COLLABORATION AGREEMENT

Collaboration Agreement

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ARIAD GENE THERAPEUTICS, INC | ARIAD PHARMACEUTICALS, INC | MERCK & CO, INC

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Title: COLLABORATION AGREEMENT
Governing Law: New York Date: 11/9/2007
Industry: Biotechnology and Drugs Law Firm: Mintz Levin Sector: Healthcare

Exhibit 10.1

COLLABORATION AGREEMENT

AMONG

ARIAD PHARMACEUTICALS, INC.

ARIAD GENE THERAPEUTICS, INC.

and

MERCK & CO., INC.

July 11, 2007

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

TABLE OF CONTENTS

Page

1 DEFINITIONS		5
2 ADMINISTRATION OF THE COLLABORATION		25
	2.1 Joint Steering Committee.	25
	2.2 Dispute Resolution	26
	2.3 Joint Commercialization Committee.	29
	2.4 Joint Manufacturing Committee.	32
	2.5 Alliance Managers.	34
	2.6 Appointment of JSC, JDC, JMC and JCC Members and Alliance Managers	35
3 DEVELOPMENT AND COMMERCIALIZATION OF PRODUCTS		35
	3.1 Implementation of Development Program.	35
	3.2 Identification of Back-up Compounds.	39
	3.3 Supply of Proprietary Materials	39
	3.4 Opt-Out Right; Limitations on Opt-Out.	40
	3.5 Product Commercialization.	41
	3.6 Supply of Products for Development and Commercialization	42
	3.7 Development and Commercialization Diligence	43
	3.8 Compliance	44
	3.9 Cooperation	44
	3.1 Exchange of Reports; Information; Updates.	44
	3.11 Product Recalls	47
	3.12 Reconciliation and Auditing of Development Costs.	47
	3.13 Co-Promotion Right.	49
	3.14 Labeling	50
4 PAYMENTS		50
	4.1 Upfront Fee	50
	4.2 Development Cost Advances	50
	4.3 Operating Income Payments.	51
	4.4 Milestone Payments.	52
	4.5 Payment of Royalties; Royalty Rates; Accounting and Records.	56
5 TREATMENT OF CONFIDENTIAL INFORMATION; PUBLICITY; NON-SOLICITATION.		61
	5.1 Confidentiality.	61

	5.2 Publicity	62
	5.3 Publications and Presentations	62
6 LICENSE GRANTS; EXCLUSIVITY; STANDSTILL AGREEMENT		63
	6.1 Licenses.	63
	6.2 Right to Sublicense.	66
	6.3 No Other Rights	67
	6.4 Exclusivity.	69
	6.5 Standstill Agreement.	69
7 INTELLECTUAL PROPERTY RIGHTS		69
	7.1 ARIAD Intellectual Property Rights	69
	7.2 MERCK Intellectual Property Rights	69
	7.3 Joint Technology Rights.	70
	7.4 Product Technology and Product Patent Rights	70
	7.5 Patent Coordinators	70
	7.6 Inventorship	70
8 FILING, PROSECUTION AND MAINTENANCE OF PATENT RIGHTS		70
	8.1 Patent Filing, Prosecution and Maintenance.	70
	8.2 Legal Actions.	72
	8.3 Trademark Prosecution and Registration.	74
9 TERM AND TERMINATION		75
	9.1 Term	75
	9.2 Termination	75
	9.3 Consequences of Termination of Agreement	77
	9.4 Surviving Provisions	79
10 REPRESENTATIONS AND WARRANTIES		79
	10.1 Mutual Representations and Warranties	79
	10.2 Additional Representations of ARIAD	80
11 INDEMNIFICATION		81
	11.1 Indemnification of MERCK by ARIAD	81
	11.2 Indemnification of ARIAD by MERCK	81
	11.3 Conditions to Indemnification	82
	11.4 Warranty Disclaimer	82
	11.5 Limited Liability	82

12 MISCELLANEOUS		83
	12.1 Arbitration	83
	12.2 Notices	84
	12.3 Governing Law	85
	12.4 Binding Effect	85
	12.5 Headings	85
	12.6 Counterparts	85
	12.7 Amendment; Waiver	85
	12.8 No Third Party Beneficiaries	86
	12.9 Purposes and Scope	86
	12.1 Assignment and Successors	86
	12.11 Force Majeure	86
	12.12 Interpretation	86
	12.13 Integration; Severability	87
	12.14 Further Assurances	87
	12.15 Authority of ARIAD Pharmaceuticals, Inc	87
	12.16 HSR Filing	87

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List of Exhibits and Schedules

Exhibit A	Form of Promissory Note
Schedule 1	Description of AP23573
Schedule 2	Licensed Patent Rights
Schedule 3	Calculation of Operating Income (Loss)
Schedule 4	Form of Press Release
Schedule 5	Material Terms to be Included in Form of Co-Promotion Agreement

COLLABORATION AGREEMENT

This COLLABORATION AGREEMENT (this “Agreement”) is entered into as of July 11, 2007 (the “Effective Date”), by and among ARIAD Pharmaceuticals, Inc. and ARIAD Gene Therapeutics, Inc., both Delaware corporations with offices at 26 Landsdowne Street, Cambridge, Massachusetts 02139 (collectively, “ARIAD”), and Merck & Co., Inc., a Corporation organized under the laws of New Jersey with offices at One Merck Drive, Whitehouse Station, NJ 08889-0100 (“MERCK”). Each of MERCK and ARIAD is sometimes referred to individually herein as a “Party” and collectively as the “Parties.”

WHEREAS, ARIAD has developed and controls certain technology and proprietary materials related to mTOR inhibitor compounds, including its proprietary compound AP23573; and

WHEREAS, MERCK is engaged in the research, development and commercialization of human therapeutics; and

WHEREAS, the Parties desire to enter into a collaboration for the purpose of developing and commercializing certain products containing or derived from such mTOR inhibitor compounds for the prevention, delay and treatment of certain cancer and, upon further agreement, non-cancer indications.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and for other good and valuable consideration, the Parties hereto, intending to be legally bound, hereby agree as follows:

1. DEFINITIONS

Whenever used in this Agreement with an initial capital letter, the terms defined in this Section 1 and in Schedule 3 attached hereto shall have the meanings specified.

1.1 “ AAA ” means the American Arbitration Association.

1.2 “ Achievement of Clinical Proof of Concept” means demonstration that a Collaboration Compound has efficacy in a Phase 1 and/or Phase 2 Clinical Trial, as evidenced by clinical endpoints and/or by validated Biomarkers(s) that are jointly agreed-upon by both Parties, and that provide a statistically significant indication of clinical efficacy.

1.3 “ Adverse Event ” means any unfavorable and unintended change in the structure (signs), function (symptoms), or chemistry (laboratory data), of the body temporally associated with the use of a Product, whether or not considered related to the use of the Product. Changes resulting from normal growth and development which do not vary significantly in frequency or severity from expected levels are not to be considered adverse experiences. Examples of changes that are not adverse events may include, but are not limited to, teething, typical crying in infants and children, and onset of menses or menopause occurring at a physiologically appropriate time.

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1.4 “ Affiliate ” means, with respect to any Person, any other Person that, directly or indirectly, controls, or is controlled by, or is under common control with, such Person. For purposes of this definition, “control” means (a) ownership of more than fifty percent (50%) of the shares of stock entitled to vote for the election of directors in the case of a corporation, or more than fifty percent (50%) of the equity interests in the case of any other type of legal entity, (b) status as a general partner in any partnership, or (c) any other arrangement whereby a Person controls or has the right to control the board of directors of a corporation or equivalent governing body of an entity other than a corporation.

1.5 “ Annual Global Development Plan ” means, with respect to each Product and Calendar Year, the written plan for the Development Program to be conducted for such Product for such Calendar Year, as such written plan may be amended, modified or updated in accordance with Section 3.1.2(b); provided, however, that the initial Annual Global Development Plan shall cover the period from the Effective Date through December 31, 2008.

1.6 “ Annual Net Sales ” means, with respect to any Calendar Year, the aggregate amount of the Net Sales for such Calendar Year.

1.7 “ AP23573 ” means the compound Controlled by ARIAD and described more fully on Schedule 1 attached hereto.

1.8 “ API ” means the active pharmaceutical ingredient known as AP23573 or any other Collaboration Compound being Developed and Commercialized hereunder.

1.9 “ Applicable Laws ” means any Federal, state, local, national and supra-national laws, statutes, rules and regulations, including any rules, regulations, guidance, guidelines or requirements of Regulatory Authorities, national securities exchanges or securities listing organizations, that are in effect from time to time during the Term and applicable to a particular activity hereunder.

1.10 “ ARIAD Background Technology ” means any Technology that is used by ARIAD, or provided by ARIAD for use, in the Development Program and that is (a) Controlled by ARIAD as of the Effective Date, or (b) conceived or first reduced to practice by employees of, or consultants to, ARIAD after the Effective Date other than in the conduct of ARIAD Development Activities and without the use, in any material respect, of any MERCK Technology, MERCK Patent Rights or MERCK Materials. For purposes of clarity, ARIAD Background Technology shall not include ARIAD Program Technology, Program Biomarker Technology or ARIAD’s interest in Joint Technology.

1.11 “ ARIAD Co-Development Percentage ” means (a) except with respect to any Cancer Indication for which ARIAD exercises an Opt-Out Right, fifty percent (50%), and (b) with respect to any Cancer Indication for which ARIAD exercises an Opt-Out Right, zero percent (0%).

1.12 “ ARIAD Decision ” means any decision with respect to the Development and/or Commercialization (other than Manufacturing) of a Product for [***] in the U.S. Territory other than Pricing, Development and Commercialization budgets or global Branding, or (iii) the commencement and prosecution of actions to address [***] in the U.S. Territory unless a U.S. Commercialization Transfer has occurred.

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1.13 “ ARIAD Development Activities ” means the Development activities specified to be conducted by ARIAD in any Annual Global Development Plan (or amendment thereto).

1.14 “ ARIAD Materials ” means any Proprietary Materials that are Controlled by ARIAD and used by ARIAD, or provided by ARIAD for use, in the Development Program.

1.15 “ ARIAD Patent Rights ” means any Patent Rights that contain one or more claims that cover ARIAD Technology. For purposes of clarity, ARIAD Patent Rights includes all Licensed Patent Rights and all ARIAD Program Patent Rights.

1.16 “ ARIAD Program Patent Rights ” means any Patent Rights Controlled by ARIAD that contain one or more claims that cover ARIAD Program Technology.

1.17 “ ARIAD Program Technology ” means (a) any Product Technology, and (b) any Program Technology other than Product Use Technology that is conceived or first reduced to practice by employees of, or consultants to, ARIAD, alone or jointly with any Third Party, without the use, in any material respect, of any MERCK Technology, MERCK Patent Rights, MERCK Materials or Joint Technology.

1.18 “ ARIAD Revenue Sharing Percentage ” means the percentage obtained by subtracting MERCK Revenue Sharing Percentage from one hundred percent.

1.19 “ ARIAD Technology ” means, collectively, ARIAD Background Technology and ARIAD Program Technology.

1.20 “ Back-Up Compound ” means any Rapamycin Derived mTOR Inhibitor within the claims of [***] or any other Rapamycin Derived mTOR Inhibitor discovered by ARIAD, or jointly by ARIAD and MERCK, and covered by a patent application filed by ARIAD and/or MERCK, in either case that is designated by the JSC for further Development as a Back-Up Compound pursuant to Section 3.2.

1.21 “ Biomarker ” means a specific protein, protein isoform, nucleic acid sequence, gene expression profile, single nucleotide polymorphism profile, microRNA profile, genomic alteration profile, metabolite, metabolic profile and/or other molecular feature, alone or in combination, the presence or level of which correlates with and/or predicts (a) the inhibition or activation of mTOR or the mTOR pathway, (b) the performance characteristics (including, without limitation, safety, efficacy and tolerability) of a Collaboration Compound, alone or in combination with other treatments, (c) the severity, characteristics or prognosis of a human condition or disease, or (d) the responsiveness of patients to a treatment or combination of treatments.

1.22 “ Biomarker Information ” means any data, information or know-how that pertains to Biomarkers and that is discovered, created, or developed (i) in the Development Program, including as a result of any pre-clinical, non-clinical or clinical testing of a Collaboration Compound in cells, animals or humans, including testing of a biological material (such as fluid, tissue or tumor samples, (ii) with the use of any biological materials, data or information developed in or resulting from the Development Program or otherwise funded by the Parties in the Collaboration, or (iii) with the use of any Biomarker Information described in the preceding clauses (i) or (ii).

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1.23 “ Branding ” means determining all matters relating to branding of any Product, including without limitation, brand names, product logos, branding colors, positioning and key messages to be incorporated in promotional materials.

1.24 “ Calendar Quarter ” means the period beginning on the Effective Date and ending on the last day of the calendar quarter in which the Effective Date falls, and thereafter each successive period of three (3) consecutive calendar months ending on March 31, June 30, September 30 or December 31.

1.25 “ Calendar Year ” means each successive period of twelve (12) months commencing on January 1 and ending on December 31.

1.26 “ Cancer Indication ” means any Sarcoma Indication, Major Cancer Indication, or Other Cancer Indication.

