<Page>
Exhibit 10.35
CONFIDENTIAL TREATMENT
FIRST REVISED AND RESTATED
RESEARCH AND EARLY DEVELOPMENT AGREEMENT
BETWEEN
VERTEX PHARMACEUTICALS INCORPORATED
AND
NOVARTIS PHARMA AG
[Certain redacted non-public information has been filed separately
with the Securities and Exchange Commission.]
<Page>
RESEARCH AND EARLY DEVELOPMENT AGREEMENT
TABLE OF CONTENTS
<Table>
<Caption>
Page Number
INTRODUCTION......................................................................................................1
ARTICLE I - DEFINITIONS........................................................................................1
ARTICLE II--- RESEARCH PROGRAM.................................................................................6
2.1. Commencement.........................................................................................6
2.2. Term.................................................................................................6
2.3. Research Diligence...................................................................................6
2.4. Research Plan........................................................................................6
2.5. Joint Research Committee.............................................................................7
2.6. Joint Steering Committee.............................................................................9
2.7. Exchange of Information..............................................................................9
2.8. [This section has been intentionally left blank.]...................................................10
2.9. Exclusivity.........................................................................................10
ARTICLE III--- PAYMENTS.......................................................................................10
3.1. Signature Payment by NOVARTIS.......................................................................10
3.2. Staffing and Research Support Payments..............................................................10
3.3. Development Loan Facility...........................................................................11
3.4. Records.............................................................................................12
ARTICLE IV--- LICENSE, DEVELOPMENT AND COMMERCIALIZATION RIGHTS...............................................12
4.1. Development Election................................................................................12
4.2. [This section has been intentionally left blank.]...................................................14
4.3. Extension of Exercise Period........................................................................14
4.4. Refused Candidate...................................................................................14
4.5. Back-up Compounds...................................................................................14
4.6. [This section has been intentionally left blank.]...................................................16
4.7. Clinical Trial Material.............................................................................16
4.8. Special Provisions Regarding VX-680, VX-528 and VX-608..............................................16
ARTICLE V--- CONFIDENTIALITY..................................................................................17
5.1. Undertaking.........................................................................................17
5.2. Exceptions..........................................................................................18
5.3. Publicity...........................................................................................19
5.4. Survival............................................................................................19
ARTICLE VI--- PUBLICATION........................................................................................19
ARTICLE VII--- INDEMNIFICATION................................................................................20
7.1. Indemnification by VERTEX...........................................................................20
7.2. Indemnification by NOVARTIS.........................................................................20
7.3. Claims Procedures...................................................................................21
7.4. Compliance..........................................................................................22
ARTICLE VIII--- PATENTABLE INVENTIONS.........................................................................22
8.1. Ownership...........................................................................................22
</Table>
First Revised and Restated
Research and Early Development Agreement -- Confidential -- Page i
<Page>
<Table>
<Caption>
Page Number
8.2. Preparation.........................................................................................22
8.3. Costs...............................................................................................22
ARTICLE IX--- TERM AND TERMINATION............................................................................23
9.1. Term................................................................................................23
9.2. Termination of the Research Program by NOVARTIS for Cause...........................................23
9.3. Termination of the Research Program by VERTEX for Cause.............................................23
9.4. [This section has been intentionally left blank.]...................................................24
9.5. Termination for Scientific Cause....................................................................24
9.6. Effect of Termination...............................................................................24
ARTICLE X--- REPRESENTATIONS AND WARRANTIES...................................................................24
10.1. Representations and Warranties of VERTEX............................................................24
10.2. Representations and Warranties of NOVARTIS..........................................................25
ARTICLE XI--- DISPUTE RESOLUTION..............................................................................25
11.1. Governing Law, and Jurisdiction.....................................................................25
11.2. Dispute Resolution Process..........................................................................25
ARTICLE XII--- MISCELLANEOUS PROVISIONS.......................................................................26
12.1. Official Language...................................................................................26
12.2. Waiver..............................................................................................26
12.3. Force Majeure.......................................................................................26
12.4. Severability........................................................................................27
12.5. Government Acts.....................................................................................27
12.6. Government Approvals................................................................................27
12.7. Export Controls.....................................................................................27
12.8. Assignment..........................................................................................27
12.9. Affiliates..........................................................................................28
12.10. Counterparts........................................................................................28
12.11. No Agency...........................................................................................28
12.12. Notice..............................................................................................28
12.13. Headings............................................................................................29
12.14. Authority...........................................................................................29
12.15. Entire Agreement....................................................................................29
12.16. Standstill..........................................................................................29
12.17. Notice of Pharmaceutical Side-Effects...............................................................30
12.18. Inflation Adjustment............................................................................... 30
12.19. Invoice Requirement................................................................................ 30
12.20. Hardship............................................................................................30
Exhibit A Form of License, Development and Commercialization Agreement
Exhibit B Form of Invoice
</Table>
First Revised and Restated
Research and Early Development Agreement -- Confidential -- Page ii
<Page>
<Table>
<Caption>
Page Number
Schedule 1.13 Excluded Compounds and Excluded Kinases
Schedule 2.4.3 Development Candidate Criteria
</Table>
First Revised and Restated
Research and Early Development Agreement -- Confidential -- Page iii
<Page>
CONFIDENTIAL TREATMENT REQUESTED
FIRST REVISED AND RESTATED
RESEARCH AND EARLY DEVELOPMENT AGREEMENT
First Revised and Restated Agreement made this 3rd day of February, 2004,
(as so revised and restated, the "Research Agreement"), revising and restating
that certain Research And Early Development Agreement dated May 8, 2000 (the
"Original Agreement"), between VERTEX PHARMACEUTICALS INCORPORATED ("VERTEX"), a
Massachusetts corporation with principal offices at 130 Waverly Street,
Cambridge, MA 02139-4242, and NOVARTIS PHARMA AG ("NOVARTIS"), a Swiss
corporation with principal offices at Lichtstrasse 35, CH-4056 Basel,
Switzerland.
This Research Agreement is intended by the parties to replace and
supercede the rights and obligations of the parties under the Original Agreement
with respect to the subject matter thereof, except that the terms of the
Original Agreement shall be deemed to govern the rights and obligations of the
parties with respect to the Compounds known as VX-680 and VX-528, subject to the
provisions of Section 4.8(b) of this Research Agreement.
INTRODUCTION
WHEREAS, VERTEX has undertaken a broad drug discovery program with the
objective of designing novel, small-molecule compounds targeting the kinase
protein super-family;
WHEREAS, NOVARTIS is also interested in developing and commercializing
drugs targeting kinase proteins and has particular expertise in developing,
registering, manufacturing, marketing and selling pharmaceuticals worldwide;
WHEREAS, both parties desire to revise and restate the Original Agreement
to reflect agreed modifications to the original collaboration, which involve
among other things a redirection of VERTEX's efforts from the delivery of
compounds which have progressed through early clinical testing, to the delivery
of Development Candidates, at an earlier stage in the development process, which
target selected Kinases and meet certain pre-agreed Development Candidate
Criteria; and
WHEREAS, NOVARTIS may elect to develop, market and sell any or all of
those Compounds as drugs upon the terms set forth herein and in a License,
Development and Commercialization Agreement identical in substance to Exhibit A
hereto;
NOW THEREFORE, in consideration of the mutual covenants set forth in this
Research Agreement, and other good and valuable consideration, the parties agree
as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the terms defined in this Article 1 shall have
the following meanings whether used in their singular or plural forms. Use of
the singular shall include the plural and vice versa, unless the context
requires otherwise:
First Revised and Restated
Research and Early Development Agreement - Confidential - Page 1
<Page>
CONFIDENTIAL TREATMENT REQUESTED
1.1. "AFFILIATE" shall mean, with respect to any Person, any other Person
which directly or indirectly, by itself or through one or more intermediaries,
controls, or is controlled by, or is under direct or indirect common control
with, such Person. The term "control" means the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities, by contract or
otherwise. Control will be presumed if one Person owns, either of record or
beneficially, more than 50% of the voting stock of any other Person. For the
avoidance of any doubt, the Novartis Institute for Functional Genomics, Inc. and
The Friedrich Miescher Institute, as currently operated, are not Affiliates of
NOVARTIS for the purposes of this Research Agreement.
1.1.1. "BACK-UP COMPOUND" shall mean, with reference to any particular
Development Candidate or Drug Product Candidate, a Compound which (a) modulates
the same Kinase as that Development Candidate or Drug Product Candidate; and
[***].
1.2. "BULK DRUG SUBSTANCE" shall mean a Drug Product Candidate in bulk
crystal, powder or other form suitable for incorporation in a Drug Product.
1.3. "COMPOUND" shall mean any chemical compound, including salts
thereof, which affects a Kinase and which was or is synthesized and/or tested
(including by screening) by or under the direction of VERTEX or its Affiliates
during the term of the Research Program conducted under this Research Agreement,
or was synthesized or tested by VERTEX or its Affiliates prior to the Effective
Date in a program targeted toward Kinase modulation.
1.4. "CONTROLLED" shall mean the legal authority or right of a party
hereto to grant a license or sublicense of intellectual property rights to
another party hereto, or to otherwise disclose proprietary or trade secret
information to such other party, without breaching the terms of any agreement
with a Third Party, infringing upon the intellectual property rights of a Third
Party, or misappropriating the proprietary or trade secret information of a
Third Party.
1.5. (a) "Development Candidate" shall mean a Compound that meets the
Development Candidate Criteria and which is either proposed by VERTEX, during
the term of the Research Program [***], for formal pre-clinical development, or
is selected by NOVARTIS on or before the Final Termination Date for formal
pre-clinical development pursuant to the provisions of Section 4.1 hereof.
1.5. (b) "DEVELOPMENT CANDIDATE INFORMATION" will mean all material
information known to VERTEX about a Development Candidate, including analytical
results and raw data, which NOVARTIS reasonably needs in order to decide whether
to exercise the Development Election with respect to the Development Candidate.
The Development Candidate Information shall include any previously undisclosed
information with respect to VERTEX Kinase Technology which is important to a
scientific and commercial evaluation of the Development Candidate. Development
Candidate Information will also include comparable information known to VERTEX
concerning all Compounds which are Back-up Compounds, as defined herein, to the
specific Development Candidate which is the subject of the Development Candidate
Information. Pursuant to the provisions of Section 5.1 hereof, the Development
Candidate Information shall also disclose [***]
1.5. (c) "DEVELOPMENT CANDIDATE CRITERIA" shall mean (a) the criteria set
forth on Schedule 2.4.3 hereof and (b) such further, more specific criteria to
be determined by the JRC as soon as possible after the start of each research
project with respect to each particular Kinase target, each therapeutic
application, special delivery forms, and the like, as set forth in Section 2.5.3
hereof.
First Revised and Restated
Research and Early Development Agreement - Confidential - Page 2
<Page>
CONFIDENTIAL TREATMENT REQUESTED
1.6. "DEVELOPMENT ELECTION" shall have the meaning set forth in Section
4.1 hereof.
1.7. "DEVELOPMENT PROGRAM" shall mean activities associated with
development of a Drug Product Candidate as specified in the License Agreement.
1.8. [This section has been intentionally left blank.]
1.9. "DRUG PRODUCT" shall mean a finished dosage form which is prepared
from Bulk Drug Substance and is ready for administration to the ultimate
consumer as a pharmaceutical.
1.10. (a) "DRUG PRODUCT CANDIDATE" shall mean a Development Candidate
which has been selected by NOVARTIS for development and commercialization under
the License Agreement, pursuant to exercise of its Development Election under
Section 4.1 hereof.
1.10. (b) "DRUG PRODUCT CANDIDATE BACKUP CANDIDATE" shall mean any
Back-up Compound for which NOVARTIS has exercised its Development Election under
Section 4.5 hereof.
1.11. [This section has been intentionally left blank.]
1.12. "EFFECTIVE DATE" shall mean the effective date of the Original
Agreement as set forth on the first page hereof.
1.13. "EXCLUDED COMPOUNDS" shall mean any chemical compounds the
therapeutic effect of which in humans is thought to be principally derived from
an effect on one or more Excluded Kinases. "Excluded Compounds" shall also
include the Compound known as [***]. An "analog" shall mean any compounds (or
salts thereof) which are claimed in [***] which NOVARTIS can demonstrate by
written record were synthesized by NOVARTIS before the Effective Date. "Excluded
Compounds" shall also include any Compounds directed toward modulation of a
Kinase which has been added to the list of Excluded Kinases by the operation of
Section 4.4 hereof; provided that in no event shall an Excluded Compound include
a Drug Product Candidate.
1.14. "EXCLUDED KINASES" shall mean the human kinases specifically
identified in Schedule 1.13 hereto. "Excluded Kinases" shall also include any
Kinase hereafter added to the list of Excluded Kinases pursuant to the
provisions of Section 4.4 hereof.
1.15. [This section has been intentionally left blank.]
1.16. "FIELD" shall mean the treatment or prevention of conditions or
diseases in humans, principally by affecting a Kinase other than an Excluded
Kinase.
1.17. "FINAL NOTICE PERIOD" shall have the meaning set forth in Section
4.1(d) hereof.
1.17.1. "FINAL REPORT" shall have the meaning set forth in Section 4.1(d)
hereof.
First Revised and Restated
Research and Early Development Agreement - Confidential - Page 1
<Page>
CONFIDENTIAL TREATMENT REQUESTED
1.17.2. "FINAL REPORT PERIOD" shall have the meaning set forth in Section
4.1(d) hereof.
1.17.3. "FINAL TERMINATION DATE" shall have the meaning set forth in
Section 4.1(d) hereof.
1.18. "FTE" shall mean the equivalent of the work of one VERTEX scientist
or other project managerial professional, full time for one year, which equates
to a total of forty-seven (47) weeks or one thousand eight hundred eighty (1880)
hours per year of work, on or directly related to the Research Program. Work in
the Research Program can include, but is not limited to, experimental laboratory
work, project and research management, activities directed toward evaluation of
the commercial potential of a possible Drug Candidate, recording and writing up
results, reviewing literature and references, holding scientific discussions,
attending appropriate seminars and symposia, and carrying out Joint Research
Committee duties. FTE's shall include equivalent scientific work in the Research
Program delegated to and carried out by contractors, under the general direction
of VERTEX scientists; provided, that the nature and quantity (as a percentage of
total program FTE's) of the delegated work shall not be such that the most
substantial parts of the overall Research Program, in terms of projected value
creation, have been delegated to Third Parties. FTE's which result from work
delegated to and carried out by contractors will be separately identified by
VERTEX on its invoices provided to NOVARTIS under Section 12.19 hereof.
1.19. [This section has been intentionally left blank.]
1.20. [This section has been intentionally left blank.]
1.21. "JOINT RESEARCH COMMITTEE" or "JRC" shall have the meaning ascribed
to it in Section 2.5 of this Research Agreement.
1.22. "JOINT STEERING COMMITTEE" or "JSC" shall have the meaning ascribed
to it in Section 2.6 of this Research Agreement.
1.23. "KINASE" shall mean a human enzyme that catalyzes the transfer of a
phosphate group from a nucleoside triphosphate to a protein.
1.24. "KINASE TECHNOLOGY" shall mean all data, technical information,
know-how, experience, inventions (whether or not patented) trade secrets,
processes and methods discovered, developed or applied (with the consent of its
owner) and Controlled by either party or its Affiliates, in connection with
performance by either party under the Research Program, or in connection with
the conduct of a Development Program under the License Agreement prior to
termination of the Research Program, that relate to the research, development,
utilization, manufacture or use of Compounds, Development Candidates, Drug
Product Candidates or Drug Products (other than any such technology which is
exclusive to Excluded Kinases); provided, however, that the term Kinase
Technology shall not apply to VERTEX's general drug design technology whether in
hardware or software form, tangible or intangible.
1.25. "KNOW-HOW" means all Kinase Technology other than inventions which
are the subject of Patents; and "LEAD PERIOD" shall have the meaning set forth
in Section 4.5(a) hereof.
First Revised and Restated
Research and Early Development Agreement - Confidential - Page 4
<Page>
CONFIDENTIAL TREATMENT REQUESTED
1.26. "LICENSE AGREEMENT" shall mean the License, Development and
Commercialization Agreement, identical in substance to EXHIBIT A to this
Research Agreement, to be executed by VERTEX and NOVARTIS with respect to each
Drug Product Candidate; and "Notice Period" shall have the meaning set forth in
Section 4.1(b) hereof.
1.27. "NOVARTIS KNOW-HOW" shall mean all Know-How of NOVARTIS.
1.28. "NOVARTIS PATENTS" shall mean any Patents controlled by NOVARTIS or
its Affiliates claiming Kinase Technology.
1.29. "NOVARTIS KINASE TECHNOLOGY" shall mean all NOVARTIS Patents and
NOVARTIS Know-How.
1.30. "PATENTS" means all existing patents and patent applications and
all patent applications hereafter filed, including any continuation,
continuation-in-part, division, provisional or any substitute applications, any
patent issued with respect to any such patent applications, any reissue,
reexamination, renewal or extension (including any supplementary protection
certificate) of any such patent, and any confirmation patent or registration
patent or patent of addition based on any such patent, and all foreign
counterparts of any of the foregoing.
1.31. "PERSON" means any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization or
government or political subdivision thereof.
1.32. [This section has been intentionally left blank.]
1.33. [This section has been intentionally left blank.]
1.34. "REFUSED CANDIDATE" shall have the meaning set forth in Section 4.4
hereof.
1.35. "REPLACEMENT CANDIDATE" shall have the meaning set forth in Section
4.5(b) hereof.
1.36. "RESEARCH PLAN" shall have the meaning set forth in Section 2.4.1
hereto.
1.37. (a) "RESEARCH PROGRAM" shall mean all research activities
undertaken under this Research Agreement associated with the identification and
design of Compounds and Development Candidates as provided herein; including but
not limited to identification and initial testing of Compounds; the conduct of
activities referenced in the Development Candidate Criteria with respect to
Compounds; and selection of Development Candidates from Compounds.
1.37. (b) "RESEARCH TERMINATION DATE" shall mean the earlier of April 30,
2006 or the date upon which the Research Program is terminated under Sections
9.2, 9.3 or 9.5 hereof.
1.38. "RESEARCH YEAR" means a twelve-month period during the term of the
Research Program commencing on May 1, and ending on April 30 of each year. The
first Research Year hereunder shall be deemed to have commenced on May 1, 2000.
1.39. [This space has been intentionally left blank.]
1.40. "TECHNOLOGY" shall mean NOVARTIS Kinase Technology and VERTEX
Kinase Technology.
1.41. "THIRD PARTY" shall mean any person or entity which is not a party
or an Affiliate of any party to this Research Agreement.
First Revised and Restated
Research and Early Development Agreement - Confidential - Page 5
<Page>
CONFIDENTIAL TREATMENT REQUESTED
1.42. "THIRD PARTY REFERRAL" shall mean the procedure for resolution of
certain disputes hereunder which is set forth in Section 11.2(b) hereof.
1.43. "VERTEX KNOW-HOW" shall mean all Know-How of VERTEX.
1.44. "VERTEX PATENTS" shall mean any Patents Controlled by VERTEX or its
Affiliates claiming Kinase Technology.
1.45. "VERTEX KINASE TECHNOLOGY" shall mean all VERTEX Patents and VERTEX
Know-How.
Capitalized terms used but not otherwise defined herein which are defined in the
License Agreement shall have the meaning ascribed to them therein.
ARTICLE II
RESEARCH PROGRAM
2.1. COMMENCEMENT.
The Research Program originally commenced on May 1, 2000. VERTEX has
principal responsibility for the conduct of the Research Program and NOVARTIS
provides consultation, advice and such research effort as may be deemed
appropriate by the JRC and accepted by NOVARTIS. The JRC shall review and
coordinate all of the parties' efforts with respect to the Research Program.
2.2. TERM.
The Research Program will conclude on May 1, 2006, unless earlier
terminated in accordance with the provisions hereof. At the request of either
party made during the fourth Research Year, the parties will discuss whether,
and upon what basis, the Research Program might be extended on comparable terms
beyond its initial 6 year term.
2.3. RESEARCH DILIGENCE.
The common objective of the parties is to identify Development
Candidates as soon as practicable for selection by NOVARTIS as Drug Product
Candidates and for worldwide development and marketing under the terms of the
License Agreement. VERTEX will work diligently and use all reasonable efforts,
consistent with prudent business judgment, to identify Development Candidates
for acceptance by NOVARTIS as Drug Product Candidates. VERTEX intends to
dedicate to the Research Program at least that level of staffing referenced in
Section 3.2 hereof, and expects to employ an optimal combination of experience
and training in the Field. As a matter of corporate strategy, VERTEX has chosen
to dedicate a significant amount of its overall research efforts to work in the
Field, and will not change that overall strategy during the term of the Research
Program without prior notice to and approval by NOVARTIS.
2.4. RESEARCH PLAN; EARLY DEVELOPMENT PLAN.
2.4.1. General. VERTEX originally prepared an overall research plan
for the Research Program which it submitted to the JRC for its review and
comment at the first meeting of the JRC after the Effective Date. The research
plan has been and will be revised, updated and submitted to the JRC at least
annually for its review and comment (as so revised, updated and submitted, the
"Research Plan").
First Revised and Restated
Research and Early Development Agreement - Confidential - Page 6
<Page>
CONFIDENTIAL TREATMENT REQUESTED
2.4.2. [This section has been intentionally left blank.]
2.4.3. Plan Review. In developing the Research Plan, VERTEX will
take into account the intention of the parties to produce Compounds which meet
the Development Candidate Criteria. VERTEX shall not perform any work under this
Research Agreement with respect to Excluded Compounds or Excluded Kinases. The
Research Plan will be reviewed as necessary at each meeting of the JRC, and at
any other time upon the request of either party, and shall be modified as
appropriate to reflect material scientific or commercial developments. Any
disagreements among the parties with respect to these matters may be referred by
either party to the Joint Steering Committee for resolution. Notwithstanding the
foregoing, VERTEX shall have the final say with respect to the Research Plan.
