License Agreement - Cubist Pharmaceuticals Inc. and Chiron Healthcare Ireland Ltd.
LICENSE AGREEMENT
BY AND BETWEEN
CUBIST PHARMACEUTICALS, INC.
AND
CHIRON HEALTHCARE IRELAND LTD.
OCTOBER 2, 2003
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TABLE OF CONTENTS
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ARTICLE 1. DEFINITIONS......................................................2
1.1. "Additional Daptomycin Product"..................................2
1.2. "Affiliate"......................................................2
1.3. "Approved New Trademark".........................................2
1.4. "Chiron Data"....................................................2
1.5. "Chiron Development Plan"........................................2
1.6. "Chiron Interest"...............................................2
1.7. "Chiron Inventions".............................................2
1.8. "Chiron Joint Technology Rights".................................3
1.9. "Chiron Know-How"................................................3
1.10. "Chiron Marketing Information".................................3
1.11. "Chiron Patent".................................................3
1.12. "Chiron Related Know-How".......................................3
1.13. "Chiron Related Patent".........................................3
1.14. "Chiron Technology".............................................3
1.15. "Commercial Launch".............................................4
1.16. "Commercialize".................................................4
1.17. "Commercially Important Indications"............................4
1.18. "Commercially Reasonable Efforts"...............................4
1.19. "Confidential Information"......................................4
1.20. "Contract Manufacturing Agreements".............................5
1.21. "Control".......................................................5
1.22. "cSSSI".........................................................5
1.23. "Cubist Data"...................................................5
1.24. "Cubist Development Plan".......................................5
1.25. "Cubist Inventions".............................................5
1.26. "Cubist Joint Technology Rights"................................5
1.27. "Cubist Know-How"...............................................5
1.28. "Cubist Marks"..................................................5
1.29. "Cubist Patent".................................................5
1.30. "Cubist Technology".............................................5
1.31. "Daptomycin"....................................................6
1.32. "Daptomycin IV Product".........................................6
1.33. "Defective Manufactured Product"................................6
1.34. "Directly Competitive Product"..................................6
1.35. "Dollar"........................................................6
1.36. "Drug Approval Application".....................................6
1.37. "Drug Master File,".............................................6
1.38. "Effective Date Third Party Licenses"...........................6
1.39. "EMEA"..........................................................6
1.40. "Fair Market Value".............................................6
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1.41. "FDA"...........................................................6
1.42. "Global Harm"...................................................7
1.43. "IND"...........................................................7
1.44. "Indemnify".....................................................7
1.45. "Information"...................................................7
1.46. "Infringement"..................................................7
1.47. "Injection".....................................................7
1.48. "Joint Coordination Team".......................................7
1.49. "Joint Inventions"..............................................7
1.50. "Joint Know-How"................................................7
1.51. "Joint Patents".................................................7
1.52. "Joint Technology"..............................................7
1.53. "Key Development Studies".......................................7
1.54. "Knowable Patent"...............................................7
1.55. "Launch Indication(s)"..........................................7
1.56. "Licensed Products".............................................7
1.57. "Lilly".........................................................8
1.58. "Lilly License".................................................8
1.59. "Lilly Patent"..................................................8
1.60. "Losses"........................................................8
1.61. "MAA"...........................................................8
1.62. "Major Market Countries"........................................8
1.63. "Manufacturing Information".....................................8
1.64. "Manufacturing Plan"............................................8
1.65. "Marketing Plan"................................................8
1.66. "Marketing Plan Trigger Event"..................................8
1.67. "Medical Affairs Studies".......................................8
1.68. "NDA"...........................................................8
1.69. "Net Sales".....................................................8
1.70. "Other Licensee"................................................9
1.71. "Other Licensee Data"...........................................9
1.72. "Patent"........................................................10
1.73. "Price Approval"................................................10
1.74. "Primary Endpoint"..............................................10
1.75. "Reasonable Buyer"..............................................10
1.76. "Reciprocating Licensee"........................................11
1.77. "Regulatory Approval"...........................................11
1.78. "Regulatory Authority"..........................................11
1.79. "Regulatory Plan"...............................................11
1.80. "Replacement Indication"........................................11
1.81. "Replacement Indication Study"..................................11
1.82. "Replacement Study".............................................11
1.83. "Required Study"................................................11
1.84. "Restricted Period".............................................11
1.85. "Royalty Rate"..................................................11
1.86. "Stock Purchase Agreement"......................................11
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1.87. "Supply Agreement"..............................................11
1.88. "Term"..........................................................11
1.89. "Territory".....................................................12
1.90. "Territory Specific Studies"....................................12
1.91. "Third Party"...................................................12
1.92. "Third Party Infringement Claim"................................12
1.93. "Transfer Price"................................................12
1.94. "Unlicensed Product"...........................................12
1.95. "Unlicensed Sales Threshold"....................................12
1.96. "Valid Claim"...................................................12
ARTICLE 2. PRODUCT RIGHTS AND RIGHTS OF FIRST NEGOTIATION...................12
2.1. Product Rights...................................................12
2.2. Licenses to Chiron...............................................13
2.3. Licenses to Cubist...............................................13
2.4. Existing Related Intellectual Property of Chiron.................14
2.5. Field............................................................14
2.6. Use of Patents and Know-How......................................14
2.7. Exclusivity......................................................14
(a) Chiron....................................................14
(b) Cubist....................................................15
2.8. Sublicenses and Transfers of Chiron Technology or Chiron Joint Technology Rights.....15
2.9. Rights of First Negotiation......................................15
2.10. Right of Co-Negotiation.........................................16
2.11. Marketing a Directly Competitive Product........................16
2.12. Mechanism to Determine Fair Market Value........................17
2.13. Subcontracting..................................................17
2.14. Rights of Last of Refusal for Canada............................18
2.15. Applicable Supply Agreement Provisions..........................18
ARTICLE 3. COORDINATION.....................................................19
3.1. General..........................................................19
3.2. Joint Coordination Team..........................................20
(a) Formation.................................................20
(b) Membership................................................20
(c) Meetings..................................................20
(d) Specific Activities......................................20
(e) Limited Authority; Not a Decision-Making Body............21
(f) Meeting Agendas..........................................22
3.3. JCT Coordinators.................................................22
3.4. Independence.....................................................22
ARTICLE 4. DEVELOPMENT......................................................22
4.1. Key Development Studies; Diligence Obligations...................22
4.2. Cubist Development Plan..........................................24
4.3. Development by Chiron............................................25
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(a) Territory Specific Studies...............................25
(b) Proposed Indications.....................................25
(c) Medical Affairs Studies..................................25
(d) Chiron Development Plan..................................26
(e) Limitation on Chiron's Development Rights................26
4.4. Access to Chiron Data............................................27
(a) Information Sharing......................................27
(b) Reciprocating Licensee...................................27
(c) License Option...........................................27
4.5. No Debarred Personnel............................................28
4.6. Chiron Compliance................................................28
ARTICLE 5. REGULATORY.......................................................28
5.1. Regulatory Plan; Diligence Obligation............................28
(a) Cubist's and Other Licensees' Activities.................28
(b) Regulatory Plan..........................................28
(c) Specific Regulatory Activities...........................30
(d) Costs and Expenses.......................................32
(e) Limitation on Activities..................................32
5.2. Ownership of Regulatory Approvals................................32
5.3. Chiron Access to Cubist and Other Licensee Data..................33
(a) Information Sharing.......................................33
(b) Chiron Use of Cubist Data.................................33
(c) License Option............................................33
(d) Manufacturing Information.................................33
5.4. Free Sales Certificates..........................................34
5.5. Safety; Adverse Event Reporting..................................34
(a) General...................................................34
(b) Reporting Outside the Territory...........................35
(c) Reporting in the Territory................................35
(d) Global Database...........................................35
5.6. Communications...................................................35
(a) Communications Relating to Regulatory Approval............35
(b) Communications Relating to Development....................35
5.7. Recalls and Voluntary Withdrawals................................36
5.8. Label............................................................37
5.9. Governmental Inspections.........................................37
ARTICLE 6. COMMERCIALIZATION; DILIGENCE.....................................37
6.1. Marketing Plan; Diligence Obligation.............................37
(a) Marketing Plan............................................37
(b) Marketing Activities......................................38
(c) Costs and Expenses........................................39
(d) Ownership of Marketing Information........................39
6.2. Prohibited Marketing and Sales Activities........................40
6.3. Discounting......................................................40
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6.4. Marketing and Promotional Literature.............................40
ARTICLE 7. COMPENSATION....................................................40
7.1. Upfront Consideration............................................40
7.2. Milestone Payments...............................................41
(a) Development Milestone Payments............................41
(b) Sales Milestone Payments..................................41
7.3. Royalties........................................................42
(a) Royalty...................................................42
(b) Know-How Step-Down........................................43
(c) Competition Step-Down.....................................43
(d) Competition Step-Down Procedures..........................44
(e) Holdback of Royalties Upon Certain Cubist Enforcement Actions.......44
(f) Chiron Enforcement Action.................................45
(g) Clinical Supplies.........................................45
7.4. Adjustments......................................................46
7.5. Third Party Royalties and Other Payments.........................46
7.6. Royalty Payments and Reports.....................................46
7.7. No Reductions or Offsets.........................................46
7.8. Tax Matters......................................................47
7.9. Foreign Exchange.................................................47
7.10. Late Payments...................................................47
7.11. Exports of Licensed Product from the Territory; [*].............47
ARTICLE 8. INTELLECTUAL PROPERTY............................................47
8.1. Ownership of Inventions..........................................47
8.2. Prosecution of Patents...........................................48
(a) Cubist Patents............................................48
(b) Chiron Patents............................................48
(c) Joint Patents.............................................49
8.3. Patent Term Extensions...........................................49
8.4. Infringement of Patents by Third Parties.........................50
(a) Notification..............................................50
(b) Infringement of Patents in the Territory..................50
(c) Other Infringement of Cubist Patents......................50
(d) Infringement of Chiron Patents and Joint Patents outside the Territory........50
(e) Settlement; Allocation of Proceeds........................51
8.5. Infringement of Third Party Rights...............................51
(a) Notice....................................................51
(b) Avoidance of Infringement.................................52
(c) Licensing to Resolve Infringement by Cubist Technology....52
(d) Determination of Relative Financial Benefits..............52
(e) Limitation of Obligation to Sublicense....................53
(f) Defense...................................................53
(g) Settlement................................................53
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8.6. Patent Oppositions...............................................53
(a) Third Party Patent Rights.................................53
(b) Parties' Patent Rights....................................54
(c) Noncontravention..........................................54
8.7. Sublicensed Technology...........................................54
(a) Generally.................................................54
(b) Lilly License.............................................55
(c) Decision to License Third Party Technology................55
(d) Licensing of Third Party Technology.......................55
(e) Limitation of Obligation to Sublicense....................56
(f) Determination of Relative Financial Benefits..............56
8.8. Patent Marking...................................................56
8.9. Applicability to Chiron Patents..................................56
8.10. Trademarks......................................................56
(a) Trademark License.........................................56
(b) Selection and Registration of Product Trademarks..........57
(c) Infringement of Trademarks by Third Parties...............57
(d) Product Trademarks Infringe Third Party Rights............58
8.11. Subordination to Lilly Rights...................................58
ARTICLE 9. REPRESENTATIONS AND WARRANTIES...................................58
9.1. Mutual Representations and Warranties............................58
(a) Corporate Existence and Power.............................58
(b) Authority and Binding Agreement...........................59
(c) No Conflict...............................................59
(d) Validity..................................................59
(e) Consents..................................................59
9.2. Cubist Representations and Warranties............................59
(a) Ownership of Intellectual Property........................59
(b) Claims Related to Use of Intellectual Property............59
(c) Notice to Third Persons...................................60
(d) Effective Date Third Party Licenses.......................60
(e) No Misappropriation.......................................60
(f) Regulatory Filings........................................60
(g) Regulatory Data and Affairs...............................60
(h) Non-Infringement of Cubist Technology by Third Parties....61
(i) Litigation................................................61
(j) Restrictive Agreements....................................61
(k) Patent Prosecution........................................61
9.3. Chiron Representation and Warranty - No Intellectual Property....61
9.4. Disclaimer.......................................................61
9.5. No Other Representations.........................................61
ARTICLE 10. INDEMNIFICATION................................................62
10.1. Indemnification by Cubist........................................62
10.2. Indemnification by Chiron........................................62
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10.3. Liability for Third Party Products Liability Claims..............63
10.4. Procedure........................................................66
10.5. Insurance........................................................66
10.6. Limitation of Liability..........................................67
ARTICLE 11. RECORDS; PUBLICATIONS...........................................68
11.1. Records..........................................................68
11.2. Publications.....................................................68
ARTICLE 12. CONFIDENTIALITY.................................................69
12.1. Treatment of Confidential Information............................69
12.2. Authorized Disclosure............................................69
12.3. Publicity........................................................70
ARTICLE 13. TERM AND TERMINATION............................................70
13.1. Term................................................................... ...70
13.2. Termination For Convenience by Chiron............................71
13.3. Termination By Either Party Upon Bankruptcy or Insolvency........71
13.4. Termination for Breach...........................................71
(a) Notice....................................................71
(b) Failure to Cure...........................................71
(c) Disputes..................................................71
(d) Termination as to Certain Licensed Products...............72
(e) Right to Sell.............................................72
13.5. INTENTIONALLY OMITTED............................................72
13.6. Consequences of Termination......................................72
13.7. Survival.........................................................74
ARTICLE 14. DISPUTE RESOLUTION..............................................75
14.1. Disputes.........................................................75
14.2. Arbitration......................................................75
14.3. Governing Law; Judicial Resolution...............................76
14.4. Equitable Remedies; Injunctive Relief............................77
14.5. [*]..............................................................77
14.6. Interest.........................................................77
ARTICLE 15. MISCELLANEOUS...................................................77
15.1. Entire Agreement; Amendment......................................77
15.2. Force Majeure....................................................77
15.3. Notices..........................................................78
15.4. Maintenance of Records...........................................79
15.5. No Strict Construction...........................................79
15.6. Assignment.......................................................79
(a) Assignment by Cubist......................................79
(b) Assignment by Chiron......................................79
(c) Restrictions on Payments..................................80
(d) Injunctive Relief.........................................80
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15.7. Performance by Affiliates........................................81
15.8. Guaranty.........................................................81
15.9. Counterparts.....................................................81
15.10. Further Actions................................................81
15.11. Severability...................................................81
15.12. Headings.......................................................81
15.13. No Waiver......................................................81
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LICENSE AGREEMENT
THIS LICENSE AGREEMENT (the "AGREEMENT") is made effective as of the 2nd
day of October, 2003 (the "EFFECTIVE DATE") by and between CHIRON HEALTHCARE
IRELAND LTD., a company organized under the laws of Ireland with offices at
United Drug House, Belgard Road, Tallaght, Dublin, Ireland ("CHIRON") and CUBIST
PHARMACEUTICALS, INC., a Delaware corporation having its principal place of
business at 65 Hayden Avenue, Lexington, Massachusetts 02421 ("CUBIST"). Cubist
and Chiron are sometimes referred to herein individually as a "PARTY" and
collectively as the "PARTIES". CHIRON CORPORATION, a Delaware corporation having
its principal place of business at 4560 Horton Street, Emeryville, California
94608 (the "CHIRON PARENT COMPANY"), is a party to this Agreement only with
respect to certain selected provisions of this Agreement as specified herein.
RECITALS
WHEREAS, Cubist is developing a proprietary compound known under the
generic name of daptomycin, and in particular a form of daptomycin which is
administered by intravenous injection;
WHEREAS, Cubist has filed a New Drug Application with the United States
Food and Drug Administration for an intravenous formulation of daptomycin for
the treatment of complicated skin and skin structure bacterial infections;
WHEREAS, Chiron possesses capabilities in the promotion and marketing of
anti-infective pharmaceutical products throughout Europe and certain other
countries (as further defined below as the "TERRITORY") and desires to seek
regulatory approval for and market an injectable form of daptomycin in the
Territory;
WHEREAS, Chiron wishes to obtain (i) exclusive (even as to Cubist) rights
to commercialize all injectable forms of daptomycin in the Territory, and (ii) a
right of first negotiation for rights in the Territory to all other forms of
daptomycin, including oral formulations and combination products, and Cubist
wishes to grant such rights to Chiron as set forth herein;
WHEREAS, the parties have executed a Manufacturing and Supply Agreement
(the "SUPPLY AGREEMENT") contemporaneously with this Agreement pursuant to which
Cubist has agreed to manufacture or have manufactured Licensed Products for use
by Chiron in connection with Commercialization of Daptomycin Products;
WHEREAS, Chiron wishes for Cubist to complete the Required Studies (as
defined below) in order to enable Chiron to obtain regulatory approval to market
in the Territory an injectable form of daptomycin for complicated skin and skin
structure bacterial infection and for a second
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indication, and Cubist has agreed to use commercially reasonable efforts to
complete the Required Studies; and
WHEREAS, the parties wish to establish a mechanism for exchanging
information and providing one another an opportunity to discuss and comment upon
activities relating to daptomycin products in their respective territories, it
being understood that such mechanism is for transparency purposes only.
NOW THEREFORE, based on the foregoing premises and the mutual covenants and
obligations set forth below, the Parties agree as follows:
ARTICLE 1.
DEFINITIONS
The following terms shall have the following meanings as used in this
Agreement:
1.1. "ADDITIONAL DAPTOMYCIN PRODUCT" shall mean any pharmaceutical
composition containing Daptomycin other than a Daptomycin IV Product. For the
avoidance of doubt, "ADDITIONAL DAPTOMYCIN PRODUCT" shall include, without
limitation, any pharmaceutical composition containing Daptomycin formulated for
oral delivery and any pharmaceutical composition containing Daptomycin and one
or more active pharmaceutical ingredient other than Daptomycin.
1.2. "AFFILIATE" shall mean, with respect to any Person, (i) any other
Person of which fifty percent (50%) or more of the securities or other ownership
interests representing the equity, the voting stock or, if applicable, general
partnership interest of such other Person are owned, controlled, or held,
directly or indirectly by, or under common ownership or control with, such
Person; or (ii) any other Person that, directly or indirectly, owns, controls,
or holds fifty percent (50%) or more of the securities or other ownership
interests representing the equity, the voting stock or, if applicable, the
general partnership interest, of such Person.
1.3. "APPROVED NEW TRADEMARK" shall have the meaning assigned to such term
in Section 8.10(b) hereof.
1.4. "CHIRON DATA" shall have the meaning assigned to such term in Section
4.4(a) hereof.
1.5. "CHIRON DEVELOPMENT PLAN" shall have the meaning assigned such term in
Section 4.3(d).
1.6. "CHIRON INTEREST" shall have the meaning assigned to such term in
Section 15.6(b) hereof.
1.7. "CHIRON INVENTIONS" shall have the meaning assigned to such term in
Section 8.1.
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1.8. "CHIRON JOINT TECHNOLOGY RIGHTS" shall mean all of Chiron's right,
title and interest in the Joint Patents, the Joint Know-How and the Joint
Inventions.
1.9. "CHIRON KNOW-HOW" shall mean all Information (i) that (A) is owned or
Controlled by Chiron after the Effective Date, (B) is not generally known and is
not disclosed in any published Chiron Patents, (C) is necessary or useful in
connection with the development, manufacture, use, sale, import or export of
Licensed Products, including, without limitation, all data and information
regarding the safety and efficacy of Licensed Products, and (D) is created,
conceived, invented, developed or reduced to practice during the Term in the
course of performing research and development activities undertaken or carried
out for the specific purpose of developing Licensed Products or of developing
any invention necessary or useful to the development, manufacture, use, sale,
import or export of Licensed Products, or (ii) that is included in "CHIRON
KNOW-HOW" pursuant to the provisions of Section 2.4 hereof. Notwithstanding the
foregoing, the term "CHIRON KNOW-HOW" shall not include any Chiron Marketing
Information, Chiron Data (other than data generated from Medical Affairs
Studies), Joint Know-How or any interest of Chiron in any of the foregoing.
1.10. "CHIRON MARKETING INFORMATION" shall have the meaning assigned to
such term in Section 6.1(d).
1.11. "CHIRON PATENT"shall mean (i) any Patent that is owned or Controlled
by Chiron, that has a filing date after the Effective Date and that covers any
invention owned or Controlled by Chiron that is created, conceived, invented,
developed or reduced to practice during the Term in the course of performing
research and development activities undertaken or carried out for the specific
purpose of developing Licensed Products or of developing any invention useful to
the development, manufacture, use, sale, import or export of Licensed Products,
and (ii) any Patent that becomes a "CHIRON PATENT" pursuant to the provisions of
Section 2.4 hereof. Notwithstanding the foregoing, the term "CHIRON PATENT"
shall not include any Joint Patents or any interest of Chiron in any Joint
Patents.
1.12. "CHIRON RELATED KNOW-HOW"shall mean all Information that (i) is not
Chiron Marketing Information, Chiron Data, Chiron Know-How or Joint Know-How,
(ii) is owned or Controlled by Chiron on the Effective Date, (iii) is not
generally known and is not disclosed in any published patents or patent
applications of Chiron, (iv) is necessary or useful in connection with the
development, manufacture, use, sale, import or export of Licensed Products, and
(v) is created, conceived, invented, developed or reduced to practice prior to
the Effective Date.
1.13. "CHIRON RELATED PATENT"shall mean any Patent (i) that is not a Chiron
Patent or a Joint Patent, (ii) that is owned or Controlled by Chiron on or at
any time after the Effective Date, and (iii) that covers any invention,
compound, improvement, method, apparatus, material, method or technique of
manufacture created, conceived, invented, developed or reduced to practice prior
to the Effective Date that is necessary or useful to the development,
manufacture, use, sale, import or export of Licensed Products.
1.14. "CHIRON TECHNOLOGY"shall mean Chiron Patents and Chiron Know-How.
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1.15. "COMMERCIAL LAUNCH" shall mean the first commercial sale of a
Licensed Product to a Third Party in a given country after obtaining Regulatory
Approval to Commercialize such Licensed Product in such country. For the
purposes of determining whether or not Commercial Launch has occurred, sales of
Licensed Product for use in clinical trials and named patient sales shall not be
considered.
1.16. "COMMERCIALIZE" shall mean all activities relating to the
commercialization of a Licensed Product including, without limitation,
promotion, marketing, sales, distribution, development for label extensions, and
conducting Medical Affairs Studies, whether conducted by a Party or for such
party by another, and "COMMERCIALIZATION" shall be interpreted accordingly.
1.17. "COMMERCIALLY IMPORTANT INDICATIONS" shall mean, with respect to a
given Licensed Product on any given date of determination, those indications
that are included in the label approved by a Regulatory Authority in the
Territory for such Licensed Product and that each account for [*] of such
Licensed Product for the four calendar quarters immediately preceding such date
of determination, or, in the event that [*] in the Territory occurred within
twelve months of such date of determination, then for the period from [*]
through such date of determination, or if there is no indication that [*], then
those three indications that account for the [*].
1.18. "COMMERCIALLY REASONABLE EFFORTS" shall mean, with respect to a
Party's obligation under this Agreement, the level of efforts required to carry
out such obligation in sustained manner consistent with the efforts a similarly
situated pharmaceutical company devotes to a product of similar market
potential, profit potential and strategic value and similar scientific,
technical, development and regulatory risks, based on conditions then
prevailing.
1.19. "CONFIDENTIAL INFORMATION" shall mean all Information, and other
information and materials, received by either Party from the other Party
pursuant to this Agreement, other than that portion of such information or
materials which:
(a) is publicly disclosed by the disclosing Party, either before
or after it becomes known to the receiving Party;
(b) was known to the receiving Party, without obligation to keep
it confidential, prior to when it was received from the disclosing Party;
(c) is subsequently disclosed to the receiving Party by a Third
Party lawfully in possession thereof without obligation to keep it confidential;
(d) has been publicly disclosed other than by the disclosing Party
and without breach of an obligation of confidentiality with respect thereto; or
(e) has been independently developed by the receiving Party
without the aid, application or use of Confidential Information, as demonstrated
by competent written proof.
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1.20. "CONTRACT MANUFACTURING AGREEMENTS" means any and all agreements
pursuant to which Licensed Products are manufactured on behalf of Cubist
(including any such agreements for any step in the manufacturing process),
including without limitation, the Abbott Laboratories, ACS Dobfar S.p.A. and DSM
Capua S.p.A. contracts, together with all amendments and extensions of such
agreements.
1.21. "CONTROL" shall mean possession of the ability to grant a license or
sublicense as provided for herein without violating the terms of any agreement
or other arrangement with any Third Party, and "CONTROLLED" shall be interpreted
accordingly.
1.22. "CSSSI" shall mean complicated skin and skin structure bacterial
infection.
1.23. "CUBIST DATA" shall mean all Information (other than Other Licensee
Data) owned or Controlled by Cubist pertaining to Licensed Products that is
necessary or useful for making applications for Regulatory Approval or other
regulatory filings for, or Commercializing, Licensed Products in the Territory.
1.24. "CUBIST DEVELOPMENT PLAN" shall have the meaning assigned such term
in Section 4.2(a).
1.25. "CUBIST INVENTIONS" shall have the meaning assigned to such term in
Section 8.1.
1.26. "CUBIST JOINT TECHNOLOGY RIGHTS" shall mean all of Cubist's right,
title and interest in the Joint Patents, the Joint Know-How and the Joint
Inventions.
1.27. "CUBIST KNOW-HOW" shall mean all Information (i) that (A) is owned or
Controlled by Cubist on the Effective Date or at any time during the Term, (B)
is not generally known and is not disclosed in any published Cubist Patents, and
(C) is necessary or useful in connection with the development, manufacture,
marketing, promotion, use, sale, import or export of Licensed Products,
including, without limitation, all data and information regarding the safety and
efficacy of Licensed Products. Notwithstanding the foregoing, the term "CUBIST
KNOW-HOW" shall not include any Joint Know-How or any interest of Cubist in any
Joint Know-How.
1.28. "CUBIST MARKS" shall mean (i) all registered trademarks issued or
that have issued on the application listed at EXHIBIT A; (ii) all pending
trademark applications listed at EXHIBIT A, as amended by Cubist from time to
time; (iii) the Cubist name and mark; and (iv) any and all Approved New
Trademarks.
1.29. "CUBIST PATENT" shall mean any Patent that is owned or Controlled by
Cubist on the Effective Date, including those set forth on EXHIBIT B, or at any
time during the Term, and that covers any Licensed Product or covers any
invention, compound, improvement, method, apparatus, material, method or
technique of manufacture necessary or useful in the development, manufacture,
use, sale, import or export of Licensed Products, including without limitation,
any and all Cubist Inventions. Notwithstanding the foregoing, the term "CUBIST
PATENT" shall not include any Joint Patents or any interest of Cubist in any
Joint Patents.
1.30. "CUBIST TECHNOLOGY" shall mean all Cubist Patents and Cubist
Know-How.
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1.31. "DAPTOMYCIN" shall mean the molecule set forth and identified as the
daptomycin molecule on EXHIBIT C, and all acids, salts and esters of such
daptomycin molecule.
1.32. "DAPTOMYCIN IV PRODUCT" shall mean any pharmaceutical composition
containing Daptomycin in all current and future formulations, but only if such
pharmaceutical composition is formulated for delivery via Injection. The term
"DAPTOMYCIN IV PRODUCT" shall not include (i) any pharmaceutical composition
formulated for delivery by any means other than via Injection or (ii) any
pharmaceutical composition that includes one or more active pharmaceutical
ingredients other than Daptomycin.
1.33. "DEFECTIVE MANUFACTURED PRODUCT" shall have the meaning assigned to
such term in the Supply Agreement.
1.34. "DIRECTLY COMPETITIVE PRODUCT" shall mean, with respect to a given
Licensed Product, (A) [*] or (B) any other pharmaceutical composition (other
than a Licensed Product) formulated for delivery [*] and that is marketed and
sold (i) primarily for [*], and (ii) solely to treat [*], and which other
pharmaceutical composition has a label approved by a Regulatory Authority in the
Territory which includes as indications for such other pharmaceutical
composition [*]. Commercially Important Indications that are included in the
label approved by a Regulatory Authority in the Territory for such Licensed
Product. Notwithstanding the foregoing, the term "DIRECTLY COMPETITIVE PRODUCT"
shall not include [*.]
1.35. "DOLLAR" shall mean a United States dollar, and "$" shall be
interpreted accordingly.
1.36. "DRUG APPROVAL APPLICATION" shall mean an application for Regulatory
Approval required before commercial sale or use of a Licensed Product as a drug
in a regulatory jurisdiction, including without limitation an NDA and a
Biologics License Application (BLA) filed in the United States.
1.37. "DRUG MASTER FILE," or "DMF" shall mean a voluntary submission that
may be used to provide confidential, detailed information about the active
pharmaceutical ingredient, daptomycin, and facilities, processes or articles
used during the manufacturing, processing, packaging and storing of daptomycin
or one or more other drug products.
1.38. "EFFECTIVE DATE THIRD PARTY LICENSES" shall have the meaning assigned
to such term in Section 8.7(a).
1.39. "EMEA" shall mean the European Medicines Evaluation Agency, or any
successor thereto, which coordinates the scientific review of human
pharmaceutical products under the centralized licensing procedures of the
European Community.
1.40. "FAIR MARKET VALUE" shall have the meaning assigned to such term in
Section 2.12 hereof.
1.41. "FDA" shall mean the United States Food and Drug Administration, or
any successor thereto.
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1.42. "GLOBAL HARM" shall mean [*].
1.43. "IND" shall mean an Investigational New Drug application.
1.44. "INDEMNIFY" shall have the meaning assigned to such term in Section
10.1 hereof.
1.45. "INFORMATION" shall mean (i) techniques, information and data
specifically relating to development, manufacture, use, sale, import or export
of Licensed Products, including, but not limited to, inventions, practices,
methods, knowledge, know-how, skill, experience, test data including
pharmacological, toxicological and clinical test data, analytical and quality
control data, regulatory submissions, correspondence and communications,
marketing, pricing, distribution, cost, sales, manufacturing, patent and legal
data or descriptions and (ii) compositions of matter, assays and biological
materials specifically relating to development, manufacture, use, sale, import
or export of Licensed Products.
1.46. "INFRINGEMENT" or "INFRINGE" shall have the meaning assigned to such
term in Section 8.4(a) hereof.
1.47. "INJECTION" shall mean all means of delivering a pharmaceutical
composition by injection and includes, without limitation, delivery by
intravenous, intramuscular and subcutaneous injection.
1.48. "JOINT COORDINATION TEAM" OR "JCT" shall mean the committee formed as
described in Section 3.2(a).
