COLLABORATION AGREEMENT

EXHIBIT 10.53

 

COLLABORATION AGREEMENT

 

THIS COLLABORATION AGREEMENT (the “Agreement”) is entered into and made effective as of March 31, 2005 (the “Effective Date”) by and between NUVELO, INC., a Delaware corporation having its principal place of business at 675 Almanor Avenue, Sunnyvale, CA 94085 (“Nuvelo”), and KIRIN BREWERY COMPANY, LTD., a corporation organized under the laws of Japan, having offices at 10-1, Shinkawa 2-chome, Chuo-ku, Tokyo 104-8288, Japan, (“Kirin”). Nuvelo and Kirin are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

 

RECITALS

 

WHEREAS, Kirin and Nuvelo are parties to that certain Collaboration Agreement dated August 11, 2001 (as amended March 5, 2002, September 3, 2002 and August 10, 2004, the “Prior Collaboration”) which provides for a research collaboration in which the parties collaboratively apply their proprietary technologies to assign functions to genes of previously unknown function and discover and identify potential therapeutics that interact with such genes and/or their protein products; and

 

WHEREAS, pursuant to the Prior Collaboration the Parties have identified the function of a protein involved in intestinal epithelial cell proliferation as well as a first product candidate they refer to as 17206 (further defined below) relating thereto, and they wish to develop and commercialize together on different terms than those provided in the Prior Collaboration a commercial product based on 17206; and

 

WHEREAS, the Parties wish to provide in this Agreement for such different terms, to supersede the terms of the Prior Collaboration, with respect to 17206 all as further provided below.

 

NOW, THEREFORE, the Parties agree as follows:

 

ARTICLE 1

 

DEFINITIONS

 

The following terms have the following meanings as used in this Agreement (with derivative forms being interpreted accordingly and references to “Articles,” “Sections,” and “Exhibits” meaning the Articles, Sections and Exhibits of and to this Agreement):

 

1.1 “17206” means the amino acid sequence which is expressly identified in Exhibit C, that was identified by the Parties pursuant to the Prior Collaboration and is referred to by them as 17206. A nucleic acid sequence (or gene sequence) for 17206 is also identified in Exhibit C.

 

1.2 “Affiliate” means a person, corporation, partnership, or other entity that controls, is controlled by or is under common control with a Party. For the purposes of this Section 1.2, the word “control” (including, with correlative meaning, the terms “controlled by” or “under the common control with”) means the actual power, either directly or indirectly through one or more intermediaries, to direct the management and policies of such entity, either by the ownership of at least fifty percent (50%) of the voting stock of such entity or by contract or law.

[*]	Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities and Exchange Act of 1934, as amended.

 

1.3 “Allowable Commercialization Expenses” has the meaning given in the Financial Appendix.

 

1.4 “Approval Application” means a New Drug Application (NDA) or Biologic License Application (BLA) submitted and filed with the FDA or the equivalent application or filing filed with any equivalent agency or government authority outside of the United States (including any supra-national agency such as in the European Union) necessary for approval of a drug in such jurisdiction.

 

1.5 “Change of Control Period” has the meaning assigned in Section 3.7(b)(i) clause (2).

 

1.6 “Collaboration” means all activities performed by or on behalf of Nuvelo or Kirin in the course of performing the activities described in, or fulfilling of their obligations pursuant to, this Agreement.

 

1.7 “Collaboration Compound” means any compound (including without limitation any protein) that contains, incorporates or comprises any of the following: (a) 17206; [*].

 

1.8 “Collaboration Invention” means any invention that (a) is a composition of matter, formulation, method of use or method of manufacture of any Collaboration Compound and/or Collaboration Product (including without limitation gene sequences, amino acid sequences, devices and other items necessary to manufacture any Collaboration Compound or Collaboration Product), and (b) is conceived under, reduced to practice under, or results from or arises out of the Collaboration, without regard to which of (or whether both of) the Parties has (or had) an employee or agent who is an inventor of such invention, but specifically excluding Service Inventions and Partner Inventions.

 

1.9 “Collaboration Know-How” means any Know-How developed during and in accordance with the Collaboration related to the Development, Commercialization, use or manufacture of a Collaboration Compound or Collaboration Product, but specifically excluding Service Know-How and Partner Know-How.

 

1.10 “Collaboration Patent” means any Patent that claims a Collaboration Invention, and any Outside Method of Use or Composition-Specific Patent.

 

1.11 “Collaboration Period” means:

 

(a) a period commencing upon the Effective Date and terminating upon the earliest of: (i) the effective opt-out of either of the Parties in accordance with Section 3.7, on a country-by-country or territory-by-territory basis as applicable in accordance with Section 3.7, in which case the Collaboration Period shall only terminate with respect to the country or territory with respect to which the Party has opted out; (ii) the effective opt-out by either of the Parties on a country-by-country or territory-by-territory basis in accordance with Section 4.12, in this case

[*]	Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities and Exchange Act of 1934, as amended.

(b) the Collaboration Period shall only terminate with respect to the country or territory with respect to which the Party has opted out; and (iii) termination of the Agreement; and

 

(c) any period commencing upon the effective opt back in of a Party in accordance with Section 3.7(b) (which excludes any territory, country, territories or countries from which a Party has opted-out in accordance with Sections 3.7(a)(ii), 3.7(a)(iii) and 4.12) and terminating as set forth in subsection (a) above.

 

1.12 “Collaboration Product” means any pharmaceutical product containing any Collaboration Compound.

 

1.13 “Commence” or “Commencement” when used to describe a Phase 1 Trial, Phase 2 Trial, Phase 3 Trial, Phase 3B or Phase 4 Trial, means the first dosing of the first patient for such trial.

 

1.14 “Commercialization” or “Commercialized” means all activities that are undertaken during the process of, and after completion of the filing of, an Approval Application for a particular Collaboration Product and that relate to the commercial manufacture, marketing and sale of a Collaboration Product, including without limitation pre-commercialization, advertising, education, planning, marketing, promotion, distribution, market and product support studies, and Phase 4 Trials.

 

1.15 “Commercialization Plan and Budget” has the meaning assigned in Section 4.2(a).

 

1.16 “Competitor Change of Control” has the meaning assigned in Section 3.7(b)(i).

 

1.17 “Confidential Information” has the meaning assigned in Section 9.1.

