Baseball arbitration

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(A)                 If such Bid is a Qualifying Offer, then the Applicable Directors may, in their discretion, accept such Bid or negotiate the terms of such Product Transfer with Bayer. If Bayer and the Applicable Directors are unable to agree to terms of such Product Transfer within ten Business Days following the Company’s receipt of such Bayer Solicited Bid Notice, then the Company may, at the instruction of the Applicable Directors, seek an independent valuation of such ROFR Product from a Valuation Firm (a “Third Party Valuation”) to determine the fair market value of such ROFR Product (assuming the Minimum Offer Terms for such Product Transfer, as adjusted by the terms in such Qualifying Offer that the Applicable Directors have accepted in principle) (the “FMV”) and the fair market value of such Qualifying Offer (“QOFMV”). The Valuation Firm will prepare and deliver to the Company a written report which provides the FMV and QOFMV for such ROFR Product, with reasonable supporting detail (the “FMV Report”), within [***] of its engagement by the Company for such Third Party Valuation. The FMV Report will be delivered to the Company, Bayer and the Applicable Directors within [***] Business Days of it being completed. If the FMV is determined to be higher than the QOFMV for such ROFR Product, Bayer will have a right to provide a revised Bid (which Bid will be binding) to the Company (the “Revised FMV Bid”) that includes terms that provide for a fair market value of such ROFR Product equal to [***] of the FMV (the “Required FMV Terms”). Such right to provide a revised Bid is required to be exercised by Bayer by submitting a Revised FMV Bid to the Company within [***] of delivery of the FMV Report (the “FMV Bid Period”). If there is any dispute with respect to whether such Revised FMV Bid satisfies such Required FMV Terms, such dispute will be referred to Baseball Arbitration. The Superior Bid will be: (x) such Qualifying Offer if the Company does not seek a Third Party Valuation or the QOFMV is determined to be higher than the FMV; (y) the Revised FMV Bid if it satisfies the Required FMV Terms; or (z) any Bid agreed to by Bayer and approved by the Applicable Directors; provided, however, there will be no Superior Bid if Bayer does not provide a Revised FMV Bid during the FMV Bid Period or the Revised FMV Bid does not satisfy the Required FMV Terms, and thereafter the Company may take any action with respect to such ROFR Product free and clear of any Program Rights and Last Topping Rights for such ROFR Product; provided, however, that Bayer will maintain its Last Topping Right in connection with any subsequent Bidding Process for such Company Product if the terms and conditions of the Superior Bid (as determined by the Applicable Directors) in such subsequent Bidding Process are not at least as favorable to the Company as those detailed in the FMV Report. If there is a Superior Bid as determined in accordance with this Section 2.4(b)(i)(A), the Company will be required to accept the Superior Bid as a Winning Bid.

(d)           If the only Qualifying Offer submitted to the Company and outstanding as of the Submission Date with respect to such Product is from Bayer or one of its Affiliates, then the Company may, at the instruction of the Applicable Directors, seek a Third Party Valuation to determine the FMV and the QOFMV. The Valuation Firm will prepare and deliver to the Company a FMV Report within [***] of its engagement by the Company for such Third Party Valuation. The FMV Report will be delivered to the Company, Bayer and the Applicable Directors within [***] Business Days of it being completed. If the FMV is determined to be higher than the QOFMV for such Product, Bayer will have a right to provide a Revised FMV Bid that includes terms that provide for the Required FMV Terms. Such right to provide a revised Bid is required to be exercised by Bayer by submitting a Revised FMV Bid to the Company within the FMV Bid Period. If there is any dispute with respect to whether such Revised FMV Bid satisfies such Required FMV Terms, such dispute will be referred to Baseball Arbitration. The Superior Bid will be: (i) such Qualifying Offer if the Company does not seek a Third Party Valuation or the QOFMV is determined to be higher than the FMV; or (ii) the Revised FMV Bid if it satisfies the Required FMV Terms. Notwithstanding the foregoing, there will be no Superior Bid if Bayer does not provide a Revised FMV Bid during the FMV Bid Period or the Revised FMV Bid does not satisfy the Required FMV Terms, in which case the Applicable Directors will terminate the Bidding Process and the Board will determine appropriate next steps with respect to such Product, which will be to further research, develop and commercialize the applicable Product (unless otherwise agreed by the Board with the Requisite Approval).

