1.41.   “FDA”		6
1.42.   “Global Harm”		7
1.43.   “IND”		7
1.44.   “Indemnify”		7
1.45.   “Information”		7
1.46.   “Infringement”		7
1.47.   “Injection”		7
1.48.   “Joint Coordination Team”		7
1.49.   “Joint Inventions”		7
1.50.   “Joint Know-How”		7
1.51.   “Joint Patents”		7
1.52.   “Joint Technology”		7
1.53.   “Key Development Studies”		7
1.54.   “Knowable Patent”		7
1.55.   “Launch Indication(s)”		7
1.56.   “Licensed Products”		7
1.57.   “Lilly”		8
1.58.   “Lilly License”		8
1.59.   “Lilly Patent”		8
1.60.   “Losses”		8
1.61.   “MAA”		8
1.62.   “Major Market Countries”		8
1.63.   “Manufacturing Information”		8
1.64.   “Manufacturing Plan”		8
1.65.   “Marketing Plan”		8
1.66.   “Marketing Plan Trigger Event”		8
1.67.   “Medical Affairs Studies”		8
1.68.   “NDA”		8
1.69.   “Net Sales”		8
1.70.   “Other Licensee”		9
1.71.   “Other Licensee Data”		9
1.72.   “Patent”		10
1.73.   “Price Approval”		10
1.74.   “Primary Endpoint”		10
1.75.   “Reasonable Buyer”		10
1.76.   “Reciprocating Licensee”		11
1.77.   “Regulatory Approval”		11
1.78.   “Regulatory Authority”		11
1.79.   “Regulatory Plan”		11
1.80.   “Replacement Indication”		11
1.81.   “Replacement Indication Study”		11
1.82.   “Replacement Study”		11
1.83.   “Required Study”		11
1.84.   “Restricted Period”		11
1.85.   “Royalty Rate”		11
1.86.   “Stock Purchase Agreement”		11

 

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1.87.   “Supply Agreement”		11
1.88.   “Term”		11
1.89.   “Territory”		12
1.90.   “Territory Specific Studies”		12
1.91.   “Third Party”		12
1.92.   “Third Party Infringement Claim”		12
1.93.   “Transfer Price”		12
1.94.   “Unlicensed Product”		12
1.95.   “Unlicensed Sales Threshold”		12
1.96.   “Valid Claim”		12
ARTICLE 2. PRODUCT RIGHTS AND RIGHTS OF FIRST NEGOTIATION		12
2.1.   Product Rights		12
2.2.   Licenses to Chiron		12
2.3.   Licenses to Cubist		13
2.4.   Existing Related Intellectual Property of Chiron		14
2.5.   Field		14
2.6.   Use of Patents and Know-How		14
2.7.   Exclusivity		14
(a)  Chiron		14
(b)  Cubist		15
2.8.   Sublicenses and Transfers of Chiron Technology or Chiron Joint Technology Rights		15
2.9.   Rights of First Negotiation		15
2.10.   Right of Co-Negotiation		15
2.11.   Marketing a Directly Competitive Product		16
2.12.   Mechanism to Determine Fair Market Value		17
2.13.   Subcontracting		17
2.14.   Rights of Last of Refusal for Canada		18
2.15.   Applicable Supply Agreement Provisions		18
ARTICLE 3. COORDINATION		19
3.1.   General		19
3.2.   Joint Coordination Team		20
(a)  Formation		20
(b)  Membership		20
(c)  Meetings		20
(d)  Specific Activities		20
(e)  Limited Authority; Not a Decision-Making Body		21
(f)  Meeting Agendas		22
3.3.   JCT Coordinators		22
3.4.   Independence		22
ARTICLE 4. DEVELOPMENT		22
4.1.   Key Development Studies; Diligence Obligations		22
4.2.   Cubist Development Plan		24
4.3.   Development by Chiron		25

 

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(a)  Territory Specific Studies		25
(b)  Proposed Indications		25
(c)  Medical Affairs Studies		25
(d)  Chiron Development Plan		26
(e)  Limitation on Chiron’s Development Rights		26
4.4.   Access to Chiron Data		27
(a)  Information Sharing		27
(b)  Reciprocating Licensee		27
(c)  License Option		27
4.5.   No Debarred Personnel		28
4.6.   Chiron Compliance		28
ARTICLE 5. REGULATORY		28
5.1.   Regulatory Plan; Diligence Obligation		28
(a)  Cubist’s and Other Licensees’ Activities		28
(b)  Regulatory Plan		28
(c)  Specific Regulatory Activities		30
(d)  Costs and Expenses		32
(e)  Limitation on Activities		32
5.2.   Ownership of Regulatory Approvals		32
5.3.   Chiron Access to Cubist and Other Licensee Data		33
(a)  Information Sharing		33
(b)  Chiron Use of Cubist Data		33
(c)  License Option		33
(d)  Manufacturing Information		33
5.4.   Free Sales Certificates		34
5.5.   Safety; Adverse Event Reporting		34
(a)  General		34
(b)  Reporting Outside the Territory		35
(c)  Reporting in the Territory		35
(d)  Global Database		35
5.6.   Communications		35
(a)  Communications Relating to Regulatory Approval		35
(b)  Communications Relating to Development		35
5.7.   Recalls and Voluntary Withdrawals		36
5.8.   Label		37
5.9.   Governmental Inspections		37
ARTICLE 6. COMMERCIALIZATION; DILIGENCE		37
6.1.   Marketing Plan; Diligence Obligation		37
(a)  Marketing Plan		37
(b)  Marketing Activities		38
(c)  Costs and Expenses		39
(d)  Ownership of Marketing Information		39
6.2.   Prohibited Marketing and Sales Activities		40
6.3.   Discounting		40

 

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6.4.   Marketing and Promotional Literature		40
ARTICLE 7. COMPENSATION		40
7.1.   Upfront Consideration		40
7.2.   Milestone Payments		41
(a)  Development Milestone Payments		41
(b)  Sales Milestone Payments		42
7.3.   Royalties		42
(a)  Royalty		42
(b)  Know-How Step-Down		43
(c)  Competition Step-Down		43
(d)  Competition Step-Down Procedures		44
(e)  Holdback of Royalties Upon Certain Cubist Enforcement Actions		44
(f)  Chiron Enforcement Action		45
(g)  Clinical Supplies		45
7.4.   Adjustments		46
7.5.   Third Party Royalties and Other Payments		46
7.6.   Royalty Payments and Reports		46
7.7.   No Reductions or Offsets		46
7.8.   Tax Matters		47
7.9.   Foreign Exchange		47
7.10.   Late Payments		47
7.11.   Exports of Licensed Product from the Territory; [*]		47
ARTICLE 8. INTELLECTUAL PROPERTY		47
8.1.   Ownership of Inventions		47
8.2.   Prosecution of Patents		48
(a)  Cubist Patents		48
(b)  Chiron Patents		48
(c)  Joint Patents		49
8.3.   Patent Term Extensions		49
8.4.   Infringement of Patents by Third Parties		50
(a)  Notification		50
(b)  Infringement of Patents in the Territory		50
(c)  Other Infringement of Cubist Patents		50
(d)  Infringement of Chiron Patents and Joint Patents outside the Territory		50
(e)  Settlement; Allocation of Proceeds		51
8.5.   Infringement of Third Party Rights		51
(a)  Notice		51
(b)  Avoidance of Infringement		52
(c)  Licensing to Resolve Infringement by Cubist Technology		52
(d)  Determination of Relative Financial Benefits		52
(e)  Limitation of Obligation to Sublicense		53
(f)  Defense		53
(g)  Settlement		53

 

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8.6.   Patent Oppositions.		53
(a)  Third Party Patent Rights		53
(b)  Parties’ Patent Rights		54
(c)  Noncontravention		54
8.7.   Sublicensed Technology		54
(a)  Generally		54
(b)  Lilly License		55
(c)  Decision to License Third Party Technology		55
(d)  Licensing of Third Party Technology		55
(e)  Limitation of Obligation to Sublicense		56
(f)  Determination of Relative Financial Benefits		56
8.8.   Patent Marking		56
8.9.   Applicability to Chiron Patents		56
8.10.   Trademarks		56
(a)  Trademark License		56
(b)  Selection and Registration of Product Trademarks		57
(c)  Infringement of Trademarks by Third Parties		57
(d)  Product Trademarks Infringe Third Party Rights		58
8.11.   Subordination to Lilly Rights		58
ARTICLE 9. REPRESENTATIONS AND WARRANTIES		58
9.1.   Mutual Representations and Warranties		58
(a)  Corporate Existence and Power		58
(b)  Authority and Binding Agreement		59
(c)  No Conflict		59
(d)  Validity		59
(e)  Consents		59
9.2.   Cubist Representations and Warranties		59
(a)  Ownership of Intellectual Property		59
(b)  Claims Related to Use of Intellectual Property		59
(c)  Notice to Third Persons		60
(d)  Effective Date Third Party Licenses		60
(e)  No Misappropriation		60
(f)  Regulatory Filings		60
(g)  Regulatory Data and Affairs		60
(h)  Non-Infringement of Cubist Technology by Third Parties		61
(i)  Litigation		61
(j)  Restrictive Agreements		61
(k)  Patent Prosecution		61
9.3.   Chiron Representation and Warranty - No Intellectual Property		61
9.4.   Disclaimer		61
9.5.   No Other Representations		61
ARTICLE 10. INDEMNIFICATION		62
10.1.   Indemnification by Cubist		62
10.2.   Indemnification by Chiron		62

 

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10.3.   Liability for Third Party Products Liability Claims		63
10.4.   Procedure		66
10.5.   Insurance		66
10.6.   Limitation of Liability		67
ARTICLE 11. RECORDS; PUBLICATIONS		68
11.1.   Records		68
11.2.   Publications		68
ARTICLE 12. CONFIDENTIALITY		69
12.1.   Treatment of Confidential Information		69
12.2.   Authorized Disclosure		69
12.3.   Publicity		70
ARTICLE 13. TERM AND TERMINATION		70
13.1.   Term		70
13.2.   Termination For Convenience by Chiron		71
13.3.   Termination By Either Party Upon Bankruptcy or Insolvency		71
13.4.   Termination for Breach		71
(a)  Notice		71
(b)  Failure to Cure		71
(c)  Disputes		71
(d)  Termination as to Certain Licensed Products		72
(e)  Right to Sell		72
13.5.   INTENTIONALLY OMITTED		72
13.6.   Consequences of Termination		72
13.7.   Survival		74
ARTICLE 14. DISPUTE RESOLUTION		75
14.1.   Disputes		75
14.2.   Arbitration		75
14.3.   Governing Law; Judicial Resolution		76
14.4.   Equitable Remedies; Injunctive Relief		77
14.5.   [*].		77
14.6.   Interest		77
ARTICLE 15. MISCELLANEOUS		77
15.1.   Entire Agreement; Amendment		77
15.2.   Force Majeure		77
15.3.   Notices		78
15.4.   Maintenance of Records		79
15.5.   No Strict Construction		79
15.6.   Assignment		79
(a)  Assignment by Cubist		79
(b)  Assignment by Chiron		79
(c)  Restrictions on Payments		80
(d)  Injunctive Relief		80

 

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15.7.   Performance by Affiliates		81
15.8.   Guaranty		81
15.9.   Counterparts		81
15.10.   Further Actions		81
15.11.   Severability		81
15.12.   Headings		81
15.13.   No Waiver		81

 

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indication, and Cubist has agreed to use commercially reasonable efforts to complete the Required Studies; and

 

WHEREAS, the parties wish to establish a mechanism for exchanging information and providing one another an opportunity to discuss and comment upon activities relating to daptomycin products in their respective territories, it being understood that such mechanism is for transparency purposes only.