1.27 “ Challenge ” means any challenge to the validity or enforceability of any of the ARIAD Patent Rights, including without limitation by (a) filing a declaratory judgment action in which any of the ARIAD Patent Rights is alleged to be invalid or unenforceable; (b) citing prior art pursuant to 35 U.S.C. §301, filing a request for re-examination of any of the ARIAD Patent Rights pursuant to 35 U.S.C. §302 and/or §311, or provoking or becoming a party to an interference with an application for any of the ARIAD Patent Rights pursuant to 35 U.S.C. §135; or (c) filing or commencing any re-examination, opposition, cancellation, nullity or similar proceedings against any of the ARIAD Patent Rights in any country.

1.28 “ Clinical Product ” means Product, in the form appropriate for a particular use, for use by MERCK and ARIAD and their Affiliates and sublicensees in Clinical Trials, the Development Program or for other non-commercial purposes.

1.29 “ Clinical Product Transfer ” shall have the meaning set forth in the Supply Agreement.

1.30 “ Clinical Trial ” means a clinical study of a Product involving the administration of Product to patients for any Indication, and includes any Phase 1 Clinical Trial, Phase 2 Clinical Trial, Phase 3 Clinical Trial, Phase 4 Clinical Trial and Phase 5 Clinical Trial as applicable.

1.31 “ Clinical Trial Proposal ” means a proposal submitted by either Party at any time on and after the date of Completion of a Phase 1 Clinical Trial and after Achievement of Clinical Proof of Concept involving a Product that describes in reasonable detail the proposed Late Stage Clinical Trial to be incorporated into the Development Program and which includes a final protocol, analysis plan and detailed synopsis for such Late Stage Clinical Trial and is designed to obtain Commercialization Regulatory Approval for such Product for a Major Cancer Indication or Other Cancer Indication (including, without limitation, an estimated budget and timeline with respect thereto).

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1.32 “ Collaboration ” means the alliance of ARIAD and MERCK established pursuant to this Agreement for the purposes of Developing Products and Commercializing Products in the Field in the Territory.

1.33 “ Collaboration Compounds ” means, collectively, (a) AP23573, and (b) any Back-Up Compounds.

1.34 “ Commercially Reasonable Efforts ” means, with respect to activities of a Party in the Development or the Commercialization of a particular Product, the efforts and resources typically used by that Party (or if the Party does not engage in that activity for other products or compounds, by biotechnology and/or pharmaceutical companies that are similar in size) in the development of product candidates or the commercialization of products of comparable market potential, taking into account all relevant factors including, as applicable and without limitation, stage of development, mechanism of action, efficacy and safety relative to competitive products in the marketplace, actual or anticipated Regulatory Authority approved labeling, the nature and extent of market exclusivity (including patent coverage and regulatory exclusivity), cost and likelihood of obtaining Commercialization Regulatory Approval, and actual or projected profitability. Commercially Reasonable Efforts shall be determined on a market-by-market and indication-by-indication basis for a particular Product, and it is anticipated that the level of effort will be different for different markets, and will change over time, reflecting changes in the status of the Product and the market(s) involved.

1.35 “ Commercialization ” or “ Commercialize ” means any and all activities directed to the offering for sale and sale of a Product, both before and after Commercialization Regulatory Approval has been obtained, including activities related to marketing, promoting, Detailing, distributing, Manufacturing (other than Manufacturing Development or Manufacturing for use in Development), importing, selling and offering to sell Product and/or conducting post-marketing human clinical studies (including Phase 5 Clinical Trials) with respect to any Targeted Indication with respect to which Commercialization Regulatory Approval has been received or for a use that is subject of an investigator-initiated study program, and interacting with Regulatory Authorities regarding the foregoing. When used as a verb, “to Commercialize” and “Commercializing” means to engage in Commercialization and “Commercialized” has a corresponding meaning.

1.36 “ Commercialization Regulatory Approval ” means, with respect to any Product, the Regulatory Approval required by Applicable Laws to sell such Product for use for an Indication in the Field in a country or region in the Territory, as well as, to the extent applicable, pricing approvals and government reimbursement approvals, even if not legally required to sell Product in a country . For purposes of clarity, (a) “Commercialization Regulatory Approval” in the United States shall mean final approval of an NDA or sNDA permitting marketing of the applicable Product in interstate commerce in the United States; (b) “Commercialization Regulatory Approval” in the European Union shall mean marketing authorization for the applicable Product granted either by a Regulatory Authority in any Major European Country or by the EMEA pursuant to Council Directive 2001/83/EC, as amended, or Council Regulation 2309/93/EEC, as amended, together with the first pricing approval and government reimbursement approval for the applicable Product granted by a Regulatory Authority in any Major European Country or by the EMEA, as the case may be; and (c) “Commercialization Regulatory Approval” in Japan shall mean final approval of an application submitted to the Ministry of Health, Labor and Welfare and the publication of a New Drug Approval Information Package permitting marketing of the applicable Product in Japan, together with pricing approval and government reimbursement approval, as any of the foregoing may be amended from time to time.

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1.37 “ Completion ” means, with respect to a Clinical Trial conducted by a Party, the date on which all material data reasonably expected to be derived therefrom has been generated and the final study report with respect thereto has been finalized.

1.38 “ Confidential Information ” means (a) with respect to ARIAD, all tangible embodiments of ARIAD Technology, (b) with respect to MERCK, all tangible embodiments of MERCK Technology and (c) with respect to each Party, (i) all tangible embodiments of Joint Technology and (ii) all information, Technology and Proprietary Materials disclosed or provided by or on behalf of such Party (the “disclosing Party”) to the other Party (the “receiving Party”) or to any of the receiving Party’s employees, consultants, Affiliates or sublicensees; provided, that, none of the foregoing shall be Confidential Information if: (A) as of the date of disclosure, it is known to the receiving Party or its Affiliates as demonstrated by contemporaneous credible written documentation, other than by virtue of a prior confidential disclosure to such receiving Party; (B) as of the date of disclosure it is in the public domain, or it subsequently enters the public domain through no fault of the receiving Party; (C) it is obtained by the receiving Party from a Third Party having a lawful right to make such disclosure free from any obligation of confidentiality to the disclosing Party; or (D) it is independently developed by or for the receiving Party without reference to or use of any Confidential Information of the disclosing Party as demonstrated by contemporaneous credible written documentation. For purposes of clarity, unless excluded from Confidential Information pursuant to the proviso at the end of the preceding sentence, any scientific, technical, manufacturing or financial information of a Party that is disclosed at any meeting of the JSC, the JDC, the JMC or the JCC or disclosed through an audit report shall constitute Confidential Information of the disclosing Party.

1.39 “ Contract Year ” means (a) the period beginning on the Effective Date and ending on the first anniversary of the last day of the calendar month in which the Effective Date falls, and (b) each succeeding twelve (12) month period thereafter.

1.40 “ Control ” or “ Controlled ” means (a) with respect to Technology (other than Proprietary Materials) or Patent Rights, the possession by a Party of the right to grant a license or sublicense to such Technology or Patent Rights as provided herein without the payment of additional consideration to, and without violating the terms of any agreement or arrangement with, any Third Party and without violating any Applicable Laws and (b) with respect to Proprietary Materials, the possession by a Party of the right to supply such Proprietary Materials to the other Party as provided herein without the payment of additional consideration to, and without violating the terms of any agreement or arrangement with, any Third Party and without violating any Applicable Laws.

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1.41 “ Co-Promoted Product ” means any quantity of Product that is not Royalty-Bearing Product.

1.42 “ Co-Promotion ” or “ Co-Promote ” means, with respect to each Co-Promoted Product, the joint promotion and Detailing of such Co-Promoted Product under the same Product Trademark in the Co-Promotion Territory using a coordinated field sales force consisting of Representatives of both MERCK and ARIAD.

1.43 “ Co-Promotion Percentage ” means, with respect to any Co-Promoted Product, the percentage of Detailing efforts to be provided by each Party in Co-Promoting such Co-Promoted Product, as determined by the JCC pursuant to Section 2.3.4(o); provided, that, under no circumstances shall the Co-Promotion Percentage of either Party be less than [***] percent ([***]%).

1.44 “ Detail ” means with respect to a Co-Promoted Product, an interactive, personal, live, contact of a Representative within the Co-Promotion Territory with a medical professional with prescribing authority or other individuals or entities that have a significant impact or influence on prescribing decisions, in an effort to increase physician prescribing preferences of such Co-Promoted Product for its approved uses within the Co-Promotion Territory. When used as an adjective, “Detailing” means of or related to performing Details.

1.45 “ Development ” or “ Develop ” means, with respect to each Product, (i) all non-clinical and clinical activities designed to obtain Regulatory Approval of such Product in accordance with this Agreement up to and including the obtaining of Commercialization Regulatory Approval of such Product, including without limitation, Phase 4 Clinical Trials, the development of Biomarkers, Biomarker Information and Program Biomarker Technology, regulatory toxicology studies, DMPK studies, statistical analysis and report writing, Clinical Trial design and operations, preparing and filing Drug Approval Applications, and all regulatory affairs related to the foregoing; and (ii) Manufacturing Development. When used as a verb, “Developing” means to engage in Development and “Developed” has a corresponding meaning.

1.46 “ Development Costs ” means the reasonable out-of-pocket costs and internal costs incurred by a Party (or for its account by an Affiliate or a Third Party) after the Effective Date that are generally consistent with the respective Development and Manufacturing Development activities of such Party in the applicable Annual Global Development Plan and are attributable to the Development of a Product. For purposes of this definition (a) out-of-pocket costs means the actual amounts paid to a Third Party for specific external Development activities applicable to a Product, including, without limitation all filing fees required for and other costs associated with, any Regulatory Filings and all patent expenses applicable to a Product; (b) internal costs means the applicable FTE Rate multiplied by the number of FTE hours utilized in the relevant period on activities directly relating to Development in accordance with the Annual Global Development Plan; and (c) the reasonable out-of-pocket and internal costs shall include the cost of Manufacturing or obtaining Collaboration Compounds or Products or raw materials or intermediates therefore for use in the activities in clause (a) or (b). For the avoidance of doubt, Development Costs shall include the costs incurred by either Party (i) in conducting Clinical Trials other than Phase 5 Clinical Trials with respect to a Product, including, without limitation, all costs incurred with respect to the initial Phase 3 Clinical Trial for a Sarcoma Indication, and (ii) the cost of acquisition of raw materials, intermediates, AP23573 and Product on hand or ordered and paid for by ARIAD as of the Effective Date that are to be used in the Development Program. Notwithstanding the above, costs incurred before the Effective Date with respect to the initial Phase 3 Clinical Trial for a Sarcoma Indication shall be included in Development Costs.

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1.47 “ Development Program ” means, with respect to each Product, the Development program (including the Manufacturing Development program) to be conducted by the Parties during the Term with respect to such Product pursuant to the Annual Global Development Plans.

1.48 “Diagnostic Product” means a product or kit using Biomarker Information or Program Biomarker Technology which is developed by or on behalf of the Parties and intended to be commercialized to test, identify, diagnose, screen or monitor a human condition or disease, or to predict or evaluate the responsiveness of a patient to treatment or a combination of treatments, other than in the Excluded Uses.

1.49 “ Dimerizer ” means a bivalent small-molecule compound used to bring into proximity two engineered fusion proteins.

1.50 “ Drug Approval Application ” means, with respect to each Product in a particular country or region, an application for Commercialization Regulatory Approval for such Product in such country or region, including without limitation: (a) an NDA or sNDA; (b) a counterpart of an NDA or sNDA in any country or region in the Territory; and (c) all supplements and amendments to any of the foregoing.

1.51 “ DMF ” shall mean a Drug Master File maintained with the FDA or its equivalent maintained with a Regulatory Authority in other countries within the Territory.

1.52 “ Effective Date ” means the date set forth in the first recital above.

1.53 “ European Union ” means all countries that comprise the European Union (whether on the Effective Date or at any time during the Term).

1.54 “ Excluded Uses ” means the use of any Product (a) in a stent or other Medical Device for which ARIAD has granted, or may hereafter grant, rights to a third Party or (b) as a Dimerizer for use in gene therapy, cell therapy or vaccines.

1.55 “ FDA ” means the United States Food and Drug Administration or any successor agency or authority thereto.

1.56 “ FDCA ” means the United States Federal Food, Drug, and Cosmetic Act, as amended.

1.57 “ Field ” means all uses, including without limitation the treatment, delay or prevention in humans of all Targeted Indications, other than the Excluded Uses.

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1.58 “ First Commercial Sale ” means, with respect to a Product in a country in the Territory, the first sale, transfer or disposition for value to an end user of such Product in such country; provided that any sale to an Affiliate or Sublicensee will not constitute a First Commercial Sale unless the Affiliate or Sublicensee is the last entity in the distribution chain of the Product; and provided further that any sale on a cost reimbursement basis for use in a Clinical Trial or other distribution for use in a Clinical Trial will not constitute a First Commercial Sale.

1.59 “ Force Majeure ” means any occurrence beyond the reasonable control of a Party that (a) prevents or substantially interferes with the performance by such Party of any of its obligations hereunder and (b) occurs by reason of any act of God, flood, fire, explosion, earthquake, strike, lockout, labor dispute, casualty or accident, or war, revolution, civil commotion, act of terrorism, blockage or embargo, or any injunction, law, order, proclamation, regulation, ordinance, demand or requirement of any government or of any subdivision, authority or representative of any such government.

1.60 “ FTE ” shall mean [***] ([***]) hours of work devoted to or in support of Development or Commercialization of Products in accordance with an Annual Global Development Plan or Product Commercialization Plan that is carried out by one or more employees, contract personnel or consultants of a Party (other than field sales force personnel), measured in accordance with such Party’s normal time allocation practices from time to time. In no event shall an individual account for more than one FTE year in any Calendar Year.

