CONFIDENTIAL TREATMENT REQUEST
Exhibit 10.1
COLLABORATIVE RESEARCH AND LICENSE AGREEMENT
between
CUBIST PHARMACEUTICALS, INC.
and
NOVARTIS PHARMA AG
dated as of February 3, 1999
CONFIDENTIAL TREATMENT
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS ............................................ 1
1.1 "Active Cubist Compound" ................................... 1
1.2 "Active Cubist Compound Derivative" ........................ 1
1.3 "Affiliate" ................................................ 1
1.4 "Back-Up Compound" ......................................... 2
1.5 "Candidate Target" ......................................... 2
1.6 "Collaboration Target List" ................................ 2
1.7 "Committed Compound" ....................................... 2
1.8 "Cubist Compound" .......................................... 2
1.9 "Cubist Invention" ......................................... 2
1.10 "Cubist Patent Rights" ..................................... 2
1.11 "Cubist Product" ........................................... 2
1.12 "Cubist Technology" ........................................ 2
1.13 "Discontinued Novartis Compound" ........................... 3
1.14 "Discontinued Target" ...................................... 3
1.15 "Discontinued Validated Assay" ............................. 3
1.16 "EDC Status" ............................................... 3
1.17 "Effective Date" ........................................... 3
1.18 "Exclusivity Period" ....................................... 3
1.19 "FDA" ...................................................... 3
1.20 "Final Proposal" ........................................... 3
1.21 "First Commercial Sale" .................................... 3
1.22 "First Refusal Right" ...................................... 3
1.23 "Invention" ................................................ 3
1.24 "Joint Invention" .......................................... 3
1.25 "Joint Patent Rights" ...................................... 4
1.26 "Joint Research Steering Committee" ........................ 4
1.27 "Joint Research Steering Committee Term" ................... 4
1.28 "Joint Technology" ......................................... 4
1.29 "Major Market Country" ..................................... 4
1.30 "Milestone Revenue Income" ................................. 4
1.31 "NDA" ...................................................... 4
1.32 "Net Sales" ................................................ 4
1.33 "Novartis Compound" ........................................ 5
1.34 "Novartis Improvement" ..................................... 5
1.35 "Novartis Invention" ....................................... 5
1.36 "Novartis Patent Rights" ................................... 5
1.37 "Novartis Product" ......................................... 5
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TABLE OF CONTENTS
(continued)
1.38 "Novartis Technology"......................................................5
1.39 "Party"....................................................................6
1.40 "Primary Contact Person"...................................................6
1.41 "Product"..................................................................6
1.42 "Research Funding Payment".................................................6
1.43 "Research Plan"............................................................6
1.44 "Research Program".........................................................6
1.45 "Research Year"............................................................6
1.46 "Selected Target"..........................................................6
1.47 "Seller"...................................................................6
1.48 "Stock Purchase Agreement..................................................6
1.49 "Third Party"..............................................................6
1.50 "Valid Claim"..............................................................6
1.51 "Validated Assay"..........................................................6
1.52 "VITA(TM)".................................................................7
ARTICLE 2 SCOPE AND MANAGEMENT OF THE RESEARCH PROGRAM.......................7
2.1 General...................................................................7
2.2 Primary Contact Persons...................................................7
2.3 Joint Research Steering Committee.........................................7
2.3.1 Formation, Composition and Term..................................7
2.3.2 Joint Research Steering Committee Functions and Powers...........7
2.3.3 Decisions of the Joint Research Steering Committee...............8
2.3.4 Deadlock.........................................................8
2.3.5 Co-Chairs........................................................9
2.3.6 Minutes and Reports..............................................9
2.3.7 Information and Results..........................................9
2.4 Availability of Employees.................................................9
2.5 Visit of Facilities.......................................................9
Article 3 THE RESEARCH PROGRAM...............................................9
3.1 Performance of Research Program...........................................9
3.2 Research Plan............................................................10
3.3 Subcontracts.............................................................10
3.4 Results and Records......................................................10
Article 4 TARGET SELECTION AND VALIDATION; VALIDATED ASSAY DEVELOPMENT......10
4.1 Collaboration Target List................................................10
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TABLE OF CONTENTS
(continued)
Page
4.2 Candidate Targets....................................................11
4.2.1 Selection...................................................11
4.2.2 Exclusivity Period..........................................11
4.3 Selected Targets.....................................................11
4.3.1 Selection...................................................11
4.3.2 Validated Assay Development.................................11
4.3.3 Validated Assay Transfer and Implementation.................11
ARTICLE 5 COMPOUND SCREENING; ACTIVE CUBIST COMPOUNDS......................12
5.1 Screening of Compounds...............................................12
5.1.1 Third Party Compounds.......................................12
5.2 Identification of Active Cubist Compounds............................12
5.2.1 Active Cubist Compound......................................12
5.2.2 Novartis Compound/Active Cubist Compound Derivative.........13
ARTICLE 6 INTELLECTUAL PROPERTY RIGHTS.....................................13
6.1 Ownership of Inventions..............................................13
6.1.1 Disclosure of Inventions....................................13
6.1.2 Cubist Inventions...........................................13
6.1.3 Novartis Inventions.........................................13
6.1.4 Joint Inventions............................................13
6.1.5 Cooperation of Employees....................................13
6.2 Filing, Prosecution and Maintenance of Patent Rights.................13
6.2.1 Cubist Inventions...........................................13
6.2.2 Novartis Inventions.........................................14
6.2.3 Joint Inventions............................................14
6.2.4 Patent Term Extension.......................................14
6.3 No Other Technology Rights...........................................14
6.4 Infringement Claims..................................................15
6.5 Enforcement of Joint Patent Rights...................................15
ARTICLE 7 OPTION AND LICENSE RIGHTS........................................16
7.1 VITA(TM).............................................................16
7.2 Candidate Targets....................................................16
7.2.1 Exclusive License During Exclusivity Period.................16
7.2.2 Co-Exclusive License After Exclusivity Period...............16
7.2.3 Effect of Termination of Research Program...................16
7.3 Selected Targets and Discontinued Targets............................16
7.3.1 Exclusive License to Selected Targets.......................16
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TABLE OF CONTENTS
(continued)
Page
7.3.2 Due Diligence Obligation for Selected Targets and
Corresponding Validated Assays..............................17
7.3.3 Co-Exclusive License to Discontinued Targets..................17
7.4 Validated Assays and Discontinued Validated Assays.....................18
7.4.1 Exclusive License to Validated Assays.........................18
7.4.2 Co-exclusive License to Discontinued Validated Assays.........18
7.5 Active Cubist Compounds and Back-Up Compounds..........................18
7.5.1 Active Cubist Compounds.......................................18
7.5.2 Due Diligence Obligation for Active Cubist Compounds..........18
7.5.3 Cubist First Refusal Right....................................19
7.5.4 Back-Up Compounds.............................................20
7.6 Sublicenses and Licenses...............................................21
7.7 Reservation of Rights..................................................21
7.8 Manufacturing Rights...................................................21
7.9 Trademarks.............................................................22
ARTICLE 8 PAYMENTS...........................................................22
8.1 Funding of the Research Program by Novartis............................22
8.2 Equity Investment by Novartis..........................................22
8.3 Milestone Payments by Novartis.........................................22
8.3.1 Technology Transfer Milestone Payments........................22
8.3.2 Development Milestone Payments................................23
8.3.3 Payment by Novartis of Milestone Payments.....................24
8.4 Royalties on Net Sales by Novartis.....................................24
8.5 Percentage of Milestone Revenue Income and Royalties by Cubist.........25
8.6 Method of Payment/Reports/Audits.......................................26
8.6.1 Royalty Reports, Exchange Rates...............................26
8.6.2 Audits........................................................26
8.6.3 Royalty Payment Terms.........................................27
8.7 Withholding of Taxes...................................................27
8.8 Exchange Controls......................................................27
8.9 Interest on Late Payments..............................................28
ARTICLE 9 CONFIDENTIALITY....................................................28
9.1 Nondisclosure Obligations..............................................28
9.2 Samples................................................................28
9.3 Terms of this Agreement/Use of Name....................................28
9.4 Publications...........................................................29
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TABLE OF CONTENTS
(continued)
Page
ARTICLE 10 REPRESENTATIONS AND WARRANTIES............................................................29
10.1 Authorization.................................................................................29
10.2 Warranty Disclaimer...........................................................................29
ARTICLE 11 INDEMNITY.................................................................................30
11.1 Novartis Indemnity Obligations................................................................30
11.2 Cubist Indemnity Obligations..................................................................30
11.3 Procedure.....................................................................................30
11.4 Novartis Insurance............................................................................31
11.5 Cubist Insurance..............................................................................31
ARTICLE 12 TERM AND TERMINATION......................................................................31
12.1 The Research Program..........................................................................31
12.1.1 Expiration of the Research Program...................................................31
12.1.2 Termination of the Research Program..................................................31
12.1.3 Existing Obligations.................................................................31
12.1.4 Effect of Expiration and Termination of Research Program.............................31
12.2 Expiration of This Agreement..................................................................32
12.3 Termination of This Agreement.................................................................32
12.3.1 Material Breach......................................................................32
12.3.2 Failure of Novartis to Pay...........................................................32
12.3.3 Failure of Cubist to Pay.............................................................32
12.3.4 Bankruptcy...........................................................................32
12.3.5 By Novartis..........................................................................32
12.4 Failure of Novartis to Diligently Develop and Sell Novartis
Product Based on Active Cubist Compound ...................................................32
12.5 Effect of Expiration or Termination of This Agreement.........................................33
12.5.1 Existing Obligations.................................................................33
12.5.2 Survival of Sublicenses..............................................................33
12.5.3 Survival.............................................................................33
12.5.4 Effect of Termination by Novartis....................................................33
12.5.5 Effect of Termination by Cubist......................................................33
12.5.6 Disposition of Inventory of Products.................................................33
ARTICLE 13 MISCELLANEOUS.............................................................................34
13.1 Force Majeure.................................................................................34
13.2 Assignment....................................................................................34
13.3 Severability..................................................................................34
13.4 Notices.......................................................................................34
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TABLE OF CONTENTS
(continued)
Page
13.5 Applicable Law.............................................35
13.6 Dispute Resolution.........................................35
13.6.1 Joint Research Steering Committee.................35
13.6.2 Chief Executive Officers..........................35
13.6.3 Mediation.........................................35
13.6.4 Arbitration.......................................36
13.7 Entire Agreement...........................................36
13.8 Headings...................................................36
13.9 Independent Contractors....................................36
13.10 Agreement Not to Solicit Employees.........................36
13.11 Waiver.....................................................36
13.12 Counterparts...............................................37
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CONFIDENTIAL TREATMENT
COLLABORATIVE RESEARCH AND LICENSE AGREEMENT
THIS COLLABORATIVE RESEARCH AND LICENSE AGREEMENT dated as of the 3rd
day of February, 1999 (the "Agreement") is made between CUBIST PHARMACEUTICALS,
INC., a Delaware corporation having its principal place of business at ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇.▇.▇. ("Cubist"), and NOVARTIS PHARMA
AG, a Swiss corporation having its principal place of business at ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇, ▇▇-▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ("Novartis").
RECITALS
A. Cubist has research facilities and experienced scientists, research
associates and other personnel at its facilities in Cambridge, Massachusetts
which enable it to conduct research activities.
B. Cubist possesses know-how, expertise and intellectual property
rights pertaining to antiinfective drug discovery and to a proprietary drug
discovery technology known as VITA(TM) which couples the validation of the
inhibition of a target in an animal model during an established infection with
assay development and screening for the discovery of novel drug leads.
C. Novartis is engaged in the research, development, marketing,
manufacturing and distribution of pharmaceutical products.
D. Novartis desires to sponsor research by Cubist using its VITA(TM)
technology to identify candidate targets and compounds.
NOW THEREFORE, in consideration of the premises and of the covenants
herein contained, the parties hereto mutually agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the terms defined in this Article shall
have the meanings specified below, whether used in their singular or plural
form:
1.1 "Active Cubist Compound" shall mean any Cubist Compound, other than
a Committed Compound, screened in a Validated Assay during the Research Program
that is shown to meet the criteria for antibacterial activity against a Selected
Target as determined by the Joint Research Steering Committee, and any
derivative, isomer, analog or homolog thereof which is made or synthesized by
Cubist.
1.2 "Active Cubist Compound Derivative" shall mean, subject without
limitation to the provisions of Sections 5.2.2 and 7.5.1, any derivative,
isomer, analog or homolog of an Active Cubist Compound which is made or
synthesized by Novartis.
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1.3 "Affiliate" shall mean any corporation or other entity which
controls, is controlled by, or is under common control with a Party to this
Agreement. A corporation or other entity shall be regarded as in control of
another corporation or entity if it owns or directly or indirectly controls more
than fifty percent (50%) of the voting stock or other ownership interest of the
other corporation or entity, or if it possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of the
corporation or other entity or the power to elect or appoint fifty percent (50%)
or more of the members of the governing body of the corporation or other entity.
1.4 "Back-Up Compound" shall have the meaning set forth in Section
7.5.4.
1.5 "Candidate Target" shall mean a target from the Collaboration
Target List selected by the Joint Research Steering Committee to undergo
research for target validation and/or assay development in accordance with
Section 4.2 and for which benchwork and experimental investigation has been
initiated.
1.6 "Collaboration Target List" shall mean potential bacterial targets
identified by Cubist or Novartis and selected by the Joint Research Steering
Committee in accordance with Section 4.1 for further research, evaluation and
development in the Research Program.
1.7 "Committed Compound" shall mean a compound owned or controlled by
Cubist that has been licensed, reserved or otherwise committed to a Third Party
or an internal program of Cubist or an Affiliate of Cubist.
1.8 "Cubist Compound" shall mean any compound owned or controlled by
Cubist or obtained by Cubist from a Third Party (to the extent that transfer or
sublicensing is permitted by such Third Party) and any derivative, isomer,
analog or homolog thereof made or synthesized by Cubist.