2.5. JOINT RESEARCH COMMITTEE.
2.5.1. Composition and Purposes. VERTEX and NOVARTIS have
established and will continue to participate in a Joint Research Committee
("JRC") consisting of at least eight (8) representatives (as may be increased or
decreased by the JRC), half of whom shall be designated from time to time by
each party. If the JRC chooses to designate a Committee Chair, the Chair will be
appointed from among the members of the Committee designated by VERTEX. The JRC
shall meet formally at least quarterly, or with such other frequency, and at
such time and location, as may be established by the Committee, for the
following purposes:
(i) To receive and review reports by VERTEX and its project
teams, which shall be prepared and submitted to the JRC on a quarterly basis
within fifteen (15) days after the end of each calendar quarter, such reports
summarizing progress during the preceding quarter under the Research Plan; and
to review information with respect to the Compounds under investigation (which
VERTEX shall provide in form and content at least as extensive as customarily
provided to the JRC under the Original Agreement);
(ii) To review a proposal by either party that specified
Excluded Compounds or Excluded Kinases be included in the Research Program, or
that a Kinase be added to the list of Excluded Kinases; provided that the JRC
shall have no authority to include or exclude any Compound or Kinase from the
Research Program, and that any such action must be the subject of a formally
adopted amendment to this Research Agreement;
(iii) To define as soon as possible the further, more specific
Development Criteria (x) for ongoing projects, after the signature of this
Research Agreement, or (y) for new projects, after the start of such new
research project;
(iv) To review Development Candidates proposed by VERTEX and to
assess whether a given Development Candidate proposed by VERTEX meets the
Development Criteria;
(v) To review the Research Plan and any proposed revisions
thereto;
(vi) [This subsection has been intentionally left blank.]; and
First Revised and Restated
Research and Early Development Agreement - Confidential - Page 7
<Page>
(vii) To discuss matters relating to Patents, as may be
presented to the JRC by VERTEX or NOVARTIS.
The party hosting a particular JRC meeting shall prepare and deliver
to the members of the JRC, within thirty (30) days after the date of each
meeting, minutes of such meeting setting forth, inter alia, all decisions of the
JRC, and including a report on the progress of work performed. In case the JRC
meets by means of telephone or video conferences, this responsibility shall lie
with VERTEX.
2.5.2. DECISION-MAKING.
(i) Each of VERTEX and NOVARTIS shall have one vote on the JRC.
The objective of the JRC shall be to reach agreement by consensus on all matters
within the scope of the Research Plan. However, in the event of a deadlock with
respect to any action (which shall be deemed to have occurred if either party
shall request a vote of the JRC on a matter and that vote shall either not be
taken within thirty (30) days of the request or if taken shall result in a tie
vote) and subject to the procedure set forth in subsection (ii) below as to
certain matters, the vote of VERTEX, rendered after reasonable and open
discussion among the members of the JRC, shall be final and controlling.
(ii) Notwithstanding the foregoing, with respect to JRC
decisions (x) as to the nature and extent of any additional Development
Candidate Criteria referenced in Section 2.5.3 hereof, any disagreement between
the parties that cannot be resolved within forty-five (45) days by the JRC (as
that period may be extended under (iii) below) shall be referred to the JSC for
resolution and if not resolved within seven (7) business days after referral,
shall be referred for final resolution in good faith by the Chief Executive
Officer of VERTEX and the Chief Executive Officer of NOVARTIS, and failing final
resolution, there will be no change to the Development Candidate Criteria; or
(y) as to whether or not Development Candidate Information provided by VERTEX,
pursuant to subsection (iii) below, is complete or as to whether or not a given
Compound proposed by VERTEX as a Development Candidate meets the Development
Criteria, the matter shall be referred as provided in subsection (x) above to
the JRC and the JSC and, failing agreement, the matter shall be referred for
final resolution under the provisions of Section 11.2(b) of this Research
Agreement.
(iii) In the event that NOVARTIS's representatives on the JRC
reasonably believe that the Development Candidate Information with respect to a
particular Development Candidate proposed by VERTEX to the JRC is incomplete,
NOVARTIS shall provide written notice thereof to VERTEX within fifteen (15)
business days after receipt of the Development Candidate Information, and VERTEX
shall undertake reasonable efforts to furnish the requested additional
Development Candidate Information within fifteen (15) business days after
receipt of NOVARTIS's notice hereunder. The 45-day period provided for action by
the JRC under subsection (ii) above shall be extended by the amount of time
required for VERTEX to provide the requested information, but in any event not
in excess of thirty (30) days.
(iv) Notwithstanding any of the foregoing, if VERTEX and
NOVARTIS deadlock on any other matters being considered by the JRC which might
have a
First Revised and Restated
Research and Early Development Agreement - Confidential - Page 8
<Page>
CONFIDENTIAL TREATMENT REQUESTED
significant impact on the time or likely success of the Research Program, the
matter shall be referred to the JSC for resolution in accordance with Section
2.6 hereof.
(v) Each party shall retain the rights, powers, and discretion
granted to it under this Research Agreement, and the JRC shall not be delegated
or vested with any such rights, powers or discretion except as expressly
provided in this Research Agreement. The JRC shall not have the power to amend
or modify this Research Agreement, which may only be amended or modified as
provided in Section 12.15.
2.5.3. ADDITIONAL DEVELOPMENT CANDIDATE CRITERIA. The parties
acknowledge that it may be necessary or appropriate to adopt additional
Development Candidate Criteria which more specifically define the
pre-development characteristics of Compounds which the parties believe may be
suitable for development and commercialization under the License Agreement,
based upon the Kinase targeted by a specific project under the Research Program
and the particular disease indication or indications thought to be addressed by
Compounds modulating the Kinase which is the subject of that project. The
parties will use good faith efforts through their respective representatives on
the JRC to agree on any such additional Development Candidate Criteria as soon
as practicable after [***] Any disagreements with respect to the selection of
additional Development Candidate Criteria hereunder will be addressed as
provided in Section 2.5.2(ii).
2.6. JOINT STEERING COMMITTEE.
2.6.1. Composition and Purposes. VERTEX and NOVARTIS have
established and will continue to participate in a Joint Steering Committee
("JSC") which shall consist of an equal number of senior executives as may be
designated by each party from time to time. The JSC shall initially have four
(4) members. If the JSC chooses to designate a Committee Chair, the Chair will
be appointed from among the members of the JSC designated by NOVARTIS. The JSC
shall meet annually, or with such other frequency, and at such time and
location, as may be established by the Committee, for the following purposes:
(i) General oversight of the entire collaboration between
VERTEX and NOVARTIS, including the Research Program and any development and
commercialization of a Drug Product Candidate under the License Agreement;
(ii) Periodically review the overall goals and strategy of the
Research Program;
(iii) Discuss and attempt to resolve any deadlocked issues
submitted to it by the JRC, although the vote of VERTEX's representatives shall
prevail if the JSC is unable to reach a consensus on any matter other than
matters submitted to the JSC under Section 2.5.2(ii).
2.7. EXCHANGE OF INFORMATION.
2.7.1. VERTEX, and at its sole discretion NOVARTIS, will share
information with the JRC, as soon as it is available, necessary to facilitate
mutual understanding of the status of the Research Program and decision-making
in connection therewith.
First Revised and Restated
Research and Early Development Agreement - Confidential - Page 9
<Page>
CONFIDENTIAL TREATMENT REQUESTED
2.7.2. Neither VERTEX nor NOVARTIS shall use Kinase Technology
disclosed by the other party (excluding information which is no longer subject
to confidentiality restrictions under Article V by reason of the exceptions set
forth in Section 5.2) for any purpose, including the filing of patent
applications containing such information, without the other party's consent,
other than for carrying out the Research Program or discharging its
responsibilities under the License Agreement, or as otherwise permitted under
the Research Agreement or the License Agreement.
2.7.3. [This section has been intentionally left blank.]
2.7.4. Neither party shall be entitled to information from the other
party concerning [***] However, neither party will apply its rights in any
Technology other than [***]
2.8. [This section has been intentionally left blank.]
2.9. FREEDOM-OF-ACTION AND EXCLUSIVITY
2.9.1. NOVARTIS and any of its Affiliates shall be free, by
itself/themselves or together with Third Parties, to pursue efforts directed
toward the identification, and/or development and/or commercialization of
compounds (other than those Compounds which have been the subject of a
Development Election procedure pursuant to Section 4.1(b)) free of any
obligation to VERTEX under this Research Agreement or the License Agreement (but
subject always to intellectual property rights, if any, held by VERTEX and the
obligations of NOVARTIS under Sections 5.1 and 5.2).
2.9.2. Subject to the provisions stated in Section 2.4.3, during the
term of the Research Program neither VERTEX nor any of its Affiliates will enter
into any agreement or collaboration with a Third Party aimed at identifying or
developing Compounds in the Field. The foregoing restrictions shall not be
applicable to Excluded Compounds or to agreements or collaborations with respect
to Excluded Kinases.
2.9.3. [This section has been intentionally left blank.]
2.9.4. [This section has been intentionally left blank.]
2.9.5. [This section has been intentionally left blank.]
2.9.6. [This section has been intentionally left blank.]
ARTICLE III
PAYMENTS
3.1. SIGNATURE PAYMENT BY NOVARTIS.
Upon the Effective Date of this Research Agreement NOVARTIS made an
initial non-refundable payment of $15,000,000 to VERTEX.
3.2. STAFFING AND RESEARCH SUPPORT PAYMENTS.
NOVARTIS has made or will make the payments specified below to
VERTEX during each Research Year in support of the Research Program under this
Research Agreement.
First Revised and Restated
Research and Early Development Agreement - Confidential - Page 10
<Page>
CONFIDENTIAL TREATMENT REQUESTED
The required payments are based upon the following assumptions: (a) the average
number of FTE's which VERTEX will have employed in the Research Program during a
Research Year will be approximately equal to the FTE Level listed in the third
column below; and (b) the annual rate per FTE is approximately [***]. If the
average FTE level for any Research Year is less than the level specified below
for that year (the difference being referred to in this section as an "FTE
Shortfall"), then the amount of funding specified below for that Research Year
shall be reduced by an amount (the "FTE Shortfall Amount") which bears the same
relation to the total funding specified below for that Research Year as the FTE
Shortfall bears to the projected FTE Level for that Year. The FTE Shortfall
Amount shall be carried over from year to year and applied to compensate VERTEX
for FTE Levels in subsequent Research Years which exceed the level for those
Years as specified below. In any such subsequent Research Year, VERTEX shall be
entitled to receive out of any remaining FTE Shortfall Amount a payment equal to
the value (computed with reference to the inflation-adjusted FTE rate specified
above) of any FTE's actually employed during that Research Year in excess of the
FTE Level specified for that year ("Excess FTE's"). Notwithstanding the
foregoing, the FTE Shortfall Amount will not be applied to compensate VERTEX on
account of more than 20 Excess FTE's in any one Research Year.
<Table>
<Caption>
Research Year Funding FTE Level
1 [***] [***]
2 [***] [***]
3 [***] [***]
4 [***] [***]
5 [***] [***]
6 [***] [***]
</Table>
Research Year 1 will be deemed to have commenced on May 1, 2000. Payments
due for each Research Year shall be made quarterly in advance on or before May
1, August 1, November 1 and February 1 of each Research Year except that the
quarterly payment due May 1, 2000 was made within thirty business days after the
Effective Date of this Research Agreement. All payments shall be made without
deduction for withholding or other similar taxes, in United States dollars to
the credit of such bank account as may be designated by VERTEX in writing to
NOVARTIS. Any payments which fall due on a date which is a legal holiday in the
Commonwealth of Massachusetts may be made on the next following day which is not
a legal holiday in the Commonwealth.
3.3. DEVELOPMENT LOAN FACILITY.
The existing development loan facility is hereby terminated. All
currently outstanding loans made under the facility will be repaid by VERTEX on
or before the earlier of: May 7, 2008, as specified in Section 3.3.3 of the
Original Agreement; or the first anniversary of the effective date of any
termination of this Research Agreement by NOVARTIS for cause under Section 9.2
hereof. Notwithstanding the foregoing, the provisions of Section 4.8 of this
Research
First Revised and Restated
Research and Early Development Agreement - Confidential - Page 11
<Page>
CONFIDENTIAL TREATMENT REQUESTED
Agreement will apply as specified therein to repayment of development loans
advanced on account of the Compounds known as VX-680 and VX-528.
3.4. RECORDS.
VERTEX shall keep accurate records and books of accounts containing
all data reasonably required for the calculation and verification of FTE's
employed by VERTEX in the Research Program.
At NOVARTIS's request, VERTEX shall make those records available, no
more than once a year, during reasonable working hours, for review by a
recognized independent accounting firm acceptable to both parties, at NOVARTIS's
expense, for the sole purpose of verifying the accuracy of those records in the
calculation of Research Program FTE's. VERTEX shall not, however, be required to
retain or make available to NOVARTIS or its accountants, any such records or
books of account for any Research Year, beyond thirty-six (36) months from the
conclusion of that Research Year. NOVARTIS shall cause the accounting firm to
retain all such information in confidence.
In the event of a negative difference between the average number of
FTE's stated to be involved in the Research Program and the number of FTE's
actually employed, the amount previously advanced to VERTEX and attributable to
any such negative difference shall be due and payable to NOVARTIS without delay.
If the negative difference is more than [***] in any Research Year, then VERTEX
shall also pay the reasonable costs of the independent accountant employed by
NOVARTIS in the review. Interest at the rate of [***], assessed from the end of
the Research Year to which the negative difference relates, shall be due from
VERTEX upon prior written notice.
ARTICLE IV
LICENSE, DEVELOPMENT AND COMMERCIALIZATION RIGHTS
4.1. DEVELOPMENT ELECTION.
(a) NOVARTIS shall have the exclusive right (the "Development
Election") to develop and commercialize, under the terms and conditions set
forth in the License Agreement and for any and all Indications, (i) each Drug
Product Candidate proposed to it by VERTEX as set forth below, and related
Back-up Compounds as provided in Section 4.5 hereof and selected by NOVARTIS,
and (ii) any Compound or Compounds selected by NOVARTIS, as provided in Section
4.1(d) hereof, from Compounds which have met the Development Candidate Criteria,
whether or not any such Compound or Compounds have been proposed as Development
Candidates by VERTEX. While the Development Election is in effect, VERTEX will
not grant to any Third Party rights to VERTEX Kinase Technology which are
inconsistent with the grant of the Development Election to NOVARTIS hereunder.
NOVARTIS's right to exercise Development Elections will expire and NOVARTIS
shall no longer have the right to select Drug Candidates hereunder upon the
first to occur of:
(1) The Final Termination Date as defined below;
First Revised and Restated
Research and Early Development Agreement - Confidential - Page 12
<Page>
CONFIDENTIAL TREATMENT REQUESTED
(2) Termination of the Research Program by VERTEX under
Section 9.3 hereof;
(3) Termination of the Research Program by either party
hereto for Scientific Cause under Section 9.5 hereof.
If NOVARTIS validly terminates the Research Program for
cause under Section 9.2 hereof, the Development Election
may nonetheless be exercised for the one-year period after
the effective date of the termination for cause, but only
with respect to Compounds which have met the Development
Candidate Criteria prior to the effective termination
date.
(b) VERTEX shall notify NOVARTIS and the JRC each time VERTEX
has identified a Compound that, in the reasonable exercise of its scientific and
business judgment, is a suitable Development Candidate and meets the Development
Candidate Criteria. The corresponding notice shall be accompanied by the
Development Candidate Information relating to the Development Candidate and its
Back-up Compounds, provided that information concerning Compound structures
shall be handled as specified in Section 5.1 hereof. NOVARTIS may, at its sole
discretion, exercise its Development Election and accept the Development
Candidate as a Drug Product Candidate by delivery of written notice to VERTEX
[***]. The total period of time from receipt of notice from VERTEX through [***]
shall be referred to as the "Notice Period". Notwithstanding any other
provisions of this Research Agreement, the Development Election with respect to
any Development Candidate will not expire until the end of the Notice Period
with respect to that Development Candidate.
(c) [This subsection has been intentionally left blank.]
(d) VERTEX will submit a final report (the "Final Report") to
NOVARTIS covering the period beginning on the Research Termination Date [***]
(the "Final Report Period"). The Final Report will contain Development Candidate
Information for any Compound that VERTEX believes, in the reasonable exercise of
its scientific and business judgment, meets the Development Candidate Criteria
[***], along with information with respect to relevant Back-up Compounds. The
procedure whereby NOVARTIS may exercise its Development Election and accept any
Development Candidate identified in the Final Report, for further development as
a Drug Product Candidate, will be the same as that described in subsection (b)
above, and the time period from receipt of the Final Report from VERTEX through
the end of the 90-day period referenced in that subsection (b) shall be called
the "Final Notice Period".
In addition, [***] If NOVARTIS, based on this information,
concludes that a given Compound does meet the Development
Candidate Criteria, a formal Development Election
procedure pursuant to Section 4.1(b) will be initiated for
such Compound. If VERTEX disagrees with NOVARTIS's
judgment that a given Compound meets the Development
Candidate Criteria, the dispute resolution provisions in
Section 2.5.2(ii) shall apply.
First Revised and Restated
Research and Early Development Agreement - Confidential - Page 13
<Page>
CONFIDENTIAL TREATMENT REQUESTED
The date upon which the Final Report Period, as and if
extended by the parties as provided for in Section 4.3
hereof, expires shall be called the "Final Termination
Date."
(e) [***]
(f) Promptly following exercise by NOVARTIS of its Development
Election, the parties will execute a License Agreement substantially identical
to the license agreement attached hereto as Exhibit A. NOVARTIS will develop and
commercialize the Drug Product Candidate under the provisions of the License
Agreement. If the Development Election has previously been exercised with
respect to another Drug Product Candidate and a License Agreement is in effect,
then the License Agreement will be amended to reflect the addition of another
Drug Product Candidate. Development of each Drug Product Candidate shall proceed
immediately after the Development Election is exercised, in accordance with the
terms of the License Agreement.
4.2. [This section has been intentionally left blank.]
4.3. EXTENSION OF NOTICE PERIOD AND FINAL NOTICE PERIOD.
NOVARTIS may propose to VERTEX by written notice delivered during
[***] the Notice Period with respect to a particular Development Candidate, or
the Final Notice Period, with specific reference to one or more Compounds
included in the Final Report and meeting the Development Candidate Criteria,
that the Notice Period or the Final Notice Period, as the case may be, for a
specific Development Candidate or Compound be extended for good reason for a
specified time to permit NOVARTIS, at its expense and under its direction, to
conduct such additional studies of that Development Candidate or Compound as may
be specified in the notice. VERTEX shall discuss this request with NOVARTIS and
the parties shall attempt in good faith to reach mutual agreement with respect
to the requested extension period and the conduct of additional studies, but
failing agreement the applicable Notice Period or Final Notice Period shall
expire as specified herein.
4.4. REFUSED CANDIDATE.
4.4.1. If NOVARTIS does not exercise its Development Election within
the Notice Period or the Final Notice Period, as applicable, specified in
Section 4.1, with respect to a particular Development Candidate proposed by
VERTEX, then the Development Election will expire with respect to that
Development Candidate (a "Refused Candidate"), and (a) NOVARTIS will relinquish
all rights under this Research Agreement and the License Agreement [***] (b)
VERTEX may thereafter develop and commercialize the Refused Candidate and any
such Excluded Compounds at its expense free of any further obligation to
NOVARTIS with respect thereto; and [***], shall be considered Excluded Compounds
under the provisions of this Section 4.4.1.
4.4.2. [This section has been intentionally left blank.]
4.5. BACK-UP COMPOUNDS.
First Revised and Restated
Research and Early Development Agreement - Confidential - Page 14
<Page>
CONFIDENTIAL TREATMENT REQUESTED
The following provisions will apply with respect to Back-up
Compounds to any Drug Product Candidate.
(a) VERTEX RESTRICTIONS ON NOMINATION AND DEVELOPMENT. So long
as NOVARTIS is using commercially reasonable efforts with respect to the
development of a particular Drug Product Candidate or the commercialization of a
particular Drug Product, VERTEX will not (i) propose a Compound for development
under the License Agreement which is a Back-up Compound with respect to that
Drug Product Candidate or Drug Product, or (ii) until after the period starting
on the date on which NOVARTIS has exercised its Development Election for a
particular Drug Product Candidate and ending [***] (the "Lead Period"), commence
development of that Back-up Compound either directly or together with or through
an Affiliate or a Third Party.
(b) TERMINATION OF DEVELOPMENT OR COMMERCIALIZATION. If, prior
to the end of the Lead Period with respect to a particular Drug Product or Drug
Product Candidate, NOVARTIS ceases to use commercially reasonable efforts to
develop or commercialize that Drug Product Candidate or Drug Product, then the
restrictions on nomination and development referenced in subsection (a) above
will no longer apply with respect to Back-up Compounds for that Drug Product
Candidate or Drug Product unless NOVARTIS, without delay, commences another
Development Program under the License Agreement with another Compound (a
"Replacement Candidate") targeting the same Kinase, which Replacement Candidate
is a Back-up Compound associated with the discontinued Drug Product Candidate or
Drug Product, and NOVARTIS shall have the right to select for this purpose any
such Back-up Compound by providing VERTEX with notice of its Development
Election in this regard. Any such Back-up Compound for which NOVARTIS has
exercised its Development Election under this subsection (b) shall hereafter be
a Drug Product Candidate subject to the terms and conditions of the License
Agreement.
(c) TERMINATION OF RIGHTS TO BACK-UP COMPOUNDS. A Back-up
Compound will no longer be subject to NOVARTIS's Development Election under the
Research Agreement after the end of the Lead Period applicable to that Back-up
Compound, except for Back-up Compounds which (i) subject to subsection (a)
above, VERTEX has proposed for development on or before the Final Termination
Date, and as to which NOVARTIS has exercised its Development Election hereunder;
or (ii) have been or will be selected by NOVARTIS for development before the end
of the applicable Lead Period under the provisions of subsection (b) above, or
(iii) for which NOVARTIS has exercised or will exercise its Development Election
before the end of the applicable Lead Period under the provisions of subsection
(d) below.