1.49. "JOINT INVENTIONS" shall have the meaning assigned in Section 8.1.
1.50. "JOINT KNOW-HOW" shall mean all Information that (i) consists of
Joint Inventions, (ii) is not generally known and is not disclosed in any
published Joint Patents, and (iii) is necessary or useful in connection with the
development, manufacture, marketing, promotion, use, sale, import or export of
Licensed Products, including, without limitation, all data and information
regarding the safety and efficacy of Licensed Products.
1.51. "JOINT PATENTS" shall have the meaning assigned such term in Section
8.2(c).
1.52. "JOINT TECHNOLOGY" shall mean all Joint Patents and Joint Know-How.
1.53. "KEY DEVELOPMENT STUDIES" means [*.]
1.54. "KNOWABLE PATENT" shall have the meaning assigned to such term in
Section 8.5(c) hereof.
1.55. "LAUNCH INDICATION(S)" shall mean cSSSI and [*], but if at the
relevant time Cubist has [*,] then the term "LAUNCH INDICATION(S)" shall at such
time mean cSSSI only.
1.56. "LICENSED PRODUCTS" shall mean all Daptomycin IV Products, and all
Additional Daptomycin Products that become Licensed Products pursuant to Section
2.9 hereof.
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1.57. "LILLY" shall mean Eli Lilly and Company.
1.58. "LILLY LICENSE" shall mean that certain Licensing Agreement between
Cubist and Lilly, dated October 6, 2000, as amended by the amending agreement
dated July 1, 2003, and as further amended and in effect from time to time,
which License Agreement replaced the prior agreement between such parties, dated
November 7, 1997.
1.59. "LILLY PATENT" shall have the meaning assigned to such term in
Section 8.11.
1.60. "LOSSES" shall have the meaning assigned such term in Section 10.1.
1.61. "MAA" shall mean an application filed with the EMEA for regulatory
approval to market and sell Licensed Products in the European Union, or an
application filed through the mutual recognition procedures in the European
Union having a similar purpose to the NDA in the United States.
1.62. "MAJOR MARKET COUNTRIES" shall mean, collectively, France, Germany,
Italy, Spain, and the United Kingdom. The term "MAJOR MARKET COUNTRY" shall mean
any of the Major Market Countries.
1.63. "MANUFACTURING INFORMATION" shall have the meaning assigned to such
term in Section 5.3(d) hereof.
1.64. "MANUFACTURING PLAN" shall have the meaning assigned to such term in
Section 2.5 of the Supply Agreement.
1.65. "MARKETING PLAN" shall have the meaning assigned such term in Section
6.1(a).
1.66. "MARKETING PLAN TRIGGER EVENT" shall have the meaning assigned such
term in Section 6.1(a).
1.67. "MEDICAL AFFAIRS STUDIES" shall mean those clinical studies conducted
after Regulatory Approval of Licensed Product has been obtained which are
neither intended nor designed to support an application for Regulatory Approval,
including but not limited to, pharmaco-economic studies, pharmaco-epidemiology
studies, and investigator-sponsored clinical studies.
1.68. "NDA" shall mean a New Drug Application for Regulatory Approval filed
in the United States.
1.69. "NET SALES" shall mean, with respect to a particular time period, the
aggregate gross sales invoiced by Chiron and its Affiliates for Licensed
Products sold directly by Chiron and its Affiliates to a Third Party (including,
without limitation, any Third Party that is a distributor of Chiron and its
Affiliates in any country within the Territory) during such time period, less:
(i) discounts, including cash and quantity discounts,
charge-back payments and rebates granted to managed health care organizations or
to domestic and foreign
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governments (including any subdivision thereof), their agencies, purchasers and
reimbursers or to trade customers, in each case to the extent actually allowed
in amounts customary in the trade;
(ii) credits or allowances actually granted upon returns of
damaged, spoiled or Non-Conforming (as defined in the Supply Agreement) units of
Licensed Products or upon recalls of units of Licensed Products, in each case in
amounts customary in the trade;
(iii) freight, postage, shipping, transportation and
insurance charges actually allowed or paid by Chiron or any of its Affiliates
for delivery of Licensed Products sold by Chiron or any of its Affiliates to a
Third Party; and
(iv) taxes, duties and other governmental charges levied on,
absorbed or otherwise imposed on import, export, sale, distribution and use of
such Licensed Products that are paid by Chiron (including, without limitation,
any taxes paid by Chiron pursuant to Section 7.5 of the Supply Agreement), all
as adjusted for rebates and refunds actually granted or reasonably anticipated
to be granted if application therefor is made; PROVIDED, HOWEVER, that in no
event shall any of the following taxes or governmental charges paid or required
to be paid by Chiron constitute a permitted deduction in calculating Net Sales:
any taxes or governmental charges calculated based on, or levied or imposed on
any profit or income earned by Chiron or any of its Affiliates or distributors.
Amounts received by Chiron and its Affiliates for the sale of Licensed
Products among Chiron and its Affiliates for resale shall not be included in the
computation of Net Sales hereunder.
[*] or otherwise in connection with any Licensed Products or in connection
with any rights to any Licensed Products, then the amount of such payment to
Chiron or its Affiliates shall be included in Net Sales in the calendar quarter
in which Chiron or its Affiliates received such payment for purposes of
calculating the royalty due to Cubist pursuant to Article 7. Without limiting
the applicability of the provisions of the foregoing sentence and without
limiting any remedy or choice of remedies that Cubist may have under applicable
law in connection with any breach by Chiron of the provisions of [*] hereof, [*]
makes any payment or payments to Chiron or its Affiliates [*] Chiron or its
Affiliates of any of the [*] then such payment or payments made to Chiron or its
Affiliates shall be included in Net Sales in the calendar quarter in which
Chiron or its Affiliates performed such actions or activities.
For the avoidance of doubt, any payments made by [*] (other than Licensed
Products and other than products that are subject to the provisions of [*], or
for customary services provided for customary consideration, [*] shall not be
included in Net Sales.
1.70. "OTHER LICENSEE" shall mean any Third Party to whom Cubist has
granted or grants a license and/or sublicense to develop or Commercialize a
Licensed Product outside the Territory.
1.71. "OTHER LICENSEE DATA" shall mean all Information that results from
any development activities conducted by any Other Licensee with respect to
Licensed Products and
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that is necessary or useful for making regulatory filings for, or
Commercializing, Licensed Products in the Territory.
1.72. "PATENT" shall mean (i) unexpired letters patent (including
inventor's certificates) which have 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 and (ii) pending applications for letters
patent, including without limitation any provisional, converted provisional,
continued prosecution application, continuation, divisional or
continuation-in-part thereof.
1.73. "PRICE APPROVAL" shall mean, with respect to any country in which the
price at which Chiron sells Licensed Product must be approved by a governmental
authority for reimbursement or payment purposes, the receipt of approval by the
applicable governmental authority with respect to such price.
1.74. "PRIMARY ENDPOINT" shall mean, with respect to a clinical trial, the
point at which the primary efficacy objective has been achieved with respect to
a clinical or microbiological outcome as specified in the protocol for such
trial, unless otherwise agreed by the Parties in writing.
1.75. "REASONABLE BUYER" shall mean, with respect to the sale, assignment,
sublicense or other transfer of the Chiron Interest in accordance with the
provisions of Section 15.6(b) hereof, a Third Party that, both at the time a
definitive agreement is entered into by Chiron and such Third Party in
connection any such transfer and at the time of the closing of such transfer:
(i) [*];
(ii) [*];
(iii) [*]
(iv) [*]:
(a) [*]
[*]
(b) [*]*;
(v) [*];
(vi) [*];
(vii) [*];
(viii) [*];
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(ix) [*]
(x) [*.]
1.76. "RECIPROCATING LICENSEE" shall have the meaning assigned to such term
in Section 4.4(b).
1.77. "REGULATORY APPROVAL" shall mean any approvals (including
supplements, variations, amendments, pre- and post-approvals and Price
Approvals), licenses, registrations or authorizations of any national,
supra-national (e.g., the FDA, the European Commission or the Council of the
European Union, or other similar body in any country), regional, state or local
regulatory agency, department, bureau, commission, council or other governmental
entity, necessary for the manufacture, distribution, use, sale, import or export
of Licensed Products in a regulatory jurisdiction.
1.78. "REGULATORY AUTHORITY" shall mean a foreign counterpart of the FDA.
1.79. "REGULATORY PLAN" shall have the meaning assigned to such term in
Section 5.1(b) hereof.
1.80. "REPLACEMENT INDICATION" shall have the meaning assigned to such term
in Section 4.1(d) hereof.
1.81. "REPLACEMENT INDICATION STUDY" shall have the meaning assigned to
such term in Section 4.1(d) hereof.
1.82. "REPLACEMENT STUDY" shall have the meaning assigned to such term in
Section 4.1(c).
1.83. "REQUIRED STUDY" shall have the meaning assigned to such term in
Section 4.1.
1.84. "RESTRICTED PERIOD" shall mean, with respect to either Party, the
period of time commencing on the Effective Date and ending on the earlier of (i)
the expiration or termination of the Term and (ii) the date when such Party
sells, assigns, sublicenses or otherwise transfers all of its rights in this
Agreement pursuant to, and in accordance with, the provisions of Section 15.6.
1.85. "ROYALTY RATE" shall have the meaning assigned to such term in
Section 7.3(a) hereof.
1.86. "STOCK PURCHASE AGREEMENT" shall mean that certain Stock Purchase
Agreement, dated as of the Effective Date, by and between Cubist and the Chiron
Parent Company.
1.87. "SUPPLY AGREEMENT" shall mean that certain Manufacturing and Supply
Agreement, dated as of the Effective Date, by and between Cubist and Chiron.
1.88. "TERM" shall mean the term of this Agreement.
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1.89. "TERRITORY" shall mean the countries listed in EXHIBIT D, and the
possessions and territories of each such country. Whenever, in accordance with
the terms of this Agreement, Chiron's rights under this Agreement shall
terminate with respect to any country or countries initially included in the
definition of Territory, any reference in this Agreement to the term Territory
shall, from and after such termination, be deemed not to refer to any such
country or countries as to which Chiron's rights under this Agreement have so
terminated.
1.90. "TERRITORY SPECIFIC STUDIES" shall have the meaning mean assigned to
such term in Section 4.3(a).
1.91. "THIRD PARTY" shall mean any entity other than Cubist or Chiron or an
Affiliate of either of them.
1.92. "THIRD PARTY INFRINGEMENT CLAIM" shall have the meaning assigned such
term in Section 8.5(a).
1.93. "TRANSFER PRICE" shall have the meaning assigned to such term in
Section 7.1 of the Supply Agreement.
1.94. "UNLICENSED PRODUCT" shall mean, with respect to any given Licensed
Product in any given country within the Territory, any pharmaceutical
composition containing Daptomycin that (A) is commercially available in such
country other than [*] and other than [*] (B) has the same [*], such Licensed
Product, and (C) [*] as such Licensed Product. If Chiron's rights under this
Agreement are expanded to include rights in Additional Daptomycin Products, then
the foregoing definition of "Unlicensed Product" shall be deemed to be expanded
to include those formulations of pharmaceutical compositions containing
Daptomycin which have been so added to the scope of Licensed Products and the
marketing and other rights of Chiron under this Agreement.
1.95. "UNLICENSED SALES THRESHOLD" shall have the meaning assigned to such
term in Section 7.3(e) hereof.
1.96. "VALID CLAIM" shall mean (i) an unexpired claim of an issued patent
within the Cubist Patents or Joint Patents which has not been found to be
unpatentable, invalid or unenforceable by a court or other authority in the
subject country, from which decision no appeal is taken or can be taken; or (ii)
a claim of a pending patent application within the Cubist Patents or Joint
Patents.
ARTICLE 2.
PRODUCT RIGHTS AND RIGHTS OF FIRST NEGOTIATION
2.1. PRODUCT RIGHTS. Subject to and upon the terms and conditions set forth
in this Agreement, Chiron shall have exclusive rights (even as to Cubist) to
Commercialize the Licensed Products in all countries of the Territory.
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2.2. LICENSES TO CHIRON. Subject to, and in accordance with, the terms and
conditions of this Agreement:
(a) Cubist grants to Chiron the exclusive (even as to Cubist)
license, under the Cubist Technology and the Cubist Joint Technology Rights, to
sell, offer for sale, have sold, import, export and Commercialize Licensed
Products in the Territory. Except to the extent otherwise provided in this
Agreement, the rights granted to Chiron pursuant to this Section 2.2(a) may not
be sublicensed or transferred.
(b) Cubist grants to Chiron the nonexclusive license, under
the Cubist Technology, to practice and use the Cubist Technology and the
Licensed Products anywhere in the world for the sole purpose of engaging in
those research and development activities that Chiron is expressly required or
permitted to perform pursuant to this Agreement. Except to the extent otherwise
provided in this Agreement, the rights granted to Chiron pursuant to this
Section 2.2(b) may not be sublicensed or transferred.
(c) Cubist grants to Chiron a nonexclusive license, under the
Cubist Technology, to make, have made, manufacture and have manufactured
anywhere in the world Licensed Products for sale in the Territory, PROVIDED that
such right to make, have made, manufacture and have manufactured shall not be
exercised by Chiron so long as the Supply Agreement remains in effect. Except to
the extent otherwise provided in this Agreement, the rights granted to Chiron
pursuant to this Section 2.2(c) may not be sublicensed or transferred.
(d) In addition to any rights expressly retained by Cubist in the
foregoing provisions of this Section 2.2, Cubist shall retain any and all rights
in and to the Cubist Technology and the Cubist Joint Technology Rights that are
not expressly granted to Chiron pursuant to this Section 2.2.
2.3. LICENSES TO CUBIST. Subject to the terms and conditions of this
Agreement:
(a) Chiron grants to Cubist the exclusive (even as to Chiron)
license, under the Chiron Technology and the Chiron Joint Technology Rights, to
sell, offer for sale, have sold, import, export and Commercialize Licensed
Products outside of the Territory. Except to the extent otherwise provided in
this Agreement, the rights granted to Cubist pursuant to this Section 2.3(a) may
not be sublicensed or transferred.
(b) Chiron grants to Cubist the nonexclusive license, under the
Chiron Technology, to practice and use the Chiron Technology and the Licensed
Products anywhere in the world for the sole purpose of engaging in research and
development activities with respect to Licensed Products pursuant to this
Agreement. Except to the extent otherwise provided in this Agreement, the rights
granted to Cubist pursuant to this Section 2.3(b) may not be sublicensed or
transferred.
(c) Chiron grants to Cubist a nonexclusive license, under the
Chiron Technology, to make, have made, manufacture and have manufactured
anywhere in the world Licensed Products. Except to the extent otherwise provided
in this Agreement, the rights granted to Cubist pursuant to this Section 2.3(c)
may not be sublicensed or transferred.
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(d) In addition to any rights expressly retained by Chiron in the
foregoing provisions of this Section 2.3, Chiron shall retain any and all rights
in and to the Chiron Technology and the Chiron Joint Technology Rights that are
not expressly granted to Cubist pursuant to this Section 2.3.
(e) Notwithstanding any provision of this Agreement to the
contrary, the provisions of this Section 2.3 shall apply to any Chiron Patent
only to the extent that the Parties have not otherwise agreed on the scope of
rights granted and reserved in respect of any such Chiron Patent.
2.4. EXISTING RELATED INTELLECTUAL PROPERTY OF CHIRON. If Chiron decides to
use or apply any Chiron Related Patent or any Chiron Related Know-How, Chiron
shall notify Cubist and provide any information concerning any such Chiron
Related Patent or Chiron Related Know-How that Cubist reasonably requests. In
the event that either Party sends a written request to the other Party
requesting a discussion at a JCT meeting concerning the need, usefulness and
advisability of using any Chiron Related Patent or Chiron Related Know-How in
connection with the development, manufacture, use or Commercialization of
Licensed Products within and/or outside the Territory, then a meeting of the JCT
shall be convened as promptly as practicable and the Parties shall discuss same.
If consensus is reached at the JCT that any such Chiron Related Patent and/or
Chiron Related Know-How should be used for such purpose, then the Parties shall
discuss the compensation that Chiron would require in order to license to Cubist
any such Chiron Related Patent and/or Chiron Related Know-How. If Cubist and
Chiron agree on the terms of any such compensation, then the Parties may enter
into an appropriate technology license agreement which license agreement shall
address the scope of the license granted, compensation and responsibilities of
the Parties on matters such as further research and development, prosecution,
maintenance and enforcement of relevant Patents, and other customary provisions
contained in such agreements. If the Parties elect not to enter into a specific
technology license agreement, any such Chiron Related Patent shall be included
within the Chiron Patents and shall become subject to the licenses granted to
Cubist pursuant to Section 2.3 hereof and/or any such Chiron Related Know-How
shall be included within the Chiron Know-How and shall become subject to the
licenses granted to Cubist pursuant to Section 2.3 hereof.
2.5. FIELD. Notwithstanding anything in this Agreement to the contrary, it
is acknowledged and agreed by the Parties that the licenses granted by Cubist to
Chiron under this Agreement with respect to the Cubist Patents and Cubist
Know-How that are licensed to Cubist pursuant to the Lilly License shall be
solely for application to the treatment of infectious diseases.
2.6. USE OF PATENTS AND KNOW-HOW. Each Party covenants to the other that it
will not practice the Patents or Know-How of the other Party except as expressly
permitted in the licenses granted to it in this Agreement.
2.7. EXCLUSIVITY.
(a) CHIRON. Chiron shall not develop, promote, sell or offer for
sale Licensed Products for use outside of the Territory. Chiron shall require
its distributors who sell Licensed
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Products to make a covenant similar to that provided in this Section 2.7(a) with
respect to Licensed Products.
(b) Cubist. Cubist shall not promote, sell, or offer for sale a
Licensed Product for use within the Territory (except for sales to Chiron
pursuant to this Agreement or the Supply Agreement). Cubist shall require any of
its Other Licensees and distributors of Licensed Products to make a covenant
similar to that provided in this Section 2.7(b) with respect to Licensed
Products.
2.8. SUBLICENSES AND TRANSFERS OF CHIRON TECHNOLOGY OR CHIRON JOINT
TECHNOLOGY RIGHTS. Chiron shall not sublicense or transfer any interest in the
Chiron Technology or the Chiron Joint Technology Rights to any Third Party
unless such Third Party shall have acknowledged and agreed in writing that any
such sublicense or transfer to such Third Party, and the rights acquired by any
such Third Party in and to the Chiron Technology and the Chiron Joint Technology
Rights as a result of such sublicense or transfer, shall be subject to any and
all rights that Chiron may have granted to Cubist pursuant to this Agreement and
the Supply Agreement.
2.9. RIGHTS OF FIRST NEGOTIATION. Cubist hereby grants Chiron (a) a right
of first negotiation to obtain Commercialization rights in the Territory with
respect to any and all Additional Daptomycin Products, and (b) a right of first
negotiation to obtain Commercialization rights in the Territory to any and all
Directly Competitive Products, in each case, on the following terms: In the
event that Cubist proposes to grant, sell, assign or otherwise transfer to a
Third Party all or any portion of any such Commercialization rights, regardless
of whether Cubist or a Third party makes the initial proposal, THEN Cubist will
promptly notify Chiron in writing thereof. As soon as practicable, Chiron will
respond to Cubist in writing regarding its interest in entering into
negotiations to obtain such rights and the Parties will promptly [*] following
the date that Cubist gives such written notice to Chiron. Upon commencement of
such negotiations, [*] to grant Commercialization rights with respect to such
Additional Daptomycin Product or Directly Competitive Product. If Chiron and
Cubist are unable to agree on material terms within [*] after receipt by Chiron
of Cubist's notice of its intent to transfer Commercialization rights, then
Cubist will [*]. Chiron shall have an exclusive [*] period to present (but shall
not be obligated to present) to Cubist a revised proposal. If Cubist does not
accept Chiron's revised proposal upon expiration of such exclusive period, in
its sole discretion, Cubist will be free to enter into negotiations with any
Third Party, PROVIDED, HOWEVER, Chiron shall have the non-exclusive right to
continue discussions with Cubist. If Cubist determines that it is likely to
accept terms with a Third Party for such Commercialization rights, Cubist will
offer Chiron an opportunity for [*], at Chiron's headquarters or at any other
location that the Parties may mutually agree upon, within [*] of Cubist's
notification to Chiron that it is affording Chiron such opportunity to meet, for
the purpose of explaining in reasonable detail the reasons that Cubist is likely
to accept such terms. Chiron shall have a period of [*] from the date of such
meeting to present to Cubist [*] and Cubist hereby agrees that it will not
accept the Third Party terms until the earlier of (a) the expiration of such [*]
period, (b) the date that Chiron affirmatively declines to make an offer, and
(c) the date that Chiron proposes, and Cubist rejects, such offer. For the
avoidance of doubt, Cubist is not obligated to offer the foregoing opportunity
for [*]. Cubist will select the party with which it wishes to enter into
negotiations for a definitive
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agreement in its sole discretion, PROVIDED, HOWEVER, in making its
determination, [*]. Chiron hereby acknowledges and agrees that [*]
2.10. RIGHT OF CO-NEGOTIATION. Chiron hereby grants Cubist a right of
co-negotiation to obtain all or any portion of the Commercialization rights in
the Territory with respect to any and all Directly Competitive Products on the
following terms: In the event that Chiron proposes to grant, sell, assign or
otherwise transfer to a Third Party all or any portion of such Commercialization
rights in the Territory for a Directly Competitive Product, regardless of
whether Chiron or a Third Party makes the initial proposal, then Chiron will
promptly notify Cubist in writing thereof and thereafter, Cubist, to the extent
that it remains so interested, shall be included among the interested parties
with whom Chiron holds discussions for the transfer of such rights until such
time as Chiron selects the party with whom it wishes to enter into negotiations
for a definitive agreement for such rights. Cubist acknowledges that [*].
Without limiting the generality of the foregoing, Cubist acknowledges that
Chiron shall have [*] for the Territory as Chiron sees fit. Except as expressly
provided in Section 2.11, Chiron shall have no obligation or liability to Cubist
for selecting a Third Party as its Commercialization partner for Directly
Competitive Products in the Territory.
2.11. MARKETING A DIRECTLY COMPETITIVE PRODUCT. Subject to the right of
first negotiation in favor of Chiron in Section 2.9, and the right of
co-negotiation in favor of Cubist in Section 2.10, the Parties acknowledge that
either Party may, at any time during the Restricted Period applicable to such
Party, market a Directly Competitive Product in the Territory. In the event that
either Party launches, either directly or indirectly, a Directly Competitive
Product in the Territory at any time during the Restricted Period applicable to
such launching Party, then the other Party (the "AGGRIEVED PARTY") shall have
recourse to the remedies provided herein. The Parties acknowledge and agree that
the objective of the remedies provided in this Section 2.11 is to have the Party
launching the Directly Competitive Product compensate the Aggrieved Party for
the [*] [*] of its interest in the Licensed Products resulting from such action.
If Cubist is the Aggrieved Party, Cubist may elect to:
(a) require Chiron to [*] to receive royalties for the sale of
Licensed Products in the Territory ("CUBIST ROYALTY INTEREST") at the [*] as it
existed immediately prior to Chiron's launch of the Directly Competitive Product
in the Territory, following which Chiron shall be entitled to continue to sell
Licensed Products in the Territory without any further obligation to pay
royalties to Cubist; or
(b) require Chiron to pay the [*] of the Cubist Royalty Interest
attributable to Chiron's launch of the Directly Competitive Product in the
Territory but following which Chiron shall be entitled to continue to sell
Licensed Products in the Territory subject to payment of the royalties as
provided herein.
If Chiron is the Aggrieved Party, then Chiron may elect to:
(c) require Cubist to purchase the Chiron Interest at its [*] as
it existed immediately prior to Cubist's launch of the Directly Competitive
Product in the Territory, following which Chiron shall have no further right to
sell Licensed Products in the Territory; or
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(d) require Cubist to pay to Chiron the [*] of the Chiron Interest
attributable to Cubist's launch of the Directly Competitive Product in the
Territory but following which Chiron shall be entitled to continue to sell
Licensed Products in the Territory subject to payment of royalties as provided
herein.
In each of the foregoing [*] shall be determined in accordance with the [*]. In
each instance in which a Party is required to make payment of compensation to
the Aggrieved Party pursuant to the provisions of this Section 2.11, the Party
required to pay compensation shall have the option of paying such amount due as
a one-time lump sum or by installments paid over a period of time not to exceed
[*], PROVIDED that, in the event that a compensating Party elects to make
payment over a period of time, such compensating Party shall pay interest on all
amounts due at the rate stipulated in Section 7.10 for late payments.
2.12. MECHANISM TO DETERMINE FAIR MARKET VALUE. [*] of this Agreement "FAIR
MARKET VALUE" (including any diminution thereof) shall mean the fair market
value of the Cubist Royalty Interest or the Chiron Interest, as the case may be,
determined as follows: If the Parties cannot agree on the Fair Market Value
within 30 days after the launch of the Directly Competitive Product, each Party
shall promptly designate a reputable investment banking or appraisal firm of its
choice (which in the case of an investment bank shall not be the regular banker
of the Party) (the "APPRAISERS" or each an "APPRAISER"), who will each be asked
to provide its best, single number estimate of the applicable Fair Market Value
(the "ESTIMATE"), using a common set of assumptions provided by the Parties, or
if the Parties cannot agree, determined by the Appraisers. Each Party shall use
its best efforts to cause its designated Appraiser to provide the Estimate not
later than 30 days after the Parties or the Appraiser, as the case may be, have
determined the common set of assumptions to be used.
If the Estimate submitted by one of the Appraisers exceeds the Estimate
submitted by the other Appraiser by 10% or less, the Fair Market Value shall be
deemed to be the arithmetic mean of the two Estimates.
If the Estimate submitted by one of the Appraisers exceeds the Estimate
submitted by the other Appraiser by more than 10%, the Parties, or if the
Parties cannot agree, the Appraisers, shall designate a third appraiser (which
in the case of an investment bank shall not be the regular banker of either
Party) (the "THIRD APPRAISER") to prepare an estimate of Fair Market Value using
the same common set of assumptions but without access to the earlier Estimates.
The Third Appraiser shall be directed to provide its estimate of Fair Market
Value within 30 days of its designation. If the estimate of Fair Market Value
submitted by the Third Appraiser falls between the Estimates of the Appraisers,
the Fair Market Value shall be deemed to be the arithmetic mean of all three
estimates of Fair Market Value. If the estimate of Fair Market Value submitted
by the Third Appraiser does not fall in between the Estimates of the Appraisers,
the Estimate submitted by one of the two Appraisers that is closest to the
estimate of Fair Market Value submitted by the Third Appraiser shall be deemed
to be the Fair Market Value.
Each party shall bear the costs and expenses of its own Appraiser as well as 50%
of the costs and expenses of the Third Appraiser, if necessary.
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2.13. SUBCONTRACTING. Each Party may exercise any of the rights or
obligations that such Party may have under this Agreement or the Supply
Agreement to engage in research and development activities, manufacturing
activities or testing activities with respect to Licensed Products by
subcontracting all or any portion of such research and development activities,
manufacturing activities or testing activities, and, in connection with any such
subcontracting, to grant such sublicenses as may be necessary to permit any
Third Party subcontractor to perform the activities subcontracted to such Third
Party subcontractor. Each Party may also exercise any of its rights or
obligations under this Agreement to Commercialize Licensed Products by
subcontracting all or any portion of such rights or obligations to distributors,
and, in connection with any such subcontracting, to grant such sublicenses as
may be necessary to permit any such distributor to perform the activities
subcontracted to such distributor, PROVIDED, HOWEVER, that Chiron shall not
grant to any such distributor any right other than the right to Commercialize in
the Territory Licensed Products supplied to such distributor by or on behalf of
Chiron, and, specifically, Chiron shall not grant to such distributor any right
to engage in research or development activities with respect to, or to
manufacture or have manufactured, Licensed Products anywhere in the world. Any
sublicenses granted pursuant to this Section 2.13 shall be consistent with all
of the terms and conditions of this Agreement and the Supply Agreement that are
applicable. The scope of any such sublicenses shall be no greater than the scope
of the rights under this Agreement or the Supply Agreement held by the Party
granting such sublicenses and such sublicenses shall be subject to all of the
limitations imposed on the rights under this Agreement and the Supply Agreement
of the Party granting such sublicenses. Subcontracting as contemplated by this
Section 2.13 by either Party of any of the rights or obligations that such Party
may have under this Agreement or the Supply Agreement shall not relieve such
Party from any of its obligations under this Agreement or the Supply Agreement.
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2.14. RIGHTS OF LAST OF REFUSAL FOR CANADA. Cubist hereby grants Chiron a
right of last refusal to obtain rights to sell any and all Licensed Products in
Canada (the "CANADIAN MARKETING RIGHTS"), on the following terms: In the event
that Cubist proposes to grant, sell, assign or otherwise transfer all or any
portion of the Canadian Marketing Rights to a Third Party (other than a
distributor appointed by Cubist, directly or indirectly, who sells Licensed
Products) who is not the party who has licensed or holds or will be licensed or
hold the Commercialization rights with respect to all Licensed Products in the
United States (the "U.S. RIGHTS HOLDER"), THEN Cubist acknowledges and agrees
that prior to entering into any agreement for the grant of the Canadian
Marketing Rights with any Third Party (other than the U.S. Rights Holder or a
distributor appointed by Cubist, directly or indirectly, who sells Licensed
Products), Cubist will provide to Chiron a copy of the fully negotiated final
draft of such proposed agreement with such Third Party and offer to Chiron the
opportunity to enter into an agreement with Cubist for the same rights and on
the same terms as set forth in such draft. Provided that Cubist has given Chiron
[*] notice of the possibility of such transaction, Chiron shall have [*] to
provide Cubist written notice of its decision. If and only if Chiron declines
such offer, or fails to accept such offer within such [*], will Cubist then be
free to enter into such agreement with such Third Party, it being understood and
acknowledged by Cubist that any material modification of the terms of such
proposed agreement with the Third Party after it had been declined by Chiron
shall constitute a breach of Cubist's obligations under this Section 2.14 and a
violation of Chiron's right of last refusal hereunder. The provsions of this
Section 2.14 shall not apply if Chiron is in material breach of this Agreement
or the Supply Agreement.
2.15. APPLICABLE SUPPLY AGREEMENT PROVISIONS. The following provisions of
the Supply Agreement are incorporated herein by reference and shall apply to
this Agreement in the same manner as which they apply to the Supply Agreement:
Sections 2.4 (Second Manufacturing Source(s)), 2.5 (Global Manufacturing Plan),
7.1 (Transfer Pricing), 8.1 (Allocation in the Event of Shortages) and 11.6
(Back-up Supply Rights of Chiron).
