LICENSE AND SUPPLY\n\n AGREEMENT\n\n between\n\n GILEAD SCIENCES, INC.\n\n and\n\n PHARMACIA & UPJOHN S.A.\n\n\n\n\n TABLE OF CONTENTS\n\n\n Page\nTable of Contents 1\nBackground 4\nARTICLE 1 Definitions\n 1.1 \"Affiliate\" 5\n 1.2 \"Best Efforts\"\n 1.3 \"Cidofovir\"\n 1.4 \"Competitive CMV Product\"\n 1.5 \"CPMP\"\n 1.6 \"EMEA\"\n 1.7 \"European Union\"\n 1.8 \"First Commercial Sale\"\n 1.9 \"Gilead Know-How\"\n 1.10 \"Gilead Patents\"\n 1.11 \"Gilead Technology\"\n 1.12 \"Joint Strategic Committee\" 6\n 1.13 \"Licensed Product\"\n 1.14 \"Net Sales\"\n 1.15 \"Non-Patented Product\"\n 1.16 \"P&U Know-How\"\n 1.17 \"P&U Patents\"\n 1.18 \"P&U Technology\n 1.19 \"P&U Territory\n 1.20 \"Patented Product\" 7\n 1.21 \"Proprietary Information\"\n 1.22 \"Specifications\"\n 1.23 \"Valid Claim\"\n 1.24 \"Vistide\"\nARTICLE 2 Grant of Rights\n 2.1 License Grants\n 2.2 Sublicensing 8\n 2.3 P&U Right of First Negotiation\n 2.4 P&U Acquisition of Competitive Product\n 2.5 P&U Acknowledgement of Other Gilead Products\n 2.6 Maintenance of Licenses to Gilead of Gilead Patents 9\n\nARTICLE 3 Development and Regulatory Affairs\n 3.1 Joint Strategic Committee\n 3.2 Gilead's Obligations 10\n 3.3 P&U's Obligations\n 3.4 Development Costs 11\n 3.5 Clinical Materials\n 3.6 Adverse Reactions\n 3.7 Intraocular Clinical Development\n\n\n 1.\n\n\n\nARTICLE 4 Due Diligence\n 4.1 Marketing Approval\n 4.2 Territorial Diligence 12\n\nARTICLE 5 Compensation\n 5.1 License Fee\n 5.2 Milestone Payment\n 5.3 Royalty Payments on Net Sales\n 5.4 Quarterly Payment Mechanism: Year-End Reconciliation 14\n 5.5 Sublicense\n 5.6 Expiration of Royalty Payment Obligations\n\nARTICLE 6 Supply and Manufacturing\n 6.1 Supply of Cidofovir\n 6.2 Technology Transfer\n 6.3 Supply of Intraocular Cidofovir 15\n 6.4 Supply Prices\n 6.5 Specifications\n 6.6 Forecasts and Orders\n 6.7 Acceptance; Shipment and Risk of Loss 16\n 6.8 Invoices\n 6.9 Shortages of Supply\n\nARTICLE 7 Marketing\n 7.1 Promotion and Marketing Efforts 17\n 7.2 Pricing\n 7.3 Trademarks\n 7.4 Use of the Gilead Name\n 7.5 Distribution of Licensed Product\n 7.6 Export Control\n\nARTICLE 8 Payments; Records; Audit 18\n 8.1 Payment; Report\n 8.2 Exchange Rate; Manner and Place of Payment\n 8.3 Records and Audit\n 8.4 Withholding Taxes 19\n\nARTICLE 9 Term and Termination\n 9.1 Term\n 9.2 Licenses Upon Expiration\n 9.3 Termination for Breach\n 9.4 Termination in Event of Patent Challenge 20\n 9.5 Unconditional Right to Terminate\n 9.6 Reversion of Product Rights\n 9.7 Survival\n\nARTICLE 10 Intellectual Property\n 10.1 Prosecution of Patents\n 10.2 Infringement of Patents by Third Parties\n 10.3 Infringement of Third Party Rights\n\n\n 2.\n\n\n\n 10.4 Patent Marking 21\n 10.5 JSC Review of Patent Strategy\n\nARTICLE 11 Indemnification\n 11.1 Indemnification by Gilead\n 11.2 Indemnification by P&U\n 11.3 Mechanics 22\n 11.4 Insurance Coverage\n\nARTICLE 12 Confidentiality\n 12.1 Proprietary Information; Exceptions\n 12.2 Authorized Disclosure 23\n 12.3 Return of Proprietary Information\n\nARTICLE 13 Representations and Warranties 24\n 13.1 Mutual Representations and Warranties\n 13.2 Gilead Representation and Warranties\n 13.3 No Other Representations\n\nARTICLE 14 Dispute Resolutions; Venue and Governing Law 25\n 14.1 Disputes\n 14.2 Alternative Dispute Resolution\n 14.3 Arbitration Procedure\n 14.4 Jurisdiction 26\n 14.5 Governing Law\n\nARTICLE 15 Miscellaneous 27\n 15.1 Agency\n 15.2 Assignment\n 15.3 Disclosure\n 15.4 Amendment\n 15.5 Notices\n 15.6 Force Majeure 28\n 15.7 Severability\n 15.8 Cumulative Rights\n 15.9 Waiver\n 15.10 Entire Agreement\n\nEXHIBITS Exhibit A: Gilead Patents\n Exhibit B: Endispute Rules\n\n\n 3.\n\n\n\n LICENSE AND SUPPLY AGREEMENT\n\n THIS LICENSE AND SUPPLY AGREEMENT (the \"Agreement\"), dated as of August 7,\n1996 (the \"Effective Date\"), is made by and between GILEAD SCIENCES, INC., a\nDelaware corporation (\"Gilead\"), and Pharmacia & Upjohn S.A., (\"P&U\") a\nLuxembourg corporation with reference to the following:\n\n\n BACKGROUND\n\n WHEREAS, Gilead has developed a proprietary compound previously designated\nas HPMPC or GS 504 and now known under the generic name of cidofovir; and\n\n WHEREAS, Gilead has received marketing approval in the United States and\nhas filed an application for marketing approval in Europe of an injectable form\nof cidofovir for intravenous use known as \"Vistide-Registered Trademark-\n(cidofovir injection)\" for the treatment of cytomegalovirus (\"CMV\") retinitis in\npatients with AIDS; and\n\n WHEREAS, Gilead is currently conducting Phase I\/II clinical trials for the\ndelivery of an intraocular formulation of cidofovir to treat CMV retinitis in\npatients with AIDS; and\n\n WHEREAS, P&U, through its divisions and\/or affiliates, is engaged in the\nproduction, commercialization and sale of pharmaceuticals; and\n\n WHEREAS, Gilead and P&U desire to enter into a license and supply agreement\nfor the development, manufacture and marketing of injectable formulations of\ncidofovir for intravenous and intraocular use; and\n\n WHEREAS, to bring injectable forms of cidofovir to market in the P&U\nTerritory on a timely basis and maximize the value of such product, P&U\nrequires, in addition to a license under Gilead's patent rights covering\ncidofovir, access to Gilead regulatory approvals, the assurance of product\nsupply and the transfer of certain know-how related to cidofovir, and also\ndesires the benefit of Gilead's further efforts to develop cidofovir for\nintraocular delivery; and\n\n WHEREAS, Gilead and P&U have entered into a Series B Preferred Stock\nPurchase Agreement of even date herewith (the \"Stock Purchase Agreement\") with a\nview to entering into this License and Supply Agreement.\n\n NOW, THEREFORE, in consideration of the foregoing premises and the\ncovenants and obligations set forth in this Agreement, the parties hereby agree\nas follows:\n\n\n ARTICLE 1\n\n DEFINITIONS\n\n As used herein, the following terms will have the following meanings:\n\n\n 4.