(d) NOVARTIS RIGHTS TO LICENSE BACK-UP COMPOUNDS. Anytime prior
to the expiry of the Lead Period with respect a particular Drug Product
Candidate, NOVARTIS may also, by paying in each case the Back-up Election Fee
provided under Section 6.1 of the License Agreement, exercise its Development
Election with respect to any one or more Back-up Compounds associated with that
Drug Product Candidate, provided that Drug Product Candidate, or a Back-up
Compound selected pursuant to the provisions of subsection (b) above, is still
in active development. Any such Back-up Compound for which NOVARTIS has
exercised its
First Revised and Restated
Research and Early Development Agreement - Confidential - Page 15
<Page>
CONFIDENTIAL TREATMENT REQUESTED
Development Election under this subsection (d) shall become a "Drug Product
Candidate Back-up Candidate" subject to the terms and conditions of the License
Agreement.
(e) NOVARTIS OBLIGATIONS WITH RESPECT TO DRUG PRODUCT CANDIDATE
BACK-UP CANDIDATES. So long as NOVARTIS is using commercially reasonable
efforts, pursuant to the provisions of Sections 3.6 and 5.6 of the License
Agreement, with respect to the development of a particular Drug Product
Candidate or the commercialization of a particular Drug Product, NOVARTIS shall
have no obligation to develop any of the Drug Product Candidate Back-up
Candidates associated with that Drug Product Candidate or Drug Product. As soon
as NOVARTIS ceases the development of a particular Drug Product Candidate,
NOVARTIS's obligations to use diligent, commercially reasonable efforts will
immediately shift from the discontinued Drug Product Candidate to an associated
Drug Product Candidate Back-up Compound. If NOVARTIS ceases the development of a
particular Drug Product Candidate and does not commence development of a Drug
Product Candidate Back-up Compound pursuant to the foregoing, the license to the
Drug Product Candidate and its Back-up Compounds under the License Agreement
will expire and the license rights will revert to VERTEX.
4.6. [This section has been intentionally left blank.]
4.7. DRUG SUBSTANCE.
As soon as practicable after the exercise of its Development
Election with respect to a Drug Product Candidate, VERTEX will deliver to
NOVARTIS, if so requested by NOVARTIS, all drug substance for that Candidate in
VERTEX's possession, if any, to the extent it is usable in connection with
development of that Candidate. NOVARTIS will reimburse VERTEX for the
Manufacturing Cost (as such term is defined in the License Agreement) of that
material within thirty (30) days of receipt of VERTEX's invoice therefor.
4.8. SPECIAL PROVISIONS REGARDING VX-680, VX-528 AND VX-608.
The parties acknowledge that VERTEX is currently pursuing three
Development Candidates which have been designated as VX-608, VX-680 and VX-528.
(a) VX-608. VX-608 will be governed by this Research Agreement
and will be subject to the Development Election. The Notice Period with respect
to VX-608 shall be deemed to have commenced on the later of (i) the date on
which this Research Agreement is entered into, or (ii) the date by which
NOVARTIS is in possession of the Development Candidate Information. If NOVARTIS
exercises its Development Election with respect to VX-608 during the Notice
Period, that Compound will become a Drug Product Candidate hereunder, and
NOVARTIS will undertake all future development of VX-608 under the terms of the
License Agreement. The Development Election Payment will be made to VERTEX and
[***]. If NOVARTIS fails to exercise its Development Election with respect to
VX-608 during the Notice Period, then VX-608 will become a Refused Candidate
hereunder and the provisions of Section 4.4 will be applicable thereafter. Any
outstanding development loan will be repaid in accordance with Section 3.3
hereof.
First Revised and Restated
Research and Early Development Agreement - Confidential - Page 16
<Page>
CONFIDENTIAL TREATMENT REQUESTED
(b) VX-680 AND VX-528. The Compounds designated by VERTEX as
VX-680 and VX-528 are in early development under the provisions of the Original
Agreement, and the terms of the Original Agreement shall continue to govern the
rights and obligations of VERTEX and NOVARTIS with respect to VX-680 and VX-528
only, with the following modifications: (i) Section 6.4 of the original License
Agreement which is part of the Original Agreement shall not be applicable; (ii)
if VERTEX develops VX-680 to Proof of Concept under the Original Agreement and
NOVARTIS declines to exercise its Development Election at that time, it will
have no Second Opportunity to do so, and all rights to VX-680 and VX-528 will
revert to VERTEX free and clear of any further obligation to NOVARTIS; and (iii)
NOVARTIS will have no obligation to make further development loans to VERTEX on
account of VX-680 or VX-528.
At its sole discretion exercisable by notice in writing
from VERTEX to NOVARTIS delivered on or before June 30,
2004, VERTEX may elect to consider VX-680 and VX-528 as
Development Candidates which have become Refused
Candidates under the Research Agreement, and the terms and
conditions of the Research Agreement as they apply to any
Refused Candidate shall thereafter apply in the case of
VX-680 and VX-528. Contemporaneously with the
aforementioned notice, VERTEX shall repay to NOVARTIS that
portion of the total amount of any development loan
previously advanced by NOVARTIS to VERTEX on account of
either Compound, which is unspent and uncommitted as of
the notice date. The balance of any development loan shall
be repaid as provided in Section 3.3 hereof.
ARTICLE V
CONFIDENTIALITY
5.1. UNDERTAKING.
During the term of this Research Agreement, each party shall keep
confidential, and other than as provided herein shall not use or disclose,
directly or indirectly, any trade secrets, confidential or proprietary
information, or any other knowledge, information, documents or materials, owned,
developed or possessed by the other party, whether in tangible or intangible
form, the confidentiality of which such other party takes reasonable measures to
protect, including but not limited to VERTEX Kinase Technology and NOVARTIS
Kinase Technology.
(a) Each party shall take any and all lawful measures to
prevent the unauthorized use and disclosure of such information, and to prevent
unauthorized persons or entities from obtaining or using such information.
(b) Each party further agrees to refrain from directly or
indirectly taking any action which would constitute or facilitate the
unauthorized use or disclosure of such information. Each party may disclose such
information to its officers, employees and agents, to authorized licensees and
sublicensees, and to subcontractors in connection with the development or
manufacture of Drug Candidates, Drug Product Candidates or Drug Products, to the
extent necessary to enable such parties to perform their obligations hereunder
or under the applicable license, sublicense or subcontract, as the case may be;
provided, that such officers, employees,
First Revised and Restated
Research and Early Development Agreement - Confidential - Page 17
<Page>
CONFIDENTIAL TREATMENT REQUESTED
agents, licensees, sublicensees and subcontractors have entered into appropriate
confidentiality agreements for secrecy and non-use of such information which by
their terms shall be enforceable by injunctive relief at the instance of the
disclosing party.
(c) Each party shall be liable for any unauthorized use and
disclosure of such information by its officers, employees and agents and any
such sublicensees and subcontractors.
(d) NOVARTIS will ensure that information with respect to the
chemical structure of any Development Candidate which is delivered to NOVARTIS
under Section 4.1(b) hereof as part of the Development Candidate Information
with respect to that Development Candidate and its associated Back-up Compounds
will be distributed or otherwise made known only to [***] The foregoing
limitation on distribution of information will cease being applicable at such
time as NOVARTIS exercises its Development Election with respect to that
Development Candidate.
5.2. EXCEPTIONS.
Notwithstanding the foregoing, the provisions of Section 5.1 hereof
shall not apply to knowledge, information, documents or materials which the
receiving party can conclusively establish:
(a) have entered the public domain without such party's breach
of any obligation owed to the disclosing party;
(b) are permitted to be disclosed by the prior written consent
of the disclosing party;
(c) have become known to the receiving party from a source
other than the disclosing party, other than by breach of an obligation of
confidentiality owed to the disclosing party;
(d) are disclosed by the disclosing party to a Third Party
without restrictions on its disclosure;
(e) are independently developed by the receiving party without
breach of this Research Agreement; or
(f) are required to be disclosed by the receiving party to
comply with applicable laws or regulations, to defend or prosecute litigation or
to comply with governmental regulations, provided that the receiving party
provides prior written notice of such disclosure to the disclosing party and
takes reasonable and lawful actions to avoid or minimize the degree of such
disclosure.
Either VERTEX or NOVARTIS may at any time, by notice in writing to
the other party, waive any or all of the confidentiality obligations to which
the other party is subject hereunder, for any length of time or with respect to
any specific information.
First Revised and Restated
Research and Early Development Agreement - Confidential - Page 18
<Page>
CONFIDENTIAL TREATMENT REQUESTED
5.3. PUBLICITY.
The parties will agree upon the timing and content of any initial
press release or other public communications relating to this First Revised and
Restated Agreement and the transactions contemplated herein.
(a) Except to the extent already disclosed in that initial
press release or other public communication, no public announcement concerning
the existence or the terms of this Research Agreement or concerning the
transactions described herein shall be made, either directly or indirectly, by
VERTEX or NOVARTIS, except as may be legally required by applicable laws,
regulations, or judicial order, without first obtaining the approval of the
other party and agreement upon the nature, text, and timing of such
announcement, which approval and agreement shall not be unreasonably withheld.
(b) The party desiring to make any such public announcement
shall provide the other party with a written copy of the proposed announcement
in sufficient time prior to public release to allow such other party to comment
upon such announcement, prior to public release.
5.4. SURVIVAL.
The provisions of this Article V shall survive the termination of
this Research Agreement and shall extend for a period of five (5) years
thereafter.
ARTICLE VI
PUBLICATION
Each of NOVARTIS and VERTEX reserves the right to publish or publicly
present the results (the "Results") of the Research Program, subject to the
following terms and conditions. The party proposing to publish or publicly
present the Results (the "publishing party") will submit a draft of any proposed
manuscript or speech to the other party (the "non-publishing party") for
comments at least thirty (30) days prior to submission for publication or oral
presentation. The non-publishing party shall notify the publishing party in
writing within fifteen (15) days of receipt of such draft whether such draft
contains (i) information of the non-publishing party which it considers to be
confidential under the provisions of Article V hereof, (ii) information that if
published would have an adverse effect on a patent application covering the
subject matter of this Research Agreement which the non-publishing party intends
to file, or (iii) information which the non-publishing party reasonably believes
would be likely to have a material adverse impact on the development or
commercialization of a Drug Product Candidate. In any such notification, the
non-publishing party shall indicate with specificity its suggestions regarding
the manner and degree to which the publishing party may disclose such
information. In the case of item (ii) above, the non-publishing party may
request a delay and the publishing party shall delay such publication, for a
period not exceeding ninety (90) days, to permit the timely preparation and
filing of a patent application or an application for a certificate of invention
on the information involved. In the case of item (i) above, no party may publish
confidential information of the other party without its consent in violation of
Article V of this Research Agreement. In the case of item (iii) above, if the
publishing party shall disagree with the non-publishing party's assessment of
the impact of the publication, then the issue shall be referred to the JSC for
resolution. If the JSC is unable to reach agreement on the matter within
First Revised and Restated
Research and Early Development Agreement - Confidential - Page 19
<Page>
CONFIDENTIAL TREATMENT REQUESTED
thirty (30) days after such referral, the matter shall be referred by the JSC to
the Chief Executive Officer of NOVARTIS and the Chief Executive Officer of
VERTEX who shall attempt in good faith to reach a fair and equitable resolution
of this disagreement. If the disagreement is not resolved in this manner within
two (2) weeks of referral by the JSC as aforesaid, then the decision of the
publishing party as to publication of any information generated by it, subject
always to the confidentiality provisions of Article V hereof, shall be final,
provided that such decision shall be exercised with reasonable regard for the
interests of the non-publishing party. The parties agree that authorship of any
publication will be determined based on the customary standards then being
applied in the relevant scientific journal. The parties will use their best
efforts to gain the right to review proposed publications relating to the
subject matter of the Research Program by consultants or contractors.
This Article VI shall terminate with the termination of this Research
Agreement, but the provisions of Article V hereof shall continue to govern the
disclosure by one party, whether by publication or otherwise, of Confidential
Information of the other, during the period set forth in Section 5.4.
ARTICLE VII
INDEMNIFICATION
7.1. INDEMNIFICATION BY VERTEX.
VERTEX will indemnify and hold NOVARTIS and its Affiliates, and
their employees, officers and directors harmless against any loss, damages,
action, suit, claim, demand, liability, expense, bodily injury, death or
property damage (a "Loss"), that may be brought, instituted or arise against or
be incurred by such persons to the extent such Loss is based on or arises out
of:
(a) the development, manufacture, use, sale, storage or
handling of a Compound, a Development Candidate, a Drug Product Candidate or a
Drug Product by VERTEX or its Affiliates or their representatives, agents,
authorized sublicensees or subcontractors under this Research Agreement, or any
actual or alleged violation of law resulting therefrom (with the exception of
Losses based on infringement or misappropriation of intellectual property
rights); or
(b) the breach by VERTEX of any of its covenants,
representations or warranties set forth in this Research Agreement; and
(c) provided however, that the foregoing indemnification shall
not apply to any Loss to the extent such Loss is caused by the negligent or
willful misconduct of NOVARTIS or its Affiliates.
7.2. INDEMNIFICATION BY NOVARTIS.
NOVARTIS will indemnify and hold VERTEX, and its Affiliates, and
their employees, officers and directors harmless against any Loss that may be
brought, instituted or arise against or be incurred by such persons to the
extent such Loss is based on or arises out of:
(a) the development, manufacture, use, sale, storage or
handling of a Compound, a Development Candidate, a Drug Product Candidate or a
Drug Product by
First Revised and Restated
Research and Early Development Agreement - Confidential - Page 20
<Page>
CONFIDENTIAL TREATMENT REQUESTED
NOVARTIS or its Affiliates or their representatives, agents, authorized
sublicensees or subcontractors under this Research Agreement, or any actual or
alleged violation of law resulting therefrom (with the exception of Losses based
on infringement or misappropriation of intellectual property rights); or
(b) the breach by NOVARTIS of any of its covenants,
representations or warranties set forth in this Research Agreement; and
(c) provided that the foregoing indemnification shall not apply
to any Loss to the extent such Loss is caused by the negligent or willful
misconduct of VERTEX or its Affiliates.
7.3. CLAIMS PROCEDURES.
Each Party entitled to be indemnified by the other Party (an
"Indemnified Party") pursuant to Section 7.1 or 7.2 hereof shall give notice to
the other Party (an "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any threatened or asserted claim as to which indemnity
may be sought, and shall permit the Indemnifying Party to assume the defense of
any such claim or any litigation resulting therefrom; provided:
(a) That counsel for the Indemnifying Party, who shall conduct
the defense of such claim or any litigation resulting therefrom, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld) and the Indemnified Party may participate in such defense at such
party's expense (unless (i) the employment of counsel by such Indemnified Party
has been authorized by the Indemnifying Party; or (ii) the Indemnified Party
shall have reasonably concluded that there may be a conflict of interest between
the Indemnifying Party and the Indemnified Party in the defense of such action,
in each of which cases the Indemnifying Party shall pay the reasonable fees and
expenses of one law firm serving as counsel for the Indemnified Party, which law
firm shall be subject to approval, not to be unreasonably withheld, by the
Indemnifying Party); and
(b) The failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Research Agreement to the extent that the failure to give notice did
not result in harm to the Indemnifying Party.
(c) No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the approval of each Indemnified Party which
approval shall not be unreasonably withheld, consent to entry of any judgment or
enter into any settlement which (i) would result in injunctive or other relief
being imposed against the Indemnified Party; or (ii) does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
(d) Each Indemnified Party shall furnish such information
regarding itself or the claim in question as an Indemnifying Party may
reasonably request in writing and shall be reasonably required in connection
with the defense of such claim and litigation resulting therefrom.
First Revised and Restated
Research and Early Development Agreement - Confidential - Page 21
<Page>
CONFIDENTIAL TREATMENT REQUESTED
7.4. COMPLIANCE.
The parties shall comply fully with all applicable laws and
regulations in connection with their respective activities under this Research
Agreement.
ARTICLE VIII
PATENTABLE INVENTIONS
8.1. OWNERSHIP.
All inventions made and all Know-How generated exclusively by either
party or its Affiliates (directly or through others acting on its behalf) prior
to and during the term of this Research Agreement shall be owned by the party
making the invention or generating the Know-How claimed, or if such invention is
made jointly (a "Joint Invention"), shall be owned jointly, all as determined in
accordance with United States laws of inventorship.
8.2. PREPARATION.
VERTEX shall take responsibility for the preparation, filing,
prosecution and maintenance of all VERTEX Patents, and any patents and patent
applications claiming Joint Inventions, and NOVARTIS shall take responsibility
for the preparation, filing, prosecution and maintenance of all NOVARTIS
Patents. VERTEX shall provide the JRC with periodic reports listing, by name,
Patents filed by VERTEX in the United States and other jurisdictions, along with
a general summary of the claims made and the jurisdictions of filing. In good
time, before the deadline for foreign filing of any patent application filed in
the United States, VERTEX will notify NOVARTIS whether it intends to foreign
file such patent application, and if it intends to do so, in what countries it
proposes to foreign file. Upon timely written notice from NOVARTIS, VERTEX will
file in such additional countries -- all being countries in which NOVARTIS would
customarily file its own cases dealing with similar subject matter -- as
NOVARTIS shall request.
8.3. COSTS.
(a) During the Research Program. NOVARTIS shall reimburse
VERTEX for [***]. If the full amount of any reimbursement commitment is not
applied in any Research Year, the unused balance may be carried over from year
to year during the Research Program.
(b) After the Research Program. Upon expiration of the Research
Program, the parties shall determine which Patents covering Drug Product
Candidates and Drug Products, and Development Candidates and Back-up Compounds
as to which the Development Election is still applicable (until it expires), are
included in the Kinase Technology, and thereafter [***]. Either party may at any
time thereafter elect, by written notice to the other party, to discontinue
support for one or more such Patents (a "Discontinued Patent") and shall not be
responsible for any costs relating to a Discontinued Patent which are incurred
more than sixty (60) days after receipt of that notice by the other party. In
such case, the other party may elect at its sole discretion to continue
preparation, filing, prosecution or maintenance of the Discontinued Patent at
its sole expense. The party so continuing shall own any such Patent, and if the
party electing to discontinue support is the owner of the Discontinued Patent,
it shall execute such documents of transfer or assignment and perform such acts
as may be reasonably necessary to transfer ownership of the Discontinued Patent
to the other party and enable that party to file or to
First Revised and Restated
Research and Early Development Agreement - Confidential - Page 22
<Page>
continue prosecution or maintenance, if the other party elects to do so.
Discontinuance may be on a country-by-country basis or for a Patent series in
total.
ARTICLE IX
TERM AND TERMINATION
9.1. TERM.
9.1.1. This Research Agreement shall have retroactive effect to the
Effective Date, replacing and superceding the rights and obligations of the
parties under the Original Agreement, except that the terms of the Original
Agreement shall be deemed to govern the rights and obligations of the parties
with respect to the Compounds known as VX-680 and VX-528, pursuant to the
provisions of Section 4.8 of this Research Agreement. This Research Agreement
will extend until the Final Termination Date as defined herein, unless earlier
terminated by either party hereto in accordance with this Research Agreement, or
unless extended by mutual agreement of the parties; provided that the Agreement
will be deemed to continue in effect with respect to any Drug Product Candidate
during the Lead Period with respect to that Candidate, but only insofar as
necessary to enable NOVARTIS to exercise its Development Election under Section
4.5 hereof with respect to any Back-up Compounds for that Drug Product
Candidate.
9.2. TERMINATION OF THE RESEARCH PROGRAM BY NOVARTIS FOR CAUSE.
Upon written notice to VERTEX, NOVARTIS may at its sole discretion
unilaterally terminate the Research Program and this Research Agreement upon the
occurrence of any of the following events:
(a) VERTEX shall materially breach any of its material
obligations, such as its obligations under Section 3.2 hereof, under this
Research Agreement or the License Agreement, and such material breach shall not
have been remedied or steps initiated to remedy the same to NOVARTIS's
reasonable satisfaction, within sixty (60) days after NOVARTIS sends written
notice of breach to VERTEX; or
(b) VERTEX shall cease to function as a going concern by
suspending or discontinuing its business for any reason except for interruptions
caused by Force Majeure, strike, labor dispute or any other events over which it
has no control.
In the event of any valid termination under this Section 9.2,
NOVARTIS shall not be required to make any payments under Section 3.2 hereof
which are not due and payable prior to receipt by VERTEX of the notice of breach
referenced under Section 9.2(a) or receipt by VERTEX of the notice of
termination pursuant to Section 9.2(b), as the case may be. Notwithstanding the
foregoing, any License Agreement then in effect shall continue in effect unless
it is expressly terminated in accordance with its terms.
9.3. TERMINATION OF THE RESEARCH PROGRAM BY VERTEX FOR CAUSE.
VERTEX may at its sole discretion terminate this Research Agreement
upon written notice to NOVARTIS upon the occurrence of any of the following
events:
(a) NOVARTIS shall materially breach any of its material
obligations under this Research Agreement or the License Agreement and such
material breach shall not have been
First Revised and Restated
Research and Early Development Agreement - Confidential - Page 23
<Page>
CONFIDENTIAL TREATMENT REQUESTED
remedied or steps initiated to remedy the same to VERTEX's reasonable
satisfaction, within sixty (60) days after VERTEX sends written notice of breach
to NOVARTIS; or
(b) NOVARTIS shall cease to function as a going concern by
suspending or discontinuing its business for any reason except for interruptions
caused by Force Majeure, strike, labor dispute or any other events over which it
has no control.
Notwithstanding the foregoing, any License Agreement then in effect
shall continue in effect unless it is expressly terminated in accordance with
its terms.
9.4. [This section has been intentionally left blank.]
9.5. TERMINATION FOR SCIENTIFIC CAUSE.
Either party may terminate this Research Agreement upon six months'
prior written notice to the other party, if the terminating party can
demonstrate to the reasonable satisfaction of the other party that, by reason of
scientific developments unknown on the Effective Date, the Research Program is
unlikely to produce any Compounds that can achieve a commercially viable
therapeutic effect through an effect on a Kinase target.