1.9 "Cubist Invention" shall mean any Invention that (a) is conceived
during and as a result of the Research Program solely by employees of Cubist or
others acting on behalf of Cubist or (b) is related to VITA(TM) and is conceived
during and as a result of the Research Program either solely by employees of
Cubist or solely by employees of Novartis or jointly by employees of Cubist and
Novartis or others working on behalf of Cubist and Novartis.
1.10 "Cubist Patent Rights" shall mean any United States or foreign
patent applications, provisional patent applications, patents, patent
extensions, certificates of invention and applications for certificates of
invention, together with any divisions, continuations or continuations-in-part,
reissues, renewals, or additions thereof owned or controlled by Cubist as of the
Effective Date or during the term or as a result of the Research Program.
1.11 "Cubist Product" shall mean any product which is discovered,
identified or developed by Cubist or its Affiliates or licensees through the use
of a Candidate Target, Discontinued Target or Discontinued Validated Assay and
for which product, pursuant without limitation to the provisions of Sections
7.2.2, 7.2.3, 7.3.3 and 7.4.2, Cubist has obtained the right to make, have made,
use, sell and import.
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1.12 "Cubist Technology" shall mean all proprietary data, information,
know-how, inventions, trade secrets, copyrights, regulatory submissions or other
intellectual property of any kind, other than Cubist Patent Rights, owned or
controlled by Cubist as of the Effective Date and during the term of the
Research Program.
1.13 "Discontinued Novartis Compound" shall mean both a "Globally
Discontinued Compound" and a "Locally Discontinued Compound" as their meaning is
set forth in Section 7.5.3(b).
1.14 "Discontinued Target" shall mean a Selected Target which Novartis
is no longer interested in or for which Novartis fails to meet its due diligence
obligations in accordance with Section 7.3.
1.15 "Discontinued Validated Assay" shall mean a Validated Assay which
Novartis is no longer interested in or for which Novartis fails to meet its due
diligence obligations in accordance with Section 7.3, as more fully described in
Section 7.4.2.
1.16 "EDC Status" or "Early Development Compound Status" shall mean the
point at which a development compound is declared, following Novartis' standard
compound development procedures, an Early Development Compound (EDC) by
Novartis' Innovation Management Board or some other similar body, which
declaration authorizes the completion of the preclinical development program
thereby allowing progression of the compound to Phase I clinical trials.
1.17 "Effective Date" shall mean the date first set forth above.
1.18 "Exclusivity Period" shall mean the period during which a
Candidate Target is available for selection by the Joint Research Steering
Committee as a Selected Target as described in Section 4.2.
1.19 "FDA" shall mean the United States Food and Drug Administration.
1.20 "Final Proposal" shall have the meaning set forth in Section
7.5.3.
1.21 "First Commercial Sale" of any Product shall mean the first sale
for use or consumption by the general public of such Product in a country after
required regulatory marketing and pricing approval has been granted by the
governing health authority of such country.
1.22 "First Refusal Right" shall have the meaning set forth in the two
subsections of 7.5.3(b).
1.23 "Invention" shall mean all ideas, data, writings, inventions,
discoveries, improvements and other technology which are directed to the
identification, development, manufacture or use of a target, Candidate Target,
Selected Target, Discontinued Target, target
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assay, Validated Assay, Active Cubist Compound, Active Cubist Compound
Derivative, Novartis Compound or a Product, whether or not patentable or
copyrightable.
1.24 "Joint Invention" shall mean any Invention, other than a Cubist
Invention or a Novartis Invention, that is discovered, made or conceived during
and as a result of the Research Program jointly by employees of Cubist and
Novartis or others working on behalf of Cubist and Novartis.
1.25 "Joint Patent Rights" shall mean any United States or foreign
patent applications, provisional patent applications, patents, patent
extensions, certificates of invention and applications for certificates of
invention, together with any divisions, continuations or continuations-in-part,
reissues, renewals, or additions claiming a Joint Invention.
1.26 "Joint Research Steering Committee" shall mean the joint committee
composed of representatives of Cubist and Novartis described in Section 2.3.
1.27 "Joint Research Steering Committee Term" shall have the meaning
set forth in Section 2.3.
1.28 "Joint Technology" shall mean all proprietary data, information,
know-how, inventions, trade secrets, copyrights, regulatory submissions or other
intellectual property of any kind made or developed jointly by Cubist and
Novartis in the performance of the Research Program.
1.29 "Major Market Country" shall mean the United States, the United
Kingdom, Germany, France, Italy, Japan and Canada.
1.30 "Milestone Revenue Income" shall mean any payments that Cubist
receives from a non-Affiliate licensee in consideration of the license of rights
pursuant to Section 7.6 which are due upon the achievement of product
development milestones by such licensee, but excluding the following payments:
royalties, license fees, license maintenance fees, payments made in
consideration for the issuance of equity or debt securities of Cubist and,
payments specifically committed to the research and development of Cubist
Products.
1.31 "NDA" shall mean a new drug application filed with the FDA after
completion of human clinical trials to obtain marketing approval for a Product
in the United States or any comparable application filed with the regulatory
authorities of a country other than the United States to obtain marketing
approval for a Product in that country.
1.32 "Net Sales" with respect to any Product shall mean the invoiced
sales of all such Product to Third Parties by the Seller, its Affiliates or its
licensees or sublicensees, less the following items as applicable to such
Product: (a) credits or allowances granted upon returns, rejections or recalls;
(b) freight, shipping and insurance costs; (c) quantity and other trade
discounts, credits or allowances actually allowed and taken; (d) customs duties,
taxes and surcharges and other governmental charges incurred in connection with
exportation or importation; and (e) government mandated rebates; all in
accordance with standard allocation
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procedures and accounting methods consistently applied, which methods are in
accordance with generally accepted accounting principles. The transfer of any
Product by Seller or one of its Affiliates to another Affiliate of Seller shall
not be considered a sale; in such cases, Net Sales shall be determined based on
the invoiced sales price by the Affiliate to its customer, less the deductions
allowed under this Section.
If a Product is sold in bulk (as distinguished from packaged
pharmaceutical form) for resale in packaged or finished form, Net Sales shall be
calculated by determining the quantity of Product in packaged pharmaceutical
form that would reasonably be produced from the bulk quantity of Product so
sold, and by multiplying such quantity by the average price for such Product in
packaged pharmaceutical form during the applicable royalty reporting period. If
a Product is sold, or otherwise commercially disposed of for value (including,
without limitation, disposition in connection with the delivery of other
products or services), in a transaction that is not an outright arm's length
sale to an independent Third Party, then the amount invoiced in such transaction
shall be deemed to be the amount that would have been paid had there been such a
sale at the average sale price of such Product during the applicable royalty
reporting period.
In the event a Product is sold in a combination with other active
ingredients, Net Sales, for purposes of royalty payments of the combination
product, shall be calculated by multiplying the Net Sales for that combination
product by the fraction A/B, where A is the gross selling price of the Product
sold separately and B is the gross selling price of the combination product. As
used herein, the term "active ingredient" does not include ingredients the
primary effect of which is the enhancement of drug delivery, even if such
ingredients have pharmacological activity.
1.33 "Novartis Compound" shall mean any compound, other than an Active
Cubist Compound, or an Active Cubist Compound Derivative, owned or controlled by
Novartis or obtained from a Third Party which is either (a) screened in a
Validated Assay and has antibacterial activity against a Selected Target or (b)
has antibacterial activity against a Selected Target (regardless of whether or
not a Validated Assay was used to determine such antibacterial activity), and
any derivative, isomer, analog or homolog thereof made or synthesized by
Novartis.
1.34 "Novartis Improvement" shall mean any improvement to an Active Cubist
Compound, other than an Active Cubist Compound Derivative derived therefrom,
developed by Novartis.
1.35 "Novartis Invention" shall mean any Invention, other than a Cubist
Invention or a Joint Invention, that is conceived during and as a result of the
Research Program solely by employees of Novartis or others acting on behalf of
Novartis.
1.36 "Novartis Patent Rights" shall mean any United States or foreign
patent applications, provisional patent applications, patents, patent
extensions, certificates of invention and applications for certificates of
invention, together with any divisions, continuations or continuations-in-part,
reissues, renewals, or additions owned or controlled by Novartis as of the
Effective Date or during the term or as a result of the Research Program.
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1.37 "Novartis Product" shall mean any product which consists of or
incorporates an Active Cubist Compound, an Active Cubist Compound Derivative, or
a Novartis Compound.
1.38 "Novartis Technology" shall mean all proprietary data, information,
know-how, inventions, trade secrets, copyrights, regulatory submissions or other
intellectual property of any kind, other than Novartis Patent Rights, owned or
controlled by Novartis as of the Effective Date and during the term of the
Research Program.
1.39 "Party" shall mean Cubist or Novartis.
1.40 "Primary Contact Person" shall have the meaning set forth in Section
2.2.
1.41 "Product" shall mean collectively Cubist Products and Novartis
Products.
1.42 "Research Funding Payment" shall have the meaning set forth in Section
8.1.
1.43 "Research Plan" shall mean the plan for conducting the research under
the Research Program, as amended from time to time by the Joint Research
Steering Committee, which plan, including all amendments, shall be attached to
this Agreement as Exhibit A.
1.44 "Research Program" shall mean the research performed by Cubist and
Novartis in accordance with the Research Plan as revised from time to time as
provided in this Agreement to identify compounds active against validated
bacterial targets.
1.45 "Research Year" shall mean each twelve (12) month period during the
term of the Research Program beginning on the Effective Date.
1.46 "Selected Target" shall mean a Candidate Target selected by the Joint
Research Steering Committee as a Selected Target to undergo research for high
throughput screening in accordance with Section 4.3.
1.47 "Seller" shall mean Novartis with respect to a Novartis Product, or
Cubist with respect to a Cubist Product.
1.48 "Stock Purchase Agreement" shall have the meaning set forth in Section
8.2.
1.49 "Third Party" shall mean any entity other than Cubist or Novartis and
their respective Affiliates.
1.50 "Valid Claim" shall mean either (a) a claim of an issued and unexpired
patent included within the Cubist Patent Rights, Joint Patent Rights or Novartis
Patent Rights, which has not been held permanently revoked, unenforceable or
invalid by a decision of a court or other governmental agency of competent
jurisdiction, unappealable or unappealed within the time allowed for appeal, and
which has not been admitted to be invalid or unenforceable through reissue or
disclaimer or otherwise or (b) a claim of a pending patent application included
within the Cubist Patent Rights, Joint Patent Rights or Novartis Patent Rights,
which claim was filed in
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good faith and has not been abandoned or finally disallowed without the
possibility of appeal or refiling of said application.
1.51 "Validated Assay" shall mean a primary assay for high-throughput
screening of the Selected Targets which is developed by Cubist in the
performance of the Research Program and which has been accepted by the Joint
Research Steering Committee.
1.52 "VITA(TM)" or "Validation In Vivo of Targets for Antiinfectives" shall
mean Cubist's proprietary technology for the validation of antiinfective targets
during an established infection in a mouse model system and the development of
assays.
ARTICLE 2
SCOPE AND MANAGEMENT OF THE RESEARCH PROGRAM
2.1 General. Cubist and Novartis will establish a research program to
identify and validate a limited number of antibacterial targets and to develop a
select number of validated assays for high-throughput screening to identify new
lead compounds active against such validated targets for the development of
drugs. The Research Program will have a term of [ ]*, unless terminated earlier
pursuant to Article 12. As set forth in Article 8, Novartis will make an equity
investment in Cubist, provide research funding payments during the Research
Program and will also pay Cubist certain milestone payments and royalties.
Cubist shall pay royalties and make certain other payments to Novartis pursuant
to Section 8.5. During the course of the Research Program, Cubist and Novartis
shall communicate regularly and shall assume certain rights and responsibilities
for the discovery and development of products, all as described more
specifically herein.
2.2 Primary Contact Persons. Within ten (10) business days of the Effective
Date, Cubist and Novartis shall each designate a primary contact person
("Primary Contact Person") who shall be responsible for the day-to-day
interactions between the Parties related to the Research Program and the
management of the day-to-day operations of the Research Program. Each Party may
change its Primary Contact Person upon written notice to the other Party.
2.3 Joint Research Steering Committee.
2.3.1 Formation, Composition and Term. A joint committee comprised of
three (3) named representatives of each of Novartis and Cubist (the "Joint
Research Steering Committee") shall be appointed within ten (10) business days
of the Effective Date and shall meet as needed, but not less than once each
quarter during the Joint Research Steering Committee Term. Such meetings shall
be at such times agreed to by Cubist and Novartis and shall alternate between
the offices of the Parties unless the Parties otherwise agree or shall be in
-------------------------
* Confidential Treatment Requested: Material has been omitted and filed
separately with the Commission.
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such other form (e.g. telephone or video conference) as the members of the Joint
Research Steering Committee shall agree. As used herein, the "Joint Research
Steering Committee Term" shall mean the period commencing upon the Effective
Date of the Agreement and continuing until the later of (a) the termination or
expiration of the Research Program, or (b) the expiration of the last
Exclusivity Period in accordance with Section 7.2.3.
2.3.2 Joint Research Steering Committee Functions and Powers. The Joint
Research Steering Committee shall be responsible for the overall supervision and
management of the Research Program. The principal functions of the Joint
Research Steering Committee will be, inter alia, to:
(a) monitor the progress and results achieved under the Research
Program and to revise, as necessary, the Research Plan;
(b) assess the therapeutic relevance and competitiveness of the
research performed under the Research Program;
(c) ▇▇▇▇▇▇ the collaborative relationship between the Parties;
(d) facilitate the transfer of technology in accordance with the
Agreement;
(e) specify the Collaboration Target List and provide regular
updates thereto;
(f) determine the number of, and which specific targets from the
Collaboration Target List will be promoted to Candidate Targets;
(g) determine the number of, and which specific Candidate Targets
will be promoted to Selected Targets and which will remain Candidate Targets;
(h) establish the criteria for antibacterial activity to be used
to determine whether a Cubist Compound is an Active Cubist Compound;
(i) review patent issues related to Joint Inventions; and
(j) review and approve scientific publications relating to the
Research Program.