(i)             If Bayer delivers a Bayer Solicited Bid Notice for such ROFR Product to the Company during the First Offer Period for such ROFR Product, Bayer will be considered a Bidding Party. Notwithstanding anything to the contrary contained in the Certificate of Incorporation, Bylaws or Investors’ Rights Agreement, only the approval of the Applicable Directors will be required for the Company to undertake any Product Transfer for such ROFR Product, and the Bidding Party’s and the Bidding Party Director’s approval, vote or consent will not be required for any stockholder or Board approval required for such Product Transfer (including the Requisite Approval). Subject to compliance with the remainder of this Section 2.4(b)(i), the Applicable Directors will determine in good faith whether Bayer’s Bid in such Bayer Solicited Bid Notice is a Qualifying Offer for such ROFR Product. If there is any dispute with respect to whether Bayer’s Bid in such Bayer Solicited Bid Notice is a Qualifying Offer for such ROFR Product, such dispute will be escalated in accordance with the procedures set forth in Exhibit C attached hereto; provided, however, if such dispute is not resolved within the 30-day period set forth therein, then such dispute will be referred to Baseball Arbitration.

5.14       Dispute Resolution. Without limitation of the choice of law and jurisdiction of Section 5.5, except as expressly provided for herein (including disputes to be resolved using Baseball Arbitration), the Parties hereby agree that controversies or claims arising out of or relating to this Agreement, or the interpretation, performance, breach, termination or validity thereof, will be escalated in accordance with the escalation procedure set forth in Exhibit C; provided, however, if such dispute is not resolved within the 30-day period set forth therein, then such dispute will resolved in accordance with Section 5.5.

(b) Baseball Arbitration for Selected Financial Allocations. Disputes over the allocation of value described in Sections 4.3 and 4.5(c) as referable for baseball arbitration under this Section shall be resolved by arbitration as provided in this Section 10.2(b). To avoid doubt, only certain allocation disputes are referable to this Section 10.2(b), and these are only those allocation disputes as to allocation decisions first arising after an Adimab Change of Control as described more particularly in Section 4.3 or 4.5(c). In the absence of such an Adimab Change of Control at the applicable time the allocation decision first arises (as described more particularly in Section 4.3 or Section 4.5(c)), Arsanis shall have no right to require baseball arbitration under this Section, notwithstanding anything express or implied in this Agreement, at law or in equity.

made as to such Product in such country (and the Revenue Election shall not be an option as to such Product in such country). Moreover, at any time that is prior to the closing of an Arsanis Trade Sale, upon written notice to Adimab, Arsanis may make an irrevocable Royalty Election with respect to a Product in any jurisdiction, indication and/or field of use as to which no Revenue Election has previously been made; provided, however, that Arsanis’ right to do so prior to an Adimab Change of Control shall not be read to imply any right for Arsanis to require revenue allocation or baseball arbitration in connection with an Arsanis Trade Sale occurring prior to an Adimab Change of Control, even if Arsanis makes Royalty Elections under this sentence prior to such time.

(ii) Adimab has undergone an Adimab Change of Control, then Arsanis may request that a Third Party determine an amount to be allocated to Program Transaction Revenue for the particular Arsanis Trade Sale, by baseball arbitration pursuant to Section 10.2(b). Any allocation determined by such baseball arbitration shall only be valid as to an Arsanis Trade Sale transaction on the terms disclosed in writing by Arsanis to Adimab and the Arbitrator pursuant to such baseball arbitration; if an Arsanis Trade Sale ultimately occurs on different terms, then the allocation must either be agreed by the Parties or re-arbitrated by baseball arbitration in accordance with Section 10.2(b).

(c) Multi-Product Deals. (i) At any time during the term of this Agreement Arsanis may, in its sole discretion, notify Adimab in writing that it is interested in making a Revenue Election with respect to a particular proposed Multi-Product Deal. Arsanis will promptly provide Adimab the relevant Program Transaction documents as described in Section 4.3(a) and Adimab and Arsanis will negotiate and endeavor to agree in good faith the allocation of Program Transaction Revenue to Multi-Product Deal Program Transaction Revenue in such Multi-Product Deal within [**] days after the date of such Arsanis notice. If despite good faith efforts the Parties are unable to agree upon such allocation within such [**] day period, and Adimab has undergone an Adimab Change of Control prior to the Multi-Product Deal, then Arsanis may request that a Third Party determine such allocation by baseball arbitration pursuant to Section 10.2(b). If despite good faith efforts the Parties are unable to agree upon such allocation within such [**] day period, and Adimab has not undergone an Adimab Change of Control prior to the Multi-Product Deal, then Arsanis shall not have any right to refer the matter for dispute resolution or baseball arbitration under Section 10.2(b), and there shall be no reduction or adjustment to Program Transaction Revenue for other products in the applicable Multi-Product Deal (if Arsanis makes the Revenue Election for such Program Transaction).