9.6. EFFECT OF TERMINATION.
(a) Except where explicitly provided elsewhere herein,
termination of this Research Agreement for any reason, or expiration of this
Research Agreement, will not affect: (i) obligations which have accrued as of
the date of termination or expiration, and (ii) obligations and rights which,
expressly or from the context thereof, are intended to survive termination or
expiration of this Research Agreement, including obligations of confidentiality
under Article V hereof, the indemnification provisions of Article VII hereof and
the rights and obligations of the parties during the Lead Period under Sections
4.1 and 4.5 with respect to a particular Drug Product Candidate and related
Back-up Compounds.
(b) Upon termination or expiration of this Research Agreement,
NOVARTIS and VERTEX will retain exclusive rights to their respective Kinase
Technology (including intellectual property), except NOVARTIS shall hold those
rights to VERTEX Technology provided in any License Agreement in effect on the
Final Termination Date covering Drug Product Candidates selected by NOVARTIS,
and shall hold those rights to Back-up Compounds and Drug Product Candidate
Back-up Compounds provided in Sections 4.1(e) and 4.5.
ARTICLE X
REPRESENTATIONS AND WARRANTIES
10.1. REPRESENTATIONS AND WARRANTIES OF VERTEX.
VERTEX represents and warrants to NOVARTIS as follows: (a)
Authorization. This Research Agreement has been duly executed and delivered by
VERTEX and constitutes the valid and binding obligation of VERTEX, enforceable
against VERTEX in accordance with its terms except as enforceability may be
limited by bankruptcy, fraudulent conveyance, insolvency, bankruptcy,
reorganization, moratorium and other laws relating to or affecting creditors'
rights generally and by general equitable principles.
First Revised and Restated
Research and Early Development Agreement - Confidential - Page 24
<Page>
CONFIDENTIAL TREATMENT REQUESTED
The execution, delivery and performance of this Research Agreement have been
duly authorized by all necessary action on the part of VERTEX, its officers and
directors.
(b) No Third Party Rights. VERTEX owns or possesses adequate
licenses or other rights to use all VERTEX Kinase Technology relating to the
Field and to grant the licenses herein. The granting of the Development Election
to NOVARTIS hereunder does not violate any right known to VERTEX of any Third
Party.
(c) Third Party Patents. Except as disclosed in writing between
the parties to this Research Agreement or their respective agents, VERTEX is not
aware of any issued patents or pending patent applications that, if issued,
would be infringed by the development, manufacture, use or sale of any Compound,
Development Candidate or Drug Product Candidate pursuant to this Research
Agreement.
10.2. REPRESENTATIONS AND WARRANTIES OF NOVARTIS.
NOVARTIS represents and warrants to VERTEX as follows:
(a) Authorization. This Research Agreement has been duly
executed and delivered by NOVARTIS and constitutes the valid and binding
obligation of NOVARTIS, enforceable against NOVARTIS in accordance with its
terms except as enforceability may be limited by bankruptcy, fraudulent
conveyance, insolvency, bankruptcy, reorganization, moratorium and other laws
relating to or affecting creditors' rights generally and by general equitable
principles.
The execution, delivery and performance of this Research Agreement have been
duly authorized by all necessary action on the part of NOVARTIS, its officers
and directors.
(b) Third Party Rights. NOVARTIS owns or possesses adequate
licenses or other rights to use all NOVARTIS Kinase Technology relating to the
Field in accordance with the provisions of this Research Agreement.
(c) Third Party Patents. Except as disclosed in writing between
the parties to this Research Agreement or their respective agents, NOVARTIS is
not aware of any issued patents or pending patent applications that, if issued,
would be infringed by the development, manufacture, use or sale of any Compound,
Development Candidate or Drug Product Candidate pursuant to this Research
Agreement.
ARTICLE XI
DISPUTE RESOLUTION
11.1. GOVERNING LAW, AND JURISDICTION.
This Research Agreement shall be governed and construed in
accordance with the internal laws of the State of New York.
11.2. DISPUTE RESOLUTION PROCESS.
(a) General. Except as set forth in (b) below or as otherwise
explicitly provided herein, in the event of any controversy or claim arising out
of or relating to any provision of this Research Agreement, or the collaborative
effort contemplated hereby, the parties shall, and either party may, initially
refer such dispute to the JSC, and failing resolution of the controversy or
claim within thirty (30) days after such referral, the matter shall be referred
First Revised and Restated
Research and Early Development Agreement - Confidential - Page 25
<Page>
CONFIDENTIAL TREATMENT REQUESTED
to the Chief Executive Officer of VERTEX and the Chief Executive Officer of
NOVARTIS who shall, as soon as practicable, attempt in good faith to resolve the
controversy or claim. If such controversy or claim is not resolved within sixty
(60) days of the date of initial referral of the matter to the JSC, either party
shall be free to initiate proceedings in any court having requisite
jurisdiction.
(b) Third Party Referral. Any dispute or claim relating to the
"Referral Matters" as defined below which the parties are unable to resolve
pursuant to the other dispute resolution mechanisms provided in this Research
Agreement (other than litigation) shall, upon the written request of one party
delivered to the other party, be submitted to and settled by a panel of Third
Parties (a "Third Party Panel") appointed by VERTEX and NOVARTIS as provided
below. The "Referral Matter" shall consist solely of disagreements concerning
whether a particular Compound has satisfied all of the applicable Development
Candidate Criteria. Within thirty (30) days after delivery of the
above-referenced written request, each party will appoint one person who is not
an Affiliate of the party appointing that person, and who is knowledgeable in
the areas of pharmaceutical science, business and commercial aspects of drug
development and sale, or the clinical development of pharmaceuticals, to hear
and determine the dispute. The two persons so chosen will select another
impartial Third Party and their majority decision will be final and conclusive
upon the parties hereto. If either party fails to designate its appointee within
the thirty (30) day period referenced above, then the appointee who has been
designated by the other party will serve as the sole member of the Third Party
Panel and will be deemed to be the single, mutually approved party to resolve
the dispute. Each party will bear its own costs in the Third Party Referral
process, and the parties will split equally the costs of the Third Party Panel
members. The Third Party Panel will, upon the request of either party, issue its
final determination in writing.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1. OFFICIAL LANGUAGE.
English shall be the official language of this Research Agreement
and the License Agreement, and all communications between the parties hereto
shall be conducted in that language.
12.2. WAIVER.
No provision of this Research Agreement may be waived except in
writing by both parties hereto. No failure or delay by either party hereto in
exercising any right or remedy hereunder or under applicable law will operate as
a waiver thereof, or a waiver of any right or remedy on any subsequent occasion.
12.3. FORCE MAJEURE.
Neither party will be in breach hereof by reason of its delay in the
performance of or failure to perform any of its obligations hereunder, if that
delay or failure is caused by strikes, acts of God or the public enemy, riots,
incendiaries, interference by civil or military authorities, compliance with
governmental priorities for materials, or any fault beyond its control or
without its fault or negligence.
First Revised and Restated
Research and Early Development Agreement - Confidential - Page 26
<Page>
CONFIDENTIAL TREATMENT REQUESTED
12.4. SEVERABILITY.
Should one or more provisions of this Research Agreement be or
become invalid, then the parties hereto shall attempt to agree upon valid
provisions in substitution for the invalid provisions, which in their economic
effect come so close to the invalid provisions that it can be reasonably assumed
that the parties would have accepted this Research Agreement with those new
provisions. If the parties are unable to agree on such valid provisions, the
invalidity of such one or more provisions of this Research Agreement shall
nevertheless not affect the validity of the Agreement as a whole, unless the
invalid provisions are of such essential importance for this Research Agreement
that it may be reasonably presumed that the parties would not have entered into
this Research Agreement without the invalid provisions.
12.5. GOVERNMENT ACTS.
In the event that any act, regulation, directive, or law of a
country or its government, including its departments, agencies or courts, should
make impossible or prohibit, restrain, modify or limit any material act or
obligation of NOVARTIS or VERTEX under this Research Agreement, the party, if
any, not so affected, shall have the right, at its option, to suspend or
terminate this Research Agreement as to such country, if good faith negotiations
between the parties to make such modifications therein as may be necessary to
fairly address the impact thereof, are not successful after a reasonable period
of time in producing mutually acceptable modifications to this Research
Agreement.
12.6. GOVERNMENT APPROVALS.
Each party will obtain any government approval required in its
country of domicile to enable this Research Agreement to become effective, or to
enable any payment hereunder to be made, or any other obligation hereunder to be
observed or performed. Each party will keep the other informed of progress in
obtaining any such government approval, and will cooperate with the other party
in any such efforts.
12.7. EXPORT CONTROLS.
This Research Agreement is made subject to any restrictions
concerning the export of materials and Technology from the United States which
may be imposed upon or related to either party to this Research Agreement from
time to time by the Government of the United States. Furthermore, NOVARTIS will
not export, directly or indirectly, any VERTEX Kinase Technology or any Bulk
Drug Substance, Drug Product Candidates or Drug Products utilizing such
Technology to any countries for which the United States Government or any agency
thereof at the time of export requires an export license or other governmental
approval, without first obtaining the written consent to do so from the
Department of Commerce or other agency of the United States Government when
required by applicable statute or regulation.
12.8. ASSIGNMENT.
This Research Agreement may not be assigned or otherwise transferred
by either party without the prior written consent of the other party; provided,
however, that either party may assign this Research Agreement, without the
consent of the other party, (i) to any of its Affiliates, if the assigning party
guarantees the full performance of its Affiliates' obligations hereunder, or
(ii) in connection with the transfer or sale of all or substantially all of its
assets or business or in the event of its merger or consolidation with another
company. Any purported assignment in contravention of this Section 12.8 shall,
at the option of the non-assigning party,
First Revised and Restated
Research and Early Development Agreement - Confidential - Page 27
<Page>
CONFIDENTIAL TREATMENT REQUESTED
be null and void and of no effect. No assignment shall release either party from
responsibility for the performance of any accrued obligation of such party
hereunder. This Research Agreement shall be binding upon and enforceable against
the successor to or any permitted assignees from either of the parties hereto.
12.9. AFFILIATES.
Each party may perform its obligations hereunder personally or
through one or more Affiliates, although each party shall nonetheless be solely
responsible for the performance of its Affiliates. Neither party shall permit
any of its Affiliates to commit any act (including any act or omission) which
such party is prohibited hereunder from committing directly. The use of
subcontractors by either party shall not increase the financial obligations of
the other party hereunder in any respect.
12.10. COUNTERPARTS.
This Research Agreement may be executed in duplicate, each of which
shall be deemed to be original and both of which shall constitute one and the
same Agreement.
12.11. NO AGENCY.
Nothing herein contained shall be deemed to create an agency, joint
venture, amalgamation, partnership or similar relationship between NOVARTIS and
VERTEX. Notwithstanding any of the provisions of this Research Agreement,
neither party to this Research Agreement shall at any time enter into, incur, or
hold itself out to third parties as having authority to enter into or incur, on
behalf of the other party, any commitment, expense, or liability whatsoever, and
all contracts, expenses and liabilities in connection with or relating to the
obligations of each party under this Research Agreement shall be made, paid, and
undertaken exclusively by such party on its own behalf and not as an agent or
representative of the other.
12.12. NOTICE.
All communications between the parties with respect to any of the
provisions of this Research Agreement will be sent to the addresses set out
below, or to such other addresses as may be designated by one party to the other
by notice pursuant hereto, by prepaid, certified air mail (which shall be deemed
received by the other party on the seventh business day following deposit in the
mails), or by facsimile transmission, or other electronic means of communication
(which shall be deemed received when transmitted), with confirmation by first
class letter, postage pre-paid, given by the close of business on or before the
next following business day:
if to NOVARTIS, at:
NOVARTIS PHARMA AG
Business Development and Licensing
P.O. Box
CH-4002
Basel, Switzerland
Attention: Victor A. Hartmann, Vice President
with a copy to: Legal Services, at the address referenced above
First Revised and Restated
Research and Early Development Agreement - Confidential - Page 28
<Page>
CONFIDENTIAL TREATMENT REQUESTED
if to VERTEX, at:
Vertex Pharmaceuticals Incorporated
130 Waverly Street
Cambridge, MA U.S.A. 02139-4211
Attention: President
with a copy to: Legal Department
Attention: General Counsel
12.13. HEADINGS.
The paragraph headings are for convenience only and will not be
deemed to affect in any way the language of the provisions to which they refer.
12.14. AUTHORITY.
The undersigned represent that they are authorized to sign this
Research Agreement on behalf of the parties hereto. The parties each represent
that no provision of this Research Agreement will violate any other agreement
that such party may have with any other person or company. Each party has relied
on that representation in entering into this Research Agreement.
12.15. ENTIRE AGREEMENT.
This Research Agreement, together with the Original Agreement
insofar as it remains applicable, as set forth in the Recitals, in Section 4.8
and elsewhere herein, with respect to VX-680 and VX-528 only, and the respective
License Agreements thereto, contains the entire understanding of the parties
relating to the matters referred to herein, and may only be amended by a written
document, duly executed on behalf of the respective parties.
12.16. STANDSTILL.
During [***] neither NOVARTIS nor any of its Affiliates will acquire
or hold, or without the prior approval of the VERTEX Board of Directors, will
propose to acquire or hold, at any time, of record or beneficially, more than
[***] of the outstanding voting securities of VERTEX, nor will NOVARTIS
participate in a group (as the term "group" is referenced in Section 14(d) of
the U.S. Securities Exchange Act of 1934 and Regulations promulgated thereunder)
which acquires or holds, or proposes to acquire or hold, such amount of
securities during the referenced time period; provided that NOVARTIS shall not
be required to reduce its share holdings if its ownership percentage increase
above [***] by reason of the actions of VERTEX, including without limitation any
recapitalization or repurchase of shares by VERTEX. Notwithstanding the
foregoing: (A) if a tender offer directed toward the acquisition of more than
[***] of the voting securities of VERTEX is commenced by a Third Party who is
not then or during the pendency of that tender offer a member of a "group" in
which NOVARTIS is participating, then NOVARTIS may during the pendency of that
tender offer commence a competing tender offer, and may thereafter complete that
offer in accordance with its terms (as revised from time to time),
notwithstanding any limitation on the acquisition or holding of VERTEX shares as
set forth above; provided that if any such tender offer by NOVARTIS is not
completed or is withdrawn, the provisions of this Section 12.16 shall thereafter
apply to any
First Revised and Restated
Research and Early Development Agreement - Confidential - Page 29
<Page>
CONFIDENTIAL TREATMENT REQUESTED
subsequent share acquisitions by NOVARTIS as if the previous tender offer had
not occurred; (B) if VERTEX shall make a public announcement that it intends to
enter into a transaction which will result in the acquisition of a controlling
interest in VERTEX's voting securities by a Third Party which is not a member of
a "group" that includes NOVARTIS, then at any time thereafter and during the
period ending with the closing of any such transaction or the public
announcement of its termination, NOVARTIS may make a competing proposal for a
transaction with VERTEX or for VERTEX's shares, and the provisions of the first
sentence of this Section 12.16 shall not operate to prevent the completion of
any such proposal or require the sale or divestiture of any VERTEX shares
acquired by NOVARTIS during that period; and (C) if a Third Party which is not a
member of a "group" that includes NOVARTIS, should acquire more than [***] of
VERTEX's voting securities, then, during such period as that Third Party owns
more than [***] of VERTEX's voting securities, NOVARTIS is entitled to increase
its holdings of VERTEX's voting securities, by purchase from Third Parties, to
an amount which will not exceed, at the time of the share purchase by NOVARTIS,
the amount owned by such Third Party. This limitation shall not be applicable if
the provisions set forth in (A) above, otherwise apply.
12.17. NOTICE OF PHARMACEUTICAL SIDE-EFFECTS.
During the term of this Research Agreement, the parties shall keep
each other promptly and fully informed and will promptly notify appropriate
authorities in accordance with applicable law, after receipt of information with
respect to any serious adverse event (as defined by the ICH Harmonized
Tripartite Guideline on Clinical Safety Data Management), directly or indirectly
attributable to the use or application of Compounds, a Development Candidate,
Bulk Drug Substance, a Drug Product Candidate or a Drug Product.
12.18. INFLATION ADJUSTMENT.
All payments required to be made to VERTEX hereunder (except any
royalty payments required to be made under the provisions of Section 6.3 of the
License Agreement) shall be adjusted at the beginning of each Research Year
(commencing at the beginning of Research Year 2) to reflect the impact of
inflation since the Effective Date of the Agreement, as measured by the biotech
worker inflation rate defined and reported in the Radford Survey (Radford/AON
Consulting Inc., San Francisco, CA), or other mutually acceptable index.
Notwithstanding the foregoing, no adjustment shall be required in any Research
Year in which the appropriate inflation adjustment, if applied, would result in
a change of less than [***] in the relevant payment amount.
12.19. INVOICE REQUIREMENT.
Any amounts payable to VERTEX hereunder (except any royalty payments
required to be made under the provisions of Section 6.3 of the License
Agreement) shall be made within thirty days after receipt by NOVARTIS, or its
nominee designated for that purpose in advance by NOVARTIS in writing to VERTEX,
of an invoice covering such payment, which invoice shall conform to the extent
reasonably practicable to the form of invoice contained in Exhibit B to this
Research Agreement.
12.20. HARDSHIP.
First Revised and Restated
Research and Early Development Agreement - Confidential - Page 30
<Page>
CONFIDENTIAL TREATMENT REQUESTED
If as a result of unforeseen events or developments relating to the
subject matter of this Research Agreement, the performance of this Research
Agreement shall cause inequitable economic hardship for one party which runs
counter to the objectives of this Research Agreement and which the other party
cannot reasonably and in good faith expect the first party to bear unrelieved,
the parties will meet and seek in good faith to find equitable means of amending
this Research Agreement to reestablish a fair and reasonable economic balance
under this Research Agreement between the parties hereto.
First Revised and Restated
Research and Early Development Agreement - Confidential - Page 31
<Page>
CONFIDENTIAL TREATMENT REQUESTED
VERTEX PHARMACEUTICALS INCORPORATED
By: /s/ Kenneth S. Boger
------------------------------------
Kenneth S. Boger
Title: Senior Vice President and
General Counsel
NOVARTIS PHARMA AG
By: /s/ Stephanie Lassarat
------------------------------------
Title: Senior Legal Counsel
By: /s/ W. Steiger
------------------------------------
Title: Head of Administration, NIBR Basil
First Revised and Restated
Research and Early Development Agreement - Confidential - Page 32
<Page>
CONFIDENTIAL TREATMENT REQUESTED
Schedule 1.13
Excluded Compounds and Excluded Kinases
- --------------------------------------------------------------------------------
Excluded Kinases
SWISSPROT Designation
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
Excluded Compounds
[***]
First Revised and Restated
Research and Early Develoment Agreement - Confidential
Schedule 1.13
<Page>
CONFIDENTIAL TREATMENT REQUESTED
Schedule 2.4.3
Development Candidate Criteria
- --------------------------------------------------------------------------------
[***]
- --------------------------------------------------------------------------------
[***] [***] [***] [***]
- --------------------------------------------------------------------------------
[***]
- --------------------------------------------------------------------------------
[***]
- --------------------------------------------------------------------------------
[***]
- --------------------------------------------------------------------------------
[***]
- --------------------------------------------------------------------------------
[***]
- --------------------------------------------------------------------------------
[***]
- --------------------------------------------------------------------------------
[***]
- --------------------------------------------------------------------------------
First Revised and Restated
Research and Early Develoment Agreement - Confidential
Schedule 2.4.3 -- Page 1
<Page>
CONFIDENTIAL TREATMENT REQUESTED
Exhibit A
FORM OF LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT
- --------------------------------------------------------------------------------
First Revised and Restated
Research and Early Develoment Agreement -- Confidential
Exhibit A
<Page>
CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT B
FORM OF INVOICE
- --------------------------------------------------------------------------------
[COMPANY Letterhead]
[Date]
Novartis Pharma AG
Zentraler Faktureneingang
Attn: Ms. R. Aschwanden
Lichtstrasse 35
CH - 4002 Basel
Switzerland
Dear Ms. Aschwanden
Re: [COMPANY] License Agreement for [PRODUCT]
This is an invoice requesting payment in connection the above-captioned
Agreement between [COMPANY] and Novartis Pharma AG.