A Party may change one or more of its representatives to the Joint
Research Steering Committee at any time. Members of the Joint Research Steering
Committee may be represented at any meeting by another member of the Joint
Research Steering Committee, or by a deputy. Either Party may permit additional
employees and consultants to attend and participate (on a non-voting basis) in
the Joint Research Steering Committee meetings, subject to the confidentiality
provisions of Article 9.
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2.3.3 Decisions of the Joint Research Steering Committee. A
quorum of the Joint Research Steering Committee shall be present at any meeting
of the Joint Research Steering Committee if at least one (1) representative of
each Party is present at such meeting in person or by telephone or video
conference. If a quorum exists at any meeting, the unanimous consent of all
members of the Joint Research Steering Committee present at such meeting is
required to take any action on behalf of the Joint Research Steering Committee.
2.3.4 Deadlock. In the event that the Joint Steering Committee
cannot reach agreement within sixty (60) days as to any matter that is subject
to its decision-making authority, Novartis shall cast the deciding vote in good
faith. Notwithstanding the foregoing, the Parties agree that Novartis shall not
(a) unreasonably cast the deciding vote against Cubist's position on matters
related to resource allocation by Cubist for the Research Program or to the
number and selection of Candidate Targets and Selected Targets or (b) have the
right to cast the deciding vote hereunder with respect to the resolution of
technical obstacles which arise in the Research Program which require Cubist's
expertise to resolve. Decisions related to the resolution of technical obstacles
described in this Section 2.3.4(b) must be made with the unanimous consent of
all members of the Joint Research Steering Committee present at such meeting or
such matter shall be referred to dispute resolution in accordance with the
procedures set forth in Section 13.6.
2.3.5 Co-Chairs. The Joint Research Steering Committee shall be
co-chaired by one Novartis representative appointed by Novartis and one Cubist
representative appointed by Cubist from the membership of the Joint Research
Steering Committee.
2.3.6 Minutes and Reports. The Joint Research Steering Committee
shall be responsible for keeping accurate minutes of its deliberations which
record all proposed decisions and all actions recommended or taken. The minutes
of each meeting will include an updated Collaboration Target List and a list of
all Candidate Targets (and the dates upon which the Exclusivity Period for each
such target expires), Selected Targets, Discontinued Targets, Validated Assays,
Discontinued Validated Assays, Active Cubist Compounds, Active Cubist Compound
Derivatives and Back-Up Compounds. Within ten (10) business days of each
meeting, the co-chairs shall provide the Parties with draft minutes of such
meeting and a draft of a written accompanying report describing in reasonable
detail, the status of the Research Program, a summary of the work and progress
to date, any issues requiring resolution and any proposed decisions and the
action to all members of the Joint Research Steering Committee. Within thirty
(30) days of each meeting, the co-chairs will sign final versions of the meeting
minutes and the accompanying report and such minutes and shall report shall
thereafter be recognized as duly accepted by the parties. All records of the
Joint Research Steering Committee shall be available to both Parties.
2.3.7 Information and Results. Except as otherwise provided, the
Parties will make available and disclose to one another all results of the work
conducted pursuant to the Research Program prior to and in preparation for the
Joint Research Steering Committee meetings, by the deadline and in the form and
format to be designated by the Joint Research Steering Committee.
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2.4 Availability of Employees. Each Party agrees to make its employees and
nonemployee consultants reasonably available at their respective places of
employment to consult with the other Party on issues arising during the Research
Program and in connection with any request from any regulatory agency, including
regulatory, scientific, technical and clinical testing issues.
2.5 Visit of Facilities. Representatives of Novartis may, upon reasonable
notice and at times reasonably acceptable to Cubist, visit Cubist's facilities
where the Research Program is being conducted, and consult informally, during
such visits and by telephone, facsimile and email, with Cubist's personnel
performing work on the Research Program.
ARTICLE 3
THE RESEARCH PROGRAM
3.1 Performance of Research Program. Cubist shall use commercially
reasonable efforts to perform the research and development tasks as described in
the Research Plan attached hereto as Exhibit A. Cubist agrees to utilize its
proprietary VITA(TM) technology in the Research Program as determined by the
Joint Research Steering Committee. The Research Program shall be conducted by
Cubist in good scientific manner, and in compliance with all applicable good
laboratory practices and applicable legal requirements.
3.2 Research Plan. The Research Program shall be conducted under the
Research Plan that describes the work to be pursued by Cubist during each
Research Year. The Research Plan will be updated and approved by the Joint
Research Steering Committee no later than sixty (60) days prior to the start of
each Research Year. The Research Plan in effect at any time may not be amended
except as agreed in writing by the Joint Research Steering Committee. If at any
time during the Research Year either Party determines that a change to the
Research Plan would benefit the Research Program, such Party shall prepare and
submit to the Joint Research Steering Committee a written proposal detailing its
proposed changes to the Research Plan. At its next meeting, the Joint Research
Steering Committee shall decide on such proposal.
3.3 Subcontracts. Subject to the provisions of Section 9.1 hereof, Cubist
may subcontract portions of the Research Program to be performed by it to Third
Parties provided it has obtained the prior consent of the Joint Research
Steering Committee; provided, however, that Cubist shall require such Third
Parties to enter into appropriate confidentiality agreements (of which Cubist
will share copies with Novartis) unless such subcontracting would not require
the transfer of confidential information (as defined in Article 9 hereof) to the
Third Party, and provided that Novartis' rights under this Agreement are not
affected.
3.4 Results and Records. The Parties will make available and disclose to
one another all results of the work conducted pursuant to the Research Program
and shall keep such records as described herein provided, that each Party shall
maintain such results and records of the other Party in confidence in accordance
with Article 9 hereof and shall not use such results or records except to the
extent otherwise permitted by this Agreement. The Parties shall maintain records
of the results in sufficient detail and in good scientific manner appropriate
for patent purposes and as will properly reflect all work done and results
achieved in the performance of the
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Research Program (including all data in the form required to be maintained under
any applicable governmental regulations). Such records shall include books,
records, reports, research notes, charts, graphs, comments, computations,
analyses, recordings, photographs, computer programs and documentation thereof,
computer information storage means, samples of materials and other graphic or
written data generated in connection with the Research Program. Each Party shall
give the other Party the right to inspect such records, and shall provide the
other Party with copies of all requested records, to the extent reasonably
required by the other Party for purposes of this Agreement.
ARTICLE 4
TARGET SELECTION AND VALIDATION; VALIDATED ASSAY DEVELOPMENT
4.1 Collaboration Target List. Within one (1) month after the Effective
Date, Cubist and Novartis shall provide to the Joint Research Steering Committee
a list of potential targets for the Collaboration Target List. The Joint
Research Steering Committee shall select the initial Collaboration Target List
within three (3) months of the Effective Date and shall update the Collaboration
Target List throughout the term of the Research Program. The number of targets
on the Collaboration Target List at any one time and the total number of targets
on the Collaboration Target List during the entire term of the Research Program
shall be determined by the Joint Research Steering Committee and shall not
exceed the number of targets which the personnel assigned to the Research
Program can reasonably accomplish consistent with the Research Plan and the
allocation of resources thereunder.
4.2 Candidate Targets.
4.2.1 Selection. From time to time as appropriate during the Research
Program, with the goal of promptly identifying appropriate targets for assay
development, the Joint Research Steering Committee will designate as Candidate
Targets specific targets from the Collaboration Target List that appear the most
promising for target validation and/or assay development. Promptly after such
selection, Cubist will conduct appropriate experimentation and bench work on the
Candidate Targets as required by the Joint Research Steering Committee which may
include, without limitation, an analysis of target inhibition utilizing
VITA(TM). Within a time frame as set by the Joint Research Committee, Cubist
shall provide to the Joint Research Steering Committee the results of all work
Cubist performs pursuant to this Section 4.2 utilizing a format and within a
time frame acceptable to the Joint Research Steering Committee. Each Candidate
Target shall be subject to the rights set forth in Section 7.2. The number of
Candidate Targets at any one time and the total number of Candidate Targets
during the entire term of the Research Program shall be determined by the Joint
Research Steering Committee and shall not exceed the number of Candidate Targets
which the personnel assigned to the Research Program can reasonably accomplish
consistent with the Research Plan and the allocation of resources thereunder.
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4.2.2 Exclusivity Period. A target selected as a Candidate Target shall
remain a Candidate Target until (a) the expiration of the Exclusivity Period,
which shall be the [ ]* period from the date the Joint Research Steering
Committee selected such target as a Candidate Target, or (b) the Candidate
Target is selected as a Selected Target pursuant to Section 4.3 below, whichever
shall first occur. Upon the expiration of the Exclusivity Period, any Candidate
Target which has not been selected as a Selected Target shall be subject to the
co-exclusive license set forth in Section 7.2.2.
4.3 Selected Targets.
4.3.1 Selection. From time to time as appropriate during the Research
Program, the Joint Research Steering Committee will select as Selected Targets
specific Candidate Targets that appear the most promising to develop further for
high throughput screening.
4.3.2 Validated Assay Development. Promptly after the selection of each
Selected Target, Cubist will develop an appropriate Validated Assay for such
Selected Target in accordance with the Research Plan. Cubist shall promptly
provide to the Joint Research Steering Committee the results of all work Cubist
performs pursuant to this Section 4.3. It is anticipated that one Validated
Assay will be developed by the end of the third quarter of 1999 and a second
Validated Assay will be developed by the end of the second quarter of 2000.
4.3.3 Validated Assay Transfer and Implementation. Upon completion,
each Validated Assay will be transferred to Novartis with a protocol and any
preliminary data generated by Cubist from such Validated Assay that Cubist
ascertains is necessary to enable Novartis to initiate the implementation of the
Validated Assay. For all purposes of this Agreement including Section 8.3, each
Validated Assay delivered to Novartis as described herein shall be deemed to be
successfully transferred to, and implementation thereof shall be deemed to be
initiated by, Novartis unless Novartis demonstrates by documentary evidence
within sixty (60) days of the date of delivery to Novartis that Novartis cannot
initiate the implementation of the Validated Assay since the results obtained by
Cubist from such Validated Assay cannot be replicated by Novartis. In the event
a Validated Assay is so demonstrated to have not been successfully transferred
to, and implemented by, Novartis, Cubist shall continue its development work on
such Validated Assay until the implementation of the Validated Assay is
successfully initiated by Novartis.
ARTICLE 5
COMPOUND SCREENING; ACTIVE CUBIST COMPOUNDS
5.1 Screening of Compounds. In accordance with the Research Plan and
decisions made by the Joint Research Steering Committee, Cubist shall screen
Cubist Compounds in each
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* Confidential Treatment Requested: Material has been omitted and filed
separately with the Commission.
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Validated Assay and Novartis shall screen its own compounds in each Validated
Assay. The primary goal of the screening is to identify Active Cubist Compounds
and compounds of Novartis that have antibacterial activity against a Selected
Target. The parties shall provide the Joint Research Steering Committee with
reports on the status of compound screening.
5.1.1 Third Party Compounds. The Joint Research Steering Committee may
agree to obtain from Third Parties the right to screen in the Validated Assays
compounds owned or controlled by such Third Parties; provided, however, that if
any fees would be payable to such Third Party or any rights conferred upon such
Third Party for screening such compounds or making, using or selling products
containing such compounds, no such Third Party compounds will be screened
without the written consent of both Parties.
5.2 Identification of Active Cubist Compounds. Upon the request of the
Joint Research Steering Committee at any time during the screening of compounds
described in Section 5.1 and promptly after completing the screening of a batch
of Cubist Compounds or Novartis compounds under Section 5.1 in the appropriate
Validated Assays, Cubist and Novartis, respectively, will provide to the Joint
Research Steering Committee the results of such screening, without the
obligation, however, to disclose to each other the structure of any of the
compounds screened. The Joint Research Steering Committee will review such
results promptly after receipt and will determine which of the Cubist Compounds
screened in the Validated Assays meet the requirements established by the Joint
Research Steering Committee for designation as an Active Cubist Compound.
5.2.1 Active Cubist Compound. In the event a Cubist Compound meets the
requirements for designation as an Active Cubist Compound, Cubist will promptly
determine if such Cubist Compound is a Committed Compound. If the Cubist
Compound is not a Committed Compound, it shall be designated as an Active Cubist
Compound, and Cubist will disclose to Novartis the structure of such Active
Cubist Compound. Each Active Cubist Compound shall be subject to the option
rights granted to Novartis as set forth in Section 7.5.1 and the diligence
requirements set forth in Section 7.5.2.
5.2.2 Novartis Compound/Active Cubist Compound Derivative. In the event
Novartis exercises its option pursuant to Section 7.5.1 and makes or synthesizes
an Active Cubist Compound Derivative, [ ]*
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* Confidential Treatment Requested: Material has been omitted and filed
separately with the Commission
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ARTICLE 6
INTELLECTUAL PROPERTY RIGHTS
6.1 Ownership of Inventions.
6.1.1 Disclosure of Inventions. During the term of the Research
Program, each Party shall promptly disclose to the other Party the Inventions
made by employees or others acting on behalf of such Party to the extent that
the other Party has a license thereto under this Agreement.
6.1.2 Cubist Inventions. All right, title and interest in all Cubist
Inventions shall be owned by Cubist. Novartis shall execute, without charge to
Cubist, irrevocable assignments of such right, title and interest in and to
Cubist Inventions to Cubist.
6.1.3 Novartis Inventions. All right, title and interest in all
Novartis Inventions shall be owned by Novartis. Cubist shall execute, without
charge to Novartis, irrevocable assignments of such right, title and interest in
and to Novartis Inventions to Novartis.