1.61 “ FTE Cost ” means, for any period, the FTE Rate multiplied by the number of FTEs in such period.

1.62 “ FTE Rate ” means a rate of [***] dollars ($ [***]) per FTE per annum for personnel engaged in Development. The FTE Rate shall be adjusted annually for each Calendar Year after 2008 to be equal to the FTE Rate for the previous Calendar Year plus a percentage increase equal to the [***], since the Effective Date, or if later, since the date of the last adjustment.

1.63 “ GAAP ” means United States generally accepted accounting principles, consistently applied.

1.64 “ GLP ” means the then current Good Laboratory Practice Standards promulgated or endorsed by the FDA or in the case of foreign jurisdictions, comparable regulatory standards promulgated or endorsed by the applicable Regulatory Authority, including those procedures expressed in or contemplated by any Regulatory Filings.

1.65 “ GMP " means current Good Manufacturing Practices that apply to the Manufacture of API and Clinical Product, including, without limitation, the United States regulations set forth under Title 21 of the United States Code of Federal Regulations, parts 210, 211 and 600-680, as may be amended from time-to-time, as well as all applicable guidance published by the FDA from time-to-time . The Parties may agree to change this definition in the Supply Agreement .

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1.66 “ Hatch-Waxman Act ” means the Drug Price Competition and Patent Term Restoration Act of 1984, as amended.

1.67 “ HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

1.68 “ IND ” means: (a) an Investigational New Drug Application as defined in the FDCA and regulations promulgated thereunder or any successor application or procedure required to initiate clinical testing of a Product in humans in the United States; (b) a counterpart of an Investigational New Drug Application that is required in any other country or region in the Territory before beginning clinical testing of a Product in humans in such country or region; and (c) all supplements and amendments to any of the foregoing.

1.69 “ Indication ” means any human disease or condition in the Field which can be treated, prevented, cured or the progression of which can be delayed.

1.70 “ Initiation ” means, with respect to a human Clinical Trial, the first date that a subject or patient is dosed in such Clinical Trial.

1.71 “ Joint Commercialization Committee ” or “ JCC ” means the committee comprised of ARIAD and MERCK representatives established pursuant to Section 2.3.

1.72 “ Joint Development Committee ” or “ JDC ” means the committee composed of ARIAD and MERCK representatives established pursuant to Section 2.2.

1.73 “ Joint Manufacturing Committee ” or “ JMC ” means the committee composed of ARIAD and MERCK representatives established pursuant to Section 2.4 of this Agreement and the Supply Agreement.

1.74 “ Joint Patent Rights ” means Patent Rights that contain one or more claims that cover Joint Technology.

1.75 “ Joint Steering Committee ” or “ JSC ” means the committee composed of ARIAD and MERCK representatives established pursuant to Section 2.1.

1.76 “ Joint Technology ” means (i) any Program Technology, other than Product Technology, that is (a) jointly conceived or reduced to practice by one or more employees of or consultants to MERCK and one or more employees of or consultants to ARIAD or (b) conceived or first reduced to practice solely by one or more employees of, or consultants to, a Party resulting from the use in any material respect of (i) any Technology, Patent Rights or Proprietary Materials Controlled by the other Party and/or (ii) any Product Use Technology; provided however, that the use by a Party of fluid, tissue or tumor samples or data collected by either Party in the Development Program in the discovery or development of Biomarker Information or Biomarkers or otherwise other than used in connection with Biomarkers for use with mTOR Inhibitors shall not cause such Biomarker Information or Biomarkers or other inventions to be Joint Technology. For clarity, Biomarkers for use with mTOR Inhibitors discovered or developed as a result of the use by a Party of fluid, tissue or tumor samples or data collected by either Party in the Development Program shall be Joint Technology.

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1.77 “ Knowledge ” or “ Known ” means, with respect to ARIAD, [***] of ARIAD.

1.78 “ Late Stage Clinical Trials ” means, with respect to any Product for any Cancer Indication, a Phase 2 Clinical Trial and/or a Phase 3 Clinical Trial or a combined Phase 2 and Phase 3 Clinical Trial, in each case for registration.

1.79 “ Launch ” means, with respect to a Product in a country, First Commercial Sale of Product in the country after approval of an NDA or equivalent in such country.

1.80 “ LIBOR Rate ” means, for any applicable interest period, the rate per annum equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or, if Reuters does not publish quotations of BBA LIBOR, another commercially available source providing quotations of BBA LIBOR as selected by agreement of the Parties) at approximately 11:00 a.m. London time two (2) London Banking Days before the commencement of the interest period, for U.S. Dollar deposits (for delivery on the first day of such interest period) with a term equivalent to such interest period. If such rate is not available at such time for any reason, then the rate for that interest period will be determined by such alternate method as reasonably selected by agreement of the Parties. A “London Banking Day” is a day on which banks in London are open for business and dealing in offshore dollars.

1.81 “ Licensed Patent Rights ” means any ARIAD Patent Rights and ARIAD’s interest in Joint Patent Rights that (a) contain one or more claims that cover any Product (including its Manufacture or its formulation or a method of its delivery or of its use); and (b) are necessary for MERCK to exercise the licenses granted to it pursuant to Sections 6.1.1(a) and (b). For purposes of clarity, the Licensed Patent Rights existing as of the Effective Date include, without limitation, the Patent Rights listed on Schedule 2 attached hereto.

1.82 “ Licensed Technology ” means any ARIAD Technology and ARIAD’s interest in Joint Technology that (a) relates to any Product (including its Manufacture or its formulation or a method of its delivery or of its use) and (b) is necessary for MERCK to exercise the licenses granted to it pursuant to Sections 6.1.1(a) and (b) and the rights and obligations of MERCK under the Supply Agreement.

1.83 “ Major Cancer Indication ” means, collectively, breast cancer, prostate cancer, colon cancer and non-small cell lung cancer.

1.84 “ Major European Country ” means each of the United Kingdom, France, Germany, Italy or Spain.

1.85 "Manufacture ” or “ Manufacturing ” or “ Manufactured " shall mean all operations involved in the manufacture, receipt, incoming inspections, storage and handling of Materials, and the manufacture, processing, fermentation, purification, formulation packaging, labeling, warehousing, quality control testing (including in-process release and stability testing), shipping and release of API or Product; as the case may be, provided that the Parties may agree to change such definition in the Supply Agreement .

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1.86 “ Manufacturing Cost ” shall mean, with respect to Clinical Product supplied by ARIAD prior to the execution of the Supply Agreement and the completion of Clinical Product Transfer, the sum of (a) all charges incurred by ARIAD for outsourcing the Manufacture of the Clinical Product (including API or any other intermediate thereof), (b) the cost of supervising and managing the toll manufacturers, and of receipt, incoming inspections, storage, packaging, handling, labeling warehousing, quality control testing and release of API and Clinical Product, and (c) [***] to the costs in (a) and (b) to cover an allocation of departmental overhead and general and administrative costs. The Parties may agree to change this definition in the Supply Agreement .

1.87 “Manufacturing Development ” means, with respect to API or Product, all activities related to the optimization of a commercial-grade Manufacturing process for the Manufacture of API or Product including, without limitation, test method development and stability testing, formulation, validation, productivity, trouble shooting and second generation formulation, process development, Manufacturing scale-up, strain improvements, development-stage Manufacturing, and quality assurance/quality control development.

1.88 “ Marketed Product ” shall have the meaning set forth in the Supply Agreement.

1.89 " Materials " shall mean all raw materials, including without limitation, API, excipients, components, containers, labels and packaging materials necessary for the Manufacture of API, Clinical Product or Marketed Product. For the avoidance of doubt, Materials shall not include API with respect to the Manufacture of API by ARIAD. It is agreed that the Parties may agree to change the definition of Materials in the Supply Agreement.

1.90 “ Medical Device ” means any device implanted permanently inside a blood vessel of a patient to release any formulation of a drug to the local area of treatment aimed at treatment of any structural abnormality or functional impairment of blood vessels which results from a medical condition other than cancer, excluding any device which (i) infuses or systemically delivers a drug into the blood, (ii) delivers a separately packaged drug (e.g., in a bottle) to the local area of treatment in the blood vessel, or (iii) delivers a drug from a reservoir or chamber packaged with or incorporated in such device to the local area of treatment in the blood vessel. For clarity, any device for the treatment, prevention or delay of cancer will not be a Medical Device.

1.91 “ MERCK Background Technology ” means any Technology that is used by MERCK, or provided by MERCK for use, in the Development Program and that is (a) Controlled by MERCK as of the Effective Date, or (b) conceived or first reduced to practice by employees of, or consultants to, MERCK after the Effective Date other than in the conduct of MERCK Development Activities and without the use in any material respect of any ARIAD Technology, ARIAD Patent Rights or ARIAD Materials. For purposes of clarity, MERCK Background Technology shall not include MERCK Program Technology, Program Biomarker Technology or MERCK’s interest in Joint Technology.

1.92 “ MERCK Co-Development Percentage ” means (a) except with respect to any Cancer Indication for which MERCK exercises an Opt-Out Right, fifty percent (50%), and (b) with respect to any Cancer Indication for which MERCK exercises an Opt-Out Right, zero percent (0%).

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1.93 “ MERCK Decision ” means any decision with respect to (i) the Development (other than Manufacturing Development) and/or Commercialization of a Product for [***] in the ROW Territory, or (ii) the commencement and prosecution of actions to address [***] in the ROW Territory or, if a U.S. Commercialization Transfer has occurred, the U.S. Territory.

1.94 “ MERCK Development Activities ” means the Development activities specified to be conducted by MERCK in any Annual Global Development Plan (or amendment thereto).

1.95 “ MERCK Materials ” means any Proprietary Materials that are Controlled by MERCK and used by MERCK, or provided by MERCK for use, in the Development Program.

1.96 “ MERCK Patent Rights ” means any Patent Rights Controlled by MERCK that contain one or more claims that cover MERCK Technology.

1.97 “ MERCK ROW Product Commercialization Plan ” means, with respect to each Product, the written Product Commercialization Plan for the Commercialization of such Product by MERCK in the ROW Territory.

1.98 “ MERCK Program Patent Rights ” means any Patent Rights that contain one or more claims that cover MERCK Program Technology.

1.99 “ MERCK Program Technology ” means any Program Technology, other than Product Technology and Product Use Technology that is conceived or first reduced to practice by employees of, or consultants to, MERCK , alone or jointly with any Third Party, without the use in any material respect of any ARIAD Technology, ARIAD Patent Rights, ARIAD Materials or Joint Technology.

1.100 “ MERCK Revenue Sharing Percentage ” means with respect to any Co-Promoted Product for which ARIAD is the Responsible Party and which is sold in the U.S. Territory for any Cancer Indication, a percentage equal to [***] percent ([***]%); provided, however, that in the event MERCK exercises an Opt-Out Right for any Major Cancer Indication, the MERCK Revenue Sharing Percentage shall be a percentage equal to [***] percent ([***]%).

1.101 “ MERCK Technology ” means, collectively, MERCK Background Technology and MERCK Program Technology.

1.102 “ mTOR Inhibitor ” means any compound that directly inhibits the activity or expression of the human protein known as mammalian target of Rapamycin or “mTOR” (UniProtKB/SwissProt database entry P42345).

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1.103 “ NDA ” means a New Drug Application, as defined in the FDCA and regulations promulgated thereunder or any successor application or procedure required to sell a Product in the United States.

1.104 “ Net Sales ” means the [***] or any of its Affiliates or Sublicensees, [***] as the case may be, [***]for sales or other dispositions or transfers for value of [***]actually allowed and taken, [***]if prepaid by the Seller and included on Seller’s bill or invoice or as a separate item[***]pursuant to agreements (including, without limitation, managed care agreements) or government regulations, to the extent actually allowed[***]similarly incurred to the extent included on the bill or invoice or as a separate item. In addition, Net Sales are subject to the following:

(a) If the Seller or any of its Affiliates effects a sale, disposition or transfer of [***]the Net Sales of such Product to such customer shall be [***] of such Product. For purposes of this subsection (a), [***]shall mean the value that would have been derived had[***](b)In the case of [***]all discounts and the like shall be allocated among products on the basis on which such discounts and the like were actually granted or, if such basis cannot be determined, [***](c)For purposes of clarity, (i) use of any[***] or other research or development activities, or disposal or transfer[***]give rise to any Net Sales and (ii) use of any Product in an [***]deemed sale for purposes of this definition unless the Seller or its Affiliates or sublicensees[***]of the Seller’s Manufacturing Cost to supply such Product.

1.105 “ Non-Cancer Indications ” means any Indication that is not a Cancer Indication.

1.106 “ Operating Income (Loss) ” has the meaning set forth on Schedule 3 attached hereto.

1.107 “ Other Cancer Indications ” means any type or class of cancer that is not a Major Cancer Indication or a [***], including without limitation, [***].

1.108 “ Participating Party ” means the Party that participates in, but is not the Responsible Party for, the Development and/or the Commercialization of a Product for an Indication in a part of the Territory.

1.109 “ Patent Rights ” means the rights and interests in and to issued patents and pending patent applications (which, for purposes of this Agreement, include certificates of invention, applications for certificates of invention and priority rights) in any country or region, including all provisional applications, substitutions, continuations, continuations-in-part, divisions, renewals, all letters patent granted thereon, and all reissues, re-examinations and extensions thereof, and all foreign counterparts of any of the foregoing.