 

1.18 “consistent with the Initial Launch Budget” has the meaning assigned in Section 4.2(a).

 

1.19 “consistent with the (applicable) Overall Plan” has the meaning assigned in Section 3.1(b).

 

1.20 “Continuing Party” has the meaning assigned in Section 3.7(d).

 

1.21 “Controlled” means owned or in-licensed from a Third Party, with the ability to grant access to or a license or sublicense to the other Party in accordance with this Agreement, without violating the terms of any agreement or other arrangement with any Third Party.

 

1.22 “Development” means activities relating to the preparation for and conducting of Phase 1 Trials, Phase 2 Trials, Phase 3 Trials, including Phase 3B Trials, and label expansion trials, obtaining Regulatory Approval of a Collaboration Product, and all activities relating to developing the ability to manufacture the same. This includes, but is not limited to: (a) preclinical testing, toxicology, formulation, clinical studies, regulatory affairs and outside counsel regulatory legal services; and (b) manufacturing process development for bulk and final

forms of Collaboration Compounds and Collaboration Products, validation documentation, all documentation generated in connection with the manufacturing or processing activities and manufacturing and quality assurance technical support activities before the first commercial sale of a Collaboration Product. Development excludes Phase 4 Trials.

 

1.23 “Development Costs” has the meaning given in the Financial Appendix.

 

1.24 “Development Plan and Budget” has the meaning given in Section 3.1(b).

 

1.25 “Diligent Efforts” means the efforts required to carry out obligations or tasks in a reasonable and diligent manner consistent with efforts and resources as commonly used in the research-based biotechnology industry (at the Development stage) and in similar sized biopharmaceutical companies (at the Commercialization stage) for a therapeutic product at a similar stage of research, development or commercialization, and having similar market potential, taking into account issues of safety, efficacy, product profile, the costs to develop, the competitiveness of alternative products that are or are expected to be in the relevant marketplace, the proprietary position of the product, the regulatory structure and the likelihood of regulatory approval and product reimbursement, the profitability of the product, and all other relevant commercial factors.

 

1.26 “Direct Commercialization” shall have the meaning given in Section 4.1.

 

1.27 “EMEA” means the European Medicines Agency of the European Union, or any successor agency thereto of the European Union.

 

1.28 “Excess Commercialization Expenses” has the meaning given in Section 7.3.

 

1.29 “Excess Development Cost” has the meaning given in Section 7.2(c).

 

1.30 “FDA” means the United States Food and Drug Administration, or any successor federal agency thereto.

 

1.31 “Financial Appendix” means the financial appendix attached as Exhibit D.

 

1.32 “Financial Statement” has the meaning given in Section 7.4(c).

 

1.33 “FTE” means the equivalent of one person working full time for one 12-month period in a Development, Commercialization, regulatory or other relevant capacity, approximating 1900 hours per year. For clarity, however, a single individual who works more than 1900 hours in a single year shall be treated as one FTE regardless of how many hours in excess of 1900 hours he or she works in the year.

 

1.34 “FTE Rate” has the meaning given in the Financial Appendix.

 

1.35 “Good Clinical Practices” or “GCP” means current Good Clinical Practices as specified in the United States Code of Federal Regulations, at the time of testing, and all FDA and ICH guidelines, including the ICH Consolidated Guidelines on Good Clinical Practices.

1.36 “Good Laboratory Practices” or “GLP” means current Good Laboratory Practices as specified in the United States Code of Federal Regulations at 21 CFR §58 at the time of testing and all applicable ICH guidelines.

 

1.37 “Good Manufacturing Practices” or “GMP” means current Good Manufacturing Practices and standards as provided for (and as amended from time to time) in European Community Directive 91/356/EEC (Principles and Guidelines of Good Manufacturing Practice for Medicinal Products) and in the Current Good Manufacturing Practice Regulations of the United States Code of Federal Regulations Title 21 (21 CFR §§210-211) in relation to the production of pharmaceutical intermediates and active pharmaceutical ingredients, as interpreted by ICH Harmonized Tripartite Guideline, Good Manufacturing Practice Guide for Active Pharmaceutical Ingredients, and subject to any arrangements, additions or clarifications agreed from time to time between the Parties.

 

1.38 “IND” means an Investigational New Drug Application filed with the FDA or the equivalent application or filing filed with any equivalent agency or government authority outside of the United States (including any supra-national agency such as in the European Union) necessary to Commence human clinical trials in such jurisdiction, and including all regulations at 21 CFR §312 et. seq. and equivalent foreign regulations.

 

1.39 “Indemnitees” has the meaning assigned in Section 13.1.

 

1.40 “Indication” means any Initial Indication or any Subsequent Indication.

 

1.41 “Information” means information, results and data of any type or kind whatsoever, in any tangible or intangible form whatsoever, and specifically includes, without limitation, preclinical and clinical data.

 

1.42 “Initial Development Plan and Budget” means the Development Plan and Budget to be exchanged by the Parties as soon as reasonably possible after the Effective Date, in accordance with Section 3.2.

 

1.43 “Initial Indications” means [*].

 

1.44 “Initial Launch Period” has the meaning assigned in Section 4.3(a).

 

1.45 “Initial Launch Budget” has the meaning assigned in Section 4.3(a).

 

1.46 “Initial Overall Plan” means the overarching plan attached as Exhibit G that outlines the general features of the Parties’ anticipated Development program for 17206 for the Initial Indication, and an estimated budget for all Phase 1 Trials, Phase 2 Trials, and Phase 3 Trials, including Phase 3B Trials, of the Collaboration Product for the Initial Indication, including without limitation Manufacturing Costs.

 

1.47 “Joint Other Invention” means any invention conceived or reduced to practice during the Collaboration Period, or the Opt-In Period (or the Change of Control Period, if it applies) only if the Opted Out Party has opted back in, by at least one employee, independent contractor or agent of either Party or jointly with at least one employee, independent contractor

[*]	Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities and Exchange Act of 1934, as amended.

or agent from each Party in the course of the Parties’ performance and/or exercise of rights under this Agreement, but specifically excluding any Collaboration Invention, Collaboration Patent, Partner Invention or Service Invention.

 

1.48 “Joint Other Patent” mean a Patent that claims a Joint Other Invention.

