLC
as of the date of termination and BioMarin/Genzyme LLC shall be dissolved.
(f) Notwithstanding the foregoing provisions of Section
13.3.3(d), if Genzyme terminates this Agreement for convenience prior to
December 31, 2000, the Convenience Buyout Amount shall be equal to (i) the
aggregate amount of Genzyme's capital contributions to BioMarin/Genzyme LLC
minus two million dollars ($2,000,000) plus (ii) interest thereon at the Base
----- ----
Rate of interest declared from time to time by BankBoston, N.A. in Boston,
Massachusetts from the date of termination to the date payment is made.
13.3.4 Upon a Change of Control. In addition to the rights and
------------------------
duties set forth in Sections 13.4 and 13.5 below, BioMarin 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 have the exclusive,
irrevocable and, except as provided in Section 13.3.4(d), royalty-free 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 Territory and in the Field, and the non-terminating Party shall
execute such documents and take all action as may be necessary or desirable to
effect the foregoing; provided, 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;
-39-
(b) the non-terminating Party shall assign and transfer all of
its interest in BioMarin/Genzyme LLC to the terminating Party, and the
terminating Party may dissolve BioMarin/Genzyme LLC in its sole discretion;
provided that in the event that BioMarin is the non-terminating Party, it shall
also cause BioMarin Genetics to assign and transfer all of its interest in
BioMarin/Genzyme LLC to Genzyme;
(c) all licenses granted pursuant to Article 3 shall be revoked
and, if BioMarin/Genzyme LLC is dissolved, any applicable Regulatory Approval,
"Orphan Drug" designations and clinical data owned or licensed by
BioMarin/Genzyme LLC and any trademarks owned or licensed by BioMarin/Genzyme
LLC shall be assigned or licensed to the terminating Party; and
(d) the terminating Party (the "Offeror") shall, pursuant to the
-------
conditions set forth in this Section 13.4(d), give the other Party (Genzyme in
the case BioMarin is terminating or the BioMarin Companies in the case Genzyme
is terminating, in either case the "Offeree") at the time of termination written
-------
notice of the Offeror's intention to purchase Offeree's entire interest in and
to (i) the Collaboration Products as of the date of termination and (ii) the
Percentage Interest of the net asset value of BioMarin/Genzyme LLC as of the
date of termination (the "Notice of Offer"). The Notice of Offer shall state
---------------
therein the specific price, terms and conditions under which the Offeror agrees
to purchase Offeree's entire interest in and to (i) the Collaboration Products
as of the date of termination and (ii) the Percentage Interest of the net asset
value of BioMarin/Genzyme LLC as of the date of termination; provided, however,
that the purchase price shall be paid in cash, publicly-traded and registered
securities or as the Parties otherwise agree. The Offeree shall then have ninety
(90) days (the "Acceptance Period") from the receipt of the Notice of Offer to
-----------------
give notice (the "Notice of Acceptance") of the Offeree's intention to accept
--------------------
the offer of the Offeror and shall sell Offeree's entire interest in and to (i)
the Collaboration Products as of the date of termination and (ii) the Percentage
Interest of the net asset value of BioMarin/Genzyme LLC as of the date of
termination to Offeror for the price and upon such terms and conditions as set
forth in the Notice of Offer. In the event the Offeree gives such Notice of
Acceptance, a closing shall be held within ninety (90) days of the receipt of
the Notice of Acceptance by the Offeror. In the event the Offeree elects not to
accept the Offeror's offer to purchase, by giving the Offeror written notice
thereof, or by failing to give the appropriate Notice of Acceptance within the
Acceptance Period, the Offeree shall thereby automatically be bound to purchase
Offeror's entire interest in and to (i) the Collaboration Products as of the
date of termination and (ii) the Percentage Interest of the net asset value of
BioMarin/Genzyme LLC as of the date of termination for the same price (as
adjusted for Percentage Interest, if necessary) and upon such terms and
conditions as specified in the Notice of Offer. In such event, a closing shall
be held within ninety (90) days of the earlier to occur of the expiration of the
Acceptance Period and the date of receipt of the written rejection, whichever is
the first to occur. In addition to any other remedies provided by this
Agreement, in the event the Offeree rejects the offer contained in the Notice of
Offer, but thereafter fails for any reason to timely close as provided herein
above, the Offeree shall, by such failure to close, be deemed to have accepted
the original offer contained in the Notice of Offer, and shall thereafter sell
Offeree's entire interest in and to (i) the Collaboration Products as of the
date of termination and (ii) the Percentage Interest of the net asset value of
BioMarin/Genzyme LLC as of the date of termination to the Offeror pursuant to
the terms of the Notice of Offer. For purposes of Sections 13.3.4 (a)-(c) above,
the Party
-40-
purchasing the other Party's interest in (i) the Collaboration Products and (ii)
the Percentage Interest of the net asset value of BioMarin/Genzyme LLC shall be
deemed to be the terminating Party and the other Party shall be deemed to be the
non-terminating Party.