Novartis Contract Code No: [will be assigned within Novartis
following execution]
Novartis Cost Centre: 630926 / 393120
SPECIFICATION: [PLEASE SPECIFY THE EVENT FOR WHICH
THE INVOICE IS DUE, AND ADD ANY
COPIES OF INVOICES FROM THIRD
PARTIES IN CASE REIMBURSEMENT FOR
THIRD PARTY WORK IS AGREED TO]
Amount and Currency: [self-explanatory]
Bank address and Account No: [insert the name and address of the
bank to which the payment should be
sent and the account number to
which it should be credited]
Sincerely yours,
[COMPANY]
First Revised and Restated
Research and Early Develoment Agreement -- Confidential
Exhibit B
<Page>
CONFIDENTIAL TREATMENT
EXHIBIT A
LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT
BETWEEN
VERTEX PHARMACEUTICALS INCORPORATED
AND
NOVARTIS PHARMA AG
<Page>
LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT
TABLE OF CONTENTS
<Table>
<Caption>
Page Number
ARTICLE I-- DEFINITIONS........................................................................................1
ARTICLE II-- LICENSE...........................................................................................7
2.1 Grant to NOVARTIS....................................................................................7
2.2 Grant to VERTEX......................................................................................7
2.3 Information Transfer.................................................................................8
ARTICLE III-- DEVELOPMENT......................................................................................8
3.1 Commencement of Development Program..................................................................8
3.2 International Project Team...........................................................................8
3.3 Development Responsibility and Costs................................................................10
3.4 Regulatory Approvals................................................................................10
3.5 Assistance Rights...................................................................................10
3.6 Reasonable Efforts in Development...................................................................11
ARTICLE IV-- MANUFACTURING AND SUPPLY.........................................................................12
4.1 Supply of Bulk Drug Substance and Drug Product......................................................12
4.2 [This section has been intentionally left blank.]...................................................12
4.3 Formulation and Packaging...........................................................................12
ARTICLE V-- COMMERCIALIZATION.................................................................................12
5.1 Marketing and Promotion.............................................................................12
5.2 Global Brand Team...................................................................................12
5.3 [This section has been intentionally left blank.]...................................................13
5.4 [This section has been intentionally left blank.]...................................................13
5.5 Co-labeling.........................................................................................13
5.6 Due Diligence.......................................................................................14
ARTICLE VI-- PAYMENTS.........................................................................................14
6.1 Development Election Payment........................................................................14
6.2 Development Milestone Payments by NOVARTIS..........................................................14
6.3 Royalties...........................................................................................15
6.4 [This section has been intentionally left blank.]...................................................16
6.5 Sales Reports.......................................................................................16
6.6 Withholding Tax.....................................................................................16
ARTICLE VII-- BACK-UP COMPOUNDS...............................................................................18
ARTICLE VIII-- INTELLECTUAL PROPERTY..........................................................................19
8.1 Patentable Inventions and Know-How..................................................................19
8.2 Infringement Claims by Third Parties................................................................20
8.3 Infringement Claims Against Third Parties...........................................................21
8.4 Notice of Certification.............................................................................21
8.5 Patent Term Extensions..............................................................................22
</Table>
License, Development and Commercialization Agreement--Confidential--
Table of Contents-- Page i
<Page>
LICENSE AND DEVELOPMENT AGREEMENT
TABLE OF CONTENTS (CONTINUED)
<Table>
<Caption>
Page Number
ARTICLE IX-- REPRESENTATIONS AND WARRANTIES...................................................................22
9.1 Representations and Warranties of VERTEX............................................................22
9.2 Representations and Warranties of NOVARTIS..........................................................23
ARTICLE X-- CONFIDENTIALITY...................................................................................24
10.1 Undertaking.........................................................................................24
10.2 Exceptions..........................................................................................25
10.3 Publicity...........................................................................................25
10.4 Survival............................................................................................26
ARTICLE XI-- PUBLICATIONS.....................................................................................26
ARTICLE XII-- DISPUTE RESOLUTION..............................................................................26
12.1 Governing Law, and Jurisdiction.....................................................................26
12.2 Dispute Resolution Process..........................................................................26
ARTICLE XIII-- TERM AND TERMINATION...........................................................................27
13.1 Term................................................................................................27
13.2 Termination For Cause...............................................................................27
13.3 Termination for Bankruptcy..........................................................................27
13.4 Termination by NOVARTIS.............................................................................27
13.5 Effect of Termination...............................................................................28
ARTICLE XIV-- INDEMNIFICATION.................................................................................28
14.1 Indemnification by VERTEX...........................................................................28
14.2 Indemnification by NOVARTIS.........................................................................28
14.3 Claims Procedures...................................................................................29
14.4 Compliance..........................................................................................30
14.5 Insurance...........................................................................................30
ARTICLE XV-- MISCELLANEOUS PROVISIONS.........................................................................30
15.1 Notice of Pharmaceutical Side-Effects...............................................................30
15.2 Waiver..............................................................................................30
15.3 Force Majeure.......................................................................................30
15.4 Registration of License.............................................................................30
15.5 Severability........................................................................................31
15.6 Government Acts.....................................................................................31
15.7 Government Approvals................................................................................31
15.8 Assignment..........................................................................................31
15.9 Affiliates..........................................................................................31
15.10 Counterparts........................................................................................31
15.11 No Agency...........................................................................................31
</Table>
License, Development and Commercialization Agreement--Confidential--
Table of Contents-- Page ii
<Page>
LICENSE AND DEVELOPMENT AGREEMENT
TABLE OF CONTENTS (CONTINUED)
<Table>
<Caption>
Page Number
15.12 Notice..............................................................................................32
15.13 Headings............................................................................................32
15.14 Authority...........................................................................................32
15.15 Entire Agreement....................................................................................33
15.16 Inflation Adjustment................................................................................33
15.17 Invoice Requirement.................................................................................33
15.18 Hardship............................................................................................33
SCHEDULES
Schedule 1.12 -- List of Drug Product Candidates
Schedule 1.25 -- List of Major Markets
Schedule 1.29 -- NOVARTIS Patents
Schedule 1.44 -- VERTEX Patents
</Table>
License, Development and Commercialization Agreement--Confidential--
Table of Contents-- Page iii
<Page>
CONFIDENTIAL TREATMENT REQUESTED
LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT
This Agreement is made and entered into as of ________, _____ ( the
"Effective Date") between Vertex Pharmaceuticals Incorporated (hereinafter
"VERTEX"), a Massachusetts corporation with principal offices at 130 Waverly
Street, Cambridge, MA 02139-4242, and NOVARTIS PHARMA AG (hereinafter
"NOVARTIS"), a Swiss corporation with principal offices at Lichtstrasse 35,
CH-4056 Basel, Switzerland.
INTRODUCTION
WHEREAS, VERTEX and NOVARTIS are parties to a certain First Revised and
Restated Research Agreement dated January __, 2004 (the "Research Agreement")
which revised and restated a certain Research and Early Development Agreement
dated May 8, 2000 (the "Original Agreement"), under which VERTEX is attempting
to design novel, small-molecule compounds targeting the Kinase protein
superfamily; and
WHEREAS, NOVARTIS may elect to develop and commercialize compounds
proposed by VERTEX under the Research Agreement; and
WHEREAS, in accordance with the Research Agreement NOVARTIS has elected
to develop and commercialize the Drug Product Candidates designated on SCHEDULE
1.12 hereto, and the parties therefore wish to execute this License, Development
and Commercialization Agreement, which is identical in substance to the
agreement attached as Exhibit A to the Research Agreement, to memorialize the
provisions specific to development and commercialization of Drug Product
Candidates;
WHEREAS, the parties have special rights and obligations with respect to
Back-up Compounds to the Drug Product Candidates (as defined in the Research
Agreement); and
NOW THEREFORE, in consideration of the foregoing premises, the parties
agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the terms defined in this Article 1 shall have
the following meanings whether used in their singular or plural forms. Use of
the singular shall include the plural and vice versa, unless the context
requires otherwise:
1.1. "AFFILIATE" shall mean, with respect to any Person, any other Person
which directly or indirectly, by itself or through one or more intermediaries,
controls, or is controlled by, or is under direct or indirect common control
with, such Person. The term "control" means the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities, by contract or
otherwise. Control will be presumed if one Person owns, either of record or
beneficially, more
License, Development and Commercialization Agreement-- Confidential-- Page 1
<Page>
CONFIDENTIAL TREATMENT REQUESTED
than 50% of the voting stock of any other Person. For the avoidance of any
doubt, the Novartis Institute for Functional Genomics, Inc. and The Friedrich
Miescher Institute, as currently operated, are not Affiliates of NOVARTIS for
the purposes of this Agreement.
1.1.1. "CHANGE OF CONTROL" shall mean (a) a transaction which
results in the voting securities of VERTEX immediately prior to such transaction
ceasing to represent more than fifty percent (50%) of the combined voting power
of the surviving entity immediately after such transaction; (b) any Third Party
(other than any trustee or other fiduciary holding securities under an employee
benefit plan, or any corporation or other entity owned directly or indirectly by
the stockholders of such party in substantially the same portion as their
ownership of stock of such party) becoming the beneficial owner of more than
fifty percent (50%) of the combined voting power of the outstanding securities
of VERTEX; or (c) a sale to a Third Party of all or substantially all of the
business of VERTEX necessary for VERTEX's performance under this Agreement.
1.2. "GLOBAL BRAND TEAM" or "GBT" shall have the meaning set forth in
Section 5.2 hereof; and "BACK-UP COMPOUND" shall have the meaning set forth in
Section 1.1.1 of the Research Agreement.
1.3. [This section has been intentionally left blank.]
1.4. "BULK DRUG SUBSTANCE" shall mean a Drug Product Candidate in bulk
crystal, powder or other form suitable for incorporation in a Drug Product.
1.5. "CONTROLLED" shall mean the legal authority or right of a party
hereto to grant a license or sublicense of intellectual property rights to
another party hereto, or to otherwise disclose proprietary or trade secret
information to such other party, without breaching the terms of any agreement
with a Third Party, infringing upon the intellectual property rights of a Third
Party, or misappropriating the proprietary or trade secret information of a
Third Party.
1.6. [This section has been intentionally left blank.]
1.7. (a) "DEVELOPMENT CANDIDATE" shall have the meaning ascribed to it in
the Research Agreement.
(b) "DEVELOPMENT ELECTION FEE" and "BACK-UP ELECTION FEE" shall each
have the meaning ascribed to it in Section 6.1 hereof.
1.8. "DEVELOPMENT PLAN" shall have the meaning ascribed to it in Section
3.2.2 hereof.
1.9. "DEVELOPMENT PROGRAM" shall mean activities associated with
development of a Drug Product Candidate which are conducted by or at the
direction of NOVARTIS after the Development Election has been exercised with
respect to that Drug Product Candidate, including but not limited to (a)
manufacture and formulation of Drug Product Candidates for use in pre-clinical,
non-clinical and clinical studies; (b) pre-clinical and non-clinical animal
studies performed in accordance with GLP (or the applicable equivalent); (c)
planning, implementation, evaluation and administration of human clinical
trials; (d) manufacturing process development, scale-up and commercial
manufacture of Drug Product; (e) preparation and submission of
License, Development and Commercialization Agreement-- Confidential-- Page 2
<Page>
CONFIDENTIAL TREATMENT REQUESTED
applications for Regulatory Approval; and (f) post-market surveillance of
approved drug indications, as required or agreed as part of a marketing approval
by any governmental regulatory authority.
1.10. [This Section has been intentionally left blank.]
1.11. "DRUG PRODUCT" shall mean a finished dosage form which is prepared
from Bulk Drug Substance and is ready for administration to the ultimate
consumer as a pharmaceutical.
1.12. "DRUG PRODUCT CANDIDATE" shall mean any Development Candidate or
Drug Product Candidate Back-up Candidate listed from time to time on Schedule
1.12 hereof, as to which NOVARTIS has exercised the Development Election under
the Research Agreement and which has become a subject of this License Agreement
in accordance with the provisions thereof; and "Drug Product Candidate Back-up
Candidate" shall have the meaning set forth in Section 7.4 of this Agreement.
1.13. "EFFECTIVE DATE" shall mean the effective date of this Agreement as
set forth on the first page hereof.
1.14. [This section has been intentionally left blank.]
1.15. "FIELD" shall mean the treatment or prevention of conditions or
diseases in humans, principally by affecting a Kinase other than an Excluded
Kinase.
1.16. "FIRST COMMERCIAL SALE" shall mean the first sale of a Drug Product
by NOVARTIS or an Affiliate or sublicensee of NOVARTIS in a country in the
Territory following Regulatory Approval of the Drug Product in that country or,
if no such Regulatory Approval or similar marketing approval is required, the
date upon which the Drug Product is first commercially launched in such country.
1.17. "FILING OUTSIDE THE U.S." shall mean any application or regulatory
filing to be made hereunder with a regulatory authority outside the United
States, for approval to manufacture and sell Drug Product(s) outside the U.S.,
and any correspondence, approvals or governmental licenses relating thereto.
1.18. [This section has been intentionally left blank.]
1.19. "GMP" shall mean the current Good Manufacturing Practice
regulations promulgated by the FDA, published at 21 CFR Part 210 et seq., as
such regulations may from time to time be amended, and such equivalent
regulations or standards of countries outside the United States as may be
applicable to activities conducted hereunder; and "GLP" shall mean the current
Good Laboratory Practices regulations promulgated by the FDA, published at 21
CFR Part 58, as such regulations may be from time to time amended, and such
equivalent regulations or standards of countries outside the United States as
may be applicable to activities conducted hereunder.
1.20. "INDICATION" shall mean a recognized disease or condition, an
important manifestation of a disease or condition, or symptom associated with a
disease or syndrome for
License, Development and Commercialization Agreement-- Confidential-- Page 3
<Page>
CONFIDENTIAL TREATMENT REQUESTED
which use of a Drug Product is indicated, as would be identified in the Drug
Product's label under applicable FDA regulations or the foreign equivalent
thereof.
1.21. "IND" shall mean the investigational new drug application relating
to a Drug Product Candidate filed with the FDA pursuant to 21 CFR Part 312,
including any amendments thereto. References herein to IND shall include, to the
extent applicable, any comparable Filing(s) Outside the U.S. (such as a CTX in
the European Union).
1.22. "INTERNATIONAL PROJECT TEAM" or "IPT" shall have the meaning set
forth in Section 3.2.1 hereof.
1.23. "JOINT STEERING COMMITTEE" or "JSC" shall have the meaning set
forth in Section 2.6 of the Research Agreement.
1.24. "KNOW-HOW" means all proprietary material and information including
data, technical information, know-how, experience, inventions, discoveries,
trade secrets, compositions of matter and methods, whether currently existing or
developed or obtained during the course of this Agreement and whether or not
patentable or confidential, that are now Controlled by a Party or its Affiliates
and that relate to the development, utilization, manufacture or use of any Drug
Product Candidate or Drug Product, including but not limited to processes,
techniques, methods, products, materials and compositions; provided however,
that for the purposes of the definition of VERTEX Know-How only, the term
"Know-How" shall not include VERTEX's general drug design technology, whether in
software or hardware, tangible or intangible, form; and "Lead Period" shall mean
the period starting on date this Agreement is effective with respect to a
particular Drug Product Candidate and ending on the second anniversary
thereafter.
1.25. "MAJOR MARKETS" shall mean those countries listed on SCHEDULE 1.25
hereto.
1.26. "MANUFACTURING COST" shall mean [***].
1.27. "NET SALES" with respect to any Drug Product shall mean the gross
amount invoiced by NOVARTIS and any NOVARTIS Affiliate, licensee or sublicensee
for that Drug Product sold to Third Parties in bona fide, arms-length
transactions, less [***]; all as determined in accordance with NOVARTIS' usual
and customary accounting methods, which are in accordance with generally
accepted accounting principles (GAAP).
1.27.1. In the case of any sale or other disposal of a Drug
Product between or among NOVARTIS and its Affiliates,
licensees and sublicensees, for resale, Net Sales shall be
calculated as above only on the value charged or invoiced
on the first arm's-length sale thereafter to a Third
Party;
1.27.2. In the case of any sale which is not invoiced or is
delivered before invoice, Net Sales shall be calculated at
the time of shipment or when the Drug Product is paid for,
if paid for before shipment or invoice;
1.27.3. In the case of any sale or other disposal for value, such
as barter or counter-trade, of any Drug Product, or part
thereof, other than in an arm's
License, Development and Commercialization Agreement-- Confidential-- Page 4
<Page>
CONFIDENTIAL TREATMENT REQUESTED
length transaction exclusively for money, Net Sales shall
be calculated as above on the value of the consideration
received or the fair market price (if higher) of the Drug
Product in the country of sale or disposal;
1.27.4. In the event the Drug Product is sold in a finished dosage
form containing the Drug Product in combination with one or more other active
ingredients (a "Combination Product"), the Net Sales of the Drug Product, for
the purposes of determining royalty payments, shall be determined by [***].
1.28. "NOVARTIS KNOW-HOW" shall mean all Know-How of NOVARTIS.
1.29. "NOVARTIS PATENTS" shall mean any Patents Controlled by NOVARTIS or
any of its Affiliates claiming Bulk Drug Substance, a Drug Product Candidate or
a Drug Product, or a formulation or prodrug thereof, discovered or identified by
NOVARTIS or its Affiliates during the course of the Research Program or a
Development Program, or a method of making or using Bulk Drug Substance, a Drug
Product Candidate or a Drug Product, or a prodrug thereof, or an improvement to
the subject matter of a Patent covering any of the foregoing. A list of NOVARTIS
Patents is appended hereto as Schedule 1.29 and will be updated periodically to
reflect additions thereto during the term of this Agreement. NOVARTIS shall keep
VERTEX periodically informed in writing of all NOVARTIS Patents.
1.30. "NOVARTIS TECHNOLOGY" shall mean all NOVARTIS Patents and all
NOVARTIS Know-How which is applied by NOVARTIS to the development, manufacture
or use of Bulk Drug Substance, a Drug Product Candidate or a Drug Product.
1.31. "PATENTS" means all existing patents and patent applications and
all patent applications hereafter filed, including any continuation,
continuation-in-part, division, provisional or any substitute applications, any
patent issued with respect to any such patent applications, any reissue,
reexamination, renewal or extension (including any supplementary protection
certificate) of any such patent, and any confirmation patent or registration
patent or patent of addition based on any such patent, and all foreign
counterparts of any of the foregoing.
1.32. "PERSON" shall mean any individual, corporation, partnership,
association. joint-stock company, trust, unincorporated organization or
government or political subdivision thereof.
1.33. "PIVOTAL REGISTRATION STUDY" shall mean a human clinical trial
conducted for inclusion in (i) that portion of the FDA submission and approval
process which provides for the continued trials of a Drug Candidate on
sufficient numbers of patients to generate safety and efficacy data to support
Regulatory Approval in the proposed therapeutic indication, as more fully
defined in 21 CFR. ss. 312.21(c), and (ii) equivalent submissions with similar
requirements in other countries.
1.34. "REGULATORY APPROVAL" shall mean, with respect to any country, all
authorizations by the appropriate governmental entity or entities necessary for
commercial sale of a Drug Product in that country including, without limitation
and where applicable, approval of labeling, price, reimbursement and
manufacturing. "Regulatory Approval" in the United States
License, Development and Commercialization Agreement-- Confidential-- Page 5
<Page>
CONFIDENTIAL TREATMENT REQUESTED
shall mean final approval of a new drug application pursuant to 21 CFR ss. 314,
permitting marketing of the applicable Drug Product in interstate commerce in
the United States. "Regulatory Approval" in the European Union shall mean final
approval of a Marketing Authorization Application pursuant to Council Directive
75/319/EEC, as amended, or Council Regulation 2309/93/EEC, as amended.
1.35. "RESEARCH AGREEMENT" shall mean that certain First Revised and
Restated Research and Early Development Agreement between VERTEX and NOVARTIS
dated February 3, 2004. 1.36. [This section has been intentionally left blank.]
1.37. [This section has been intentionally left blank.]
1.38. "TECHNOLOGY" shall mean VERTEX Technology and NOVARTIS Technology.
1.39. "TERRITORY" shall mean all the countries in the world.
1.40. "THIRD PARTY" shall mean any person or entity which is not a party
or an Affiliate of any party to this Agreement.
1.41. [This section has been intentionally left blank.]
1.42. "VALID PATENT CLAIM" shall mean either (a) a claim of an issued and
unexpired Patent which has not been revoked or held permanently 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 which
claim was filed in good faith and has not been abandoned or finally disallowed
without the possibility of appeal or refiling of said application.
1.43. "VERTEX KNOW-HOW" shall mean all Know-How of VERTEX.
1.44. "VERTEX PATENTS" shall mean any Patents Controlled by VERTEX or any
of its Affiliates claiming Bulk Drug Substance, a Drug Product Candidate or a
Drug Product, or a formulation or prodrug thereof, discovered or identified by
VERTEX or its Affiliates during the course of the Research Program and the
Development Program, or a method of making or using Bulk Drug Substance, a Drug
Product Candidate or a Drug Product, or a prodrug thereof, or an improvement to
the subject matter of a Patent covering any of the foregoing. A list of VERTEX
Patents is appended hereto as Schedule 1.44 and will be updated periodically to
reflect additions thereto during the term of this Agreement.
1.45. "VERTEX TECHNOLOGY" shall mean all VERTEX Patents and all VERTEX
Know-How.
1.46. The term "EUROPEAN UNION" shall mean those countries which are now
or later become members of the European Union.
License, Development and Commercialization Agreement-- Confidential-- Page 6
<Page>
CONFIDENTIAL TREATMENT REQUESTED
Capitalized terms used but not otherwise defined herein which are defined in the
Research Agreement shall have the meaning ascribed to them therein.
ARTICLE II
LICENSE
2.1. GRANT TO NOVARTIS.
(a) Subject to the other provisions of this Agreement, VERTEX
hereby grants to NOVARTIS an exclusive worldwide license
under VERTEX Technology to the extent useful to permit
NOVARTIS to carry out its rights and obligations set forth
in this Agreement and to develop, manufacture, have
manufactured, market, use, sell and import for sale, as
provided herein, Bulk Drug Substance, Drug Product
Candidates and Drug Products worldwide. NOVARTIS shall
have the right to sublicense under this Agreement. Subject
to the provisions of this Agreement, VERTEX shall have the
right to use VERTEX Technology to discharge its
obligations and exercise its rights under this Agreement.
VERTEX retains all rights to VERTEX Technology except to
the extent explicitly granted to NOVARTIS hereunder.
(b) NOVARTIS may subcontract its rights to manufacture Bulk
Drug Substance, Drug Product Candidates, and Drug Product
and may contract with reputable organizations to conduct
or assist in the conduct of human clinical trials and the
evaluation of trials data, after prior notice to, but
without the consent of, VERTEX. NOVARTIS shall be
responsible to VERTEX for the performance of any of its
sublicensees or subcontractors under any provisions of
this Agreement for which NOVARTIS is responsible. NOVARTIS
shall not permit any subcontractors or sublicensees to use
VERTEX Technology without provisions safeguarding
confidentiality at least equivalent to those provided in
this Agreement. Any such provisions will allow VERTEX the
right to directly enforce the obligations of
confidentiality with respect to VERTEX Technology in
possession of the Third Party.
(c) The license set forth in subsection (a) above may be [***]
upon reasonable and customary terms and conditions
mutually agreeable to the parties. [***]
2.2. GRANT TO VERTEX. Subject to the other provisions of this Agreement,
NOVARTIS hereby grants to VERTEX a non-exclusive, worldwide license or (as
appropriate) sublicense under NOVARTIS Technology, only to the extent necessary
to permit VERTEX to carry out the activities which it is permitted to undertake
in this Agreement. VERTEX shall not sublicense such license to the NOVARTIS
Technology without the consent of NOVARTIS (which shall not be unreasonably
withheld). Any permitted sublicense will contain provisions safeguarding
confidentiality at least equivalent to those provided in this Agreement, which
will allow NOVARTIS the right to directly enforce the obligations of
confidentiality with respect to
License, Development and Commercialization Agreement-- Confidential-- Page 7
<Page>
CONFIDENTIAL TREATMENT REQUESTED
NOVARTIS Technology in possession of the Third Party. NOVARTIS retains all
rights to NOVARTIS Technology except to the extent explicitly granted to VERTEX
hereunder.