 

1.49 “Joint Steering Committee” or “JSC” means the steering committee described in Section 2.2.

 

1.50 “Kirin Competitor” means [*]. For the purposes of the preceding sentence, the word “control” (including, with correlative meaning, the terms “controlled by” or “under common control with”) means the actual power, either directly or indirectly through one or more intermediaries, to direct the management and policies of such entity by the ownership of at least 50% of the voting stock of such entity.

 

1.51 “Kirin Information” means all Information produced by or for Kirin, in the course of performing the Development Plan and Budget or the Commercialization Plan and Budget.

 

1.52 “Kirin Territory” means all countries and multinational jurisdictions that were included in the Kirin Territory under the Prior Collaboration, as expressly set forth in Exhibit B of the Prior Collaboration.

 

1.53 “Know-How” means any proprietary data, instructions, processes, methods, formulae, materials, expert opinions, information and biological materials (including without limitation cell lines, vectors and their progeny and derivatives), including without limitation, biological, chemical, pharmacological, toxicological, pharmaceutical, physical and analytical, clinical, safety, manufacturing and quality control data and information. Know-How does not include what is set forth in any published and/or issued Patents.

 

1.54 “Launch Budget Dispute” means the Parties’ failure to agree as to any Initial Launch Budget by the deadline set forth for such Initial Launch Budget in Section 4.3(a).

 

1.55 “Lead” means, during the Collaboration Period and with respect to any activity under the Collaboration, the Lead Development Party, Lead Regulatory Party, or Lead Marketing Party (as the case may be) with respect to such activity.

 

1.56 “Lead Development Party” means Nuvelo unless: (a) otherwise agreed by the Parties in writing in their sole discretions on a country-by-country basis or worldwide; or (b) Nuvelo opts-out, in which case such term means Kirin and Kirin will retain the right to lead even if Nuvelo opts back in. Kirin shall not owe any payment for or in connection with conversion to Lead Development Party status resulting from Nuvelo’s opt-out in accordance with clause (b) above.

 

1.57 “Lead Marketing Party” means Nuvelo unless: (a) otherwise agreed by the Parties in writing in their sole discretions on a country-by-country basis or worldwide; or (b) Nuvelo opts-out, in which case such term means Kirin and Kirin will retain the right to lead even if Nuvelo opts back in. If Nuvelo has opted out on a country-by-country basis in

[*]	Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities and Exchange Act of 1934, as amended.

accordance with Section 4.12, then Kirin shall obtain Lead Marketing Party status only with respect to the opted-out country(ies). Kirin shall not owe any payment for or in connection with conversion to Lead Marketing Party status resulting from Nuvelo’s opt-out in accordance with clause (b) above.

 

1.58 “Lead Regulatory Party” means Nuvelo unless: (a) otherwise agreed by the Parties in writing in their sole discretions on a country-by-country basis or worldwide; or (b) Nuvelo opts-out, in which case such term means Kirin and Kirin will retain the right to lead even if Nuvelo opts back in. Kirin shall not owe any payment for or in connection with conversion to Lead Regulatory status resulting from Nuvelo’s opt-out in accordance with clause (b) above.

 

1.59 “Licensed Technology” means: (a) Original Nuvelo Patents, Collaboration Patents, Collaboration Know-How, Other Background Patents that the Parties have mutually agreed to include in the Collaboration pursuant to Section 6.7, Outside Formulation and Manufacture-Specific Patents, Prior Collaboration 17206 Patents and Prior Collaboration 17206 Know-How; and (b) Partner Inventions, Service Inventions and Partner Know-How and Service Know-How, to the extent Controlled by a Party.

 

1.60 “Licensing Revenue” has the meaning given in the Financial Appendix.

 

1.61 “Losses” has the meaning given in Section 13.1.

 

1.62 “Manufacturing Costs” has the meaning given in the Financial Appendix.

 

1.63 “MHW” means the Japanese Ministry of Health and Welfare, or any successor thereto in Japan.

 

1.64 “Net Sales” has the meaning given in the Financial Appendix.

 

1.65 “Non-Lead” means the Party to this Agreement that is not the Lead with respect to the referenced activity or activities during the Collaboration Period.

 

1.66 “Non-Removed Party” has the meaning assigned in Section 11.3(d)(i)(1).

 

1.67 “Nuvelo Information” means all Information produced by or for Nuvelo in the course of performing the Development Plan and Budget or Commercialization Plan and Budget.

 

1.68 “Opted-Out Party” means a Party that has elected to opt out of Development and Commercialization in accordance with any of the clauses of Section 3.7(a).

 

1.69 “Opt-In Period” has the meaning given in Section 3.7(b)(i).

 

1.70 “Original Nuvelo Patent” means any Patent listed in Exhibit B (which represent patent filings with respect to the gene sequence coding for 17206, which patent filings pre-existed the Prior Collaboration) and all divisions, substitutions, continuations, or continuations-in-part of the foregoing applications; all patents issuing on any of the foregoing; all extensions, registrations, confirmations, reissues, re-examinations, or renewals of any of the foregoing patents or any like filing thereof; and all counterparts to any of the foregoing in other countries.

1.71 “Other Background Patents” means, to the extent Controlled by a Party, any Patent that (a) is Controlled by a Party during the Collaboration Period, (b) claims an invention that is necessary or useful to Develop or Commercialize a Collaboration Compound or Collaboration Product, and (c) is not a Patent claiming a Service Invention, a Patent claiming a Partner Invention, a Prior Collaboration 17206 Patent, a Collaboration Patent, or an Outside Formulation and Manufacture-Specific Patent.

 

1.72 “Outside Formulation and Manufacture-Specific Patent” means, to the extent owned by a Party, any Patent, other than a Collaboration Patent, that (a) claims an invention conceived or reduced to practice by such Party outside the Collaboration during the Term (whether solely or jointly with another entity), (b)[*] Collaboration Compound or Collaboration Product, and (c) does not claim a Service Invention or a Partner Invention. By way of example but without limiting the foregoing definition, a Patent, other than a Collaboration Patent, that includes in the [*] a Collaboration Compound. For clarity, a Patent that [*] a Collaboration Compound or Collaboration Product would not be an Outside Formulation and Manufacture-Specific Patent.