13.3.5 Upon Bankruptcy. In addition to the rights and duties set
---------------
forth in Sections 13.4 and 13.5 below, BioMarin and Genzyme shall have the
following rights and duties upon termination of this Agreement pursuant to
Section 13.2.5 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 BioMarin/Genzyme LLC to the terminating Party, and the
terminating Party may dissolve BioMarin/Genzyme LLC in its sole discretion;
provided that in the event that BioMarin is the non-terminating Party, it shall
also cause BioMarin Genetics to assign and transfer all of its interest in
BioMarin/Genzyme LLC to Genzyme.
(c) all licenses granted to Article 3 shall be revoked and,
if BioMarin/Genzyme LLC is dissolved, any applicable Regulatory Approvals (other
than any Regulatory Approvals filed in the name of an entity other than
BioMarin/Genzyme LLC pursuant to Section 5.3 hereof), "Orphan Drug" designations
and clinical data owned or licensed by BioMarin/Genzyme LLC and any trademarks
owned or licensed by BioMarin/Genzyme LLC (other than any trademarks registered
in the name of an entity other than BioMarin/Genzyme 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 BioMarin/Genzyme LLC shall be (A) exclusively licensed to
BioMarin/Genzyme LLC, the terminating Party or any Third Party or Affiliate
designated by such Party until such time as BioMarin/Genzyme 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 BioMarin/Genzyme 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 (i) one hundred percent (100%) of
the Fair Value (as defined in Section 13.3.6 below) of the non-terminating
Party's interest in the Collaboration Products as of the date of termination
(or, in the event that BioMarin is the non-terminating Party, Genzyme shall
pay the BioMarin Companies an amount equal to one hundred percent (100%) of
the Fair Value of the BioMarin Companies' aggregate interest in the
Collaboration Products as of the date of termination), plus (ii) the
----
non-terminating Party's Percentage Interest of the net asset value of
BioMarin/Genzyme
-41-
LLC as of the date of termination after deduction of net assets included in
the Fair Value of Collaboration Products, plus (iii) interest thereon at the
----
Base Rate of interest declared from time to time by BankBoston, N.A. in
Boston, Massachusetts 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.
13.3.6 Fair Value. For purposes of this Section 13.3, the "Fair
---------- ----
Value" of a Party's interest in the Collaboration Products shall be the amount
an informed and willing buyer under no compulsion to buy would be willing to
pay and an informed and willing seller under no compulsion to sell would be
willing to accept for all right, title and interest in the Collaboration
Products, determined as of the date of termination, which determination shall
be made by the mutual agreement of BioMarin and Genzyme. In the event that
BioMarin and Genzyme are unable to agree upon the Fair Value within one
hundred and twenty (120) days of the date of termination the Fair Value shall
be determined by an investment banking firm selected by mutual agreement of
BioMarin and Genzyme, and the costs and expenses incurred in connection with
the engagement of such investment banking firm shall be shared equally by
BioMarin and Genzyme.
13.3.7 Other. In the event that a Party (the "Purchasing Party")
----- ----------------
purchases the other Party's (or in the case of BioMarin, the BioMarin
Companies', in each case the "Selling Party") entire interest in and to (i) the
-------------
Collaboration Products and (ii) the Percentage Interest of the net asset value
of BioMarin/Genzyme LLC pursuant to this Section 13.3, the Purchasing Party
shall be deemed to assume all of the liabilities inuring to the Selling Party's
Percentage Interest being acquired. At closing, the Parties shall execute any
and all documents necessary to effectuate such transfer, including an assignment
of all of the Selling Party's Percentage Interest and mutual releases which
shall have the effect of releasing each Party from all claims or liabilities
pertaining to BioMarin/Genzyme LLC (except for any liabilities specifically
included in the terms of such sale).