6.1.4 Joint Inventions. All right, title and interest in all Joint
Inventions shall be owned jointly by Novartis and Cubist.
6.1.5 Cooperation of Employees. Each Party represents and agrees that
all employees or others acting on its behalf in performing its obligations under
this Agreement shall be obligated under a binding written agreement to assign to
such Party, or as such Party shall direct, all Inventions made or conceived by
such employee or other person, or in the case of non-employees working for other
companies or institutions on behalf of Cubist or Novartis.
6.2 Filing, Prosecution and Maintenance of Patent Rights.
6.2.1 Cubist Inventions. Cubist shall have sole responsibility for and
control over the filing, prosecution, maintenance and enforcement of the Cubist
Patent Rights claiming Cubist Inventions, at Cubist's expense. The Cubist Patent
Rights as to which Novartis is licensed under this Agreement as of the Effective
Date shall be listed on Exhibit C hereto and at regular intervals, or upon
request, Cubist shall provide Novartis with updated information on its patent
portfolio as to which Novartis is licensed under this Agreement, and Exhibit C
hereto shall be amended accordingly. If Cubist shall elect not to continue to
prosecute or maintain any patent application or patent included in the Cubist
Patent Rights, then Cubist shall give Novartis the timely opportunity to direct
Cubist to continue to prosecute or maintain the patent application or patent in
Cubist' name and at Novartis' expense.
Cubist shall notify Novartis of the issuance of each patent included
within the Cubist Patent Rights as to which Novartis is licensed under this
Agreement, giving the date of issue, patent number and normal expiry date for
each such patent. Cubist shall notify Novartis of each filing for patent term
restoration under the United States Drug Price Competition and Patent Term
Restoration Act of 1984, any allegations of failure to show due diligence, and
all awards of patent term restoration in the United States with respect to the
Cubist Patent Rights as
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to which Novartis is licensed under this Agreement. Novartis shall make
corresponding notifications to Cubist in respect of any patent included within
the Joint Patent Rights.
6.2.2 Novartis Inventions. Novartis shall have sole responsibility for
and control over the filing, prosecution, maintenance and enforcement of the
Novartis Patent Rights claiming Novartis Inventions, at Novartis' expense.
6.2.3 Joint Inventions. Subject to Article 7, Novartis and Cubist shall
have and retain sole and exclusive title to their interest in Joint Inventions
provided however responsibility for patent filing with respect to Joint
Inventions shall be as set forth in this Section 6.2.3 and provided further
that, except in connection with a permitted assignment of this Agreement
pursuant to Section 13.2, neither Party may transfer its interest in any Joint
Invention which is claimed in a patent application or patent unless notice of
such transfer has been first given to the other Party and the transferee agrees
in writing to be bound by the terms of this Agreement with respect to the
interest so transferred. Novartis shall have the first right to assume
responsibility at its sole expense for the preparation, filing, prosecution and
maintenance of any Joint Patent Rights and shall keep Cubist reasonably informed
of, and consult with Cubist with respect to, all significant actions relating
thereto. If Novartis elects not to assume such responsibility, Cubist shall have
the right to do so and shall keep Novartis reasonably informed of, and consult
with Novartis with respect to, all significant actions relating thereto; and in
such event, Novartis shall bear one-half the reasonable expenses of preparation,
filing, prosecution and maintenance thereof. If Cubist assumes such
responsibility but Novartis declines to pay its one-half share of expenses,
Novartis shall automatically grant to Cubist an exclusive, perpetual, paid-up
license under its interest in such Joint Patent Rights.
6.2.4 Patent Term Extension. Cubist shall cooperate with Novartis in
obtaining patent term extension or supplemental protection certificates and the
like with respect to the Cubist Patent Rights and Joint Patent Rights as to
which Novartis is licensed under this Agreement, in each country and region
where it is possible to do so. Novartis shall have the right to make the
election and Cubist agrees to abide by such election.
6.3 No Other Technology Rights. Except as otherwise expressly provided in
this Agreement, under no circumstances shall a Party hereto, as a result of this
Agreement, obtain any ownership interest in or other right to any technology,
know-how, patents, pending patent applications, products, or chemical or
biological materials of the other Party, including items owned, controlled or
developed by the other Party, or transferred by the other Party to said Party at
any time pursuant to this Agreement. It is understood and agreed that this
Agreement does not grant, except to the extent specifically set forth herein (i)
Novartis any license or other right under the Cubist Patent Rights, Cubist
Technology or Cubist's interest in Joint Patent Rights or Joint Technology,
VITA(TM), Candidate Targets, Selected Targets, Discontinued Targets, Validated
Assays, Discontinued Validated Assays, Cubist Compounds, Active Cubist Compounds
or Back-Up Compounds and, (ii) Cubist any license or other right under the
Novartis Patent Rights, Novartis Technology or Novartis' interest in Joint
Patent Rights or Joint Technology, Novartis Compounds, Active Cubist Compound
Derivatives, Novartis Improvements or Novartis Products.
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6.4 Infringement Claims. If the manufacture, sale or use of Product
pursuant to this Agreement results in any claim, suit or proceeding lodged by a
Third Party alleging patent infringement by Cubist or Novartis (or its licensees
or sublicensees), or by an Affiliate of Cubist or Novartis, such Party shall
promptly notify the other Party hereto in writing. The Party subject to such
claim shall have the exclusive right to defend and control the defense of any
such claim, suit or proceeding, at its own expense, using counsel of its own
choice; provided, however, that Novartis shall not enter into any settlement
which admits or concedes that any aspect of the Cubist Patent Rights is invalid
or unenforceable without the prior written consent of Cubist. The Party subject
to the claim shall keep the other Party hereto reasonably informed of all
material developments in connection with any such claim, suit or proceeding.
6.5 Enforcement of Joint Patent Rights. Cubist and Novartis shall each
promptly notify the other in writing of any alleged or threatened infringement
of the Joint Patent Rights of which they become aware. Cubist and Novartis shall
then confer and may agree jointly to prosecute any such infringement. If the
Parties do not agree on whether or how to proceed with enforcement activity (i)
within ninety (90) days following the notice of alleged infringement or (ii) ten
(10) business days before the time limit, if any, set forth in the appropriate
laws and regulations for the filing of such actions, whichever comes first, then
Cubist may commence litigation with respect to the alleged or threatened
infringement at its own expense, and credit against the percentage of Milestone
Revenue Income and royalties otherwise due Novartis under Section 8.5 all of its
expenses incurred in such action (including attorneys' fees and expenses). In
the event that Cubist does not commence litigation within five (5) business days
of the above-specified date, Novartis may do so and credit against the
development milestones payments due Cubist under Section 8.3.2 and the royalties
due Cubist under Section 8.4 all of its expenses incurred in such action
(including attorneys' fees and expenses). In the event a Party brings an
infringement action, the other Party shall cooperate fully, including, if
required to bring such action, the furnishing of a power of attorney. Neither
Party shall have the right to settle any patent infringement litigation under
this Section in a manner that diminishes the rights or interests of the other
Party without the express written consent of such other Party.
Except as otherwise agreed to by the Parties as part of a cost sharing
arrangement, any recovery realized as a result of such litigation (whether by
way of settlement or otherwise) shall be first allocated to reimbursement of
unreimbursed legal fees and expenses incurred by the Party initiating the
proceeding, then toward reimbursement of any unreimbursed legal fees and
expenses of the other Party, then, if applicable, toward reimbursement of the
other Party for the amount of any payments withheld by the Party initiating the
proceeding as permitted above, and then the remainder shall be divided between
the Parties as follows: (i) if the award is based on lost profits, Seller shall
receive an amount equal to the damages the court determines the Seller has
suffered as a result of the infringement less the amount of any royalties that
would have been due to the other party on sales of Products lost by Seller as a
result of the infringement had Seller made such sales, and the other party shall
receive an amount equal to the royalties and other payments it would have
received under Article 8 if such sales had been made by Seller; and (ii) as to
awards other than those based on lost profits, sixty percent (60%) to the party
initiating such proceedings and forty percent (40%) to the other party.
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ARTICLE 7
OPTION AND LICENSE RIGHTS
7.1 VITA(TM). Subject to the terms of this Agreement, Cubist hereby grants
Novartis a worldwide, non-exclusive right and license during the term of the
Research Program, without the right to sublicense, under the Cubist Patent
Rights and Cubist Technology covering VITA(TM) for research use solely as
necessary for Novartis to participate in the Research Program with respect to
the Collaboration Target List and Candidate Targets.
7.2 Candidate Targets.
7.2.1 Exclusive License During Exclusivity Period. With respect to each
Candidate Target, subject to the terms of this Agreement, Cubist hereby grants
Novartis a worldwide exclusive right and license during the Exclusivity Period,
with the right to sublicense, under the Cubist Patent Rights, Cubist Technology
and Cubist's interest in Joint Patent Rights and Joint Technology covering such
Candidate Target to use such Candidate Targets in Novartis' research program
aimed at making, having made, using, selling and importing Novartis Products.
7.2.2 Co-Exclusive License After Exclusivity Period. Upon the
expiration of the Exclusivity Period for a Candidate Target pursuant to Section
4.2.2, Novartis' license under Section 7.2.1 shall become a co-exclusive license
with Cubist, with the right to sublicense. Subject to Section 8.5, Cubist and
its Affiliates and licensees shall be free to make, have made, use, sell and
import Cubist Products based on the Candidate Targets subject to the
co-exclusive rights hereunder.
7.2.3 Effect of Termination of Research Program. With respect to any
Candidate Target which was selected by the Joint Research Steering Committee
less than one (1) year prior to the expiration of the Research Program in
accordance with Section 12.1.1 or the termination of the Research Program in
accordance with Section 12.1.2, the exclusive license granted by Cubist to
Novartis pursuant to this Section 7.2 shall continue beyond the expiration or
termination of the Research Program for the remainder of the Exclusivity Period
provided however that upon the expiration of the Exclusivity Period, in the
event the Joint Research Steering Committee has not selected such Candidate
Target as a Selected Target, then Novartis' license under Section 7.2.1 shall
become a co-exclusive license with Cubist, with the right to sublicense. Subject
to Section 8.5, Cubist and its Affiliates and licensees shall be free to make,
have made, use, sell and import Cubist Products based on the Candidate Targets
subject to the co-exclusive rights hereunder.
7.3 Selected Targets and Discontinued Targets.
7.3.1 Exclusive License to Selected Targets. With respect to each
Selected Target, subject to the terms of this Agreement including without
limitation Section 7.3.2, Cubist hereby grants Novartis a worldwide exclusive
right and license, with the right to sublicense, under the Cubist Patent Rights,
Cubist Technology and Cubist's interest in Joint Patent Rights and Joint
Technology covering such Selected Target to use such Selected Target in
Novartis' research program aimed at making, having made, using, selling and
importing Novartis Products
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provided however that in the event Novartis decides to discontinue a given
Selected Target in its research program or fails to meet the diligence
obligations set forth in Section 7.3.2, then it will inform Cubist of its
decision and the Selected Target shall become a Discontinued Target and shall be
subject to Section 7.3.3.
With respect to any Selected Target which was selected by the Joint
Research Steering Committee prior to the expiration or termination of the
Research Program in accordance with Sections 12.1.1 or 12.1.2, the exclusive
license granted by Cubist to Novartis as set forth in this Section 7.3.1 shall
continue beyond the expiration or termination of the Research Program.
7.3.2 Due Diligence Obligation for Selected Targets and Corresponding
Validated Assays. As a condition for Novartis maintaining an exclusive license
to a Selected Target pursuant to Section 7.3.1 and an exclusive license to a
corresponding Validated Assay pursuant to Section 7.4.1, Novartis shall, upon
the transfer to, and initiation of implementation by, Novartis of a Validated
Assay for such Selected Target pursuant to Section 4.3.3, be obligated to
maintain itself or through its Affiliates or sublicensees a diligent, continuous
program of utilizing the Selected Target and its corresponding Validated Assay
to identify potential antibacterial compounds.
Novartis shall be deemed not to be maintaining a diligent continuous
program with respect to a Selected Target and its corresponding Validated Assay
unless (i) Novartis is actively using the Selected Target and its corresponding
Validated Assay in Novartis' screening systems or, (ii) upon the designation of
an Active Cubist Compound or an Active Cubist Compound Derivative or a Novartis
Compound active against such Selected Target, Novartis is actively undertaking
diligent, commercially reasonable efforts, similar to those used for products of
comparable commercial potential originating in Novartis for the continuing
development of such Active Cubist Compound or Active Cubist Compound Derivative
or Novartis Compound and the commercialization of a Novartis Product including,
without limitation, the performance of an active derivatisation and lead
optimisation program, the designation of EDC Status, initiation of clinical
trials, submission of regulatory filings and commercial launch of a Novartis
Product.
In the event Novartis fails to maintain a diligent continuous program
described in (i) or (ii) above or if Novartis notifies Cubist that it is not
interested in maintaining a diligent program with respect to such Selected
Target or its corresponding Validated Assay, then such Selected Target and
Validated Assay shall be subject to the provisions of Sections 7.3.3 and 7.4.2,
respectively.
During the term of the Research Program, Novartis shall provide
information regarding its screening systems and programs described herein to the
Joint Research Steering Committee on a quarterly basis. Thereafter, at any time
during the term of an exclusive license to a Selected Target, Novartis shall on
a not less than quarterly basis provide documentation to the reasonable
satisfaction of Cubist that Novartis is maintaining a diligent, continuous
program with respect to the Selected Target and its corresponding Validated
Assay.
7.3.3 Co-Exclusive License to Discontinued Targets. In the event
Novartis fails to meet the diligence obligations for a Selected Target or
notifies Cubist that it is not interested
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CONFIDENTIAL TREATMENT
in maintaining a diligent program for a Selected Target, as provided in Section
7.3.2, then such Selected Target shall become a Discontinued Target and the
exclusive license granted to Novartis under Section 7.3.1 shall become a
co-exclusive license with Cubist, with the right to sublicense. Subject to
Section 8.5, Cubist and its Affiliates and licensees shall be free to make, have
made, use, sell and import Cubist Products based on such Discontinued Targets
subject to co-exclusive rights hereunder.