ARTICLE 3.
COORDINATION
3.1. GENERAL. The Parties desire to establish a committee to review the
Parties' activities under this Agreement, to exchange information regarding, and
to discuss the Parties' development and commercialization of, Licensed Products
within and outside of the Territory. It is the intent of the Parties that such
committee would serve as a forum for discussion and exchange of ideas and that
the Parties shall endeavor to reach consensus on matters discussed in this
forum. Such committee shall operate as set forth in this Article 3 and in other
provisions of this Agreement.
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3.2. JOINT COORDINATION TEAM.
(a) FORMATION. Within thirty (30) days after the Effective Date,
Cubist and Chiron shall establish the Joint Coordination Team (the "JCT"), which
shall (i) serve as a forum for the review and discussion of the Parties' efforts
under this Agreement including the development and marketing and sales
activities in the Territory and outside the Territory with respect to Licensed
Products, and (ii) serve as a forum for the resolution of disputes between the
Parties in accordance with the provisions of Article 15 of this Agreement.
(b) MEMBERSHIP. Cubist and Chiron each shall designate an equal
number of representatives (but in no event more than four (4) representatives
each) with appropriate expertise to serve as members of the JCT. Of the initial
representatives to be designated by each Party, there shall be expertise in
regulatory matters, clinical development matters, and sales and marketing
matters. The Parties shall be free to change their representatives over time as
the needs evolve over time. Each representative serving on the JCT shall have
appropriate technical credentials, experience and knowledge, and ongoing
familiarity in the specific area of such representative's expertise. A Party may
replace its representatives serving on the JCT from time to time by written
notice to the other Party specifying the prior representative(s) to be replaced
and the replacement(s) therefor. Each Party shall select one (1) person
appointed by it to the JCT to serve as co-chair. The co-chairpersons shall be
responsible for calling meetings, preparing and circulating an agenda in advance
of each meeting, and preparing and issuing minutes of each meeting within thirty
(30) days thereafter.
(c) MEETINGS. The JCT shall hold meetings at such times as it
elects to do so, but in no event shall such meetings be held less frequently
than once every three (3) months unless otherwise agreed by the Parties. The
first meeting of the JCT shall be held no earlier than 60 days after the
Effective Date and no later than 90 days after the Effective Date. The JCT shall
meet alternately at Cubist's facility and at Chiron's facility, or at such
location(s) as the Parties may otherwise agree. With the consent of the
representatives of each Party serving on the JCT, other representatives of each
Party or of Third Parties involved in the manufacture, development or
commercialization of the Licensed Products may attend meetings of the JCT.
Meetings of the JCT may be held by audio or video teleconference with the
consent of each Party, provided that at least one (1) meeting per year shall be
held in person. Each Party shall be responsible for all of its own expenses of
participating in the JCT. Meetings of the JCT shall be effective only if at
least two (2) representatives of each Party are present or participating. The
co-chairpersons will alternate responsibility for preparing minutes of each
meeting of the JCT, which minutes will not be finalized until the co-chairperson
that did not prepare such minutes reviews and confirms the accuracy of such
minutes in writing.
(d) SPECIFIC ACTIVITIES. In addition to its functions described in
Section 3.2(a), the JCT shall in particular review, consider, discuss and
comment upon where appropriate:
(i) the overall strategy for the development of Licensed
Products for sale within and outside the Territory, and the design of all
pre-clinical trials and clinical trials in connection with the development of
Licensed Products for sale within and outside the Territory;
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(ii) the development activities of Cubist with respect to
Licensed Products, and the development activities of Chiron with respect to
Licensed Products;
(iii) the Cubist Development Plan and Chiron's development
plan (if any), each updated annually;
(iv) the strategies for obtaining and maintaining Regulatory
Approvals within and outside the Territory;
(v) the regulatory activities of Cubist for obtaining and
maintaining Regulatory Approvals of Licensed Products in the United States, and
the regulatory activities of Chiron for obtaining and maintaining Regulatory
Approvals of Licensed Products in the Territory;
(vi) the Regulatory Plan and the corresponding plan of
Cubist for obtaining Regulatory Approval outside of the Territory updated
annually;
(vii) the general strategy for the manufacturing and supply
of Licensed Products and the corresponding Manufacturing Plan, updated annually;
(viii) the general strategy for the Commercialization of
Licensed Products within and outside the Territory;
(ix) the Commercialization activities of Cubist with respect
to Licensed Products in the United States, and the Commercialization activities
of Chiron with respect to Licensed Products in the Territory;
(x) the Marketing Plan and the corresponding plan of Cubist
for Commercializing the Licensed Products outside of the Territory updated
annually;
(xi) the Manufacturing Plan for the manufacture and supply
of Licensed Products worldwide updated annually;
(xii) the Parties' scientific presentation and publication
strategy relating to Licensed Products; and
(xiii) such other materials as are specifically provided for
review at the JCT elsewhere in this Agreement or in the Supply Agreement.
(e) LIMITED AUTHORITY; NOT A DECISION-MAKING BODY.
(i) Except for its function as a dispute resolution forum,
the role of the JCT shall be facilitative. The JCT shall serve as a forum for
the sharing of information. In addition, the JCT may serve the purpose of
preventing, or informally resolving, disputes between the Parties. The rights
and responsibilities of each Party shall be governed by this Agreement,
including the exhibits hereto, and the JCT shall not have any power to amend,
modify or waive compliance with this Agreement.
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(ii) Although it is not the purpose of the JCT to make
decisions that control the Parties' respective activities under this Agreement,
the JCT shall at all appropriate times endeavor to operate by consensus. In the
event that one Party elects to deviate from a course of action for which
consensus was achieved in the JCT, as a courtesy to the other Party, the
deviating Party will notify the other Party in writing of the intended deviation
and the reasons therefor. In addition, when a Party brings a matter to the JCT
for review and comment (either as required by the provisions of this Agreement
or voluntarily), if the Party seeking comment elects not to incorporate the
other Party's comments, then, as a courtesy to the other Party, the Party that
sought comments will notify the other Party in writing of the decision not to
incorporate the comments and the reasons therefor. With respect to matters to be
discussed by the JCT, the representatives of each Party shall endeavor to
present a unified position on behalf of such Party.
(f) MEETING AGENDAS. Each Party will disclose to the other Party
its final agenda items along with appropriate related information at least ten
(10) business days in advance of each meeting of the JCT.
3.3. JCT COORDINATORS. Each Party shall appoint a designee (a "JCT
COORDINATOR") to coordinate its activities under this Agreement. The JCT
Coordinators shall serve as primary contacts between the Parties with respect to
this Agreement. Each Party shall notify the other Party within thirty (30) days
of the date of this Agreement of the appointment of its JCT Coordinator and
shall notify the other Party as soon as practicable upon changing such
appointment. The JCT Coordinator appointed by each Party shall be responsible
for (i) preparing such Party's representatives serving on the JCT for meetings
of the JCT, (ii) coordinating the distribution and exchange of information to,
from and among such Party's representatives serving on the JCT, and (iii)
assisting in the coordination of the day-to-day activities of such Party's
representatives serving on the JCT so that the JCT can function effectively and
such representatives can more effectively discharge their responsibilities as
members of the JCT.
3.4. INDEPENDENCE. Subject to the terms of this Agreement, the activities
and resources of each Party shall be managed by such Party, acting independently
and in its individual capacity. The relationship between Cubist and Chiron is
that of independent contractors, and neither Party shall have the power to bind
or obligate the other Party in any manner, other than as is expressly set forth
in this Agreement.
ARTICLE 4.
DEVELOPMENT
4.1. KEY DEVELOPMENT STUDIES; DILIGENCE OBLIGATIONS. Cubist shall use
Commercially Reasonable Efforts to complete, subject to the provisions of this
Section 4.1, the Key Development Studies. Cubist reserves the right to change or
modify any of the Key Development Studies, or to abandon or discontinue any of
the Key Development Studies, in accordance with the provisions set forth below:
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(a) Cubist may change or modify any Key Development Study if such
change or modification is designed to improve the probability of obtaining
Regulatory Approval of the indication targeted by such Key Development Study.
(b) Cubist may change, modify, abandon or discontinue any Key
Development Study in response to (i) any regulatory feedback, (ii) increases of
[*] or more in the anticipated costs of clinical trials for any reason other
than due to an increase in the size or scope of such clinical trials, or (iii)
any significant adverse event or condition relating to the safety or efficacy of
a Licensed Product.
(c) If Cubist abandons or discontinues any Key Development Study,
Cubist will use Commercially Reasonable Efforts to replace such study with
another clinical study that is designed to improve the probability of obtaining
Regulatory Approval of the indication targeted by such abandoned or discontinued
study (a "REPLACEMENT STUDY"). Following any such replacement, Cubist shall use
Commercially Reasonable Efforts to complete the Replacement Study provided that
Cubist may change, modify, abandon or discontinue such study to the same extent
as provided in this Section 4.1 for the Key Development Studies.
(d) If Cubist abandons or discontinues a Key Development Study or
a Replacement Study, as the case may be, and if Cubist is required but is
unable, using Commercially Reasonable Efforts, to replace such abandoned or
discontinued study with another Replacement Study that Cubist is able to
complete using Commercially Reasonable Efforts, then Cubist will use
Commercially Reasonable Efforts to replace any such abandoned or discontinued
study [*] who treat infectious diseases as being difficult to treat (such new
indication, a "REPLACEMENT INDICATION" and any such clinical study for a
Replacement Indication, a "REPLACEMENT INDICATION STUDY"). In the event of, and
following, any such replacement, Cubist shall use Commercially Reasonable
Efforts to complete such Replacement Indication Study provided that Cubist may
change, modify, abandon or discontinue such study to the same extent as provided
in this Section 4.1 for the Key Development Studies.
Notwithstanding anything in this Section 4.1 to the contrary, prior to making
any decision to abandon or discontinue any of the Key Development Studies, any
Replacement Study or any Replacement Indication Study (each a "REQUIRED STUDY"),
or to change or modify any Required Study so as to effectively abandon same,
Cubist shall have first provided its reasons in support of such decision to
Chiron via the JCT and the JCT shall have met to discuss the merits of such
decision. Cubist shall bear all of the costs and expenses in connection with any
and all development activities engaged in by Cubist and its Affiliates in
connection with all Required Studies.
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4.2. CUBIST DEVELOPMENT PLAN.
(a) Cubist shall prepare and update annually a development plan
for Licensed Products (the "CUBIST DEVELOPMENT PLAN"). The Cubist Development
Plan may include, as appropriate and without limitation, the following elements:
(i) Cubist's plan for conducting and completing the
Required Studies;
(ii) Cubist's general strategy for developing indications
other than the indications pursued in the Required Studies for use of Licensed
Products throughout the world;
(iii) design and execution of pre-clinical and clinical
studies for indications other than the indications pursued in the Required
Studies;
(iv) development of improvements in formulation,
presentation and other features of Licensed Products considered desirable for
life cycle management and maximizing sales of Licensed Products throughout the
world; and
(v) an analysis of the total costs and expenses incurred or
to be incurred by Cubist in connection with its development activities set forth
in the Development Plan.
Cubist shall update the Cubist Development Plan annually and provide such
updated Cubist Development Plan to Chiron prior to the JCT's last scheduled
meeting during the then current year. Chiron shall have the right to review and
comment, via the JCT, on the Cubist Development Plan and any and all revisions
and updates thereto, and Cubist shall, in good faith, consider all comments made
by Chiron.
(b) Subject to the provisions of this Section 4.2(b), Cubist shall
use Commercially Reasonable Efforts to carry out and perform during each
calendar year the activities set forth in the Cubist Development Plan as may be
in effect for such calendar year that are materially significant for obtaining
Regulatory Approval. With the exception of the Required Studies (which Cubist
may not change, modify, abandon or discontinue except in accordance with the
provisions of Section 4.1 hereof), Cubist reserves the right at any time to
change or modify the Cubist Development Plan or any of the preclinical studies
or clinical trials described in the Cubist Development Plan, or to abandon any
portion of the Cubist Development Plan or discontinue any such preclinical
studies or clinical trials, in response to (i) changes in clinical or regulatory
strategy, (ii) regulatory feedback, (iii) scientific feasibility, (iv) increases
in the anticipated costs of clinical trials, (v) any significant adverse event
or condition relating to the safety or efficacy of a Licensed Product, (vi)
manufacturing feasibility, including, without limitation, changes in the
anticipated costs of manufacturing, (vii) significant adverse changes in market
conditions or in market potential of a drug candidate, or (viii) any other
reason that Cubist determines in its reasonable discretion justifies such
change, modification, abandonment or discontinuation; however, prior to making
any decision to abandon any development effort (or change or modify any such
effort so as to effectively abandon same), Cubist shall have first
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provided its reasons in support of such decision to Chiron via the JCT and the
JCT shall have met to discuss the merits of such decision.
(c) Except to the extent otherwise provided in Section 4.2(d)
below, Cubist shall bear all of the costs and expenses in connection with any
and all development activities engaged in by Cubist and its Affiliates pursuant
to, and in accordance with, the provisions of this Section 4.2 and any Cubist
Development Plan made hereunder.
(d) In the event that Cubist and Chiron consider it appropriate to
consolidate their efforts in the Territory in the Cubist Development Plan and
the Chiron Development Plan into common clinical studies, the Parties shall
discuss at the JCT an appropriate sharing of resources, costs and expenses in
connection with such studies. If the Parties cannot agree to a sharing of
resources, costs and expenses, then neither Party shall be obligated to
consolidate its respective clinical activities with those of the other Party.
Except pursuant to any such agreement between Cubist and Chiron, Cubist shall
have no obligation to undertake any clinical studies or to make material
protocol changes that are not required by the FDA or any other Regulatory
Authorities outside the Territory but are proposed to be undertaken for the sole
purpose of complying with the requirements of any Regulatory Authority in the
Territory.
4.3. DEVELOPMENT BY CHIRON.
(a) TERRITORY SPECIFIC STUDIES. The Parties acknowledge that
Regulatory Authorities in the Territory may require that certain clinical
studies be conducted in connection with Regulatory Approval sought in the
Territory by Chiron, but which studies are not required by the FDA or any other
Regulatory Authorities outside the Territory (the "TERRITORY SPECIFIC STUDIES"
and each a "TERRITORY SPECIFIC STUDY"). Chiron shall use Commercially Reasonable
Efforts to conduct the Territory Specific Studies provided that Chiron shall be
entitled to decline to perform any Territory Specific Study if, in its sole
discretion, it considers the study to be prohibitively expensive, uneconomical
or not in its commercial interest. If Chiron elects not to conduct any
particular Territory Specific Study, it will notify Cubist in writing of its
reasons therefor and discuss same at a meeting of the JCT. If the Parties are
unable to reach an agreement on cost sharing to conduct such Territory Specific
Study, Chiron shall have no further obligation to conduct such Territory
Specific Study.
(b) PROPOSED INDICATIONS. Chiron may, from time to time, propose
to Cubist through the JCT that Cubist consider pursuing development for a new
indication (the "PROPOSED INDICATION"). Such proposal shall be in writing and
contain such information as may be readily gathered which will assist Cubist to
evaluate the proposal on its merits. If after due consideration by Cubist and
Chiron at the JCT, consensus is reached to pursue development for such new
indication, Cubist shall add the Proposed Indication to the Cubist Development
Plan. In the event that the Parties are unable to reach consensus on adding the
Proposed Indication then Chiron shall be free to pursue, at its own expense,
development of such Proposed Indication.
(c) MEDICAL AFFAIRS STUDIES. Chiron may conduct Medical Affairs
Studies of the Licensed Products at its sole cost and expense. Chiron shall
provide to Cubist via the JCT its proposal for any Medical Affairs Study it
wishes to conduct, for review and discussion purposes only. Cubist shall supply
Licensed Products to be used in Medical Affairs Studies (i) at a
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purchase price equal to the Transfer Price, and (ii) in an amount not to exceed
[*], during the first complete calendar year (and any part thereof) after
Commercial Launch, and for any calendar year thereafter, [*] by Chiron for the
corresponding period as reflected in the forecasts of purchase quantities
delivered by Chiron to Cubist pursuant to the Supply Agreement.
(d) CHIRON DEVELOPMENT PLAN. Chiron will prepare and update
annually a development plan for Chiron's development activities pursuant to this
Section 4.3 (the "CHIRON DEVELOPMENT PLAN"). Chiron shall update the Chiron
Development Plan each year to reflect the activities that Chiron expects to
conduct during the following calendar year and Chiron shall provide the updated
Chiron Development Plan to Cubist prior to the JCT's last scheduled meeting
during the then current year. Cubist shall have the right to review and comment,
via the JCT, on the Chiron Development Plan and any and all revisions or updates
thereto and Chiron shall, in good faith, consider all comments made by Cubist.
Subject to the provisions set forth below in this Section 4.3(d), Chiron shall
use Commercially Reasonable Efforts to carry out and perform during each
calendar year the activities set forth in the Chiron Development Plan, as may be
in effect for such calendar year, that are materially significant for obtaining
Regulatory Approval in the Territory. With the exception of the Territory
Specific Studies (which Chiron may decline to perform in accordance with the
provisions of Section 4.3(a) above), Chiron reserves the right at any time to
change or modify the Chiron Development Plan or any of the preclinical studies
or clinical trials described in the Chiron Development Plan, or to abandon any
portion of the Chiron Development Plan or discontinue any such preclinical
studies or clinical trials, in response to (i) changes in clinical or regulatory
strategy of either Chiron or Cubist, (ii) regulatory feedback, (iii) scientific
feasibility, (iv) increases in the anticipated costs of clinical trials, (v) any
significant adverse event or condition relating to the safety or efficacy of a
Licensed Product, (vi) manufacturing feasibility, including, without limitation,
changes in the anticipated costs of manufacturing and/or procuring Licensed
Product, (vii) significant adverse changes in market conditions or in market
potential of a drug candidate, or (viii) any other reason that Chiron determines
in its reasonable discretion justifies such change, modification, abandonment or
discontinuation; however, prior to making any decision to abandon any
development effort (or change or modify any such effort so as to effectively
abandon same), Chiron shall have first provided its reasons in support of such
decision to Cubist via the JCT and the JCT shall have met to discuss the merits
of such decision. The exercise by Chiron of any right that it may have under
this Section 4.3(d) to change, modify, abandon or discontinue all or any portion
of the Chiron Development Plan or any of the preclinical studies or clinical
trials described in the Chiron Development Plan shall not relieve Chiron from
its obligations to use Commercially Reasonable Efforts under Section 5.1 or
Section 6.1 hereof.
(e) LIMITATION ON CHIRON'S DEVELOPMENT RIGHTS. Notwithstanding
anything in this Section 4.3 to the contrary, in the event that at any time
Cubist reasonably believes, on the basis of medical, clinical, scientific and
other data, facts and knowledge that have been published or are otherwise
documented and available or are known to subject matter experts, and presented
to Chiron, that any of the development activities being conducted or to be
conducted by Chiron pursuant to this Section 4.3 is substantially likely to
result in Global Harm, Cubist shall promptly convene a meeting of the JCT to
discuss same. Prior to the meeting, Cubist will provide to Chiron all relevant
documents, materials and information suggesting the likelihood of Global Harm as
well as Cubist's recommendations to Chiron on the course of action (e.g. modify
the
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study, terminate the study, etc.). At the JCT, the Parties will discuss and
attempt to reach consensus on the course of action. Following such discussion,
in the absence of consensus, Cubist shall have the right to require Chiron to
modify or discontinue those development activities that Cubist reasonably and in
good faith believes, based on the totality of the data, facts and knowledge
presented to Chiron and the data, facts and knowledge presented by Chiron in
response, are substantially likely to result in Global Harm. In the event that
there is no person (including a successor-in-interest to Cubist) to carry out
Cubist's development obligations under Section 4.1, then (i) the provisions of
this Section 4.3(e) shall not be applicable to the Licensed Product(s) as to
which such development obligations are not being performed, and (ii) Chiron
shall be free from its obligations to consult via the JCT under Sections 4.3(b)
and 4.3(c) with respect to the Licensed Product(s) as to which such development
obligations are not being performed. In the event that a successor-in-interest
to Cubist shall be in material breach of such development obligations, then (i)
the provisions of this Section 4.3(e) shall not be applicable to the Licensed
Product(s) and the indication(s) as to which such development obligations are
not being performed, and (ii) Chiron shall be free from its obligations to
consult via the JCT under Sections 4.3(b) and 4.3(c) with respect to the
Licensed Product(s) and the indications as to which such development obligations
are not being performed.
4.4. ACCESS TO CHIRON DATA.
(a) INFORMATION SHARING. Chiron will provide to Cubist all
Information that results from any development activities conducted pursuant to
Section 4.3 above or the Chiron Development Plan (the "CHIRON DATA"). Subject to
Section 4.4(c), any such Chiron Data so provided shall be strictly for
information purposes only and Cubist shall have no right to use the Chiron Data
for any purpose whatsoever, including without limitation, to access, reference,
interpret, disclose, tabulate, analyze or otherwise use any such Chiron Data for
the purpose of supporting any Drug Approval Application anywhere in the world.
(b) RECIPROCATING LICENSEE. Cubist may share the Chiron Data with
any Other Licensee who has agreed in writing to permit reciprocal sharing by
Cubist with Chiron of the results of such Other Licensee's own development
activities in accordance with the provisions of Section 5.3 hereof (each a
"RECIPROCATING LICENSEE"), PROVIDED that Cubist has first communicated the
restrictions set forth in this Section 4.4 on use of the Chiron Data and
obtained the Reciprocating Licensee's written agreement to abide by such
restrictions.
(c) LICENSE OPTION. Chiron hereby grants to Cubist an option to
acquire a nonexclusive license on commercially reasonable terms (as to which the
Parties shall agree thereon at any time on or prior to the date of the exercise
of the option) to access, reference, interpret, disclose, tabulate, analyze or
otherwise use all Chiron Data for the purpose of supporting Drug Approval
Applications in any country outside the Territory. The Parties contemplate that
such license will include a right of Cubist to grant sublicenses to any
Reciprocating Licensee who agrees in writing to grant a reciprocal option to
Cubist to acquire a nonexclusive license on commercially reasonable terms (as to
which such Reciprocating Licensee and Cubist shall agree thereon at any time on
or prior to the date of the exercise of the option) to access, reference,
interpret, disclose, tabulate, analyze or otherwise use all similar development
data of such Reciprocating Licensee for the purpose of supporting Drug Approval
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Applications in any country within the Territory, with a right of Cubist to
grant sublicenses to Chiron.
4.5. NO DEBARRED PERSONNEL. In the course of the development of Licensed
Products, neither Party shall use, during the term of this Agreement, the
services of any employee or consultant that has been debarred by the FDA or
Regulatory Authorities, or, to the best of such Party's knowledge, is the
subject of debarment proceedings by the FDA or Regulatory Authorities.
4.6. CHIRON COMPLIANCE. In connection with any development activities
undertaken by Chiron in connection with any Licensed Product, Chiron shall
comply with all applicable laws and regulations regarding the care and use of
experimental animals, as such laws and regulations are in effect where such
development activities are undertaken. All animals used by Chiron to evaluate
Daptomycin or any Licensed Product shall be provided humane care and treatment
in accordance with the most acceptable veterinary practices.
ARTICLE 5.
REGULATORY
5.1. REGULATORY PLAN; DILIGENCE OBLIGATION.
(a) CUBIST'S AND OTHER LICENSEES' ACTIVITIES. Cubist shall prepare
and present to Chiron via the JCT, and update annually, its regulatory plan for
the Licensed Products outside of the Territory. Cubist shall keep Chiron
apprised of the status of Cubist's and the Other Licensees' efforts to obtain
Regulatory Approval in countries outside of the Territory. Prior to making any
decision to abandon any efforts and activities set forth in such regulatory plan
to obtain Regulatory Approval in the United States for a Licensed Product (or
for an indication or formulation of same), Cubist shall have first provided its
reasons in support of such decision to Chiron via the JCT and the JCT shall have
met to discuss the reasons for such decision.
(b) REGULATORY PLAN. Within the time period set forth in Section
5.1(c)(i), Chiron shall prepare and deliver to Cubist one regulatory plan for
the Territory, which regulatory plan shall set forth Chiron's plan, strategy and
proposed activities to obtain Regulatory Approval in the Territory for the
Launch Indication(s) (the "REGULATORY PLAN"). The Regulatory Plan may include,
as appropriate and without limitation, the following elements:
(i) Chiron's general strategy for seeking Regulatory
Approval for the Launch Indication(s) in the Major Market Countries;
(ii) Chiron's plans for the preparation and filing of
applications for Regulatory Approval for the Launch Indication(s) in the Major
Market Countries;
(iii) Chiron's general strategy for seeking Regulatory
Approval for the Launch Indication(s) in the remaining countries of the
Territory, however such outline may at Chiron's sole discretion deal with such
remaining countries individually or in the aggregate;
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(iv) if known, a description of any clinical studies or
clinical data that will be necessary in order to obtain Regulatory Approval in
the countries referenced in the foregoing clauses (i)-(iii) of this Section
5.1(b), with respect to the Launch Indication(s), and a discussion of the impact
of any such clinical studies or clinical data requirement on the timing of
obtaining Regulatory Approval for the Launch Indication(s) in such country or
countries; and
(v) the proposed timetable for obtaining anticipated
Regulatory Approval for the Launch Indication(s) in the countries referenced in
the foregoing clauses (i) and (ii) of this Section 5.1(b), and the countries
referenced in the foregoing clause (iii) of this Section 5.1(b), individually or
in the aggregate, and a discussion of the factors that could result in an
acceleration or a delay of such proposed timetable.
Chiron shall update the Regulatory Plan annually and provide such updated
Regulatory Plan to Cubist prior to the JCT's last scheduled meeting during the
then current year. Such updated Regulatory Plan shall, at such later time as and
when considered appropriate by Chiron in its sole discretion, cover, among other
things, additional Licensed Products, additional indications and additional
countries, considered individually or in the aggregate. Cubist shall have the
right to review and comment, via the JCT, on the Regulatory Plan and any and all
revisions and updates thereto, and Chiron shall, in good faith, consider all
comments made by Cubist. For the avoidance of doubt, the foregoing provisions of
this Section 5.1(b) shall not impose any obligation on Chiron to have any plan,
strategy or any proposed activities, or to conduct any particular activities,
with respect to any specific country within the Territory (it being understood
that Chiron may have no such plan, strategy or any proposed activities with
respect to any specific country in the Territory) but shall only impose an
obligation on Chiron to set forth in the Regulatory Plan any such plan, strategy
or proposed activities with respect to any specific country within the Territory
to the extent that Chiron has any such plan, strategy or proposed activities.
The provisions of the foregoing sentence shall not relieve Chiron from its
obligations to use Commercially Reasonable Efforts under Section 5.1(c) below.
Subject to the provisions of this Section 5.1(b), Chiron shall use Commercially
Reasonable Efforts to carry out and perform during each calendar year the plan,
strategy and proposed activities set forth in the Regulatory Plan, as may be in
effect for such calendar year, that are materially significant for obtaining
Regulatory Approval in the Territory. Chiron reserves the right at any time to
change or modify the Regulatory Plan in response to (i) changes in clinical
strategy or regulatory strategy of either Chiron or Cubist, (ii) regulatory
feedback, (iii) scientific feasibility, (iv) increases in anticipated costs of
any Territory Specific Studies, (v) any significant adverse event or condition
relating to the safety or efficacy of a Licensed Product, (vi) manufacturing
feasibility, including, without limitation, changes in the anticipated costs of
manufacturing and/or procuring Licensed Product, (v) significant adverse changes
in market conditions or a market potential of a drug candidate, or (vi) any
other reason that Chiron determines in its reasonable discretion justifies such
change or modification; however, prior to making any decision to change or
modify the Regulatory Plan (other than the annual updates), Chiron shall have
first provided its reasons in support of such decision to Cubist via the JCT and
the JCT shall have met to discuss the merits of such decision. The exercise by
Chiron of any right that it may have under this Section 5.1(b) to change or
modify all or any portion of the Regulatory Plan shall not relieve Chiron from
its obligations to use Commercially Reasonable Efforts under Section 5.1(c)
below or Section 6.1 hereof.
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(c) SPECIFIC REGULATORY ACTIVITIES. Chiron will use Commercially
Reasonable Efforts to:
(i) inform Cubist whether Chiron will pursue a central
filing strategy or a mutual recognition strategy in the European Union as soon
as practicable, but in no event later than [*] after the date that Cubist
provides Chiron with all information submitted by Cubist to the FDA in
connection with its application for Regulatory Approval of Licensed Product in
the United States;
(ii) if Chiron has determined to pursue a central filing
strategy in the European Union, prepare and file an application to obtain
Regulatory Approval of Licensed Products for the Launch Indication(s) with
respect to all countries in the European Union within [*] after either (a)
receiving from Cubist, or (b) collection on its own, as the case may be, all
data and information required for such filing;
(iii) if Chiron has determined to pursue a mutual recognition
strategy in the European Union, prepare and file an application for Regulatory
Approval of Licensed Products for the Launch Indication(s) in the reference
member state within [*] after either (a) receiving from Cubist, or (b)
collecting on its own, as the case may be, all data and information required for
such filings;
(iv) if Chiron has determined to pursue a mutual recognition
strategy in the European Union, prepare and file applications for Regulatory
Approval of Licensed Products for the Launch Indication(s) in all Major Market
Countries within [*] of obtaining Regulatory Approval in the reference member
state;
(v) if Chiron has determined to pursue a mutual recognition
strategy in the European Union, then no later than [*] after obtaining
Regulatory Approval in the reference member state, prepare and file applications
for Regulatory Approval of Licensed Products for the Launch Indication(s) in at
least [*] other countries to be selected by Chiron from the countries listed
under the caption "EUROPE" on EXHIBIT D hereto that are not Major Market
Countries;
(vi) no later than [*] after obtaining Regulatory Approval
in the reference member state (if pursuing a mutual recognition strategy in the
European Union) or in all countries of the European Union (if pursuing a central
filing strategy in the European Union), prepare and file an application for
Regulatory Approval of Licensed Products for the Launch Indication(s) in at
least one country listed under the caption "LATIN AMERICA" on EXHIBIT D hereto,
PROVIDED, HOWEVER, that, in lieu of complying with the foregoing provisions of
this clause (vii), Chiron may elect, instead, to have at least [*] with the
Regulatory Authorities of at least [*] countries listed under the caption "LATIN
AMERICA" on EXHIBIT D hereto no later than such [*] period, and, if Chiron makes
such election, then the number of countries as to which Chiron must satisfy the
requirements of clause (v) above in this Section 5.1(c) shall be increased from
[*] other countries in the European Union to [*] other countries in the European
Union;
(vii) respond in timely fashion to requests for data and
information from Regulatory Authorities, provided that such data and information
are in Chiron's possession,
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given to Chiron by Cubist or otherwise available to Chiron without having to
incur any substantial cost in order to acquire such data and information;
(viii) meet with officials from Regulatory Authorities at such
times as may be requested by such Regulatory Authorities;
(ix) subject to Chiron's right under Section 4.3(a) to
decline to perform any given Territory Specific Study for economic reasons (and
subject to Cubist's right under Section 4.3(e) to require Chiron to modify or
discontinue a specific study for substantial likelihood of Global Harm), perform
the following activities, as appropriate, with respect to any Territory Specific
Study:
(1) prepare draft protocols for the Territory
Specific Study after the Regulatory Authority has confirmed any such requirement
for such study;
(2) take such actions to obtain approvals from
appropriate Regulatory Authorities and other governmental authorities of any
draft protocol and corresponding clinical trial application for the Territory
Specific Study as soon as reasonably practicable after such draft protocol has
been prepared;
(3) identify and engage suitable investigators and
study sites for the Territory Specific Study as soon as reasonably practicable
after the draft protocol for the Territory Specific Study has been prepared and
such protocol and corresponding clinical trial application has been approved by
the appropriate Regulatory Authorities and other governmental authorities; and
(4) commence enrollment for the Territory Specific
Study as soon as reasonably practicable after all required approvals have been
obtained, suitable investigators and study sites have been engaged, suitable
quantities of Licensed Product for clinical use have been obtained by Chiron,
and all other necessary or advisable steps have been taken to prepare
investigators and study sites to enroll patients;
(x) conduct and complete any Territory Specific Study in
accordance with the approved protocol, subject to (X) Chiron's right under
Section 4.3(a) to decline to perform any given Territory Specific Study for
economic reasons, (Y) Cubist's right under Section 4.3(e) to require Chiron to
modify or discontinue a specific study for substantial likelihood of Global
Harm, and (Z) completion of the steps described in Section 5.1(c)(ix), above.