\n\n\n\n 1.1 \"AFFILIATE\" means any entity that directly or indirectly Owns, is\nOwned by or is under common Ownership with, a party to this Agreement, where\n\"Own\" or \"Ownership\" means direct or indirect possession of at least fifty\npercent (50%) of the outstanding voting securities of a corporation or a\ncomparable ownership in any other type of entity, PROVIDED, HOWEVER, that if the\nlaw of the jurisdiction in which such entity operates does not allow fifty\npercent (50%) or greater ownership by a party to this Agreement, such ownership\ninterest shall be at least forty percent (40%).\n\n 1.2 \"BEST EFFORTS\" has the meaning assigned to it in Section 4.1.\n\n 1.3 \"CIDOFOVIR\" means (S)-1-(3-hydroxy-2-phosphonylmethoxypropyl)-\ncytosine, also known scientifically as HPMPC, which is the active agent\ncontained in the Gilead pharmaceutical known as \"Vistide-Registered Trademark-\n(cidofovir injection).\" As used in this Agreement, the term \"Cidofovir\" excludes\nprodrugs the active species of which is HPMPC.\n\n 1.4 \"COMPETITIVE CMV PRODUCT\" has the meaning assigned to it in Section\n2.3.\n\n 1.5 \"CPMP\" means the Committee for Proprietary Medicinal Products, which\nrepresents the medicine authorities of the European Community member states.\n\n 1.6 \"EMEA\" means the European Medicines Evaluation Agency, which\ncoordinates the scientific review of human pharmaceutical products under the\ncentralized licensing procedure of the European Community.\n\n 1.7 \"EUROPEAN UNION\" or \"EU\" means the following countries: Austria,\nBelgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,\nThe Netherlands, Portugal, Spain, Sweden, the United Kingdom, and future members\nof the European Union (or its successor), upon their admission for full\nmembership (with commercial rights and privileges substantially comparable to\nthose of the foregoing countries).\n\n 1.8 \"FIRST COMMERCIAL SALE\" means, in any particular country, the first\nsale for use by the general public of the Licensed Product after required\nmarketing and pricing approvals have been granted by the governing health\nauthority of that country.\n\n\n 1.9 \"GILEAD KNOW-HOW\" means all proprietary inventions, technology,\ntrade secrets, clinical and preclinical results, and any physical, chemical or\nbiological material, or other information, owned or acquired with right to\nsublicense during the term of this Agreement by Gilead or any Affiliate of\nGilead, which are necessary or useful to P&U in the development, formulation,\nuse or sale of the Licensed Product.\n\n 1.10 \"GILEAD PATENTS\" mean all patents and patent applications, both\nforeign and domestic, which cover Cidofovir and which now or at any time during\nthe term of this Agreement are owned by or licensed to Gilead or any Gilead\nAffiliate with the right to sublicense. Set forth as Exhibit A is a list of the\nGilead Patents as of the Effective Date. Such Exhibit shall be updated no more\nfrequently than annually upon P&U's request. Gilead Patents expressly excludes\npatents and patent applications covering proforms of Cidofovir, or their use or\nmanufacture, in particular esters or amides of Cidofovir, or cyclic HPMPC (also\nknown as GS 930).\n\n 1.11 \"GILEAD TECHNOLOGY\" means Gilead Patents and Gilead Know-How.\n\n\n 5.\n\n\n\n 1.12 \"JOINT STRATEGIC COMMITTEE\" OR \"JSC\" means that committee comprised\nof three named representatives of Gilead and three named representatives of P&U\nwhose responsibility shall be as set forth in Section 3.1.\n\n 1.13 \"LICENSED PRODUCT\" means any formulation of Cidofovir manufactured\nor sold pursuant to this Agreement exclusively for intravenous or intraocular\nadministration. Licensed Products may be either Patented Products or Non-\nPatented Products. Licensed Products exclude formulations of Cidofovir other\nthan intravenous and intraocular formulations.\n\n 1.14 \"NET SALES\" means the gross billings for the sale to a third party\nof Licensed Product in finished product form made by P&U or its Affiliates or\nsublicensees, as appropriate, less the following deductions:\n\n (a) Amounts repaid or credited by reason of timely rejections or\nreturns;\n\n (b) Taxes, excises or other governmental charges upon or\nmeasured by the production, sale, transportation, delivery or use of goods;\n\n (c) Transportation and delivery charges actually incurred,\nincluding shipping insurance;\n\n (d) Normal and customary trade, cash and quantity discounts,\nrebates and allowances granted to third parties, including mandatory rebates to\ngovernmental agencies with discounts etc, which are based on multiple products\nto be allocated reasonably; and\n\n (e) Retroactive price reductions imposed by public authorities.\n\n Notwithstanding the foregoing, amounts received by P&U or its Affiliates or\nsublicensees for the sale of Licensed Products among P&U and its Affiliates or\nsublicensees for resale shall not be included in the computation of Net Sales\nhereunder.\n\n 1.15 \"NON-PATENTED PRODUCT\" means any Licensed Product, P&U's activities\nwith respect to which would not, in the absence of a license granted herein,\ninfringe a Valid Claim of any Gilead Patent in the country in which such\nactivity occurs or in a country where no Gilead Patent issues.\n\n 1.16 \"P&U KNOW-HOW\" means all proprietary inventions, technology, trade\nsecrets, clinical and preclinical results, and any physical, chemical or\nbiological material, or other information owned or acquired with right to\nsublicense during the term of this Agreement by P&U or any Affiliate of P&U,\nwhich are used in the manufacture, use or sale of Licensed Product.\n\n 1.17 \"P&U PATENTS\" means all patents and patent applications, both\nforeign and domestic, which result from P&U's work with Licensed Product, or\ncover inventions practiced by P&U in the manufacture, use or sale of Licensed\nProduct, and which now or at any time during the term of this Agreement are\nowned by or licensed to P&U or any P&U Affiliate with the right to sublicense.\n\n 1.18 \"P&U TECHNOLOGY\" means P&U Patents and P&U Know-How.\n\n 1.19 \"P&U TERRITORY\" means initially the world excluding the United\nStates, its territories and possessions subject to subsequent reductions as\nprovided in Article 4.\n\n\n 6.\n\n\n\n 1.20 \"PATENTED PRODUCT\" means any Licensed Product, P&U's activities with\nrespect to which, absent the license grants set forth herein, would infringe a\nValid Claim of any Gilead Patent in the country in which such activity occurs.