13.4 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 Article 1, Sections 3.3, 4.3, 4.5, 9.1.1, 9.3, 9.5, Article
10, Section 11.5, Article 12, Sections 13.3, 13.4, 14.1, 14.3, 14.4, 14.8, 14.9,
14.10 and 14.11 and the first sentence of Section 7.4 and the last sentences of
Sections 2.2, 7.3 and 9.1.3 hereof shall survive any termination of this
Agreement.
-42-
ARTICLE XIV
MISCELLANEOUS
14.1 Cooperation. If either BioMarin 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 filed hereunder reasonably necessary to allow the
Assuming Party to perform the duties assumed and otherwise exercise the rights
and licenses granted hereunder. The Responsible Party shall further use its best
efforts to provide reasonable 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 any disruption in the continuity of
supply or marketing of Collaboration Products. If the Responsible Party is the
Manufacturing Party for a Collaboration Product, the Responsible Party shall, at
the option of the Assuming Party, supply such Collaboration Product until the
earlier of (i) twenty-four (24) months from the effective date of termination
and (ii) ninety (90) days after the Assuming Party delivers notice to the
Responsible Party that the Assuming Party is able to manufacture such
Collaboration Product, in each case subject to customary and commercially
reasonable terms and conditions (but at a price not to exceed one hundred
twenty percent (120%) of the Fully Allocated Cost of Goods for such
Collaboration Product. 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
BioMarin/Genzyme 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 at the option of the
Assuming Party.
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 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 BankBoston, N.A. in Boston,
Massachusetts, calculated on the number of days payment is delinquent.
-43-
14.5 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 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 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.
14.6 Assignment. This Agreement may not be assigned or otherwise
----------
transferred by any Party without the consent of the other Parties; provided,
however, that either BioMarin 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;
accordingly, all references herein to the assigning Party shall be deemed
references to the assignee to whom the Agreement is so assigned. Any purported
assignment in violation of this Section 14.6 shall be void.
14.7 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. In the event a Party seeks to avoid a material
provision of this Agreement upon an assertion that such provision is invalid,
illegal or otherwise unenforceable, the other Party shall have the right to
terminate this Agreement upon sixty (60) days prior written notice to the
asserting Party, unless such assertion is eliminated and cured within such sixty
(60) day period. Such a termination shall be deemed a termination by such Party
for breach pursuant to Section 13.2.1.
-44-
14.8 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 14.8 and
shall be effective upon receipt by the addressee.
If to BioMarin: BioMarin Pharmaceutical Inc.
or BioMarin Genetics ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Genzyme: Genzyme Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Genzyme Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Legal Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to BioMarin/Genzyme BioMarin/Genzyme LLC
LLC (if such notice is sent c/o Genzyme Corporation
by BioMarin): ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Genzyme Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Legal Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
-45-
If to BioMarin/Genzyme BioMarin/Genzyme LLC
LLC (if such notice is sent c/o BioMarin Pharmaceutical Inc.
by Genzyme): ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
14.9 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.
14.10 Arbitrate. 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.
14.10.1 General. Except as otherwise provided in this Section
-------
14.10, 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 single arbitrator appointed in accordance
with such rules, provided that if either Party requests the arbitration shall be
conducted by a panel of three (3) arbitrators (the "Arbitration Panel"). In the
-----------------
case of three (3) arbitrators, each of BioMarin 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 BioMarin 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 Chicago, Illinois.
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.
14.10.2 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
-46-
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 14.10.2(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.
(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 14.10.2(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.
14.11 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 seek equitable relief to enforce Article 10 hereof.
14.12 Entire Agreement. This Agreement, the Purchase 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, including, but not limited to the
Confidential Disclosure Agreement and modifications thereof dated February 23,
1998, June 25, 1998 and June 29, 1998. 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, the
Purchase 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.
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14.13 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.
14.14 Independent Contractors. It is expressly agreed that BioMarin and
-----------------------
Genzyme shall be independent contractors and that, except as Members of
BioMarin/Genzyme LLC, the relationship between the two Parties shall not
constitute a partnership, joint venture or agency. Neither BioMarin 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.
14.15 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.
14.16 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.
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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/ G. Jan van Heek
-------------------
Title: Executive Vice President
-------------------------
Date: September 4, 1998
------------------
BIOMARIN PHARMACEUTICAL, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
-------------------------
Title: Chief Executive Officer
------------------------
Date: September 4, 1998
-----------------
BIOMARIN/GENZYME LLC
By: BIOMARIN PHARMACEUTICAL, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
-------------------------
Title: Chief Executive Officer
------------------------
Date: September 4, 1998
-----------------
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