 

1.73 “Outside Method of Use and Composition-Specific Patent” means any Patent (a) that claims an invention conceived or reduced to practice solely by a Party, its Affiliates, employees or agents outside the Collaboration during the Term, (b) that [*] a Collaboration Compound or Collaboration Product (each a “Use or Composition-Only Item”),[*], and (c) that does not claim a Service Invention or a Partner Invention.

 

1.74 “Overall Plan” means the Initial Overall Plan or any Subsequent Overall Plan.

 

1.75 “Partnered Commercialization” has the meaning given in Section 4.1.

 

1.76 “Partnering Activities” means: (a) activities to identify and negotiate with potential Third Party Partners and prepare, negotiate and execute, and amend as necessary, a Partnering Agreement (the activities in this clause (a) to be referred to as “Partnering Negotiation Activities”); or (b) any activity which is conducted pursuant to a Partnering Agreement.

 

1.77 “Partnering Agreement” means an executed and in-force written agreement, entered into after the Effective Date, between either Party and a Third Party, wherein such Third Party is granted a license, sublicense or other similar right (including without limitation options for licenses or sublicenses) to Develop and/or Commercialize, alone or in collaboration with a Party (or any other Third Party), a Collaboration Compound or Collaboration Product in any country or countries or territory or territories of the world or on a worldwide basis; but, Service Agreements are not, and shall not be deemed to be, Partnering Agreements.

 

1.78 “Partner Inventions” means any patentable invention conceived or reduced to practice by the employees or agents of a Third Party Partner, either alone or jointly with any employee(s) or agent(s) of a Party, resulting from or arising out of a Partnering Agreement.

[*]	Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities and Exchange Act of 1934, as amended.

1.79 “Partner Know-How” means any Know-How made, developed, conceived, reduced to practice or otherwise discovered by the employees or agents of a Third Party Partner, either alone or jointly with any employee(s) or agent(s) of a Party, during and in accordance with a Partnering Agreement and that relates to Development and/or Commercialization.

 

1.80 “Partnering Costs” has the meaning given in the Financial Appendix.

 

1.81 “Partnered Territory” means a territory or territories in the world covered by, or that was or were covered by, a Partnering Agreement.

 

1.82 “Patent” means: (a) an unexpired patent (including inventor’s certificate) which has not been held invalid or unenforceable by a court of competent jurisdiction from which no appeal can be taken or has been taken within the required time period, including without limitation any substitution, extension, registration, confirmation, reissue, re-examination, renewal or any like filing thereof; (b) any pending patent application, including without limitation any continuation, division or continuation-in-part thereof and any provisional application; or (c) all counterparts to any of the foregoing in other countries.

 

1.83 “Patent Costs” has the meaning given in the Financial Appendix.

 

1.84 “Phase 1 Trial” means that portion of the clinical development program that generally provides for the first introduction into humans of a product with the primary purpose of determining safety, metabolism and pharmacokinetic properties and clinical pharmacology of the product, and generally consistent with 21 CFR §312.21(a) or the applicable rules and regulations of the jurisdiction in which the clinical trial is conducted.

 

1.85 “Phase 2 Trial” means a clinical trial of a product on patients, including possibly pharmacokinetic studies, the principal purpose of which is to make a preliminary determination that such product is safe for its intended use and to obtain sufficient information about such product’s efficacy to permit the design of further clinical trials, and generally consistent with 21 CFR §312.21(b) or the applicable rules and regulations of the jurisdiction in which the clinical trial is conducted.

 

1.86 “Phase 3 Trial” means that portion of the clinical development program that provides for a pivotal human clinical trial of a Product, which trial is designed to: (a) establish that a product is safe and efficacious for its intended use; (b) define warnings, precautions and adverse reactions that are associated with the product in the dosage range to be prescribed; (c) support Regulatory Approval of such product; and (d) generally consistent with 21 CFR §312.21(c) or the applicable rules and regulations of the jurisdiction in which the clinical trial is conducted.

 

1.87 “Phase 3B Trial” means a Phase 3 Trial conducted after an NDA for such product is submitted to the FDA in the United States, but prior to the time that such NDA is approved.

 

1.88 “Phase 4 Trial” means a clinical trial of a product Commenced in a particular country after receipt of Regulatory Approval for commercial sale of the product in such country, in order to support commercialization of the Collaboration Product. Phase 4 Trials exclude all

clinical trials of products conducted to support label expansion for the product, notwithstanding that such clinical trials may be conducted after the Parties obtain Regulatory Approval for the product.

 

1.89 “Preclinical Development” means those Development activities performed before the filing of an IND.

 

1.90 “Prior Collaboration” has the meaning given in the Recitals.

 

1.91 “Prior Collaboration 17206 Know-How” means the Know-How developed, made, conceived, reduced to practice or otherwise discovered in the course of performance of the Prior Collaboration that relates to: (a) a Collaboration Compound or Collaboration Product, (b) a method of making any Collaboration Compound or Collaboration Product, (c) an item or device necessary or useful to manufacture any Collaboration Compound or Collaboration Product, or (d) a method of use of any Collaboration Compound or Collaboration Product.

 

1.92 “Prior Collaboration 17206 Patents” means the Patents existing as of the Effective Date and listed in Exhibit A to this Agreement and all divisions, substitutions, continuations, and continuations-in-part of the foregoing applications; all patents issuing on any of the foregoing; all extensions, registrations, confirmations, reissues, re-examinations, or renewals of any of the foregoing patents; and all counterparts to any of the foregoing in other countries. If either Party Controls a Patent resulting from or arising out of the Prior Collaboration directed to (a) a Collaboration Compound, (b) a method of making any Collaboration Compound, (c) an item or device necessary to manufacture any Collaboration Compound (including without limitation any genetic sequence coding for 17206), (d) a method of use of any Collaboration Compound, or (e) any method necessary for the Development of any Collaboration Compound, and such Patent is not listed in Exhibit A, such Patent shall be deemed automatically included in such Exhibit and within the Collaboration Patents licensed hereunder.

 

1.93 “Product Profit(Loss)” has the meaning given in the Financial Appendix.

 

1.94 “Regulatory Approval” means any and all approvals (including supplements, amendments, pre- and post-approvals, pricing and reimbursement approvals), licenses, registrations or authorizations of any national, supra-national (e.g., the European Commission or the Council of the European Union), regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity, that are necessary for the manufacture, distribution, use or sale of a Collaboration Product in a regulatory jurisdiction.