\n\n 1.21 \"PROPRIETARY INFORMATION\" means, subject to the limitations set\nforth in Section 11.1 hereof, all information received by a party hereto\npursuant to this Agreement to the other party. In particular, Proprietary\nInformation shall be deemed to include, but is not limited to, any patent\napplication or drawing, any trade secret, information, invention, idea, samples\nof assay components, process, formula, or test data relating to any research\nproject, work in process, future development engineering, manufacturing,\nregulatory, marketing, servicing, financing or personnel matter relating to the\ndisclosing party, its present or future products, sales, suppliers, clients,\ncustomers, employees, investors or business, whether in oral, written, graphic\nor electronic form.\n\n 1.22 \"SPECIFICATIONS\" means those specifications for bulk Cidofovir and\nall associated test methods and finished Licensed Product as defined by Gilead.\nSuch specifications may be modified from time to time by Gilead, as provided in\nSection 6.5 below.\n\n 1.23 \"VALID CLAIM\" means a claim of (a) an issued patent, which claim has\nnot lapsed, been canceled, or become abandoned and which claim has not been\ndeclared invalid or unenforceable by a court of competent jurisdiction in a\nfinal decision from which no appeal has or can be taken, or (b) a patent\napplication, so long as such application is being diligently prosecuted.\n\n 1.24 \"VISTIDE\" means the intravenous formulation of Cidofovir which is\npresently the subject of an application for marketing approval which has been\nfiled by Gilead with the CPMP under the EMEA's centralized procedure.\n\n ARTICLE 2\n\n GRANT OF RIGHTS\n\n 2.1 LICENSE GRANTS.\n\n (a) GILEAD TECHNOLOGY. Subject to the terms of this \nAgreement, Gilead hereby grants to P&U an exclusive license to use the Gilead \nTechnology only for the manufacture, importation, use, sale and offer for \nsale of the Licensed Product in the P&U Territory, with a right to sublicense \nits Affiliates. Gilead grants no rights to P&U to manufacture bulk cidofovir \nor to import, sell or offer for sale Cidofovir in the fifty United States \nprovided, however, that the foregoing shall not restrict P&U from \nmanufacturing bulk cidofovir following the expiration of Gilead's supply \nobligations under Article 6.\n\n (b) P&U TECHNOLOGY. Subject to the terms of this Agreement, \nP&U hereby grants to Gilead and its Affiliates a non-exclusive license to use \nthe P&U Technology only for the manufacture, importation, use, sale and offer \nfor sale of (i) Licensed Products outside of the P&U Territory, and (ii) \npharmaceuticals containing Cidofovir which are not Licensed Products, on a \nworldwide basis, and (iii) otherwise in the performance of this Agreement. \nSuch license shall be royalty-free, except that if any such P&U Technology is \nin-licensed by P&U and a running royalty obligation to a non-Affiliate of P&U \nis applicable thereto, then such running royalty obligation shall be passed \nalong to Gilead. If Gilead does not agree to pay any such passed-along \namount, then the sublicense for such in-licensed technology shall not be \ngranted.\n\n 7.\n\n\n\n 2.2 SUBLICENSING. P&U shall have the right to sublicense the rights \ngranted under Section 2.1(a) to its non-Affiliates with the prior written \nconsent of Gilead, which consent shall not be unreasonably withheld. Gilead \nshall have the right to sublicense the rights granted under Section 2.1(b) to \nits non-Affiliates with the prior written consent of P&U, which consent shall \nnot be unreasonably withheld.\n\n 2.3 P&U RIGHT OF FIRST NEGOTIATION. Except as otherwise provided in \nthis Section 2.3, P&U shall have a right of first negotiation with respect to \nany product or potential product in a country of the P&U Territory (other \nthan a Licensed Product) that Gilead intends to license to a third party \nwhich is, or which can reasonably be expected to be, indicated for the \nprevention and\/or treatment of CMV infection (a \"Competitive CMV Product\") as \nfollows: Gilead shall notify P&U in writing that it intends to seek third \nparty licensees for a Competitive CMV Product prior to contacting any such \npotential third party licensees. Such written notice shall include \nsufficient detailed technical information concerning the Competitive CMV \nProduct as P&U may reasonably require to evaluate its interest in such \nproduct. P&U shall notify Gilead within [ ] after receiving \nGilead's notice of such licensing opportunity whether it is interested in \nnegotiating with Gilead the terms under which P&U shall license such \nCompetitive CMV Product from Gilead. If P&U provides such notice, the \nparties shall negotiate in good faith for a period of up to [ ]\nafter Gilead receives P&U's notice of interest (the \"Negotiation Period\") the \nterms of an agreement pursuant to which P&U will license such Competitive CMV \nProduct from Gilead. Neither Gilead nor P&U shall have any obligation to \nactually enter into a license with respect to a Competitive CMV Product. \nGilead shall be free to discuss licensing such Competitive CMV Product to \nthird parties and to grant such a license (i) if P&U does not respond to \nGilead's notice of intent to license the Competitive CMV Product within \n[ ] after P&U's receipt thereof, at any time after expiration \nof such [ ] period, or (ii) if Gilead and P&U fail to agree upon \nthe terms of a possible license to the Competitive CMV Product during the \nNegotiation Period, at any time after expiration of the Negotiation Period. \nThe foregoing right of first negotiation shall not apply to (i) any product \nwhich Gilead is developing and marketing independently for the treatment of \nCMV infection, or (ii) any products incorporating PMEA \n(9-[phosphonomethoxyethyl] adenine) or its prodrug forms, including \nspecifically adefovir dipivoxil (also known as GS 840 or bis-POM PMEA).