2.3. INFORMATION TRANSFER.
(a) Neither party shall be entitled to information from the
other party concerning know-how or technology discovered
or developed by that party outside the Research Program
under the Research Agreement or outside a Development
Program under this Agreement ("Excluded Technology"), or
otherwise unrelated to research or development of Drug
Product Candidates or Drug Products under this Agreement.
However, neither party will apply its rights in any
Excluded Technology other than Excluded Technology
claiming Excluded Compounds or the use thereof (and will
use good faith efforts to prevent its licensees, if any,
from applying similar rights acquired by license) to block
or impede the use of the Kinase Technology as permitted
hereunder by the other party or its assignees or
licensees.
(b) VERTEX shall deliver to NOVARTIS all information
Controlled by it and requested by NOVARTIS relating to
Drug Product Candidates which is necessary or useful for
exercise by NOVARTIS of the rights granted hereunder. The
information to be delivered shall include copies of all
Patents, copyrights, copyright registrations and
applications therefor and all other manifestations of the
intellectual property embodied in the Drug Product
Candidates whether in human or machine readable form.
(c) NOVARTIS shall deliver to VERTEX all information
Controlled by it and requested by VERTEX which is
necessary or useful for exercise by VERTEX of the
assistance rights under Section 3.5.
ARTICLE III
DEVELOPMENT
3.1. COMMENCEMENT OF DEVELOPMENT PROGRAM. NOVARTIS shall promptly and
diligently commence and pursue a Development Program with respect to each Drug
Product Candidate as soon as practicable after exercise by NOVARTIS of its
Development Election with respect to that Drug Product Candidate.
3.2. INTERNATIONAL PROJECT TEAM.
3.2.1. FORMATION AND RESPONSIBILITIES. As soon as practicable
after the exercise by NOVARTIS of its Development Election
with respect to a Drug Product Candidate, NOVARTIS will
establish an International Project Team ("IPT") which
shall include one representative designated by VERTEX from
time to time; provided, however, an IPT shall no longer
License, Development and Commercialization Agreement-- Confidential-- Page 8
<Page>
CONFIDENTIAL TREATMENT REQUESTED
include a representative designated by VERTEX in case of a
Change of Control of VERTEX. Additional IPT's, which shall
also include one VERTEX representative, may be established
from time to time in connection with the development of
additional Drug Product Candidates. The IPT (or its
successor organization, as designated by NOVARTIS) will be
the principal organization through which the development
of a Drug Product Candidate is planned, administered,
evaluated and completed, subject to appropriate review and
approval at senior management levels as required by
NOVARTIS from time to time. In addition to the VERTEX
member, the IPT will typically have members from the
various functional groups (e.g., research, preclinical
safety, clinical, regulatory, marketing) which are or will
be expected to be involved in development and launch of
the Drug Product Candidate and Drug Product. NOVARTIS will
appoint the IPT Chair. The IPT will typically meet every
four to six weeks, depending on the level of current
development activity, and will be responsible for
preparation and implementation of the Development Plan
described in Section 3.2.2 below with respect to each Drug
Product Candidate.
3.2.2. DEVELOPMENT PLAN. The IPT shall prepare and oversee the
implementation of the overall Development Plan for each
Drug Product Candidate. The Development Plan shall, among
other things, detail, schedule and fully describe the
proposed toxicology studies, clinical trials, regulatory
plans, clinical trial and commercial material
requirements, and process development and manufacturing
plans for each Drug Product Candidate, along with relevant
budget information for the described items, and will
outline the key elements involved in obtaining Regulatory
Approval in each country where the Drug Product is to be
marketed. The parties expect that development tasks will
be advanced in parallel rather than serially where
practicable and appropriate, if doing so would be likely
to advance the ultimate date of Regulatory Approval and
launch and is otherwise commercially reasonable.
3.2.3. MEETING MATERIALS. The IPT will consider all information
that is material to an assessment of the status, direction
and progress of the Development Program, including all
clinical trials protocols, data and reports. The IPT
Leader will ensure that full and complete minutes are
prepared and distributed to each member of the IPT
promptly after each meeting. Those minutes shall contain a
full report on the activities of the IPT during its
meeting. VERTEX's representative on the IPT will receive
all documents and information distributed or communicated
to members of the IPT generally, and may review copies of
all other information relative to the development of a
Drug Product Candidate unless the IPT Leader denies access
to that information for good reason.
3.2.4. [This section has been intentionally left blank.]
License, Development and Commercialization Agreement-- Confidential-- Page 9
<Page>
CONFIDENTIAL TREATMENT REQUESTED
3.3. DEVELOPMENT RESPONSIBILITY AND COSTS. Except as provided in Section
3.5 below, NOVARTIS will have sole responsibility for, and bear the cost of
conducting, the Development Program with respect to each Drug Product Candidate.
3.4. REGULATORY APPROVALS. NOVARTIS shall be solely responsible for
preparing and submitting registration dossiers for Regulatory Approval of Drug
Product Candidates in the Territory.
3.4.1. NOVARTIS Ownership. All Regulatory Approvals shall be held
by and in the name of NOVARTIS, and NOVARTIS shall own all
submissions in connection therewith, provided that VERTEX
shall have a right of reference to all or any part of the
submissions if the "Assistance Rights" become effective
under Section 3.5 hereof.
3.4.2. Principal Interface. All formulary or marketing approvals
shall also be obtained by and in the name of NOVARTIS, and
NOVARTIS will be the principal interface with and will
otherwise handle all interactions with regulatory agencies
concerning any Drug Product including, to the extent
legally possible, being the sole contact with such
agencies, subject to the rights of VERTEX under Section
3.4.3.
3.4.3. Regulatory Meetings. To the extent not prohibited by law
or regulation, VERTEX shall have the right, after
consultation with NOVARTIS and unless VERTEX's presence
would impede the regulatory approval process, to have one
representative participate in all material meetings
between representatives of NOVARTIS and any of the FDA,
the EMEA and Koseisho (MHW Japan).
(a) NOVARTIS will undertake to provide VERTEX with
information reasonably in advance of the meeting
sufficient to ensure that the VERTEX representative
is adequately informed about the issues to be
presented at any such meeting.
(b) VERTEX may request NOVARTIS to provide VERTEX with a
copy of any correspondence between the FDA, the EMEA
and Koseisho that relates to any material issues
involving Regulatory Approval of a Drug Product
Candidate, and NOVARTIS shall provide that
information upon request, unless NOVARTIS has good
reason to withhold any such correspondence, in which
case it will notify VERTEX of that reason promptly.
(c) Notwithstanding the foregoing, NOVARTIS will have
sole discretion as to the regulatory strategy and
decision-making for any Drug Product Candidate or
Drug Product.
3.5. ASSISTANCE RIGHTS. If NOVARTIS is not using commercially reasonable
efforts, pursuant to the provisions of Sections 3.6 and 5.6 of this Agreement,
to conduct development
License, Development and Commercialization Agreement-- Confidential-- Page 10
<Page>
CONFIDENTIAL TREATMENT REQUESTED
activities ("Development Work") on the critical path provided for in the then
current Development Plan and if, as a consequence thereof, such Development Work
is materially delayed, and if VERTEX believes that delay to be unreasonable
under the circumstances,] VERTEX may request the JSC to review and discuss the
matter and a special meeting of the JSC will be convened for that purpose within
[***] of VERTEX's written request. If within [***] after review by [***]
NOVARTIS is unwilling or unable to cure the delay, then VERTEX may propose, by
written notice to NOVARTIS, undertake that particular Development Work at its
own expense. VERTEX shall be free to do so commencing [***] after delivery of
its notice to NOVARTIS unless [***]
3.5.1. Notwithstanding the foregoing, if the Development Work is
terminated or delayed as a result of [***] then VERTEX may [***]
3.5.2. If VERTEX pursues its Assistance Rights:
(a) REGULATORY ACTIONS. NOVARTIS will continue to make
any necessary and appropriate regulatory filings with
respect to the Development Work and will, if required
for VERTEX to exercise its Assistance Rights
effectively, transfer to VERTEX at VERTEX's expense
any IND material (or equivalents thereof) relevant to
such Development Work.
(b) MANUFACTURE OF CLINICAL SUPPLY OF DRUG PRODUCT
CANDIDATE. NOVARTIS will supply VERTEX (for up to two
years) with the necessary clinical supply of Drug
Product Candidate required to perform such
Development Work in accordance with NOVARTIS' then
current scale of manufacturing at NOVARTIS'
Manufacturing Cost and upon such other reasonable and
customary terms as to shipment, delivery and similar
matters as may be agreed.
(c) MILESTONES. If NOVARTIS elects to resume the
Development Program for a Drug Product Candidate, it
will provide VERTEX with ninety (90) days prior
notice thereof, and will reimburse VERTEX for the
actual direct cost of the Development Work of good
quality, if such work conforms with the requirements
of the relevant Development Plan. NOVARTIS will pay
VERTEX interest on the reimbursable costs incurred by
VERTEX in the conduct of the Development Work, at a
rate compounded quarterly equal to the thirty-day
London InterBank Offered Rate ("LIBOR") for the local
currency in which payment is made, as quoted in The
Financial Times as determined on the date the
Development Work is first undertaken by VERTEX and on
the last Business Day of each calendar quarter
thereafter.
3.6. REASONABLE EFFORTS IN DEVELOPMENT. NOVARTIS will use diligent,
commercially reasonable efforts consistent with those used by NOVARTIS for its
own compounds of similar commercial potential to develop Drug Product Candidates
into Drug Products. NOVARTIS will promptly notify VERTEX in writing if it should
determine that development of any Drug Product Candidate or Drug Product is not
technically feasible or commercially justifiable, specifying in reasonable
detail the reasons for that determination.
License, Development and Commercialization Agreement-- Confidential-- Page 11
<Page>
CONFIDENTIAL TREATMENT REQUESTED
ARTICLE IV
MANUFACTURING AND SUPPLY
4.1. SUPPLY OF BULK DRUG SUBSTANCE AND DRUG PRODUCT. NOVARTIS will be
responsible for manufacturing and supply of all Bulk Drug Substance, Drug
Product Candidates and Drug Product as necessary for the conduct of the
Development Plan and for all commercial purposes in the Territory. Pursuant to
the provisions of Section 4.7 of the Research Agreement, the parties will agree
on reasonable and appropriate measures by which manufacturing previously being
undertaken by VERTEX shall be transitioned to NOVARTIS following the exercise of
its Development Election with respect to a particular Drug Product Candidate.
The objective of both parties will be to accomplish a smooth and timely
transition. Any Bulk Drug Substance provided to NOVARTIS during the transition
period will be supplied at VERTEX's reasonable Manufacturing Cost.
4.2. [This section has been intentionally left blank.]
4.3. FORMULATION AND PACKAGING. In all events, NOVARTIS will be
responsible for formulation and packaging of Drug Products.
ARTICLE V
COMMERCIALIZATION
5.1. MARKETING AND PROMOTION. NOVARTIS shall have exclusive rights to
market, sell and distribute all Drug Products in the Territory. NOVARTIS will
book all sales of Drug Products and will report those sales to VERTEX as
specified in Section 6.5 of this Agreement.
5.2. GLOBAL BRAND TEAM. Not later than six months prior to the
commencement of Phase III Clinical Trials for any Drug Product Candidate,
NOVARTIS will form a Global Brand Team ("GBT"), which will include one
representative designated by VERTEX; provided, however, [***]. Additional GBT's,
which shall also include one VERTEX representative, may be established from time
to time in connection with the marketing of additional Drug Product Candidates.
The GBT (or its successor organization, as designated by NOVARTIS) will be the
principal organization through which the marketing of a Drug Product is planned,
administered, evaluated and effected, subject to appropriate review at senior
management levels as required by NOVARTIS. NOVARTIS will appoint the chair of
the GBT, who will normally be the Brand Director. The GBT will periodically meet
as necessary, depending on the level of marketing activity at the time.
5.2.1. MARKETING PLANS. The Global Brand Team will prepare and
oversee the implementation of a detailed marketing plan (a
"Marketing Plan") for the launch of each Drug Product,
addressing the overall branding and branding elements as
well as the key promotional product claims. The GBT will
select an external agency or agencies which will be
charged with the execution of some components of the
Marketing Plan. The Marketing Plan will contain among
other things budgets, schedules, product positioning,
pricing, market research plans and results and other
customary planning and marketing material with respect to
marketing and
License, Development and Commercialization Agreement--Confidential--Page 12
<Page>
CONFIDENTIAL TREATMENT REQUESTED
launch of the Drug Product. The Marketing Plan will be
periodically updated to reflect changes in market
information, sales performance and forecasts, sales force
deployment, communication plans and information concerning
competition and competitors.
5.2.2. LOCAL PRODUCT TEAMS. Local Product Teams will be
established in each country to prepare and execute the
product launch for a Drug Product within the framework of
the Marketing Plan. .
5.2.3. CAMPAIGNS AND PROMOTIONAL MATERIALS. The GBT will review
all general product campaigns (including target audience
and principal messages) and may from time to time review
the principal promotional material to be used in
connection with the marketing and sale of a Drug Product.
5.2.4. [This section has been intentionally left blank.]
5.3. [This section has been intentionally left blank.]
5.4. [This section has been intentionally left blank.]
5.5. CO-LABELING. To the extent not prohibited by law or regulation and
subject to any required Regulatory Approval, Drug Products (including labels,
packaging and inserts) and all promotional materials for the same, sold in North
America, the countries of the European Union and Japan will bear both NOVARTIS'
and VERTEX's company names and logos with equal prominence (including equal
sized type face), or if equal prominence is prohibited by law, with such
prominence as may otherwise be permitted by law. To the extent not prohibited by
law or regulation and subject to any required Regulatory Approval, Drug Products
(including labels, packaging and inserts) and all promotional materials for the
same, sold in the rest of the world will include VERTEX's company name (in the
English alphabet) and logo with the designation: "under license from" ;
provided, however, that this provision shall no longer apply in case of a Change
of Control of VERTEX. Any trademark for a Drug Product will be selected by, and
will be the property of, NOVARTIS.
5.5.1. REVIEW OF REGULATORY FILINGS. NOVARTIS will permit VERTEX
to review all material regulatory filings which relate to
product labeling, and all proposed labels, packaging,
package inserts, and promotional materials required under
the Agreement to bear VERTEX's name, if permitted by law,
prior to the filing of any such materials with any
regulatory authority; provided, however, that this
provision shall no longer apply in case of a Change of
Control of VERTEX.
5.5.2. REGULATORY COMMUNICATIONS.
(a) NOVARTIS will permit VERTEX to participate with
NOVARTIS in material communications with regulatory
officials which concern the matters referenced in
this Section 5.5; provided, however, [***].
License, Development and Commercialization Agreement-- Confidential-- Page 13
<Page>
CONFIDENTIAL TREATMENT REQUESTED
(b) NOVARTIS will immediately inform VERTEX of any
material regulatory communications received by
NOVARTIS which might operate to restrict VERTEX's
rights under this Section 5.5.2, and will cooperate
with any reasonable request of VERTEX aimed at
facilitating approval by a regulatory authority for
co-labeling consistent with this provision.
5.6. DUE DILIGENCE. NOVARTIS shall use diligent and commercially
reasonable efforts consistent with the requirements of the Development Program
and sound and reasonable business practices and judgment to effect introduction
of Drug Products into Major Markets as soon as reasonably practicable, devoting
the same degree of attention and diligence to such efforts that it devotes to
such activities for other of its products of comparable market potential.
Following the First Commercial Sale of a Drug Product and until the expiration
of this Agreement, NOVARTIS shall endeavor to keep Drug Products reasonably
available to the public in each of the Major Markets. NOVARTIS shall promptly
notify VERTEX if it shall determine that the marketing and sale of a Drug
Product in any country is not commercially reasonable or economically profitable
or if for other unforeseen reasons further commercial support of the Drug
Product in certain territories is no longer prudent or practical. In determining
whether NOVARTIS is in compliance with the foregoing provisions, there shall be
taken into account the normal course of assertive drug development programs in
the pharmaceutical industry conducted with sound and reasonable business
practices and judgment.
ARTICLE VI
PAYMENTS
6.1. DEVELOPMENT ELECTION PAYMENT. NOVARTIS will pay to VERTEX a
milestone payment in the amount of [***] (a "Development Election Fee") each
time NOVARTIS exercises its Development Election with respect to a Development
Candidate. Each time NOVARTIS exercises its Development Election under Section
4.1 of the Research Agreement with respect to a Compound which is a Back-up
Compound to a Drug Product Candidate, NOVARTIS will pay to VERTEX a milestone
payment in the amount of [***] (the "Back-up Election Fee"); [***].
6.2. DEVELOPMENT MILESTONE PAYMENTS BY NOVARTIS.
6.2.1. NOVARTIS will make the following payments to VERTEX upon
the achievement of any of the following milestones with
respect to a Drug Product Candidate:
License, Development and Commercialization Agreement-- Confidential-- Page 14
<Page>
CONFIDENTIAL TREATMENT REQUESTED
-----------------------------------------------------------
[***] [***]
-----------------------------------------------------------
[***] [***]
-----------------------------------------------------------
[***] [***]
-----------------------------------------------------------
[***] [***]
-----------------------------------------------------------
[***] [***]
-----------------------------------------------------------
[***] [***]
-----------------------------------------------------------
6.2.2. [This section has been intentionally left blank.]
6.2.3. All payments shall be made by wire transfer in United
States dollars ("Dollars") to the credit of such bank
account as may be designated by VERTEX in writing to
NOVARTIS. Any payment which falls due on a date which is a
Saturday, Sunday or a legal holiday in the Commonwealth of
Massachusetts may be made on the next succeeding day which
is not a Saturday, Sunday or a legal holiday in the
Commonwealth.
6.2.4. If a Drug Product Candidate is abandoned during the term
of this Agreement for any scientific or medical reasons after any one or more of
the foregoing milestone payments are made, and if a Back-up Compound to that
Drug Product Candidate is developed to replace the abandoned Drug Product
Candidate for the same Indications, then no milestone payment shall be required
with respect to the Back-up Compound to the extent that that milestone payment
has already been made with respect to the abandoned Drug Product Candidate.
6.3. ROYALTIES. NOVARTIS shall pay to VERTEX the following annual
royalties on Net Sales of each Drug Product in the Territory.
[***]
[***]
[***]
6.3.1. THIRD PARTY ROYALTIES: If NOVARTIS is required to pay
royalties to any Third Party in order to exercise its
rights to sell a Drug Product in a country, then [***]
payable to such Third Party in any calendar quarter for
such Drug Product in such country shall be deductible from
the royalties payable to VERTEX under this Agreement in
respect of sales of that Drug Product in such country for
the same calendar quarter, provided that in no
License, Development and Commercialization Agreement-- Confidential-- Page 15
<Page>
CONFIDENTIAL TREATMENT REQUESTED
event shall the net royalty rate payable fall below [***],
as a result of the application of this Sections 6.3.1 and
6.3.2.
6.3.2. UNLICENSED COMPETITION: If in any country a Third Party
sells a pharmaceutical product which is a "generic version"
of a Drug Product being sold in that country (a "Third
Party Product") -- where "generic version" means a
pharmaceutical product (other than a product originally
sold as a Drug Product) that includes the same active
ingredient as that used in a Drug Product-- then for the
period in which the sales of such Third Party Product in
such country are at least [***], the royalties payable to
VERTEX by NOVARTIS on sales of such Product in such country
for such period shall be [***] in Section 6.3 , but in no
event shall the royalties owed for such Drug Product in
such country, when combined with any royalty reduction
provided under Section 6.3.1 hereof, reduce the royalties
payable on Net Sales of such Drug Product in that country
by more than [***]
6.4. [This section has been intentionally left blank.]
6.5. SALES REPORTS.
(a) During the term of this Agreement and after the First Commercial
Sale of a Drug Product, NOVARTIS shall furnish or cause to be furnished to
VERTEX on a quarterly basis a written report or reports covering each calendar
quarter (each such calendar quarter being sometimes referred to herein as a
"reporting period") showing (i) the Net Sales of each Drug Product in each
country in the world during the reporting period by NOVARTIS and each Affiliate
and sublicensee; (ii) the royalties, payable in Dollars, which shall have
accrued under Section 6.3 hereof in respect of such sales and the basis of
calculating those royalties; (iii) withholding taxes, if any, required by law to
be deducted in respect of any such sales; (iv) the exchange rates used in
converting into Dollars, from the currencies in which sales were made, any
payments due which are based on Net Sales; and (v) dispositions of Drug Products
other than pursuant to sale for cash. With respect to sales of Drug Products
invoiced in Dollars, the Net Sales amounts and the amounts due to VERTEX
hereunder shall be expressed in Dollars. With respect to sales of Drug Products
invoiced in a currency other than Dollars, the Net Sales and amounts due to
VERTEX hereunder shall be expressed in the domestic currency of the party making
the sale, together with the Dollar equivalent of the amount payable to VERTEX,
calculated using NOVARTIS' then-current standard exchange rate methodology for
the translation of foreign currency sales into U.S. dollars. In each report the
methodology will be disclosed, will be identical to that employed by NOVARTIS,
generally, in its external financial reporting, as reviewed and approved by its
independent auditors and will be in conformity with NOVARTIS' usual and
customary general accounting principles consistently applied. If any sublicensee
makes any sales invoiced in a currency other than its domestic currency, the Net
Sales shall be converted to its domestic currency in accordance with the
sublicensee's normal accounting principles. NOVARTIS shall furnish to VERTEX
appropriate evidence of payment of any tax or other amount required by
applicable laws or regulations to be deducted from any royalty payment,
including any tax or withholding levied by a foreign taxing authority in respect
of the payment or accrual of any royalty. Reports shall be due on the thirtieth
(30th) day
License, Development and Commercialization Agreement-- Confidential-- Page 16
<Page>
CONFIDENTIAL TREATMENT REQUESTED
following the close of each reporting period, although NOVARTIS shall
also provide VERTEX with a "flash" report of Net Sales, only, within ten (10)
business days after the end of each month. NOVARTIS shall keep accurate records
in sufficient detail to enable the amounts due hereunder to be determined and to
be verified by VERTEX.