 

NOW THEREFORE , based on the foregoing premises and the mutual covenants and obligations set forth below, the Parties agree as follows:

 

ARTICLE 1.

 

DEFINITIONS

 

The following terms shall have the following meanings as used in this Agreement:

 

1.1.  “Additional Daptomycin Product” shall mean any pharmaceutical composition containing Daptomycin other than a Daptomycin IV Product.  For the avoidance of doubt, “ Additional Daptomycin Product ” shall include, without limitation, any pharmaceutical composition containing Daptomycin formulated for oral delivery and any pharmaceutical composition containing Daptomycin and one or more active pharmaceutical ingredient other than Daptomycin.

 

1.2.  “Affiliate” shall mean, with respect to any Person,  (i) any other Person of which fifty percent (50%) or more of the securities or other ownership interests representing the equity, the voting stock or, if applicable, general partnership interest of such other Person are owned, controlled, or held, directly or indirectly by, or under common ownership or control with, such Person; or (ii) any other Person that, directly or indirectly, owns, controls, or holds fifty percent (50%) or more of the securities or other ownership interests representing the equity, the voting stock or, if applicable, the general partnership interest, of such Person.

 

1.3.  “Approved New Trademark” shall have the meaning assigned to such term in Section 8.10(b) hereof.

 

1.4.  “Chiron Data” shall have the meaning assigned to such term in Section 4.4(a) hereof.

 

1.5.  “Chiron Development Plan” shall have the meaning assigned such term in Section 4.3(d).

 

1.6.   “Chiron Interest” shall have the meaning assigned to such term in Section 15.6(b) hereof.

 

1.7.   “Chiron Inventions” shall have the meaning assigned to such term in Section 8.1.

 

1.8.  “Chiron Joint Technology Rights” shall mean all of Chiron’s right, title and interest in the Joint Patents, the Joint Know-How and the Joint Inventions.

 

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1.9.   “Chiron Know-How” shall mean all Information (i) that (A) is owned or Controlled by Chiron after the Effective Date, (B) is not generally known and is not disclosed in any published Chiron Patents, (C) is necessary or useful in connection with the development, manufacture, use, sale, import or export of Licensed Products, including, without limitation, all data and information regarding the safety and efficacy of Licensed Products, and (D) is created, conceived, invented, developed or reduced to practice during the Term in the course of performing research and development activities undertaken or carried out for the specific purpose of developing Licensed Products or of developing any invention necessary or useful to the development, manufacture, use, sale, import or export of Licensed Products, or (ii) that is included in “ Chiron Know-How ” pursuant to the provisions of Section 2.4 hereof. Notwithstanding the foregoing, the term “ Chiron Know-How ” shall not include any Chiron Marketing Information, Chiron Data (other than data generated from Medical Affairs Studies), Joint Know-How or any interest of Chiron in any of the foregoing.

 

1.10.  “Chiron Marketing Information” shall have the meaning assigned to such term in Section 6.1(d).

 

1.11.  “Chiron Patent” shall mean (i) any Patent that is owned or Controlled by Chiron, that has a filing date after the Effective Date and that covers any invention owned or Controlled by Chiron that is created, conceived, invented, developed or reduced to practice during the Term in the course of performing research and development activities undertaken or carried out for the specific purpose of developing Licensed Products or of developing any invention useful to the development, manufacture, use, sale, import or export of Licensed Products, and (ii) any Patent that becomes a “ Chiron Patent ” pursuant to the provisions of Section 2.4 hereof.  Notwithstanding the foregoing, the term “ Chiron Patent ” shall not include any Joint Patents or any interest of Chiron in any Joint Patents.

 

1.12.  “Chiron Related Know-How” shall mean all Information that (i) is not Chiron Marketing Information, Chiron Data, Chiron Know-How or Joint Know-How, (ii) is owned or Controlled by Chiron on the Effective Date, (iii) is not generally known and is not disclosed in any published patents or patent applications of Chiron, (iv) is necessary or useful in connection with the development, manufacture, use, sale, import or export of Licensed Products, and (v) is created, conceived, invented, developed or reduced to practice prior to the Effective Date.

 

1.13.  “Chiron Related Patent” shall mean any Patent (i) that is not a Chiron Patent or a Joint Patent, (ii) that is owned or Controlled by Chiron on or at any time after the Effective Date, and (iii) that covers any invention, compound, improvement, method, apparatus, material, method or technique of manufacture created, conceived, invented, developed or reduced to practice prior to the Effective Date that is necessary or useful to the development, manufacture, use, sale, import or export of Licensed Products.

 

1.14.  “Chiron Technology” shall mean Chiron Patents and Chiron Know-How.

 

1.15.  “Commercial Launch” shall mean the first commercial sale of a Licensed Product to a Third Party in a given country after obtaining Regulatory Approval to Commercialize such Licensed Product in such country.  For the purposes of determining whether

 

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or not Commercial Launch has occurred, sales of Licensed Product for use in clinical trials and named patient sales shall not be considered.

 

1.16.  “Commercialize” shall mean all activities relating to the commercialization of a Licensed Product including, without limitation, promotion, marketing, sales, distribution, development for label extensions, and conducting Medical Affairs Studies, whether conducted by a Party or for such party by another, and “ Commercialization ” shall be interpreted accordingly.

 

1.17.  “Commercially Important Indications” shall mean, with respect to a given Licensed Product on any given date of determination, those indications that are included in the label approved by a Regulatory Authority in the Territory for such Licensed Product and that each account for [*] of such Licensed Product for the four calendar quarters immediately preceding such date of determination, or, in the event that [*] in the Territory occurred within twelve months of such date of determination, then for the period from [*] through such date of determination, or if there is no indication that [*], then those three indications that account for the [*].

 

1.18.  “Commercially Reasonable Efforts” shall mean, with respect to a Party’s obligation under this Agreement, the level of efforts required to carry out such obligation in sustained manner consistent with the efforts a similarly situated pharmaceutical company devotes to a product of similar market potential, profit potential and strategic value and similar scientific, technical, development and regulatory risks, based on conditions then prevailing.

 

1.19.  “Confidential Information”  shall mean all Information, and other information and materials, received by either Party from the other Party pursuant to this Agreement, other than that portion of such information or materials which:

 

(a)            is publicly disclosed by the disclosing Party, either before or after it becomes known to the receiving Party;

 

(b)           was known to the receiving Party, without obligation to keep it confidential, prior to when it was received from the disclosing Party;

 

(c)           is subsequently disclosed to the receiving Party by a Third Party lawfully in possession thereof without obligation to keep it confidential;

 

(d)            has been publicly disclosed other than by the disclosing Party and without breach of an obligation of confidentiality with respect thereto; or

 

(e)            has been independently developed by the receiving Party without the aid, application or use of Confidential Information, as demonstrated by competent written proof.

 

1.20.  “Contract Manufacturing Agreements” means any and all agreements pursuant to which Licensed Products are manufactured on behalf of Cubist (including any such agreements for any step in the manufacturing process), including without limitation, the Abbott

 

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Laboratories, ACS Dobfar S.p.A. and DSM Capua S.p.A. contracts, together with all amendments and extensions of such agreements.

 

1.21.  “Control” shall mean possession of the ability to grant a license or sublicense as provided for herein without violating the terms of any agreement or other arrangement with any Third Party, and “ Controlled ” shall be interpreted accordingly.

 

1.22.  “cSSSI” shall mean complicated skin and skin structure bacterial infection.

 

1.23.  “Cubist Data” shall mean all Information (other than Other Licensee Data) owned or Controlled by Cubist pertaining to Licensed Products that is necessary or useful for making applications for Regulatory Approval or other regulatory filings for, or Commercializing, Licensed Products in the Territory.

 

1.24.  “Cubist Development Plan” shall have the meaning assigned such term in Section 4.2(a).

 

1.25.  “Cubist Inventions” shall have the meaning assigned to such term in Section 8.1.

 

1.26.  “Cubist Joint Technology Rights” shall mean all of Cubist’s right, title and interest in the Joint Patents, the Joint Know-How and the Joint Inventions.

 

1.27.  “Cubist Know-How” shall mean all Information (i) that (A) is owned or Controlled by Cubist on the Effective Date or at any time during the Term, (B) is not generally known and is not disclosed in any published Cubist Patents, and (C) is necessary or useful in connection with the development, manufacture, marketing, promotion, use, sale, import or export of Licensed Products, including, without limitation, all data and information regarding the safety and efficacy of Licensed Products.  Notwithstanding the foregoing, the term “ Cubist Know-How ” shall not include any Joint Know-How or any interest of Cubist in any Joint Know-How.

 

1.28.  “Cubist Marks” shall mean (i) all registered trademarks issued or that have issued on the application listed at Exhibit A ; (ii) all pending trademark applications listed at Exhibit  A, as amended by Cubist from time to time; (iii) the Cubist name and mark; and (iv) any and all Approved New Trademarks.

 

1.29.  “Cubist Patent” shall mean any Patent that is owned or Controlled by Cubist on the Effective Date, including those set forth on Exhibit B , or at any time during the Term, and that covers any Licensed Product or covers any invention, compound, improvement, method, apparatus, material, method or technique of manufacture necessary or useful in the development, manufacture, use, sale, import or export of Licensed Products, including without limitation, any and all Cubist Inventions.  Notwithstanding the foregoing, the term “ Cubist Patent ” shall not include any Joint Patents or any interest of Cubist in any Joint Patents.

 

1.30.  “Cubist Technology” shall mean all Cubist Patents and Cubist Know-How.

 

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1.31.  “Daptomycin” shall mean the molecule set forth and identified as the daptomycin molecule on Exhibit C , and all acids, salts and esters of such daptomycin molecule.

 

1.32.  “Daptomycin IV Product” shall mean any pharmaceutical composition containing Daptomycin in all current and future formulations, but only if such pharmaceutical composition is formulated for delivery via Injection. The term “Daptomycin IV Product” shall not include (i) any pharmaceutical composition formulated for delivery by any means other than via Injection or (ii) any pharmaceutical composition that includes one or more active pharmaceutical ingredients other than Daptomycin.

 

1.33.  “Defective Manufactured Product” shall have the meaning assigned to such term in the Supply Agreement.

 

1.34.  “Directly Competitive Product” shall mean, with respect to a given Licensed Product, (A) [*] or (B) any other pharmaceutical composition (other than a Licensed Product) formulated for delivery [*] and that is marketed and sold (i) primarily for [*], and (ii) solely to treat [*], and which other pharmaceutical composition has a label approved by a Regulatory Authority in the Territory which includes as indications for such other pharmaceutical composition [*].  Commercially Important Indications that are included in the label approved by a Regulatory Authority in the Territory for such Licensed Product.  Notwithstanding the foregoing, the term “Directly Competitive Product” shall not include [*.]

 

1.35.  “Dollar” shall mean a United States dollar, and “$” shall be interpreted accordingly.

 

1.36.  “Drug Approval Application” shall mean an application for Regulatory Approval required before commercial sale or use of a Licensed Product as a drug in a regulatory jurisdiction, including without limitation an NDA and a Biologics License Application (BLA) filed in the United States.

 

1.37.  “Drug Master File,” or “DMF” shall mean a voluntary submission that may be used to provide confidential, detailed information about the active pharmaceutical ingredient, daptomycin, and facilities, processes or articles used during the manufacturing, processing, packaging and storing of daptomycin or one or more other drug products.