\n\n 2.4 P&U ACQUISITION OF COMPETITIVE PRODUCT. In the event P&U \nacquires rights to any Competitive CMV Product (either by licensing \ntechnology from, or acquiring, a third party) in the P&U Territory, P&U shall \npromptly so inform Gilead. At least [ ] before filing an \napplication for marketing approval for such Competitive CMV Product, P&U \nshall have the option to terminate the license granted to it in Section \n2.1(a) with respect to the country or countries where P&U has obtained such \nproduct rights. If P&U does not provide notice of its intent to exercise such \noption in such country or countries during such time period, Gilead may elect \nat any time thereafter to convert the exclusive license granted to P&U \npursuant to Section 2.1(a) to a non-exclusive license, solely with respect to \nsuch country or countries. Such conversion shall be effective upon receipt \nby P&U of Gilead's written notice to P&U of such election. Any such \ntermination or conversion of P&U's license shall not otherwise affect the \nparties' rights and obligations under this Agreement.\n\n 2.5 P&U ACKNOWLEDGEMENT OF OTHER GILEAD PRODUCTS. P&U acknowledges \nthat Gilead has entered into a License and Supply Agreement with American \nHome Products for the development and worldwide marketing of topical \nophthalmic formulations of Cidofovir, and that Gilead is developing \nindependently a topical gel formulation of Cidofovir which is not a \nCompetitive CMV Product. P&U also confirms its understanding that Gilead \nmaintains an active program to develop prodrugs of Cidofovir, the most \nadvanced of which is cyclic HPMPC (or GS 930). P&U confirms its understanding \nthat these other formulations and products, among others, are not included in \nthe license granted to P&U under this Agreement.\n\n [*] CONFIDENTIAL TREATMENT REQUESTED\n 8.\n\n\n\n 2.6 MAINTENANCE OF LICENSES TO GILEAD OF GILEAD PATENTS. Gilead \nshall use diligent efforts to maintain valid licenses to the Gilead Patents \nwhich are in-licensed by Gilead and listed on Exhibit A as of the Effective \nDate. Gilead shall give prompt notice to P&U when it becomes aware of the \npossibility of a breach or default of any such license. Both parties shall \nmeet and mutually determine an appropriate course of action to prevent such a \nbreach or default.\n\n ARTICLE 3\n\n DEVELOPMENT AND REGULATORY AFFAIRS\n\n 3.1 JOINT STRATEGIC COMMITTEE.\n\n (a) JSC MEMBERSHIP AND GOVERNANCE. The parties shall establish\na Joint Strategic Committee to coordinate the clinical, regulatory,\nmanufacturing and commercial activities of the parties with respect to Licensed\nProduct in their respective territories. Each party shall within thirty (30)\ndays after the Effective Date select three (3) representatives to serve as\nmembers of the JSC. Each party may select additional representatives to replace\nthe initial JSC members selected by such party as necessary during the term of\nthe Agreement. Any JSC members selected by one party shall be subject to the\napproval of the other party. P&U shall appoint the Chairperson of the JSC for\nthe first year of the term of this Agreement, and upon the first anniversary of\nthe Effective Date, Gilead shall appoint the Chairperson of the JSC for the\nfollowing year. The parties will similarly alternate responsibility for\nappointing the JSC Chairperson for subsequent one-year terms during the term of\nthis Agreement. The JSC shall attempt to operate by consensus, and any issues\nthat the JSC is unable to resolve by consensus shall be submitted for resolution\npursuant to Article 14. The Chairperson of the JSC shall be responsible for\nproviding an agenda for each JSC meeting at least ten (10) days in advance of\nsuch meeting and shall prepare written minutes of all JSC meetings in reasonable\ndetail. The Chairperson shall distribute such minutes to all JSC members within\ntwenty (20) days after the relevant JSC meeting.\n\n (b) JSC MEETINGS AND RESPONSIBILITIES. The JSC shall meet at\nleast two (2) times per year during the term of this Agreement, provided that\neither party may request additional meetings as reasonably required. The JSC\nwill provide the primary means of communication between the parties regarding\nthe clinical development, regulatory approval and marketing of Licensed\nProducts. The parties shall report to the JSC on all material clinical,\nregulatory and marketing issues relating to Licensed Products, and the JSC shall\nmake recommendations and provide strategic guidance with respect to such issues.\nSpecifically, each party shall submit to the JSC any plan relating to\npublications, symposia or marketing meetings, marketing efforts, clinical\ndevelopment efforts (including any pre- and post-marketing clinical trials),\nregulatory plans, advertising and promotional materials relating to Licensed\nProducts, and the labelling of Licensed Products, in advance of its\nimplementation thereof. Additionally the JSC shall serve as a forum for\ndiscussion of opportunities for cost sharing where such activities would have\nmutual benefit. Each party shall submit to the JSC its plans for any clinical\ntrials of Licensed Product in advance of the anticipated commencement date\nthereof. Neither party shall commence any clinical trial of the Licensed\nProduct until the JSC has approved the plans therefor; provided, however that\nGilead shall not be required to obtain prior JSC approval of any Phase IV\nclinical trial of Vistide which was agreed to by Gilead with the U.S. FDA prior\nto the Effective Date in connection with obtaining marketing approval, or any\nclinical trial of Licensed Product agreed to by Gilead with clinical\ninvestigators prior to the Effective Date. The parties shall present their\nplans for commercializing Licensed Products to the JSC, which shall work with\nthe parties to help formulate a consistent, worldwide commercialization strategy\nfor Licensed Products.\n\n\n 9.\n\n\n\n 3.2 GILEAD'S OBLIGATIONS.\n\n (a) DISCLOSURE OF GILEAD KNOW-HOW. Following the Effective Date\nand through the term of this Agreement, Gilead shall make available to P&U,\nsubject to the terms of this Agreement, all Gilead Know-How, PROVIDED, HOWEVER,\nthat Gilead shall not be obligated to transfer Gilead Know-How which relates to\nthe manufacture of bulk Cidofovir, except to the extent required for regulatory\npurposes or to satisfy its customary internal requirements for quality control.