(b) Amounts shown to have accrued by each sales report provided for under
subsection 6.5(a), above, shall be due and payable on the date such sales report
is due.
(c) All payments shall be made in Dollars. If at any time legal
restrictions prevent the prompt remittance of any payments with respect to any
country of the Territory where Drug Products are sold, NOVARTIS or its
sublicensees shall have the right and option to make such payments by depositing
the amount thereof in local currency to VERTEX's account in a bank or depository
in such country.
(d) Upon the written request of VERTEX, at VERTEX's expense and not more
than once in or in respect of any calendar year, NOVARTIS shall permit an
independent accountant of national prominence selected by VERTEX, to have access
during normal business hours to those records of NOVARTIS as may be reasonably
necessary to verify the accuracy of the sales reports furnished by NOVARTIS
pursuant to this Section 6.5, in respect of any calendar year ending not more
than thirty-six (36) months prior to the date of such notice. NOVARTIS shall
include in each sublicense entered into by it pursuant to this Agreement a
provision requiring the sublicensee to keep and maintain adequate records of
sales made pursuant to such sublicense and to grant access to such records by
the aforementioned independent accountant for the reasons specified in this
Section 6.5. Upon the expiration of thirty-six (36) months following the end of
any calendar year, the calculation of amounts payable with respect to such
fiscal year shall be binding and conclusive upon VERTEX, and NOVARTIS and its
sublicensees shall be released from any liability or accountability with respect
to payments for such year. The report prepared by such independent accountant, a
copy of which shall be sent or otherwise provided to NOVARTIS by such
independent accountant at the same time it is sent or otherwise provided to
VERTEX, shall contain the conclusions of such independent accountant regarding
the audit and will specify that the amounts paid to VERTEX pursuant thereto were
correct or, if incorrect, the amount of any underpayment or overpayment. If such
independent accountant's report shows any underpayment, NOVARTIS shall remit or
shall cause its sublicensees to remit to VERTEX within thirty (30) days after
NOVARTIS' receipt of such report, (i) the amount of such underpayment and (ii)
if such underpayment exceeds [***] owed for the calendar year then being
audited, the reasonable and necessary fees and expenses of such independent
accountant performing the audit, subject to reasonable substantiation thereof.
Any overpayments shall be fully creditable against amounts payable in subsequent
payment periods. VERTEX agrees that all information subject to review under this
Section 6.5 or under any sublicense agreement is confidential and that VERTEX
shall retain and cause its accountant to retain all such information in
confidence.
(e) In case of any delay in payment by NOVARTIS to VERTEX not occasioned
by Force Majeure, interest at the rate of [***], assessed from the thirty-first
day after the due date of the payment, shall be due from NOVARTIS upon prior
written notice.
License, Development and Commercialization Agreement-- Confidential-- Page 17
<Page>
CONFIDENTIAL TREATMENT REQUESTED
6.6. WITHHOLDING TAX. If during the term of this Agreement, withholding
tax should be required by law to be deducted from any payments required to be
made by NOVARTIS to VERTEX hereunder, the parties will agree upon an equitable
division of liability for any sum which is withheld and for which VERTEX is not
compensated or reimbursed by way of usable tax credits or otherwise. In that
connection VERTEX at NOVARTIS' request shall sign a usual and customary
exemption application and in addition shall apply for a tax refund at the
request of NOVARTIS from any tax authority to which NOVARTIS has paid
withholding tax on account of any payments made by NOVARTIS to VERTEX hereunder.
ARTICLE VII
BACK-UP COMPOUNDS
Notwithstanding the provisions under the Research Agreement with respect
to Back-up Compounds and for the sake of clarity, it is reminded that the
parties agreed the following with respect to Back-up Compounds in Section 4.5 of
the Research Agreement.
7.1 VERTEX RESTRICTIONS ON NOMINATION AND DEVELOPMENT. So long as
NOVARTIS is using commercially reasonable efforts with respect to the
development of a particular Drug Product Candidate or the commercialization of a
particular Drug Product, pursuant to Sections 3.6 and 5.6 hereof, VERTEX will
not (i) propose a Compound for development under the License Agreement which is
a Back-up Compound with respect to that Drug Product Candidate or Drug Product,
or (ii) until after the period starting on the date on which NOVARTIS has
exercised its Development Election for a particular Drug Product Candidate and
ending [***] (the "Lead Period"), commence development of that Back-up Compound
either directly or together with or through an Affiliate or a Third Party.
7.2 TERMINATION OF DEVELOPMENT OR COMMERCIALIZATION. If, prior to the end
of the Lead Period with respect to a particular Drug Product or Drug Product
Candidate, pursuant to Sections 3.6 and 5.6 hereof, NOVARTIS ceases to use
commercially reasonable efforts to develop or commercialize that Drug Product
Candidate or Drug Product, then the restrictions on nomination and development
referenced in Section 7.1 above will no longer apply with respect to Back-up
Compounds for that Drug Product Candidate or Drug Product unless NOVARTIS,
without delay, commences another Development Program under the License Agreement
with another Compound (a "Replacement Candidate") targeting the same Kinase,
which Replacement Candidate is a Back-up Compound associated with the
discontinued Drug Product Candidate or Drug Product, and NOVARTIS shall have the
right to select for this purpose any such Back-up Compound by providing VERTEX
with notice of its Development Election in this regard. Any such Back-up
Compound for which NOVARTIS has exercised its Development Election under this
Section 7.2 shall hereafter be a Drug Product Candidate subject to the terms and
conditions of this Agreement.
7.3. TERMINATION OF RIGHTS TO BACK-UP COMPOUNDS. A Back-up Compound will
no longer be subject to NOVARTIS' Development Election under the Research
Agreement after the
License, Development and Commercialization Agreement-- Confidential-- Page 18
<Page>
CONFIDENTIAL TREATMENT REQUESTED
end of the Lead Period applicable to that Back-up Compound, except for
Back-up Compounds which (i) subject to Section 7.1 above, VERTEX has proposed
for development on or before the Final Termination Date, and as to which
NOVARTIS has exercised its Development Election hereunder; or (ii) have been or
will be selected by NOVARTIS for development before the end of the applicable
Lead Period under the provisions of Section 7.2 above, or (iii) for which
NOVARTIS has exercised or will exercise its Development Election before the end
of the applicable Lead Period under the provisions of Section 7.4 below.
7.4 NOVARTIS RIGHTS TO LICENSE BACK-UP COMPOUNDS. Anytime prior to the
expiry of the Lead Period with respect a particular Drug Product Candidate,
NOVARTIS may also, by paying in each case the Back-up Election Fee provided
under Section 6.1 of the this Agreement, exercise its Development Election with
respect to any one or more Back-up Compounds associated with that Drug Product
Candidate, provided that Drug Product Candidate, or a Back-up Compound selected
pursuant to the provisions of Section 7.2 above, is still in active development.
Any such Back-up Compound for which NOVARTIS has exercised its Development
Election under Section 7.4 shall become a "Drug Product Candidate Back-up
Candidate" subject to the terms and conditions of this Agreement.
7.5 NOVARTIS OBLIGATIONS WITH RESPECT TO DRUG PRODUCT CANDIDATE BACK-UP
CANDIDATES. So long as NOVARTIS is using commercially reasonable efforts,
pursuant to the provisions of Sections 3.6 and 5.6 of this Agreement, with
respect to the development of a particular Drug Product Candidate or the
commercialization of a particular Drug Product, NOVARTIS shall have no
obligation to develop any of the Drug Product Candidate Back-up Candidates
associated with that Drug Product Candidate or Drug Product. As soon as NOVARTIS
ceases the development of a particular Drug Product Candidate, NOVARTIS'
obligations to use diligent, commercially reasonable efforts will immediately
shift from the discontinued Drug Product Candidate to an associated Drug Product
Candidate Back-up Compound. If NOVARTIS ceases the development of a particular
Drug Product Candidate and does not commence development of a Drug Product
Candidate Back-up Compound pursuant to the foregoing, the license to the Drug
Product Candidate and its Back-up Compounds under this Agreement will expire and
the license rights will revert to VERTEX.
ARTICLE VIII
INTELLECTUAL PROPERTY
8.1. PATENTABLE INVENTIONS AND KNOW-HOW.
8.1.1. OWNERSHIP. Any inventions made and all Know-How generated
by either party or its Affiliates during the term of this
Agreement, and Controlled by such party, relating to the
manufacture or use of Bulk Drug Substance, a Drug Product
Candidate or a Drug Product, or a prodrug thereof, will be
disclosed to the other party promptly after the disclosing
party recognizes
License, Development and Commercialization Agreement-- Confidential-- Page 19
<Page>
CONFIDENTIAL TREATMENT REQUESTED
the significance thereof. All patents and technology shall
be owned by the party making the invention claimed or
contained therein or, if such invention is made jointly,
shall be owned jointly, all as determined in accordance
with U.S. laws of inventorship.
8.1.2. PATENT PROSECUTION. VERTEX shall be responsible for the
preparation, filing, prosecution and maintenance of all patents and
patent applications included in VERTEX Patents and all patents and patent
applications included in Patents claiming inventions jointly owned with
NOVARTIS. NOVARTIS shall be responsible for the preparation, filing,
prosecution and maintenance of all patents and patent applications
included in NOVARTIS Patents. In each case the responsible party shall
consult from time to time with the other party with respect thereto.
VERTEX shall provide NOVARTIS with periodic reports listing the
jurisdictions in which the VERTEX Patents licensed hereunder have been
filed. Subject to the next succeeding sentences, VERTEX will file patent
applications with respect to those VERTEX Patents in such other countries
as NOVARTIS shall request in writing, all such other countries being
countries in which NOVARTIS would customarily file its own cases dealing
with similar subject matters. The party initially responsible for
preparation, filing, prosecution and maintenance of a particular Patent
(the "Initial Responsible Party") shall give thirty (30) days advance
notice (the "Discontinuance Election") to the other party of any decision
to cease preparation, filing, prosecution and maintenance of that Patent
in any jurisdiction (a "Discontinued Patent"). In such case, the other
party may elect at its sole discretion to continue preparation, filing
and prosecution or maintenance of the Discontinued Patent at its sole
expense. The party so continuing shall own any such Patent; and the
Initial Responsible Party shall execute such documents and perform such
acts as may be reasonably necessary for the other party to file or to
continue prosecution or maintenance, including assigning ownership of
such Patent to such electing party. Discontinuance may be on a
country-by-country basis or for a patent application or patent series in
total.
Each party will consult the other party with respect to its choice of
patent counsel and will keep that party continuously informed of all matters
relating to the preparation, filing, prosecution and maintenance of Patents
covered by this Agreement. Each party shall endeavor in good faith to coordinate
its efforts with those of the other party to minimize or avoid interference with
the prosecution of the other party's patent applications.
8.1.3. COSTS. Costs incurred in the preparation, prosecution and
maintenance of Patents shall be borne by each party as set forth in Section 8.3
of the Research Agreement.
8.2. INFRINGEMENT CLAIMS BY THIRD PARTIES.
8.2.1. NOTICE. If the manufacture, use or sale of Bulk Drug
Substance and/or Drug Product results in a claim against a
party hereto for patent
License, Development and Commercialization Agreement-- Confidential-- Page 20
<Page>
CONFIDENTIAL TREATMENT REQUESTED
infringement or for inducing or contributing to patent
infringement ("Infringement Claim"), the party first having
notice of an Infringement Claim shall promptly notify the
other in writing. The notice shall set forth the facts of
the Infringement Claim in reasonable detail.
8.2.2. THIRD PARTY LICENSES. In the event that practicing the
Technology in connection with the manufacture, use or sale
of a Drug Product in any country would infringe a Third
Party's patent, then VERTEX will use reasonable efforts to
obtain a license under the Third Party's patents with a
right to sublicense to NOVARTIS, under terms reasonably
acceptable to both VERTEX and NOVARTIS, and VERTEX and
NOVARTIS will [***]
8.2.3. DISCONTINUED SALES, LICENSE OR DEFENSE OF SUIT. If the
required license is either unavailable or its terms are unacceptable both to
VERTEX and to NOVARTIS, then NOVARTIS may elect in its sole discretion to
discontinue sales of the Drug Product in such country or to undertake the
defense of a patent infringement action or the prosecution of a declaratory
judgment action with respect to the Third Party patents. The parties shall [***]
Provided that NOVARTIS is conducting the defense of the Infringement Claim or
the prosecution of such declaratory judgment actions, [***]. The costs and
expenses of all suits brought by a party under this Section 8.2.3 shall be
reimbursed to such party and then to the other party, if it participates in such
suit, pro rata, out of any damages or other monetary awards recovered therein in
favor of VERTEX or NOVARTIS. [***] No settlement or consent judgment or other
voluntary final disposition of a suit under this Section 8.2 may be entered into
without the joint consent of VERTEX and NOVARTIS (which consent shall not be
unreasonably withheld).
8.3. INFRINGEMENT CLAIMS AGAINST THIRD PARTIES.
8.3.1. VERTEX and NOVARTIS each agree to take reasonable actions
to protect their respective patents and technology from
infringement and from unauthorized possession or use.
8.3.2. If any VERTEX Patents or NOVARTIS Patents are infringed or
VERTEX Know-How or NOVARTIS Know-How is misappropriated, as
the case may be, by a Third Party, the party to this
Agreement first having knowledge of such infringement or
misappropriation, or knowledge of a reasonable probability
of such infringement or misappropriation, shall promptly
notify the other in writing. The notice shall set forth the
facts of such infringement or misappropriation in
reasonable detail. The owner of the patent or technology,
or VERTEX, in the case of joint ownership between the
parties hereto, shall have the primary right, but not the
obligation, to institute, prosecute, and
License, Development and Commercialization Agreement-- Confidential-- Page 21
<Page>
CONFIDENTIAL TREATMENT REQUESTED
control with its own counsel any action or proceeding with
respect to infringement or misappropriation of such patent
or technology and the other party shall have the right, at
its own expense, to be represented in such action by its
own counsel. If the party having the primary right or
responsibility to institute, prosecute, and control such
action or prosecution fails to do so within a period of one
hundred twenty (120) days after receiving notice of the
infringement, the other party shall have the right to bring
and control any such action by counsel of its own choice,
and the other shall have the right, at its own expense, to
be represented in any such action by counsel of its own
choice. If one party brings any such action or proceeding,
the second party may be joined as a party plaintiff and, in
case of joining, the second party agrees to give the first
party reasonable assistance and authority to file and to
prosecute such suit. The costs and expenses of all suits
brought by a party under this Section 8.3.2 shall be
reimbursed to such party and to the other party, if it
participates in such suit, pro rata, out of any damages or
other monetary awards recovered therein in favor of VERTEX
or NOVARTIS. [***] No settlement or consent judgment or
other voluntary final disposition of a suit under this
Section 8.3 may be entered into without the joint consent
of VERTEX and NOVARTIS (which consent shall not be
unreasonably withheld).
8.4. NOTICE OF CERTIFICATION. VERTEX and NOVARTIS each shall immediately
give notice to the other of any certification filed under the U.S. "Drug Price
Competition and Patent Term Restoration Act of 1984" claiming that a VERTEX
Patent or a NOVARTIS Patent is invalid or that any infringement will not arise
from the manufacture, use or sale of any product by a third party. If VERTEX
decides not to bring infringement proceedings against the entity making such a
certification, VERTEX shall give notice to NOVARTIS of its decision not to bring
suit within twenty-one (21) days after receipt of notice of such certification.
NOVARTIS may then, but is not required to, bring suit against the party that
filed the certification. Any suit by NOVARTIS or VERTEX shall either be in the
name of NOVARTIS or in the name of VERTEX, or jointly by NOVARTIS and VERTEX, as
may be required by law. For this purpose, the party not bringing suit shall
execute such legal papers necessary for the prosecution of such suit as may be
reasonably requested by the party bringing suit.
8.5. PATENT TERM EXTENSIONS. The parties shall cooperate in good faith
with each other in gaining patent term extension wherever applicable to VERTEX
Patents and NOVARTIS Patents covering Drug Product Candidates or Drug Products.
NOVARTIS and VERTEX shall mutually determine which patents shall be extended.
All filings for such extension shall be made by the party who owns the patent,
provided, however, that in the event that the party who owns the patent elects
not to file for an extension, such party shall (i) inform the other party of its
intention not to file and (ii) grant the other party the right to file for such
extension.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
9.1. REPRESENTATIONS AND WARRANTIES OF VERTEX. VERTEX represents and
warrants to NOVARTIS as follows:
9.1.1. AUTHORIZATION. This Agreement has been duly executed and
delivered by VERTEX and constitutes the valid and binding
obligation of VERTEX,
License, Development and Commercialization Agreement-- Confidential-- Page 22
<Page>
CONFIDENTIAL TREATMENT REQUESTED
enforceable against VERTEX in accordance with its terms
except as enforceability may be limited by bankruptcy,
fraudulent conveyance, insolvency, reorganization,
moratorium and other laws relating to or affecting
creditors' rights generally and by general equitable
principles. The execution, delivery and performance of this
Agreement have been duly authorized by all necessary action
on the part of VERTEX, its officers and directors.
9.1.2. NO THIRD PARTY RIGHTS. Except as previously disclosed in
writing to NOVARTIS on or before the date set forth on the
first page hereof, (a) VERTEX owns or possesses adequate
licenses or other rights to use all VERTEX Technology, and
to grant the licenses herein; and (b) the granting of the
licenses to NOVARTIS hereunder does not violate any right
known to VERTEX of any Third Party.
9.1.3. NO THIRD PARTY PATENTS. Except as disclosed in writing by
VERTEX to NOVARTIS or its agents, to VERTEX's knowledge and
based on its current understanding of the Drug Product
Candidate(s) and its use, the development, manufacture, use
or sale of any Bulk Drug Substance, Drug Product Candidates
or Drug Products pursuant to this Agreement will not
infringe or conflict with any Third Party right or patent,
and VERTEX is not aware of any issued patent or pending
patent application that, if issued, would be infringed by
the development, manufacture, use or sale of any Bulk Drug
Substance, Drug Product Candidates or Drug Products
pursuant to this Agreement.
9.1.4. MAINTENANCE OF PATENTS AND LICENSES. Subject to the
provisions of Section 8.1.2 with respect to Discontinued
Patents, VERTEX will take all reasonable steps to obtain
any consent required for and to maintain in effect,
including by means of extension, any license, sublicense,
patent or patent application applicable to the Field for
which it has granted rights to NOVARTIS hereunder.
9.2. REPRESENTATIONS AND WARRANTIES OF NOVARTIS. NOVARTIS represents and
warrants to VERTEX as follows:
9.2.1. AUTHORIZATION. This Agreement has been duly executed and
delivered by NOVARTIS and constitutes the valid and binding
obligation of NOVARTIS, enforceable against NOVARTIS in
accordance with its terms, except as enforceability may be
limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium and other laws relating to
creditors' rights generally and by general equitable
principles. The execution, delivery and performance of this
Agreement have been duly authorized by all necessary action
on the part of NOVARTIS, its officers and directors.
9.2.2. NO THIRD PARTY RIGHTS. Except as previously disclosed in
writing to VERTEX on or before the date set forth on the
first page hereof,
License, Development and Commercialization Agreement-- Confidential-- Page 23
<Page>
CONFIDENTIAL TREATMENT REQUESTED
(a) NOVARTIS owns or possesses adequate licenses or other
rights to use all NOVARTIS Technology, and to grant the
licenses herein; and (b) the granting of the licenses to
VERTEX hereunder does not violate any right known to
NOVARTIS of any Third Party.
9.2.3. NO THIRD PARTY PATENTS. Except as disclosed in writing by
NOVARTIS to VERTEX or its agents, to NOVARTIS' knowledge
and based on its current understanding of the Drug Product
Candidate(s) and its use, the manufacture, use or sale of
any Bulk Drug Substance, Drug Product Candidates or Drug
Products pursuant to this Agreement will not infringe or
conflict with any Third Party right or patent, and NOVARTIS
is not aware of any issued patent or pending patent
application that, if issued, would be infringed by the
development, manufacture, use or sale of any Bulk Drug
Substance, Drug Product Candidates or Drug Products
pursuant to this Agreement.
9.2.4. MAINTENANCE OF PATENTS AND LICENSES. Subject to the
provisions of Section 8.1.2 with respect to Discontinued
Patents, NOVARTIS will take all reasonable steps to obtain
any consent required for and to maintain in effect,
including by means of extension, any license, sublicense,
patent or patent application applicable to the Field for
which it has granted rights to VERTEX hereunder.
ARTICLE X
CONFIDENTIALITY
10.1. UNDERTAKING. During the term of this Agreement, each party shall
keep confidential, and other than as provided herein shall not use or disclose,
directly or indirectly, any trade secrets, confidential or proprietary
information, or any other knowledge, information, documents or materials, owned,
developed or possessed by the other party, whether in tangible or intangible
form, the confidentiality of which such other party takes reasonable measures to
protect, including but not limited to VERTEX Technology and NOVARTIS Technology.
10.1.1. Each party shall take any and all lawful measures to
prevent the unauthorized use and disclosure of such
information, and to prevent unauthorized persons or
entities from obtaining or using such information.
10.1.2. Each party further agrees to refrain from directly or
indirectly taking any action which would constitute or
facilitate the unauthorized use or disclosure of such
information. Each party may disclose such information to
its officers, employees and agents, to authorized licensees
and sublicensees, and to subcontractors in connection with
the development or manufacture of Bulk Drug Substance, Drug
Product Candidates or Drug Products, to the extent
necessary to enable such parties to perform their
obligations hereunder or under the applicable license,
sublicense or subcontract, as the case may be; provided,
that such officers, employees,
License, Development and Commercialization Agreement-- Confidential-- Page 24
<Page>
CONFIDENTIAL TREATMENT REQUESTED
agents, licensees, sublicensees and subcontractors have
entered into appropriate confidentiality agreements for
secrecy and non-use of such information which by their
terms shall be enforceable by injunctive relief at the
instance of the disclosing party.
10.1.3. Each party shall be liable for any unauthorized use and
disclosure of such information by its officers, employees
and agents and any such sublicensees and subcontractors.