7.4 Validated Assays and Discontinued Validated Assays.
7.4.1 Exclusive License to Validated Assays. With respect to each
Validated Assay, subject to the terms of this Agreement including without
limitation Section 7.3.2, Cubist hereby grants Novartis a worldwide exclusive
license, with the right to sublicense, under Cubist Patent Rights, Cubist
Technology and Cubist's interest in Joint Patent Rights and Joint Technology
covering such Validated Assay to use the Validated Assay in Novartis' research
program aimed at making, having made, using, selling and importing Novartis
Products. Notwithstanding the foregoing, Cubist retains the right to utilize
each Validated Assay in order to screen compounds in accordance with the
Research Plan as it may be amended by the Joint Research Steering Committee.
7.4.2 Co-exclusive License to Discontinued Validated Assays. In the
event Novartis fails to meet the diligence obligations for a Selected Target and
its corresponding Validated Assay or notifies Cubist that it is not interested
in maintaining a diligent program for a Selected Target, as provided in Section
7.3.2, then such Validated Assay shall become a Discontinued Validated Assay and
the exclusive license granted to Novartis under Section 7.3.1 shall become a
co-exclusive license with Cubist, with the right to sublicense. Subject to
Section 8.5, Cubist and its Affiliates and licensees shall be free to make, have
made, use, sell and import Cubist Products based on such Discontinued Validated
Assays subject to co-exclusive rights hereunder.
7.5 Active Cubist Compounds and Back-Up Compounds.
7.5.1 Active Cubist Compounds. With respect to each Active Cubist
Compound, subject to the terms of this Agreement including without limitation
Section 7.5.2, Cubist hereby grants Novartis an exclusive option to an exclusive
right and license, with the right to sublicense, under the Cubist Patent Rights,
Cubist Technology and Cubist's interest in Joint Patent Rights and Joint
Technology covering such Active Cubist Compound to (i) create Active Cubist
Compound Derivatives, (ii) use such Active Cubist Compound or Active Cubist
Compound Derivatives in Novartis' research and development program and to make,
have made, use, sell and import Novartis Products. The option granted to
Novartis in this Section 7.5.1 may be exercised by Novartis by providing written
notice to Cubist within [ ]* of the designation
---------------------
* Confidential Treatment Requested: Material has been omitted and filed
separately with the Commission.
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CONFIDENTIAL TREATMENT
of the Cubist Compound as an Active Cubist Compound by the Joint Research
Steering Committee.
7.5.2 Due Diligence Obligation for Active Cubist Compounds. In the
event Novartis exercises the option right to an Active Cubist Compound granted
to Novartis pursuant to Section 7.5.1, as a condition for Novartis maintaining
the exclusive license to such Active Cubist Compound, Novartis shall itself or
through its Affiliates or sublicensees undertake diligent, commercially
reasonable efforts, similar to those used for products of comparable commercial
potential originating in Novartis, for the continuing development of such Active
Cubist Compound and the commercialization of a Novartis Product including,
without limitation, the designation of EDC Status, initiation of clinical
trials, submission of regulatory filings and commercial launch of a Novartis
Product. In the event Novartis fails to undertake and maintain the diligent,
commercially reasonable program described herein for an Active Cubist Compound,
the exclusive license to such Active Cubist Compound shall be terminated in
accordance with Section 12.4 and Cubist shall have the rights set forth in
Section 7.5.3(a).
During the term of the Research Program, Novartis shall provide
information regarding its programs described herein to the Joint Research
Steering Committee on a quarterly basis. Thereafter, during the term of an
exclusive license to an Active Cubist Compound, Novartis shall provide Cubist on
a not less than quarterly basis with documentation to the reasonable
satisfaction of Cubist that Novartis is maintaining diligent, commercially
reasonable efforts with respect to the Active Cubist Compound.
7.5.3 Cubist First Refusal Right.
(a) Novartis Improvements to Active Cubist Compounds. In the event an
exclusive license to an Active Cubist Compound is terminated in accordance with
Section 12.4, then Cubist shall have the right to obtain a worldwide, exclusive
royalty-bearing license on commercially reasonable terms under Novartis Patent
Rights, Novartis Technology and Novartis' interest in Joint Patent Rights and
Joint Technology covering any Novartis Improvement to the Active Cubist Compound
to use such Novartis Improvement in Cubist's research and development program
and to make, have made, use, sell and import products. Novartis shall disclose
any Novartis Improvement to an Active Cubist Compound within [ ]* of the
termination of the exclusive license to such Active Cubist Compound, and Cubist
and Novartis shall negotiate in good faith a term sheet for a license agreement
for an additional period of [ ]* and a definitive agreement for such license for
an additional period of up to [ ]*. If, at the end of either of such periods,
Cubist and Novartis are unable to agree on terms for the license agreement for
the Novartis Improvement, then, unless the parties agree to extend the
negotiation period, Novartis shall promptly deliver to Cubist a final proposal
detailing the terms on which it would enter into such a license agreement (the
"Final Proposal"). Cubist shall have [ ]* from receipt of the Final Proposal to
notify Novartis of its willingness to enter into
-----------------------
* Confidential Treatment Requested: Material has been omitted and filed
separately with the Commission.
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CONFIDENTIAL TREATMENT
an agreement on such terms. If Cubist does not so notify Novartis, then Novartis
shall be free to enter into a license agreement for the Novartis Improvement
with a Third Party; provided however, that the financial terms thereof, as a
whole, are no more favorable to such Third Party than the Final Proposal
delivered to Cubist. If Novartis desires to offer a Third Party a license for
such Novartis Improvement at terms more favorable, then Novartis shall offer
such more favorable terms to Cubist and, if [ ]* of such offer, Cubist informs
Novartis that it is prepared to entered into an agreement with Novartis in
accordance with such terms, Novartis shall conclude such agreement with Cubist
upon such terms. If no such statement is made by Cubist within said [ ]*,
Novartis shall be free to enter into an agreement in accordance with such terms
with a Third Party.
(b) Discontinued Novartis Compounds.
(i) Globally Discontinued Novartis Compounds. In the event that
(aa) Novartis determines, or is forced, to discontinue the development or the
global commercialization of a Novartis Product based on a Novartis Compound or
an Active Cubist Compound Derivative (such Novartis Compound or Active Cubist
Compound Derivative being referred to herein as a "Globally Discontinued
Novartis Compound"), and (bb) if Novartis, at its sole discretion, decides to
license to a Third Party such Globally Discontinued Novartis Compound, then
Novartis shall notify Cubist in writing of the occurrence of the above. Cubist
shall then have the right of first refusal (the "First Refusal Right"),
following the same negotiation procedure and deadlines as outlined under Section
7.5.3(a) above, to obtain a worldwide, exclusive royalty-bearing license under
Novartis Patent Rights, Novartis Technology and Novartis' interest in Joint
Patent Rights and Joint Technology covering the Globally Discontinued Novartis
Compound to use such Globally Discontinued Novartis Compound in Cubist's
research and development program and to make, have made, use, sell and import
products.
(ii) Locally Discontinued Novartis Compounds. In the event that
(aa) in any country, following the First Commercial Sale of a Novartis Product
based on a Novartis Compound or an Active Cubist Compound Derivative, there is a
continuous one (1) year period in which no such Novartis Product is sold in such
country (provided that such sale is not prevented by force majeure, government
regulation or intervention or institution of a law suit by a Third Party), (such
Novartis Compound or Active Cubist Compound Derivative being referred to herein
as a "Locally Discontinued Novartis Compound"), and (bb) if Novartis, at its
sole discretion, decides to license to a Third Party such Locally Discontinued
Novartis Compound, Novartis shall notify Cubist in writing of the occurrence of
the above. Cubist then shall have the right of first refusal (the "First Refusal
Right"), following the same negotiation procedure and deadlines as outlined
under Section 7.5.3(a) above, to obtain an exclusive royalty-bearing license
under Novartis Patent Rights, Novartis Technology and Novartis' interest in
Joint
----------------------
* Confidential Treatment Requested: Material has been omitted and filed
separately with the Commission.
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CONFIDENTIAL TREATMENT
Patent Rights and Joint Technology covering the Locally Discontinued Novartis
Compound to use such Locally Discontinued Novartis Compound in Cubist's research
and development program and to make, have made, use, sell in and import products
into the country where sales have been discontinued.
7.5.4 Back-Up Compounds. With respect to each Active Cubist Compound to
which Novartis has exercised its option pursuant to Section 7.5.1, Novartis
shall also be free to designate up to five (5) other Active Cubist Compounds as
"Back-Up Compounds" which Novartis may develop to a certain early stage of
development (usually at EDC Status) and which are parked at this stage to serve
as possible replacements for a more advanced Active Cubist Compound whose
development and/or commercialization efforts have to be abandoned. In the event
Novartis discontinues its research and development program with respect to an
Active Cubist Compound pursuant to Section 7.5.2, Novartis shall so notify
Cubist in writing and Novartis shall obtain an exclusive [ ]* option to
designate one of the Back-Up Compounds as an Active Cubist Compound which
thereafter shall be subject to Sections 7.5.1 and 7.5.2 while those Back-Up
Compounds which will not be so designated shall continue to be Back-Up
Compounds. Upon the expiration of the [ ]* period, if Novartis has not
designated any of the Back-Up Compounds as an Active Cubist Compound, Novartis
shall have no rights with respect to any Back-Up Compound for the discontinued
Active Cubist Compound. Thereafter, if Novartis is interested in obtaining
rights to the former Back-Up Compound, Cubist will, subject to availability,
discuss the possibility of licensing such former Back-Up Compound to Novartis
provided that Cubist shall have no obligation to grant any rights to Novartis.
7.6 Sublicenses and Licenses. Any sublicense by Novartis of the rights
granted to Novartis in this Article 7 shall be consistent with the terms of this
Agreement and shall include an obligation for the sublicensee to comply with the
applicable obligations of this Agreement including, without limitation, Section
8.6 pertaining to reports and audits and Article 9 pertaining to
confidentiality. Novartis shall notify Cubist of the existence of any sublicense
of the rights granted herein to a non-Affiliate of Novartis and to the inclusion
into such sublicense(s) of the obligation set forth in this Section 7.6 within
ten (10) business days of entering into such sublicense.
Cubist shall be free to license Cubist's co-exclusive rights pursuant
to Sections 7.2.2, 7.3.3 and 7.4.2 provided that each license shall be
consistent with the terms of this Agreement and shall include an obligation for
the licensee to comply with the applicable obligations of this Agreement
including, without limitation, Section 8.6 pertaining to reports and audits and
Article 9 pertaining to confidentiality. Cubist shall notify Novartis of the
existence of any license of the rights retained herein to a non-Affiliate of
Cubist and to the inclusion into such sublicense(s) of the obligation set forth
in this Section 7.6 within ten (10) business days of entering into such license.
------------------------
* Confidential Treatment Requested: Material has been omitted and filed
separately with the Commission.
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CONFIDENTIAL TREATMENT
7.7 Reservation of Rights. Notwithstanding the grant of any licenses
pursuant to this Article 7, Cubist at all times reserves the rights under the
Cubist Patent Rights, Cubist Technology and Cubist's interest in Joint Patent
Rights and Joint Technology to (i) use VITA(TM) for any purpose provided such
purpose is not in conflict with any of the obligations Cubist undertakes under
this Agreement, (ii) to use each Candidate Target, Selected Target, Discontinued
Target, Validated Assay and Discontinued Validated Assay for research uses in
accordance with this Agreement, (iii) to make, use and sell Cubist Compounds
which are not designated as Active Cubist Compounds, or Active Cubist Compounds
as to which Novartis' option rights are not exercised or as to which Novartis'
license rights have been terminated, for any purpose, provided, however, that
Cubist shall not develop, make, have made, use and sell itself or license to a
Third Party any such Cubist Compounds or Active Cubist Compounds that show
activity to any Candidate Targets or Selected Targets as to which, and for so
long as, Novartis is licensed exclusively hereunder, (iv) to make and use, for
research purposes only, Active Cubist Compounds as to which Novartis has
exercised its option and (v) to make and have made Cubist Products in accordance
with Sections 7.8 and 8.5 below.
7.8 Manufacturing Rights. Novartis or its designee shall be responsible for
the manufacture of each Novartis Product. Novartis shall also be responsible for
providing all documentation to regulatory authorities regarding the manufacture
of such Novartis Products for commercial sale needed to register the Novartis
Products and arranging for pre-approval inspections. Cubist or its designee
shall be responsible for the manufacture of each Cubist Product. Cubist shall
also be responsible for providing all documentation to regulatory authorities
regarding the manufacture of such Cubist Products for commercial sale needed to
register the Cubist Products and arranging for pre-approval inspections.
7.9 Trademarks. Novartis shall be free to use and to register in any
trademark office any trademark for use with a Novartis Product in its sole
discretion. Novartis shall own all right, title and interest in and to any such
trademark in its own name during and after the term of this Agreement.
Cubist shall be free to use and to register in any trademark office any
trademark for use with a Cubist Product in its sole discretion. Cubist shall own
all right, title and interest in and to any such trademark in its own name
during and after the term of this Agreement.
ARTICLE 8
PAYMENTS
8.1 Funding of the Research Program by Novartis. In consideration of
Cubist's performance of its obligations under the Research Program, Novartis
will pay Cubist [ ]* U.S. Dollars ($[ ]*) in each Research Year. Such funding
represents support for [ ]* full-
-----------------------
* Confidential Treatment Requested: Material has been omitted and filed
separately with the Commission.