\n\n (b) REGULATORY FILINGS. Gilead shall provide P&U with letters\nof reference to its dossier of regulatory filings for Licensed Products in the\nTerritory, including the drug master file regarding the manufacture of bulk\nCidofovir and any other comparable files. Gilead shall also provide reasonable\ntechnical assistance required by P&U in connection with the regulatory filings\nreferred to in Section 3.3, at no additional cost to P&U. Gilead shall provide\nadditional information as may be required by the regulatory authorities of a\nparticular country within the P&U Territory if a letter of reference is not\nsufficient for that country.\n\n (c) CENTRALIZED CPMP APPROVAL OF VISTIDE; SUBSEQUENT TRANSFER \nOF MAA. Gilead, as approved by the JSC, will perform [ \n ]any additional clinical trials and make regulatory filings necessary \nto obtain marketing approval of Vistide by the CPMP under the EMEA's \ncentralized licensing procedure. Gilead shall be the primary party \nresponsible for all communications with regulatory authorities in connection \nwith such filings, especially in regard to providing medical expertise, \nprovided that P&U will have a right to participate in all meetings between \nGilead and such authorities relating to development of Licensed Product under \nthis Agreement. As provided in Section 3.3, after Gilead has obtained CPMP \napproval of Vistide, P&U shall be the primary party responsible for obtaining \nany other required national or local reimbursement and pricing approvals and \nagreements for Vistide in the European Union countries. Gilead shall \ntransfer to P&U the marketing authorization application (\"MAA\"), or resulting \nmarketing authorization (\"MA\") covering Vistide, which is presently held by \nGilead Sciences Limited, a U.K. company wholly owned by Gilead. The parties \nagree to effect such transfer in the manner most convenient to the parties \nwhich conforms with applicable regulatory requirements. Each party shall \nbear its own expenses incurred in connection with such transfer, except that \nany transfer-related filing fees shall be divided equally by the parties. If \nsuch transfer occurs by means of the sale of Gilead Sciences Limited, the \npurchase price shall be equal to Gilead's invested capital (which is \nnominal), P&U shall promptly thereafter change the name of such entity so as \nnot to include the name of \"Gilead\", and Gilead shall indemnify P&U for any \nliabilities of such company incurred prior to the date of such sale.\n\n 3.3 P&U'S OBLIGATIONS.\n\n (a) DISCLOSURE OF P&U KNOW-HOW. Subject to Section 2.1(b), P&U\nshall disclose to Gilead any P&U Know-How which is discovered or developed\nduring the term of this Agreement.\n\n (b) REGULATORY FILINGS. Except as provided in Section 3.2(c),\nP&U will file such additional regulatory filings as may be necessary for the\nsale of Licensed Product within the P&U Territory in its own name. P&U will be\nresponsible for all communications with regulatory authorities in connection\nwith such filings provided that Gilead will have the right to participate in all\nmeetings between P&U and such regulatory authorities relating to the development\nor marketing of Licensed Products under this Agreement. P&U will keep Gilead\ninformed of the progress of such filings in each country, and will provide\nGilead with at least fifteen (15) days advance notice of the final submission of\nan application for marketing approval in any country of the P&U Territory. P&U\nwill provide Gilead with access to all regulatory filings with respect to\nLicensed Product made in the P&U Territory, and will\n\n [*] CONFIDENTIAL TREATMENT REQUESTED\n 10.\n\n\n\npromptly advise Gilead when it has obtained marketing approval, reimbursement\napproval, or pricing approval of Licensed Products in each country.\n\n 3.4 DEVELOPMENT COSTS. P&U shall be responsible for the [ \n ] clinical trials of Licensed Product in the P&U Territory including\nexpanded access or compassionate use programs, [ \n \n ] of all\nexternal development costs which are approved by the JSC and which are (i)\nrequired in order to obtain marketing approval of Licensed Product in countries\nof the P&U Territory, or (ii) required in order to improve approved product\nlabelling. In Japan, [ \n ] subject to advance budget approval by the JSC. [ \n \n ] From time to time, the parties\nmay agree to allocate the costs of clinical trials of Licensed Product in a\nmanner other than that set forth in this Agreement.\n\n 3.5 CLINICAL MATERIALS. Gilead shall timely supply P&U with such\nquantities of Licensed Product in final form as may be reasonably required by\nP&U for the conduct of clinical trials. P&U will reimburse Gilead for its\nactual costs of manufacturing such material as set forth in Article 6.\n\n 3.6 ADVERSE REACTIONS. The parties agree that, to the extent permitted\nby applicable law, Gilead shall be responsible outside of the P&U Territory for\nthe reporting of adverse events related to the use of Licensed Product, and P&U\nshall be responsible inside the P&U Territory for the reporting of such adverse\nevents. In this regard, each party agrees to advise regulatory authorities of\nthe other's role and to conform with the adverse event reporting procedures of\nthe countries in which they are marketing Licensed Products. The parties shall\nagree upon standard operating procedures for reporting such adverse events to\ngovernmental regulatory authorities and to each other prior to the date of First\nCommercial Sale of Licensed Product in any country in the P&U Territory. Any\nmodifications to the standard procedure for adverse event reporting shall be\neffective only upon the mutual consent of the parties. The provisions of this\nSection 3.6 shall survive termination of this Agreement so long as both parties\nare marketing Licensed Products.\n\n 3.7 INTRAOCULAR CLINICAL DEVELOPMENT. The JSC will meet to agree upon a\nclinical development plan for the intraocular formulation of cidofovir which\nshall have the same development costs sharing arrangement between the Parties as\nfor Vistide under Section 3.4.