 

1.38.  “Effective Date Third Party Licenses” shall have the meaning assigned to such term in Section 8.7(a).

 

1.39.  “EMEA” shall mean the European Medicines Evaluation Agency, or any successor thereto, which coordinates the scientific review of human pharmaceutical products under the centralized licensing procedures of the European Community.

 

1.40.  “Fair Market Value” shall have the meaning assigned to such term in Section 2.12 hereof.

 

1.41.  “FDA” shall mean the United States Food and Drug Administration, or any successor thereto.

 

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1.42.  “Global Harm” shall mean [*].

 

1.43.  “IND” shall mean an Investigational New Drug application.

 

1.44.  “Indemnify” shall have the meaning assigned to such term in Section 10.1 hereof.

 

1.45.  “Information” shall mean (i) techniques, information and data specifically relating to development, manufacture, use, sale, import or export of Licensed Products, including, but not limited to, inventions, practices, methods, knowledge, know-how, skill, experience, test data including pharmacological, toxicological and clinical test data, analytical and quality control data, regulatory submissions, correspondence and communications, marketing, pricing, distribution, cost, sales, manufacturing, patent and legal data or descriptions and (ii) compositions of matter, assays and biological materials specifically relating to development, manufacture, use, sale, import or export of Licensed Products.

 

1.46.  “Infringement” or “Infringe” shall have the meaning assigned to such term in Section 8.4(a) hereof.

 

1.47.  “Injection” shall mean all means of delivering a pharmaceutical composition by injection and includes, without limitation, delivery by intravenous, intramuscular and subcutaneous injection.

 

1.48.  “Joint Coordination Team” or “JCT” shall mean the committee formed as described in Section 3.2(a).

 

1.49.  “Joint Inventions” shall have the meaning assigned in Section 8.1.

 

1.50.  “Joint Know-How” shall mean all Information that (i) consists of Joint Inventions, (ii) is not generally known and is not disclosed in any published Joint Patents, and (iii) is necessary or useful in connection with the development, manufacture, marketing, promotion, use, sale, import or export of Licensed Products, including, without limitation, all data and information regarding the safety and efficacy of Licensed Products.

 

1.51.  “Joint Patents” shall have the meaning assigned such term in Section 8.2(c).

 

1.52.  “Joint Technology” shall mean all Joint Patents and Joint Know-How.

 

1.53.  “Key Development Studies” means [*.]

 

1.54.  “Knowable Patent” shall have the meaning assigned to such term in Section 8.5(c) hereof.

 

1.55.  “Launch Indication(s)” shall mean cSSSI and [*], but if at the relevant time Cubist has [*,] then the term “ Launch Indication(s) ” shall at such time mean cSSSI only.

 

1.56.  “Licensed Products” shall mean all Daptomycin IV Products, and all Additional Daptomycin Products that become Licensed Products pursuant to Section 2.9 hereof.

 

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1.57.  “Lilly” shall mean Eli Lilly and Company.

 

1.58.  “Lilly License” shall mean that certain Licensing Agreement between Cubist and Lilly, dated October 6, 2000, as amended by the amending agreement dated July 1, 2003, and as further amended and in effect from time to time, which License Agreement replaced the prior agreement between such parties, dated November 7, 1997.

 

1.59.  “Lilly Patent” shall have the meaning assigned to such term in Section 8.11.

 

1.60.  “Losses” shall have the meaning assigned such term in Section 10.1.

 

1.61.  “MAA” shall mean an application filed with the EMEA for regulatory approval to market and sell Licensed Products in the European Union, or an application filed through the mutual recognition procedures in the European Union having a similar purpose to the NDA in the United States.

 

1.62.  “Major Market Countries” shall mean, collectively, France, Germany, Italy, Spain, and the United Kingdom.  The term “ Major Market Country ” shall mean any of the Major Market Countries.

 

1.63.  “Manufacturing Information” shall have the meaning assigned to such term in Section 5.3(d) hereof.

 

1.64.  “Manufacturing Plan” shall have the meaning assigned to such term in Section 2.5 of the Supply Agreement.

 

1.65.  “Marketing Plan” shall have the meaning assigned such term in Section 6.1(a).

 

1.66.  “Marketing Plan Trigger Event” shall have the meaning assigned such term in Section 6.1(a).

 

1.67.  “Medical Affairs Studies” shall mean those clinical studies conducted after Regulatory Approval of Licensed Product has been obtained which are neither intended nor designed to support an application for Regulatory Approval, including but not limited to, pharmaco-economic studies, pharmaco-epidemiology studies, and investigator-sponsored clinical studies.

 

1.68.  “NDA” shall mean a New Drug Application for Regulatory Approval filed in the United States.

 

1.69.  “Net Sales” shall mean, with respect to a particular time period, the aggregate gross sales invoiced by Chiron and its Affiliates for Licensed Products sold directly by Chiron and its Affiliates to a Third Party (including, without limitation, any Third Party that is a distributor of Chiron and its Affiliates in any country within the Territory) during such time period, less:

 

(i)             discounts, including cash and quantity discounts, charge-back payments and rebates granted to managed health care organizations or to domestic and foreign

 

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governments (including any subdivision thereof), their agencies, purchasers and reimbursers or to trade customers, in each case to the extent actually allowed in amounts customary in the trade;

 

(ii)            credits or allowances actually granted upon returns of damaged, spoiled or Non-Conforming (as defined in the Supply Agreement) units of Licensed Products or upon recalls of units of Licensed Products, in each case in amounts customary in the trade;

 

(iii)          freight, postage, shipping, transportation and insurance charges actually allowed or paid by Chiron or any of its Affiliates for delivery of Licensed Products sold by Chiron or any of its Affiliates to a Third Party; and

 

(iv)           taxes, duties and other governmental charges levied on, absorbed or otherwise imposed on import, export, sale, distribution and use of such Licensed Products that are paid by Chiron (including, without limitation, any taxes paid by Chiron pursuant to Section 7.5 of the Supply Agreement), all as adjusted for rebates and refunds actually granted or reasonably anticipated to be granted if application therefor is made; provided , however , that in no event shall any of the following taxes or governmental charges paid or required to be paid by Chiron constitute a permitted deduction in calculating Net Sales: any taxes or governmental charges calculated based on, or levied or imposed on any profit or income earned by Chiron or any of its Affiliates or distributors.

 

Amounts received by Chiron and its Affiliates for the sale of Licensed Products among Chiron and its Affiliates for resale shall not be included in the computation of Net Sales hereunder.

 

[*] or otherwise in connection with any Licensed Products or in connection with any rights to any Licensed Products, then the amount of such payment to Chiron or its Affiliates shall be included in Net Sales in the calendar quarter in which Chiron or its Affiliates received such payment for purposes of calculating the royalty due to Cubist pursuant to Article 7.  Without limiting the applicability of the provisions of the foregoing sentence and without limiting any remedy or choice of remedies that Cubist may have under applicable law in connection with any breach by Chiron of the provisions of [*] hereof, [*] makes any payment or payments to Chiron or its Affiliates [*] Chiron or its Affiliates of any of the [*] then such payment or payments made to Chiron or its Affiliates shall be included in Net Sales in the calendar quarter in which Chiron or its Affiliates performed such actions or activities.

 

For the avoidance of doubt, any payments made by [*] (other than Licensed Products and other than products that are subject to the provisions of [*], or for customary services provided for customary consideration, [*] shall not be included in Net Sales.

 

1.70.  “Other Licensee” shall mean any Third Party to whom Cubist has granted or grants a license and/or sublicense to develop or Commercialize a Licensed Product outside the Territory.

 

1.71.  “Other Licensee Data” shall mean all Information that results from any development activities conducted by any Other Licensee with respect to Licensed Products and

 

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that is necessary or useful for making regulatory filings for, or Commercializing, Licensed Products in the Territory.

 

1.72.  “Patent” shall mean (i) unexpired letters patent (including inventor’s certificates)  which have not been held invalid or unenforceable by a court of competent jurisdiction from which no appeal can be taken or has been taken within the required time period, including without limitation any substitution, extension, registration, confirmation, reissue, re-examination, renewal or any like filing thereof and (ii) pending applications for letters patent, including without limitation any provisional, converted provisional, continued prosecution application, continuation, divisional or continuation-in-part thereof.

 

1.73.  “Price Approval” shall mean, with respect to any country in which the price at which Chiron sells Licensed Product must be approved by a governmental authority for reimbursement or payment purposes, the receipt of approval by the applicable governmental authority with respect to such price.

 

1.74.  “Primary Endpoint” shall mean, with respect to a clinical trial, the point at which the primary efficacy objective has been achieved with respect to a clinical or microbiological outcome as specified in the protocol for such trial, unless otherwise agreed by the Parties in writing.

 

1.75.  “Reasonable Buyer” shall mean, with respect to the sale, assignment, sublicense or other transfer of the Chiron Interest in accordance with the provisions of Section 15.6(b) hereof, a Third Party that, both at the time a definitive agreement is entered into by Chiron and such Third Party in connection any such transfer and at the time of the closing of such transfer:

 

 

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1.76.  “Reciprocating Licensee” shall have the meaning assigned to such term in Section 4.4(b).

 

1.77.  “Regulatory Approval” shall mean any approvals (including supplements, variations, amendments, pre- and post-approvals and Price Approvals), licenses, registrations or authorizations of any national, supra-national (e.g., the FDA, the European Commission or the Council of the European Union, or other similar body in any country), regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity, necessary for the manufacture, distribution, use, sale, import or export of Licensed Products in a regulatory jurisdiction.

 

1.78.  “Regulatory Authority” shall mean a foreign counterpart of the FDA.

 

1.79.  “Regulatory Plan” shall have the meaning assigned to such term in Section 5.1(b) hereof.

 

1.80.  “Replacement Indication” shall have the meaning assigned to such term in Section 4.1(d) hereof.

 

1.81.  “Replacement Indication Study” shall have the meaning assigned to such term in Section 4.1(d) hereof.

 

1.82.  “Replacement Study” shall have the meaning assigned to such term in Section 4.1(c).

 

1.83.  “Required Study” shall have the meaning assigned to such term in Section 4.1.

 

1.84.  “Restricted Period” shall mean, with respect to either Party, the period of time commencing on the Effective Date and ending on the earlier of (i) the expiration or termination of the Term and (ii) the date when such Party sells, assigns, sublicenses or otherwise transfers all of its rights in this Agreement pursuant to, and in accordance with, the provisions of Section 15.6.

 

1.85.  “Royalty Rate” shall have the meaning assigned to such term in Section 7.3(a) hereof.

 

1.86.  “Stock Purchase Agreement” shall mean that certain Stock Purchase Agreement, dated as of the Effective Date, by and between Cubist and the Chiron Parent Company.

 

1.87.  “Supply Agreement” shall mean that certain Manufacturing and Supply Agreement, dated as of the Effective Date, by and between Cubist and Chiron.

 

1.88.  “Term” shall mean the term of this Agreement.

 

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1.89.  “Territory” shall mean the countries listed in Exhibit D , and the possessions and territories of each such country.  Whenever, in accordance with the terms of this Agreement, Chiron’s rights under this Agreement shall terminate with respect to any country or countries initially included in the definition of Territory, any reference in this Agreement to the term Territory shall, from and after such termination, be deemed not to refer to any such country or countries as to which Chiron’s rights under this Agreement have so terminated.

 

1.90.  “Territory Specific Studies” shall have the meaning mean assigned to such term in Section 4.3(a).

 

1.91.  “Third Party” shall mean any entity other than Cubist or Chiron or an Affiliate of either of them.