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CONFIDENTIAL TREATMENT
time Cubist employees per year at a cost of [ ]* U.S. Dollars ($[ ]*) per
full-time employee per year. The amounts payable for each Research Year shall be
paid in advance by certified or bank check or wire transfer in United States
dollars in four equal payments to be paid quarterly upon presentation of an
invoice by Cubist. (each such payment referred to as a "Research Funding
Payment"). Research Funding Payments shall be made no later than (a) by the
first (1st) business day of each Research Year quarter or (b) thirty (30) days
after receipt of the corresponding invoice, whichever is the later. Research
Funding Payments shall not be credited against equity, milestone or royalty
payments due Cubist under Sections 8.2 through 8.4 below.
8.2 Equity Investment by Novartis. Upon the execution of this Agreement,
Novartis shall make an investment in Cubist's Common Stock in the aggregate
amount of Four Million Dollars ($4,000,000) on the terms and subject to the
conditions set forth in the Stock Purchase Agreement dated as of the date hereof
between the Parties (the "Stock Purchase Agreement"), a copy of which is
attached hereto as Exhibit B. Payments made to Cubist pursuant to the Stock
Purchase Agreement are solely for the purchase of Cubist Common Stock and will
not be credited against any payments due Cubist under this Collaborative
Research and License Agreement.
8.3 Milestone Payments by Novartis.
8.3.1 Technology Transfer Milestone Payments. In consideration of
Cubist's work on the Research Program and the license and option rights granted
to Novartis hereunder, Novartis shall pay the following amounts to Cubist upon
the achievement (prior to the expiration or termination of this Agreement
pursuant to Article 12) of each of the applicable milestones:
==========================================================================================================
Milestone Payment
----------------------------------------------------------------------------------------------------------
1. First successful transfer to, and successful initiation of implementation
by, Novartis of a Validated Assay $[ ]*
==========================================================================================================
2. Each subsequent transfer to, and successful initiation of implementation
by, Novartis of a Validated Assay $[ ]*
==========================================================================================================
provided however, that in no event shall Novartis be required to pay Cubist
under this Section 8.3 more than [ ]* U.S. Dollars ($[ ]*). Payments made to
Cubist pursuant to this Section 8.3.1 will not be credited against Research
Funding Payments payable under Section 8.1 or equity, development milestone, or
royalty payments due Cubist under Sections 8.2 through 8.4.
8.3.2 Development Milestone Payments. In consideration of Cubist's work
on the Research Program and the license and option rights granted to Novartis
hereunder, Novartis
------------------------
* Confidential Treatment Requested: Material has been omitted and filed
separately with the Commission.
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CONFIDENTIAL TREATMENT
shall pay the following amounts to Cubist upon the achievement of each of the
applicable milestones:
(a) For each (except Milestone A) Active Cubist Compound or Active
Cubist Compound Derivative:
==========================================================================================================
Milestone Payment
----------------------------------------------------------------------------------------------------------
A. First compound to reach EDC Status (one-time payment only, i.e. payable
only for the first Compound, whether this be an Active Cubist Compound
or an Active Cubist Compound Derivative, to achieve this milestone) $[ ]*
----------------------------------------------------------------------------------------------------------
B. Initiation of Phase I clinical trial $[ ]*
----------------------------------------------------------------------------------------------------------
C. Initiation of Phase III clinical trial $[ ]*
----------------------------------------------------------------------------------------------------------
D. First NDA Submission in a Major Market Country $[ ]*
----------------------------------------------------------------------------------------------------------
E. First launch in a Major Market Country $[ ]*
==========================================================================================================
(i) provided however that [ ]* percent ([ ]*%) of the payments made
to Cubist pursuant to this Section 8.3.2(a) shall be credited against royalties
due to Cubist for Novartis Products incorporating such Active Cubist Compound or
Active Cubist Compound Derivative pursuant to Section 8.4(a) hereof;
(ii) provided further that no royalty payment under Section 8.4(a)
shall be reduced by more than [ ]* percent ([ ]* %); and
(iii) provided further that if an Active Cubist Compound or an
Active Cubist Compound Derivative is abandoned during development after one or
more of the milestone payments B., C., or D. above has been made, and if a
replacement compound is developed to replace such abandoned Active Cubist
Compound or Active Cubist Compound Derivative, then no milestone payment B., C.
or D. shall be made in respect of the replacement compound which milestone
payment has already been made in respect of the abandoned Active Cubist Compound
or Active Cubist Compound Derivative; provided however, that the provisions of
this subsection (iii) shall not apply with respect to a replacement compound if
(aa) the abandoned compound is an Active Cubist Compound, and (bb) Novartis,
pursuant to the provisions of Section 7.5.4 had parked one or more Back-Up
Compounds as possible replacement compounds for such Active Cubist Compound. If
the conditions of (aa) and (bb) above are met, then Novartis shall pay, with
respect to the replacement compound for the abandoned Active Cubist Compound,
regular milestone payments upon the achievement of each of the applicable
milestones as set forth in this Section 8.3.2(a), irrespective of whether the
replacement compound is a Back-Up Compound or not.
-------------------------
* Confidential Treatment Requested: Material has been omitted and filed
separately with the Commission.
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CONFIDENTIAL TREATMENT
(b) For each (except Milestone A) Novartis Compound:
==========================================================================================================
Milestone Payment
----------------------------------------------------------------------------------------------------------
A. First compound to reach EDC status (one-time payment only, i.e. payable
only for the first Novartis Compound to achieve this milestone) $[ ]*
----------------------------------------------------------------------------------------------------------
B. Initiation of Phase I clinical trial $[ ]*
----------------------------------------------------------------------------------------------------------
C. Initiation of Phase III clinical trial $[ ]*
----------------------------------------------------------------------------------------------------------
D. First NDA Submission in a Major Market Country $[ ]*
----------------------------------------------------------------------------------------------------------
E. First launch in a Major Market Country $[ ]*
==========================================================================================================
(i) provided however that [ ]* percent ([ ]*%) of the payments made
to Cubist pursuant to this Section 8.3.2(b) shall be credited against royalties
due to Cubist for Novartis Products incorporating such Novartis Compound
pursuant to Section 8.4(b) hereof;
(ii) provided further that no royalty payment under Section 8.4(b)
shall be reduced by more than [ ]* percent ([ ]*%); and
(iii) provided further that if a Novartis Compound is abandoned
during development after one or more of the milestone payments B., C., or D.
above has been made, and if a replacement compound is developed to replace such
abandoned Novartis Compound, then no milestone payment B., C. or D. shall be
made in respect of the replacement compound which milestone payment has already
been made in respect of the abandoned Novartis Compound.
8.3.3 Payment by Novartis of Milestone Payments. All payments to be
made by Novartis to Cubist pursuant to this Section 8.3 shall be made within
thirty (30) days of receipt of an invoice from Cubist. Novartis shall promptly
report to Cubist the occurrence of any event triggering a milestone payment
according to Sections 8.3.1 or 8.3.2 above.
8.4 Royalties on Net Sales by Novartis. In consideration of the licenses
granted to Novartis pursuant to Article 7 hereof, Novartis shall pay Cubist the
following royalties on Net Sales:
(a) For each Novartis Product consisting of or incorporating an
Active Cubist Compound or an Active Cubist Compound Derivative:
==========================================================================================================
Net Sales per annum Royalty Rate
----------------------------------------------------------------------------------------------------------
on Net Sales less than $300,000,000 [ ]*%
----------------------------------------------------------------------------------------------------------
on the increment of Net Sales equal to or greater than $300,000,000 but less
than $500,000,000 [ ]*%
----------------------------------------------------------------------------------------------------------
on the increment of Net Sales equal to or greater than $500,000,000 but less
than $1,000,000,000 [ ]*%
----------------------------------------------------------------------------------------------------------
on the increment of Net Sales equal to or greater than $1,000,000,000 [ ]*%
==========================================================================================================
---------------------------
* Confidential Treatment Requested: Material has been omitted and filed
separately with the Commission.
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provided, however, that royalties under this Section 8.4(a) shall be
payable on a country-by-country basis for the longer of (i) the period that such
Novartis Product, its manufacture, use or sale is covered by a Valid Claim in
such country or (ii) [ ]* from the date of First Commercial Sale of each
Novartis Product in such country; and,
provided, furthermore, that if after expiry of the relevant Valid Claim in
a country, substantial competition in the sale of a Novartis Product under this
Section 8.4(a) is created by any independent Third Party entering the market
with such a Product, then with respect solely to such country any royalty still
payable shall be reduced by [ ]* percent ([ ]*%) of the amounts set forth above,
commencing with the first full calendar quarter following written notice to
Cubist of such substantial competition and continuing for only so long as such
substantial competition exists. As used in this Section, "substantial
competition" shall mean a market share of an independent Third Party entering
the market greater than twenty percent (20%) of the Novartis market as shown by
IMS Panel data or, if not available, such market research data mutually agreed
upon by the Parties.
(b) For each Novartis Product consisting of or incorporating a
Novartis Compound:
==========================================================================================================
Net Sales per annum Royalty Rate
----------------------------------------------------------------------------------------------------------
on Net Sales less than $300,000,000 [ ]*%
----------------------------------------------------------------------------------------------------------
on the increment of Net Sales equal to or greater than $300,000,000 but less
than $500,000,000 [ ]*%
----------------------------------------------------------------------------------------------------------
on the increment of Net Sales equal to or greater than $500,000,000 but less
than $1,000,000,000 [ ]*%
----------------------------------------------------------------------------------------------------------
on the increment of Net Sales equal to or greater than $1,000,000,000 [ ]*%
==========================================================================================================
provided, however, that royalties under this Section 8.4(b) shall be
payable on a country-by-country basis for [ ]* from the date of First Commercial
Sale of each Novartis Product in such country.
------------------------
* Confidential Treatment Requested: Material has been omitted and filed
separately with the Commission.
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CONFIDENTIAL TREATMENT
8.5 Percentage of Milestone Revenue Income and Royalties by Cubist. With
respect to each Cubist Product sold by Cubist or its Affiliates or any licensee
of Cubist, Cubist shall pay Novartis the following:
(a) [ ]** percent ([ ]*%) of all Milestone Revenue Income received
by Cubist from any licensee.
All payments to be made by Cubist to Novartis pursuant to this
Section 8.5(a) shall be made within thirty (30) days of receipt of an invoice
from Novartis. Cubist shall promptly report to Novartis the occurrence of any
event triggering a milestone payment according to this Section 8.5(a).
(b) the following royalties shall be payable on a
country-by-country basis for [ ]* from the date of First Commercial Sale of each
Cubist Product in such country whether such Cubist Product is commercialized by
Cubist itself, by an Affiliate of Cubist, or a licensee of Cubist:
==========================================================================================================
Net Sales per annum Royalty Rate
----------------------------------------------------------------------------------------------------------
on Net Sales less than $300,000,000 [ ]*%
----------------------------------------------------------------------------------------------------------
on the increment of Net Sales equal to or greater than $300,000,000 but less
than $500,000,000 [ ]*%
----------------------------------------------------------------------------------------------------------
on the increment of Net Sales equal to or greater than $500,000,000 but less
than $1,000,000,000 [ ]*%
----------------------------------------------------------------------------------------------------------
on the increment of Net Sales equal to or greater than $1,000,000,000 [ ]*%
==========================================================================================================
8.6 Method of Payment/Reports/Audits. All payments to be made by Novartis
to Cubist pursuant to Sections 8.3 and 8.4 and all payments to be made by Cubist
to Novartis pursuant to Section 8.5 shall be made in United States dollars.
8.6.1 Royalty Reports, Exchange Rates. During the term of this
Agreement, following the First Commercial Sale in any country of a Novartis
Product or a Cubist Product, the Seller shall furnish to the other Party a
written quarterly report showing, on a country by country basis: (i) the gross
sales of all Products sold by Seller and its Affiliates and any of its
distributors who are not Affiliates and its licensees or sublicensees during the
reporting period and the calculation of Net Sales from such gross sales; (ii)
the royalties and other payments payable in United States dollars which shall
have accrued hereunder in respect of such sales; (iii) withholding taxes, if
any, required by law to be deducted in respect of such sales, as applicable;
(iv) the dates of the First Commercial Sales of any Products in any country by
Seller and its
-----------------------
* Confidential Treatment Requested: Material has been omitted and filed
separately with the Commission.
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CONFIDENTIAL TREATMENT
Affiliates and any of its distributors who are not Affiliates and its licensees
or sublicensees during the reporting period; (v) the amount of any credits
against the royalties and other payments which have accrued hereunder pursuant
to Sections 6.4 and 8.3; and (vi) the exchange rates used in determining the
amount of United States dollars. All amounts payable will first be calculated in
the currency of sale and then converted into United States dollars using as a
rate of exchange the average exchange rate reported in the Wall Street Journal
during the calendar quarter to which the payment relates. Reports together with
the royalty payable for the periods to which the reports relate shall be due on
the sixtieth (60th) day following the close of each calendar quarter. If no
royalty is due for any royalty period hereunder, the parties shall so report.
Seller shall keep complete and accurate records in sufficient detail to properly
reflect all gross sales and Net Sales and to enable the royalties payable
hereunder to be determined.
8.6.2 Audits. Upon the written request of the other Party, Seller shall
permit an independent certified public accountant selected by the requesting
Party and acceptable to Seller, which acceptance shall not be unreasonably
withheld or delayed, to have access during normal business hours to such of the
records of Seller as may be reasonably necessary to verify the accuracy of the
royalty reports hereunder in respect of any fiscal year ending not more than
twenty-four (24) months prior to the date of such request. All such
verifications shall be conducted at the expense of the requesting Party and not
more than once in each calendar year.
In the event such accountant concludes that additional royalties were
owed during such period, the additional royalty shall be paid within thirty (30)
days of the date the requesting Party delivers to Seller such accountant's
written report so concluding. The fees charged by such accountant shall be paid
by the requesting Party unless the audit discloses that the royalties payable by
Seller for the audited period are more than one hundred and ten percent (110%)
of the royalties actually paid for such period, in which case Seller shall pay
the reasonable fees and expenses charged by the accountant.