Notwithstanding any provision of this Section 5.1(c) to the contrary,
Chiron shall not be deemed to be in material breach of any of its obligations
under this Section 5.1(c) to prepare and file applications for Regulatory
Approval for each Launch Indication if and to the extent that Chiron cannot meet
any of such obligations solely by virtue of the fact that one or more Regulatory
Authorities do not permit Chiron to file such applications for Regulatory
Approval for only a single indication. If a Regulatory Authority in the
Territory informs Chiron that it may not file applications for Regulatory
Approval for a single indication, then the Parties shall convene a meeting of
the JCT to discuss alternative strategies that could be pursued by the
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Parties. In the event that Chiron is not permitted to file applications for
Regulatory Approval in any country within the Territory for a single indication,
then the Parties agree that as soon thereafter as Chiron is permitted to file
for Regulatory Approval in such country (whether because such filing will be for
more than a single indication or because the regulatory environment in such
country has changed so as to permit a filing for Regulatory Approval for a
single indication), then Chiron shall at that time again be obligated to comply
with the requirements, if any, imposed by this Section 5.1(c) with respect to
preparing and making filings for Regulatory Approval in such country, and, for
purposes of applying the timelines in this Section 5.1(c) at that time, the date
on which Chiron is first permitted to make such filing in such country shall be
deemed to be the end of the [*] period after Cubist has given to Chiron all of
the information necessary to make such filing.
(d) COSTS AND EXPENSES. Chiron shall bear all of the costs and
expenses in connection with any and all regulatory activities within the
Territory engaged in by Chiron and its Affiliates pursuant to, and in accordance
with, the provisions of this Section 5.1, it being understood that the foregoing
regulatory activities shall not include any activities of Chiron to assist
Cubist with its development obligations under this Agreement or outlined in the
Cubist Development Plan. Cubist shall bear all of the costs and expenses in
connection with any and all regulatory activities engaged in by Cubist and its
Affiliates in connection with obtaining and maintaining Regulatory Approval for
Licensed Products outside the Territory, regardless of whether such activities
occur within the Territory or outside the Territory.
(e) LIMITATION ON ACTIVITIES. Notwithstanding anything in this
Section 5.1 or elsewhere in this Agreement to the contrary, in the event that at
any time Cubist reasonably believes on the basis of medical, clinical,
scientific and other data, facts and knowledge that have been published or are
otherwise documented and available or are known to subject matter experts, and
presented to Chiron, that obtaining Regulatory Approval in the Territory for any
Licensed Product for any particular indication either: (i) substantially
increases the risk that an adverse safety event will occur; or (ii) would result
in the use of a Licensed Product to treat an indication for which such Licensed
Product is an ineffective or inferior therapeutic alternative and such use would
materially adversely affect the development, marketing, distribution or
Commercialization of such Licensed Product or any other Licensed Product within
or outside the Territory for other indications; Cubist shall promptly convene a
meeting of the JCT to discuss same. Prior to the meeting, Cubist will provide to
Chiron all relevant documents, materials and information suggesting the
likelihood of events described in clauses (i) and (ii) above, as well as
Cubist's recommendations to Chiron on the course of action (e.g., not seeking
approval of a particular Licensed Product or not seeking approval of a
particular indication, etc.). At the JCT, the Parties will discuss and attempt
to reach consensus on the course of action. Following such discussion, in the
absence of consensus, Cubist shall have the right to require Chiron to modify or
discontinue those regulatory activities that Cubist reasonably and in good faith
believes, based on the totality of the data, facts and knowledge presented to
Chiron and the data, facts and knowledge presented by Chiron in response, are
substantially likely to result in the events described in clause (i) or clause
(ii) above in this Section 5.1(e).
5.2. OWNERSHIP OF REGULATORY APPROVALS. Except to the extent otherwise
provided elsewhere in this Agreement, Chiron shall file in its own name and own
all Drug Approval Applications and Regulatory Approvals for Licensed Products in
the Territory, and shall be
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solely responsible for all communications with regulatory authorities in such
countries. All such filings shall be made in such manner as may be required
under the laws of the applicable jurisdiction to allow for the expeditious
transfer of such Drug Approval Applications and Regulatory Approvals for
Licensed Products to Cubist if such transfer is required pursuant to Article 13
hereof upon termination (but not expiration) of this Agreement. Promptly
following execution of this Agreement, Cubist shall transfer and assign to
Chiron any and all such Drug Approval Applications or Regulatory Approvals held
by Cubist as of the date hereof.
5.3. CHIRON ACCESS TO CUBIST AND OTHER LICENSEE DATA.
(a) INFORMATION SHARING. Subject to the provisions of Section
5.3(d) below, during the Term, Cubist will provide to Chiron any Cubist Data and
Other Licensee Data necessary or useful for making regulatory filings for, or
marketing of, Licensed Products in the Territory as such Cubist Data and Other
Licensee Data are or become available. The Parties shall discuss, via their
participation in the JCT, the form in which Cubist shall provide Chiron Cubist
Data and Other Licensee Data pursuant to this Section 5.3(a). Subject to the
provisions of Section 5.3(c) below, any such Other Licensee Data so provided
shall be strictly for information purposes only and Chiron shall have no right
to use the Other Licensee Data for any purpose whatsoever, including without
limitation, to access, reference, interpret, disclose, tabulate, analyze or
otherwise use any such Other Licensee Data for the purpose of supporting any
Drug Approval Application anywhere in the world.
(b) CHIRON USE OF CUBIST DATA. Chiron shall have a right of
access, a right of reference and the right to use and incorporate all Cubist
Data provided to it pursuant to this Section 5.3 in its Drug Approval
Applications for Regulatory Approvals of Licensed Products within the Territory.
(c) LICENSE OPTION. Cubist shall use Commercially Reasonable
Efforts to obtain the written agreement of each Other Licensee granting to
Cubist an option to acquire a nonexclusive license to access, reference,
interpret, disclose, tabulate, analyze or otherwise use all Other Licensee Data
for the purpose of supporting Drug Approval Applications in any country within
the Territory. Cubist shall also use Commercially Reasonable Efforts to obtain
the written agreement of such Other Licensee that Cubist shall have the right to
grant to Chiron a sublicense to any such nonexclusive license such that Chiron
can access, reference, interpret, disclose, tabulate, analyze or otherwise use
all the Other Licensee Data of such Other Licensee for the purpose of supporting
Drug Approval Applications in any country within the Territory. In the event
that any such nonexclusive license may be sublicensed to Chiron and that Chiron
requests that Cubist exercise any such option to acquire such nonexclusive
license, then Chiron shall pay for any and all of the costs of exercising such
option to the extent attributable to the grant of the sublicense to Chiron.
(d) MANUFACTURING INFORMATION. Cubist acknowledges and agrees that
certain Cubist Know-How and other Information pertaining to the manufacture of
the Licensed Products (the "MANUFACTURING INFORMATION") will be required to be
provided or made available to Chiron so as to permit Chiron to obtain Regulatory
Approval in the Territory, conduct quality assurance testing and release of
Licensed Products for use in the Territory and otherwise comply with the
requirements of the Regulatory Authorities in the Territory. The right of Chiron
to
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receive and use Manufacturing Information shall be as set forth in this Section
5.3(d) and the Supply Agreement.
To the extent that Chiron needs to submit and make available any
Manufacturing Information in connection with obtaining Regulatory Approval in
the Territory, the Parties agree that, to the fullest extent permissible under
applicable law, rules and regulations, such Manufacturing Information shall be
made available to the applicable Regulatory Authorities in the Territory via a
Drug Master File appropriately formatted for the country in which such DMF is
filed and [*] (i.e. upon Chiron's [*] under the Supply Agreement to manufacture
or have manufactured Licensed Products). Drug Master Files will be maintained
and kept up to date by Cubist or the Cubist Suppliers. Chiron will be notified
of changes proposed to the DMF [*] in accordance with change control procedures
set forth in Section 3.2 of the Supply Agreement. Chiron shall be responsible
for notifying the Regulatory Authorities in the Territory, as required by
applicable laws, of the updating of the DMF by Cubist or the Cubist Suppliers.
Notwithstanding the foregoing, the applicable Regulatory Authorities in the
Territory shall have full access to all of the Manufacturing Information in such
DMF [*], to the extent considered necessary by such applicable Regulatory
Authorities to consider and act upon any applications for Regulatory Approvals
in the Territory that are submitted by Chiron, and [*] to allow such Regulatory
Authorities to refer to all of the Manufacturing Information in such DMF to the
extent necessary to assess applications for Regulatory Approvals of Licensed
Products in the Territory and to obtain such Regulatory Approvals.
If and to the extent that Chiron needs to submit and make available any
Manufacturing Information in connection with any submission by Chiron of any
application for Regulatory Approval of Licensed Product within the Territory and
the applicable regulatory requirements do not permit the submission of such
Manufacturing Information via a DMF, then the Parties agree that such
Manufacturing Information shall be made available to Chiron for the sole purpose
of filing applications for Regulatory Approvals of Licensed Products in the
Territory and obtaining such Regulatory Approvals, and that Chiron shall not be
entitled to use such Manufacturing Information for any other purpose whatsoever
other than to manufacture or have manufactured Licensed Products and conduct
quality assurance testing and release of Finished Products, but only if, when
and to the extent that Chiron is expressly authorized under the Supply Agreement
to use such Information for such manufacturing purposes.
5.4. FREE SALES CERTIFICATES. The Parties agree to cooperate with each
other to obtain free sale certificates where appropriate.
5.5. SAFETY; ADVERSE EVENT REPORTING.
(a) GENERAL. The Parties shall promptly exchange any and all
appropriate safety data, and the Parties shall report, and take other
appropriate actions in relation to, adverse events with Licensed Products to
each other, all in accordance with a reporting protocol that will be established
by the JCT. In addition, each Party shall have the right to review the other
Party's internal processes and procedures for the collection and processing of
safety data. Without limiting the generality of the foregoing, each Party shall
maintain a record of all non-medical and medical product-related complaints and
reports of adverse events that it receives with respect to
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any Licensed Product and each Party shall notify the other Party of any
complaint received by it and, within [*] of the initial receipt, provide the
other Party with a copy of such complaint(s) and adverse event reports.
(b) REPORTING OUTSIDE THE TERRITORY. Cubist shall be responsible
for reporting to the FDA and Regulatory Authorities outside of the Territory any
adverse experience and safety issues for Licensed Products in compliance with
the requirements of the U.S. Food, Drug and Cosmetic Act, 21 U.S.C. Section 321
et seq., the regulations promulgated thereunder, and the equivalent laws, rules
and regulations in countries other than the United States outside of the
Territory, and shall promptly thereafter provide to Chiron a copy of such
report.
(c) REPORTING IN THE TERRITORY. Chiron shall be responsible for
reporting to Regulatory Authorities in the Territory any adverse experience and
safety issues for Licensed Products in compliance with the requirements of the
applicable laws, rules and regulations, and shall promptly thereafter provide to
Cubist a copy of such report. Cubist shall require each of its Other Licensees
to comply with obligations corresponding to those in this Section 5.5.
(d) GLOBAL DATABASE. Cubist shall be responsible for compiling a
validated global database that captures all adverse events reported to Cubist
from any source and maintaining said database as defined in the Supply Agreement
(or any associated Quality Agreement referenced in the Supply Agreement). Cubist
shall also provide Chiron with [*] so as to support the applications for
Regulatory Approval and the maintenance of marketing authorizations in the
Territory, PROVIDED that it is technically feasible to do so and that Chiron
makes payment of any incremental license fees that may be required in order add
Chiron as an authorized user.
5.6. COMMUNICATIONS.
(a) COMMUNICATIONS RELATING TO REGULATORY APPROVAL. Except as may
be required by law or as otherwise expressly provided in this Agreement or the
Supply Agreement, during the Term, Cubist shall not communicate with any
Regulatory Authority having jurisdiction in the Territory regarding Regulatory
Approval for any Licensed Product in the Territory unless requested to do so by
Chiron. If Cubist is required by applicable laws or regulations or a Regulatory
Authority having jurisdiction in the Territory to disclose such information
directly to such Regulatory Authority, Cubist shall notify Chiron in writing of
the requirement and the particulars of the information required to be disclosed,
and Cubist shall coordinate with Chiron in making any such disclosure. [*]
between Cubist and such Regulatory Authority but Chiron shall lead any such
face-to-face meetings or scheduled conference calls. Each party shall advise the
other party of material developments and events relating to their respective
regulatory responsibilities in writing within two (2) business days after notice
of such material development event.
(b) COMMUNICATIONS RELATING TO DEVELOPMENT. Cubist shall have the
right to communicate with Regulatory Authorities in the Territory regarding
Licensed Products for the purpose of advancing its global development activities
in connection with Licensed Products, including, those development activities as
described in the Cubist Development Plan, PROVIDED that Cubist complies with the
provisions of this Section 5.6. Cubist shall notify Chiron in
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advance of any such communications and Chiron shall have the right to be present
and to participate at any face-to-face meetings or scheduled conference calls
between Cubist and such Regulatory Authority regarding such communications, but
Cubist shall lead any such face-to-face meetings or scheduled conference calls
at which Chiron is present and participating. Cubist shall consult with Chiron
prior to any such face-to-face meeting or scheduled conference calls at which
Chiron is present and participating to develop a strategy for the meeting.
5.7. RECALLS AND VOLUNTARY WITHDRAWALS.
(a) The Parties shall exchange their internal standard operating
procedures ("SOPS") as to product recalls and the treatment of product
complaints and inquiries as to safety, quality or efficacy reasonably in advance
of the date of Commercial Launch of any Licensed Product in the Territory. If
either Party becomes aware of information about any Licensed Product indicating
that it may not conform to the specifications for Licensed Product then in
effect pursuant to the Supply Agreement, or that there are potential
adulteration, misbranding and/or other issues regarding safety or effectiveness,
it shall promptly so notify the other Party. The JCT shall meet to discuss such
circumstances and to consider appropriate courses of action, which courses of
action with respect to each recall shall be consistent with the internal SOP of
the Party having the right to control such recall pursuant to this Section 5.7.
Except to the extent otherwise provided in Section 5.7(b) below, Chiron shall
control, at its sole expense, all recalls of Licensed Product within the
Territory. Cubist shall control, at its sole expense, all recalls of Licensed
Product outside the Territory. Chiron shall maintain complete and accurate
records of any recall for such periods as may be required by legal requirements,
but in any event for no less than three (3) years.
(b) In the event that any recall of Licensed Product in the
Territory is required or necessary by virtue of such Licensed Product being
Defective Manufactured Product, then both Parties shall work together to devise
a reasonable and appropriate plan to implement such recall, it being understood
that the objective of such plan shall be to effect such recall as quickly and as
cost-effectively as reasonably possible under the circumstances. After the
Parties shall have reached agreement on the terms of such plan (or, in the event
that the Parties cannot reach agreement as to the terms of such plan, Chiron
shall have the right, acting reasonably and in good faith, to adopt another
plan), Chiron shall implement such recall in a manner consistent with the terms
of such plan. Cubist shall cooperate with Chiron in any way that Chiron
reasonably requests in order to support the implementation of such recall.
Subject to the limitation of liability set forth in Section 10.6(a), Cubist
shall reimburse Chiron for all Recall Expenses (as defined below) provided that
[*]. For the avoidance of doubt, the limitation set forth above in this Section
5.7(b) (and in Section 6.6(b) of the Supply Agreement) on Cubist's
responsibility for Recall Expenses shall not apply to limit Chiron's remedies
and Cubist's obligations or liabilities with respect to matters other than
Recall Expenses, including, without limitation, (i) Cubist's obligation to
indemnify Chiron pursuant to Sections 10.1 and 10.3 of this Agreement with
respect to costs and expenses other than Recall Expenses, and (ii) Chiron's
remedies under Sections 8.1, 9.1(d) and 11.6 of the Supply Agreement. "RECALL
EXPENSES" shall mean the costs and expenses incurred by Chiron in connection
with a recall of Licensed Product that is implemented in accordance with this
Section 5.7(b) (and/or Section 6.6(b) of the Supply Agreement), including,
without limitation, the costs and expenses associated with notification and
destruction and/or return of such recalled Licensed Product.
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5.8. LABEL. To the extent permitted by applicable law, regulation or the
Regulatory Authority having jurisdiction, Chiron shall identify Cubist as the
licensor of the Cubist Marks applied to Licensed Products on the vial label,
package insert, outside of the packaging and advertising materials for such
Licensed Product in each country of the Territory in a manner approved in
advance in writing by Cubist, such consent not to be unreasonably withheld,
conditioned or delayed. Chiron shall also comply with the patent marking
provisions of Section 8.8 hereof.
5.9. GOVERNMENTAL INSPECTIONS. Each party shall advise the other party of
any governmental visits to, or written or oral inquires about, any facilities or
procedures for the manufacture, storage, or handling of the Licensed Product, or
the marketing, selling, promotion or distribution of the Licensed Product,
promptly (but in no event later than [*] after notice of such visit or inquiry.
Each party shall, within [*] of receipt or submission, furnish to the other
party any report or correspondence issued by or provided to the governmental
authority in connection with such visit or inquiry.
ARTICLE 6.
COMMERCIALIZATION; DILIGENCE
6.1. MARKETING PLAN; DILIGENCE OBLIGATION.
(a) MARKETING PLAN. Not later than three (3) months after the
acceptance by a Regulatory Authority of an application for Regulatory Approval
for the Launch Indication(s) in any Major Market Country (the "MARKETING PLAN
TRIGGER EVENT"), Chiron shall prepare and deliver to Cubist one marketing plan
for the Territory, which marketing plan shall set forth Chiron's plan, strategy
and proposed activities to market the Licensed Products in the Territory with
respect to the Launch Indication(s) (the "MARKETING PLAN"). The Marketing Plan
may include, as appropriate and without limitation, the following elements:
(i) the anticipated date of Commercial Launch for the
Launch Indication(s) in each Major Market Country;
(ii) a description of Chiron's general strategy with respect
to pre-launch and post-launch marketing, advertising and promotion activities
(including, without limitation, sponsoring medical education events) for the
Launch Indication(s) in each Major Market Country;
(iii) a description of the marketing, advertising and
promotional activities (including, without limitation, sponsoring medical
education events and product positioning of Chiron) for the Launch Indication(s)
in each Major Market Country;
(iv) an estimated time schedule for the performance of
marketing activities;
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(v) a general description of the personnel resources of
Chiron that will perform the marketing activities; and
(vi) a general description of Chiron's pricing strategy in
the Territory.
Effective upon the occurrence of the Marketing Plan Trigger Event, Chiron shall
update annually and provide such updated Marketing Plan to Cubist prior to the
JCT's last scheduled meeting during the then current year. Such updated
Marketing Plan shall, at such later time as Chiron shall determine in its sole
discretion, cover, among other things, additional Licensed Products, additional
indications and additional countries for which Regulatory Approval has been
obtained, considered individually or in the aggregate. Cubist shall have the
right to review and comment, via the JCT, on the Marketing Plan and any and all
revisions and updates thereto, and Chiron shall, in good faith, consider all
comments made by Cubist. For the avoidance of doubt, the foregoing provisions of
this Section 6.1(a) shall not impose any obligation on Chiron to have any plan,
strategy or any proposed activities, or to conduct any particular activities,
with respect to any specific country within the Territory (it being understood
that Chiron may have no such plan, strategy or any proposed activities with
respect to any specific country in the Territory) but shall only impose an
obligation on Chiron to set forth in the Marketing Plan any such plan, strategy
or proposed activities with respect to any specific country within the Territory
to the extent that Chiron has any such plan, strategy or proposed activities.
The provisions of the foregoing sentence shall not relieve Chiron from its
obligations to use Commercially Reasonable Efforts under Section 6.1(b) below.
Effective from and after the Marketing Plan Trigger Event, and subject to the
provisions of this Section 6.1(a), Chiron shall use Commercially Reasonable
Efforts to carry out and perform during each calendar year the plan, strategy
and proposed activities set forth in the Marketing Plan, as may be in effect for
such calendar year. Chiron reserves the right at any time to change or modify
the Marketing Plan in response to (i) changes in clinical strategy or regulatory
strategy of either Chiron or Cubist, (ii) regulatory feedback, (iii) scientific
feasibility, (iv) increases in anticipated costs of any Territory Specific
Studies, (v) any significant adverse event or condition relating to the safety
or efficacy of a Licensed Product, (vi) manufacturing feasibility, including,
without limitation, changes in the anticipated costs of manufacturing and/or
procuring Licensed Product, (v) significant adverse changes in market conditions
or a market potential of a drug candidate, or (vi) any other reason that Chiron
determines in its reasonable discretion justifies such change or modification;
however, prior to making any decision to change or modify the Marketing Plan
(other than annual updates), Chiron shall have first provided its reasons in
support of such decision to Cubist via the JCT and the JCT shall have met to
discuss the merits of such decision. The exercise by Chiron of any right that it
may have under this Section 6.1(a) to change or modify all or any portion of the
Marketing Plan shall not relieve Chiron from its obligations to use Commercially
Reasonable Efforts under Section 6.1(b) below.
(b) MARKETING ACTIVITIES. Chiron will use Commercially Reasonable
Efforts to:
(i) effect the Commercial Launch of Licensed Product for
the Launch Indication(s) within [*] after obtaining Regulatory Approval and
acceptable Price Approval therefor; and
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(ii) market, sell and distribute Licensed Products for the
Launch Indication(s), upon receipt of Regulatory Approval and acceptable Price
Approval.
In addition and without limiting the foregoing, during the period commencing [*]
before the date of first Commercial Launch of Licensed Product in each of the
Major Market Countries, and continuing through the [*] after such first
Commercial Launch, Chiron shall:
(1) budget and spend on marketing, advertising and
promotion activities with respect to Licensed Product (exclusive of fully loaded
direct and indirect costs attributable to salespersons): (A) in each Major
Market Country an amount equal to the greater of: (I) [*], or (II) [*] of the
forecasted Net Sales of such Licensed Product in such Major Market Country; or
(B) in all of the Major Market Countries collectively, an aggregate amount equal
to the greater of: (III) [*] the amount in the foregoing clause (I) during the
period commencing [*] before the date of first Commercial Launch of Licensed
Product in the first such country and continuing through the [*] after such
first Commercial Launch in the last such country, or (IV) [*] the amount in the
foregoing clause (II) during the period commencing [*] before the date of first
Commercial Launch of Licensed Product in the first such country and continuing
through the [*] after such first Commercial Launch in the last such country; and
(2) employ or engage not less than [*] salespersons to sell
Licensed Products in each Major Market Country or not less than [*] salespersons
in the aggregate in all of the Major Market Countries.
For purposes of the foregoing provisions of this Section 6.1(b), the
availability of supply of Licensed Products shall be considered in determining
whether Chiron has used Commercially Reasonable Efforts to meet its diligence
obligations. Further, any delay by Chiron in effecting Commercial Launch in any
Major Market Country until Regulatory Approval in such country has been obtained
for a second indication (to the extent that a single indication does not allow
Chiron to obtain acceptable Price Approval in such country) shall be deemed not
to be a material breach by Chiron of any of its obligations under this
Agreement.
(c) COSTS AND EXPENSES. Chiron shall bear all of the costs and
expenses in connection with any and all Commercialization activities engaged in
by Chiron and its Affiliates pursuant to, and in accordance with, the provisions
of this Section 6.1.
(d) OWNERSHIP OF MARKETING INFORMATION. Chiron shall be the sole
owner of all rights, including intellectual property rights, in and to all
sales, marketing, financial and business Information of Chiron, including
without limitation, all customer and distributor lists of Chiron and all
Information of Chiron regarding sales projections, distribution channels, market
potential and competitive products analyses for the Licensed Products (the
"CHIRON MARKETING INFORMATION"), and, except to the extent otherwise expressly
provided elsewhere in this Agreement or the Supply Agreement, no right of
access, use or other license is granted to Cubist or to any Other Licensee under
this Agreement. Notwithstanding any provision in this Agreement to the contrary,
no Chiron Marketing Information shall form any part of Chiron Data, Chiron
Know-How, Chiron Related Know-How or any Joint Know-How.
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6.2. PROHIBITED MARKETING AND SALES ACTIVITIES. Chiron shall not engage in
any direct marketing activities for the Licensed Products outside of the
Territory without Cubist approval. Cubist shall not engage in any direct
marketing activities inside the Territory without Chiron approval. The foregoing
shall not prohibit either party from participating in any conferences, symposia
or other industry gatherings merely because the venue for such gathering happens
to be outside of the Territory in the case of Chiron or inside the Territory in
the case of Cubist. Chiron shall require that its distributors make all
commercially reasonable efforts to prevent any units of Licensed Product sold by
such distributors in any country within the Territory from being resold in, or
transported to, any country outside of the Territory.
6.3. DISCOUNTING. Neither Chiron nor its Affiliates shall discount the
price of Licensed Products or agree to reduce the unit volume of purchases or
sales of any Licensed Product in consideration of any price increase on, the
receipt of any payment in connection with, or the entering of an arrangement for
the purchase or sale (including, without limitation, any arrangement
guaranteeing volume increases or minimum volume) of, a product other than a
Licensed Product, or shall enter into any agreement for such purpose.
6.4. MARKETING AND PROMOTIONAL LITERATURE. Marketing and promotional
literature related to the Licensed Products and prepared for use in the
Territory by Chiron shall be prepared in a manner consistent with relevant local
statutes and regulations. In all marketing and promotional literature, Cubist
shall be presented and described as the party who developed the Licensed
Product. To the extent permitted by law, all marketing and promotional
literature shall display the Cubist Marks, trade names, logos and trade dress of
the Licensed Product in a manner that promotes the Product and each of the
parties in an appropriate manner. To the extent practical, the Cubist name and
logo shall appear the same in size and proximity as the Chiron name and logo on
all marketing and promotional literature used in each country of the Territory
unless prohibited by the law, statutes or regulations of such country. With the
consent of Chiron, which consent shall not be unreasonably withheld or delayed,
Cubist shall have the right to reproduce, distribute and otherwise use outside
the Territory all Licensed Product related marketing and promotional literature
prepared by Chiron. With the consent of Cubist, which consent shall not be
unreasonably withheld or delayed, Chiron shall have the right to reproduce,
distribute and otherwise use in the Territory all Licensed Product related
marketing and promotional literature prepared by Cubist.
ARTICLE 7.
COMPENSATION
7.1. UPFRONT CONSIDERATION.
(a) In consideration for the licenses granted to Chiron under this
Agreement, Chiron shall, as soon as practicable after the Effective Date (but in
no event later than the seventh (7th) business day following the Effective
Date), make payment to Cubist of a license fee in the amount of eight million
dollars ($8,000,000). Such license fee shall be in the form of a
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cash payment made by wire transfer of immediately available funds to a bank
account or bank accounts designated by Cubist. Such license fee shall be
nonrefundable and noncreditable.
(b) Simultaneously with the execution and delivery of this
Agreement, the Chiron Parent Company and Cubist are entering into the Stock
Purchase Agreement pursuant to which, among other things, at the closing
referred to below in this Section 7.1(b), Cubist shall agree to sell to the
Chiron Parent Company, and the Chiron Parent Company shall agree to purchase
from Cubist, [*] shares of Cubist common stock (subject to adjustment for any
reclassification, stock split, stock dividend, reverse stock split merger,
consolidation or similar transaction or event). The aggregate purchase price
payable by the Chiron Parent Company for all of such shares of Cubist common
stock shall be equal to ten million dollars ($10,000,000), payable in the form
of a cash payment made by wire transfer of immediately available funds to a bank
account or bank accounts designated by Cubist.
(c) The closing of the sale and purchase of such shares of Cubist
Common Stock shall take place as soon as practicable after the Effective Date
but in no event later than the seventh (7th) business day following the
Effective Date.
7.2. MILESTONE PAYMENTS. Subject to Section 13.6(a)(v), in consideration
for the licenses and exclusive rights of this Agreement, Chiron shall make a
milestone payment to Cubist upon the achievement of each development milestone
with respect to a Licensed Product as set forth in the table in Section 7.2(a)
below, and Chiron shall also make a milestone payment to Cubist upon the
achievement of each sales milestone with respect to a Licensed Product as set
forth in the table in Section 7.2(b) below. Chiron shall make payment of the
applicable milestone payment within [*] after Chiron's receipt of notice from
Cubist of the first achievement of each such development milestone and of each
such sales milestone, as documented by appropriate written and/or other
materials. Each such milestone payment by Chiron shall be in the form of a cash
payment made by wire transfer of immediately available funds to a bank account
or bank accounts designated by Cubist. Each milestone payment by Chiron to
Cubist hereunder shall be paid only once, and shall be noncreditable and
nonrefundable.