\n\n ARTICLE 4\n\n DUE DILIGENCE\n\n 4.1 MARKETING APPROVAL. P&U shall devote its Best Efforts to obtain\nmarketing approval for Licensed Product in substantially all markets in the P&U\nTerritory and to achieve First Commercial Sale of Licensed Product on a timely\nbasis thereafter in each country where approval is obtained. [\n\n\n\n\n\n\n\n ]\n\n [*] CONFIDENTIAL TREATMENT REQUESTED\n 11.\n\n\n\n 4.2 TERRITORIAL DILIGENCE. Specifically, to maintain its license \nrights under Section 2.1(a) in each country of the P&U territory, P&U shall \nuse Best Efforts to obtain marketing, pricing and reimbursement approval for \neach country in the P&U Territory (subject to approval by the JSC and Section \n4.2 (b) below) and to achieve First Commercial sale of Licensed Product in \neach such country within [ ] of receiving all required \napprovals. For Japan the Parties agree to [\n ]\n\n If P&U fails to satisfy such diligence standards in any particular country\nin the P&U Territory, Gilead shall have the right to notify P&U of its intent to\nterminate P&U's license in such country. Upon receipt of such notice, P&U shall\nhave a sixty (60) day period within which to submit to Gilead a specific,\nwritten plan to achieve regulatory and, where required, pricing and\nreimbursement approvals and its action steps for First Commercial Sale of\nLicensed Product within the country in question within [ ] after\nregulatory and, where required, pricing and reimbursement approval. The efforts\nof P&U sublicensees shall be treated as efforts of P&U for purposes of this\nSection 4.2. If P&U later fails to make the First Commercial Sale of Licensed\nProduct within such additional [ ] period, the countries shall be\nexcluded from the definition of P&U Territory upon ninety (90) days' advance\nwritten notice from Gilead, except if such delay is shown to be outside the\ncontrol of P&U.\n\n (a) REPORTS. Each Party shall provide regular reports to the\nJSC concerning the development and marketing of Licensed Product in the various\ncountries of the world.\n\n (b) EXCEPTIONS. Nothing in this Section 4.2 shall require P&U\nto develop or market the Licensed Product in any country in which by reason of\npricing restrictions, costs of doing business, or other reasons P&U can\ndemonstrate to Gilead's satisfaction (not to be unreasonably withheld) that P&U\nwould reasonably not choose to market Licensed Product in view of market\npotential, profit potential or strategic purpose in view of conditions then\nprevailing in such country (either directly or by reason of the effect that such\nactivity would have on other markets for the Licensed Product). It is\nspecifically understood that any request by P&U for relief under this Section\n4.2(b) shall be accompanied by a specific and detailed economic analysis\npresenting the basis for its conclusion. P&U shall not lose any license rights\nfor failure of diligence under Article 4 in any territory in which P&U is able\nto demonstrate P&U's reasoning to Gilead's satisfaction. In addition, P&U may\npropose to the JSC that regulatory approval for Licensed Product not be sought\nor obtained in a particular country. P&U shall not be relieved of its\nobligations under this Section 4.2 unless Gilead consents to removing such\ncountry from P&U's diligence obligations or delaying the time periods set forth\nabove to take into account unforeseen circumstances.\n\n ARTICLE 5\n\n COMPENSATION\n\n 5.1 LICENSE FEE. P&U shall pay to Gilead a license fee of ten million\ndollars ($10,000,000) within ten (10) days of the Effective Date. Such license\nfee shall be nonrefundable and noncreditable.\n\n 5.2 MILESTONE PAYMENT. P&U shall pay to Gilead a ten million dollar\n($10,000,000) milestone payment within thirty (30) days after its receipt of\nnotice from Gilead that the CPMP has issued a decision granting a marketing\nauthorization for Vistide. Such milestone payment shall be nonrefundable and\nnoncreditable.\n\n 5.3 ROYALTY PAYMENTS ON NET SALES. P&U shall make royalty payments to\nGilead on Net Sales of Licensed Products in the P&U Territory, payable on a\nquarterly calendar basis (\"Royalty Payments\"). Royalty Payments shall be\ncalculated on Net Sales of Patented Products as set forth in\n\n [*] CONFIDENTIAL TREATMENT REQUESTED\n 12.\n\n\n\nsubsection (a) below and shall be calculated on Net Sales of Non-Patented\nProducts as set forth in subsection (b) below.\n\n (a) PATENTED PRODUCTS ROYALTY. [\n\n\n\n\n\n\n\n\n\n\n\n ]\n\n\n (b) NON-PATENTED PRODUCTS ROYALTY. [\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n ]\n\n (c) ADJUSTMENT FOR PACKAGED PRODUCT. In the event Licensed\nProduct is sold as a package with other products (a \"Packaged Product\"), then\nthe Net Sales applicable to such sale of the Packaged Product shall be\ndetermined in a fair and reasonable manner.\n\n (d) PAYMENT FOR NON-PATENT BENEFITS. In establishing a\nstructure which provides for a lower Royalty Payment for Non-Patented Products,\nthe parties recognize, and P&U acknowledges, the substantial value of the\nvarious actions being taken by Gilead under this Agreement, in addition to the\ngrant of a patent license, to enable the rapid and effective market introduction\nof the Licensed Products in the P&U Territory. These actions include, by way of\nexample, the completion of the CPMP approval process and the transfer of the\nMAA; ongoing access to Gilead regulatory filings; the supply commitments set\nforth in Article 6; the willingness to transfer manufacturing know-how; the\nlicenses under the Gilead Know-How and trademarks; and ongoing access to\nimprovements in the Licensed Products made by Gilead during the term of this\nAgreement, including the possible introduction of an intraocular formulation of\nCidofovir. The parties agree that the Royalty Payment (plus the license fee,\nsupply payments, and the cost reimbursements provided for elsewhere herein)\nprovides fair compensation to Gilead for these \n\n [*] CONFIDENTIAL TREATMENT REQUESTED\n 13.\n\n\n\nadditional benefits in the case of the sale of Patented Products, and that \nbecause Gilead is not being otherwise compensated under this Agreement for \nsuch additional benefits, a lesser Royalty Payment is appropriate for the \nsale of Licensed Products not covered by Gilead Patents. The parties have \nagreed to the payment structure set forth herein as a convenient and fair \nmechanism to compensate Gilead for these additional benefits.