Seller shall include in each license or sublicense granted by it
pursuant to this Agreement a provision requiring the licensee or sublicensee to
make reports to Seller, to keep and maintain records of sales made pursuant to
such license or sublicense and to grant access to such records by the other
Party's independent accountant to the same extent required of Seller under this
Agreement.
The parties agree that all information subject to review under this
Section 8.6.2 or under any sublicense agreement is confidential and that it
shall cause its accountant to retain all such information in confidence.
8.6.3 Royalty Payment Terms. Royalties shown to have accrued by each
royalty report provided for under this Agreement shall be due and payable on the
date such royalty report is due. Payment of royalties in whole or in part may be
made in advance of such due date. Royalties determined to be owing, and any
overpayments to be credited, with respect to any prior quarter shall be added,
together with interest thereon accruing under this Agreement from the date of
the report for the quarter for which such amounts are owing, or credited, as the
case may be, to the next quarterly payment hereunder.
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8.7 Withholding of Taxes. Any withholding of taxes levied by tax
authorities outside the United States on the payments hereunder shall be
deducted by Seller from the sums otherwise payable by it hereunder for payment
to the proper tax authorities on behalf of the other Party and shall be borne by
such other Party. Seller agrees to cooperate with the other Party in the event
the other Party claims exemption from such withholding or seeks deductions under
any double taxation or other similar treaty or agreement from time to time in
force, such cooperation to consist of providing receipts of payment of such
withheld tax or other documents reasonably available to Seller.
8.8 Exchange Controls. Except as hereinafter provided in this Section,
all payments to be made pursuant to this Article 8 shall be paid in United
States dollars. If at any time legal restrictions prevent the prompt remittance
of part or all royalties with respect to any country where the Product is sold,
payment shall be made through such lawful means or methods as Seller may
determine. When in any country the law or regulations prohibit both the
transmittal and deposit of royalties on sales in such a country, royalty
payments shall be suspended for as long as such prohibition is in effect, and as
soon as such prohibition ceases to be in effect, all royalties that Seller or
its licensees or sublicensees would have been obligated to transmit or deposit,
but for the prohibition, shall forthwith be deposited or transmitted promptly to
the extent allowable, as the case may be. If the royalty rate specified in this
Agreement should exceed the permissible rate established in any country, the
royalty rate for sales in such country shall be adjusted to the highest legally
permissible or government-approved rate.
8.9 Interest on Late Payments. Any payments by Seller that are not paid
on or before the date such payments are due under this Agreement shall bear
interest, to the extent permitted by applicable law, at the Base Rate of
interest declared from time to time by BankBoston N.A. in Boston, Massachusetts,
calculated on the number of days payment is delinquent.
ARTICLE 9
CONFIDENTIALITY
9.1 Nondisclosure Obligations. Except as otherwise provided in this Article
9, during the term of this Agreement and for a period of [ ]* thereafter, both
Parties shall maintain in confidence and use only for purposes specifically
authorized under this Agreement information and data received from the other
Party during the Program ("Information").
To the extent it is reasonably necessary or appropriate to fulfil its
obligations or exercise its rights under this Agreement, a Party may disclose
Information it is otherwise obligated under this Section not to disclose to its
Affiliates, licensees, sublicensees, consultants, outside contractors and
clinical investigators, on a need-to-know basis on condition that such entities
or persons agree to keep the Information confidential for the same time periods
and to the
--------------------------
* Confidential Treatment Requested: Material has been omitted and filed
separately with the Commission.
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same extent as such Party is required to keep the Information confidential; and
a Party or its licensees or sublicensees may disclose such Information to
government or other regulatory authorities to the extent that such disclosure is
reasonably necessary to obtain patents or authorizations to conduct clinical
trials with and to commercially market any Product. The obligation not to
disclose Information shall not apply to any part of such Information that (i) is
or becomes patented, published or otherwise part of the public domain other than
by acts of the Party obligated not to disclose such Information or its
Affiliates or licensees or sublicensees in contravention of this Agreement; (ii)
is disclosed to the receiving Party or its Affiliates or licensees or
sublicensees by a Third Party, provided such Information was not obtained by
such Third Party directly or indirectly from the other Party under this
Agreement; (iii) prior to disclosure under this Agreement, was already in the
possession of the receiving Party or its Affiliates or licensees or
sublicensees, provided such Information was not obtained directly or indirectly
from the other Party under this Agreement; or (iv) can be shown by written
documents to have been independently developed by the receiving Party or its
Affiliates without breach of any of the provisions of this Agreement.
9.2 Samples. Samples of compounds provided by one Party (the "Supplying
Party") to the other Party (the "Receiving Party") during the Research Program
shall not be supplied or sent by the Receiving Party to any Third Party without
the written consent of the Supplying Party.
9.3 Terms of this Agreement/Use of Name. Except as required by applicable
law or regulation, neither Party shall use the name of the other Party in any
publicity or advertising without the prior written approval of the other Party,
except that either party may disclose the existence of the collaboration. Cubist
and Novartis each agrees not to disclose any terms or conditions of this
Agreement to any Third Party without the prior consent of the other Party,
except as required by applicable law or to persons with whom Novartis or Cubist
has entered into or proposes to enter into a business relationship related to
the subject matter hereof, and provided that such persons are subject to
appropriate confidentiality agreements. Notwithstanding the foregoing, Novartis
and Cubist agree that the information contained in a press release mutually
agreed by the Parties may be used to describe the nature of this transaction,
and Novartis and Cubist may disclose such information, as modified by mutual
agreement from time to time, without the other Party's consent.
9.4 Publications. Cubist and Novartis each acknowledge the other Party's
interest in publishing certain of the results of the Research Program to obtain
recognition within the scientific community and to advance the state of
scientific knowledge. Each Party also recognizes the mutual interest in
obtaining valid patent protection. Consequently, either Party, its employees or
consultants wishing to make a publication (including any oral disclosure made
without obligation of confidentiality) relating to work performed as part of the
Research Program (the "Publishing Party") shall transmit to the Joint Research
Steering Committee and the other Party (the "Reviewing Party") a copy of the
proposed written publication at least forty-five (45) days prior to submission
for publication, or an abstract of such oral disclosure at least fifteen (15)
days prior to submission of the abstract or the oral disclosure, whichever is
earlier. The Joint Research Steering Committee and/or the Reviewing Party shall
have the right (a) to propose
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modifications to the publication for accuracy and/or patent reasons, (b) to
request a delay in publication or presentation in order to protect patentable
information or maintain trade secrets.
If the Joint Research Steering Committee or the Reviewing Party
requests such a delay, the Publishing Party shall delay submission or
presentation of the publication for a period determined by the Joint Research
Steering Committee to enable patent applications protecting each Party's rights
in such information to be filed or to protect trade secrets. Upon the expiration
of forty-five (45) days, in the case of proposed written disclosures, or fifteen
(15) days, in the case of an abstract of proposed oral disclosures, from
transmission of such proposed disclosures to the Joint Research Steering
Committee and the Reviewing Party, the Publishing Party shall be free to proceed
with the written publication or the oral presentation, respectively, unless the
Joint Research Steering Committee or the Reviewing Party has requested the delay
described above.
ARTICLE 10
REPRESENTATIONS AND WARRANTIES
10.1 Authorization. Each Party represents and warrants to the other that it
has the legal right and power to enter into this Agreement, to extend the rights
and licenses granted or to be granted to the other in this Agreement, and to
fully perform its obligations hereunder, and that it has not made nor will it
make any commitments to others in conflict with or in derogation of such rights
or this Agreement. Except as otherwise disclosed, each Party further represents
to the other that it is not aware of any legal obstacles which could prevent it
from carrying out the provisions of this Agreement.
10.2 Warranty Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS
AGREEMENT, CUBIST MAKES NO WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE
QUALITY OF RESULTS GENERATED PURSUANT TO THE RESEARCH PROGRAM, CUBIST COMPOUNDS,
TARGETS IDENTIFIED BY CUBIST FOR THE COLLABORATION TARGET LIST, CANDIDATE
TARGETS, SELECTED TARGETS, VALIDATED ASSAYS OR ANY CUBIST TECHNOLOGY OR PATENT
RIGHTS THEREIN, OR OTHER SUBJECT MATTER OF THIS AGREEMENT AND HEREBY DISCLAIMS
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NON-INFRINGEMENT WITH RESPECT TO ANY AND ALL OF THE FOREGOING.
ARTICLE 11
INDEMNITY
11.1 Novartis Indemnity Obligations. Except to the extent attributable to
Cubist's negligence, a breach of warranty by Cubist or willful or tortious acts
or omissions of Cubist, Novartis agrees to defend, indemnify and hold Cubist,
its Affiliates and their respective employees and agents harmless from all
claims, losses, damages or expenses arising as a result of: (a) actual or
asserted violations of any applicable law or regulation by Novartis, its
Affiliates or sublicensees by virtue of which Novartis Products manufactured,
distributed or sold by Novartis, its Affiliates or sublicensees shall be alleged
or determined to be adulterated, misbranded, mislabeled or otherwise not in
compliance with any applicable law or regulation; (b)
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claims for bodily injury, death or property damage attributable to the
development, manufacture, distribution, sale or use of Novartis Products by
Novartis, its Affiliates or sublicensees; or (c) a recall of Novartis Products
manufactured, distributed or sold by Novartis, its Affiliates or sublicensees
ordered by a governmental agency or required by a confirmed Novartis Product
failure as reasonably determined by Novartis.
11.2 Cubist Indemnity Obligations. Except to the extent attributable to
Novartis' negligence, a breach of warranty by Novartis or willful or tortuous
acts or omissions of Novartis, Cubist agrees to defend, indemnify and hold
Novartis, its Affiliates and their respective employees and agents harmless from
all claims, losses, damages or expenses arising as a result of: (a) actual or
asserted violations of any applicable law or regulation by Cubist, its
Affiliates or sublicensees by virtue of which Cubist Products manufactured,
distributed or sold by Novartis, its Affiliates or sublicensees shall be alleged
or determined to be adulterated, misbranded, mislabeled or otherwise not in
compliance with any applicable law or regulation; (b) claims for bodily injury,
death or property damage attributable to the development, manufacture,
distribution, sale or use of Cubist Products by Cubist, its Affiliates or
sublicensees; or (c) a recall of Cubist Products manufactured, distributed or
sold by Cubist, its Affiliates or sublicensees ordered by a governmental agency
or required by a confirmed Cubist Product failure as reasonably determined by
Cubist.
11.3 Procedure. A Party or any of its Affiliates or their respective
employees or agents (the "Indemnitee") that intends to claim indemnification
under this Article 11 shall promptly notify the other Party (the "Indemnitor")
of any loss, claim, damage, liability or action in respect of which the
Indemnitee intends to claim such indemnification, and the Indemnitor shall
assume the defense thereof with counsel mutually satisfactory to the Parties;
provided, however, that an Indemnitee shall have the right to retain its own
counsel, with the fees and expenses to be paid by the Indemnitor, if
representation of such Indemnitee by the counsel retained by the Indemnitor
would be inappropriate due to actual or potential conflicting interests between
such Indemnitee and any other Party represented by such counsel in such
proceedings. The indemnity agreement in this Article 11 shall not apply to
amounts paid in settlement of any loss, claim, damage, liability or action if
such settlement is effected without the consent of the Indemnitor, which consent
shall not be withheld unreasonably. The failure to deliver notice to the
Indemnitor within a reasonable time after the commencement of any such action,
if materially prejudicial to its ability to defend such action, shall relieve
such Indemnitor of any liability to the Indemnitee under this Article 11, but
the omission so to deliver notice to the Indemnitor will not relieve it of any
liability that it may have to any Indemnitee otherwise than under this Article
11. The Indemnitee under this Article 11, its employees and agents, shall
cooperate fully with the Indemnitor and its legal representatives in the
investigation of any action, claim or liability covered by this indemnification.
11.4 Novartis Insurance. Novartis shall maintain product liability
insurance with respect to development, manufacture and sales of Novartis
Products by Novartis in such amount as Novartis customarily maintains with
respect to sales of its other products. Novartis shall maintain such insurance
for so long as it continues to manufacture or sell any Novartis Products, and
thereafter for so long as Novartis maintains insurance for itself covering such
manufacture or
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sales. Novartis shall provide Cubist with written evidence of such insurance
upon request by Cubist.
11.5 Cubist Insurance. Cubist shall maintain product liability insurance
with respect to development, manufacture and sales of Cubist Products by Cubist
in such amount as Cubist customarily maintains with respect to sales of its
other products. Cubist shall maintain such insurance for so long as it continues
to manufacture or sell any Cubist Products, and thereafter for so long as Cubist
maintains insurance for itself covering such manufacture or sales. Cubist shall
provide Novartis with written evidence of such insurance upon request by
Novartis.
ARTICLE 12
TERM AND TERMINATION
12.1 The Research Program.
12.1.1 Expiration of the Research Program. Unless this Agreement is
sooner terminated in accordance with the provisions of this Article 12, the term
of the Research Program shall expire upon the completion of [ ]* Research Years.
12.1.2 Termination of the Research Program. The Research Program may
be terminated by Novartis, in its discretion, at the end of [ ]* Research Years
upon written notice to Cubist before the end of [ ]* from the Effective Date. If
such notice is not received before the end of [ ]* from the Effective Date, the
Parties agree that Novartis will be obligated to provide the full amount of
research funding pursuant to Section 8.1 for the third Research Year.
12.1.3 Existing Obligations. The expiration or termination of the
Research Program shall not relieve the Parties of any obligation that accrued
prior to such expiration or termination.