(a) DEVELOPMENT MILESTONE PAYMENTS.
PAYMENT
AMOUNT
MILESTONE EVENT (IN MILLIONS)
------------------------------------------------------------------------------------------------- -----------------
1. Regulatory Approval of a Licensed Product [*] [*]
2. Price Approval of a Licensed Product [*] [*]
3. Regulatory Approval of a Licensed Product for [*] by Regulatory Authorities [*] [*]
TOTAL POTENTIAL DEVELOPMENT MILESTONE PAYMENTS -----------------
[*]
(b) SALES MILESTONE PAYMENTS.
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PAYMENT
AMOUNT
MILESTONE EVENT (IN MILLIONS)
------------------------------------------------------------------------------------------------- -----------------
1. Cumulative Net Sales in the Territory is equal to or greater than [*] [*]
2. Cumulative Net Sales in the Territory is equal to or greater than [*] [*]
3. Cumulative Net Sales in the Territory is equal to or greater than [*] [*]
4. Cumulative Net Sales in the Territory is equal to or greater than [*] [*]
5. Cumulative Net Sales in the Territory is equal to or greater than [*] [*]
------------------------------------------------------------------------------------------------- -----------------
TOTAL POTENTIAL SALES MILESTONE PAYMENTS [*]
7.3. ROYALTIES.
(a) ROYALTY. Subject to the other terms and conditions of this
Agreement (and, in particular , the provisions of Section 7.3(b) and Section
7.3(c) below), Chiron shall pay Cubist a royalty with respect to each Licensed
Product sold by Chiron or its Affiliates equal to a percentage determined in
accordance with the table below or in accordance with Sections 7.3(b) or 7.3(c)
below, as applicable, taking into consideration the protection afforded by
Cubist Patents at the relevant time, (such applicable percentage, the "ROYALTY
RATE"), of Net Sales in any country within the Territory of units of such
Licensed Product during each calendar quarter from and after the date of
Commercial Launch in such country, less the aggregate Transfer Price previously
paid to Cubist for having supplied pursuant to the Supply Agreement such units
of such Licensed Product that are sold by Chiron or its Affiliates during such
calendar quarter:
ROYALTY RATE FOR THE FIRST [*] OF ROYALTY RATE FOR AGGREGATE
AGGREGATE ANNUAL NET SALES OF ANNUAL NET SALES OF ALL
ALL LICENSED PRODUCTS IN ALL LICENSED PRODUCTS IN ALL
COUNTRIES OF THE TERRITORY UNDER COUNTRIES OF THE TERRITORY IN
PATENT AND KNOW-HOW EXCESS OF [*] UNDER PATENT AND
ROYALTY YEAR EXCLUSIVITY KNOW-HOW EXCLUSIVITY
--------------------------------------------------------------------------------------
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
For purposes of this Section 7.3, the first Royalty Year with respect to
all Licensed Products shall commence on the date of Commercial Launch by Chiron
or any of its Affiliates in any country within the Territory and end on December
31 of the year in which the Commercial Launch occurred. Each succeeding Royalty
Year shall commence on January 1 of the ensuing
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year and end on December 31 of such year. Accordingly, the determination of the
Royalty Year for the purpose of determining the Royalty Rate which applies shall
not be either on a Licensed Product-by-Licensed Product basis or on a
country-by-country basis.
The determination of the Royalty Rate pursuant to the table in this Section
7.3(a) (i.e. whether the Royalty Rate in left hand column or the right hand
column in the table above applies) shall also not be made on a Licensed
Product-by-Licensed Product basis or on a country-by-country basis, but,
instead, shall be made based on the aggregate amount of annual Net Sales for all
Licensed Products in all countries in the Territory.
The determination of the amount of royalties due Cubist pursuant to this
Section 7.3(a) shall be made on a Licensed Product-by-Licensed Product basis and
on a country-by-country basis by multiplying the Royalty Rate that is applicable
for any particular Royalty Year, as determined in accordance with the foregoing
provisions of this Section 7.3(a), by the Net Sales arising from sales in each
country within the Territory of units of each Licensed Product by Chiron or its
Affiliates during each calendar quarter of the applicable Royalty Year.
(b) KNOW-HOW STEP-DOWN. Notwithstanding Section 7.3(a) but subject
to Section 7.3(c), for any given country in the Territory, if there is no Valid
Claim that would be infringed by the sale by Chiron or its Affiliates of
Licensed Product in such country BUT FOR the licenses granted by Cubist to
Chiron hereunder (treating, for purposes of this Section 7.3(b) only, all Joint
Patents as if Cubist owned all right, title and interest in and to the Joint
Patents and Chiron had no interest in the Joint Patents other than the rights
licensed to Chiron by Cubist), then the Royalty Rate applicable to Net Sales of
such Licensed Product by Chiron or its Affiliates in such subject country shall
be the rate as determined in accordance with the table in Section 7.3(a) above,
but reduced by [*] (for example, the Royalty Rate for the second royalty year
where aggregate annual Net Sales are less than [*] shall be [*] instead of [*]).
The determination of the amount of royalties due Cubist pursuant to this Section
7.3(b) shall be made on a Licensed Product-by-Licensed Product basis and on a
country-by-country basis by multiplying the Royalty Rate that is applicable for
any particular Royalty Year, as determined in accordance with the foregoing
provisions of this Section 7.3(b), by the Net Sales arising from sales in each
country within the Territory of units of each Licensed Product by Chiron or its
Affiliates during each calendar quarter of the applicable Royalty Year.
Notwithstanding anything in this Agreement to the contrary, no royalty shall be
payable by Chiron pursuant to this Section 7.3(b) after [*].
(c) COMPETITION STEP-DOWN. Notwithstanding anything in the
foregoing provisions of this Section 7.3 to the contrary, for any given country
within the Territory, if (i) the aggregate unit sales by all Third Parties in
such country of Unlicensed Products constitute more than [*] of the market share
on a per unit basis with respect to all unit sales of such Unlicensed Products
and the affected Licensed Product in such country (I.E., including the unit
sales by Chiron and its Affiliates and distributors of the Licensed Product
whose market share has been affected by sales of such Unlicensed Product), and
(ii) there is no Valid Claim which is being infringed by such Third Parties in
connection with such Third Parties' use or sale of such Unlicensed Products in
such country or in connection with such Third Parties' manufacture of such
Unlicensed Products anywhere in the world, then, subject to the provisions set
forth below
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in this Section 7.3(c) and Sections 7.3(d), 7.3(e) and 7.3(f), the obligation of
Chiron and its Affiliates to pay royalties to Cubist under this Section 7.3 with
respect to sales of such Licensed Product in such country shall terminate and be
of no further force or effect.
(d) COMPETITION STEP-DOWN PROCEDURES. If Chiron believes that the
provisions of Section 7.3(c) apply, Chiron shall notify Cubist in writing of
such belief and shall provide, together with such notice, copies of the market
research studies, market surveys or other marketing data that show that the
aggregate unit sales in such subject country of Unlicensed Products exceeds the
[*] market share threshold set forth in clause (i) of Section 7.3(c). Cubist
shall have a period of [*] from the date that such notice and market data is
delivered to Cubist to evaluate the issue and reach its own determination as to
whether the criteria of Section 7.3(c) have been satisfied.
(i) If within such [*] period Cubist sends written notice
to Chiron stating that Cubist agrees with Chiron's position on the issue, then
the provisions of Section 7.3(c) shall apply to sales of such Licensed Product
by Chiron or its Affiliates in such country and Chiron shall be entitled to
cease paying royalties under this Section 7.3 in connection with such sales.
(ii) If Cubist does not send such written notice to Chiron
within the [*] period in clause (i) above, but within [*] after the end of such
[*], Cubist commences an action against the allegedly infringing Third Parties
to enforce the Valid Claims and prevent sales of Unlicensed Products in such
country, then Chiron shall continue making payment of royalties in connection
with sales of the affected Licensed Product by Chiron or its Affiliates in such
country in the manner set forth in Section 7.3(e).
(iii) If Cubist does not send such written notice to Chiron
within the [*] period in clause (i) above and if Cubist does not commence such
action within the [*] period in clause (ii) above, then the provisions of
Section 7.3(c) shall be deemed to apply to sales of such Licensed Product by
Chiron or its Affiliates in such country and Chiron shall be entitled to cease
paying royalties under this Section 7.3 in connection with such sales.
If Chiron becomes entitled to cease paying royalties under Section 7.3(c) (i.e.
pursuant to clause (i) or (iii) of this Section 7.3(d)), then, within [*] after
Chiron so becomes entitled to cease paying royalties, Cubist shall make payment
to Chiron of all unearned royalties previously paid by Chiron to Cubist as of
the earliest month when sales of Unlicensed Product exceeded the [*] market
share threshold, together with interest thereon at the rate specified for late
payments pursuant to Section 7.10 hereof.
(e) HOLDBACK OF ROYALTIES UPON CERTAIN CUBIST ENFORCEMENT ACTIONS.
If after having received Chiron's notice to Cubist pursuant to Section 7.3(d),
Cubist has timely commenced an action to enforce the Valid Claims as required by
Section 7.3(d)(ii), then, with respect to any sales of such Licensed Product in
the country in question, from and after the date that Cubist commences such
action, Chiron shall pay to Cubist [*] of the royalties that Chiron otherwise
would be required to pay to Cubist in connection with such sales pursuant to
Section 7.3(a) or Section 7.3(b), as applicable, and without giving effect for
this purpose to Section 7.3(c). The obligation of Chiron to make the partial
payment of royalties in accordance with the
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foregoing provisions of this Section 7.3(e) shall continue with respect to such
sales of such Licensed Product in such country for so long as Cubist shall
continue the action to enforce the Valid Claims in order to prevent sales in
such country of the applicable Unlicensed Products, subject however to the other
terms of this Agreement governing the duration of the obligation of Chiron to
pay royalties to Cubist. If the final adjudication (following the expiration of
all rights of appeal) or final settlement of such action will result in
aggregate unit sales by all Third Parties in such country of such applicable
Unlicensed Products to be less than [*] of the market share on a per unit basis
with respect to all unit sales of such applicable Unlicensed Products and the
affected Licensed Product in such country (I.E., including the unit sales by
Chiron and its Affiliates and distributors of the Licensed Product whose market
share has been affected by sales of such applicable Unlicensed Product) (such
[*] [*] market share on a per unit basis, the "UNLICENSED SALES THRESHOLD"),
then, within [*] after written notice to Chiron that such final adjudication or
final settlement has occurred, Chiron shall make payment to Cubist the remaining
[*] of the royalties payable that Chiron withheld pursuant to this Section
7.3(e) together with interest thereon at the rate specified for late payments
pursuant to Section 7.10 hereof. If, on the other hand, the final adjudication
or final settlement of such action will not result in the aggregate unit sales
by all Third Parties in such country of such applicable Unlicensed Products to
be below the Unlicensed Sales Threshold in such country, then, within [*] of
such final adjudication or final settlement, Cubist shall make payment to Chiron
of all unearned royalties paid by Chiron to Cubist pursuant to this Section
7.3(e) together with interest thereon at the rate specified for late payments
pursuant to Section 7.10 hereof.
(f) CHIRON ENFORCEMENT ACTION. Notwithstanding anything expressed
or implied in Sections 7.3(c), 7.3(d) or 7.3(e) to the contrary, if Chiron
commences an action to enforce a Valid Claim against any sales of Unlicensed
Products in any given country in the Territory, then Chiron shall continue to
make payment to Cubist of royalties payable in connection with sales of Licensed
Products in such country in accordance with the provisions of Section 7.3(a) or
Section 7.3(b), as applicable, unless and until there is a final adjudication
(following the expiration of all rights of appeal) or final settlement of such
action that will result in aggregate unit sales by all Third Parties in such
country of such Unlicensed Products to be greater than the Unlicensed Sales
Threshold in such country. If the final adjudication or final settlement of such
action will result in aggregate unit sales by all Third Parties in such country
of such Unlicensed Products to be greater than the Unlicensed Sales Threshold in
such country, then, within [*] after written notice to Cubist that such final
adjudication or final settlement has occurred, Cubist shall make payment to
Chiron of all unearned royalties paid by Chiron to Cubist pursuant to this
Section 7.3(f) as of the earliest month when sales of Unlicensed Product
exceeded the [*] market share threshold, together with interest thereon at the
rate specified for late payments pursuant to Section 7.10 hereof. Chiron shall
not enter into any such final settlement without the prior written consent of
Cubist (which consent shall not be unreasonably withheld or delayed).
(g) CLINICAL SUPPLIES. Notwithstanding any provision in this
Agreement to the contrary, Chiron shall have no obligation to pay any royalty to
Cubist for any Licensed Products distributed by Chiron for use in any clinical
study conducted by Chiron under this Agreement, including without limitation,
Territory Specific Studies, clinical studies for Proposed Indications and
Medical Affairs Studies.
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7.4. ADJUSTMENTS. In recognition and acknowledgement of the commercial
advantage provided to Chiron under this Agreement even in the absence of a Valid
Claim, including, but not limited to, advantages obtained by use of Cubist's
Know-How or regulatory exclusivity, the Parties have agreed to the royalty rates
set forth in Section 7.3(b). In the event that a court of competent jurisdiction
or arbitration panel determines that the downward adjustment on the applicable
Royalty Rate effected by the provisions of Section 7.3(b) is insufficient to
avoid violating the doctrine of patent misuse or otherwise to avoid rendering
the obligation of Chiron to pay royalties to Cubist pursuant to Section 7.3
unenforceable, in either case in connection with sales of any Licensed Product
in any country in the Territory that would be subject to the foregoing
provisions of Section 7.3(b), then the Parties hereby agree (i) that any such
court of competent jurisdiction or arbitration panel shall have the discretion
and right to reduce the applicable Royalty Rate to a level where such court of
competent jurisdiction or arbitration panel deems appropriate or necessary so
that the doctrine of patent misuse or any other applicable law is not violated
and (ii) that such court of competent jurisdiction or arbitration panel shall
enforce the obligation of Chiron and its Affiliates to pay royalties to Cubist
pursuant to Section 7.3 using such reduced applicable Royalty Rate to calculate
Chiron's royalty obligation under Section 7.3.
7.5. THIRD PARTY ROYALTIES AND OTHER PAYMENTS. The royalties payable by
Chiron to Cubist under Section 7.3 shall be inclusive of (and Cubist shall be
solely responsible for) any and all royalty obligations or other payment
obligations to Third Parties arising from license or other agreements entered
into by Cubist prior to the Effective Date relating to the manufacture, use,
sale, offer for sale or importation of the Licensed Products, including without
limitation, the Lilly License, or after the Effective Date with respect to such
obligations incurred by Cubist pursuant to Section 8.5(c) relating to Patents of
any Third Party that were published or generally available prior to the
Effective Date.
7.6. ROYALTY PAYMENTS AND REPORTS. All amounts payable to Cubist under this
Agreement shall be paid by Chiron in Dollars within [*] of the end of each
calendar quarter except as otherwise specifically provided herein. Each payment
of royalties owing to Cubist shall be accompanied by a statement, on a
country-by-country basis, of (i) the amount of gross sales of Licensed Product,
(ii) an itemized calculation of Net Sales showing deductions during such
calendar quarter provided for in the definition of Net Sales, (iii) the amount
of aggregate gross sales of Licensed Product and Net Sales in all countries
within the Territory during such calendar quarter and on a cumulative basis as
of the end of such calendar quarter, (iv) the amount of royalty due on such
sales, and (v) the currency exchange rates used in determining the amount of
Dollars payable to Cubist. If any royalty reductions are claimed by Chiron under
this Agreement from the full royalty rates set forth in Section 7.3, then the
report shall set forth in detail the claimed reduction and the related facts.
7.7. NO REDUCTIONS OR OFFSETS. Chiron and its Affiliates shall make payment
to Cubist of all amounts that Chiron is required to pay to Cubist pursuant to
this Article 7 without any reduction, offset or setoff, except to the extent
otherwise expressly provided in Sections 7.3(c), 7.3(d), 7.3(e) or 7.3(f). In
addition, in the event that the amount of royalties due from Chiron to Cubist
pursuant to this Agreement is less than the aggregate Transfer Price previously
paid to Cubist for such units, then Chiron acknowledges and agrees that it shall
not be entitled to any refund or credit of such previously paid Transfer Price,
and that Cubist shall not be liable or responsible for, or owe Chiron any monies
as a result of, such deficiency.
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7.8. TAX MATTERS.
(a) The Parties acknowledge and agree that under the current
United States - Ireland Tax Treaty (the "TAX TREATY"), Chiron has no obligation
to withhold any amounts on account of taxes from any payment by Chiron to Cubist
under this Article 7.
(b) [*] to Cubist under this Article 7 [*] shall at its sole
discretion either (i) [*], or (ii) [*] to the extent of any [*].
(c) [*] to Cubist [*] shall at its sole discretion either (i) [*],
or (ii) [*] to the extent of any [*].
7.9. FOREIGN EXCHANGE. For the purpose of computing the Net Sales for
Licensed Products sold in a currency other than Dollars, such currency shall be
converted into Dollars using the average monthly rate of exchange for the month
in which such currencies are received, as at 12:00 P.M. New York time for the
Federal Reserve Bank of New York (Bloomberg Page USCF Index).
7.10. LATE PAYMENTS. Any amounts not paid by Chiron when due under this
Agreement shall be subject to interest from and including the date payment is
due through and including the date upon which Chiron has made a wire transfer of
immediately available funds into an account designated by Cubist at a rate equal
to [*] quoted in the Money Rates section of the Wall Street Journal (New York
Edition) calculated daily on the basis of a 365-day year, or similar reputable
data source, or, if lower, the highest rate permitted under applicable law.
7.11. EXPORTS OF LICENSED PRODUCT FROM THE TERRITORY; [*] In the event that
Cubist provides to Chiron written evidence that Licensed Products sold in any
country in the Territory by Chiron are being exported from such country and
imported into a country outside the Territory, and that such export of Licensed
Product has had a material adverse effect on the sales by Cubist or an Other
Licensee of Licensed Product in such country outside the Territory, then Chiron
shall use Commercially Reasonable Efforts to employ such remedies as are
available to Chiron under applicable laws in the Territory to prevent the
continued export of Licensed Product from the country in the Territory to such
country outside of the Territory. In the event that Chiron is in breach of its
obligations under this Section 7.11, The [*] until such time as Chiron shall
have provided to Cubist and implemented a plan to remedy the situation.
ARTICLE 8.
INTELLECTUAL PROPERTY
8.1. OWNERSHIP OF INVENTIONS. Subject to the licenses granted by either
Party to the other Party pursuant to this Agreement, the entire right, title and
interest in and to all discoveries, improvements, processes, formulas, data,
inventions, enhancements, know-how and trade secrets, patentable or otherwise,
that arise from activities performed under or pursuant to this Agreement or the
Supply Agreement and that were or are developed or invented:
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(a) solely by employees of Cubist ("CUBIST INVENTIONS") shall be
owned solely by Cubist;
(b) solely by employees of Chiron ("CHIRON INVENTIONS") shall be
owned solely by Chiron; and
(c) jointly by employees of Cubist and Chiron ("JOINT INVENTIONS")
shall be owned jointly by Cubist and Chiron.
Inventorship shall be determined in accordance with U.S. patent laws.
8.2. PROSECUTION OF PATENTS.
(a) CUBIST PATENTS. Cubist shall be responsible for the filing,
prosecution and maintenance of the Cubist Patents at its sole expense; PROVIDED,
HOWEVER, that Cubist shall (i) provide Chiron with all material documentation
and correspondence from, sent to or filed with patent offices in the Territory
regarding the Cubist Patents, (ii) provide Chiron with a reasonable opportunity
to review and comment upon all filings with such patent offices in advance of
submissions to such patent offices, and (iii) shall consider, in good faith,
incorporating any reasonable comments provided by Chiron. If Cubist determines
in its sole discretion to abandon or not file or maintain any claim or patent
application within the Cubist Patents anywhere in the Territory, then Cubist
shall provide Chiron with thirty (30) days prior written notice of such
determination, or reasonable notice if the period for determination is less than
thirty (30) days, and shall provide Chiron with the opportunity to file,
prosecute and maintain such claim or patent application in the Territory in the
name of Chiron (or an Affiliate of Chiron) as assignee and Cubist shall assign
to Chiron its entire right in such claim or patent application in the Territory,
and thereafter Chiron shall be responsible for all costs and expenses in
connection with the filing, prosecution or maintenance of any such claim or
patent application assigned by Cubist to Chiron pursuant to this Section 8.2(a).
Chiron shall also pay for all costs and expenses in connection with any
assignment by Cubist to Chiron of any claim or patent application pursuant to
this Section 8.2(a). Cubist shall inform Chiron of any patents, information or
proceeding of which Cubist becomes aware that relate to Cubist Patents that may
adversely impact the validity, title or enforceability of Cubist Patents in the
Territory.
(b) CHIRON PATENTS. Chiron shall be responsible for the filing,
prosecution and maintenance of the Chiron Patents at its sole expense; PROVIDED,
HOWEVER, that Chiron shall (i) provide Cubist with all material documentation
and correspondence from, sent to or filed with patent offices regarding the
Chiron Patents, (ii) provide Cubist with a reasonable opportunity to review and
comment upon all filings with such patent offices in advance of submissions to
such patent offices, and (iii) shall consider, in good faith, incorporating any
reasonable comments provided by Cubist. If Chiron determines in its sole
discretion to abandon or not file or maintain any claim or patent application
within the Chiron Patents, then Chiron shall provide Cubist with thirty (30)
days prior written notice of such determination, or reasonable notice if the
period for determination is less than thirty (30) days, and shall provide Cubist
with the opportunity to file, prosecute and maintain such claim or patent
application in the name of Cubist (or an Affiliate of Cubist) as assignee and
Chiron shall assign to Cubist its entire right in such claim or patent
application, and thereafter Cubist shall be responsible for all costs and
expenses in connection with the filing, prosecution or maintenance of any such
claim or patent application assigned by Chiron to Cubist pursuant to this
Section 8.2(b). Cubist shall also pay for all costs and expenses in connection
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with any assignment by Chiron to Cubist of any claim or patent application
pursuant to this Section 8.2(b). Chiron shall inform Cubist of any patents,
information or proceeding of which Chiron becomes aware that relate to Chiron
Patents that may adversely impact the validity, title or enforceability of
Chiron Patents.
(c) JOINT PATENTS. Unless the Parties otherwise mutually agree in
writing, Cubist shall have the first right to file, prosecute and maintain in
the Territory and outside the Territory, upon appropriate consultation with
Chiron, all patent applications and patents that claim any Joint Inventions (any
such patent application and any patents issuing therefrom a "JOINT PATENT"),
PROVIDED HOWEVER, in the event that Cubist elects not to file any patent
application in the Territory or outside the Territory with respect to any Joint
Invention, Chiron shall have such right and upon exercise of such right, Chiron
shall have the right to prosecute and maintain in the Territory and outside the
Territory, upon appropriate consultation with Cubist, the Joint Patents to which
such Joint Invention relates. In each case, the filing Party (A) shall give the
non-filing Party a reasonable opportunity to review the text of the application
or submission before filing, (B) shall consult with the non-filing Party with
respect thereto, (C) shall, prior to filing any application or submission,
incorporate any reasonable comments that the non-filing Party shall make on a
timely basis to such application or submission and (D) shall supply the
non-filing Party with a copy of the application or submission as filed, together
with notice of its filing date and serial number and all substantive
prosecution. Each Party shall keep the other advised of the status of the actual
and prospective patent filings described above in this Section 8.2(c) and, upon
the request of the other, provide advance copies of any papers related to the
filing, prosecution and maintenance of such patent filings. Cubist shall
promptly give notice to Chiron of the grant, lapse, revocation, surrender,
invalidation or abandonment in the Territory or outside the Territory of any
Joint Patent being prosecuted by Cubist. Chiron shall promptly give notice to
Cubist of the grant, lapse, revocation, surrender, invalidation or abandonment
in the Territory or outside the Territory of any Joint Patent being prosecuted
by Chiron. With respect to all filings hereunder, the filing Party shall be
responsible for payment of all costs and expenses related to such filings
(subject to partial reimbursement to the extent provided in the next sentence).
Where the filing Party is Chiron, it shall be entitled to reimbursement from
Cubist for [*] of the expenses and costs incurred by the filing Party in
connection with the prosecution and maintenance of Joint Patents. Except to the
extent either Party is restricted by the licenses granted to the other Party,
and covenants contained herein, and to the extent permitted by law, each Party
shall be entitled to practice and sublicense Joint Patents and Joint Know-How
without restriction or an obligation to account to the other Party. Either Party
may disclaim its interest in any particular Patent covering a Joint Invention,
in which case (X) the disclaiming Party shall assign its ownership interest in
such Patent to the other Party for no additional consideration, (Y) the Party
which is then the sole owner shall be solely responsible for all future costs of
such Patent, and (Z) the disclaiming Party shall hold no further rights
thereunder.
8.3. PATENT TERM EXTENSIONS. Cubist will, in its sole discretion, after
discussing its strategy with Chiron and reasonably considering Chiron's
comments, in each country in the Territory, determine for which, if any, of the
Patents within the Cubist Patents and Joint Patents, the Parties will apply to
extend the patent term with respect to Licensed Products, as provided for
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in patent term extension laws or regulations in the Territory similar to the
Patent Term Restoration Act or other similar laws and regulations affording an
extension or restoration of patent terms in the United States, which similar
laws and regulations shall include without limitation any Supplementary
Protection Certificates. Chiron shall not make any submissions, filings or other
communications with any governmental agency with respect to patent term
restoration (or other similar grant of a monopoly right with respect to any
Licensed Product) for any Patents within the Cubist Patents or Joint Patents
without Cubist's express consent. Chiron will cooperate fully with Cubist in
making such filings at Cubist's sole expense which may include without
limitation, making available regulatory data and information for such purpose.
Notwithstanding anything in the foregoing provisions of this Section 8.3 to the
contrary, in the event that Cubist, in its sole discretion, makes a
determination not to seek an extension within the Territory of the patent term
of any Cubist Patent or Joint Patent in the Territory with respect to Licensed
Products, then Cubist shall provide Chiron with thirty (30) days prior written
notice of such determination, or reasonable notice if the period for
determination is less than thirty (30) days, and shall provide Chiron with the
opportunity, at Chiron's sole discretion and sole cost and expense, to make
submissions and filings, and take such other actions as may be reasonably
required, on behalf of Cubist to extend within the Territory the patent term of
any Cubist Patent or Joint Patent in the Territory with respect to License
Products.
8.4. INFRINGEMENT OF PATENTS BY THIRD PARTIES.
(a) NOTIFICATION. Each Party shall promptly notify the other Party
in writing of any alleged or threatened infringement of the Cubist Patents,
Chiron Patents and Joint Patents of which it becomes aware (such infringement,
"INFRINGEMENT", and "INFRINGE" shall be interpreted accordingly).
(b) INFRINGEMENT OF PATENTS IN THE TERRITORY. For all Infringement
of Cubist Patents, Chiron Patents or Joint Patents in the Territory, Chiron
shall have the right, but not the obligation, to bring, at its own expense and
in its sole control, an appropriate action against the person or entity engaged
in such Infringement directly or contributorily. If Chiron does not bring such
action within ninety (90) days of notification thereof to or by Cubist pursuant
to Section 8.4(a) or within ninety (90) days of the date upon which notification
thereof to Cubist was given by Chiron pursuant to Section 8.4(a) hereof, Cubist
shall have the right, but not the obligation, to bring at Cubist's expense and
in its sole control, such appropriate action. The Party not bringing an action
under this paragraph (b) shall be entitled to separate representation in such
matter by counsel of its own choice and at its own expense, but such Party shall
cooperate reasonably with the Party bringing such action, including without
limitation agreeing to be named as a party to such action if necessary.
(c) OTHER INFRINGEMENT OF CUBIST PATENTS. For all Infringement of
Cubist Patents other than Infringement described in Section 8.4(b) above, Cubist
shall have the exclusive right, but not the obligation, to bring, at Cubist's
expense and in its sole control, an appropriate action against any person or
entity engaged in such Infringement directly or contributorily.
(d) INFRINGEMENT OF CHIRON PATENTS AND JOINT PATENTS OUTSIDE THE
TERRITORY. For all Infringement of Chiron Patents and Joint Patents outside of
the Territory,
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Cubist shall have the right, but not the obligation, to bring, at Cubist's
expense and in its sole control, an appropriate action against any person or
entity engaged in such Infringement directly or contributorily. If Cubist does
not bring such action within ninety (90) days of notification thereof to or by
Chiron pursuant to Section 8.4(a) or within ninety (90) days of the date upon
which notification thereof to Chiron was given by Cubist pursuant to Section
8.4(a) hereof, Chiron shall have the right, but not the obligation, to bring at
Chiron's expense and in its sole control, such appropriate action. The Party not
bringing an action under this paragraph (d) shall be entitled to separate
representation in such matter by counsel of its own choice and at its own
expense, but such Party shall cooperate reasonably with the Party bringing such
action, including without limitation agreeing to be named as a party if
necessary for such action.
(e) SETTLEMENT; ALLOCATION OF PROCEEDS. Cubist shall not settle a
claim brought under this Section 8.4 involving Cubist Patents, Chiron Patents or
Joint Patents in a manner that would limit or restrict the ability of Chiron to
sell, or Chiron's sales of, Licensed Products in the Territory, without the
prior written consent of Chiron (which consent shall not be unreasonably
withheld or delayed). Chiron shall not settle a claim brought under this Section
8.4 involving Cubist Patents, Chiron Patents or Joint Patents in a manner that
would limit or restrict the ability of Cubist to sell, or Cubist's sales of,
Licensed Products outside the Territory, without the prior written consent of
Cubist (which consent shall not be unreasonably withheld or delayed). In the
event of any recovery of monetary damages from the Third Party in an action
brought under Section 8.4(b), Section 8.4(c) or Section 8.4(d), whether such
damages result from the infringement of Cubist Patents, Chiron Patents or Joint
Patents, such recovery shall be allocated first to the reimbursement of any
reasonable expenses incurred by the Parties in the litigation under this Section
8.4 (including, for this purpose, a reasonable allocation of internal counsel),
and any remaining amounts ("REMAINDER") shall be allocated as follows:
(i) the portion of the Remainder that represents recovery
for Infringement in the Territory shall be treated as Net Sales of Licensed
Products in accordance with Section 7.3 with Chiron retaining such amounts and
paying to Cubist the applicable royalty thereon unless the Remainder consists of
a recovery in any action brought by Cubist pursuant to Section 8.4(b) hereof in
which case the portion of the Remainder that represents recovery for
Infringement in the Territory shall be [*] Cubist and [*] Chiron; and
(ii) the portion of the Remainder that represents recovery
for Infringement outside the Territory shall be [*] for Cubist unless the
Remainder consists of a recovery in an action brought by Chiron pursuant to
Section 8.4(d) hereof in which case the portion of the Remainder that represents
recovery for Infringement outside the Territory shall be [*] Cubist and [*]
Chiron.