 

1.92.  “Third Party Infringement Claim” shall have the meaning assigned such term in Section 8.5(a).

 

1.93.  “Transfer Price” shall have the meaning assigned to such term in Section 7.1 of the Supply Agreement.

 

1.94.  “Unlicensed Product” shall mean, with respect to any given Licensed Product in any given country within the Territory, any pharmaceutical composition containing Daptomycin that (A) is commercially available in such country other than [*] and other than [*] (B) has the same [*], such Licensed Product, and (C) [*] as such Licensed Product.  If Chiron’s rights under this Agreement are expanded to include rights in Additional Daptomycin Products, then the foregoing definition of “Unlicensed Product” shall be deemed to be expanded to include those formulations of pharmaceutical compositions containing Daptomycin which have been so added to the scope of Licensed Products and the marketing and other rights of Chiron under this Agreement.

 

1.95.  “Unlicensed Sales Threshold” shall have the meaning assigned to such term in Section 7.3(e) hereof.

 

1.96.  “Valid Claim” shall mean (i) an unexpired claim of an issued patent within the Cubist Patents or Joint Patents which has not been found to be unpatentable, invalid or unenforceable by a court or other authority in the subject country, from which decision no appeal is taken or can be taken; or (ii) a claim of a pending patent application within the Cubist Patents or Joint Patents.

 

ARTICLE 2.

 

PRODUCT RIGHTS AND RIGHTS OF FIRST NEGOTIATION

 

2.1.  Product Rights. Subject to and upon the terms and conditions set forth in this Agreement, Chiron shall have exclusive rights (even as to Cubist) to Commercialize the Licensed Products in all countries of the Territory.

 

2.2.  Licenses to Chiron. Subject to, and in accordance with, the terms and conditions of this Agreement:

 

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(a)            Cubist grants to Chiron the exclusive (even as to Cubist) license, under the Cubist Technology and the Cubist Joint Technology Rights, to sell, offer for sale, have sold, import, export and Commercialize Licensed Products in the Territory. Except to the extent otherwise provided in this Agreement, the rights granted to Chiron pursuant to this Section 2.2(a) may not be sublicensed or transferred.

 

(b)            Cubist grants to Chiron the nonexclusive license, under the Cubist Technology, to practice and use the Cubist Technology and the Licensed Products anywhere in the world for the sole purpose of engaging in those research and development activities that Chiron is expressly required or permitted to perform pursuant to this Agreement. Except to the extent otherwise provided in this Agreement, the rights granted to Chiron pursuant to this Section 2.2(b) may not be sublicensed or transferred.

 

(c)            Cubist grants to Chiron a nonexclusive license, under the Cubist Technology, to make, have made, manufacture and have manufactured anywhere in the world Licensed Products for sale in the Territory, provided that such right to make, have made, manufacture and have manufactured shall not be exercised by Chiron so long as the Supply Agreement remains in effect. Except to the extent otherwise provided in this Agreement, the rights granted to Chiron pursuant to this Section 2.2(c) may not be sublicensed or transferred.

 

(d)            In addition to any rights expressly retained by Cubist in the foregoing provisions of this Section 2.2, Cubist shall retain any and all rights in and to the Cubist Technology and the Cubist Joint Technology Rights that are not expressly granted to Chiron pursuant to this Section 2.2.

 

2.3.  Licenses to Cubist. Subject to the terms and conditions of this Agreement:

 

(a)            Chiron grants to Cubist the exclusive (even as to Chiron) license, under the Chiron Technology and the Chiron Joint Technology Rights, to sell, offer for sale, have sold, import, export and Commercialize Licensed Products outside of the Territory. Except to the extent otherwise provided in this Agreement, the rights granted to Cubist pursuant to this Section 2.3(a) may not be sublicensed or transferred.

 

(b)           Chiron grants to Cubist the nonexclusive license, under the Chiron Technology, to practice and use the Chiron Technology and the Licensed Products anywhere in the world for the sole purpose of engaging in research and development activities with respect to Licensed Products pursuant to this Agreement. Except to the extent otherwise provided in this Agreement, the rights granted to Cubist pursuant to this Section 2.3(b) may not be sublicensed or transferred.

 

(c)           Chiron grants to Cubist a nonexclusive license, under the Chiron Technology, to make, have made, manufacture and have manufactured anywhere in the world Licensed Products. Except to the extent otherwise provided in this Agreement, the rights granted to Cubist pursuant to this Section 2.3(c) may not be sublicensed or transferred.

 

(d)           In addition to any rights expressly retained by Chiron in the foregoing provisions of this Section 2.3, Chiron shall retain any and all rights in and to the Chiron

 

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Technology and the Chiron Joint Technology Rights that are not expressly granted to Cubist pursuant to this Section 2.3.

 

(e)           Notwithstanding any provision of this Agreement to the contrary, the provisions of this Section 2.3 shall apply to any Chiron Patent only to the extent that the Parties have not otherwise agreed on the scope of rights granted and reserved in respect of any such Chiron Patent.

 

2.4.  Existing Related Intellectual Property of Chiron. If Chiron decides to use or apply any Chiron Related Patent or any Chiron Related Know-How, Chiron shall notify Cubist and provide any information concerning any such Chiron Related Patent or Chiron Related Know-How that Cubist reasonably requests.  In the event that either Party sends a written request to the other Party requesting a discussion at a JCT meeting concerning the need, usefulness and advisability of using any Chiron Related Patent or Chiron Related Know-How in connection with the development, manufacture, use or Commercialization of Licensed Products within and/or outside the Territory, then a meeting of the JCT shall be convened as promptly as practicable and the Parties shall discuss same.  If consensus is reached at the JCT that any such Chiron Related Patent and/or Chiron Related Know-How should be used for such purpose, then the Parties shall discuss the compensation that Chiron would require in order to license to Cubist any such Chiron Related Patent and/or Chiron Related Know-How.  If Cubist and Chiron agree on the terms of any such compensation, then the Parties may enter into an appropriate technology license agreement which license agreement shall address the scope of the license granted, compensation and responsibilities of the Parties on matters such as further research and development, prosecution, maintenance and enforcement of relevant Patents, and other customary provisions contained in such agreements.  If the Parties elect not to enter into a specific technology license agreement, any such Chiron Related Patent shall be included within the Chiron Patents and shall become subject to the licenses granted to Cubist pursuant to Section 2.3 hereof and/or any such Chiron Related Know-How shall be included within the Chiron Know-How and shall become subject to the licenses granted to Cubist pursuant to Section 2.3 hereof.

 

2.5.  Field. Notwithstanding anything in this Agreement to the contrary, it is acknowledged and agreed by the Parties that the licenses granted by Cubist to Chiron under this Agreement with respect to the Cubist Patents and Cubist Know-How that are licensed to Cubist pursuant to the Lilly License shall be solely for application to the treatment of infectious diseases.

 

2.6.  Use of Patents and Know-How. Each Party covenants to the other that it will not practice the Patents or Know-How of the other Party except as expressly permitted in the licenses granted to it in this Agreement.

 

2.7.  Exclusivity.

 

(a)  Chiron.   Chiron shall not develop, promote, sell or offer for sale Licensed Products for use outside of the Territory.  Chiron shall require its distributors who sell Licensed Products to make a covenant similar to that provided in this Section 2.7(a) with respect to Licensed Products.

 

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(b)  Cubist.  Cubist shall not promote, sell, or offer for sale a Licensed Product for use within the Territory (except for sales to Chiron pursuant to this Agreement or the Supply Agreement).  Cubist shall require any of its Other Licensees and distributors of Licensed Products to make a covenant similar to that provided in this Section 2.7(b) with respect to Licensed Products.

 

2.8.  Sublicenses and Transfers of Chiron Technology or Chiron Joint Technology Rights.   Chiron shall not sublicense or transfer any interest in the Chiron Technology or the Chiron Joint Technology Rights to any Third Party unless such Third Party shall have acknowledged and agreed in writing that any such sublicense or transfer to such Third Party, and the rights acquired by any such Third Party in and to the Chiron Technology and the Chiron Joint Technology Rights as a result of such sublicense or transfer, shall be subject to any and all rights that Chiron may have granted to Cubist pursuant to this Agreement and the Supply Agreement.

 

2.9.  Rights of First Negotiation.   Cubist hereby grants Chiron (a) a right of first negotiation to obtain Commercialization rights in the Territory with respect to any and all Additional Daptomycin Products, and (b) a right of first negotiation to obtain Commercialization rights in the Territory to any and all Directly Competitive Products, in each case, on the following terms:  In the event that Cubist proposes to grant, sell, assign or otherwise transfer to a Third Party all or any portion of any such Commercialization rights, regardless of whether Cubist or a Third party makes the initial proposal, then Cubist will promptly notify Chiron in writing thereof. As soon as practicable, Chiron will respond to Cubist in writing regarding its interest in entering into negotiations to obtain such rights and the Parties will promptly [*] following the date that Cubist gives such written notice to Chiron. Upon commencement of such negotiations, [*] to grant Commercialization rights with respect to such Additional Daptomycin Product or Directly Competitive Product.  If Chiron and Cubist are unable to agree on material terms within [*] after receipt by Chiron of Cubist’s notice of its intent to transfer Commercialization rights, then Cubist will [*].  Chiron shall have an exclusive [*] period to present (but shall not be obligated to present) to Cubist a revised proposal.  If Cubist does not accept Chiron’s revised proposal upon expiration of such exclusive period, in its sole discretion, Cubist will be free to enter into negotiations with any Third Party, provided, however , Chiron shall have the non-exclusive right to continue discussions with Cubist.  If Cubist determines that it is likely to accept terms with a Third Party for such Commercialization rights, Cubist will offer Chiron an opportunity for [*], at Chiron’s headquarters or at any other location that the Parties may mutually agree upon, within [*] of Cubist’s notification to Chiron that it is affording Chiron such opportunity to meet, for the purpose of explaining in reasonable detail the reasons that Cubist is likely to accept such terms.  Chiron shall have a period of [*] from the date of such meeting to present to Cubist [*] and Cubist hereby agrees that it will not accept the Third Party terms until the earlier of (a) the expiration of such [*] period, (b) the date that Chiron affirmatively declines to make an offer, and (c) the date that Chiron proposes, and Cubist rejects, such offer.  For the avoidance of doubt, Cubist is not obligated to offer the foregoing opportunity for [*].  Cubist will select the party with which it wishes to enter into negotiations for a definitive agreement in its sole discretion, provided, however , in making its determination, [*].  Chiron hereby acknowledges and agrees that [*]

 

2.10.  Right of Co-Negotiation.   Chiron hereby grants Cubist a right of co-negotiation to obtain all or any portion of the Commercialization rights in the Territory with respect to any and

 

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all Directly Competitive Products on the following terms:  In the event that Chiron proposes to grant, sell, assign or otherwise transfer to a Third Party all or any portion of such Commercialization rights in the Territory for a Directly Competitive Product, regardless of whether Chiron or a Third Party makes the initial proposal, then Chiron will promptly notify Cubist in writing thereof and thereafter, Cubist, to the extent that it remains so interested, shall be included among the interested parties with whom Chiron holds discussions for the transfer of such rights until such time as Chiron selects the party with whom it wishes to enter into negotiations for a definitive agreement for such rights. Cubist acknowledges that [*].  Without limiting the generality of the foregoing, Cubist acknowledges that Chiron shall have [*] for the Territory as Chiron sees fit.  Except as expressly provided in Section 2.11, Chiron shall have no obligation or liability to Cubist for selecting a Third Party as its Commercialization partner for Directly Competitive Products in the Territory.