1.110 “ Permitted Pre-Clinical Research ” means pre-clinical research conducted by (a) ARIAD (or by an Affiliate of ARIAD or by a Third Party under an agreement with ARIAD) for any Non-Cancer Indication for any Collaboration Compound, and (ii) MERCK (or by an Affiliate of MERCK or by a Third Party under an agreement with MERCK) for any Non-Cancer Indication other than Excluded Uses for any Collaboration Compound.

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1.111 “ Permitted Transactions ” means any agreement by and between a Party and (a) any Third Party pursuant to which such Third Party conducts contract services permitted pursuant to Section 6.2.1(a) of this Agreement or (b) any Third Party non-profit or academic institution, which agreement provides for the grant to the Party entering into the agreement of all rights to Technology and Patent Rights relating to the use of mTOR Inhibitors in the Field that are conceived or reduced to practice by any party under such agreement, with the right to sublicense to the other Party.

1.112 “ Person ” means an individual, sole proprietorship, partnership, limited partnership, limited liability partnership, corporation, limited liability company, business trust, joint stock company, trust, incorporated association, joint venture or similar entity or organization, including a government or political subdivision, department or agency of a government.

1.113 “ Phase 1 Clinical Trial ” means a Clinical Trial in any country that would satisfy the requirements of 21 CFR 312.21(a).

1.114 “ Phase 2 Clinical Trial ” means, as to a particular Product for any Indication, a Clinical Trial conducted in any country that would satisfy the requirements of 21 CFR 312.21(b) .

1.115 “ Phase 3 Clinical Trial ” means, a Clinical Trial in any country that would satisfy the requirements of 21 CFR 312.21(c) .

1.116 “ Phase 4 Clinical Trial ” means a post-registrational Clinical Trial conducted in any country or countries and required as a condition to, or for the maintenance of, any Regulatory Approval for a Product in the Territory.

1.117 “ Phase 5 Clinical Trial ” means a post-registrational Clinical Trial conducted in any country or countries and not required as a condition to, or for the maintenance of, any Regulatory Approval for a Product in the Territory. For avoidance of doubt, such Phase 5 Clinical Trials are commonly referred to as “marketing” Clinical Trials.

1.118 “ Pricing ” means determining Product pricing at all levels, including wholesale, retail, hospital, clinic, health care provider, HMO, non-profit entity or government entities, including average sales price, average wholesale price and best price.

1.119 “ Product ” means any pharmaceutical or medicinal item, substance or formulation that is comprised of or contains a Collaboration Compound (whether or not such Collaboration Compound is the sole active ingredient). For purposes of clarity, Product includes Co-Promoted Product and Royalty-Bearing Products.

1.120 “ Product Commercialization Plan ” means, with respect to each Product, the written plan for the Commercialization of such Product in the U.S. Territory (including, without limitation, expected Manufacturing requirements, for such Product; and a detailed strategy, budget and proposed timelines), as such plan may be amended or updated. Each Product Commercialization Plan shall include, without limitation, (a) demographics and market dynamics, market strategies, a marketing plan (including advertising, Detailing forecasts, pricing strategies pertaining to discounts, samples and sales forecasts) for the U.S. Territory, (b) the specific Commercialization objectives, projected milestones, resource allocation requirements and activities to be performed over such period (including, without limitation, all anticipated Clinical Trials); (c) the Party responsible for such activities; (d) a timeline for such activities, including the estimated launch date(s) in the U.S. Territory; (e) a sales and expense forecast (including at least five (5) years of estimated sales and expenses) for the U.S. Territory, (f) Manufacturing plans and the expected product profile, (g) a “Commercialization Budget” including a budget of the expenses expected to be incurred in performing all activities therein contained, as well as any Third Parties proposed to be utilized and, to the extent applicable, any proposed Third Party arrangements, and (h) the expected Regulatory Filings to be required and prepared, and the expected timetable for making such Regulatory Filings. Each Product Commercialization Plan, and each amendment, modification or update to each Product Commercialization Plan, shall be prepared by, or at the direction of, the JCC, and approved by the JSC at such time as JSC may from time to time direct and in any event, on or prior to the initiation of Commercialization activities with respect to the Product and shall be attached to the minutes of the meeting of the JSC at which such Product Commercialization Plan or amendment, modification or update is approved by the JSC.

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1.121 “ Product Delivery Technology ” means any Program Technology that covers the formulation or delivery of any Collaboration Compound or any Product.

1.122 “ Product Technology ” means any Program Technology that covers the composition of matter of any Collaboration Compound or the final chemical synthesis step used to convert Rapamycin to API of any Collaboration Compound.

1.123 “ Product Trademark ” means any trademark or trade name, whether or not registered, or any trademark application or renewal, extension or modification thereof, in the Territory, or any trade dress and packaging, in each case (a) that are applied to or used with any Product by the Responsible Party and (b) together with all goodwill associated therewith and promotional materials relating thereto.

1.124 “ Product Use Technology ” means any Program Technology that covers (i) the use of any mTOR Inhibitor, and/or (ii) the use of any Biomarker with any mTOR Inhibitor. Without limiting the generality of the foregoing, Product Use Technology includes methods of treatment, combinations with other drugs, and the use of Biomarkers in connection with the treatment of patients with an mTOR Inhibitor.

1.125 “ Program Biomarker Technology ” means any Technology that constitutes a Biomarker or covers any Biomarker that is both (a) Program Technology and (b) conceived or first reduced to practice solely by one or more employees of, or consultants to, a Party, or jointly by one or more employees of, or consultants to, each Party, in either case resulting from use in any material respect of any biological materials, data, or information developed in, resulting from, or funded by the Parties in, the Collaboration.

1.126 “ Program Technology ” means any Technology (including, without limitation, any new and useful process, method of manufacture or composition of matter) or Proprietary Material that is conceived and first reduced to practice (actually or constructively) by either Party or jointly by both Parties in the conduct of the Development Program and/or in the Commercialization of Products; provided however, that the use by a Party of fluid, tissue or tumor samples or data collected by either Party in the Development Program in the discovery or development of Biomarker Information or Biomarkers or otherwise other than used in connection with Biomarkers for use with mTOR Inhibitors shall not cause such Biomarker Information or Biomarkers or other inventions to be Program Technology. For clarity, Biomarkers for use with mTOR Inhibitors discovered or developed as a result of the use by a Party of fluid, tissue or tumor samples or data collected by either Party in the Development Program shall be Program Technology.

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1.127 “ Proprietary Materials ” means tangible chemical, biological or physical materials (a) that are furnished by or on behalf of one Party to the other Party in connection with this Agreement, whether or not specifically designated as proprietary by the transferring Party, or (b) that are otherwise conceived or reduced to practice in the conduct of the Development Program and/or in connection with the Commercialization of Products.

1.128 “ Rapamycin Analog ” means any chemical derivative of Rapamycin or any variant of Rapamycin produced by fermentation.

1.129 “ Rapamycin Derived mTOR Inhibitor ” means an mTOR Inhibitor that is a Rapamycin Analog.

1.130 “ Regulatory Approval ” means, with respect to any country or region in the Territory, any approval, product and establishment license, registration or authorization of any Regulatory Authority required for the Manufacture, use, storage, importation, exportation, transport, distribution or sale of a Product in such country or region. (including without limitation all applicable pricing and governmental reimbursement approvals even if not legally required to sell Product in a country) .

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

1.132 “ Regulatory Filings ” means, collectively: (a) all INDs, NDAs, BLAs, establishment license applications, DMFs, applications for designation as an “Orphan Product(s)” under the Orphan Drug Act, for “Fast Track” status under Section 506 of the FDCA (21 U.S.C. § 356) or for a Special Protocol Assessment under Section 505(b)(4)(B) and (C) of the FDCA (21 U.S.C. § 355(b)(4)(B)) and all other similar filings (including, without limitation, counterparts of any of the foregoing in any country or region in the Territory); (b) all supplements and amendments to any of the foregoing; and (c) all data and other information contained in, and correspondence relating to, any of the foregoing.

1.133 “ Responsible Party ” means the Party that is primarily responsible for the Development of a Product under a Development Program or the Commercialization of a Product. For purposes of clarity, (a) ARIAD shall be the Responsible Party for (i) the conduct of the Development Program for any Product for the Sarcoma Indication in the U.S. Territory and the Commercialization of any Product for the Sarcoma Indication in the U.S. Territory, (ii) the Manufacture of Clinical Product, and (iii) subject to the terms of the Supply Agreement, the Manufacture and supply of API; (b) MERCK shall be the Responsible Party for (i) Development and Commercialization of Products for all Cancer Indications in the ROW Territory and (ii) subject to the terms of the Supply Agreement, the Manufacture and supply of Product for all Indications in the Territory ; and (c) the Parties shall jointly serve as Responsible Party for Development and Commercialization of Products for all Major Cancer Indications and other Cancer Indications in the U.S. Territory.

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1.134 “ ROW Territory ” means all of the countries and territories of the world other than the U.S. Territory.

1.135 “ Royalty-Bearing Product ” means all quantities of Product that are sold by MERCK in the Royalty-Bearing Territory.

1.136 “ Royalty-Bearing Territory ” means (a) the ROW Territory; and (b) the U.S. Territory following the occurrence of a U.S. Commercialization Transfer.

1.137 “ Royalty Term ” means, (i) with respect to each Royalty-Bearing Product in each country in the ROW Territory, the period beginning on the date of First Commercial Sale of such Royalty-Bearing Product in such country and ending on the later to occur of (a) expiration of the last to expire Valid Claim of the ARIAD Patent Rights, MERCK Patent Rights or Joint Patent Rights in such country that covers the composition of matter or sale or import of the Collaboration Compound contained in such Royalty-Bearing Product or its use for any indication for which Commercialization Regulatory Approval has been obtained in such country, (b) [***] from the date of the First Commercial Sale of such Royalty-Bearing Product in such country, or (c) the last date upon which ARIAD supplies any Product to MERCK pursuant to the Supply Agreement; and (ii) with respect to each Royalty-Bearing Product in the U.S. Territory in the event of a U.S. Commercialization Transfer, the period beginning on the date of the U.S. Commercialization Transfer and ending on the latest to occur of (a) expiration of the last to expire Valid Claim of the ARIAD Patent Rights, MERCK Patent Rights or Joint Patent Rights in the U.S. that covers the composition of matter or sale or import of the Collaboration Compound contained in such Royalty-Bearing Product or its use for any indication for which Commercialization Regulatory Approval has been obtained in the U.S. Territory, (b) [***] from the date of the First Commercial Sale of such Royalty-Bearing Product in the U.S. Territory, (c) the last date upon which ARIAD [***] pursuant to the Supply Agreement, or (d) the last date upon which ARIAD co-promotes any Product in the U.S. Territory.

1.138 “ Sarcoma Indication ” means any cancer of the connective or supportive tissue that is generally known in medical practice as a sarcoma.

1.139 “ Serious Adverse Event” means any untoward medical occurrences that at any dose results in any of the following: death, is life-threatening, requires inpatient hospitalization or prolongation of existing hospitalization, results in persistent or significant disability/incapacity, or, is a congenital anomaly/birth defect

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1.140 “ sNDA ” means a Supplemental New Drug Application, as defined in the FDCA and applicable regulations promulgated thereunder.

1.141 “ Sublicensee ” means any Affiliate or Third Party to which a Party grants a sublicense in accordance with Section 6.2.

1.142 “ Sublicense Agreement ” means any agreement by and between a Party and a Sublicensee which is entered into in accordance with Section 6.2.

1.143 “ Targeted Indications ” means, collectively, the following Indications: (a) [***] Indications; (b) [***] Indications; (c) [***] Indications; and (d) [***] Indications.

1.144 “ Technology ” means, collectively, inventions, discoveries, improvements, trade secrets and proprietary methods, whether or not patentable, including without limitation: (a) methods of Manufacture or use of, and structural and functional information pertaining to, chemical compounds and (b) compositions of matter, data, formulations, processes, techniques, know-how and results (including any negative results).

1.145 “ Territory ” means all countries and territories of the world, consisting of the U.S. Territory and the ROW Territory.

1.146 “ Third Party ” means a Person other than MERCK and ARIAD and their respective Affiliates.

1.147 “ Third Party Data Provider ” means [***] and/or any other Third Party reasonably acceptable to the Parties that performs market analyses and provides sales data for the biotechnology or pharmaceutical industry.

1.148 “ U.S. Territory ” means the United States of America and its territories, including, without limitation, Puerto Rico and the U.S. Virgin Islands.

1.149 “ Valid Claim ” means any claim of a pending patent application or an issued unexpired patent that (a) has not been finally cancelled, withdrawn, abandoned or rejected by any administrative agency or other body of competent jurisdiction, (b) has not been permanently revoked, held invalid, or declared unpatentable or unenforceable in a decision of a court or other body of competent jurisdiction that is unappealable or unappealed within the time allowed for appeal, (c) has not been rendered unenforceable through disclaimer or otherwise, and (d) is not lost through an interference proceeding.