8.5. INFRINGEMENT OF THIRD PARTY RIGHTS.
(a) NOTICE. If any Licensed Product developed, manufactured, used
or sold by either Party, its Affiliates, licensees, sublicensees or distributors
becomes the subject of a Third Party claim of patent infringement relating to
the development, manufacture, use, sale, offer for sale or importation of such
Licensed Product, or if either Party reasonably believes, based on facts that
such Party has become aware of, that a reasonable potential for any such claim
exists, the Party first having notice of such claim or having such reasonable
belief shall promptly notify
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the other Party in writing, and the Parties shall promptly meet to evaluate the
claim and discuss the appropriate course of action. Any claim or potential claim
referred to in this Section 8.5(a) is hereinafter referred to as a "THIRD PARTY
INFRINGEMENT CLAIM".
(b) AVOIDANCE OF INFRINGEMENT. In the event that there is a Third
Party Infringement Claim that arises from the use or practice of any Cubist
Technology, Chiron Technology or any Joint Technology in connection with the
research, development, manufacture, use, sale, offer for sale or importation of
Licensed Products in the Territory and/or outside the Territory, the Parties
shall confer in good faith as promptly as practicable after both parties become
aware of such Third Party Infringement Claim as to whether it is feasible to
alter their approach to the infringing activities with respect to the Licensed
Product so as to avoid such infringement without adversely affecting their
rights under this Agreement. In the event the Parties determine in good faith
that it is feasible to alter their approach to such infringing activities
without adversely affecting their rights under this Agreement, the Parties shall
implement such alternative approach to such infringing activities.
(c) LICENSING TO RESOLVE INFRINGEMENT BY CUBIST TECHNOLOGY. If the
Parties determine in good faith that it is not feasible to alter their approach
to any infringing activities referred to in Section 8.5(b) so as to avoid such
infringement without adversely affecting their rights under this Agreement,
then, if such infringement arises from the use or practice of any Cubist
Technology or the research, development, manufacture, use, sale, offer for sale
or importation of Licensed Products in the Territory, Cubist shall use
commercially reasonable efforts to obtain a license on commercially reasonable
terms from the Third Party whose intellectual property rights are being
infringed so as to avoid, eliminate, resolve or settle such infringement. In the
event that Cubist shall obtain a license from a Third Party pursuant to this
Section 8.5(c) in order to avoid, eliminate, resolve or settle any Third Party
Infringement Claim of such Third Party and such license consists of or provides
rights relating to the development, manufacture, use, sale, offer for sale or
import of Licensed Products in the Territory, then Cubist shall sublicense such
rights to Chiron for use in the Territory to the same extent that Cubist
Technology is licensed by Cubist to Chiron for use in the Territory pursuant to
Article 2 hereof, PROVIDED that Chiron agrees in writing to make payment, and
makes payment when due, to Cubist of the portion of the costs or other amounts
paid and required to be paid by Cubist to obtain and maintain such license that
are reasonably appropriate for Chiron to bear in light of the relative financial
benefits that could reasonably be expected to be derived from such license by
Chiron in the Territory, on the one hand, and by Cubist and, if applicable,
Third Party licensees of Cubist, outside the Territory, on the other hand.
Notwithstanding any provision of this Agreement to the contrary, for purposes of
this Section 8.5(c), the Parties hereby agree that Chiron shall not be obligated
to bear any portion of the costs or other amounts paid and required to be paid
by Cubist to obtain and maintain such license if the intellectual property
rights of such Third Party that are infringed or allegedly infringed by the use
or practice of any Cubist Technology, or the research, development, manufacture,
use, sale, offer for sale or importation of Licensed Products in the Territory,
consists of Patents of such Third Party that had published or were generally
available to the public as of the Effective Date (a "KNOWABLE PATENT").
(d) DETERMINATION OF RELATIVE FINANCIAL BENEFITS. In connection
with any determination of the relative financial benefits that could reasonably
be expected to be derived by Chiron, Cubist and, if applicable, Third Party
licensees of Cubist in connection with any
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license obtained by Cubist or Chiron pursuant to Section 8.5(c), such relative
financial benefits shall be determined by considering actual and projected net
sales and actual or projected royalties from sales of the infringing Licensed
Product by Chiron, Cubist and, if applicable, Third Party licensees of Cubist in
the territory or territories that is or are covered by any such license.
(e) LIMITATION OF OBLIGATION TO SUBLICENSE. Notwithstanding
anything in this Agreement expressed or implied to the contrary, Cubist shall
have no obligation to sublicense to Chiron any rights licensed by Cubist
pursuant to Section 8.5(c) if Chiron has not agreed in writing to pay, and does
not make payment when due, of the portion of the cost and expense incurred or to
be incurred by Cubist in connection with seeking and maintaining such license
that Chiron is required to pay pursuant to Section 8.5(c).
(f) DEFENSE. The Party against which a Third Party Infringement
Claim is brought shall defend against such claim at its sole expense and the
other Party shall have the right, but not the obligation, to participate in any
such suit, at its sole option and at its own expense. Such other Party shall
reasonably cooperate with the Party conducting the defense of the claim,
including if required to conduct such defense, furnishing a power of attorney.
(g) SETTLEMENT. Neither Party shall enter into any settlement of a
claim brought under this Section 8.5 that materially adversely affects the other
Party's rights or interests without such other Party's written consent, which
consent shall not be unreasonably withheld or delayed.
8.6. PATENT OPPOSITIONS.
(a) THIRD PARTY PATENT RIGHTS. If either Party desires to bring an
opposition, action for declaratory judgment, nullity action, interference,
reexamination or other attack upon the validity, title or enforceability of a
Patent owned or Controlled by a Third Party that covers or may cover the
manufacture, use, sale, offer for sale or importation of any Licensed Product,
such Party shall so notify the other Party and the Parties shall promptly confer
in good faith to determine whether to bring such action or the manner in which
to settle such action. Cubist shall have the first right, but not the
obligation, to bring at its own expense and in its sole control such action
outside the Territory. If Cubist does not bring such action within ninety (90)
days of notification thereof pursuant to this Section 8.6(a) (or earlier, if
required by the nature of the proceeding), Chiron shall have the right, but not
the obligation, to bring at Chiron's expense and in its sole control, such
action. Chiron shall have the first right, but not the obligation, to bring at
its own expense and in its sole control such action in the Territory. If Chiron
does not bring such action within ninety (90) days of notification thereof
pursuant to this Section 8.6(a) (or earlier, if required by the nature of the
proceeding), Cubist shall have the right, but not the obligation, to bring at
Cubist's expense and in its sole control, such action. The Party not bringing an
action under this Section 8.6(a) shall be entitled to separate representation in
such proceeding by counsel of its own choice and at its own expense, and shall
cooperate reasonably with the Party bringing such action. Any awards or amounts
received in bringing any such action shall be first allocated to reimburse the
Parties' reasonable expenses incurred in such action, and any remaining amounts
shall be retained by the Party bringing such action.
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(b) PARTIES' PATENT RIGHTS. If a Cubist Patent, a Chiron patent or
a Joint Patent becomes the subject of any proceeding commenced by a Third Party
in connection with an opposition, reexamination request, action for declaratory
judgment, nullity action, interference or other attack upon the validity, title
or enforceability thereof, then the Party responsible for the prosecution of
such Cubist Patent, such Chiron Patent or such Joint Patent pursuant to Section
8.2 hereof shall control such action at the sole cost or expense of the
controlling Party unless the Parties otherwise agree in writing. The controlling
Party will permit the non-controlling Party to participate in the proceeding to
the extent permissible under law, and to be represented by its own counsel in
such proceeding, at the non-controlling Party's expense. If either Party decides
that it does not wish to defend against such action, then the other Party shall
have a backup right to assume defense of such Third Party action at its own
expense. Any awards or amounts received in defending any such Third Party action
shall be allocated between the Parties as provided in Section 8.4(e) as if the
Party conducting such opposition were the Party that brought an action against
an alleged infringer.
(c) NONCONTRAVENTION. Nothing in this Section 8.6 shall be
construed to relieve either Party of its obligations under Section 8.5 hereof.
8.7. SUBLICENSED TECHNOLOGY.
(a) GENERALLY. The licenses granted under Article 2, to the extent
they include sublicenses of Third-Party technology licensed by Cubist as of the
Effective Date, a complete list of which is set forth in EXHIBIT E, and
including without limitation the Lilly License ("EFFECTIVE DATE THIRD PARTY
LICENSES"), shall be subject to the terms and conditions of such Effective Date
Third Party Licenses. Cubist shall faithfully and timely perform and discharge
its obligations under the Effective Date Third Party Licenses (including without
limitation the payment of all royalties and other financial compensation due to
such Third Parties thereunder in connection with the sale of Licensed Products)
and shall not permit any action to be taken or event to occur, in each case,
within Cubist's reasonable control, which would give such Third Party the right
to terminate such Effective Date Third Party License. Further, Cubist shall not
amend any Effective Date Third Party License without Chiron's consent, such
consent not to be unreasonably withheld. Notwithstanding the provisions of the
foregoing two sentences, Cubist shall not be liable to Chiron for breach of the
obligations set forth in the foregoing two sentences unless such breach shall
materially adversely affect Chiron's ability to develop or Commercialize
Licensed Products in accordance with the provisions of this Agreement. If Cubist
is notified or otherwise becomes aware of its material breach of any such
Effective Date Third Party License, it shall promptly notify Chiron in writing,
reasonably detailing such breach. Cubist shall also notify Chiron of any
material breach by such Third Parties of any of their obligations under the
Effective Date Third Party Licenses. The Parties shall promptly confer in good
faith regarding an appropriate manner for curing any such breach within the time
allotted by such Effective Date Third Party License, or if the Third Party is in
breach, monitoring the ability and adequacy of the Third Party's efforts to cure
such breach. If Cubist does not perform the agreed-upon remedy of such breach
within the designated time, then Chiron may itself perform the agreed-upon
remedy for such breach for the benefit of Cubist and any amounts that Chiron
pays to cure such breach shall be either promptly reimbursed by Cubist or Chiron
may withhold an equal amount from any payments due to Cubist under this
Agreement. If a good faith dispute between a Third Party and Cubist arises about
the interpretation of any provision within such Effective Date Third Party
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License, Chiron shall use its Commercially Reasonable Efforts to ensure that its
actions, if any, under this Section 8.7(a) do not detrimentally affect the
ability of Cubist to contest the interpretation advanced by such Third Party.
(b) LILLY LICENSE. It is agreed and acknowledged that in the event
of termination of the Lilly License, any sublicense granted by Cubist to Chiron
under this Agreement of any rights granted by Lilly to Cubist under the Lilly
License shall automatically be assigned by Cubist to Lilly in accordance with
the provisions of Section 10.06 of the Lilly License.
(c) DECISION TO LICENSE THIRD PARTY TECHNOLOGY. In the event that
either Party believes that certain Third Party intellectual property may be
useful to the development, manufacture, use, sale, offer for sale or import of
Licensed Products in the Territory and/or outside the Territory, then such Party
shall request through the JCT that the Parties consider (i) whether the Parties
should seek a license to such Third Party intellectual property to allow either
or both Parties to use or practice such Third Party intellectual property in
connection with the development, manufacture, use, sale, offer for sale or
import of Licensed Products, (ii) how to allocate the costs of obtaining and
maintaining such license between the Parties, (iii) how the Parties should
proceed to seek such license, and (iv) whether, instead of seeking such license,
the Parties can develop, manufacture, use, sell, offer for sale or import
Licensed Product in a way that would eliminate or reduce the usefulness or
desirability of licensing such Third Party intellectual property.
(d) LICENSING OF THIRD PARTY TECHNOLOGY. If the Parties reach a
consensus that the Parties should seek a license to any Third Party intellectual
property referred to in Section 8.7(c), then the Parties shall seek such license
in a manner and on terms consistent with the determinations made by the Parties
with respect to the matters set forth in clauses (i), (ii) and (iii) of Section
8.7(c). If the Parties are unable to reach a consensus that the Parties should
seek such license and if the Parties are unable to reach a consensus that the
Parties can develop, manufacture, use, sell, offer for sale or import Licensed
Products in a way that would eliminate or reduce the usefulness and desirability
of obtaining such license, then either Party shall be free to itself seek such
license at its sole cost and expense. If Cubist is the Party that seeks such
license and such license consists of or provides rights useful to the
development, manufacture, use, sale, offer for sale or import of Licensed
Products in the Territory, then, at Chiron's request made at any time during the
Term, Cubist shall sublicense such rights to Chiron for use in the Territory
provided that Chiron agrees in writing to make payment, and makes payment when
due, to Cubist of the portion of the costs paid and required to be paid by
Cubist to obtain and maintain such license that are reasonably appropriate for
Chiron to bear in light of the relative financial benefits that could reasonably
be expected to be derived from such license by Chiron in the Territory, on the
one hand, and by Cubist and, if applicable, Third Party licensees of Cubist,
outside the Territory, on the other hand. If Chiron is the Party that seeks such
license and such license consists of or provides rights useful to the
development, manufacture, use, sale, offer for sale or import of Licensed
Products outside the Territory, then, at Cubist's request made at any time
during the Term, Chiron shall sublicense such rights to Cubist outside the
Territory provided that Cubist agrees in writing to make payment, and makes
payment when due, to Chiron of the portion of the costs paid and required to be
paid by Chiron to obtain and maintain such license that are reasonably
appropriate for Cubist to bear in light of the relative financial benefits that
could reasonably be expected to be derived from such license by Cubist and, if
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applicable, Third Party licensees of Cubist outside the Territory, on the one
hand, and by Chiron in the Territory, on the other hand.
(e) LIMITATION OF OBLIGATION TO SUBLICENSE. Notwithstanding
anything in this Agreement expressed or implied to the contrary, the Party that
obtains a license pursuant to Section 8.7(d) above shall have no obligation to
make the licensed rights obtained pursuant to such license available to the
other Party if such other Party is not bearing a reasonably appropriate portion
of the cost and expense of seeking and maintaining such license in light of the
relative financial benefits that could reasonably be expected to be derived from
such license by Chiron in the Territory, on the one hand, and by Cubist and, if
applicable, Third Party licensees of Cubist outside the Territory, on the other
hand.
(f) DETERMINATION OF RELATIVE FINANCIAL BENEFITS. In connection
with any determination of the relative financial benefits that could reasonably
be expected to be derived by Chiron, Cubist and, if applicable, Third Party
licensees of Cubist in connection with any license obtained by Cubist or Chiron
pursuant to this Section 8.7, such relative financial benefits shall be
determined by considering actual and projected net sales and actual or projected
royalties from sales of the applicable Licensed Product by Chiron, Cubist and,
if applicable, Third Party licensees of Cubist in the territory or territories
that is or are covered by any such license.
8.8. PATENT MARKING. Licensed Products marketed and sold by the Parties
hereunder shall be marked with appropriate patent numbers or indicia at Cubist's
request, to the extent permitted by law, in those countries in which such
markings have notice value as against infringers of patents.
8.9. APPLICABILITY TO CHIRON PATENTS. Notwithstanding any provision of this
Agreement to the contrary, the provisions of this Article 8 shall apply to any
Chiron Patent only to the extent that the Parties have not otherwise agreed on
responsibilities for prosecution, maintenance, enforcement, defense and other
management of such Chiron Patent.
8.10. TRADEMARKS.
(a) TRADEMARK LICENSE. Subject to the provisions set forth in this
Section 8.10, Cubist hereby grants Chiron an exclusive, royalty-free license
under its entire right, title and interest in and to the Cubist Marks to use and
display the Cubist Marks in connection with the Commercialization of Licensed
Products within the Territory. Chiron shall not use Cubist's trade names and/or
marks in a way which would be confusing or otherwise adversely affect their
value. Chiron agrees that it will not reproduce or use the Cubist Marks in any
manner whatsoever other than as authorized by this Agreement, and that its uses
of the Cubist Marks will comply with the current trademark guidelines that
Cubist may provide from time to time. Chiron shall provide Cubist with copies of
any materials containing any Cubist Marks prior to using or disseminating such
materials, and shall reasonably consider all comments made by Cubist regarding
the use of the Cubist Marks. Cubist will have the right to monitor Chiron's use
of the Cubist Marks and to request that Chiron correct any failure to comply
with this Section 8.10 adversely affecting the strength or value of such
trademark.
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(b) SELECTION AND REGISTRATION OF PRODUCT TRADEMARKS. Subject to
the provisions set forth below in this Section 8.10, Chiron shall use in
connection with the Commercialization of any Licensed Product in the Territory
those trademarks used by Cubist in connection with the Commercialization of such
Licensed Product outside the Territory. In the event that (i) any trademark or
trademarks used by Cubist in connection with the Commercialization of any
Licensed Product outside the Territory may not be registered for use in the
Territory with such Licensed Product or (ii) Chiron believes that it would be a
significant advantage for the Commercialization of any Licensed Product in the
Territory to select and use a trademark or trademarks in connection therewith
that is or are different from the trademark or trademarks being utilized by
Cubist in connection with the Commercialization of such Licensed Product outside
the Territory, then Chiron shall notify Cubist about the matter and shall submit
to Cubist several other trademarks that Chiron desires to use, and believes can
be used, with the Licensed Product in question in the Territory. Cubist and
Chiron shall jointly consider, discuss and decide the matter. Chiron shall not
use any trademark in connection with the Commercialization of any Licensed
Product within the Territory that is different from the trademark or trademarks
being utilized by Cubist in connection with the Commercialization of such
Licensed Product outside the Territory without Cubist's written consent. Any
trademark used by Chiron in connection with the Commercialization of any
Licensed Product in the Territory that is different than the trademark or
trademarks utilized by Cubist in connection with the Commercialization of such
Licensed Product outside the Territory and that has been selected and approved
in accordance with the provisions of this Section 8.10(b) is hereinafter
referred to as an "APPROVED NEW TRADEMARK". Subject to Chiron's right to use
each Approved New Trademark in accordance with the provisions of this Agreement,
Cubist shall own all right, title and interest to each Approved New Trademark,
and each Approved New Trademark shall become one of, and be included among, the
Cubist Marks, and, to the extent permitted by applicable law, Cubist shall be
responsible for registering and maintaining such Approved New Trademark within
and outside the Territory, at Cubist's own expense. Chiron hereby assigns to
Cubist any and all right, title, interest, and goodwill that Chiron may have in
any such Approved New Trademark (other than the right, if applicable, set forth
below in this Section 8.10 to register and maintain such Approved New Trademark
and Chiron's license and right to use such Approved New Trademark pursuant to
the provisions of Section 8.10(a) hereof) and hereby agrees to execute such
further documents as Cubist shall reasonably request to further evidence and
perfect such assignment. In the event that the laws of any applicable country
within the Territory shall not permit Cubist to register any Cubist Mark, then
Chiron shall be responsible for registering and maintaining such Cubist Mark in
such applicable country, notwithstanding the fact that Cubist shall own such
Cubist Mark, and any use or goodwill arising from use of the mark shall inure to
the benefit of Cubist.
(c) INFRINGEMENT OF TRADEMARKS BY THIRD PARTIES. Each Party shall
notify the other Party in writing promptly upon learning of any actual, alleged
or threatened infringement in the Territory or outside the Territory of any
Cubist Mark or of any unfair trade practices, trade dress imitation, passing off
of counterfeit goods, or like offenses, in any case involving or affecting
Licensed Products in the Territory or outside the Territory (hereinafter "TM
INFRINGEMENT"). In the case of any TM Infringement in the Territory, after any
such written notice has been sent and received with respect to such TM
Infringement, the Parties shall confer in good faith as to the reasonable
response to such TM Infringement. In the absence of other
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agreement between the Parties, (i) Cubist shall have the exclusive right, in its
own discretion and at its own expense, to bring an action to address TM
Infringement outside the Territory, (ii) Chiron shall have the first right, in
its own discretion and at its own expense, to bring an action to address TM
Infringement in the Territory, and (iii) if Chiron does not exercise its rights
under the foregoing clause (ii) within ninety (90) days after the Parties shall
have conferred in good faith as to the reasonable response to such TM
Infringement in the Territory in accordance with the above provisions of this
Section 8.10(c), Cubist shall have the right, in its own discretion and its own
expense, to bring an action to address such TM Infringement in the Territory.
Any recovery by the Party pursuing the Third Party for the alleged TM
Infringement shall be applied first to reimburse the costs and expenses incurred
by the Party pursuing the infringer, and the portion of any remainder that is
attributable to TM Infringement outside the Territory shall be allocated [*] to
Cubist, and the portion of such remainder that is attributable to TM
Infringement in the Territory shall be allocated as follows: (i) if the pursuing
Party is Chiron, [*]; and (ii) if the pursuing Party is Cubist, [*].
(d) PRODUCT TRADEMARKS INFRINGE THIRD PARTY RIGHTS. Each Party
shall notify the other Party in writing promptly upon being notified that any
Cubist Mark or trade dress associated with the sale of License Products in the
Territory or outside the Territory is alleged to infringe any Third Party
trademark or other related intellectual property rights. In the case of any such
alleged infringement in the Territory, after any such written notice has been
sent and received with respect to such alleged infringement, the Parties shall
confer in good faith as to the reasonable response to such alleged infringement.
8.11. SUBORDINATION TO LILLY RIGHTS. Notwithstanding anything in this
Article 8 expressed or implied to the contrary, the Parties hereby agree that
the respective rights and obligations of the Parties under this Article 8 with
respect to the Cubist Patents licensed by Cubist from Lilly pursuant to the
Lilly Agreement and set forth on EXHIBIT F hereto (in each case, a "LILLY
PATENT") shall, to the extent applicable, be subject to the respective rights
and obligations of Lilly and Cubist with respect to such Lilly Patent as set
forth in the Lilly Agreement. In the event that the rights and obligations of
Lilly and Cubist under the Lilly Agreement with respect to any Lilly Patent
shall be in conflict with the respective rights and obligations of Cubist and
Chiron under this Article 8 with respect to such Lilly Patent, the respective
rights and obligations of Lilly and Cubist under the Lilly Agreement with
respect to such Lilly Patent shall control, take precedence and supersede the
respective rights and obligations of Cubist and Chiron under this Article 8 with
respect to such Lilly Patent to the extent of any such conflict.
ARTICLE 9.
REPRESENTATIONS AND WARRANTIES
9.1. MUTUAL REPRESENTATIONS AND WARRANTIES. Each Party hereby represents
and warrants to the other Party as follows:
(a) CORPORATE EXISTENCE AND POWER. It is a corporation duly
organized, validly existing and in good standing under the laws of the state in
which it is incorporated, and has full corporate power and authority and the
legal right to own and operate its property and assets and
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to carry on its business as it is now being conducted and as contemplated in
this Agreement, including, without limitation, the right to grant the licenses
granted hereunder.
(b) AUTHORITY AND BINDING AGREEMENT. As of the Effective Date, (i)
it has the corporate power and authority and the legal right to enter into this
Agreement and perform its obligations hereunder; (ii) it has taken all necessary
corporate action on its part required to authorize the execution and delivery of
the Agreement and the performance of its obligations hereunder; and (iii) the
Agreement has been duly executed and delivered on behalf of such Party, and
constitutes a legal, valid and binding obligation of such Party that is
enforceable against it in accordance with its terms.
(c) NO CONFLICT. It has not entered into any agreement with any
Third Party that is in conflict with the rights granted to the other Party under
this Agreement, and has not taken any action that would in any way prevent it
from granting the rights granted to the other Party under this Agreement, or
that would otherwise materially conflict with or adversely affect the rights
granted to the other Party under this Agreement. Its performance and execution
of this Agreement will not result in a breach of any other contract to which it
is a Party.
(d) VALIDITY. It is aware of no action, suit, inquiry or
investigation instituted by any Third Party which questions or threatens the
validity of this Agreement.
(e) CONSENTS. All necessary consents, approvals and authorizations
of all governmental authorities and other persons or entities required to be
obtained by such Party in connection with the execution and delivery of this
Agreement have been obtained.
9.2. CUBIST REPRESENTATIONS AND WARRANTIES. Cubist hereby represents and
warrants to Chiron as follows:
(a) OWNERSHIP OF INTELLECTUAL PROPERTY. Except for the rights
licensed to Cubist pursuant to the Effective Date Third Party Licenses, except
for any Third Party intellectual property rights that would be infringed or
misappropriated by the use or practice of the Cubist Patents, Cubist Know-How
and the Cubist Marks (as to which infringement or misappropriation Cubist has no
knowledge as of the Effective Date), [*] Cubist is the owner of the Cubist
Patents, the Cubist Know-How and Cubist Marks that exist as of the Effective
Date, free and clear (as of the Effective Date) of all liens, encumbrances,
security interests, licenses, and options to acquire or license in favor of
Third Parties. Except for any Third Party intellectual property rights that
would be infringed or misappropriated by the use or practice of the Cubist
Patents, Cubist Know-How and the Cubist Marks (as to which infringement or
misappropriation Cubist has no knowledge as of the Effective Date), as of the
Effective Date, (1) Cubist has the requisite right to grant to Chiron the
licenses granted herein to Chiron, and (2) no right or license of any Third
Party is required to permit Cubist to perform its obligations under this
Agreement in accordance with the terms of this Agreement and to permit Chiron to
exercise its rights hereunder in accordance with the terms of this Agreement.
(b) CLAIMS RELATED TO USE OF INTELLECTUAL PROPERTY. As of the
Effective Date, Cubist is not aware of any pending or threatened claims against
Cubist asserting that any of the activities of Cubist relating to the Licensed
Products or the conduct by the Parties of any of the
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activities contemplated by this Agreement relating to the Licensed Products
infringes the rights of any Third Party. As of the Effective Date, Cubist is not
aware of any published or generally available Patents of any Third Party that
would be infringed by the use or practice of the Cubist Patents, Cubist Know-How
or the Cubist Marks.
(c) NOTICE TO THIRD PERSONS. As of the Effective Date, Cubist has
not given any notice to any Third Party asserting infringement, misappropriation
or violation by such Third Party upon any of the Cubist Technology.
(d) EFFECTIVE DATE THIRD PARTY LICENSES. EXHIBIT E is an accurate
and complete list of all Effective Date Third Party Licenses, including without
limitation, the Lilly License. As of the Effective Date, all Effective Date
Third Party Licenses remain in effect and Cubist is not in breach or default in
the performance of its obligations under the Effective Date Third Party
Licenses. Cubist has not received any notice from any of the other parties to
any of the Effective Date Third Party Licenses, including without limitation,
Lilly, of any breach, default or non-compliance of Cubist under the terms of any
of the Effective Date Third Party Licenses, including without limitation, the
Lilly License. There have been no amendments or other modification to the
Effective Date Third Party Licenses, including without limitation, the Lilly
License, except as have been disclosed to Chiron in writing. Cubist has the
requisite right under the Lilly License to grant to Chiron a sublicense of
Cubist's rights under the Lilly License. Lilly's right of first negotiation
under the Lilly License to acquire the rights licensed by Cubist to Chiron as of
the Effective Date pursuant to this Agreement has expired or been exhausted or
waived.
(e) NO MISAPPROPRIATION. To the best knowledge of Cubist as of the
Effective Date (after having made due inquiry of its employees on or prior to
the Effective Date), it has not misappropriated the trade secret of any Third
Party in its activities to develop and Commercialize Licensed Products.
(f) REGULATORY FILINGS. EXHIBIT G is an accurate and complete list
of all INDs, NDAs and other Drug Approval Applications for Licensed Products
filed by Cubist anywhere in the world as of the Effective Date. Except for the
rights granted to Chiron pursuant to this Agreement and the Supply Agreement,
Cubist is as of the Effective Date the owner of all INDs, NDAs and other Drug
Approval Applications set forth on EXHIBIT G attached hereto, free and clear (as
of the Effective Date) of all liens, encumbrances, security interests, licenses,
and options to acquire or license in favor of Third Parties. As of the Effective
Date, Cubist has complied in all material respects with all laws applicable to
all INDs, NDAs and other Drug Approval Applications set forth on EXHIBIT G
attached hereto.
(g) REGULATORY DATA AND AFFAIRS. Cubist has disclosed to Chiron
all material information and data that is known to Cubist and that is in the
possession of, or otherwise available to, Cubist relating to (i) the results of
pre-clinical and clinical studies of Licensed Products conducted by or on behalf
of Cubist or Lilly, and (ii) Cubist's pending Drug Approval Application in the
United States for the Licensed Product and its status. All such material
information and data disclosed by Cubist to Chiron are complete and accurate in
all material respects.
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(h) NON-INFRINGEMENT OF CUBIST TECHNOLOGY BY THIRD PARTIES. As of
the Effective Date, Cubist is unaware of any activities by Third Parties that
would constitute infringement or misappropriation of any Cubist Technology.
(i) LITIGATION. [*,] Cubist is not aware of any litigation against
Cubist that has been pending or threatened with respect to the Cubist
Technology, Licensed Products or Cubist's rights in either of the foregoing.
(j) RESTRICTIVE AGREEMENTS. As of the Effective Date, Cubist has
not entered into any agreement with a Third Party pursuant to which Cubist shall
have agreed not to enforce any right of Cubist to preclude such Third Party from
using or practicing any or all of the Cubist Technology or Commercialize
Licensed Products in the Territory.
(k) PATENT PROSECUTION. To the best of Cubist's knowledge as of
the Effective Date, (i) Cubist has complied in all material respects with all
laws applicable to the prosecution and maintenance of the Cubist Patents, and
(ii) those employees of Cubist having a duty to disclose to the patent office of
any country in the Territory information material to the patentability of the
subject matter of any or all of the Cubist Patents in such country have
disclosed all such information.
9.3. CHIRON REPRESENTATION AND WARRANTY - NO INTELLECTUAL PROPERTY. Chiron
hereby represents and warrants to Cubist that as of the Effective Date, Chiron
is not aware (without having conducted any review of its existing intellectual
property portfolio) that it has any patents, trade secrets or know-how that
would be useful in connection with the development, manufacture, marketing,
promotion, use, sale, import or export of Licensed Products.