 

2.11.  Marketing a Directly Competitive Product.   Subject to the right of first negotiation in favor of Chiron in Section 2.9, and the right of co-negotiation in favor of Cubist in Section 2.10, the Parties acknowledge that either Party may, at any time during the Restricted Period applicable to such Party, market a Directly Competitive Product in the Territory.  In the event that either Party launches, either directly or indirectly, a Directly Competitive Product in the Territory at any time during the Restricted Period applicable to such launching Party, then the other Party (the “ Aggrieved Party ”) shall have recourse to the remedies provided herein.  The Parties acknowledge and agree that the objective of the remedies provided in this Section 2.11 is to have the Party launching the Directly Competitive Product compensate the Aggrieved Party for the [*] [*] of its interest in the Licensed Products resulting from such action.  If Cubist is the Aggrieved Party, Cubist may elect to:

 

(a)            require Chiron to [*] to receive royalties for the sale of Licensed Products in the Territory (“ Cubist Royalty Interest ”) at the [*] as it existed immediately prior to Chiron’s launch of the Directly Competitive Product in the Territory, following which Chiron shall be entitled to continue to sell Licensed Products in the Territory without any further obligation to pay royalties to Cubist; or

 

(b)            require Chiron to pay the [*] of the Cubist Royalty Interest attributable to Chiron’s launch of the Directly Competitive Product in the Territory but following which Chiron shall be entitled to continue to sell Licensed Products in the Territory subject to payment of the royalties as provided herein.

 

If Chiron is the Aggrieved Party, then Chiron may elect to:

 

(c)            require Cubist to purchase the Chiron Interest at its [*] as it existed immediately prior to Cubist’s launch of the Directly Competitive Product in the Territory, following which Chiron shall have no further right to sell Licensed Products in the Territory; or

 

(d)            require Cubist to pay to Chiron the [*] of the Chiron Interest attributable to Cubist’s launch of the Directly Competitive Product in the Territory but following which Chiron shall be entitled to continue to sell Licensed Products in the Territory subject to payment of royalties as provided herein.

 

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In each of the foregoing [*] shall be determined in accordance with the [*].  In each instance in which a Party is required to make payment of compensation to the Aggrieved Party pursuant to the provisions of this Section 2.11, the Party required to pay compensation shall have the option of paying such amount due as a one-time lump sum or by installments paid over a period of time not to exceed [*], provided that, in the event that a compensating Party elects to make payment over a period of time, such compensating Party shall pay interest on all amounts due at the rate stipulated in Section 7.10 for late payments.

 

2.12.  Mechanism to Determine Fair Market Value.   [*] of this Agreement “ Fair Market Value ” (including any diminution thereof) shall mean the fair market value of the Cubist Royalty Interest or the Chiron Interest, as the case may be, determined as follows:  If the Parties cannot agree on the Fair Market Value within 30 days after the launch of the Directly Competitive Product, each Party shall promptly designate a reputable investment banking or appraisal firm of its choice (which in the case of an investment bank shall not be the regular banker of the Party) (the “ Appraisers ” or each an “ Appraiser ”), who will each be asked to provide its best, single number estimate of the applicable Fair Market Value (the “ Estimate ”), using a common set of assumptions provided by the Parties, or if the Parties cannot agree, determined by the Appraisers.  Each Party shall use its best efforts to cause its designated Appraiser to provide the Estimate not later than 30 days after the Parties or the Appraiser, as the case may be, have determined the common set of assumptions to be used.

 

If the Estimate submitted by one of the Appraisers exceeds the Estimate submitted by the other Appraiser by 10% or less, the Fair Market Value shall be deemed to be the arithmetic mean of the two Estimates.

 

If the Estimate submitted by one of the Appraisers exceeds the Estimate submitted by the other Appraiser by more than 10%, the Parties, or if the Parties cannot agree, the Appraisers, shall designate a third appraiser (which in the case of an investment bank shall not be the regular banker of either Party) (the “ Third Appraiser ”) to prepare an estimate of Fair Market Value using the same common set of assumptions but without access to the earlier Estimates.  The Third Appraiser shall be directed to provide its estimate of Fair Market Value within 30 days of its designation.  If the estimate of Fair Market Value submitted by the Third Appraiser falls between the Estimates of the Appraisers, the Fair Market Value shall be deemed to be the arithmetic mean of all three estimates of Fair Market Value.  If the estimate of Fair Market Value submitted by the Third Appraiser does not fall in between the Estimates of the Appraisers, the Estimate submitted by one of the two Appraisers that is closest to the estimate of Fair Market Value submitted by the Third Appraiser shall be deemed to be the Fair Market Value.

 

Each party shall bear the costs and expenses of its own Appraiser as well as 50% of the costs and expenses of the Third Appraiser, if necessary.

 

2.13.  Subcontracting.   Each Party may exercise any of the rights or obligations that such Party may have under this Agreement or the Supply Agreement to engage in research and development activities, manufacturing activities or testing activities with respect to Licensed Products by subcontracting all or any portion of such research and development activities, manufacturing activities or testing activities, and, in connection with any such subcontracting, to grant such sublicenses as may be necessary to permit any Third Party subcontractor to perform

 

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the activities subcontracted to such Third Party subcontractor.  Each Party may also exercise any of its rights or obligations under this Agreement to Commercialize Licensed Products by subcontracting all or any portion of such rights or obligations to distributors, and, in connection with any such subcontracting, to grant such sublicenses as may be necessary to permit any such distributor to perform the activities subcontracted to such distributor, provided , however , that Chiron shall not grant to any such distributor any right other than the right to Commercialize in the Territory Licensed Products supplied to such distributor by or on behalf of Chiron, and, specifically, Chiron shall not grant to such distributor any right to engage in research or development activities with respect to, or to manufacture or have manufactured, Licensed Products anywhere in the world. Any sublicenses granted pursuant to this Section 2.13 shall be consistent with all of the terms and conditions of this Agreement and the Supply Agreement that are applicable.  The scope of any such sublicenses shall be no greater than the scope of the rights under this Agreement or the Supply Agreement held by the Party granting such sublicenses and such sublicenses shall be subject to all of the limitations imposed on the rights under this Agreement and the Supply Agreement of the Party granting such sublicenses.  Subcontracting as contemplated by this Section 2.13 by either Party of any of the rights or obligations that such Party may have under this Agreement or the Supply Agreement shall not relieve such Party from any of its obligations under this Agreement or the Supply Agreement.

 

2.14.  Rights of Last of Refusal for Canada.   Cubist hereby grants Chiron a right of last refusal to obtain rights to sell any and all Licensed Products in Canada (the “ Canadian Marketing Rights ”), on the following terms:   In the event that Cubist proposes to grant, sell, assign or otherwise transfer all or any portion of the Canadian Marketing Rights to a Third Party (other than a distributor appointed by Cubist, directly or indirectly, who sells Licensed Products) who is not the party who has licensed or holds or will be licensed or hold the Commercialization rights with respect to all Licensed Products in the United States (the “ U.S. Rights Holder ”), then Cubist acknowledges and agrees that prior to entering into any agreement for the grant of the Canadian Marketing Rights with any Third Party (other than the U.S. Rights Holder or a distributor appointed by Cubist, directly or indirectly, who sells Licensed Products), Cubist will provide to Chiron a copy of the fully negotiated final draft of such proposed agreement with such Third Party and offer to Chiron the opportunity to enter into an agreement with Cubist for the same rights and on the same terms as set forth in such draft.  Provided that Cubist has given Chiron [*] notice of the possibility of such transaction, Chiron shall have [*] to provide Cubist written notice of its decision.  If and only if Chiron declines such offer, or fails to accept such offer within such [*], will Cubist then be free to enter into such agreement with such Third Party, it being understood and acknowledged by Cubist that any material modification of the terms of such proposed agreement with the Third Party after it had been declined by Chiron shall constitute a breach of Cubist’s obligations under this Section 2.14 and a violation of Chiron’s right of last refusal hereunder.  The provsions of this Section 2.14 shall not apply if Chiron is in material breach of this Agreement or the Supply Agreement.

 

2.15.  Applicable Supply Agreement Provisions.   The following provisions of the Supply Agreement are incorporated herein by reference and shall apply to this Agreement in the same manner as which they apply to the Supply Agreement:  Sections 2.4 (Second Manufacturing Source(s)), 2.5 (Global Manufacturing Plan), 7.1 (Transfer Pricing), 8.1 (Allocation in the Event of Shortages) and 11.6 (Back-up Supply Rights of Chiron).

 

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3.2.  Joint Coordination Team.

 

(a)  Formation.  Within thirty (30) days after the Effective Date, Cubist and Chiron shall establish the Joint Coordination Team (the “ JCT ”), which shall (i) serve as a forum for the review and discussion of the Parties’ efforts under this Agreement including the development and marketing and sales activities in the Territory and outside the Territory with respect to Licensed Products, and (ii) serve as a forum for the resolution of disputes between the Parties in accordance with the provisions of Article 15 of this Agreement.

 

(b)  Membership.  Cubist and Chiron each shall designate an equal number of representatives (but in no event more than four (4) representatives each) with appropriate expertise to serve as members of the JCT.  Of the initial representatives to be designated by each Party, there shall be expertise in regulatory matters, clinical development matters, and sales and marketing matters.  The Parties shall be free to change their representatives over time as the needs evolve over time.  Each representative serving on the JCT shall have appropriate technical credentials, experience and knowledge, and ongoing familiarity in the specific area of such representative’s expertise.  A Party may replace its representatives serving on the JCT from time to time by written notice to the other Party specifying the prior representative(s) to be replaced and the replacement(s) therefor.  Each Party shall select one (1) person appointed by it to the JCT to serve as co-chair.  The co-chairpersons shall be responsible for calling meetings, preparing and circulating an agenda in advance of each meeting, and preparing and issuing minutes of each meeting within thirty (30) days thereafter.

 

(c)  Meetings.  The JCT shall hold meetings at such times as it elects to do so, but in no event shall such meetings be held less frequently than once every three (3) months unless otherwise agreed by the Parties.  The first meeting of the JCT shall be held no earlier than 60 days after the Effective Date and no later than 90 days after the Effective Date.  The JCT shall meet alternately at Cubist’s facility and at Chiron’s facility, or at such location(s) as the Parties may otherwise agree.  With the consent of the representatives of each Party serving on the JCT, other representatives of each Party or of Third Parties involved in the manufacture, development or commercialization of the Licensed Products may attend meetings of the JCT.  Meetings of the JCT may be held by audio or video teleconference with the consent of each Party, provided that at least one (1) meeting per year shall be held in person.  Each Party shall be responsible for all of its own expenses of participating in the JCT.  Meetings of the JCT shall be effective only if at least two (2) representatives of each Party are present or participating.  The co-chairpersons will alternate responsibility for preparing minutes of each meeting of the JCT, which minutes will not be finalized until the co-chairperson that did not prepare such minutes reviews and confirms the accuracy of such minutes in writing.