Additional Definitions . In addition, each of the following definitions shall have the respective meanings set forth in the section of this Agreement indicated below:

Definition	Section
Abandonment Party	8.1.5
Advances	4.2
Alliance Manager	2.5.1
Acquisition	12.10

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Appointing Party	2.6.2
Arbitration Matter	12.1
ARIAD Development Cost Cap	4.2
ARIAD Indemnitees	11.2
Assuming Party	8.1.5
Claims	11.1
Clinical Supplies	3.6.3(a)
Co-Development Net Sales	4.3.4
Collaborator IP Rights	6.4.3
Combination Product	4.6.1(c)
Competing Drug	4.6.1(a)(ii)
Co-Promoted Product	3.13.1
Co-Promotion Agreement	3.13.2(a)
Co-Promotion Territory	3.13.1
Co-Promotion Trademarks	8.3.1
Cost Audited Party	3.12.2(b)
Cost Auditing Party	3.12.2(b)
Date First Learned	3.10.5(a)
Development Transfer	3.4(b)(i)
Diagnostic Product Agreement	3.1.2(d)
Disputed Matter	2.1.5
Estimate	4.3.2(c)

Estimated Loss	4.3.2(c)
Estimated Operating Income Payment	4.3.2(c)

Indemnified Party	11.3
Indemnifying Party	11.3
Infringement	8.2.1(a)(i)
Infringement Notice	8.2.1(a)(i)
Losses	11.1
MERCK Indemnitees	11.1
MERCK Manufacturing Technology and Patent Rights	6.1.2(c)
Operating Income Payments	4.3.1
Opting-Out Party	3.4(a)
Opt-Out Notice	3.4(a)
Opt-Out Notice Period	3.4(a)
Opt-Out Right	3.4(a)
Other Products	4.6.1(c)
Patent Coordinator	7.5
Phase 1/2 Clinical Trial	4.5(c)
Phase 2/3 Clinical Trial	4.5(d)
Program Confidential Information	6.4.4(c)
Promissory Note	4.2
Reasonably Estimated Commercial Value	4.6.1(c)
Representative	Schedule 3

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ROW Development Costs	3.12.1
Recipient Party	3.3
Separation Date	3.4(a)
Supply Agreement	3.6
Term	9.1(c)
Transfer Date	3.4(b)(ii)
Transferring Party	3.3
U.S. Commercialization Transfer	3.4(b)(ii)
Weighted Average Sales Price	4.6.1(c)

2. ADMINISTRATION OF THE COLLABORATION

2.1 Joint Steering Committee .

2.1.1 Establishment . ARIAD and MERCK hereby establish the Joint Steering Committee. The JSC shall have and perform the responsibilities set forth in Section 2.1.4.

2.1.2 Membership . Each of ARIAD and MERCK shall designate in writing an equal (not less than two (2)) number of representatives to the JSC, who shall be senior level personnel. One (1) representative of each Party shall be designated as Co-Chairs of the JSC. Each Party shall have the right at any time to substitute individuals, on a permanent or temporary basis, for any of its previously designated representatives to the JSC by giving written notice to the other Party.

2.1.3 Meetings .

(a) Schedule of Meetings; Agenda . The JSC shall establish a schedule of times for regular meetings, taking into account, without limitation, the planning needs of the Development Program and the Commercialization of Products and the responsibilities of the JSC. Special meetings of the JSC may be convened by any member upon not less than thirty (30) days (or, if such meeting is proposed to be conducted by teleconference, upon not less than ten (10) days) written notice to the other members; provided that (i) notice of any such special meeting may be waived at any time, either before or after such meeting and (ii) attendance of any member at a special meeting shall constitute a valid waiver of notice from such member. In no event shall the JSC meet less frequently than once every six (6) months. Regular and special meetings of the JSC may be held in person or by teleconference or videoconference; provided that meetings held in person shall alternate between the respective offices of the Parties in Cambridge, Massachusetts and Upper Gwynedd, PA or at other locations mutually agreeable to the JSC members. The Co-Chairs shall alternate the responsibility for preparing and circulating to each JSC member an agenda for each JSC meeting not later than one (1) week prior to such meeting.

(b) Quorum; Voting; Decisions . At each JSC meeting, (i) the presence in person of at least one (1) member designated by each Party shall constitute a quorum and (ii) each member who is present shall have one vote on all matters before the JSC at such meeting. All decisions of the JSC, shall be made by majority vote; provided, that, any member designated by a Party shall have the right to cast the votes of any of such Party’s members on the JSC who are absent from the meeting. Alternatively, the JSC may act by written consent signed by at least one (1) member designated by each Party. Whenever any action by the JSC is called for hereunder during a time period in which the JSC is not scheduled to meet, either Co-Chair shall cause the JSC to take the action in the requested time period by calling a special meeting or by circulating a written consent. Representatives of each Party or of its Affiliates who are not members of the JSC (including, without limitation, the Patent Coordinators) may attend JSC meetings as non-voting observers at the request of either Co-Chair.

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(c) Minutes . The JSC shall keep minutes of its meetings that record all decisions and all actions recommended or taken in reasonable detail. Drafts of the minutes shall be prepared and circulated to the members of the JSC within a reasonable time after the meeting, not to exceed thirty (30) business days, and the Co-Chairs shall alternate responsibility for the preparation and circulation of draft minutes. Each member of the JSC shall have the opportunity to provide comments on the draft minutes. Draft minutes shall be approved, disapproved and revised as soon as practicable. Upon approval, final minutes of each meeting shall be circulated to the members of the JSC by the Co-Chair with responsibility for preparing such minutes.

(d) Expenses . ARIAD and MERCK shall each bear all expenses of their respective JSC representatives related to their participation on the JSC and attendance at JSC meetings.

2.1.4 Responsibilities . The JSC shall be responsible for overseeing the conduct and progress of the Development Program, and the global Development and Commercialization in the U.S. Territory of Products. Without limiting the generality of the foregoing, the JSC shall have the following responsibilities:

(a) overseeing the activities and performance by each of the JDC, the JCC and the JMC of its respective responsibilities;

(b) reviewing data, reports or other information submitted to it by the JDC, the JCC or the JMC from time to time;

(d) review and approve Annual Global Development Plan and budget and the Product Commercialization Plan and Commercialization Budget;

(e) resolving all JDC, JCC or JMC matters that are in dispute;

(f) designating Back-Up Compounds; and

(g) making such other decisions as may be delegated to the JSC pursuant to this Agreement or by mutual written agreement of the Parties during the Term.

2.1.5 Dispute Resolution . The JSC members shall use reasonable efforts to reach agreement on any and all matters. In the event that, despite such reasonable efforts, agreement on a particular matter cannot be reached by the JSC within ten (10) days after the JSC first meets to consider such matter or such later date as may be mutually acceptable to the Parties (each such matter, a “Disputed Matter”), then, [***] shall refer such Disputed Matter to the [***] for MERCK and the [***] for ARIAD who shall promptly initiate discussions in good faith to resolve such Disputed Matter. If the Disputed Matter is not resolved by the aforementioned senior executives, the Disputed Matter will [***] of MERCK (as appropriate) and the [***] for ARIAD. If the Disputed Matter is not resolved by the [***] within the later of (i) ten (10) days after the date the [***] first meet to consider such Disputed Matter, or (ii) thirty (30) days after the date the JSC first met to consider such Disputed Matter, then (a) if the Disputed Matter involves an ARIAD Decision, the [***] of ARIAD shall have the right to make the final decision on such Disputed Matter, [***] (b) if the Disputed Matter involves a MERCK Decision, the [***] of MERCK (as appropriate) MERCK shall have the right to make the final decision on such Disputed Matter, [***] and (c) if the Disputed Matter involves any other matter (including, without limitation, Development and Commercialization decisions in the U.S. Territory for all Indications other than Sarcoma Indications, as well as all decisions in the U.S. Territory relating to [***], such Disputed Matter must be promptly resolved by consensus of the JSC or the foregoing officers [***].

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2.2 Joint Development Committee .

2.2.1 Establishment . ARIAD and MERCK hereby establish the Joint Development Committee. The JDC shall have and perform the responsibilities set forth in Section 2.2.4. Unless otherwise agreed by the Parties, the term for the JDC shall commence on the Effective Date and continue until the JSC determines to discontinue the JDC as a result of the completion of all Development activities for Products.

2.2.2 Membership . Each of ARIAD and MERCK shall designate in writing an equal (not less than two (2)) number of representatives to the JDC. Unless otherwise agreed by the Parties, one representative of each Party shall be designated as Co-Chairs of the JDC. Each Party shall have the right at any time to substitute individuals, on a permanent or temporary basis, for any of its previously designated representatives to the JDC by giving written notice to the other Party.

2.2.3 Meetings .

(a) Schedule of Meetings; Agenda . The JDC shall establish a schedule of times for regular meetings, taking into account, without limitation, the planning needs of the Development Program and the responsibilities of the JDC. Special meetings of the JDC may be convened by any member upon not less than thirty (30) days (or, if such meeting is proposed to be conducted by teleconference, upon not less than ten (10) days) written notice to the other members; provided that (i) notice of any such special meeting may be waived at any time, either before or after such meeting and (ii) attendance of any member at a special meeting shall constitute a valid waiver of notice from such member. In no event shall the JDC meet less frequently than once each Calendar Quarter. Regular and special meetings of the JDC may be held in person or by teleconference or videoconference; provided that meetings held in person shall alternate between the respective offices of the Parties in Cambridge, Massachusetts and Upper Gwynedd, PA or at other locations mutually agreeable to the JDC members. The Co-Chairs shall alternate the responsibility for preparing and circulating to each JDC member an agenda for each JDC meeting not later than one (1) week prior to such meeting.

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(b) Quorum; Voting; Decisions . At each JDC meeting, (i) the presence in person of at least one (1) member designated by each Party shall constitute a quorum and (ii) each member who is present shall have one vote on all matters before the JDC at such meeting. All decisions of the JDC, shall be made by majority vote; provided, that, any member designated by a Party shall have the right to cast the votes of any of such Party’s members on the JDC who are absent from the meeting. Alternatively, the JDC may act by written consent signed by at least one (1) member designated by each Party. Whenever any action by the JDC is called for hereunder during a time period in which the JDC is not scheduled to meet, either Co-Chair shall cause the JDC to take the action in the requested time period by calling a special meeting or by circulating a written consent. Representatives of each Party or of its Affiliates who are not members of the JDC (including, without limitation, the Patent Coordinators) may attend JDC meetings as non-voting observers. In the event that the JDC is unable to resolve any matter before it, such matter shall be resolved in accordance with Section 2.2.5.

(c) Minutes . The JDC shall keep minutes of its meetings that record all decisions and all actions recommended or taken in reasonable detail. Drafts of the minutes shall be prepared and circulated to the members of the JDC within a reasonable time after the meeting, not to exceed thirty (30) business days, and the Parties shall alternate responsibility for the preparation and circulation of draft minutes. Each member of the JDC shall have the opportunity to provide comments on the draft minutes. Draft minutes shall be approved, disapproved and revised as necessary at the next JDC meeting. Upon approval, final minutes of each meeting shall be circulated to the members of the JDC by the by the Co-Chair with responsibility for preparing such minutes.

(d) Expenses . ARIAD and MERCK shall each bear all expenses of their respective JDC representatives related to their participation on the JDC and attendance at JDC meetings.

2.2.4 Responsibilities . The JDC shall be responsible for overseeing the conduct and progress of the Development Program and the global Development of Products. Without limiting the generality of the foregoing, the JDC shall have the following responsibilities:

(a) preparing, or directing the preparation by the Parties of, each Annual Global Development Plan, including the budget;

(b) preparing, or directing the preparation by the Parties of, each amendment to any Annual Global Development Plan or the related budget;

(c) establishing guidelines and procedures for allocating FTEs of the Parties to the performance of the Annual Global Development Plans and determining the proportion of such FTEs to be allocated to the U.S. Territory and the ROW Territory and making any revisions to such allocations.

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(d) monitoring the progress of the Development Program under each Annual Global Development Plan and of each Party’s activities thereunder;

(e) providing a forum for consensual decision making with respect to the Development Program, including making decisions regarding the form of drug product;

(f) reviewing and circulating to the Parties data, reports or other information submitted by either Party with respect to work conducted under the Development Program;

(g) reviewing any Clinical Trial Proposal submitted by either Party and integrating, or directing the integration of, such Clinical Trial Proposal into the applicable Annual Global Development Plan;

(h) reviewing and approving any agreement entered into by a Party with a Third Party pursuant to Section 6.2.1;

(i) determining and approving the overall strategy for publications and presentations in support of Product in the Territory and supervising the Publication Committee;

(j) making such other decisions as may be delegated to the JDC pursuant to this Agreement or by the JSC or by mutual written agreement of the Parties during the Term.

(k) determining whether studies in the Annual Global Development Plan will be conducted as company-sponsored or as investigator-initiated trials; and

(l) reconciling issues between the Parties with respect to the Parties’ respective share of Development Costs with respect to Co-Promoted Products.

2.2.5 Dispute Resolution . The JDC members shall use reasonable efforts to reach agreement on any and all matters. In the event that, despite such reasonable efforts, agreement on a particular matter cannot be reached by the JDC within ten (10) days after the JDC first meets to consider such matter, then the matter shall be referred to the JSC for resolution pursuant to Section 2.1.5.

2.3 Joint Commercialization Committee .

2.3.1 Establishment . ARIAD and MERCK hereby establish the Joint Commercialization Committee. The JCC shall have and perform the responsibilities set forth in Section 2.3.4. Unless otherwise agreed by the Parties, the term for the JCC shall commence at such time as the JSC determines and continue for so long as a Product is being Commercialized.