 

1.95 “Regulatory Authority” means the FDA or any counterpart of the FDA outside the United States, or other national, supra-national, regional, state or local regulatory agency, department, bureau, commission, council, or other governmental entity with authority over the distribution, importation, exportation, manufacture, production, use, storage, transport or clinical testing or sale of a Collaboration Product.

 

1.96 “Regulatory Documentation” means, with respect to a Collaboration Product, all regulatory filings and supporting documents created, submitted to the FDA or any equivalent agency or government authority outside of the United States (including any supra-national agency such as in the European Union) relating to such Product, and all data contained therein,

including, without limitation, any IND(s), NDA(s), BLA(s), Investigator’s Brochures, Drug Master File (“DMF”), correspondence to and from the FDA or any equivalent agency or governmental authority outside of the United States, minutes from teleconferences with Regulatory Authorities, registrations and licenses, regulatory drug lists, advertising and promotion documents shared with Regulatory Authorities, adverse event files, complaint files and manufacturing records.

 

1.97 “Removed Party” has the meaning assigned in Section 11.3(d)(i)(1).

 

1.98 “Royalty Period” has the meaning assigned in Section 7.6(f).

 

1.99 “Share” means, for Nuvelo, 60%, and for Kirin, 40%.

 

1.100 “Service Agreement” means:

 

(a) any agreement in which a Party or Third Party Partner engages a Third Party to perform, on behalf of such Party or Third Party Partner, any Development or Commercialization obligations or activities of such Party or Third Party Partner, including without limitation manufacture of Collaboration Compound or Collaboration Product, without (i) the contracting Third Party obtaining a financial interest in, or right to Develop or Commercialize for its own account, any Collaboration Compound or Collaboration Product, or (ii) paying the contracting Party any monetary consideration, except as set forth in subsection (b) immediately below; and

 

(b) any agreement in which a Party or Third Party Partner engages a Third Party solely to distribute or sell a Collaboration Product to Third Party end users, if and only if such agreement does not include provisions for the payment, to the Party or Third Party Partner, of any upfront, milestone or other payments that are not payments for quantities of Licensed Product.

 

1.101 “Service Invention” means any patentable invention conceived or reduced to practice by the employees or agents of a Third Party, either alone or jointly with any employee(s) or agents of a Party, during and in accordance with a Service Agreement during the Collaboration Period, or the Opt-In Period (or the Change of Control Period, if it applies) if and only if the Opted Out Party has opted back in.

 

1.102 “Service Know-How” means any Know-How made, developed, conceived, reduced to practice or otherwise discovered by the employees or agents of a Third Party, either alone or jointly with any employee(s) or agents of a Party, during and in accordance with a Service Agreement during the Collaboration Period, or the Opt-In Period (or the Change of Control Period, if it applies) if and only if the Opted Out Party has opted back in, and that relates to Development and/or Commercialization.

 

1.103 “Subsequent Indication” means any indication other than the Initial Indications.

 

1.104 “Subsequent Overall Plan” means any overarching plan agreed upon by the Parties in writing after the Effective Date in accordance with Section 2.4(c)(iii), if any.

1.105 “Term” has the meaning assigned in Article 10.

 

1.106 “Third Party” means any entity other than: (a) Nuvelo; (b) Kirin; or (c) an Affiliate of either of them.

 

1.107 “Third Party Partner” means a Third Party that has entered into a Partnering Agreement.

 

1.108 “Title 11” has the meaning assigned in Section 15.3.

 

1.109 “Valid Claim” has the meaning assigned in Section 7.6(c).

 

ARTICLE 2

 

COLLABORATION OVERVIEW AND MANAGEMENT

 

2.1 Overview. The general goals and intent of the Collaboration are to clinically develop and commercialize 17206, so long as the data support such continued activity. All other products arising out of the Prior Collaboration will be Developed and Commercialized pursuant to (and subject to the terms and conditions of) the Prior Collaboration and all agreements entered into hereafter between the Parties.

 

2.2 Overall Management Structure. The Parties shall form a Joint Steering Committee in accordance with this Article 2 (the “JSC”) to discuss, review and provide input to the strategic direction of the Collaboration and the Development and Commercialization efforts under the Collaboration and having the powers, responsibilities and other characteristics set forth in the remainder of this Article 2.

 

2.3 Joint Steering Committee.

 

(a) Membership. The JSC shall have at least 6 members, with an equal number of members appointed by each Party. Each Party’s initial membership on the JSC shall be as set forth in Exhibit E. Each Party may replace its JSC representatives at any time upon written notice to the other Party, provided that each Party shall appoint and maintain for the duration of the term of this Agreement at least one senior management representative on the JSC. The JSC shall keep minutes and prepare a quarterly report for internal senior management review by the Parties. The host Party at each in-person meeting shall prepare the minutes for that meeting and the Parties will alternate hosting meetings held via telephone or video conference.

 

(b) Power and Responsibilities. The JSC shall provide recommendations and support the overall strategy for the Collaboration. The JSC shall have the following specific responsibilities and authority:

 

(i) review and comment upon the annual Development Plan and Budget submitted as provided in Section 3.3 and Section 3.4;

(ii) review, comment upon and approve the Initial Launch Budget in accordance with Section 4.3(a) and review and comment upon the annual Commercialization Plan and Budget submitted as provided in Section 4.2(c) and 4.2(d);

 

(iii) evaluate the progress of the Development Plan and Budget and the Commercialization Plan and Budget;

 

(iv) monitor compliance with the diligence provisions set forth in Sections 3.6 and 4.13;

 

(v) review and comment upon the Commercialization of the Collaboration Product, including: the planning, annual budgeting, manufacturing, marketing, sales and distribution and sub-licensing of Collaboration Products;

 

(vi) monitor, review and comment on costs incurred by the Parties in the commercial manufacture, marketing, sale and distribution of the Collaboration Product;

 

(vii) review and comment upon any Subsequent Overall Plan;

 

(viii) receive and provide to the Parties quarterly sales and financial reports pertaining to Commercialization of the Collaboration Product;

 

(ix) facilitate the flow of Information with respect to the Commercialization of the Collaboration Product; and

 

(x) serve as a forum for Information sharing between the Parties with respect to Development and Commercialization of Collaboration Compounds and Collaboration Products and (to avoid any doubt, without conferring on the JSC or the Lead any additional decision-making authority with respect to a Party’s pre-IND-enabling research) any pre-IND-enabling work relating to a Collaboration Compound or Collaboration Product that a Party conducts as permitted under Section 3.1(a)(ii).