(c) Combination Products Adjustment. If Arsanis, its Affiliate, their successors or the Product marketer of any of them under a Program Transaction for which the Royalty Election has been made sells a Combination Product, then Net Sales for such Combination Product shall be calculated as (i) [**] percent ([**]%) of actual Net Sales if neither (ii) nor (iii) applies; (ii) the percentage of Net Sales (or formula to calculate such percentage) mutually agreed in writing by the Parties in advance of First Commercial Sale, if the Parties mutually agree in writing to such percentage (or formula to calculate such percentage); and (iii) if the Parties have failed to agree on such percentage in writing within [**] days after Arsanis in writing requests discussions, and Adimab has prior to such time undergone an Adimab Change of Control, then the percentage of Net Sales determined in baseball arbitration under Section 10.2(b). Arsanis shall have no right to refer the matter for dispute resolution or baseball arbitration under Section 10.2(b) unless Adimab has undergone an Adimab Change of Control prior to the First Commercial Sale of the applicable Product in the applicable country.

(ii) For each Program Transaction that is part of a Multi-Product Deal, the Royalty Election shall be deemed made automatically if Arsanis does not (in its discretion) within [**] days after the date of such Program Transaction notify Adimab in writing that Arsanis makes the Revenue Election with respect thereto and either (A) confirm (accurately) its agreement to an allocation of Program Transaction Revenue to Multi-Product Deal Program Transaction Revenue with respect to such Multi-Product Deal (which shall be mere confirmation of an allocation previously negotiated in good faith and agreed to in writing by the Parties or (if the matter initially arose after an Adimab Change of Control) determined by the arbitrator pursuant to Section 10.2(b) (in those cases where arbitration is available because Adimab has undergone an Adimab Change of Control prior to the Multi-Product Deal), and the notice shall only be effective if merely confirmatory), or (B) if the Parties have not previously agreed on such allocation or submitted the allocation dispute to arbitration pursuant to Section 10.2(b) below, and Adimab has previously undergone an Adimab Change of Control, then request that a Third Party determine such allocation by baseball arbitration as set forth in Section 10.2(b). If Adimab has not undergone an Adimab Change of Control prior to the Multi-Product Deal, then Arsanis shall not have any right to refer the matter for dispute resolution or baseball arbitration under Section 10.2(b), and there shall be [**] to Program Transaction Revenue in the applicable Multi-Product Deal based on Multi-Product Deal status (i.e., Multi-Product Deal Program Transaction Revenue for the particular Multi-Product Deal shall be equal to [**]% of the Program Transaction Revenue associated with such Multi-Product Deal).

(a) Royalty Rate for Products. Arsanis shall pay Adimab royalties at the rate of [**]percent ([**]%) of Net Sales of each Product that is not comprised of any Optimized Antibodies. Arsanis shall pay Adimab royalties at the rate of [**] percent ([**]%) of Net Sales of each Product, the Licensed Antibodies of which are all Optimized Antibodies. In each case such royalties are payable during the applicable Royalty Term, determined on a country-by-country and Product-by-Product basis in accordance with Section 4.5(b). In the case of a Product comprised of one or more Licensed Antibodies that are Optimized Antibodies and one or more Licensed Antibodies that are not Optimized Antibodies, the Parties will mutually agree on the applicable blended royalty rate (not to exceed [**] percent ([**]%)) in advance of First Commercial Sale of such Product, and if the Parties have failed to agree on such percentage in writing within [**] days after Arsanis in writing requests discussions, and Adimab has prior to such time undergone an Adimab Change of Control, then the percentage of Net Sales determined in baseball arbitration under Section 10.2(b). Arsanis shall have no right to refer the matter for dispute resolution or baseball arbitration under Section 10.2(b) unless Adimab has undergone an Adimab Change of Control prior to the First Commercial Sale of the applicable Product in the applicable country,

good-faith discussions over a period of not less than [**] days (the “Senior Executives Discussions”). Each Party will make its executives reasonably available for such discussions. If the Parties are unable to resolve the dispute through the Senior Executives Discussions within such [**] days, then either Party may proceed to seek a judicial resolution of the matter, except that in the case of a dispute or failure to agree over an allocation of Program Transaction Revenue that is provided in this Agreement not to be subject to baseball arbitration under Section 10.2(b) due to Adimab not having undergone a Change of Control by the applicable time for the matter to be referable to such baseball arbitration (“Adimab-Reserved Allocation Decisions”), notwithstanding anything express or implied in this Agreement, at law or in equity, the Adimab- Reserved Allocation Decisions shall not be referable for judicial resolution either, under any circumstance (including in the case of an allegation by Arsanis that Adimab has failed to negotiate in good faith).