9.4. DISCLAIMER. Chiron understands that Licensed Products are the subjects
of ongoing clinical research and development and that Cubist cannot assure the
safety or usefulness of Licensed Products, however, the foregoing shall not be
construed to affect the allocation of risks agreed upon by the Parties under to
Article 10.
9.5. NO OTHER REPRESENTATIONS. THE EXPRESS REPRESENTATIONS AND WARRANTIES
STATED IN THIS ARTICLE 9 ARE IN LIEU OF ALL OTHER REPRESENTATIONS AND
WARRANTIES, EXPRESS, IMPLIED, OR STATUTORY, INCLUDING WITHOUT LIMITATION,
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NON-INFRINGEMENT OR NON-MISAPPROPRIATION OF THIRD PARTY INTELLECTUAL PROPERTY
RIGHTS.
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ARTICLE 10.
INDEMNIFICATION
10.1. INDEMNIFICATION BY CUBIST. Subject to all of the provisions of this
Article 10, Cubist hereby agrees to defend, hold harmless and indemnify
(collectively "INDEMNIFY") Chiron and its Affiliates, and their respective
agents, directors, officers and employees (the "CHIRON INDEMNITEES") from and
against any and all suits, claims, actions, demands, liabilities, expenses
and/or losses, including without limitation reasonable legal expenses and
attorneys' fees (collectively "LOSSES") suffered or incurred by any of such
Chiron Indemnitees resulting from (i) a material breach of any of Cubist's
representations and warranties pursuant to Article 9 of this Agreement or
Article 9 of the Supply Agreement; (ii) a material breach of any of Cubist's
covenants and agreements made pursuant to this Agreement or the Supply
Agreement; (iii) any Third Party claim made against any such Chiron Indemnitee
for damages suffered by such Third Party arising from any failure of Cubist or
any of its Affiliates, contractors or distributors, or any of their respective
agents or employees, to comply in any material respect with applicable laws or
regulations; (iv) any Third Party claim made against any such Chiron Indemnitees
for death, bodily injury or property damage suffered by such Third Party arising
from the negligence, recklessness or willful misconduct of Cubist or any of its
Affiliates, contractors or distributors, or any of their respective agents or
employees, in the course of carrying out any of the actions or activities of
Cubist under or in connection with this Agreement or the Supply Agreement; or
(v) any Third Party claim made against any such Chiron Indemnitees for death,
bodily injury or property damage suffered by such Third Party arising from any
activities of Cubist or any of its Affiliates, licensees (other than Chiron),
contractors or distributors, or any of their respective agents or employees,
anywhere in the world prior to, on, or after the Effective Date in connection
with their respective development, manufacturing or Commercialization activities
with respect to Licensed Products; PROVIDED, HOWEVER, that Cubist shall not be
required to indemnify the Chiron Indemnitees for any Losses pursuant to this
Section 10.1 to the extent that (1) such Losses arise from matters or claims for
which Chiron is required to indemnify any of the Cubist Indemnities pursuant to
Section 10.2 hereof, (2) such Losses arise from Chiron's breach or
non-compliance with any of the provisions of this Agreement or the Supply
Agreement, (3) such Losses arise or result from the negligence, recklessness or
willful misconduct of Chiron or any of its Affiliates, contractors or
distributors, or any of their respective agents or employees, (4) such Losses
arise or result from any Third Party products liability claim, (5) such Losses
consist of Recall Expenses that are in excess of the maximum amount of such
Recall Expenses for which Cubist is liable under Section 5.7(b) of this
Agreement and Section 6.6(b) of the Supply Agreement or (6) Cubist's liability
for such Losses is limited pursuant to Section 10.6. Cubist's liability to any
of the Chiron Indemnitees with respect to Third Party products liability claim
is set forth in Section 10.3 below.
10.2. INDEMNIFICATION BY CHIRON. Subject to all of the provisions of this
Article 10, Chiron hereby agrees to Indemnify Cubist and its Affiliates, and
their respective agents, directors, officers and employees (the "CUBIST
INDEMNITEES") from and against any and all Losses suffered or incurred by any of
such Cubist Indemnitees resulting from (i) a material breach of any of Chiron's
representations and warranties pursuant to Article 9 of this Agreement or
Article 9 of the Supply Agreement; (ii) a material breach of any of Chiron's
covenants and
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agreements made pursuant to this Agreement or the Supply Agreement; (iii) any
Third Party claim made against any such Cubist Indemnitee for damages suffered
by such Third Party arising from any failure of Chiron or any of its Affiliates,
contractors or distributors, or any of their respective agents or employees, to
comply in any material respect with applicable laws and regulations; (iv) any
Third Party claim made against any such Cubist Indemnitee for death, bodily
injury or property damage suffered by such Third Party arising from the
negligence, recklessness or willful misconduct of Chiron or any of its
Affiliates, contractors or distributors, or any of their respective agents or
employees, in the course of carrying out any of the actions or activities of
Chiron under or in connection with this Agreement or the Supply Agreement; or
(v) any Third Party claim made against any such Cubist Indemnitees for death,
bodily injury or property damage suffered by such Third Party arising from any
activities of Chiron or any of its Affiliates, licensees (other than Cubist),
contractors or distributors, or any of their respective agents or employees,
anywhere in the world on or after the Effective Date in connection with their
respective development, manufacturing or Commercialization activities with
respect to Licensed Products; PROVIDED, HOWEVER, that Chiron shall not be
required to indemnify the Cubist Indemnitees for any Losses pursuant to this
Section 10.2 to the extent that (1) such Losses arise from matters or claims for
which Cubist is required to indemnify any of the Chiron Indemnities pursuant to
Section 10.1 hereof, (2) such Losses arise from Cubist's breach or
non-compliance with any of the provisions of this Agreement or the Supply
Agreement, (3) such Losses arise or result from the negligence, recklessness or
willful misconduct of Cubist or any of its Affiliates, contractors or
distributors, or any of their respective agents or employees, (4) such Losses
arise or result from any Third Party products liability claim or (5) Chiron's
liability for such Losses is limited pursuant to Section 10.6. Chiron's
liability to any of the Cubist Indemnitees with respect to Third Party products
liability claim is set forth in Section 10.3 below.
10.3. LIABILITY FOR THIRD PARTY PRODUCTS LIABILITY CLAIMS.
(a) Subject to all of the provisions of this Article 10, Cubist
hereby agrees to Indemnify the Chiron Indemnitees from and against any and all
Losses suffered or incurred by any of such Chiron Indemnitees resulting from any
Third Party product liability claim made against any such Chiron Indemnitee for
death, bodily injury or property damage suffered by such Third Party from or in
connection with any Licensed Product sold by Chiron or its Affiliates or
distributors for use in the Territory but only if and to the extent that such
death, bodily injury or property damage was or is caused by reason of such
Licensed Product being a Defective Manufactured Product; PROVIDED, HOWEVER, that
Cubist shall not be required to indemnify the Chiron Indemnitees for any Losses
pursuant to this Section 10.3(a) to the extent that (1) such Losses arise from
matters or claims for which Chiron is required to indemnify any of the Cubist
Indemnities pursuant to Section 10.3(b) hereof or (2) such Losses arise from
Chiron's breach or non-compliance with any of the provisions of this Agreement
or the Supply Agreement.
(b) Subject to all of the provisions of this Article 10, Chiron
hereby agrees to Indemnify the Cubist Indemnitees from and against any and all
Losses suffered or incurred by any of such Cubist Indemnitees resulting from any
Third Party product liability claim made against any such Cubist Indemnitee for
death, bodily injury or property damage suffered by such Third Party from or in
connection with any Licensed Product sold or used by Chiron or its Affiliates or
distributors but only if and to the extent that such death, bodily injury or
property damage arises or results from (A) the improper use, transportation,
packaging, storage or
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handling of such Licensed Product by Chiron or any of its Affiliates,
contractors or distributors, or any of their respective agents or employees,
including, without limitation, any such use, transportation, packaging, storage
or handling of such Licensed Products that does not conform with any of the
applicable specifications of such Licensed Product or with the requirements of
any Regulatory Authorities or any applicable laws within the Territory, (B) the
failure of such Licensed Product to have an appropriate shelf-life at the time
such Licensed Product was sold or used by Chiron or any of its Affiliates,
contractors or distributors, or any of their respective agents or employees,
PROVIDED that such Licensed Product is not a Defective Manufactured Product, (C)
any defect or deficiency in the label or package insert of, or the marketing or
promotional materials with respect to, such Licensed Product, including, without
limitation, the failure of the label or package insert of, or the marketing or
promotional materials with respect to, such Licensed Product to meet the
requirements of any Regulatory Authority or any applicable laws within the
Territory, except to the extent that such defect or deficiency resulted from
incorrect information received by Chiron from Cubist or from the failure by
Cubist to disclose to Chiron information that is in the possession of Cubist,
(D) the promotion (including the establishment of any program to provide
treatment on a named patient basis or other similar basis) by Chiron or any of
its Affiliates, contractors or distributors, or any of their respective agents
or employees, of such Licensed Product for use in connection with an indication
for which such Licensed Product has not received Regulatory Approval if data in
Chiron's possession establishes that it would not be safe or effective to use
such License Product for the treatment of such indication, (E) a defect in such
Licensed Product due to improper manufacture by Chiron or by a Third Party
manufacturer, (F) any failure by Chiron to develop, use, market, promote or sell
such License Product in compliance with all of the applicable requirements of
the Regulatory Authorities in the Territory and all of the applicable laws
within the Territory, (G) any of the activities or responsibilities that Chiron
performs or is required to perform pursuant to the Supply Agreement, or (H) any
breach by Chiron of any of its obligations under this Agreement or the Supply
Agreement; PROVIDED, HOWEVER, that Chiron shall not be required to indemnify the
Cubist Indemnitees for any Losses pursuant to this Section 10.3(b) to the extent
that (1) such Losses arise from matters or claims for which Cubist is required
to indemnify any of the Chiron Indemnities pursuant to Section 10.3(a) hereof or
(2) such Losses arise from Cubist's breach or non-compliance with any of the
provisions of this Agreement or the Supply Agreement.
(c) Subject to the provisions of Section 10.3(d) and 10.4(b)
below, in the event that there is a Third Party products liability claim for
death, bodily injury or property damage suffered by such Third Party from or in
connection with any Licensed Product sold or used by Chiron or its Affiliates or
distributors and neither Party is required to indemnify the other Party pursuant
to Section 10.3(a) or 10.3(b) above in connection with such Third Party products
liability claim, then the Parties agree to [*] amounts that are paid or are
required to be paid to such Third Party in connection with such Third Party
products liability claim (regardless of whether such amounts are determined by a
court of competent jurisdiction, arbitration proceeding or negotiated
settlement), with [*] of this Agreement in connection with [*] in connection
with the [*]. The Parties hereby agree that this clause (c) is not intended to
cover Third Party products liability claims arising from sales of Licensed
Product outside of the Territory by Cubist, its Affiliates or Other Licensees,
or any of their respective distributors.
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(d) Notwithstanding anything expressed or implied in Section
10.3(c) to the contrary, in no event shall Cubist have any obligation under
Section 10.3(c) with respect to any Third Party products liability claim if and
to the extent that, prior to the time that such Third Party products liability
claim arises, (i) Cubist has taken steps to eliminate or mitigate the risk of
any such Third Party products liability claim arising outside the Territory, the
adequacy of such steps to be judged in accordance with the applicable laws and
regulatory requirements outside the Territory, (ii) Cubist has communicated to
Chiron the potential risk of any such Third Party products liability claim could
arise in the future and the steps that Cubist has taken, is taking or will be
taking to eliminate or mitigate such risk outside the Territory and (iii) Chiron
has not taken substantially the same steps in the Territory as Cubist has taken
outside the Territory. Cubist shall also not have any obligation under Section
10.3(c) with respect to any Third Party products liability claim if and to the
extent that, prior to the time that such Third Party products liability claim
arises, (x) Chiron has knowledge of facts and circumstances that establish that
there is a risk of any such Third Party products liability claim arising in the
Territory and fails to disclose such knowledge to Cubist, (y) Chiron fails to
implement any plan previously discussed and agreed to by the Parties to
eliminate or mitigate the risk of any such Third Party products liability claim
arising in the Territory or (z) if the Parties have not discussed any such plan
or cannot agree on any such plan, and Chiron fails to take steps to eliminate or
mitigate the risk of any such Third Party products liability claim arising in
the Territory, the adequacy of such steps to be judged in accordance with the
applicable laws and regulatory requirements in the Territory.
(e) EXCEPT TO THE EXTENT EITHER PARTY HAS ANY LIABILITY TO THE
OTHER PARTY PURSUANT TO THIS SECTION 10.3, NEITHER PARTY SHALL HAVE ANY
LIABILITY TO THE OTHER PARTY UNDER THIS AGREEMENT, THE SUPPLY AGREEMENT OR
OTHERWISE UNDER ANY THEORY OF LIABILITY FOR ANY THIRD PARTY PRODUCTS LIABILITY
CLAIM IN CONNECTION WITH LICENSED PRODUCTS.
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10.4. PROCEDURE.
(a) If either Party is seeking indemnification under Section
10.1, 10.2, 10.3(a) or 10.3(b) in connection with a Third Party claim, it shall
inform the indemnifying Party of such Third Party claim giving rise to the
obligation to indemnify pursuant to such section as soon as reasonably
practicable after receiving notice of the claim. The indemnifying Party shall
have the right to assume the defense of any such Third Party claim for which it
is obligated to indemnify the indemnified Party under Section 10.1, 10.2,
10.3(a) or 10.3(b). The indemnified Party shall cooperate with the indemnifying
Party (and its insurer) as the indemnifying Party may reasonably request, and at
the indemnifying Party's sole cost and expense. The indemnified Party shall have
the right to participate, at its own expense and with counsel of its choice, in
the defense of any claim or suit that has been assumed by the indemnifying
Party. Neither Party shall have any obligation to indemnify the other Party in
connection with any settlement made without the indemnifying Party's written
consent, PROVIDED that the indemnifying Party does not unreasonably withhold or
delay any such written consent. If the Parties cannot agree as to the
application of Sections 10.1, 10.2, 10.3(a) or 10.3(b) to any Third Party claim,
the Parties may conduct separate defenses of such claims, with each Party
retaining the right to claim indemnification from the other in accordance with
Section 10.1, 10.2, 10.3(a) or 10.3(b) upon resolution of the underlying claim.
(b) If either Party becomes subject to a Third Party products
liability claim for which such Party believes that it has the right to require
the other Party to share, in accordance with the provisions of Section 10.3(c)
above, in any payments to be made to such Third Party in connection with such
claim, such Party shall inform the other of such Third Party products liability
claim as soon as reasonably practicable after receiving notice of the claim. The
Party that is subject to the Third Party products liability claim shall have the
right to control the defense of such claim, but the other Party shall have the
right to participate, at its own expense and with counsel of its choice, in the
defense of such Third Party products liability claim. Neither Party shall have
any obligation to share in the cost of any settlement of any such Third Party
products liability claim if such settlement is made without such Party's written
consent, PROVIDED that such Party does not unreasonably withhold or delay any
such written consent.
10.5. INSURANCE. Each Party shall procure and maintain insurance or
self-insurance, including product liability insurance, adequate to cover its
obligations hereunder and which are consistent with normal business practices of
prudent companies similarly situated at all times during which any Licensed
Product is being clinically tested with human subjects or commercially
distributed or sold by Chiron, Cubist or Other Licensees. It is understood that
such insurance shall not be construed to create a limit of either Party's
liability with respect to its indemnification obligations under this Article 10.
Each Party shall provide the other with written evidence of such insurance (or
financial information that describes the amounts available under any
self-insurance facility) upon request.
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10.6. LIMITATION OF LIABILITY.
(a) NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR LOST
PROFITS OR FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, PUNITIVE OR
EXEMPLARY DAMAGES OF THE OTHER PARTY IN CONNECTION WITH THIS AGREEMENT OR THE
SUPPLY AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR THE
SUPPLY AGREEMENT, HOWEVER CAUSED, UNDER ANY THEORY OF LIABILITY. THE FOREGOING
LIMITATION SHALL NOT APPLY SO AS TO LIMIT THE LIABILITY OF EITHER PARTY FOR LOST
PROFITS OR FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, PUNITIVE OR
EXEMPLARY DAMAGES THAT MAY BE IMPOSED UPON SUCH PARTY UNDER ANY THEORY OF
LIABILITY (OTHER THAN BREACH OF CONTRACT), WHETHER BY STATUTE OR COMMON LAW, AS
A RESULT OF ANY INFRINGEMENT BY SUCH PARTY OF THE INTELLECTUAL PROPERTY RIGHTS
OF THE OTHER PARTY OR AS A RESULT OF THE FAILURE OF SUCH PARTY TO PERFORM AND
OBSERVE ITS CONFIDENTIALITY OBLIGATIONS TO THE OTHER PARTY.
(b) EXCEPT AS A RESULT OF A MATERIAL BREACH BY EITHER PARTY OF
ITS REPRESENTATIONS AND WARRANTIES PURSUANT TO ARTICLE 9 OF THIS AGREEMENT OR OF
A MATERIAL BREACH BY SUCH PARTY OF ITS COVENANTS AND AGREEMENTS IN SECTION 8.5
OR SECTION 8.10 OF THIS AGREEMENT, AND EXCEPT FOR ANY INDEMNIFICATION OBLIGATION
THAT EITHER PARTY MAY HAVE UNDER CLAUSE (i) OR (ii) OF SECTION 10.1 OR 10.2 (AS
APPLICABLE) OF THIS AGREEMENT WITH RESPECT TO ANY MATERIAL BREACH BY SUCH PARTY
OF ITS REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS UNDER ARTICLE 9,
SECTION 8.5 OR SECTION 8.10 OF THIS AGREEMENT, SUCH PARTY SHALL NOT HAVE ANY
LIABILITY TO THE OTHER PARTY UNDER THIS AGREEMENT OR THE SUPPLY AGREEMENT FOR
ANY THIRD PARTY CLAIM MADE AGAINST SUCH OTHER PARTY FOR ACTUAL OR ALLEGED
INFRINGEMENT OR MISAPPROPRIATION OF THE INTELLECTUAL PROPERTY RIGHTS OF SUCH
THIRD PARTY TO THE EXTENT THAT SUCH INFRINGEMENT OR MISAPPROPRIATION ARISES FROM
ACTIVITIES UNDER OR PURSUANT TO THIS AGREEMENT OR THE SUPPLY AGREEMENT,
INCLUDING, WITHOUT LIMITATION, ANY ACTUAL OR ALLEGED INFRINGEMENT OR
MISAPPROPRIATION OF THE INTELLECTUAL PROPERTY RIGHTS OF SUCH THIRD PARTY CAUSED
AS A RESULT OF THE USE OR PRACTICE BY SUCH OTHER PARTY OF THE INTELLECTUAL
PROPERTY RIGHTS OF SUCH PARTY.
(c) CUBIST'S LIABILITY UNDER THIS AGREEMENT OR THE SUPPLY
AGREEMENT OR UNDER TORT PRINCIPLES OF NEGLIGENCE FOR FAILURE TO SUPPLY LICENSED
PRODUCT TO CHIRON OR THE SUPPLY OF DEFECTIVE MANUFACTURED PRODUCTS [*] ANY
FAILURE TO SUPPLY, OR ANY SUPPLY OF DEFECTIVE MANUFACTURED PRODUCT, WHICH ARISES
OUT OF A PARTICULAR CIRCUMSTANCE (EVEN IF SUCH CIRCUMSTANCE AFFECTS MULTIPLE
LOTS OF LICENSED PRODUCT) CONSTITUTES A SINGLE "BREACH" FOR THIS PURPOSE. [*]
SHALL NOT APPLY IN THE CASE OF FRAUD OR A WILLFUL BREACH BY CUBIST OF ITS SUPPLY
OBLIGATIONS OR BREACH OF CUBIST'S OBLIGATION TO ALLOCATE
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LIMITED SUPPLIES IN ACCORDANCE WITH SECTION 8.1 OF THE SUPPLY AGREEMENT, OR TO
CUBIST'S OBLIGATIONS UNDER SECTION 5.7 (RECALLS AND VOLUNTARY WITHDRAWALS) AND
SECTION 10.3 (LIABILITY FOR THIRD PARTY PRODUCT LIABILITY CLAIMS) OF THIS
AGREEMENT AND SECTION 9.1(d) (CUBIST'S PRODUCT WARRANTIES - EXCLUSIVE REMEDY) OF
THE SUPPLY AGREEMENT.
ARTICLE 11.
RECORDS; PUBLICATIONS
11.1. RECORDS. Each Party shall keep or cause to be kept full and accurate
books of account and records containing all particulars that may be necessary to
determine, in a manner consistent with generally accepted accounting principles
in the United States, the sums or credits due under this Agreement, including,
but not limited to Transfer Prices, Manufacturing Costs and Net Sales. At the
written request (and expense) of either Party, the other Party and its
Affiliates and licensees and sublicensees shall permit an independent certified
public accountant appointed by such Party and reasonably acceptable to the other
Party, accompanied by representatives of the financial department of the audited
Party at reasonable times, upon reasonable notice and no more frequently than
once per calendar year, to examine only (i) those records as may be necessary to
determine the correctness or completeness of any report or payment made under
this Agreement and the Supply Agreement, including but not limited to Transfer
Prices, Manufacturing Costs, and Net Sales, with respect to any calendar year
ending not more than three (3) years prior to such Party's request and (ii)
those records as may be necessary to comply with the requesting Party's
obligations under applicable law or with a request made by any governmental
authority, in either case with respect to any calendar year ending not more than
seven (7) years prior to such Party's request. Results of any such examination
shall be (i) made available to both Parties, (ii) limited to information
relating to the Licensed Products and (iii) subject to Article 12. The Party
requesting the audit shall bear the full cost of the performance of any such
audit, unless such audit discloses a variance of more than [*] from the amount
of the original report, royalty or payment calculation. In such case, the Party
being audited shall bear the full cost of the performance of such audit.
11.2. PUBLICATIONS. Neither Party shall publish or present the results of
studies carried out under this Agreement without the opportunity for prior
review by the other Party in accordance with the provisions set forth in this
Section 11.2. Subject to Section 12.2, each Party agrees to provide the other
Party the opportunity to review any proposed abstracts, manuscripts or
presentations (including verbal presentations) which relate to any Licensed
Product at least sixty (60) days prior to their intended submission for
publication and agrees, upon request, not to submit any such abstract or
manuscript for publication, or to make such presentation, until the other Party
is given a reasonable period of time to secure patent protection for any
material in such publication or presentation that is owned by the requesting
Party (either individually or jointly with the non-requesting Party) and which
the requesting Party believes to be patentable. In the event that the nature of
the content of any proposed publication or presentation is such that a Party is
entitled to request that submission of such publication or delivery of such
presentation be delayed pursuant to the foregoing provisions of this Section
11.2, then both Parties understand that a reasonable commercial strategy may
require delay of publication or presentation of
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information or filing of patent applications. The Parties agree to review and
consider delay of publication or presentation and filing of patent applications
under certain circumstances. Neither Party shall have the right to publish or
present Confidential Information of the other Party, and each Party shall remove
the Confidential Information of the other Party from any proposed publication or
presentation upon request by such other Party. Nothing contained in this Section
11.2 shall prohibit the inclusion of information necessary to file a patent
application with a government authority, except for Confidential Information of
the non-filing Party, PROVIDED the non-filing Party is given a reasonable
opportunity to review the information to be included prior to submission of such
patent application. Notwithstanding the foregoing, the Parties recognize that
independent investigators have been engaged, and will be engaged in the future,
to conduct clinical trials of Licensed Products. Independent investigators that
have been engaged by a Party or both Parties prior to or on the Effective Date
may release information regarding such studies in a manner consistent with
academic standards within the scope of such investigator's agreement with the
relevant Party. Independent investigators that are engaged by a Party or both
Parties after the Effective Date are understood to operate in an academic
environment and shall be allowed to release information regarding such studies
in a manner consistent with academic standards and within the scope of such
investigator's agreement with the relevant Party. With respect to any agreement
entered by either Party with any independent investigator after the Effective
Date to conduct clinical trials of Licensed Products, such Party shall use
Commercially Reasonable Efforts to include in such agreements provisions that
would give such Party the right to limit the publication rights of such
independent investigator with respect to any results of such clinical trials to
the same extent as such Party would have under this Section 11.2 if such
independent investigator were the other Party to this Agreement; provided,
however, that in no event shall such Party be required or obligated to make any
payment to such independent investigator or incur any financial cost or penalty
for the benefit of such independent investigator in order to limit the
publication rights of such independent investigator in the manner contemplated
under this Section 11.2.
ARTICLE 12.
CONFIDENTIALITY
12.1. TREATMENT OF CONFIDENTIAL INFORMATION. The Parties agree that during
the Term, and after this Agreement expires or terminates, a Party receiving
Confidential Information of the other Party shall (i) maintain in confidence
such Confidential Information to the same extent such Party maintains its own
proprietary industrial information of similar kind and value (but at a minimum
each Party shall use commercially reasonable efforts to maintain Confidential
Information in confidence); (ii) not disclose such Confidential Information to
any Third Party without prior written consent of the disclosing Party, except
for disclosures made in confidence to any Third Party pursuant to a plan
approved by the JCT or to its licensees or sublicensees who agree to be bound by
obligations of non-disclosure and non-use at least as stringent as those
contained in this Article 12; and (iii) not use such Confidential Information
for any purpose except those purposes expressly permitted by this Agreement.
12.2. AUTHORIZED DISCLOSURE. Notwithstanding any other provision of this
Agreement, each Party may disclose Confidential Information of the other Party:
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(a) to the extent and to the persons and entities required by
an applicable governmental law, rule or regulation or court order; PROVIDED,
HOWEVER, that the Party required to disclose Confidential Information shall
first have given prompt notice to the other Party hereto to enable it to seek
any available exemptions from or limitations on such disclosure requirement and
shall reasonably cooperate in such efforts by the other Party (in particular,
the Parties acknowledge that Cubist and/or Chiron may be obligated to file a
copy of this Agreement with the U.S. Securities and Exchange Commission with its
next quarterly report on Form 10-Q, annual report on Form 10-K or current report
on Form 8-K or with any registration statement filed with the U.S. Securities
and Exchange Commission (the "SEC") pursuant to the Securities Act of 1933, as
amended; in the event of any such filing, the Parties agree to cooperate and
work together to request confidential treatment pursuant to, and in accordance
with, the rules and regulations of the SEC);
(b) to the extent and to the persons and entities required
by rules of the National Association of Securities Dealers;
(c) as necessary to file or prosecute patent applications,
prosecute or defend litigation or otherwise establish rights or enforce
obligations under this Agreement, but only to the extent that any such
disclosure is necessary;
(d) as required by the Lilly License;
(e) to investigators, institutions, contract research
organizations, clinical research associates and Regulatory Authorities and the
like in connection with conducting clinical trials and obtaining authorizations
for same; or
(f) to Regulatory Authorities in connection with Drug Approval
Applications.
12.3. PUBLICITY. Subject to Section 11.2, any other publication, news
release or other public announcement relating to this Agreement or to the
performance hereunder, shall first be reviewed and approved by both Parties,
which approval shall not be unreasonably withheld.
ARTICLE 13.
TERM AND TERMINATION
13.1. TERM. This Agreement shall become effective on the Effective Date and
shall remain in effect until the earlier of (i) the effective date of the
termination of this Agreement pursuant to Section 13.2, 13.3 or 13.4 below, or
(ii) the expiration of the term of this Agreement on the date on which Chiron is
no longer obligated, pursuant to this Agreement, to make payment to Cubist of
any royalties in connection with sales of Licensed Products in the Territory. In
the event that the term of this Agreement expires pursuant to clause (ii) of
this Section 13.1, then the licenses granted by Cubist to Chiron, and any
licenses granted by Chiron to Cubist, pursuant to Article 2 and Section 8.10
shall survive such expiration and shall be fully paid-up, royalty-free,
perpetual and irrevocable licenses.
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13.2. TERMINATION FOR CONVENIENCE BY CHIRON. Chiron shall have, at any
time, the right to terminate this Agreement in its entirety upon [*] prior
written notice to Cubist. Chiron shall have, at any time, the right to terminate
this Agreement with respect only to one or more countries within the Territory
(but not more than [*] of all countries within the Territory in any [*] upon [*]
prior written notice to Cubist; PROVIDED, HOWEVER, that the foregoing right of
Chiron to terminate this Agreement on a country-by-country basis shall not apply
to any Major Market Country so as to permit Chiron to terminate this Agreement
with respect to any Major Market Country. Chiron's termination rights under this
Section 13.2 shall not apply on a Licensed Product-by-Licensed Product basis.
13.3. TERMINATION BY EITHER PARTY UPON BANKRUPTCY OR INSOLVENCY. This
Agreement may be terminated in its entirety by either Party by giving written
notice of termination to the other Party in the event that such other Party
files or institutes any bankruptcy, liquidation or receivership proceedings, or
in the event that such other Party makes an assignment of a substantial portion
of the assets of such other Party for the benefit of its creditors; PROVIDED,
HOWEVER, that, in the case of any involuntary bankruptcy proceeding such right
to terminate shall only become effective if such other Party consents to the
involuntary bankruptcy or such proceeding is not dismissed within [*] after the
filing thereof.
13.4. TERMINATION FOR BREACH.
(a) NOTICE. If either Party believes that the other is in material
breach of this Agreement with respect to one or more Licensed Products or if
Cubist believes that Chiron is in material breach of the Supply Agreement with
respect to one or more Licensed Products, then the Party holding such belief
(the "NON-BREACHING PARTY") may deliver notice of such breach to the other Party
(the "NOTIFIED PARTY"). A breach by Chiron of its diligence obligations under
Section 5.1 or under Section 6.1 hereof and a breach by Cubist of its obligation
under Section 4.1 hereof, except as specified otherwise, shall be deemed to be a
material breach of this Agreement by Chiron or Cubist, as the case may be. The
Notified Party shall have ninety (90) days to cure such breach, PROVIDED that,
if cure cannot be reasonably effected within such ninety (90) day period, the
Notified Party may elect to deliver to the Non-breaching Party within such
ninety (90) day period a plan to cure such breach within a timeframe that is
reasonably prompt in light of the circumstances then prevailing, and the
Non-breaching Party shall have the right to approve or reject in writing such
proposed plan in its absolute discretion. If the Non-breaching Party approves in
writing such proposed plan, then the cure period will be extended in accordance
with the terms of such plan and the Notified Party shall use Commercially
Reasonable Efforts to carry out such plan and cure the breach in accordance with
the provisions of such plan.