 

(c) The JSC shall have no power to amend or waive compliance with this Agreement. Any amendments that alter the terms of this Agreement shall be implemented, if at all, pursuant to Section 15.1 below (i.e. by the Parties agreeing in their sole discretions to do so in a writing executed by authorized officers of each Party). The JSC shall have only the responsibility explicitly provided for it in Section 2.3(b), and shall not have any other powers or responsibilities.

 

2.4 Meetings. The Parties shall endeavor to schedule meetings of the JSC at least 30 days in advance. During the Collaboration Period, the JSC shall meet at least 1 time in each quarter and shall hold at least 2 in-person meetings per year, with at least 1 in-person meeting being held at the offices of each Party each year. During the Opt-In Period (or any Change of Control Period, if it applies), the JSC shall meet in person, only twice each year. Other than the 2 meetings per year that must be held in person as provided above, meetings of the JSC may be held by teleconference or video conference. Committee meetings held in person will: (a) alternate between sites designated by each Party during the Collaboration Period; (b) be held at the offices of the Lead or Continuing Party during the Opt-In Period (or any Change of Control

Period, if it applies), and any and all costs and expenses of each such in person JSC meeting (during the Opt-In Period or any Change of Control Period, if it applies) shall be paid by the Opted-Out Party; or (c) as otherwise agreed upon by the Parties. With the consent of the representatives of each Party serving on the JSC, other representatives of each Party may attend meetings of the JSC. Except as otherwise provided in this Section, each Party shall be responsible for all of its own expenses of participating in JSC meetings, without inclusion in Development Costs or Allowable Commercialization Expenses.

 

(a) Decision Making. During the Collaboration Period and Opt-In Period (or Change of Control Period, if it applies) the JSC will reasonably discuss all matters that come before it. The Lead Development Party is entitled to make all final decisions with respect to Development so long as it follows the processes set forth in Article 3 and the final decisions are consistent with the express terms and conditions of this Agreement. The Lead Marketing Party is entitled to make all final decisions with respect to Commercialization, except as otherwise expressly provided regarding the Initial Launch Budget, so long as it follows the processes set forth in Article 4 and the final decisions are consistent with the express terms and conditions of this Agreement. The Lead Regulatory Party is entitled to make all final decisions with respect to Regulatory Documentation and Regulatory Approvals for the Collaboration Compounds and the Collaboration Product so long as it follows the processes set forth in Section 3.8 and the final decisions are consistent with the express terms and conditions of this Agreement. The JSC shall accept the final decisions made by the Lead Development Party, Lead Marketing Party and Lead Regulatory Party to the full extent such decisions are made in accordance with this Section 2.4 and the express terms and conditions of this Agreement.

 

(b) Collaborative Discussion Process. For matters discussed by the JSC in accordance with Section 2.3 for which a Party has final decision making authority under Section 2.4(a), if the JSC does not agree, and the Non-Lead for the matter, within 5 business days after the JSC meeting requests further discussion, then senior executives (Vice President level and above) of the Parties with full authority to resolve the matter shall meet within 5 business days after the request, by telephone or otherwise, to seek consensus. Both Parties must approach such discussion in good faith. If such senior executives are unable to reach consensus within 30 business days after the JSC meeting at which the disagreement occurred, then the Party with the right to make the final decision under Section 2.4(a) shall be immediately entitled to exercise such final decision-making authority. Nothing in this Section 2.4(b) is intended to prevent or delay the Lead Party from taking an action required under exigent circumstances to respond to an emergency on an interim basis.

 

(c) Reserved Decisions. Notwithstanding anything else express or implied in this Agreement:

 

(i) A Party shall not be entitled to compel through a final decision under and in accordance with Section 2.4(a), allocation of the other Party’s personnel or require actions of the other Party, other than funding in accordance with this Agreement, without the consent of the other Party, which such other Party may withhold in its sole discretion.

 

(ii) The Initial Overall Plan shall only be changed by mutual written agreement of the Parties, and may not be changed by a final decision of any Party or through

dispute resolution in accordance with Article 14, except solely and exclusively as and to the extent stated in 3.1(a)(iii) regarding FDA-, EMEA-, or MHW-mandated Development. A Party may withhold its consent to changes to the Initial Overall Plan in such Party’s sole discretion, except solely and exclusively as and to the extent stated in 3.1(a)(iii).

 

(iii) Any Subsequent Overall Plan for any Subsequent Indication shall only be approved by mutual written agreement of the Parties, which agreement a Party may withhold in its sole discretion, and shall not be approved by a final decision of any Party or through dispute resolution in accordance with Article 14.

 

(iv) Without limiting Section 2.4(c)(ii) regarding the Initial Overall Plan, any Overall Plan shall only be changed by mutual written agreement of the Parties, and may not be changed by a final decision of any Party or through dispute resolution in accordance with Article 14, except solely and exclusively as and to the extent stated in 3.1(a)(iii). A Party may withhold its consent to changes to any Overall Plan in such Party’s sole discretion, except solely and exclusively as and to the extent stated in 3.1(a)(iii).

 

2.5 Obligations of Parties. On a quarterly basis during the Collaboration Period, Nuvelo and Kirin shall provide the JSC with a report summarizing any Information relating to the Development or Commercialization of Collaboration Compounds and Collaboration Products which the JSC may reasonably require in order to perform its obligations hereunder.

 

ARTICLE 3

 

DEVELOPMENT

 

3.1 Overall Plan and Development Plan and Budget.

 

(a) Overall Plan.

 

(i) Initial Overall Plan. The Parties have on or before the Effective Date exchanged the Initial Overall Plan, in accordance with which the Parties intend to Develop a Collaboration Compound into a Collaboration Product for the Initial Indication, in accordance with the terms and conditions of this Agreement.