2.3.2 Membership . Each of ARIAD and MERCK shall designate in writing an equal (not less than two (2)) number of representatives to the JCC. Unless otherwise agreed by the Parties, one representative of each Party shall be designated as Co-Chairs of the JCC. Each Party shall have the right at any time to substitute individuals, on a permanent or temporary basis, for any of its previously designated representatives to the JDC by giving written notice to the other Party.

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2.3.3 Meetings .

(a) Schedule of Meetings; Agenda . The JCC shall establish a schedule of times for regular meetings, taking into account, without limitation, the planning needs for the Commercialization of Products and the responsibilities of the JCC. Special meetings of the JCC may be convened by any member upon not less than thirty (30) days (or, if such meeting is proposed to be conducted by teleconference, upon ten (10) days) written notice to the other members; provided that (i) notice of any such special meeting may be waived at any time, either before or after such meeting and (ii) attendance of any member at a special meeting shall constitute a valid waiver of notice from such member. In no event shall the JCC meet less frequently than once each Calendar Quarter. Regular and special meetings of the JCC may be held in person or by teleconference or videoconference; provided that meetings held in person shall alternate between the respective offices of the Parties in Cambridge, Massachusetts and Whitehouse Station, New Jersey or at other locations mutually agreeable to the JCC members. The Co-Chairs shall alternate responsibility for preparing and circulating to each JCC member an agenda for each JCC meeting not later than one (1) week prior to such meeting.

(b) Quorum; Voting; Decisions . At each JCC meeting, (i) the presence in person of at least one (1) member designated by each Party shall constitute a quorum and (ii) each member who is present shall have one vote on all matters before the JCC at such meeting. All decisions of the JCC, shall be made by majority vote; provided, that, any member designated by a Party shall have the right to cast the votes of any of such Party’s members on the JCC who are absent from the meeting. Alternatively, the JCC may act by written consent signed by at least one (1) member designated by each Party. Whenever any action by the JCC is called for hereunder during a time period in which the JCC is not scheduled to meet, the Co-Chairs shall cause the JCC to take the action in the requested time period by calling a special meeting or by circulating a written consent. Representatives of each Party or of its Affiliates who are not members of the JCC (including, without limitation, the Patent Coordinators) may attend JCC meetings as non-voting observers. In the event that the JCC is unable to resolve any matter before it, such matter shall be resolved in accordance with Section 2.3.5.

(c) Minutes . The JCC shall keep minutes of its meetings that record all decisions and all actions recommended or taken in reasonable detail. Drafts of the minutes shall be prepared and circulated to the members of the JCC within a reasonable time after the meeting, not to exceed ten (10) business days, and the Parties shall alternate responsibility for the preparation and circulation of draft minutes. Each member of the JCC shall have the opportunity to provide comments on the draft minutes. Draft minutes shall be approved, disapproved and revised as necessary at the next JCC meeting. Upon approval, final minutes of each meeting shall be circulated to the members of the JCC by the by the Co-Chair with responsibility for preparing such minutes.

(d) Expenses . ARIAD and MERCK shall each bear all expenses of their respective JCC representatives related to their participation on the JCC and attendance at JCC meetings.

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2.3.4 Responsibilities . The JCC shall be responsible for overseeing the conduct and progress of the Commercialization of each Product in the U.S. Territory and the Co-Promotion of each Co-Promoted Product in the U.S. Territory. Without limiting the generality of the foregoing, the JCC shall have the following responsibilities:

(a) preparing or directing the preparation by the Parties of, each Product Commercialization Plan, including the budget;

(b) preparing or directing the preparation by the Parties of, each amendment to any Product Commercialization Plan or the related budget;

(d) deciding appearance of the Product, packaging and promotional materials;

(e) determining managed health care strategy and tactics, including pricing, rebates, discounts and charge-backs;

(f) agreeing upon the market definition against which the Product will be measured for internal and external reporting purposes;

(g) determining the appropriate use of medical science liaisons in support of the Product;

(h) determining the format and quantities of promotional sales, marketing and educational materials for the Product;

(i) reviewing and approving any proposals for development of additional Product or modifications of existing Products, including, without limitation, new formulations after First Commercial Sale and line extensions;

(j) agreeing upon the design and implementation of all Product launch activities;

(k) monitoring the progress of Commercialization of Products under each Annual Product Commercialization Plan and of each Party’s activities thereunder;

(l) reviewing and circulating to the Parties data, reports or other information submitted by either Party with respect to the Commercialization of Products;

(m) reconciling issues between, the Parties with respect to the Parties’ respective share of Operating Income (Loss) with respect to Co-Promoted Products;

(n) preparing or directing the preparation by the Parties of short-term and long-term sales forecasts for Products;

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(o) determining appropriate targets for sales force staffing and territory mapping purposes, determining the Co-Promotion Percentage of each Party, provided that the Co-Promotion percentage of neither Party shall be [***], and coordinating the Detailing efforts of both Parties with respect to Co-Promoted Products;

(p) overseeing all recalls, market withdrawals and any other corrective actions related to Products;

(q) receiving and providing to the Parties sales reports pertaining to Collaboration Products;

(r) subject to the requirement in the Co-Promotion Agreement that Third Parties shall only be used to Co-Promote if the other Party has been given the option to conduct the extra Details and be reimbursed on the basis set forth in the Co-Promotion Agreement and turned down the option, approving all Third Parties to be engaged by either Party to provide Representatives to Co-Promote Collaboration Products, any such approval to be reflected in the minutes of the JCC;

(s) monitoring compliance of marketing activities throughout the Territory with Applicable Laws and the corporate governance codes and policies of the Parties;

(t) making such other decisions as may be delegated to the JCC pursuant to this Agreement or by the JSC or by mutual written agreement of the Parties during the Term;

(u) reviewing the MERCK ROW Product Commercialization Plan as set forth in Section 3.5.2 and providing a forum for discussion with respect to the Commercialization of Products in the ROW Territory.

2.3.5 Dispute Resolution . The JCC members shall use reasonable efforts to reach agreement on any and all matters. In the event that, despite such reasonable efforts, agreement on a particular matter cannot be reached by the JCC within ten (10) days after the JCC first meets to consider such matter, then the matter shall be referred to the JSC for resolution pursuant to Section 2.1.5.

2.4 Joint Manufacturing Committee .

2.4.1 Establishment . ARIAD and MERCK hereby establish the Joint Manufacturing Committee, which shall report to the JSC. The JMC shall have and perform the responsibilities set forth in the Supply Agreement. Unless otherwise agreed by the Parties, the term for the JMC shall commence at such time as the JSC determines and shall continue as long as the Supply Agreement remains in effect.

2.4.2 Membership . Each of ARIAD and MERCK shall designate in writing an equal (not less than two (2)) number of representatives to the JMC. Unless otherwise agreed by the Parties, one representative of each Party shall be designated as Co-Chairs of the JMC. Each Party shall have the right at any time to substitute individuals, on a permanent or temporary basis, for any of its previously designated representatives to the JMC by giving written notice to the other Party.

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2.4.3 Meetings .

(a) Schedule of Meetings; Agenda . The JMC shall establish a schedule of times for regular meetings, taking into account, without limitation, the planning needs for the Manufacture of Products and the responsibilities of the JMC. Special meetings of the JMC may be convened by any member upon not less than thirty (30) days (or, if such meeting is proposed to be conducted by teleconference, upon not less than ten (10) days) written notice to the other members; provided that (i) notice of any such special meeting may be waived at any time, either before or after such meeting and (ii) attendance of any member at a special meeting shall constitute a valid waiver of notice from such member. In no event shall the JMC meet less frequently than quarterly. Regular and special meetings of the JMC may be held in person or by teleconference or videoconference; provided that meetings held in person shall alternate between the respective offices of the Parties in Cambridge, Massachusetts and Whitehouse Station, New Jersey or at other locations mutually agreeable to the JMC members. The Co-Chairs shall alternate the responsibility for preparing and circulating to each JMC member an agenda for each JMC meeting not later than one (1) week prior to such meeting.

(b) Quorum; Voting; Decisions . At each JMC meeting, (i) the presence in person of at least one (1) member designated by each Party shall constitute a quorum and (ii) each member who is present shall have one vote on all matters before the JMC at such meeting. All decisions of the JMC, shall be made by majority vote; provided, that, any member designated by a Party shall have the right to cast the votes of any of such Party’s members on the JMC who are absent from the meeting. Alternatively, the JMC may act by written consent signed by at least one (1) member designated by each Party. Whenever any action by the JMC is called for hereunder during a time period in which the JMC is not scheduled to meet, either Co-Chair shall cause the JMC to take the action in the requested time period by calling a special meeting or by circulating a written consent. Representatives of each Party or of its Affiliates who are not members of the JMC may attend JMC meetings as non-voting observers. In the event that the JMC is unable to resolve any matter before it, such matter shall be resolved in accordance with Section 2.4.5.

(c) Minutes . The JMC shall keep minutes of its meetings that record all decisions and all actions recommended or taken in reasonable detail. Drafts of the minutes shall be prepared and circulated to the members of the JMC within a reasonable time after the meeting, not to exceed thirty (30) business days, and the Parties shall alternate responsibility for the preparation and circulation of draft minutes. Each member of the JMC shall have the opportunity to provide comments on the draft minutes. Draft minutes shall be approved, disapproved and revised as necessary at the next JMC meeting. Upon approval, final minutes of each meeting shall be circulated to the members of the JMC by the by the Co-Chair with responsibility for preparing such minutes.

(d) Expenses . ARIAD and MERCK shall each bear all expenses of their respective JMC representatives related to their participation on the JMC and attendance at JMC meetings.

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2.4.4 Responsibilities . The JMC shall be responsible for overseeing the Manufacture of Products. Without limiting the generality of the foregoing, the JMC shall have the following responsibilities below, which responsibilities shall be subject to revisions set forth in the Supply Agreement:

(a) providing input relating to the Specifications for Product to the JDC or JCC;

(b) reviewing issues relating to quality standards for Product;

(c) reviewing issues relating to, and monitoring the progress of, Manufacturing Development of Product and providing a forum for consensual decision making with respect to Manufacturing of Product;

(d) reviewing issues relating to supply ( e.g., quantity forecast of Product, shortage, and regulatory information regarding Product) of Product by ARIAD to MERCK;

(e) providing CMC input to the JCC with respect to Product.

2.4.5 Dispute Resolution . The JMC members shall use reasonable efforts to reach agreement on any and all matters. In the event that, despite such reasonable efforts, agreement on a particular matter cannot be reached by the JMC within ten (10) days after the JMC first meets to consider such matter, then the matter shall be referred to the JSC for resolution pursuant to Section 2.1.5.

2.5 Alliance Managers.

2.5.1 Appointment . Each Party shall have the right to appoint a person who shall oversee interactions between the Parties for all matters related to the Development and Commercialization of Products between meetings of the JSC, the JDC, the JMC and the JCC (each, an “Alliance Manager”). The Alliance Managers shall have the right to attend all meetings of the JSC, JDC, JMC and the JCC, as the case may be, as non-voting participants and may bring to the attention of the JSC, JDC, JMC or the JCC, as the case may be, any matters or issues either of them reasonably believes should be discussed and shall have such other responsibilities as the Parties may mutually agree in writing. Each Party may replace its Alliance Manager at any time or may designate different Alliance Managers with respect to Development and Commercialization, respectively, by notice in writing to the other Party.

2.5.2 Responsibilities . The Alliance Managers, if appointed, shall have the responsibility of creating and maintaining a constructive work environment within the JSC, JDC, JMC and the JCC and between the Parties for all matters related to the Collaboration. Without limiting the generality of the foregoing, each Alliance Managers shall:

(a) identify and bring to the attention of the JSC, as applicable, any disputes arising between the Parties related to the Collaboration in a timely manner, including, without limitation, any asserted occurrence of a material breach by a Party, and function as the point of first referral in the resolution of each dispute;

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(b) provide a single point of communication for seeking consensus within the Parties’ respective organizations and between the Parties with respect to the Collaboration;

(c) plan and coordinate cooperative efforts, internal communications and external communications between the Parties with respect to the Collaboration; and

(d) take such steps as may be required to ensure that meetings of the JSC, the JDC, the JMC and the JCC occur as set forth in this Agreement, that procedures are followed with respect to such meetings (including, without limitation, the giving or proper notice and the preparation and approval of minutes) and that relevant action items resulting from such meetings are appropriately carried out or otherwise addressed.

2.6 Appointment of JSC, JDC, JMC and JCC Members and Alliance Managers

2.6.1 Appointment is a Right . The appointment of members of the JSC, JDC, JMC and JCC and Alliance Managers is a right of each Party and not an obligation and shall not be a “deliverable” as defined in EITF Issue No. 00-21. Each Party shall be free to determine not to appoint members to the JSC, JDC, JMC and JCC and not to appoint an Alliance Manager.

2.6.2 Consequence of Non-Appointment . If a Party (“Appointing Party”) does not appoint members of the JSC, JDC, JMC or JCC or an Alliance Manager, it shall not be a breach of this Agreement, nor shall any consideration be required to be returned, and unless and until such persons are appointed, the other Party may discharge the roles of the Committees for which members were not appointed by an Appointing Party.

2.7 Interests of the Parties . All decisions made and all actions taken by the JSC, the JDC, the JCC, the JMC or the officers of the Parties pursuant to Section 2.1.5 shall be made or taken with due interest of both Parties considered in good faith. This provision shall not be subject to arbitration or other dispute resolution under this Agreement.