 

(d)   Specific Activities.  In addition to its functions described in Section 3.2(a), the JCT shall in particular review, consider, discuss and comment upon where appropriate:

 

(i)            the overall strategy for the development of Licensed Products for sale within and outside the Territory, and the design of all pre-clinical trials and clinical trials in connection with the development of Licensed Products for sale within and outside the Territory;

 

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(ii)           the development activities of Cubist with respect to Licensed Products, and the development activities of Chiron with respect to Licensed Products;

 

(iii)         the Cubist Development Plan and Chiron’s development plan (if any), each updated annually;

 

(iv)          the strategies for obtaining and maintaining Regulatory Approvals within and outside the Territory;

 

(v)            the regulatory activities of Cubist for obtaining and maintaining Regulatory Approvals of Licensed Products in the United States, and the regulatory activities of Chiron for obtaining and maintaining Regulatory Approvals of Licensed Products in the Territory;

 

(vi)          the Regulatory Plan and the corresponding plan of Cubist for obtaining Regulatory Approval outside of the Territory updated annually;

 

(vii)         the general strategy for the manufacturing and supply of Licensed Products and the corresponding Manufacturing Plan, updated annually;

 

(viii)        the general strategy for the Commercialization of Licensed Products within and outside the Territory;

 

(ix)          the Commercialization activities of Cubist with respect to Licensed Products in the United States, and the Commercialization activities of Chiron with respect to Licensed Products in the Territory;

 

(x)           the Marketing Plan and the corresponding plan of Cubist for Commercializing the Licensed Products outside of the Territory updated annually;

 

(xi)          the Manufacturing Plan for the manufacture and supply of Licensed Products worldwide updated annually;

 

(xii)         the Parties’ scientific presentation and publication strategy relating to Licensed Products; and

 

(xiii)       such other materials as are specifically provided for review at the JCT elsewhere in this Agreement or in the Supply Agreement.

 

(e)   Limited Authority; Not a Decision-Making Body.

 

(i)            Except for its function as a dispute resolution forum, the role of the JCT shall be facilitative.  The JCT shall serve as a forum for the sharing of information.  In addition, the JCT may serve the purpose of preventing, or informally resolving, disputes between the Parties.  The rights and responsibilities of each Party shall be governed by this Agreement, including the exhibits hereto, and the JCT shall not have any power to amend, modify or waive compliance with this Agreement.

 

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(ii)           Although it is not the purpose of the JCT to make decisions that control the Parties’ respective activities under this Agreement, the JCT shall at all appropriate times endeavor to operate by consensus.  In the event that one Party elects to deviate from a course of action for which consensus was achieved in the JCT, as a courtesy to the other Party, the deviating Party will notify the other Party in writing of the intended deviation and the reasons therefor.  In addition, when a Party brings a matter to the JCT for review and comment (either as required by the provisions of this Agreement or voluntarily), if the Party seeking comment elects not to incorporate the other Party’s comments, then, as a courtesy to the other Party, the Party that sought comments will notify the other Party in writing of the decision not to incorporate the comments and the reasons therefor.  With respect to matters to be discussed by the JCT, the representatives of each Party shall endeavor to present a unified position on behalf of such Party.

 

(f)   Meeting Agendas.  Each Party will disclose to the other Party its final agenda items along with appropriate related information at least ten (10) business days in advance of each meeting of the JCT.

 

3.3.  JCT Coordinators.  Each Party shall appoint a designee (a “ JCT Coordinator ”) to coordinate its activities under this Agreement.  The JCT Coordinators shall serve as primary contacts between the Parties with respect to this Agreement.  Each Party shall notify the other Party within thirty (30) days of the date of this Agreement of the appointment of its JCT Coordinator and shall notify the other Party as soon as practicable upon changing such appointment.  The JCT Coordinator appointed by each Party shall be responsible for (i) preparing such Party’s representatives serving on the JCT for meetings of the JCT, (ii) coordinating the distribution and exchange of information to, from and among such Party’s representatives serving on the JCT, and (iii) assisting in the coordination of the day-to-day activities of such Party’s representatives serving on the JCT so that the JCT can function effectively and such representatives can more effectively discharge their responsibilities as members of the JCT.

 

3.4.  Independence.  Subject to the terms of this Agreement, the activities and resources of each Party shall be managed by such Party, acting independently and in its individual capacity.  The relationship between Cubist and Chiron is that of independent contractors, and neither Party shall have the power to bind or obligate the other Party in any manner, other than as is expressly set forth in this Agreement.

 

ARTICLE 4.

 

DEVELOPMENT

 

4.1.  Key Development Studies; Diligence Obligations.  Cubist shall use Commercially Reasonable Efforts to complete, subject to the provisions of this Section 4.1, the Key Development Studies.  Cubist reserves the right to change or modify any of the Key Development Studies, or to abandon or discontinue any of the Key Development Studies, in accordance with the provisions set forth below:

 

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(a)            Cubist may change or modify any Key Development Study if such change or modification is designed to improve the probability of obtaining Regulatory Approval of the indication targeted by such Key Development Study.

 

(b)           Cubist may change, modify, abandon or discontinue any Key Development Study in response to (i) any regulatory feedback, (ii) increases of [*] or more in the anticipated costs of clinical trials for any reason other than due to an increase in the size or scope of such clinical trials, or (iii) any significant adverse event or condition relating to the safety or efficacy of a Licensed Product.

 

(c)           If Cubist abandons or discontinues any Key Development Study, Cubist will use Commercially Reasonable Efforts to replace such study with another clinical study that is designed to improve the probability of obtaining Regulatory Approval of the indication targeted by such abandoned or discontinued study (a “ Replacement Study ”).  Following any such replacement, Cubist shall use Commercially Reasonable Efforts to complete the Replacement Study provided that Cubist may change, modify, abandon or discontinue such study to the same extent as provided in this Section 4.1 for the Key Development Studies.

 

(d)           If Cubist abandons or discontinues a Key Development Study or a Replacement Study, as the case may be, and if Cubist is required but is unable, using Commercially Reasonable Efforts, to replace such abandoned or discontinued study with another Replacement Study that Cubist is able to complete using Commercially Reasonable Efforts, then Cubist will use Commercially Reasonable Efforts to replace any such abandoned or discontinued study [*] who treat infectious diseases as being difficult to treat (such new indication, a “ Replacement Indication ” and any such clinical study for a Replacement Indication, a “ Replacement Indication Study ”).  In the event of, and following, any such replacement, Cubist shall use Commercially Reasonable Efforts to complete such Replacement Indication Study provided that Cubist may change, modify, abandon or discontinue such study to the same extent as provided in this Section 4.1 for the Key Development Studies.

 

Notwithstanding anything in this Section 4.1 to the contrary, prior to making any decision to abandon or discontinue any of the Key Development Studies, any Replacement Study or any Replacement Indication Study (each a “ Required Study ”), or to change or modify any Required Study so as to effectively abandon same, Cubist shall have first provided its reasons in support of such decision to Chiron via the JCT and the JCT shall have met to discuss the merits of such decision.  Cubist shall bear all of the costs and expenses in connection with any and all development activities engaged in by Cubist and its Affiliates in connection with all Required Studies.

 

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4.2.  Cubist Development Plan.

 

(a)           Cubist shall prepare and update annually a development plan for Licensed Products (the “ Cubist Development Plan ”).  The Cubist Development Plan may include, as appropriate and without limitation, the following elements:

 

(i)            Cubist’s plan for conducting and completing the Required Studies;

 

(ii)           Cubist’s general strategy for developing indications other than the indications pursued in the Required Studies for use of Licensed Products throughout the world;

 

(iii)         design and execution of pre-clinical and clinical studies for indications other than the indications pursued in the Required Studies;

 

(iv)          development of improvements in formulation, presentation and other features of Licensed Products considered desirable for life cycle management and maximizing sales of Licensed Products throughout the world; and

 

(v)            an analysis of the total costs and expenses incurred or to be incurred by Cubist in connection with its development activities set forth in the Development Plan.

 

Cubist shall update the Cubist Development Plan annually and provide such updated Cubist Development Plan to Chiron prior to the JCT’s last scheduled meeting during the then current year.  Chiron shall have the right to review and comment, via the JCT, on the Cubist Development Plan and any and all revisions and updates thereto,  and Cubist shall, in good faith, consider all comments made by Chiron.

 

(b)           Subject to the provisions of this Section 4.2(b), Cubist shall use Commercially Reasonable Efforts to carry out and perform during each calendar year the activities set forth in the Cubist Development Plan as may be in effect for such calendar year that are materially significant for obtaining Regulatory Approval.  With the exception of the Required Studies (which Cubist may not change, modify, abandon or discontinue except in accordance with the provisions of Section 4.1 hereof), Cubist reserves the right at any time to change or modify the Cubist Development Plan or any of the preclinical studies or clinical trials described in the Cubist Development Plan, or to abandon any portion of the Cubist Development Plan or discontinue any such preclinical studies or clinical trials, in response to (i) changes in clinical or regulatory strategy, (ii) regulatory feedback, (iii) scientific feasibility, (iv) increases in the anticipated costs of clinical trials, (v) any significant adverse event or condition relating to the safety or efficacy of a Licensed Product, (vi) manufacturing feasibility, including, without limitation, changes in the anticipated costs of manufacturing, (vii) significant adverse changes in market conditions or in market potential of a drug candidate, or (viii) any other reason that Cubist determines in its reasonable discretion justifies such change, modification, abandonment or discontinuation; however, prior to making any decision to abandon any development effort (or change or modify any such effort so as to effectively abandon same), Cubist shall have first

 

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provided its reasons in support of such decision to Chiron via the JCT and the JCT shall have met to discuss the merits of such decision.

 

(c)           Except to the extent otherwise provided in Section 4.2(d) below, Cubist shall bear all of the costs and expenses in connection with any and all development activities engaged in by Cubist and its Affiliates pursuant to, and in accordance with, the provisions of this Section 4.2 and any Cubist Development Plan made hereunder.

 

(d)           In the event that Cubist and Chiron consider it appropriate to consolidate their efforts in the Territory in the Cubist Development Plan and the Chiron Development Plan into common clinical studies, the Parties shall discuss at the JCT an appropriate sharing of resources, costs and expenses in connection with such studies.  If the Parties cannot agree to a sharing of resources, costs and expenses, then neither Party shall be obligated to consolidate its respective clinical activities with those of the other Party.  Except pursuant to any such agreement between Cubist and Chiron, Cubist shall have no obligation to undertake any clinical studies or to make material protocol changes that are not required by the FDA or any other Regulatory Authorities outside the Territory but are proposed to be undertaken for the sole purpose of complying with the requirements of any Regulatory Authority in the Territory.

 

4.3.  Development by Chiron.

 

(a)   Territory Specific Studies.  The Parties acknowledge that Regulatory Authorities in the Territory may require that certain clinical studies be conducted in connection with Regulatory Approval sought in the Territory by Chiron, but which studies are not required by the FDA or any other Regulatory Authorities outside the Territory (the “ Territory Specific Studies ” and each a “ Territory Specific Study ”).  Chiron shall use Commercially Reasonable Efforts to conduct the Territory Specific Studies provided that Chiron shall be entitled to decline to perform any Territory Specific Study if, in its sole discretion, it considers the study to be prohibitively expensive, uneconomical or not in its commercial interest.  If Chiron elects not to conduct any particular Territory Specific Study, it will notify Cubist in writing of its reasons therefor and discuss same at a meeting of the JCT.  If the Parties are unable to reach an agreement on cost sharing to conduct such Territory Specific Study, Chiron shall have no further obligation to conduct such Territory Specific Study.

 

(b)   Proposed Indications.  Chiron may, from time to time, propose to Cubist through the JCT that Cubist consider pursuing development for a new indication (the “Proposed Indication” ).  Such proposal shall be in writing and contain such information as may be readily gathered which will assist Cubist to evaluate the proposal on its merits.  If after due consideration by Cubist and Chiron at the JCT, consensus is reached to pursue development for such new indication, Cubist shall add the Proposed Indication to the Cubist Development Plan.  In the event that the Parties are unable to reach consensus on adding the Proposed Indication then Chiron shall be free to pursue, at its own expense, development of such Proposed Indication.