(c) With respect to a Program Transactions in which rights are granted to both (i) one or more Licensed Antibodies and/or Products that are not, and are not comprised of, an Optimized Antibody and (ii) one or more Licensed Antibodies and/or Products that are, or are comprised of, Optimized Antibodies, then Arsanis shall pay to Adimab [**] percent ([**]%) of the Program Transaction Revenue allocated to Licensed Antibodies described in clause (c)(i) above and [**] percent ([**]%) of the Program Transaction Revenue allocated to Licensed Antibodies described in clause (c)(ii) above. Adimab and Arsanis will negotiate and endeavor to agree in good faith the allocation of Program Transaction Revenue to each such class of Lincensed Antibody within [**] days after the date of notice from Arsanis of such Program Transaction. If despite good faith efforts the Parties are unable to agree upon such allocation within such [**] day period, and Adimab has undergone an Adimab Change of Control prior to the Program Transaction, then Arsanis may request that a Third Party determine such allocation by baseball arbitration pursuant to Section 10.2(b). If despite good faith efforts the Parties are unable to agree upon such allocation within such [**] day period, and Adimab has not undergone an Adimab Change of Control prior to the Program Transaction, then Arsanis shall not have any right to refer the matter for dispute resolution or baseball arbitration under Section 10.2(b), and there shall be no reduction or adjustment to Program Transaction Revenue in the applicable Program Transaction for Licensed Antibodies and Products that are, or are comprised of, Optimized Antibodies.

(e) Program Revenue Transactions Involving Combination Products. If the lead and/or any actively developed backup Product candidate or Product in a Program Transaction is a Combination Product, then Section 4.3(c) shall apply mutatis mutandis to allow for proportional reduction of Program Transaction Revenue by mutual written agreement of the Parties, or, if (and only if) Adimab has undergone an Adimab Change of Control prior to the applicable Program Transaction, by baseball arbitration under Section 10.2(b).

Any Baseball Arbitration shall be held in San Francisco, California, according to the then-current commercial arbitration rules of the American Arbitration Association (“AAA”), except to the extent such rules are inconsistent with this Paragraph 10.4. The Baseball Arbitration will be conducted by one (1) arbitrator who shall be reasonably acceptable to the Parties and who shall be appointed in accordance with AAA rules. If the Parties are unable to select an arbitrator, then the arbitrator shall be appointed in accordance with AAA rules. Any arbitrator chosen hereunder shall have educational training and industry experience sufficient to demonstrate a reasonable level of experience relevant to the nature of the matter in dispute. Within twenty (20) days after the selection of the arbitrator, each Party shall submit to the arbitrator and the other Party a proposal for the steps Licensee is to take to address the material breach, together with any relevant evidence in support thereof (the “Proposals”). Within fifteen (15) days after the delivery of the last Proposal to the arbitrator, each Party may submit a written rebuttal of the other Party’s Proposal and may also amend and re-submit its original Proposal. The Parties and the arbitrator shall meet within fifteen (15) days after the Parties have submitted their Proposals, at which time each Party shall have one (1) hour to argue in support of its Proposal. The Parties shall not have the right to call any witnesses in support of their arguments, nor compel any production of documents or take any discovery from the other Party in preparation for the meeting. Within thirty (30) days after such meeting, the arbitrator shall select one of the Proposals so submitted by one of the Parties as the resolution of the dispute, but may not alter the terms of either Proposal and may not resolve the dispute in a manner other than by selection of one of the submitted Proposals. If a Party fails to submit a Proposal within the initial twenty (20) day time frame set forth above, the arbitrator shall select the Proposal of the other Party as the determination of the steps Licensee shall take to remedy the material breach. Any time period set forth in this Paragraph 10,4 may be extended by mutual agreement of the Parties. The content (but not

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