 

(ii) Subsequent Indication and Subsequent Overall Plan. The Parties acknowledge that during research, Development or Commercialization of a Collaboration Compound or Collaboration Product, a Party, the Parties or a Third Party Partner or a Third Party providing services to a Party, may identify Subsequent Indications for a Collaboration Compound or Collaboration Product that both Parties would desire to further Develop during the Collaboration Period. If and when a Party can provide the other Party to this Agreement with substantive, repeatable Information showing that a Collaboration Compound or Collaboration Product could be Developed for a Subsequent Indication, that Party shall submit a written copy of such Information to the other Party no later than 30 days after such Party developed such Information. If the Collaboration Period and the Opt-In Period (or any Change of Control Period, if it applies) have not expired or been terminated in accordance with Article 11, at the next scheduled JSC meeting, the JSC shall discuss the Information regarding the Subsequent Indication and whether both Parties wish to pursue the Subsequent Indication, and whether both

Parties wish to generate and approve a Subsequent Overall Plan. If the JSC is unable to agree on whether or not to pursue the Subsequent Indication and have a Subsequent Overall Plan generated, the matter will be referred to senior executives (Vice President level and above) of the Parties with full authority to resolve the matter, by telephone or otherwise, to negotiate the matter in good faith, using reasonable diligent efforts. If these senior executives are unable to reach agreement after 90 days of good faith, diligent efforts, neither Party shall have any obligation to negotiate further; the matter may not be referred to dispute resolution in accordance with Article 14; and the Subsequent Indication and Subsequent Overall Plan shall not be approved. To avoid any doubt, the Lead shall not be entitled to compel agreement or approval of any Subsequent Indication or Subsequent Overall Plan through a final decision under Section 2.4(a). The Lead and Non-Lead shall not conduct Development or Commercialization activities for any Subsequent Indications without an approved Subsequent Overall Plan (but may conduct pre-IND-enabling research without limitation as to indication), except that this provision shall in no way limit the Lead’s ability to conduct Partnering Activities. To avoid any doubt, nothing in this Section 3.1(a) prevents, nor shall be deemed to prevent, the Lead or Continuing Party from entering into a Partnering Agreement that includes Subsequent Indications, or conducting Partnering Activities, including entering into Service Agreement(s) pursuant to, in accordance with and solely for the purposes of performing under the Partnering Agreements, for any Subsequent Indication. Unless there is an agreed upon Subsequent Overall Plan, the Non-Lead shall not have any ability under this Agreement to comment upon, approve or otherwise participate in Development or Commercialization of Subsequent Indications conducted in accordance with a Partnering Agreement. Whether or not the Parties have agreed on a Subsequent Overall Plan, the Non-Lead will be entitled to its Share of Product Profit(Loss) that is attributable to such Subsequent Indications, to the extent that there is profit to be Shared after an accounting of the Product Profit(Loss) in accordance with Section 7.4(c), and any Licensing Revenue attributable to such Subsequent Indications, or any applicable royalty under Section 7.6 in such jurisdictions that the Non-Lead has opted-out. However, the Non-Lead shall not be under any obligation to pay any Share of any Development Costs incurred for any Subsequent Indication unless the Parties have agreed to a Subsequent overall Plan in accordance with this Section 3.1(a)(ii). Any Subsequent Overall Plan put in place as set forth in this Section 3.1(a)(ii) shall outline the general features of the Parties’ then-anticipated Development program for 17206 for any Subsequent Indication covered by such plan, and an estimated budget for all Phase 1 Trials, Phase 2 Trials, and Phase 3 Trials, including Phase 3B Trials, of the Collaboration Product for such Subsequent Indication, including without limitation Manufacturing Costs.

 

(iii) FDA-, EMEA-, or MHW-Mandated Development. If after a Collaboration Compound has been studied in a clinical trial sponsored by or on behalf of the Parties to treat an Initial Indication, the FDA, EMEA or MHW indicates that, in order for such agency to approve any subsequent clinical trial or an NDA (or equivalent in such agency’s jurisdiction) for such Collaboration Compound for such Initial Indication, such agency requires additional studies of such Collaboration Compound, and the budget of then-in-effect Overall Plan with respect to the Initial Indication would not allow completion of such additional studies within the applicable phase and indication budgetary constraints of the Overall Plan, the Parties shall promptly meet and discuss the matter. In this case, the Lead shall, within [*] days after it receives notice from the FDA, EMEA or MHW, as applicable, provide to the Non-Lead a good faith estimate of the additional funding necessary to complete such additional studies. Either Party may, within [*]days after the Non-Lead receives the Lead’s good faith estimate (or[*] days

[*]	Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities and Exchange Act of 1934, as amended.

after notice from the applicable regulatory authority if later), opt out of the Collaboration for the applicable territory (i.e., the United States, the European Union, or Japan) pursuant to Section 3.7(a)(ii) applied mutatis mutandis as if the territory opted out of under this Section 3.1(a)(iii) were a Partnered Territory opted out of under 3.7(a)(ii) (to avoid any doubt, consequently, the Party that has so opted out shall have no right to Share in the Product Profit(Loss) for such territory and shall have only a right to receive the applicable opt-out royalty for such territory, which opt-out royalty remains subject to any reductions in the applicable royalty rate that apply under Sections 6.3(a), 7.6(d), 7.6(e) and 7.6(g)). In their discussions, the Parties shall seek to agree to an expansion of the Overall Plan for the applicable indication and clinical phase to include the studies required by the FDA, EMEA or MHW and a reasonable budget for such studies. If the Parties fail to reach agreement as to such expansion and budget modifications to the Overall Plan within [*] months, the matter shall as of the [*]-month deadline be deemed a “Required Study Dispute” and shall be resolved as set forth in Section 14.3.