3. DEVELOPMENT AND COMMERCIALIZATION OF PRODUCTS

3.1 Implementation of Development Program .

3.1.1 Objectives of the Development Program . The objectives of the Development Program shall be the Development of Products in order to obtain Commercialization Regulatory Approval of Products in the Field in the Territory pursuant to the Annual Global Development Plans.

3.1.2 Global Development Plan .

(a) Initial [***] Activities. The Parties anticipate that the Development Program will include, during the [***] after the Effective Date, among other things: (i) a Phase 3 Clinical Trial in a Sarcoma Indication, (ii) specified [***] and [***] for [***] (i.e., [***], and (iii) specified [***] for any [***] (initially, [***]), (iv) additional Clinical Trials in the [***], (v) a [***] in a [***] population [***] and (vi) specific [***] intended to be pivotal trials for use in seeking [***] that are selected based on [***] listed in the preceding clauses. The parties anticipate that, subject to success in earlier required Clinical Trials in the case of Phase 3 Clinical Trials, all of the Clinical Trials listed above will be conducted during the [***] after the Effective Date and that multiple Cancer Indications will be pursued concurrently. Certain Phase 1 and Phase 2 Clinical Trials may be investigator initiated studies, as set forth in the Annual Global Development Plan. In order to develop and finalize the definitive Development Program, ARIAD and MERCK will engage in further in-depth discussion, and will obtain external input from thought leaders in the appropriate scientific fields and from Regulatory Authorities. All aspects of the Development Program are subject to the approval of the JDC.

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(b) Preparation of Annual Global Development Plan. An initial Annual Global Development Plan and budget for the period from the Effective Date through December 31, 2008 for each Product and Indication shall be prepared by the Parties at the direction of the JDC, and submitted to the JSC for approval within ninety (90) days after the Effective Date. Thereafter, for Calendar Year 2009 and for each Calendar Year thereafter during the Term, an Annual Global Development Plan and budget for each Product and Indication shall be prepared by the Parties at the direction of the JDC and submitted to the JSC for approval as provided in Section 2.2.4(a) at least twenty (20) days before the meeting at which it will be considered; provided, that, the Parties shall manage the preparation of each such Annual Global Development Plan and budget in a manner designed to obtain such JSC approval no later than thirty (30) days prior to the end of the then-current Calendar Year. Each Annual Global Development Plan shall: (a) set forth (i) the Development objectives, including pre-clinical studies, Clinical Trials and other activities, priorities, timelines, budget (taking into account, with respect to budgeting amounts for specific Clinical Trial activities to be conducted internally by ARIAD or MERCK, the amount of expenditure that would be incurred by that Party if it elected to outsource such activities to a qualified contract research organization) and resources for the initial period or Calendar Year covered by the Annual Global Development Plan with reasonable specificity, (ii) which activities are ARIAD Development Activities and/or MERCK Development Activities, (iii) with respect to such Development Activities, the number of FTEs to be allocated to perform such activities and the corresponding FTE Cost, and (iv) the allocation of the Development Cost for the Development Activities between the U.S. Territory and the ROW Territory, and (v) jointly determine which studies will be conducted as company-sponsored and which will be conducted as investigator-initiated; and (b) be consistent with the other terms of this Agreement. Each amendment, modification and/or update to any Annual Global Development Plan shall include the resulting changes to the budget and shall be set forth in a written document prepared by, or at the direction of, the JDC and approved by the JDC in accordance with Section 2.2.4(b), shall specifically state that it is an amendment, modification or update to any Annual Global Development Plan and shall be attached to the minutes of the meeting of the JDC at which such amendment, modification or update was submitted.

(c) Non-Cancer Indications . Notwithstanding anything to the contrary in this Agreement, under no circumstances shall a Clinical Trial for a Non-Cancer Indication be initiated by either Party for any Collaboration Compound unless the Parties have agreed in writing to initiate such Clinical Trial and have agreed upon, inter alia, the funding, milestones, commercialization responsibility and revenue sharing applicable thereto, and the Party responsible for overseeing the conduct of such Clinical Trial and its trial design. Each Party shall be free to conduct Permitted Pre-clinical Research, provided that it gives reasonable detailed advance written notice of such Permitted Pre-clinical Research in the Field to the other Party. A Party conducting any Permitted Pre-clinical Research in the Field shall promptly disclose the results thereof to the other Party. The cost of any Permitted Pre-clinical Research by either Party shall not be a Development Cost. If either Party conducts any such Permitted Pre-clinical Research in the Field, any resulting Technology shall be Joint Technology and any Patent Rights covering such Joint Technology shall be Joint Patent Rights; provided however, that neither party may use outside the Collaboration, or license or sublicense to Affiliates and Third Parties for use outside the Collaboration, all or any portion of its interest in such Joint Technology or Joint Patent Rights created pursuant to this Section 3.1.2(c) without the prior written consent of the other Party.

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(d) Diagnostic Products and Biomarkers . Research to develop Biomarker Information and Biomarkers under this Agreement will be conducted as set forth in the Annual Global Development Plans as part of the Development Program. Neither Party shall conduct activities to develop Biomarker Information or any Biomarker for use with Rapamycin Derived mTOR Inhibitors except as set forth in the Annual Global Development Plans, which shall set forth the experiments to be performed, the analyses to be conducted and the number of FTEs to be utilized and the budget for such activities. Neither Party shall conduct activities to develop a Diagnostic Product or commercialize a Diagnostic Product or Biomarker for use with Rapamycin Derived mTOR Inhibitors unless the Parties have executed an agreement (a “Diagnostic Product Agreement”) setting forth, inter alia , a global development plan, funding, milestones, development and commercialization responsibility (including the use of Third Parties to conduct activities in furtherance thereof) and revenue sharing applicable thereto. Each Diagnostic Product Agreement shall also include, inter alia, provisions (i) for joint decision-making by ARIAD and MERCK with respect to the development activities, funding, milestones and such other matters as the Parties shall agree, (ii) for the grant by each Party of a license rights, as applicable, under its interest in the Licensed Technology, Licensed Patent Rights, MERCK Technology, MERCK Patent Rights Joint Technology, Joint Patent Rights, Product Use Technology, Biomarker Information and Program Biomarker Technology and Program Technology for the purpose of conducting activities to Develop and Commercialize the Diagnostic Products and Biomarkers which are the subject of such Diagnostic Product Agreement, (iii) that any Technology resulting from the Development of Diagnostic Products and Biomarkers shall be governed by the ownership rules set forth in Sections 7.1, 7.2, 7.3 and 7.6, and (iv) specifically dealing with the treatment of revenues from the combination of a Diagnostic Product sold with a Product for purposes of royalties and sharing of Operating Income hereunder. No costs of Development or Commercialization of Biomarkers or Diagnostic Products shall be a Development Cost or Commercialization Expense unless set forth in a Diagnostic Product Agreement or incurred in activities specifically set forth in an Annual Global Development Plan as set forth above.

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3.1.3 Responsibility for Development of Products . Prior to Clinical Product Transfer, ARIAD shall be the Responsible Party and MERCK shall be the Participating Party for Manufacturing Development of API and Clinical Product. After Clinical Product Transfer, MERCK shall be the Responsible Party and ARIAD shall be the Participating Party for Manufacturing Development of Clinical Product and Marketed Product; and ARIAD shall be the Responsible Party and MERCK shall be the Participating Party for Manufacturing Development of API provided, however, that such Party's status as a Responsible Party shall not make any Manufacturing Development matter an ARIAD Decision or a MERCK Decision, as the case may be. Both Parties will, in accordance with the provisions of the Supply Agreement or as agreed to by the parties in the Global Development Plan , participate and contribute to Manufacturing Development of API, Clinical Product and Marketed Product. Reference to “Development” below in this Section 3.1.3 shall not include Manufacturing Development. Subject to the exercise by a Party of an Opt-Out Right and/or a Development Transfer pursuant to Section 3.4(b)(i) and unless otherwise set forth in any Annual Global Development Plan, (a) ARIAD shall be the Responsible Party and MERCK will be the Participating Party for all aspects of the Development of Product for all Sarcoma Indications in the U.S. Territory in accordance with the applicable Annual Global Development Plan; (b) ARIAD and MERCK shall jointly be the Responsible Party for all aspects of the Development of Product for all Major Cancer Indications and Other Cancer Indications in the U.S. Territory in accordance with the applicable Annual Global Development Plan; and (c) MERCK shall be the Responsible Party and ARIAD will be the Participating Party for all aspects of the Development of Product for all Cancer Indications in the ROW Territory in accordance with the applicable Annual Global Development Plan. Each Party shall have the right to engage Third Party contractors to perform functions in connection with the Development or Commercialization of Products hereunder. Notwithstanding the foregoing, with respect to the Phase 3 Sarcoma Clinical Trial and other ongoing Clinical Trials in the ROW Territory as of the Effective Date, the Parties agree that ARIAD shall continue to conduct such trials in the ROW Territory. Except as set forth in any Annual Global Development Plan, the Responsible Party for Development of a Product shall have the primary right and responsibility for the conduct of all non-clinical studies for such Product for use in seeking Regulatory Approvals in its Territory. For Clinical Trials conducted in both the U.S. Territory and the ROW Territory or in the U.S. Territory only for an Indication other than Sarcoma, the Parties will be jointly responsible for the conduct of all activities related to such Clinical Trials except as set forth in the Annual Global Development Plan. For Clinical Trials conducted only in the ROW Territory, MERCK will be responsible for the conduct of all activities related to such Clinical Trials except as set forth in the Annual Global Development Plan. Notwithstanding the Parties’ designation as Responsible Party in various parts of the Territory, each Party may conduct Clinical Trials throughout the world as set forth in the Annual Global Development Plan; provided, that any Clinical Trial proposed to be conducted by MERCK in the U.S. Territory to be used in seeking any Regulatory Approval in the ROW Territory shall require the prior written consent of ARIAD (who shall be the holder of the IND for such Clinical Trials in the U.S.) and any Clinical Trial for a Sarcoma Indication proposed to be conducted in the ROW Territory to be used in seeking any Regulatory Approval in the U.S. Territory (other than the Phase 3 Sarcoma Trial planned as of the Effective Date) shall require the prior written consent of MERCK. Such approval may be withheld by ARIAD if such Clinical Trial is inconsistent with clinical development activities being conducted or proposed to be conducted by ARIAD in the U.S. Territory, but otherwise may not be unreasonably withheld. Subject to Section 3.10.3, (i) ARIAD shall file all Regulatory Filings and Drug Approval Applications in the U.S. Territory in its own name, and (ii) MERCK shall file all Regulatory Filings and Drug Approval Applications in the ROW Territory in its own name; and all Regulatory Filings and Drug Approval Applications for Products shall be owned by ARIAD in the U.S. Territory and by MERCK in the ROW Territory. ARIAD shall be responsible in the U.S. Territory for reporting all Adverse Events related to any Product to Regulatory Authorities if and to the extent required by Applicable Laws, unless ARIAD transfers Regulatory Approvals in the U.S to Merck pursuant to this Agreement, in which case MERCK shall have such responsibility. MERCK shall be responsible in the ROW Territory for reporting all Adverse Events related to any Product to Regulatory Authorities if and to the extent required by Applicable Laws.

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3.1.4 Global Coordination . In addition to meetings of the JDC, representatives of the Parties will meet periodically to ensure that the clinical and regulatory activities and strategy are consistent on a global basis. Both Parties will provide input into the global regulatory strategy, will review all significant Regulatory Filings prior to submission to Regulatory Authorities, will receive copies of all correspondence from Regulatory Authorities in a timely manner, and will have the right to attend all Regulatory Authority meetings/interactions in the U.S. Territory or with the EMEA or the Regulatory Authorities in any European Country or in Japan. The Party that is the Responsible Party may schedule meetings with such Regulatory Authorities and shall give the other Party as much notice as is practicable of such meetings.

3.2 Identification of Back-up Compounds .

3.2.1 Back-Up Compounds . If requested by the JSC, and upon agreement by the Parties on a research plan, including the allocation of research responsibilities, and a budget, one or both Parties will use Commercially Reasonable Efforts to deliver one (1) or more Rapamycin Derived mTOR Inhibitors in addition to AP23573 which may be Developed as a follow-up compound or simultaneously with AP23573 for Targeted Indications (each such compound, a “Back-Up Compound”). All activities conducted by the Parties to identify each Back-Up Compound shall be performed and funded as Development Activities and the Annual Global Development Plan shall be amended accordingly. The rights and obligations of the Parties relating to each Back-Up Compound shall be identical to those applicable to AP23573, except as otherwise expressly provided herein. Either Party shall notify the JSC in writing in the event it wishes to replace AP23573 with a specified Rapamycin Derived mTOR Inhibitor developed hereunder as a Back-Up Compound or to Develop such Rapamycin Derived mTOR Inhibitor as a Back-Up Compound in addition to AP23573. Within thirty (30) days after its receipt of such notice, the JSC shall review the data information and determine whether to so designate the proposed Rapamycin Derived mTOR Inhibitor as a Back-Up Compound. Subsequent to such designation, as applicable, any reference to the Product shall be deemed to include or to be made to the Back-Up Compound for the purposes of this Agreement.