10.2. EXCEPTIONS. Notwithstanding the foregoing, the provisions of
Section 10.1 hereof shall not apply to knowledge, information, documents or
materials which the receiving party can conclusively establish:
10.2.1. have entered the public domain without such party's breach
of any obligation owed to the disclosing party;
10.2.2. are permitted to be disclosed by the prior written consent
of the disclosing party;
10.2.3. have become known to the receiving party from a source
other than the disclosing party, other than by breach of an
obligation of confidentiality owed to the disclosing party;
10.2.4. are disclosed by the disclosing party to a Third Party
without restrictions on its disclosure;
10.2.5. are independently developed by the receiving party without
breach of this Agreement; or
10.2.6. are required to be disclosed by the receiving party to
comply with applicable laws or regulations, to defend or
prosecute litigation or to comply with governmental
regulations, provided that the receiving party provides
prior written notice of such disclosure to the disclosing
party and takes reasonable and lawful actions to avoid or
minimize the degree of such disclosure.
10.3. PUBLICITY. The parties will agree upon the timing and content of
any initial press release or other public communications relating to this
Agreement and the transactions contemplated herein.
10.3.1. Except to the extent already disclosed in that initial
press release or other public communication, no public
announcement concerning the existence or the terms of this
Agreement or concerning the transactions described herein
shall be made, either directly or indirectly, by VERTEX or
NOVARTIS, except as may be legally required by applicable
laws, regulations, or judicial order, without first
obtaining the approval of the other party and agreement
upon the nature, text, and timing of such announcement,
which approval and agreement shall not be unreasonably
withheld.
License, Development and Commercialization Agreement-- Confidential-- Page 25
<Page>
CONFIDENTIAL TREATMENT REQUESTED
10.3.2. The party desiring to make any such public announcement
shall provide the other party with a written copy of the
proposed announcement in sufficient time prior to public
release to allow such other party to comment upon such
announcement, prior to public release.
10.4. SURVIVAL. The provisions of this Article X shall survive
the termination of this Agreement and shall extend for a
period of five (5) years thereafter.
ARTICLE XI
PUBLICATION
NOVARTIS reserves the sole right to publish or publicly present the
results of the Development Program and information concerning Drug Product
Candidates and Back-up Compounds (collectively, the "Results"), subject to the
following terms and conditions. NOVARTIS will submit a draft of any proposed
manuscript or speech to VERTEX for comments at least thirty (30) days prior to
submission for publication or oral presentation. VERTEX shall notify NOVARTIS in
writing within fifteen (15) days of receipt of such draft whether such draft
contains (i) information of VERTEX which it considers to be confidential under
the provisions of Article IX hereof, or (ii) information that if published would
have an adverse effect on a patent application covering the subject matter of
this Agreement which VERTEX intends to file,. In any such notification, VERTEX
shall indicate with specificity its suggestions regarding the manner and degree
to which NOVARTIS may disclose such information. In the case of item (ii) above,
VERTEX may request a delay and NOVARTIS shall delay such publication, for a
period not exceeding ninety (90) days, to permit the timely preparation and
filing of a patent application or an application for a certificate of invention
on the information involved. In the case of item (i) above, NOVARTIS may not
publish confidential information of VERTEX without its consent in violation of
Article IX of this Agreement. The parties agree that authorship of any
publication will be determined based on the customary standards then being
applied in the relevant scientific journal.
This Article XI shall terminate with the termination of this Agreement,
but the provisions of Article X hereof shall continue to govern the disclosure
by one party, whether by publication or otherwise, of Confidential Information
of the other, during the period set forth in Section 10.4.
ARTICLE XII
DISPUTE RESOLUTION
12.1. GOVERNING LAW, AND JURISDICTION. This Agreement shall be governed
and construed in accordance with the internal laws of the State of New York.
12.2. DISPUTE RESOLUTION PROCESS. Except as otherwise explicitly provided
herein, in the event of any controversy or claim arising out of or relating to
any provision of this Agreement, or the collaborative effort contemplated
hereby, the parties shall, and either party may, initially refer such dispute to
the Joint Steering Committee, and failing resolution of the controversy or claim
within thirty (30) days after such referral, the matter shall be referred to the
Chief Executive Officer of VERTEX and the Chief Executive Officer of NOVARTIS
who shall,
License, Development and Commercialization Agreement-- Confidential-- Page 26
<Page>
CONFIDENTIAL TREATMENT REQUESTED
as soon as practicable, attempt in good faith to resolve the controversy or
claim. If such controversy or claim is not resolved within sixty (60) days of
the date of initial referral of the matter to the JSC, either party shall be
free to initiate proceedings in any court having requisite jurisdiction.
ARTICLE XIII
TERM AND TERMINATION
13.1. TERM. The term of this Agreement shall extend with respect to a
Drug Product in a particular country until the later of: (a) the last to expire
of any VERTEX Patents containing a Valid Patent Claim covering the Drug Product
or its use or manufacture in that country; or (b) if there is no such Valid
Patent Claim under a VERTEX Patent in a particular country, ten (10) years from
the earlier of the date Regulatory Approval is received in that country for sale
of the Drug Product, or the date of First Commercial Sale of the Drug Product in
that country.
13.2. TERMINATION FOR CAUSE. In addition to rights of termination which
may be granted to either party under other provisions of this Agreement, either
party may terminate this Agreement upon sixty (60) days prior written notice to
the other party upon the material breach by such other party of any of its
obligations under this Agreement, provided that such termination shall become
effective only if the breaching party shall fail to remedy or cure the breach
within such sixty (60) day period.
13.3. TERMINATION FOR BANKRUPTCY. If at any time during the term of this
Agreement, an Event of Bankruptcy (as defined below) relating to either party
(the "Bankrupt Party") occurs, the other party (the "Other Party") shall have,
in addition to all other legal and equitable rights and remedies available
hereunder, the option to terminate this Agreement upon 30 days' written notice
to the Bankrupt Party. It is agreed and understood that if the Other Party does
not elect to terminate this Agreement upon the occurrence of an Event of
Bankruptcy, except as may otherwise be agreed with the trustee or receiver
appointed to manage the affairs of the Bankrupt Party, the Other Party shall
continue to make all payments required of it under this Agreement as if the
Event of Bankruptcy had not occurred, and the Bankrupt Party shall not have the
right to terminate any license granted herein. As used above, the term "Event of
Bankruptcy" shall mean (a) dissolution, termination of existence, liquidation or
business failure of either party; (b) the appointment of a custodian or receiver
for either party who has not been terminated or dismissed within 90 days; (c)
the institution by either party of any proceeding under national, federal or
state bankruptcy, reorganization, receivership or other similar laws affecting
the rights of creditors generally or the making by either party of a composition
or any assignment or trust mortgage for the benefit of creditors or under any
national, federal or state bankruptcy, reorganization, receivership or other
similar law affecting the rights of creditors generally, which proceeding is not
dismissed within 90 days of filing.
13.4. TERMINATION BY NOVARTIS. NOVARTIS may terminate this Agreement at
any time with respect to one or more Drug Product Candidates or Drug Products,
upon [***] prior written notice to VERTEX if [***]. In such event NOVARTIS, at
the request of VERTEX,
License, Development and Commercialization Agreement-- Confidential-- Page 27
<Page>
CONFIDENTIAL TREATMENT REQUESTED
shall assign or otherwise transfer to VERTEX all of its regulatory filings with
respect to the Drug Product Candidate or Drug Product as to which NOVARTIS has
terminated this Agreement.
13.5. EFFECT OF TERMINATION.
(a) Termination of this Agreement for any reason, or
expiration of this Agreement, will not affect: (i)
obligations, including the payment of any royalties
and any supply price payments, which have accrued as
of the date of termination or expiration, and (ii)
rights and obligations which, from the context
thereof, are intended to survive termination or
expiration of this Agreement.
(b) For each country, at the end of the Agreement term as
provided in Section 13.1 hereof in respect of a Drug
Product, NOVARTIS shall have a perpetual, nonexclusive,
transferable, paid-up, royalty-free license under VERTEX
Technology, in each case which is in existence at the end
of such Agreement term, to use, make, have made and sell
that Drug Product in that country and to make or have
made Drug Product for use and sale in that country.
ARTICLE XIV
INDEMNIFICATION
14.1. INDEMNIFICATION BY VERTEX. VERTEX will indemnify and hold NOVARTIS
and its Affiliates, and their employees, officers and directors harmless against
any loss, damages, action, suit, claim, demand, liability, expense, bodily
injury, death or property damage (a "Loss"), that may be brought, instituted or
arise against or be incurred by such persons to the extent such Loss is based on
or arises out of:
14.1.1. the development, manufacture, use, storage or handling of
a Drug Product Candidate or a Drug Product by VERTEX or its
Affiliates or their representatives, agents or
subcontractors under this Agreement, or any actual or
alleged violation of law resulting therefrom (with the
exception of Losses based on infringement or
misappropriation of intellectual property rights); or
14.1.2. the breach by VERTEX of any of its covenants,
representations or warranties set forth in this Agreement;
and
14.1.3. provided however, that the foregoing indemnification shall
not apply to any Loss to the extent such Loss is caused by
the negligent or willful misconduct of NOVARTIS or its
Affiliates.
14.2. INDEMNIFICATION BY NOVARTIS. NOVARTIS will indemnify and hold
VERTEX, and its Affiliates, and their employees, officers and directors harmless
against any Loss that may be brought, instituted or arise against or be incurred
by such persons to the extent such Loss is based on or arises out of:
License, Development and Commercialization Agreement-- Confidential-- Page 28
<Page>
CONFIDENTIAL TREATMENT REQUESTED
14.2.1. the development, manufacture, use, sale, storage or
handling of a Drug Product Candidate or a Drug Product by
NOVARTIS or its Affiliates or their representatives, agents
or subcontractors under this Agreement, or any actual or
alleged violation of law resulting therefrom (with the
exception of Losses based on infringement or
misappropriation of intellectual property rights); or
14.2.2. the breach by NOVARTIS of any of its covenants,
representations or warranties set forth in this Agreement;
and
14.2.3. provided that the foregoing indemnification shall not
apply to any Loss to the extent such Loss is caused by the
negligent or willful misconduct of VERTEX or its
Affiliates.
14.3. CLAIMS PROCEDURES. Each Party entitled to be indemnified by the
other Party (an "Indemnified Party") pursuant to Section 14.1 or 14.2 hereof
shall give notice to the other Party (an "Indemnifying Party") promptly after
such Indemnified Party has actual knowledge of any threatened or asserted claim
as to which indemnity may be sought, and shall permit the Indemnifying Party to
assume the defense of any such claim or any litigation resulting therefrom;
provided: That counsel for the Indemnifying Party, who shall conduct the defense
of such claim or any litigation resulting therefrom, shall be approved by the
Indemnified Party (whose approval shall not unreasonably be withheld) and the
Indemnified Party may participate in such defense at such party's expense
(unless (i) the employment of counsel by such Indemnified Party has been
authorized by the Indemnifying Party; or (ii) the Indemnified Party shall have
reasonably concluded that there may be a conflict of interest between the
Indemnifying Party and the Indemnified Party in the defense of such action, in
each of which cases the Indemnifying Party shall pay the reasonable fees and
expenses of one law firm serving as counsel for the Indemnified Party, which law
firm shall be subject to approval, not to be unreasonably withheld, by the
Indemnifying Party); and
14.3.1. The failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of
its obligations under this Agreement to the extent that the
failure to give notice did not result in harm to the
Indemnifying Party.
14.3.2. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the approval of each
Indemnified Party which approval shall not be unreasonably
withheld, consent to entry of any judgment or enter into
any settlement which (i) would result in injunctive or
other relief being imposed against the Indemnified Party;
or (ii) does not include as an unconditional term thereof
the giving by the claimant or plaintiff to such Indemnified
Party of a release from all liability in respect to such
claim or litigation.
14.3.3. Each Indemnified Party shall furnish such information
regarding itself or the claim in question as an
Indemnifying Party may reasonably request in writing and
shall be reasonably required in connection with the defense
of such claim and litigation resulting therefrom.
License, Development and Commercialization Agreement-- Confidential-- Page 29
<Page>
CONFIDENTIAL TREATMENT REQUESTED
14.4. COMPLIANCE. The parties shall comply fully with all applicable laws
and regulations in connection with their respective activities under this
Agreement.
14.5. INSURANCE. Each party shall use all commercially reasonable efforts
to maintain insurance, including product liability insurance, with respect to
its activities hereunder.
14.5.1. Such insurance shall be in such amounts and subject to
such deductibles as the parties may agree based upon
standards prevailing in the industry at the time.
14.5.2. Either party may satisfy its obligations under this
Section through self-insurance to the same extent.
14.5.3. At such time as a Drug Product is being manufactured by a
party for commercial sale, that party shall name the other
party as an additional insured on any such policies.
ARTICLE XV
MISCELLANEOUS PROVISIONS
15.1. NOTICE OF PHARMACEUTICAL SIDE-EFFECTS. During the term of this
Agreement, each of the parties will notify appropriate authorities in accordance
with applicable law, and the other party, promptly after receipt of information
with respect to any serious adverse event (as defined by the ICH Harmonized
Tripartite Guideline on Clinical Safety Data Management), directly or indirectly
attributable to the use or application of a Development Candidate, Bulk Drug
Substance, a Drug Product Candidate or a Drug Product.
15.2. WAIVER. No provision of the Agreement may be waived except in
writing by both parties hereto. No failure or delay by either party hereto in
exercising any right or remedy hereunder or under applicable law will operate as
a waiver thereof, or a waiver of a particular right or waiver of any right or
remedy on any subsequent occasion.
15.3. 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,
other than an obligation to make a payment, when such failure or delay is caused
by or results from fire, floods, embargoes, government regulations, prohibitions
or interventions, war, acts of war (whether war be declared or not),
insurrections, riots, civil commotions, strikes, lockouts, acts of God, or any
other cause beyond the reasonable control of the affected party.
15.4. REGISTRATION OF LICENSE. NOVARTIS may, at its expense, register
the license granted under this Agreement in any country where the use, sale
or manufacture of a Drug Product in such country would be covered by a Valid
Patent Claim. Upon request by NOVARTIS, VERTEX agrees promptly to execute any
"short form" licenses submitted to it by NOVARTIS in order to effect the
foregoing registration in such country, but such licenses shall in no way
alter or affect the obligations of the parties hereunder.
License, Development and Commercialization Agreement-- Confidential-- Page 30
<Page>
CONFIDENTIAL TREATMENT REQUESTED
15.5. SEVERABILITY. It is the intention of the parties to comply with all
applicable laws domestic or foreign in connection with the performance of its
obligations hereunder. In the event that any provision of this Agreement, or any
part hereof, is found invalid or unenforceable, the remainder of this Agreement
will be binding on the parties hereto, and will be construed as if the invalid
or unenforceable provision or part thereof had been deleted, and the Agreement
shall be deemed modified to the extent necessary to render the surviving
provisions enforceable to the fullest extent permitted by law.
15.6. GOVERNMENT ACTS. In the event that any act, regulation, directive,
or law of a government, including its departments, agencies or courts, should
make impossible or prohibit, restrain, modify or limit any material act or
obligation of NOVARTIS or VERTEX under this Agreement, the party, if any, not so
affected shall have the right, at its option, to suspend or terminate this
Agreement as to such country, if good faith negotiations between the parties to
make such modifications to this Agreement as may be necessary to fairly address
the impact thereof, are not successful after a reasonable period of time in
producing mutually acceptable modifications to this Agreement.
15.7. GOVERNMENT APPROVALS. NOVARTIS will use reasonable efforts to
obtain any government approval required to enable this Agreement to become
effective, or to enable any payment hereunder to be made, or any other
obligation hereunder to be observed or performed. Each party will keep the other
informed of progress in obtaining any such approvals.
15.8. ASSIGNMENT. This Agreement may not be assigned or otherwise
transferred by either party without the prior written consent of the other
party; provided, however, that either party may assign this Agreement, without
the consent of the other party, (i) to any of its Affiliates, if the assigning
party guarantees the full performance of its Affiliates' obligations hereunder,
or (ii) in connection with the transfer or sale of all or substantially all of
its assets or business or in the event of its merger or consolidation with
another company. Any purported assignment in contravention of this Section 15.8
shall, at the option of the non-assigning party, be null and void and of no
effect. No assignment shall release either party from responsibility for the
performance of any accrued obligation of such party hereunder. This Agreement
shall be binding upon and enforceable against the successor to or any permitted
assignee from either of the parties hereto.
15.9. AFFILIATES. Each party may perform its obligations hereunder
personally or through one or more Affiliates, although each party shall
nonetheless be solely responsible for the performance of its Affiliates. Neither
party shall permit any of its Affiliates to commit any act (including any act of
omission) which such party is prohibited hereunder from committing directly. The
use of subcontractors by either party shall not increase the financial
obligations of the other party hereunder in any respect.
15.10. COUNTERPARTS. This Agreement may be executed in duplicate both of
which shall be deemed to be originals, and both of which shall constitute one
and the same Agreement.
15.11. NO AGENCY. Nothing herein contained shall be deemed to create an
agency, joint venture, amalgamation, partnership or similar relationship between
NOVARTIS and VERTEX. Notwithstanding any of the provisions of this Agreement,
neither party shall at any time enter
License, Development and Commercialization Agreement-- Confidential-- Page 31
<Page>
CONFIDENTIAL TREATMENT REQUESTED
into, incur, or hold itself out to third parties as having authority to enter
into or incur, on behalf of the other party, any commitment, expense, or
liability whatsoever, and all contracts, expenses and liabilities undertaken or
incurred by one party in connection with or relating to the development,
manufacture or sale of Bulk Drug Substance, Drug Product Candidates or Drug
Products shall be undertaken, incurred or paid exclusively by that party, and
not as an agent or representative of the other party.
15.12. NOTICE. All communications between the parties with respect to any
of the provisions of this Agreement will be sent to the addresses set out below,
or to other addresses as designated by one party to the other by notice pursuant
hereto, by prepaid certified, air mail (which shall be deemed received by the
other party on the seventh business day following deposit in the mails), or by
cable, telex, facsimile transmission, or other electronic means of communication
(which shall be deemed received when transmitted), with confirmation by letter
given by the close of business on or before the next following business day:
If to NOVARTIS, at:
NOVARTIS PHARMA AG
Business Development and Licensing
P.O. Box
CH-4002
Basel, Switzerland
Attention: Victor A. Hartmann, Vice President
with a copy to: Legal Services, at the address referenced above
and
if to VERTEX, at:
Vertex Pharmaceutical Incorporated
130 Waverly Street
Cambridge, MA U.S.A. 02139-4211
Attention: President
with a copy to:
Legal Department
Attention: General Counsel
15.13. HEADINGS. The paragraph headings are for convenience only and will
not be deemed to affect in any way the language of the provisions to which they
refer.
15.14. AUTHORITY. The undersigned represent that they are authorized to
sign this Agreement on behalf of the parties hereto. The parties each represent
that no provision of this Agreement will violate any other agreement that such
party may have with any other person or company. Each party has relied on that
representation in entering into this Agreement.
License, Development and Commercialization Agreement-- Confidential-- Page 32
<Page>
CONFIDENTIAL TREATMENT REQUESTED
15.15. ENTIRE AGREEMENT. This Agreement, including the Schedules appended
hereto, contains the entire understanding of the parties relating to the matters
referred to herein, except as matters referenced herein are also addressed in
the Research Agreement, and may only be amended by a written document, duly
executed on behalf of the respective parties.
15.16. INFLATION ADJUSTMENT. All payments required to be made to VERTEX
hereunder (except any royalty payments required to be made under the provisions
of Section 6.3 hereof) shall be adjusted at the beginning of each calendar year
to reflect the impact of inflation since the date of execution of the Revised
and Restated Research Agreement, as measured by the biotech worker inflation
rate defined and reported in the Radford Survey (Radford/AON Consulting Inc.,
San Francisco, CA), or other mutually acceptable index. Notwithstanding the
foregoing, no adjustment shall be required in any calendar year in which the
appropriate inflation adjustment, if applied, would result in a change of less
than [***].
15.17. INVOICE REQUIREMENT. Any amounts payable to VERTEX hereunder
(except any royalty payments required to be made under the provisions of Section
6.3 hereof) shall be made within thirty days after receipt by NOVARTIS, or its
nominee designated for that purpose in advance by NOVARTIS in writing to VERTEX,
of an invoice covering such payment, which invoice shall conform to the extent
reasonably practicable to the form of invoice contained in Exhibit B to the
Research Agreement.
15.18. HARDSHIP. If as a result of unforeseen events or developments
relating to the subject matter of this Agreement, the performance of this
Agreement shall cause inequitable economic hardship for one party which runs
counter to the objectives of this Agreement and which the other party cannot
reasonably and in good faith expect the first party to bear unrelieved, the
parties will meet and seek in good faith to find equitable means of amending
this Agreement to reestablish a fair and reasonable economic balance under this
Agreement between the parties hereto.
License, Development and Commercialization Agreement-- Confidential-- Page 33
<Page>
CONFIDENTIAL TREATMENT REQUESTED
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
VERTEX PHARMACEUTICALS INCORPORATED
By:
---------------------------------------------
Kenneth S. Boger
Title: Senior Vice President and General Counsel
NOVARTIS PHARMA AG
By:
----------------------------------------------
Title:
-------------------------------------------
By:
----------------------------------------------
Title:
-------------------------------------------
License, Development and Commercialization Agreement-- Confidential-- Page 34
<Page>
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE 1.12
LIST OF DRUG PRODUCT CANDIDATES
- -------------------------------------------------------------------------------
To be supplied
License, Development and Commercialization Agreement--Confidential
<Page>
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE 1.25
LIST OF MAJOR MARKETS
- -------------------------------------------------------------------------------
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
License, Development and Commercialization Agreement--Confidential
<Page>
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE 1.29
NOVARTIS PATENTS
- -------------------------------------------------------------------------------
License, Development and Commercialization Agreement--Confidential
<Page>
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE 1.44
VERTEX PATENTS
- -------------------------------------------------------------------------------
License, Development and Commercialization Agreement--Confidential