\n\n 5.4 QUARTERLY PAYMENT MECHANISM; YEAR-END RECONCILIATION. For each of\nthe first three calendar quarters of each calendar year in which a Royalty\nPayment is due, P&U shall make a payment to Gilead equal to (i) P&U's total Net\nSales of Patented Products and Non-Patented Products during such quarter\nmultiplied by (ii) the total Royalty Payment that was due with respect to the\nprevious calendar year divided by the total Net Sales of Patented Products and\nNon-Patented Products during such previous calendar year. During the first\ncalendar year of this Agreement during which there are Net Sales, the rate under\n(ii) above shall be [ ] The payment due with respect to the final calendar\nquarter of the year shall be equal to the total Royalty Payment due for such\nyear less the aggregate Royalty Payments made with respect to the first three\nquarters of the year. (Thus, during the first three calendar quarters of each\ncalendar year, the Royalty Payment shall be made on the basis of the average\nrate applicable to Net Sales during the previous year. At the end of the year,\na reconciliation shall occur so that the actual payments for the year as a whole\nare equal to the amount due under Section 5.3.)\n\n 5.5 SUBLICENSE. In the event P&U sublicenses its right to sell Licensed\nProduct, such sublicenses shall include an obligation for the sublicensee to\naccount for and report its Net Sales of Licensed Products on the same basis as\nif such sales were Net Sales of Licensed Products by P&U, and P&U shall pay\nRoyalty Payments to Gilead as if the Net Sales of the sublicensee were Net Sales\nof P&U.\n\n 5.6 EXPIRATION OF ROYALTY PAYMENT OBLIGATIONS. On a country-by-country\nand product-by-product basis, P&U's Royalty Payment obligations (i) with respect\nto Patented Products shall expire upon the date on which P&U's activities with\nrespect to a Licensed Product no longer infringe a Valid Claim of a Gilead\nPatent in such country, and (ii) with respect to Non-Patented Products shall\nexpire on the date which is [ ] after the date of First Commercial\nSale of such product in such country. Upon expiration of P&U's Royalty Payment\nobligations in a country with respect to a Licensed Product, P&U's exclusive\nlicense under Gilead Know-How in such country shall convert with no further\naction required to a nonexclusive license, and P&U may thereafter continue to\nsell such Licensed Product in such country on a royalty-free basis. Thereafter,\nGilead may obtain marketing approval and market such product in such country, at\nGilead's sole expense, with no obligation to P&U.\n\n ARTICLE 6\n\n SUPPLY AND MANUFACTURING\n\n 6.1 SUPPLY OF CIDOFOVIR. Subject to the terms and conditions of this\nArticle 6, Gilead shall supply to P&U all of its requirements of bulk Cidofovir\nfor sales of Licensed Products in the P&U Territory; P&U shall not obtain bulk\nCidofovir from a third party or manufacture it directly without Gilead's written\nconsent. Such supply obligation shall terminate upon the expiration of the last\nGilead Patent. P&U will be responsible for obtaining supply of finished\nLicensed Product, by manufacturing directly or through a third party. It is\nunderstood by Gilead that P&U wishes to enter into a direct manufacturing\nagreement with Ben Venue to provide for at least the initial supply of finished\nLicensed Product. Gilead shall assist P&U in consummating this agreement.\n\n 6.2 TECHNOLOGY TRANSFER. Gilead shall cooperate in the timely transfer\nof Gilead Technology relating to the manufacture of finished Licensed Product to\nP&U or its sublicensee approved\n\n [*] CONFIDENTIAL TREATMENT REQUESTED\n 14.\n\n\n\nby Gilead. Gilead will have the right to test and approve samples from the\nfirst three (3) lots of finished Licensed Product manufactured by P&U prior to\nrelease for commercial distribution. Any such transfer of Gilead Technology\nshall be subject to the confidentiality obligations of the parties hereunder.\nSuch technology transfer shall be provided without charge to P&U, except that if\nany Gilead or other personnel need to travel in order to effect such transfer,\nthe costs of such travel and associated lodging and other expenses shall be\nborne by P&U.\n\n 6.3 SUPPLY OF INTRAOCULAR CIDOFOVIR. The parties intend that Gilead\nshall supply P&U with clinical materials for intraocular Cidofovir, but that P&U\nwill obtain its own source of manufacturing capacity for commercial quantities\nof intraocular Cidofovir. In such event, subject to the termination provisions\nof Section 9.3, Gilead shall supply such quantities of bulk Cidofovir as may be\nordered by P&U to enable the production of intraocular Cidofovir.\n\n 6.4 SUPPLY PRICES. [\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n ]\n\n 6.5 SPECIFICATIONS. Promptly following execution of this Agreement,\nGilead shall deliver to P&U its current specifications for bulk Cidofovir (the\n\"Specifications\"), which are consistent with those set forth in the applications\nfor marketing approval of Vistide filed by Gilead in the United States and\nEurope. The parties recognize that Gilead may hereafter make changes to the\nSpecifications for bulk Cidofovir. Any changes in the Specifications which\nrequires regulatory approval, or materially and demonstrably adversely affects\nthe Licensed Product as then being developed or sold by P&U, may be made by\nGilead only with the prior written approval of P&U. Any changes in the\nSpecifications which do not require regulatory approval, and do not materially\nand demonstrably adversely affect the Licensed Product as then being developed\nor sold by P&U, may be made by Gilead upon written notice to P&U. In no event\nshall Gilead cease to supply P&U with bulk Cidofovir conforming to the old\nSpecifications until P&U has obtained the necessary approvals provided, however,\nthat P&U shall make a good faith effort to obtain the necessary approvals in a\ntimely fashion.