12.1.4 Effect of Expiration and Termination of Research Program. In
the event of the expiration or termination of the Research Program pursuant to
Section 12.1, then (a) the Exclusivity Period for Candidate Targets set forth in
Section 7.2.3 shall survive; (b) the co-exclusive rights to Candidate Targets as
provided in Section 7.2.2, to Discontinued Targets as provided in Section 7.3.3
and to Discontinued Validated Assays as provided in Section 7.4.2 shall survive;
(c) the exclusive rights to Selected Targets as set forth in Section 7.3.1 shall
survive; (d) Novartis' due diligence obligations pursuant to Sections 7.3.2 and
7.5.2 shall survive; (e) Cubist's rights pursuant to Section 7.5.3(a) and
Cubist's First Refusal Right pursuant to Section 7.5.3(b) shall survive; and (f)
the exclusive rights to Active Cubist Compounds for which Novartis exercised its
option prior to the expiration or termination of the Research Program shall
survive.
--------------------
* Confidential Treatment Requested: Material has been omitted and filed
separately with the Commission.
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12.2 Expiration of This Agreement. Unless terminated earlier pursuant to
Section 12.3, this Agreement shall expire on the expiration of Novartis' or
Cubist's obligations to pay royalties to the other Party under this Agreement,
and the licenses granted by either Party to the other hereunder shall become
fully paid up and royalty-free, on a country-by-country basis.
12.3 Termination of This Agreement. This Agreement may be terminated in the
following circumstances:
12.3.1 Material Breach. By one Party upon written notice by reason of
a material breach by the other Party not described in Section 12.3.2 or 12.3.3
that the breaching Party fails to remedy within sixty (60) days after written
notice thereof by the non-breaching Party;
12.3.2 Failure of Novartis to Pay. By Cubist, if Novartis fails to
make (i) any payment under Sections 8.1, 8.2 or 8.3 within twenty (20) business
days after such payment becomes payable or (ii) any royalty payment under
Section 8.4 within thirty (30) days after such payment becomes payable, and, in
any such case under (i) and (ii), such failure is not remedied within thirty
(30) days after notice thereof from Cubist.
12.3.3 Failure of Cubist to Pay. By Novartis, if Cubist fails to make
any Milestone Revenue Income or royalty payment under Section 8.5 within twenty
(20) business days after such payment becomes payable, and, in any such case,
such failure is not remedied within thirty (30) days after notice thereof from
Novartis.
12.3.4 Bankruptcy. By either Party upon bankruptcy, insolvency,
dissolution or winding up of the other.
12.3.5 By Novartis. By Novartis, in its discretion, in its entirety,
or with respect to a Novartis Product on a country-by-country basis, at any time
upon delivery by Novartis to Cubist of six (6) months prior notice thereof.
12.4 Failure of Novartis to Diligently Develop and Sell Novartis Product
Based on Active Cubist Compound. In the event that (a) Novartis fails to use
commercially reasonable efforts to develop a Novartis Product based on an Active
Cubist Compound in accordance with Section 7.5.2 or (b) following the First
Commercial Sale of a Novartis Product based on an Active Cubist Compound in a
Major Market County, there is a continuous one (1) year period in which no such
Novartis Product is sold in such Major Market Country (provided that such sale
is not prevented by force majeure, government regulation or intervention or
institution of a law suit by a Third Party), and Novartis fails to remedy or
take reasonable action to initiate a remedy of such default within ninety (90)
days after notice thereof by Cubist, Cubist shall have the right to terminate
the license and right granted to Novartis to such Active Cubist Compound
pursuant to Section 7.5 in such Major Market Country for such Active Cubist
Compound-based Novartis Product (and Cubist shall have the rights set forth in
Section 7.5.3(a)), but Cubist shall not have the right to terminate this
Agreement in its entirety.
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12.5 Effect of Expiration or Termination of This Agreement.
12.5.1 Existing Obligations. Expiration pursuant to Section 12.2 or
termination pursuant to Section 12.3 of this Agreement for any reason shall not
relieve the Parties of any obligation that accrued prior to such expiration or
termination.
12.5.2 Survival of Sublicenses. Upon termination of this Agreement for
any default by Novartis, any existing sublicenses of Novartis shall be
automatically assigned to Cubist, and Cubist shall be bound by the terms of such
sublicenses provided that the sublicensees continue to perform in accordance
with their respective sublicense agreements. Notwithstanding the foregoing,
Cubist's obligations to any such sublicensee shall not be interpreted to extend
beyond any obligations to Novartis hereunder with respect to the subject matter
of the sublicense.
12.5.3 Survival. Upon expiration or termination of this Agreement, the
obligations which by their nature are intended to survive expiration or
termination of the Agreement, shall survive.
12.5.4 Effect of Termination by Novartis. In the event of termination
of this Agreement by Novartis pursuant to Sections 12.3.1, 12.3.3 or 12.3.4,
Novartis may elect to either (a) terminate this Agreement, in which case all
licenses and rights granted to Novartis shall terminate and Novartis will
immediately cease to manufacture and sell Novartis Products (except as provided
in Section 12.5.6) and Novartis shall be entitled to claim from Cubist all
damages which would otherwise be due to Novartis under law or equity or (b)
offset the amount of damages and/or costs obtained in a final judgment or award
of monetary damages and/or costs against Cubist based on Cubist's default
against any amounts otherwise due to Cubist under Article 8.
12.5.5 Effect of Termination by Cubist. In the event of termination of
this Agreement by Cubist pursuant to Sections 12.3.1, 12.3.2 or 12.3.4, all
licenses and rights granted to Novartis hereunder shall terminate and, except as
provided in Section 12.5.6 below, Novartis will immediately cease to manufacture
and sell each Novartis Product.
12.5.6 Disposition of Inventory of Products. Novartis may dispose of
its inventory of Novartis Products on hand as of the effective date of
termination, and may fill any orders for Novartis Products accepted prior to the
effective date of termination, for a period of [ ]* after the effective date of
termination and (b) within [ ]* after disposition of such inventory and
fulfillment of such orders (and in any event within [ ]* after termination)
Novartis will forward to Cubist a final report containing the details required
by Section 8.6 hereof and pay Cubist all royalties due for Net Sales in such
period.
---------------------
* Confidential Treatment Requested: Material has been omitted and filed
separately with the Commission.
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ARTICLE 13
MISCELLANEOUS
13.1 Force Majeure. Neither Party shall be held liable or responsible to
the other Party nor be deemed to have defaulted under or breached this Agreement
for failure or delay in fulfilling or performing any term of this Agreement when
such failure or delay is caused by or results from causes beyond the reasonable
control of the affected Party, including but not limited to fire, floods,
embargoes, war, acts of war (whether war is declared or not), insurrections,
riots, civil commotions, strikes, lockouts or other labor disturbances, acts of
God or acts, omissions or delays in acting by any governmental authority or the
other Party; provided, however, that the Party so affected shall use reasonable
commercial efforts to avoid or remove such causes of nonperformance, and shall
continue to perform hereunder with reasonable dispatch whenever such causes are
removed. Either Party shall provide the other Party with prompt written notice
of any delay or failure to perform that occurs by reason of force majeure. The
Parties shall mutually seek a resolution of the delay or the failure to perform
as noted above.
13.2 Assignment. This Agreement may not be assigned or otherwise
transferred by either Party without the prior written consent of the other
Party, which consent shall not be unreasonably withheld or delayed; provided,
however, that each of the Parties may, without such consent, assign this
Agreement and its rights and obligations hereunder to its Affiliates or in
connection with the transfer or sale of all or substantially all of the portion
of its business to which this Agreement relates, or in the event of its merger
or consolidation or change in control or similar transaction or, in the case of
Cubist, the creation of a special purpose corporation or research and
development limited partnership. Any purported assignment in violation of the
preceding sentences shall be void. Any permitted assignee shall assume all
obligations of its assignor under this Agreement in writing.
13.3 Severability. Each Party hereby agrees that it does not intend to
violate any public policy, statutory or common laws, rules, regulations, treaty
or decision of any government agency or executive body thereof of any country or
community or association of countries. Should one or more provisions of this
Agreement be or become invalid, the Parties hereto shall substitute, by mutual
consent, valid provisions for such invalid provisions which valid provisions in
their economic effect are sufficiently similar to the invalid provisions that it
can be reasonably assumed that the Parties would have entered into this
Agreement with such valid provisions. In case such valid provisions cannot be
agreed upon, the invalidity of one or several provisions of this Agreement shall
not affect the validity of this Agreement as a whole, unless the invalid
provisions are of such essential importance to this Agreement that it is to be
reasonably assumed that the Parties would not have entered into this Agreement
without the invalid provisions.
13.4 Notices. Any consent, notice or report required or permitted to be
given or made under this Agreement by one of the Parties hereto to the other
shall be in writing, delivered personally or by facsimile (and promptly
confirmed by personal delivery or courier) or courier, postage prepaid (where
applicable), addressed to such other Party at its address indicated below, or to
such other address as the addressee shall have last furnished in writing to the
addressor and shall be effective upon receipt by the addressee.
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If to Cubist: Cubist Pharmaceuticals, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ & Dodge LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Novartis: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇.▇. ▇▇▇
▇▇-▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇▇▇▇▇▇▇
Attention: Legal Department
Fax: ▇▇▇-▇▇-▇▇▇-▇▇▇▇
13.5 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of New York.
13.6 Dispute Resolution. Any disputes arising between the Parties relating
to, arising out of or in any way connected with this Agreement or any term or
condition hereof, or the performance by either Party of its obligations
hereunder, whether before or after termination of this Agreement, shall be
resolved as follows:
13.6.1 Joint Research Steering Committee. During the term of the
Research Program, the dispute shall be referred to the Joint Research Steering
Committee for resolution in accordance with Article 2.
13.6.2 Chief Executive Officers. If the dispute cannot be resolved by
the Joint Research Steering Committee in accordance with Article 2, the Joint
Research Steering Committee shall promptly notify the Head of Research of
Novartis and the Chief Executive Officer of Cubist, who shall meet in person at
a mutually acceptable time and location or by means of telephone or video
conference within thirty (30) days of such notice and attempt to negotiate a
settlement.
13.6.3 Mediation. If the matter remains unresolved within sixty (60)
days after the date of notice by the Joint Research Steering Committee or if the
Chief Executive Officers fail to meet within thirty (30) days, then either Party
may initiate mediation upon written notice to the other party, whereupon both
parties shall be obligated to engage in a mediation proceeding under the then
current Center for Public Resources ("CPR") Model Procedure for Mediation of
Business Disputes, except that specific provisions of this Section shall
override inconsistent provisions of the CPR Model Procedure. The mediator will
be selected from the CPR Panel of Neutrals. If the Parties cannot agree upon the
selection of the mediator within ten (10) days of the initiation of the
mediation, then CPR shall appoint the mediator. The Parties shall attempt to
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resolve the dispute through mediation until one of the following occurs: (i) the
Parties reach a written settlement; (ii) the mediator notifies the Parties in
writing that they have reached an impasse; (iii) the Parties agree in writing
that they have reached an impasse; or (iv) the Parties have not reached a
settlement within sixty (60) days of the initiation of the mediation.
13.6.4 Arbitration. If the parties fail to resolve the dispute through
mediation, then such dispute shall be finally resolved by binding arbitration.
Whenever a Party shall decide to institute arbitration proceedings, it shall
give written notice to that effect to the other Party. Any arbitration hereunder
shall be conducted under the Commercial Arbitration Rules of the American
Arbitration Association. Each such arbitration shall be conduced in the English
language by a panel of one or three arbitrators appointed in accordance with
such Rules. Any such arbitration shall be held in Boston, Massachusetts. The
arbitrators shall have the authority to grant specific performance, and to
allocate between the Parties the costs of arbitration in such equitable manner
as they determine. Judgment upon the award so rendered may be entered in any
court having jurisdiction or application may be made to such court for judicial
acceptance of any award and an order of enforcement, as the case may be.
13.7 Entire Agreement. This Agreement, together with the Exhibits hereto
and the Stock Purchase Agreement between the Parties, dated the date hereof,
contains the entire understanding of the Parties with respect to the subject
matter hereof. In the event of any conflict or inconsistency between any
provision of any Exhibit hereto and any provision of this Agreement, the
provisions of this Agreement shall prevail. All express or implied agreements
and understandings, either oral or written, heretofore made are expressly merged
in and made a part of this Agreement. This Agreement may be amended, or any term
hereof modified, only by a written instrument duly executed by both Parties
hereto.
13.8 Headings. The captions to the several Articles and Sections hereof and
Exhibits hereto are not a part of this Agreement, but are merely guides or
labels to assist in locating and reading the several Articles and Sections
hereof.
13.9 Independent Contractors. It is expressly agreed that Cubist and
Novartis shall be independent contractors and that the relationship between the
two Parties shall not constitute a partnership, joint venture or agency. Neither
Cubist nor Novartis shall have the authority to make any statements,
representations or commitments of any kind, or to take any action, which shall
be binding on the other, without the prior consent of the other Party to do so.
13.10 Agreement Not to Solicit Employees. During the term of this Agreement
and for a period of two (2) years following the termination of the Research
Program, Cubist and Novartis agree not to seek to persuade or induce any
employee of the other company to discontinue his or her employment with that
company in order to become employed by or associated with any business,
enterprise or effort that is associated with its own business.
13.11 Waiver. The waiver by either Party hereto of any right hereunder or
the failure to perform or of a breach by the other Party shall not be deemed a
waiver of any other right hereunder or of any other breach or failure by said
other Party whether of a similar nature or otherwise.
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CONFIDENTIAL TREATMENT
13.12 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first set forth above.
CUBIST PHARMACEUTICALS, INC. NOVARTIS PHARMA AG
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------- ----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Ph.D. Name: ▇▇. ▇. ▇▇▇▇▇▇▇▇
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Title: President and Chief Financial Officer Title: Head of Research
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Noartis Pharma Inc.
▇-▇▇▇, ▇▇.▇▇
▇▇ - ▇▇▇▇ ▇▇▇▇/▇▇▇▇▇▇▇▇▇▇▇
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CONFIDENTIAL TREATMENT
Exhibits
Exhibit A Research Plan
Exhibit B Stock Purchase Agreement
Exhibit C Cubist Patent Portfolio