(b) FAILURE TO CURE. If the Notified Party fails to cure such
breach as provided for in Section 13.4(a), the Non-breaching Party may terminate
this Agreement either in its entirety or with respect to one or more Licensed
Products upon written notice to the Notified Party, PROVIDED THAT, the
Non-breaching Party gives such written notice of termination within [*] after
the Notified Party has failed to cure such breach as provided for in Section
13.4(a).
(c) DISPUTES. If a Party gives notice of termination under this
Section 13.4 and the other Party disputes whether such termination is proper
under this Section 13.4, then the issue of whether this Agreement may properly
be terminated upon expiration of the notice period
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(unless such breach is cured as provided in Section 13.4(a)) shall be resolved
in accordance with Article 14 (Dispute Resolution). If as a result of such
dispute resolution process it is determined that the notice of termination was
proper, then such termination shall be deemed to have been effective ninety (90)
days following the date of the notice of termination. If as a result of such
dispute resolution process it is determined that the notice of termination was
improper, then no termination shall have occurred and this Agreement shall
remain in effect.
(d) TERMINATION AS TO CERTAIN LICENSED PRODUCTS. Notwithstanding the
foregoing provisions of this Section 13.4, Cubist may exercise its right to
terminate the Agreement pursuant to this Section 13.4 with respect to one or
more particular Licensed Products as to which Chiron has breached its
obligations under this Agreement or the Supply Agreement, rather than with
respect to the entire Agreement, in which case the notice provided by Cubist
pursuant to Section 13.4(a) shall specify that the Agreement is being terminated
pursuant to this Section 13.4 only with respect to certain Licensed Products
listed in such notice. If Cubist makes such an election under this Section
13.4(d), then subsections (a) through (c) shall be deemed to refer to
termination of the Agreement only with respect to those Licensed Products set
forth in the notice provided pursuant to Section 13.4(a).
(e) RIGHT TO SELL. Notwithstanding anything expressed or implied in
this Agreement to the contrary, in the event that Cubist shall terminate this
Agreement in accordance with the provisions of this Section 13.4, Chiron shall,
notwithstanding any such termination, have the opportunity and right to sell,
assign, sublicense or otherwise transfer this Agreement and the Chiron Interest
to any Reasonable Buyer pursuant to, and in accordance with, the provisions of
Section 15.6 of this Agreement, PROVIDED that any such sale, assignment,
sublicense or other transfer is effected [*] after the expiration of the cure
period referred to in Section 13.4(a) or, in the event that there is a dispute
between the Parties as to whether Cubist's termination of this Agreement has
been proper, [*] after the resolution of such dispute pursuant to the provisions
of Article 14 hereof. Any such Reasonable Buyer shall acquire the Chiron
Interest free and clear of any breach by Chiron that led to the termination of
this Agreement and such Reasonable Buyer shall following such acquisition have
all of the rights and obligations that Chiron would have had under this
Agreement as if Chiron had not breached this Agreement and Cubist had not
terminated the Agreement. Any such sale, assignment, sublicense or other
transfer of the Chiron Interest to a Reasonable Buyer pursuant to this Section
13.4(e) shall not relieve or release Chiron from any liability that Chiron may
have to Cubist in connection with any breach that resulted in the exercise by
Cubist of its right to terminate this Agreement. Until the expiration of the [*]
referred to above in this Section 13.4(e), Chiron shall continue to perform in
accordance with the provisions of this Agreement and the Supply Agreement, and
shall be liable for, any and all obligations that accrue during such [*] under
this Agreement and the Supply Agreement. In the event that Chiron is unable to
consummate a sale, assignment, sublicense or other transfer of this Agreement
and the Chiron Interest within such [*], then all of Chiron's rights under this
Section 13.4(e) shall terminate and be of no further force or effect whatsoever
13.5. INTENTIONALLY OMITTED.
13.6. CONSEQUENCES OF TERMINATION.
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(a) If either Cubist or Chiron terminates this Agreement in its
entirety, or with respect to one or more Licensed Product(s), or with respect to
one or more countries, in each case pursuant to any provisions of this Article
13, then, subject to the right of Chiron to sell, assign, license or otherwise
transfer its rights, obligations and interests under this Agreement pursuant to
Section 13.4(e):
(i) The licenses granted by Cubist and Chiron under
Article 2 shall terminate (1) with respect to all Licensed Products and all
countries within the Territory if the Agreement has been terminated in its
entirety, or (2) with respect to those Licensed Products as to which Chiron or
Cubist has exercised termination rights, in which case the licenses granted by
Cubist and Chiron under Article 2 shall terminate with respect to such Licensed
Products for all countries in the Territory if Chiron or Cubist exercised
termination rights with respect to such Licensed Products in all countries in
the Territory or the licenses granted by Cubist and Chiron under Article 2 shall
terminate with respect to such Licensed Products only in certain countries
within the Territory if Chiron or Cubist exercised termination rights with
respect to such Licensed Products only in such countries within the Territory
but not the other countries within the Territory. For purposes of this
Agreement, the term "REVERTED PRODUCTS" shall mean those Licensed Products as to
which Cubist or Chiron exercise termination rights pursuant to this Article 13
(and could mean, in any particular context, all of the Licensed Products if this
Agreement is terminated in its entirety), and the term "REVERTED COUNTRY" shall
mean any country within the Territory as to which Cubist or Chiron exercise
termination rights pursuant to this Article 13 (and could mean, in any
particular context, all of the countries within the Territory if this Agreement
were terminated in its entirety or, with respect to any particular Licensed
Product, if Chiron's rights to such Licensed Product are terminated as to all
countries within the Territory).
(ii) Chiron shall discontinue making any representation
regarding its status as a licensee of or distributor for Cubist in all Reverted
Countries for all applicable Reverted Products, and shall cease conducting any
Commercialization activities in all Reverted Countries with respect to all
applicable Reverted Products.
(iii) As promptly as possible, Chiron shall transfer to
Cubist all Drug Approval Applications and Regulatory Approvals that Chiron holds
as of the time of any such termination for Reverted Products in all applicable
Reverted Countries. In such event, Chiron shall take all actions necessary to
effect such transfer of such Drug Approval Applications and Regulatory Approvals
to Cubist.
(iv) Promptly after any such termination, Chiron shall
execute any documents required in the reasonable opinion of Cubist (1) for
Cubist to be entered as a "registered user" or owner of the Cubist Marks in
connection with the Commercialization of the Reverted Products in those
applicable Reverted Countries in which Chiron was previously entered into as the
registered user, owner or registered licensee of the Cubist Marks pursuant to,
and in accordance with, the provisions of Section 8.10 hereof, or (2) for Chiron
to be removed as registered user or licensee of the Cubist Marks in connection
with the Commercialization of the Reverted Products in such applicable Reverted
Countries.
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(v) Chiron shall be responsible for payment of any
milestone payments that accrue to Cubist for any milestones achieved for any
Reverted Product(s) prior to the effective date of any such termination, but not
for any milestones achieved for any Reverted Product(s) after the effective date
of any such termination.
(b) In the event that this Agreement is terminated due to the
rejection of this Agreement by or on behalf of a Party under Section 365 of the
United States Bankruptcy Code (the "CODE"), all licenses and rights to licenses
granted under or pursuant to this Agreement by one Party to the other are, and
shall otherwise be deemed to be, for purposes of Section 365(n) of the Code,
licenses of rights to "intellectual property" as defined under Section
101(35A)of the Code. The Parties agree that the licensed Party, as a licensee of
such rights under this Agreement, shall retain and may fully exercise all of its
rights and elections under the Code.
13.7. SURVIVAL.
(a) Expiration or termination of this Agreement shall not relieve
the Parties of any liability hereunder which accrued, or which arose during or
relates to, any period prior to the effective date of such expiration or
termination, nor preclude either Party from pursuing all rights and remedies it
may have hereunder or at law or in equity with respect to any breach of this
Agreement prior to the effective date of such expiration or termination, nor
prejudice either Party's right to obtain performance of any obligation hereunder
which accrued, or which arose during or relates to, any period prior to the
effective date of such expiration or termination. The remedies provided in this
Article 13 are not exclusive of any other remedies a Party may have in law or
equity (it being understood that nothing in this sentence shall limit the scope
or application of any limitations on Chiron's remedies that may be expressly set
forth elsewhere in this Agreement, including Section 10.6 of this Agreement).
Upon any expiration of the term of this Agreement pursuant to clause (ii) of
Section 13.1 hereof, the following provisions of this Agreement shall survive
any such expiration: Articles 1, 10, 12, 14 and 15 and Sections 2.2, 2.3, 2.8,
4.6, 5.5, 8.2(c), 8.4, 8.7(a), 8.7(b), 8.8, 8.9, 8.10, 8.11, 11.1 and this 13.7,
and Sections 9.1, 9.2 and 9.3 (but Sections 9.1, 9.2 and 9.3 shall survive only
for purposes of making an indemnification claim in accordance with the
provisions of Article 10 with respect to a Third Party claim that arises from
any breach of Section 9.1, 9.2 or 9.3 and that relates to any period prior to
any such expiration of the term of this Agreement). In addition, the provisions
of Section 8.5 hereof shall survive the expiration of the term of this Agreement
pursuant to clause (ii) of Section 13.1 hereof so as to cover and apply to any
Third Party Infringement Claim that arises after such expiration and that is
based on infringement of a Knowable Patent.
(b) Notwithstanding expiration of this Agreement,
(i) Chiron shall not promote, sell or offer for sale
Licensed Products in any Cubist Patent Country;
(ii) Chiron shall require its distributors who sell
Chiron's Licensed Products to make a similar covenant;
(iii) Chiron shall require its sublicensees to make a similar
covenant; and
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(iv) Chiron shall not grant to any subcontractor or
sublicensee any rights that are broader in scope than the rights that Chiron has
at the time of such expiration.
"CUBIST PATENT COUNTRY" means any country in which there is an unexpired Cubist
Patent or Joint Patent which includes a valid and enforceable claim that covers
the Licensed Product sold by Chiron and in which Cubist or its licensees are
selling their own Licensed Products.
(c) Upon any termination of this Agreement pursuant to Sections
13.2, 13.3 or 13.4, the following provisions of this Agreement shall survive any
such termination: Articles 1, 10, 12, 14 and 15, and Sections 11.1, 13.4, 13.6
and this Section 13.7, and Sections 9.1, 9.2 and 9.3 (but Sections 9.1, 9.2 and
9.3 shall survive only for purposes of making an indemnification claim in
accordance with the provisions of Article 10 with respect to a Third Party claim
that arises from any breach of Section 9.1, 9.2 or 9.3 and that relates to any
period prior to any such termination of this Agreement).
ARTICLE 14.
DISPUTE RESOLUTION
14.1. DISPUTES. The Parties recognize that disputes as to certain matters
may from time to time arise during the term of this Agreement which relate to
either Party's rights and/or obligations hereunder. It is the objective of the
Parties to establish procedures to facilitate the resolution of disputes arising
under this Agreement in an expedient manner by mutual cooperation and without
resort to litigation. To accomplish this objective, the Parties agree to follow
the procedures set forth in this Section 14.1 if and when a dispute arises under
this Agreement. Business issues that are not contractual disputes arising under
this Agreement shall be discussed by the JCT at the request of either party. Any
contractual dispute arising under this Agreement shall be discussed first by the
JCT. In the event that the JCT is unable to resolve any such contractual dispute
within thirty (30) days after such contractual dispute is submitted to the JCT,
then any such contractual dispute shall, by either Party providing written
notice to the other Party, be referred to the respective chief executive
officers of the Parties for attempted resolution by good faith negotiations
within thirty (30) days after such notice is received. In the event that the
designated officers are not able to resolve such dispute within such thirty (30)
day period, and do not agree to extend the time period for resolving the
dispute, or if the terms and conditions of the resolution or settlement of the
dispute are breached, the dispute shall be submitted for mediation by a mutually
acceptable Third Party within thirty (30) days after expiration of the previous
thirty (30) day period, unless the Parties agree to extend the period for
submitting the contractual dispute for mediation. In the event that such
contractual dispute is not resolved within thirty (30) days after such
contractual dispute is submitted for mediation, unless the parties otherwise
agree to extend the time period for resolving the dispute, then such contractual
dispute shall be resolved by arbitration pursuant to the provisions of Section
14.2. Pending resolution of any dispute covered by this Section 14.1, both
Parties will continue their performance under this Agreement and the Supply
Agreement of any obligations (including, without limitation, payment
obligations) that are not the subject of such dispute.
14.2. ARBITRATION. If the dispute is not resolved pursuant to Section 14.1
above, then the Parties shall follow the procedures set forth below.
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(a) Any claim, dispute, or controversy arising out of or relating
to this Agreement that is not resolved in accordance with the provisions of
Section 14.1 and that the Parties agree to submit to binding arbitration
pursuant to this Section 14.2 will be submitted by the parties to arbitration
under rules then in effect ("ICC RULES") of the International Chamber of
Commerce ("ICC") in New York, New York U.S.A. as modified herein or by agreement
of the parties. Any such arbitration shall be conducted in New York, New York by
three (3) arbitrators. Each Party shall select one (1) arbitrator and such
arbitrators shall jointly appoint the third arbitrator who shall act as the
chairman. If either Party fails to appoint an arbitrator within thirty (30) days
of a request by the other Party, or if the arbitrators selected by the parties
cannot agree on a chairman within thirty (30) days after they have been
selected, then either Party may request the ICC to appoint such co-arbitrator
(for the non-responsive Party) or the chairman. Such appointment shall be
binding on the Parties. Each Party irrevocably and unconditionally (i) consents
to the jurisdiction of any such proceeding and waives any objection that it may
have to personal jurisdiction or the laying of venue of any such proceeding; and
(ii) knowingly and voluntarily waives its rights to have disputes tried and
adjudicated by a judge and jury except as otherwise expressly provided herein.
The Parties hereby agree to exercise their respective rights under the ICC Rules
to cause any arbitration proceeding under this Section 14.2(a) to be finalized
and a decision rendered by the arbitrators as soon as reasonably practicable but
in no event more than six (6) months after the commencement of such arbitration
proceeding. Without limiting the provisions of the preceding sentence, the
Parties will cooperate with each other in causing the arbitration to be held in
as efficient and expeditious a manner as practicable. Unless the Parties agree
otherwise, they shall be limited in their discovery to directly relevant
documents. Responses or objections to a document request shall be served twenty
(20) days after receipt of the request. The arbitrators shall resolve any
discovery disputes. Nothing herein shall prevent the Parties from settling any
dispute by mutual agreement at any time.
(b) Except as otherwise required by law, the Parties and the
arbitrator(s) shall maintain as confidential all information or documents
obtained during the arbitration process, including the resolution of the
dispute. The arbitration shall be conducted in English language.
(c) The arbitrator(s) shall not have the authority to award any
injunctive relief or to award exemplary or punitive damages, and the Parties
expressly waive any right to such damages. The arbitrator(s) shall have the
authority to award actual money damages (including interest on unpaid amounts
from the date due). The costs and expenses of the arbitration, but not the costs
and expenses of the Parties, shall be shared equally by the Parties, provided
that the non-prevailing Party in any arbitration shall pay the other Party's
costs and expenses (including travel expenses) and reimburse such Party for its
portion of the arbitration costs. In the event that neither Party wins totally,
reimbursement shall be made proportionally in accordance with the ICC Rules. Any
award rendered by the arbitrator(s) shall be final and binding upon the Parties.
Judgment upon the award may be entered in any court of competent jurisdiction.
If a Party fails to proceed with arbitration, unsuccessfully challenges the
arbitration award, or fails to comply with the arbitration award, the other
Party is entitled to costs, including reasonable attorneys' fees, for having to
compel arbitration or defend or enforce the award.
14.3. GOVERNING LAW; JUDICIAL RESOLUTION. Resolution of all disputes
arising out of or related to this Agreement or the performance, enforcement,
breach or termination of this Agreement and any remedies relating thereto, shall
be governed by and construed under the
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substantive laws of the United States of America and the State of New York, as
applied to Agreements executed and performed entirely in the State of New York
by residents of the State of New York, without regard to conflicts of law rules.
Any dispute arising under this Agreement shall be submitted to a state or
federal court of competent jurisdiction, except as otherwise expressly provided
in this Agreement.
14.4. EQUITABLE REMEDIES; INJUNCTIVE RELIEF. Nothing in this Article 14
shall prohibit either Party from seeking or obtaining any equitable remedy,
including, but not limited to, injunctive relief, from a court or government
agency of competent jurisdiction.
14.5. [*] If a dispute is submitted to arbitration in accordance with
Section 14.2 in connection with any alleged breach of this Agreement by [*],
PROVIDED HOWEVER, [*] pursuant to this Agreement [*] that relates to such
dispute. [*] after such dispute is submitted to arbitration [*] final
determination of the arbitration or upon mutual agreement of Cubist and Chiron.
14.6. INTEREST. All amounts owed by either Party to the other Party in
connection with any breach of this Agreement or the Supply Agreement shall bear
interest at the rate stipulated in Section 7.10 hereof for late payments.
ARTICLE 15.
MISCELLANEOUS
15.1. ENTIRE AGREEMENT; AMENDMENT. This Agreement, including the Exhibits
hereto, sets forth the complete, final and exclusive agreement and all the
covenants, promises, agreements, warranties, representations, conditions and
understandings between the Parties hereto and supersedes and terminates all
prior agreements and understandings between the Parties. There are no covenants,
promises, agreements, warranties, representations, conditions or understandings,
either oral or written, between the Parties other than as are set forth herein
and therein. No subsequent alteration, amendment, change or addition to this
Agreement shall be binding upon the Parties unless reduced to writing and signed
by an authorized officer of each Party.
15.2. FORCE MAJEURE. Both Parties shall be excused from the performance of
their obligations under this Agreement to the extent that such performance is
prevented by force majeure and the nonperforming Party promptly provides notice
of the prevention to the other Party. Such excuse shall be continued so long as
the condition constituting force majeure continues and the nonperforming Party
uses reasonable efforts to remove the condition. For purposes of this Agreement,
force majeure shall include conditions beyond the control of the parties, such
as an act of God, voluntary or involuntary compliance with any regulation, law
or order of any government, war, an act of terrorism, civil commotion, labor
strike or lock-out, epidemic, failure or default of public utilities or common
carriers, destruction of production facilities or materials by fire, earthquake,
storm or like catastrophe; PROVIDED, HOWEVER, the payment of invoices due and
owing hereunder shall not be delayed by the payer because of a force majeure
affecting the payer.
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15.3. NOTICES. Any notice required or permitted to be given under this
Agreement shall be in writing, shall specifically refer to this Agreement and
shall be deemed to have been sufficiently given for all purposes if mailed by
first class certified or registered mail, postage prepaid, express delivery
service or personally delivered, or if sent by facsimile, electronic
transmission confirmed. Unless otherwise specified in writing, the mailing
addresses of the Parties shall be as described below.
For Chiron: Chiron Healthcare Ireland Ltd.
United Drug House,
Belgard Road,
Tallaght, Dublin, Ireland
Fax: +353 (1) 458-5583
With a Copy to: Chiron Corporation
460 Horton Street
Emeryville, CA 94608
Fax: (510) 923-5360
Attention: General Counsel
For Chiron Corporation: Chiron Corporation
460 Horton Street
Emeryville, CA 94608
Fax: (510) 923-3823
Attention: President, BioPharmaceuticals
With a Copy to: Chiron Corporation
460 Horton Street
Emeryville, CA 94608
Fax: (510) 923-5360
Attention: General Counsel
For Cubist: Cubist Pharmaceuticals, Inc.
65 Hayden Avenue
Lexington, Massachusetts 02421
Attention: General Counsel
Fax: 781-860-1407
With a Copy to: Bingham McCutchen LLP
150 Federal Street
Boston, Massachusetts 02110
Attention: Julio E. Vega, Esq.
Fax: (617) 951-8736
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15.4. MAINTENANCE OF RECORDS. Each Party shall keep and maintain all
records required by law or regulation with respect to Licensed Products and
shall make copies of such records available to the other Party upon request.
15.5. NO STRICT CONSTRUCTION. This Agreement has been prepared jointly and
shall not be strictly construed against either Party.
15.6. ASSIGNMENT.
(a) ASSIGNMENT BY CUBIST. Cubist may sell, assign, sublicense or
otherwise transfer this Agreement, the Supply Agreement, all (or any portion) of
its rights under this Agreement or the Supply Agreement and/or all (or any
portion) of its obligations under this Agreement or the Supply Agreement to a
Third Party, without any requirement or condition that Chiron consent to any
such sale, assignment, sublicense or other transfer, PROVIDED that:
(i) (a) if and to the extent that Cubist sells,
assigns, sublicenses or transfers any of its obligations under this Agreement to
such Third Party, then Cubist also sells, assigns, sublicenses or transfers to
such Third Party any obligations of Cubist under the Supply Agreement that
correspond, without limitation, on a Licensed Product by Licensed Product basis,
or on a country by country basis, to the obligations of Cubist under this
Agreement that are being sold, assigned, sublicensed or transferred to such
Third Party by Cubist, and (B) if and to the extent that Cubist sells, assigns,
sublicenses or transfers any of its obligations under the Supply Agreement to
such Third Party, then Cubist also sells, assigns, sublicenses or transfers to
such Third Party any obligations of Cubist under this Agreement that correspond,
without limitation, on a Licensed Product by Licensed Product basis, or on a
country by country basis, to the obligations of Cubist under the Supply
Agreement that are being sold, assigned, sublicensed or transferred to such
Third Party by Cubist; and
(ii) such Third Party has expressly agreed in writing
to assume the performance of any and all obligations under this Agreement and
the Supply Agreement that Cubist sells, assigns, sublicenses or transfers to
such Third Party or is required to sell, assign, sublicense or transfer to such
Third Party pursuant to the provisions of this Section 15.6(a).
(b) ASSIGNMENT BY CHIRON. Notwithstanding any other provision in this
Agreement to the contrary, Chiron may not sell, assign, sublicense or otherwise
transfer this Agreement, the Supply Agreement or any of its rights or
obligations under this Agreement or the Supply Agreement without the prior
written consent of Cubist (which consent may be withheld or delayed by Cubist in
its absolute discretion), except for any sale, assignment, sublicense or other
transfer that is effected in strict compliance with the provisions set forth
below in this Section 15.6(b) and Section 15.6(c) which shall not require or be
conditioned upon any consent by Cubist to any such sale, assignment, sublicense
or other transfer. At any time from and after [*], Chiron may sell, assign,
sublicense or otherwise transfer this Agreement and the Supply Agreement and all
(but not less than all) of its rights and obligations under this Agreement and
the Supply Agreement (collectively, the "CHIRON INTEREST") to any Reasonable
Buyer without having to obtain the consent of Cubist to any such sale,
assignment, sublicense or other transfer; PROVIDED, HOWEVER, that (i) prior to
any such sale, assignment, sublicense or other transfer of the Chiron Interest,
such Reasonable Buyer has expressly agreed in writing to assume the
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performance of any and all obligations of Chiron under this Agreement and the
Supply Agreement, and (ii) Chiron shall have given Cubist at least [*] advance
notice of any such sale, assignment, sublicense or other transfer; and,
PROVIDED, further, that, if and to the extent applicable, all of the conditions
set forth in Section 15.6(c) below are satisfied. Notwithstanding the foregoing
provisions of this Section 15.6(b), in the event that Cubist enters into a
definitive agreement with any Third Party granting to such Third Party any
Commercialization rights with respect to any Licensed Product in the United
States, then at any time on or prior to [*] any such definitive agreement
between Cubist and such Third Party, Chiron may sell, assign, sublicense or
otherwise transfer the Chiron Interest to any Third Party without having to
obtain the consent of Cubist; PROVIDED, HOWEVER, that as a part of the
consummation of such sale, assignment, sublicense or other transfer of the
Chiron Interest, such Third Party has expressly agreed in writing to assume the
performance of any and all obligations of Chiron under this Agreement and the
Supply Agreement; and, PROVIDED, FURTHER, that, if and to the extent applicable,
all of the conditions set forth in Section 15.6(c) below are satisfied.
(c) RESTRICTIONS ON PAYMENTS. Notwithstanding any other provision in
this Section 15.6 to the contrary, Chiron's right to sell, assign, sublicense or
otherwise transfer its rights to the Chiron Interest to a Reasonable Buyer or
any other Third Party subject to, and in accordance with, Section 15.6(b)
without obtaining the consent of Cubist shall also be subject to the
requirements and conditions that (i) such sale, assignment, sublicense or other
transfer results in the transfer by Chiron of all of its then prospective
economic rights in and to the Chiron Interest to such Reasonable Buyer or other
Third Party, and (ii) in the event that any such sale, assignment, sublicense or
other transfer calls for royalty payments, earn-out payments, milestone-based or
performance-based payments or other payments of any kind to be made over time by
such Reasonable Buyer or other Third Party to Chiron, the agreement between
Chiron and such Reasonable Buyer or other Third Party shall stipulate a maximum
aggregate dollar amount of royalty payments, earn-out payments, milestone-based
or performance-based payments and/or other payments that such Reasonable Buyer
or other Third Party shall pay to Chiron in connection with such sale,
assignment, sublicense or other transfer of the Chiron Interest and shall also
stipulate that from and after the sixth anniversary of the closing of any such
sale, assignment, sublicense or other transfer such Reasonable Buyer or other
Third Party shall have no further obligation to make any payments of any kind or
pay any kind of consideration to Chiron in connection with such sale,
assignment, sublicense or other transfer of the Chiron Interest.
(d) INJUNCTIVE RELIEF. The Parties hereby acknowledge that Cubist
would suffer irreparable damage and injury in the event of any sale, assignment,
sublicense or other transfer by Chiron of the Chiron Interest to any Reasonable
Buyer or other Third Party if any such sale, assignment, sublicense or other
transfer would not be effected in compliance with the provisions of Section
15.6(b) and Section 15.6(c). Accordingly, it is the intent of the Parties that
in the event that Chiron attempts or is attempting to sell, assign, sublicense
or otherwise transfer the Chiron Interest without complying with all of the
provisions of Section 15.6(b) and Section 15.6(c), Cubist may, in addition to
any other remedies that Cubist may have at law, seek injunctive relief against
Chiron (and/or any proposed transferee to the extent Cubist may be so entitled
under applicable law) for the sole purpose of enforcing all of the provisions of
Section 15.6(b) and Section 15.6(c). In the event that Cubist brings any such
action for injunctive relief
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to enforce the provisions of Section 15.6(b) and Section 15.6(c), Chiron hereby
agrees to waive any defenses that Cubist has an adequate remedy at law and that
Cubist will not suffer irreparable harm, and also any requirement that Cubist
post any bond in connection with any such action for injunctive relief. For the
avoidance of doubt, other than the defenses and the requirement specifically
waived in the foregoing two sentences, nothing in this Section 15.6(d) shall be
construed to be a waiver by Chiron of any of its remaining defenses at law or in
equity.
15.7. PERFORMANCE BY AFFILIATES. Each of Cubist and Chiron acknowledge that
obligations under this Agreement may be performed by Affiliates of Cubist and
Chiron. Each of Cubist and Chiron guarantee performance of this Agreement by its
Affiliates. Wherever in this Agreement the Parties delegate responsibility to
Affiliates or local operating entities, the Parties agree that such entities may
not make decisions inconsistent with this Agreement, amend the terms of this
Agreement or act contrary to its terms in any way.
15.8. GUARANTY. Chiron Parent Company hereby unconditionally and
irrevocably guarantees, as primary obligor, to Cubist, the due and punctual
payment and performance as and when due of the obligations, responsibilities,
undertakings, representations, warranties, payment covenants, obligations and
agreements of Chiron and its Affiliates under this Agreement, the Supply
Agreement and any other agreement regarding Licensed Products.
15.9. COUNTERPARTS. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
15.10. FURTHER ACTIONS. Each Party agrees to execute, acknowledge and
deliver such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.
15.11. SEVERABILITY. If any one or more of the provisions of this Agreement
is held to be invalid or unenforceable by any court of competent jurisdiction
from which no appeal can be or is taken, the provision shall be considered
severed from this Agreement and shall not serve to invalidate any remaining
provisions hereof. The Parties shall make a good faith effort to replace any
invalid or unenforceable provision with a valid and enforceable one such that
the objectives contemplated by the Parties when entering this Agreement may be
realized.
15.12. HEADINGS. The headings for each article and section in this
Agreement have been inserted for convenience of reference only and are not
intended to limit or expand on the meaning of the language contained in the
particular article or section.
15.13. NO WAIVER. Any delay in enforcing a Party's rights under this
Agreement or any waiver as to a particular default or other matter shall not
constitute a waiver of such Party's rights to the future enforcement of its
rights under this Agreement, except with respect to an express written and
signed waiver relating to a particular matter for a particular period of time.
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IN WITNESS WHEREOF, the Parties have executed this License Agreement in
duplicate originals by their proper officers as of the Effective Date.
CUBIST PHARMACEUTICALS, INC. CHIRON HEALTHCARE IRELAND LTD.
By: /s/ Oliver S. Fetzer By: /s/ Craig A. Wheeler
---------------------------------- ------------------------------------
Title: Senior Vice President and Title: President,
Chief Business Officer Chiron Biopharmaceuticals
------------------------------- ---------------------------------
Date: October 2, 2003 Date: October 2, 2003
------------------------------- ---------------------------------
Agreed only as to Section 7.1(b)and (c)
and Section 15.8 by:
CHIRON CORPORATION
By: /s/ Craig A. Wheeler
-------------------------------------
Title: President,
Chiron Biopharmaceuticals
----------------------------------
Date: October 2, 2003
-----------------------------------
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EXHIBIT A
CUBIST MARKS
Mark Country Filing Application
Date Number
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[*]
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EXHIBIT B
CUBIST PATENTS
COUNTRY DOCKET APP DATE APP NO PUB DATE PUB NO SUB STAT. PAT NO. GRANT DT EXP DT
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[*]
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EXHIBIT C
PRIMARY DAPTOMYCIN MOLECULE
[GRAPHIC]
* CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED WITH THE
COMMISSION
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EXHIBIT D
REGIONS AND COUNTRIES OF THE TERRITORY
[*]
* CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED WITH THE
COMMISSION
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EXHIBIT E
CUBIST TECHNOLOGY LICENSED FROM THIRD PARTIES
[*].
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EXHIBIT F
LILLY PATENTS
COUNTRY DOCKET APP DATE APP NO PUB DATE PUB NO SUB STAT. PAT NO. GRANT DT EXP DT
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[*]
* CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED WITH THE
COMMISSION
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EXHIBIT G
INDS, NDAS AND DRUG APPROVAL APPLICATIONS
[*]
* CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED WITH THE
COMMISSION