3.3 Supply of Proprietary Materials . From time to time during the Term, either Party (the “Transferring Party”) may supply the other Party (the “Recipient Party”) with Proprietary Materials of the Transferring Party for use in the Development Program. In connection therewith, each Recipient Party hereby agrees that (a) it shall not use such Proprietary Materials for any purpose other than exercising its rights or performing its obligations hereunder; (b) it shall use such Proprietary Materials only in compliance with all Applicable Laws; (c) it shall not transfer any such Proprietary Materials to any Third Party without the prior written consent of the Transferring Party, except for (i) the transfer of Products for use in Clinical Trails or (ii) in a Permitted Transaction or for Permitted Preclinical Research or as otherwise expressly permitted hereby; (d) the Recipient Party shall not acquire any right, title or interest in or to such Proprietary Materials as a result of such supply by the Transferring Party; and (e) upon the expiration or termination of the Development Program, the Recipient Party shall, if and as instructed by the Transferring Party, either destroy or return any such Proprietary Materials that are not the subject of the grant of a continuing license hereunder.

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3.4 Opt-Out Right; Limitations on Opt-Out .

(a) Opt-Out Right . At any time on and after the date of Completion of a Phase 1 Clinical Trial and Achievement of Clinical Proof of Concept for a Product for any [***] or [***], either Party may submit a Clinical Trial Proposal to the JDC. The JDC shall meet to consider such Clinical Trial Proposal within sixty (60) days, and shall promptly integrate, or direct the integration of, such Clinical Trial Proposal into the Annual Global Development Plan. Subject to Section 3.4(b), during the period commencing on the date of presentation to the JDC of a Clinical Trial Proposal and continuing for a period of sixty (60) days, the Party not submitting the Clinical Trial Proposal (the “Opting-Out Party”) shall have the right (the “Opt-Out Right”), in its sole discretion, to elect not to fund or otherwise participate in the Late Stage Clinical Trial(s) proposed in such Clinical Trial Proposal, by providing the other Party with written notice (the “Opt-Out-Notice”) pursuant to Section 12.2 prior to the expiration of the Opt-Out Period which shall specify the Clinical Trial Proposal with respect to which the Opting-Out Party is exercising its Opt-Out Right and shall indicate the date (the “Separation Date”) on which the Opt-Out Right shall be effective, which shall under no circumstances be sooner than thirty (30) days from the date of the Opt-Out Notice (the “Opt-Out Notice Period”). During the Opt-Out Notice Period, the Parties shall continue to Develop the Product in accordance with the applicable Annual Global Development Plan. If an Opting-Out Party exercises its Opt-Out Right as provided in this Section 3.4 and the Party submitting the Clinical Trial Proposal determines to proceed with the Late Stage Clinical Trial(s) proposed in the Clinical Trial Proposal, then, as of the Separation Date (a) the Party that receives the Opt-Out Notice shall thereafter be the Responsible Party for the conduct of the proposed Late Stage Clinical Trial(s) as set forth in the Clinical Trial Proposal that is the subject of the Opt-Out Notice; and (b) the Opting-Out Party shall have [***] with respect to the conduct of such Late Stage Clinical Trial(s) and the other Party shall fund [***].

(b) Consequences of Exercise of Opt-Out Right By ARIAD . Notwithstanding anything to the contrary in this Agreement,

(i) Development Transfer . In the event ARIAD exercises an Opt-Out Right on any occasion for Late Stage Clinical Trials proposed in a Clinical Trial Proposal submitted by MERCK for a Product for a [***] and MERCK proceeds with the Late Stage Clinical Trials for such [***], then, as of the Separation Date, MERCK shall be the Responsible Party and ARIAD will be the Participating Party for the Development of Products for [***] throughout the Territory (including, for the avoidance of doubt, the U.S. Territory) (a “Development Transfer”);and the license set forth in Section 6.1.1(a) shall become exclusive with respect to the conduct of Clinical Trials throughout the Territory.

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(ii) U.S. Commercialization Transfer . Upon the receipt of Commercialization Regulatory Approval in the United States of a Product for any Major Cancer Indication for which ARIAD exercised an Opt-Out Right, (a) [***] for all Cancer Indications throughout the Territory (including, for the avoidance of doubt, the U.S. Territory) (a “ U.S. Commercialization Transfer”), [***], and in any event within sixty (60) days after MERCK’s request: (A) [***] applicable to such Product, if any, other than Product Trademarks incorporating ARIAD’s name or logo; (B) [***] then in its name applicable to Products in the U.S. Territory, if any; and all Confidential Information Controlled by ARIAD relating to such Regulatory Filings, Drug Approval Applications and Regulatory Approvals; (C) [***] and take any other action reasonably necessary to effect such transfer; (D) [***] and such Regulatory Authorities relating to such Regulatory Filings, Drug Approval Applications and Regulatory Approvals; (E) unless expressly prohibited by any Regulatory Authority, [***] of such Product being conducted in the U.S. Territory by or on behalf of ARIAD as of the Separation Date and continue to conduct such trials, at MERCK’s sole expense, for up to [***] to enable such transfer to be completed without interruption of any such trial; (F) [***] with any Third Party with respect to the conduct of Clinical Trials for Products including, without limitation, agreements with contract research organizations, clinical sites and investigators, unless expressly prohibited by any such agreement (in which case ARIAD shall cooperate with MERCK in all reasonable respects to secure the consent of such Third Party to such assignment); and (G) [***] or its Affiliates pursuant to this Agreement that relate to any Product [***]. As of such grant date (the “Transfer Date”), (A) MERCK shall be deemed the Responsible Party for Commercialization of such Products for all Cancer Indications in the Territory [***], (B) the Parties will agree upon and implement a plan for the orderly transfer of [***] from ARIAD to MERCK, including responsibility for order fulfillment and distribution of Product in the U.S. Territory and upon implementation of such plan (C) ARIAD shall have the right to Co-Promote Products in the U.S. Territory as set forth in Section 3.13, (D) if MERCK reduces ARIAD’s level of Co-Promotion effort, a reasonable transition period, but in no event less than [***] will be allowed to permit ARIAD to adjust its field sales force, and (E) ARIAD will receive from MERCK, in lieu of [***], the [***] described in [***] on [***] that occur in the U.S. Territory after the date of implementation of the plan for U.S. Commercialization Transfer. The exercise of an Opt–Out Right by ARIAD shall not change the Parties' responsibilities for Manufacturing as provided in Section 3.5.2 and the Supply Agreement.

(iii) Consequences of Exercise of Opt Out Right by MERCK . In the event MERCK exercises an Opt-Out Right on any occasion for Late Stage Clinical Trial(s) proposed in a Clinical Trial Proposal submitted by ARIAD for any Major Cancer Indication, and ARIAD proceeds with the Late Stage Clinical Trial(s) for such Major Cancer Indication, then upon subsequent FDA approval in the United States of the Product for that Major Cancer for which MERCK exercised its Opt-Out Right, MERCK Revenue Sharing Percentage shall be [***] percent ([***]%). For clarity, the reduction in the MERCK Revenue Sharing Percentage shall apply attributable to sales of the Product in the U.S. Territory for all Indications. The exercise of an Opt–Out Right by MERCK shall not change the Parties' responsibilities for Manufacturing as provided in Section 3.5.2 and the Supply Agreement.

3.5 Product Commercialization .

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3.5.1 Product Commercialization Plans . Subject to resolution of disputes as set forth in Section 2.1.5, the JCC shall prepare, and/or direct the preparation of, and approve a Product Commercialization Plan for each Product, at such time as the JSC may direct. Each such Product Commercialization Plan shall be updated and approved at such time as the JCC may determine, not less than annually.

3.5.2 Responsibility for Commercialization of Products . Subject to the exercise by a Party of an Opt-Out Right pursuant to Section 3.4 and unless otherwise set forth in any Product Commercialization Plan (a) ARIAD shall be the Responsible Party and MERCK will be the Participating Party for all Sarcoma Indications in the U.S. Territory other than budgets, Pricing and Branding and the Parties shall jointly be the Responsible Party and have the right and responsibility for all aspects of the Commercialization of Products for all Major Cancer Indications and Other Cancer Indications in the U.S. Territory and for budgets, Pricing and Branding for all Indications in the U.S. Territory in accordance with the applicable Product Commercialization Plan; provided that ARIAD shall have responsibility for Manufacturing all API for Product under the Supply Agreement and Clinical Product (prior to Clinical Product Transfer) and for order fulfillment and distribution of Product in the U.S. Territory and shall book all sales in the U.S. Territory; and (b) MERCK shall be the Responsible Party and have the sole right and responsibility for all aspects of the Commercialization of Products for all Cancer Indications in the ROW Territory in accordance with the applicable MERCK ROW Product Commercialization Plan and shall book all sales in the ROW Territory and shall have responsibility for Manufacturing all Product , including Clinical Product (after Clinical Product Transfer), under the Supply Agreement. Without limiting the foregoing, the Responsible Party (or Parties) shall have the right and responsibility for the conduct of all pre-marketing, marketing, promotion, sales, distribution, import and export activities (including securing reimbursement, sales and marketing and conducting any post-marketing trials or post-marketing safety surveillance or maintaining databases), subject to the oversight of the JSC with respect to Co-Promoted Products. MERCK will provide ARIAD with a draft or update of the MERCK ROW Product Commercialization Plan annually, not later than March 31 of each Calendar Year and will give good faith consideration to ARIAD’s comments on such draft. MERCK will review the MERCK ROW Product Commercialization Plan with ARIAD at a meeting of the JCC and will provide ARIAD with an annual roll-up of the MERCK ROW Product Commercialization Plan.

3.6 Supply of Products for Development and Commercialization .

3.6.1 Negotiation and Execution . As soon as possible after the execution hereof, ARIAD and MERCK shall negotiate in good faith and enter into a supply agreement (the “Supply Agreement”) providing for the terms of Manufacture and supply of API by ARIAD and Product in tablet form by MERCK for the Collaboration in such form and substance as mutually agreed by the Parties. If it is determined pursuant to this Agreement to Develop and Commercialize Product in a form other than tablets, a separate supply agreement or an amendment to the Supply Agreement shall be negotiated for supply of such Product. The Parties agree that no Collaboration Compound or Product shall be sold by either Party for use in the Field until the Supply Agreement has been executed by the Parties. ARIAD shall be the Responsible Party for (i) supply of Clinical Product in tablet form until the Supply Agreement is executed and a Clinical Product Transfer has been completed and (ii) for supply of Clinical Product in any form other than tablets until an additional supply agreement or an amendment to the Supply Agreement has been executed. The Parties further agree that the definitions and other provisions of this Agreement concerning supply of Clinical Product shall not be precedent for the terms of the Supply Agreement.

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3.6.2 Dispute Resolution . In the event the Parties fail to execute and deliver the Supply Agreement within thirty (30) days after the Effective Date, (i) the Parties shall use reasonable efforts to complete such negotiations and to execute and deliver the Supply Agreement as soon as possible after such thirty (30) day period and (ii) without limiting the generality of the foregoing, after the expiration of such thirty (30) day period, either Party may by written notice to the other Party require that each Party produce a list of issues on which they have failed to reach agreement and submit its list to the JSC to be resolved in accordance with Section 2.1.5. For clarity, no issue referred to the JSC pursuant to this Section 3.6.2 shall be an ARIAD Decision or a MERCK Decision.

3.6.3 Non-Commercial Supply of Product .

(a) Prior to Clinical Product Transfer, ARIAD shall have Manufactured API, Product and intermediates thereof for Clinical Trials, pre-clinical studies, and start-up, pre-validation and other non-commercial purposes in the Territory (“ Clinical Supplies ”), and ARIAD shall supply MERCK with Clinical Supplies for use by MERCK in Clinical Trials and otherwise in the Development Program. The Manufacturing Cost of such Clinical Supplies shall be a Development Cost.

(b) Prior to Clinical Product Transfer, ARIAD shall have Manufactured the Clinical Supplies in accordance with all applicable laws, rules and regulations, including applicable cGMPs.

(c) ARIAD shall notify MERCK in writing of any deviations from applicable regulatory or legal requirements relating to the Clinical Supplies provided by ARIAD to MERCK. ARIAD hereby certifies that it will not and has not employed or otherwise used in any capacity the services of any person debarred under Section 21 USC 335a in performing any portion of the Manufacture of Clinical Supplies.

(d) ARIAD shall maintain complete and accurate records of all relevant data and information relating to the performance by ARIAD of its obligations under this Section 3.6.3. ARIAD shall maintain original batch records for seven (7) years and, at such time thereafter as ARIAD intends to dispose of such batch records, ARIAD shall notify MERCK in advance, and shall permit MERCK, at its discretion, to take possession of such batch records.

(e) Upon execution of the Supply Agreement, the terms of the Supply Agreement shall govern Clinical Supplies supplied to MERCK by ARIAD and to ARIAD by MERCK.

3.7 Development and Commercialization Diligence . During the Term, each Party shall use Commercially Reasonable Efforts to (a) conduct the Development Activities assigned to it as set forth in each Annual Global Development Plan; and (b) Commercialize Products for Indications in the portions of the Territory for which it is the Responsible Party, and each Party shall commit such resources (including employees, consultants, contractors, facilities, equipment and materials) as each deems necessary to conduct such Development Activities and Commercialize Products.

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3.8 Compliance . Each Party shall perform its obligations under each Annual Global Development Plan and Product Commercialization Plan in good scientific manner and in compliance in all material respects with all Applicable Laws. For purposes of clarity, with respect to each activity performed under an Annual Global Development Plan and Product Commercialization Plan that will or would reasonably be expected to be submitted to a Regulatory Authority in support of a Regulatory Filing or Drug Approval Application, the P

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