 

(b) Development Plan and Budget. Development shall be governed by a development plan, and associated budget, that describes the proposed overall program of Development (the “Development Plan and Budget”). The Development Plan and Budget shall include a description of, without limitation: (i) all major Development tasks to be conducted before submission of filings for Regulatory Approval of a Collaboration Product for the Initial Indications; (ii) key Development objectives, expected associated resources, risk factors, timelines, manufacturing plans, go/no go decision points and relevant decision criteria; (iii) anticipated clinical trials to the extent known; and (iv) a reasonably detailed annual budget for the activities covered by such Development Plan and Budget. All Development Plans and Budgets (including without limitation the budgetary portion thereof) must be consistent with the applicable Overall Plan and with the express terms and conditions of this Agreement. If any Development Plan and Budget is inconsistent with the applicable Overall Plan or the express terms and conditions of this Agreement, the express terms and conditions of this Agreement or the applicable Overall Plan (as applicable) shall prevail. The Lead Development Party shall determine whether to allocate any Development responsibilities to the other Party under this Agreement, but shall have no obligation to allocate any responsibilities to the other Party. The other Party shall have no obligation to participate directly in Development except with its consent, which it may withhold in its sole discretion. As used throughout this Agreement, “consistent with the (applicable) Overall Plan” means that the particular plan and budget being compared to the applicable Overall Plan (i) describes only activities directed at Development for the Indications specified in the applicable Overall Plan, and (ii) contains a budget that, on an indication-by-indication basis, is within the budgetary limits set by the applicable Overall Plan for the phases(s) of Development covered by the plan and budget for the particular indication specified in the Overall Plan (considered together with plans and budgets for other years covering activities for the same stage of Development for such indication).

 

3.2 Initial Development Plan and Budget. The Initial Development Plan and Budget shall set forth: (i) the Development activities for the Initial Indication commencing upon the Effective Date and continuing up through and until the end of 2005; and (ii) Development Costs commencing upon the Effective Date and continuing up through and until the end of 2005. Nuvelo will submit the Initial Development Plan and Budget to Kirin as soon as reasonably possible after the Effective Date, and Kirin will have 30 days thereafter to either approve the Initial Development Plan and Budget or opt-out of the Collaboration in accordance with

[*]	Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities and Exchange Act of 1934, as amended.

Section 3.7(a)(i). If Kirin fails to provide Nuvelo with written notice of its decision to either approve the Initial Development Plan and Budget or opt-out in accordance with Section 3.7(a)(i) before the expiration of the applicable 30 day period, Kirin shall be deemed to have approved the Initial Development Plan and Budget. Any decision by Kirin not to approve the Initial Development Plan and Budget is not, does not constitute, and shall not be deemed to be a Dispute under this Agreement; provided, however, that this shall not be read to limit any rights and remedies of Kirin arising under this Agreement if the Initial Development Plan and Budget is not consistent with the Initial Overall Plan or the express terms and conditions of this Agreement. If Kirin in good faith disputes any such consistency, Kirin may so notify Nuvelo in accordance with Article 14, and the Dispute shall be resolved in accordance with Article 14; but, even if Kirin has notified Nuvelo of a consistency Dispute, Kirin shall still be required while the Dispute is being resolved to pay its Share of Development Costs in accordance with the Development Plan and Budgets in effect provided by Nuvelo while the Dispute is being resolved, unless Kirin has sent Nuvelo proper notice that it has opted-out in accordance with Section 3.7(a)(i). If there is a gross discrepancy between the budget of the Initial Development Plan and Budget Nuvelo provided and the budgetary limitation of the Overall Plan for the applicable development period, then Kirin shall only be required to pay its Share of Development Costs within the limit it in good faith believes is imposed by the Overall Plan for the applicable development period, [*]. The eventual resolution of the Dispute may include, without limitation, a refund to the Non-Lead of amounts overpaid, if any, to the extent in accordance with Article 14.

 

3.3 Review and Approval of Development Plan and Budget. No later than [*] days before the commencement of 2006 and no later than [*] days before the commencement of every subsequent calendar year during the Collaboration Period (i.e., on or before [*] of each year), the Lead Development Party shall prepare and submit to the JSC and the Non-Lead a draft of the Development Plan and Budget that is consistent with the applicable Overall Plan and the express terms and conditions of this Agreement for the forthcoming year. The Non-Lead shall submit its comments on the Lead Development Party’s draft Development Plan and Budget to the JSC and the Lead Development Party at least [*] days prior to a JSC meeting to occur no earlier than [*] days after such Non-Lead’s receipt of the draft Development Plan and Budget. At the applicable JSC meeting, the JSC shall evaluate the draft Development Plan and Budget and any comments or proposed revisions to the draft Development Plan and Budget. If the JSC is unable to reach consensus on the Development Plan and Budget at this JSC meeting, and the Non-Lead within [*] business days after the JSC meeting requests further discussion, then senior executives (Vice President level and above) of the Parties with full authority to resolve the matter shall meet within [*] business days after the request, by telephone or otherwise, to seek consensus. The Lead Development Party shall submit the final Development Plan and Budget to the Non-Lead no later than [*] days after such JSC meeting. Such final Development Plan and Budget shall not contain significant changes or new content relative to the preliminary version except to the extent reflecting the Non-Lead’s comments or a compromise fully discussed at the JSC meeting or by the senior executives of the Parties. The Non-Lead shall have until [*] days after its receipt of the final Development Plan and Budget to either approve it or opt out of the Collaboration in accordance with Section 3.7(a)(i) (the ”Development Decision”). If the Non-Lead fails to provide the Lead Development Party with written notice of its Development Decision before the expiration of [*], then the Non-Lead shall be deemed to have approved the final Development Plan and Budget for the forthcoming year. Any decision by the Non-Lead not

[*]	Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities and Exchange Act of 1934, as amended.

to approve the final Development Plan and Budget is not, does not constitute, and shall not be deemed to be a Dispute under this Agreement; provided, however, that this shall not be read to limit any rights and remedies of the Non-Lead arising under this Agreement if the final Development Plan and Budget is not consistent with the applicable Overall Plan and the express terms and conditions of this Agreement. If the Non-Lead in good faith disputes any such consistency, the Non-Lead may so notify the Lead in accordance with Article 14, and the Dispute shall be resolved in accordance with Article 14; but, even if the Non-Lead has notified the Lead of a consistency Dispute, the Non-Lead shall still be required while the Dispute is being resolved to pay its Share of Development Costs in accordance with the Development Plan and Budgets in effect that the Lead has provided while the Dispute is being resolved, unless the Non-Lead has sent the Lead proper notice that it has opted-out in accordance with Section 3.7(a)(i). If there is a gross discrepancy between the budget of the Development Plan and Budget the Lead provided and the budgetary limitation of the Overall Plan for the applicable development period, then the Non-Lead shall only be required to pay its Share of Development Costs within the limit it in good faith believes is imposed by the Overall Plan for the applicable development period, [*]. The eventual resolution of the Dispute may include, without limitation, a refund to the Non-Lead o