 

(c)   Medical Affairs Studies.  Chiron may conduct Medical Affairs Studies of the Licensed Products at its sole cost and expense.  Chiron shall provide to Cubist via the JCT its proposal for any Medical Affairs Study it wishes to conduct, for review and discussion purposes only.  Cubist shall supply Licensed Products to be used in Medical Affairs Studies (i) at a

 

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purchase price equal to the Transfer Price, and (ii) in an amount not to exceed [*], during the first complete calendar year (and any part thereof) after Commercial Launch, and for any calendar year thereafter, [*] by Chiron for the corresponding period as reflected in the forecasts of purchase quantities delivered by Chiron to Cubist pursuant to the Supply Agreement.

 

(d)   Chiron Development Plan.  Chiron will prepare and update annually a development plan for Chiron’s development activities pursuant to this Section 4.3 (the “Chiron Development Plan” ). Chiron shall update the Chiron Development Plan each year to reflect the activities that Chiron expects to conduct during the following calendar year and Chiron shall provide the updated Chiron Development Plan to Cubist prior to the JCT’s last scheduled meeting during the then current year.  Cubist shall have the right to review and comment, via the JCT, on the Chiron Development Plan and any and all revisions or updates thereto and Chiron shall, in good faith, consider all comments made by Cubist. Subject to the provisions set forth below in this Section 4.3(d), Chiron shall use Commercially Reasonable Efforts to carry out and perform during each calendar year the activities set forth in the Chiron Development Plan, as may be in effect for such calendar year, that are materially significant for obtaining Regulatory Approval in the Territory.  With the exception of the Territory Specific Studies (which Chiron may decline to perform in accordance with the provisions of Section 4.3(a) above), Chiron reserves the right at any time to change or modify the Chiron Development Plan or any of the preclinical studies or clinical trials described in the Chiron Development Plan, or to abandon any portion of the Chiron Development Plan or discontinue any such preclinical studies or clinical trials, in response to (i) changes in clinical or regulatory strategy of either Chiron or Cubist, (ii) regulatory feedback, (iii) scientific feasibility, (iv) increases in the anticipated costs of clinical trials, (v) any significant adverse event or condition relating to the safety or efficacy of a Licensed Product, (vi) manufacturing feasibility, including, without limitation, changes in the anticipated costs of manufacturing and/or procuring Licensed Product, (vii) significant adverse changes in market conditions or in market potential of a drug candidate, or (viii) any other reason that Chiron determines in its reasonable discretion justifies such change, modification, abandonment or discontinuation; however, prior to making any decision to abandon any development effort (or change or modify any such effort so as to effectively abandon same), Chiron shall have first provided its reasons in support of such decision to Cubist via the JCT and the JCT shall have met to discuss the merits of such decision. The exercise by Chiron of any right that it may have under this Section 4.3(d) to change, modify, abandon or discontinue all or any portion of the Chiron Development Plan or any of the preclinical studies or clinical trials described in the Chiron Development Plan shall not relieve Chiron from its obligations to use Commercially Reasonable Efforts under Section 5.1 or Section 6.1 hereof.

 

(e)   Limitation on Chiron’s Development Rights.  Notwithstanding anything in this Section 4.3 to the contrary, in the event that at any time Cubist reasonably believes, on the basis of medical, clinical, scientific and other data, facts and knowledge that have been published or are otherwise documented and available or are known to subject matter experts, and presented to Chiron, that any of the development activities being conducted or to be conducted by Chiron pursuant to this Section 4.3 is substantially likely to result in Global Harm, Cubist shall promptly convene a meeting of the JCT to discuss same.  Prior to the meeting, Cubist will provide to Chiron all relevant documents, materials and information suggesting the likelihood of Global Harm as well as Cubist’s recommendations to Chiron on the course of action (e.g. modify the

 

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study, terminate the study, etc.).  At the JCT, the Parties will discuss and attempt to reach consensus on the course of action.  Following such discussion, in the absence of consensus, Cubist shall have the right to require Chiron to modify or discontinue those development activities that Cubist reasonably and in good faith believes, based on the totality of the data, facts and knowledge presented to Chiron and the data, facts and knowledge presented by Chiron in response, are substantially likely to result in Global Harm.  In the event that there is no person (including a successor-in-interest to Cubist) to carry out Cubist’s development obligations under Section 4.1, then (i) the provisions of this Section 4.3(e) shall not be applicable to the Licensed Product(s) as to which such development obligations are not being performed, and (ii) Chiron shall be free from its obligations to consult via the JCT under Sections 4.3(b) and 4.3(c) with respect to the Licensed Product(s) as to which such development obligations are not being performed.   In the event that a successor-in-interest to Cubist shall be in material breach of such development obligations, then (i) the provisions of this Section 4.3(e) shall not be applicable to the Licensed Product(s) and the indication(s) as to which such development obligations are not being performed, and (ii) Chiron shall be free from its obligations to consult via the JCT under Sections 4.3(b) and 4.3(c) with respect to the Licensed Product(s) and the indications as to which such development obligations are not being performed.

 

4.4.  Access to Chiron Data.

 

(a)    Information Sharing.  Chiron will provide to Cubist all Information that results from any development activities conducted pursuant to Section 4.3 above or the Chiron Development Plan (the “Chiron Data” ).  Subject to Section 4.4(c), any such Chiron Data so provided shall be strictly for information purposes only and Cubist shall have no right to use the Chiron Data for any purpose whatsoever, including without limitation, to access, reference, interpret, disclose, tabulate, analyze or otherwise use any such Chiron Data for the purpose of supporting any Drug Approval Application anywhere in the world.

 

(b)    Reciprocating Licensee.  Cubist may share the Chiron Data with any Other Licensee who has agreed in writing to permit reciprocal sharing by Cubist with Chiron of the results of such Other Licensee’s own development activities in accordance with the provisions of Section 5.3 hereof (each a “Reciprocating Licensee” ), provided that Cubist has first communicated the restrictions set forth in this Section 4.4 on use of the Chiron Data and obtained the Reciprocating Licensee’s written agreement to abide by such restrictions.

 

(c)    License Option.  Chiron hereby grants to Cubist an option to acquire a nonexclusive license on commercially reasonable terms (as to which the Parties shall agree thereon at any time on or prior to the date of the exercise of the option) to access, reference, interpret, disclose, tabulate, analyze or otherwise use all Chiron Data for the purpose of supporting Drug Approval Applications in any country outside the Territory.  The Parties contemplate that such license will include a right of Cubist to grant sublicenses to any Reciprocating Licensee who agrees in writing to grant a reciprocal option to Cubist to acquire a nonexclusive license on commercially reasonable terms (as to which such Reciprocating Licensee and Cubist shall agree thereon at any time on or prior to the date of the exercise of the option) to access, reference, interpret, disclose, tabulate, analyze or otherwise use all similar development data of such Reciprocating Licensee for the purpose of supporting Drug Approval

 

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Applications in any country within the Territory, with a right of Cubist to grant sublicenses to Chiron.

 

4.5.  No Debarred Personnel.  In the course of the development of Licensed Products, neither Party shall use, during the term of this Agreement, the services of any employee or consultant that has been debarred by the FDA or Regulatory Authorities, or, to the best of such Party’s knowledge, is the subject of debarment proceedings by the FDA or Regulatory Authorities.

 

4.6.  Chiron Compliance.  In connection with any development activities undertaken by Chiron in connection with any Licensed Product, Chiron shall comply with all applicable laws and regulations regarding the care and use of experimental animals, as such laws and regulations are in effect where such development activities are undertaken.  All animals used by Chiron to evaluate Daptomycin or any Licensed Product shall be provided humane care and treatment in accordance with the most acceptable veterinary practices.

 

ARTICLE 5.

 

REGULATORY

 

5.1.  Regulatory Plan; Diligence Obligation.

 

(a)    Cubist’s and Other Licensees’ Activities.  Cubist shall prepare and present to Chiron via the JCT, and update annually, its regulatory plan for the Licensed Products outside of the Territory.  Cubist shall keep Chiron apprised of the status of Cubist’s and the Other Licensees’ efforts to obtain Regulatory Approval in countries outside of the Territory.  Prior to making any decision to abandon any efforts and activities set forth in such regulatory plan to obtain Regulatory Approval in the United States for a Licensed Product (or for an indication or formulation of same), Cubist shall have first provided its reasons in support of such decision to Chiron via the JCT and the JCT shall have met to discuss the reasons for such decision.

 

(b)   Regulatory Plan.  Within the time period set forth in Section 5.1(c)(i), Chiron shall prepare and deliver to Cubist one regulatory plan for the Territory, which regulatory plan shall set forth Chiron’s plan, strategy and proposed activities to obtain Regulatory Approval in the Territory for the Launch Indication(s) (the “Regulatory Plan” ).  The Regulatory Plan may include, as appropriate and without limitation, the following elements:

 

(i)            Chiron’s general strategy for seeking Regulatory Approval for the Launch Indication(s) in the Major Market Countries;

 

(ii)           Chiron’s plans for the preparation and filing of applications for Regulatory Approval for the Launch Indication(s) in the Major Market Countries;

 

(iii)         Chiron’s general strategy for seeking Regulatory Approval for the Launch Indication(s) in the remaining countries of the Territory, however such outline may at Chiron’s sole discretion deal with such remaining countries individually or in the aggregate;

 

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(iv)          if known, a description of any clinical studies or clinical data that will be necessary in order to obtain Regulatory Approval in the countries referenced in the foregoing clauses (i)-(iii) of this Section 5.1(b), with respect to the Launch Indication(s), and a discussion of the impact of any such clinical studies or clinical data requirement on the timing of obtaining Regulatory Approval for the Launch Indication(s) in such country or countries; and

 

(v)            the proposed timetable for obtaining anticipated Regulatory Approval for the Launch Indication(s) in the countries referenced in the foregoing clauses (i) and (ii) of this Section 5.1(b), and the countries referenced in the foregoing clause (iii) of this Section 5.1(b), individually or in the aggregate, and a discussion of the factors that could result in an acceleration or a delay of such proposed timetable.

 

Chiron shall update the Regulatory Plan annually and provide such updated Regulatory Plan to Cubist prior to the JCT’s last scheduled meeting during the then current year.  Such updated Regulatory Plan shall, at such later time as and when considered appropriate by Chiron in its sole discretion, cover, among other things, additional Licensed Products, additional indications and additional countries, considered individually or in the aggregate.  Cubist shall have the right to review and comment, via the JCT, on the Regulatory Plan and any and all revisions and updates thereto, and Chiron shall, in good faith, consider all comments made by Cubist.  For the avoidance of doubt, the foregoing provisions of this Section 5.1(b) shall not impose any obligation on Chiron to have any plan, strategy or any proposed activities, or to conduct any particular activities, with respect to any specific country within the Territory (it being understood that Chiron may have no such plan, strategy or any proposed activities with respect to any specific country in the Territory) but shall only impose an obligation on Chiron to set forth in the Regulatory Plan any such plan, strategy or proposed activities with respect to any specific country within the Territory to the extent that Chiron has any such plan, strategy or proposed activities. The provisions of the foregoing sentence shall not relieve Chiron from its obligations to use Commercially Reasonable Efforts under Section 5.1(c) below.

 

Subject to the provisions of this Section 5.1(b), Chiron shall use Commercially Reasonable Efforts to carry out and perform during each calendar year the plan, strategy and proposed activities set forth in the Regulatory Plan, as may be in effect for such calendar year, that are materially significant for obtaining Regulatory Approval in the Territory.  Chiron reserves the right at any time to change or modify the Regulatory Plan in response to (i) changes in clinical strategy or regulatory strategy of either Chiron or Cubist, (ii) regulatory feedback, (iii) scientific feasibility, (iv)  increases in anticipated costs of any Territory Specific Studies, (v) any significant adverse event or condition relating to the safety or efficacy of a Licensed Product, (vi) manufacturing feasibility, including, without limitation, changes in the anticipated costs of manufacturing and/or procuring Licensed Product, (v) significant adverse changes in market conditions or a market potential of a drug candidate, or (vi) any other reason that Chiron determines in its reasonable discretion justifies such change or modification; however, prior to making any decision to change or modify the Regulatory Plan (other than the annual updates), Chiron shall have first provided its reasons in support of such decision to Cubist via the JCT and the JCT shall have met to discuss the merits of such decision.  The exercise by Chiron of any right that it may have under this Section 5.1(b) to change or modify all or any portion of the Regulatory Plan shall not relieve Chiron from its obligations to use Commercially Reasonable Efforts under Section 5.1(c) below or Section 6.1 hereof.

 

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(c)   Specific Regulatory Activities.  Chiron will use Commercially Reasonable Efforts to:

 

(i)             inform Cubist whether Chiron will pursue a central filing strategy or a mutual recognition strategy in the European Union as soon as practicable, but in no event later than [*] after the date that Cubist provides Chiron with all information submitted by Cubist to the FDA in connection with its application for Regulatory Approval of Licensed Product in the United States;

 

(ii)            if Chiron has determined to pursue a central filing strategy in the European Union, prepare and file an application to obtain Regulatory Approval of Licensed Products for the Launch Indication(s) with respect to all countries in the European Union within [*] after either (a) receiving from Cubist, or (b) collection on its own, as the case may be, all data and information required for such filing;

 

(iii)          if Chiron has determined to pursue a mutual recognition strategy in the European Union, prepare and file an application for Regulatory Approval of Licensed Products for the Launch Indication(s) in the reference member state within [*] after either (a) receiving from Cubist, or (b) collecting on its own, as the case may be, all data and information required for such filings;

 

(iv)           if Chiron has determined to pursue a mutual recognition strategy in the European Union, prepare and file applications for Regulatory Approval of Licensed Products for the Launch Indication(s) in all Major Market Countries within [*] of obtaining Regulatory Approval in the reference member state;

 

(v)             if Chiron has determined to pursue a mutual recognition strategy in the European Union, then no later than [*] after obtaining Regulatory Approval in the reference member state, prepare and file applications for Regulatory Approval of Licensed Products for the Launch Indication(s) in at least [*] other countries to be selected by Chiron from the countries listed under the caption “EUROPE” on Exhibit D hereto that are not Major Market Countries;

 

(vi)           no later than [*] after obtaining Regulatory Approval in the reference member state (if pursuing a mutual recognition strategy in the European Union) or in all countries of the European Union (if pursuing a central filing strategy in the European Union), prepare and file an application for Regulatory Approval of Licensed Products for the Launch Indication(s) in at least one country listed under the caption “LATIN AMERICA” on Exhibit D hereto, provided, however , that, in lieu of complying with the foregoing provisions of this clause (vii), Chiron may elect, instead, to have at least [*] with the Regulatory Authorities of at least [*] countries listed under the caption “LATIN AMERICA” on Exhibit D hereto no later than such [*] period, and, if Chiron makes such election, then the number of countries as to which Chiron must satisfy the requirements of clause (v) above in this Section 5.1(c) shall be increased from [*] other countries in the European Union to [*] other countries in the European Union;

 

(vii)          respond in timely fashion to requests for data and information from Regulatory Authorities, provided that such data and information are in Chiron’s possession,

 

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given to Chiron by Cubist or otherwise available to Chiron without having to incur any substantial cost in order to acquire such data and information;

 

(viii)         meet with officials from Regulatory Authorities at such times as may be requested by such Regulatory Authorities;

 

(ix)           subject to Chiron’s right under Section 4.3(a) to decline to perform any given Territory Specific Study for economic reasons (and subject to Cubist’s right under Section 4.3(e) to require Chiron to modify or discontinue a specific study for substantial likelihood of Global Harm), perform the following activities, as appropriate, with respect to any Territory Specific Study:

 

(1)          prepare draft protocols for the Territory Specific Study after the Regulatory Authority has confirmed any such requirement for such study;

 

(2)          take such actions to obtain approvals from appropriate Regulatory Authorities and other governmental authorities of any draft protocol and corresponding clinical trial application for the Territory Specific Study as soon as reasonably practicable after such draft protocol has been prepared;

 

(3)          identify and engage suitable investigators and study sites for the Territory Specific Study as soon as reasonably practicable after the draft protocol for the Territory Specific Study has been prepared and such protocol and corresponding clinical trial application has been approved by the appropriate Regulatory Authorities and other governmental authorities; and

 

(4)          commence enrollment for the Territory Specific Study as soon as reasonably practicable after all required approvals have been obtained, suitable investigators and study sites have been engaged, suitable quantities of Licensed Product for clinical use have been obtained by Chiron, and all other necessary or advisable steps have been taken to prepare investigators and study sites to enroll patients;

 

(x)            conduct and complete any Territory Specific Study in accordance with the approved protocol, subject to (X) Chiron’s right under Section 4.3(a) to decline to perform any given Territory Specific Study for economic reasons, (Y) Cubist’s right under Section 4.3(e) to require Chiron to modify or discontinue a specific study for substantial likelihood of Global Harm, and (Z) completion of the steps described in Section 5.1(c)(ix), above.

 

Notwithstanding any provision of this Section 5.1(c) to the contrary, Chiron shall not be deemed to be in material breach of any of its obligations under this Section 5.1(c) to prepare and file applications for Regulatory Approval for each Launch Indication if and to the extent that Chiron cannot meet any of such obligations solely by virtue of the fact that one or more Regulatory Authorities do not permit Chiron to file such applications for Regulatory Approval for only a single indication.  If a Regulatory Authority in the Territory informs Chiron that it may not file applications for Regulatory Approval for a single indication, then the Parties shall convene a meeting of the JCT to discuss alternative strategies that could be pursued by the

 

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Parties.  In the event that Chiron is not permitted to file applications for Regulatory Approval in any country within the Territory for a single indication, then the Parties agree that as soon thereafter as Chiron is permitted to file for Regulatory Approval in such country (whether because such filing will be for more than a single indication or because the regulatory environment in such country has changed so as to permit a filing for Regulatory Approval for a single indication), then Chiron shall at that time again be obligated to comply with the requirements, if any, imposed by this Section 5.1(c) with respect to preparing and making filings for Regulatory Approval in such country, and, for purposes of applying the timelines in this Section 5.1(c) at that time, the date on which Chiron is first permitted to make such filing in such country shall be deemed to be the end of the [*] period after Cubist has given to Chiron all of the information necessary to make such filing.

 

(d)   Costs and Expenses.  Chiron shall bear all of the costs and expenses in connection with any and all regulatory activities within the Territory engaged in by Chiron and its Affiliates pursuant to, and in accordance with, the provisions of this Section 5.1, it being understood that the foregoing regulatory activities shall not include any activities of Chiron to assist Cubist with its development obligations under this Agreement or outlined in the Cubist Development Plan.  Cubist shall bear all of the costs and expenses in connection with any and all regulatory activities engaged in by Cubist and its Affiliates in connection with obtaining and maintaining Regulatory Approval for Licensed Products outside the Territory, regardless of whether such activities occur within the Territory or outside the Territory.

 

(e)   Limitation on Activities.  Notwithstanding anything in this Section 5.1 or elsewhere in this Agreement to the contrary, in the event that at any time Cubist reasonably believes on the basis of medical, clinical, scientific and other data, facts and knowledge that have been published or are otherwise documented and available or are known to subject matter experts, and presented to Chiron, that obtaining Regulatory Approval in the Territory for any Licensed Product for any particular indication either: (i) substantially increases the risk that an adverse safety event will occur; or (ii) would result in the use of a Licensed Product to treat an indication for which such Licensed Product is an ineffective or inferior therapeutic alternative and such use would materially adversely affect the development, marketing, distribution or Commercialization of such Licensed Product or any other Licensed Product within or outside the Territory for other indications; Cubist shall promptly convene a meeting of the JCT to discuss same.  Prior to the meeting, Cubist will provide to Chiron all relevant documents, materials and information suggesting the likelihood of events described in clauses (i) and (ii) above, as well as Cubist’s recommendations to Chiron on the course of action (e.g., not seeking approval of a particular Licensed Product or not seeking approval of a particular indication, etc.).  At the JCT, the Parties will discuss and attempt to reach consensus on the course of action.  Following such discussion, in the absence of consensus, Cubist shall have the right to require Chiron to modify or discontinue those regulatory activities that Cubist reasonably and in good faith believes, based on the totality of the data, facts and knowledge presented to Chiron and the data, facts and knowledge presented by Chiron in response, are substantially likely to result in the events described in clause (i) or clause (ii) above in this Section 5.1(e).

 

5.2.  Ownership of Regulatory Approvals.  Except to the extent otherwise provided elsewhere in this Agreement, Chiron shall file in its own name and own all Drug Approval Applications and Regulatory Approvals for Licensed Products in the Territory, and shall be

 

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solely responsible for all communications with regulatory authorities in such countries. All such filings shall be made in such manner as may be required under the laws of the applicable jurisdiction to allow for the expeditious transfer of such Drug Approval Applications and Regulatory Approvals for Licensed Products to Cubist if such transfer is required pursuant to Article 13 hereof upon termination (but not expiration) of this Agreement.  Promptly following execution of this Agreement, Cubist shall transfer and assign to Chiron any and all such Drug Approval Applications or Regulatory Approvals held by Cubist as of the date hereof.

 

5.3.  Chiron Access to Cubist and Other Licensee Data.

 

(a)  Information Sharing.  Subject to the provisions of Section 5.3(d) below, during the Term, Cubist will provide to Chiron any Cubist Data and Other Licensee Data necessary or useful for making regulatory filings for, or marketing of, Licensed Products in the Territory as such Cubist Data and Other Licensee Data are or become available. The Parties shall discuss, via their participation in the JCT, the form in which Cubist shall provide Chiron Cubist Data and Other Licensee Data pursuant to this Section 5.3(a).  Subject to the provisions of Section 5.3(c) below, any such Other Licensee Data so provided shall be strictly for information purposes only and Chiron shall have no right to use the Other Licensee Data for any purpose whatsoever, including without limitation, to access, reference, interpret, disclose, tabulate, analyze or otherwise use any such Other Licensee Data for the purpose of supporting any Drug Approval Application anywhere in the world.

 

(b)  Chiron Use of Cubist Data.  Chiron shall have a right of access, a right of reference and the right to use and incorporate all Cubist Data provided to it pursuant to this Section 5.3 in its Drug Approval Applications for Regulatory Approvals of Licensed Products within the Territory.

 

(c)  License Option.  Cubist shall use Commercially Reasonable Efforts to obtain the written agreement of each Other Licensee granting to Cubist an option to acquire a nonexclusive license to access, reference, interpret, disclose, tabulate, analyze or otherwise use all Other Licensee Data for the purpose of supporting Drug Approval Applications in any country within the Territory.  Cubist shall also use Commercially Reasonable Efforts to obtain the written agreement of such Other Licensee that Cubist shall have the right to grant to Chiron a sublicense to any such nonexclusive license such that Chiron can access, reference, interpret, disclose, tabulate, analyze or otherwise use all the Other Licensee Data of such Other Licensee for the purpose of supporting Drug Approval Applications in any country w