\n\n 6.6 FORECASTS AND ORDERS. P&U shall provide Gilead with rolling\nforecasts of its expected requirements of bulk Cidofovir over the next 18\nmonths. Forecasts shall be due quarterly and shall set forth (i) P&U's actual\nrequirements for the following two quarters, which portion of the forecast shall\nbe binding and serve as an order for bulk Cidofovir, and (ii) P&U's best\nestimate of its requirements for the following four quarters. Gilead shall\ndeliver the bulk Cidofovir ordered for delivery by the start of each calendar\nquarter, but in no event shall Gilead be required to deliver more Cidofovir in\nany given quarter than was estimated for such quarter in the last two applicable\nforecasts. In addition, except with the written consent of Gilead, P&U may not\nincrease its forecast of any material requirements in a\n\n [*] CONFIDENTIAL TREATMENT REQUESTED\n 15.\n\n\n\nparticular calendar quarter by more than twenty five percent (25%) from its\nforecast for such quarter during its immediately preceding forecast.\n\n 6.7 ACCEPTANCE; SHIPMENT AND RISK OF LOSS.\n\n (a) ACCEPTANCE. Gilead (directly or through its supplier) shall\ntest a portion of each batch in each delivery of Cidofovir and supply P&U with a\nsample of bulk Cidofovir and a certificate of analysis (\"CERTIFICATE OF\nANALYSIS\") confirming that such batch meets the Specifications. P&U may then\nretest the Cidofovir to confirm that it meets Specifications. P&U may reject\nany batch of Cidofovir for failure to meet Specifications by providing written\nnotice to Gilead within fifteen (15) days of P&U's receipt of such batch. In\nthe event that P&U rejects any batch of Cidofovir, Gilead shall use its Best\nEfforts to supply P&U with replacement material within thirty (30) days after\nGilead receives P&U's written notice of rejection. If Gilead agrees that the\nbatch did not meet Specifications, such replacement batch shall be provided\nwithout charge. If Gilead disagrees with P&U's determination that certain\nmaterial does not meet the Specifications, such material shall be submitted to a\nmutually acceptable third party laboratory. Such third party laboratory shall\ndetermine whether the material in question meets the Specifications and the\nparties agree that such laboratory's determination shall be final and\ndeterminative. The party against whom the third party tester rules shall bear\nall costs of the third party testing. If the third-party tester rules that the\nbatch fails to meet Specifications, Gilead's replacement of the batch shall be\nat no charge to P&U. If the third party tester rules that the batch did meet\nSpecifications, P&U shall accept such batch for use or reimburse Gilead's cost\nof manufacture. If for any reason P&U does not use a batch of material\ndelivered to it by Gilead, it shall destroy or return such batch of material, as\ndirected by Gilead.\n\n (b) SHIPMENT; RISK OF LOSS. Unless otherwise agreed to in\nwriting, all shipments shall be F.O.B the place of manufacture. Material\nsupplied under this Article 6 shall be made available for shipment upon\nacceptance of the relevant sample in accordance with Section 6.9(a). Shipment\nshall occur by such method and carrier as P&U may designate, and all\ntransportation expenses for the delivery of material to P&U shall be borne by\nP&U. P&U shall bear the risk of loss of any material following shipment from\nthe place of manufacture.\n\n (c) MINIMUM INVENTORIES. P&U acknowledges the inherent risk\nthat a batch of bulk or finished product may be lost in production or shipment,\nand agrees to maintain an inventory of materials it purchases from Gilead\nsufficient to supply at least ninety (90) days worth of P&U's requirements in\nthe event of late delivery by Gilead.\n\n 6.8 INVOICES. Gilead will invoice P&U for each batch of material \nsupplied to P&U under this Article 6. P&U shall pay such invoices within \n[ ] of receipt of goods. Any invoiced amount which is not paid \nwithin [ ] period shall be assessed a late payment fee at \nthe rate of 10% per annum or the maximum rate permitted by applicable law \nwith respect to such payment obligations, whichever is less.\n\n 6.9 SHORTAGES OF SUPPLY. If Gilead is unable to supply quantities of\nbulk Cidofovir ordered by P&U in accordance with this Article 6, then, unless\nthe parties otherwise agree at the time, Gilead shall allocate the available\nbulk Cidofovir, as the case may be, between itself and P&U on a pro rata basis\nin accordance with the respective utilization of each party of the material in\nquestion in the four calendar quarters immediately preceding the quarter in\nwhich such shortage occurs. In such event, Gilead shall further use its\nreasonable efforts to remedy the shortage in question. The product allocation\nprovided in this Section 6.9 shall be the sole remedy of P&U in the event of\nsuch a supply shortage, and Gilead shall not have monetary liability as a result\nof such supply shortage.\n\n [*] CONFIDENTIAL TREATMENT REQUESTED\n 16.\n\n\n\n ARTICLE 7\n\n MARKETING\n\n 7.1 PROMOTION AND MARKETING EFFORTS. Upon gaining the necessary\nregulatory, pricing and reimbursement approvals, P&U and\/or its sublicensees\nshall use its Best Efforts to promote and market the Licensed Product in all\ncountries in the P&U Territory (except in those countries where the provisions\nof Article 4 do not require such marketing). Any sublicense of marketing rights\nby P&U shall include a covenant for such sublicensee to use Best Efforts to\nmaintain and increase sales of the Licensed Product in each country covered by\nthe sublicense.\n\n 7.2 PRICING. P&U shall determine, in its sole discretion, the pricing,\ndiscounting policy and other commercial terms relating solely to Licensed\nProducts.\n\n 7.3 TRADEMARKS. P&U shall sell Licensed Product under the mark\n\"Vistide\" and other trademarks selected and owned by Gilead to the extent\nallowed by regulatory authorities in the P&U Territory. In the event such\nauthorities do not permit P&U to use the Gilead trademarks, P&U shall select and\nown its own trademarks for the commercialization of Licensed Product. Gilead\nhereby grants P&U a limited license to the use of the Gilead marks, trade names\nand logos to be designated by Gilead in connection with the commercialization\nactivities provided for herein (collectively, the \"Marks\") for the sole purpose\nof selling Licensed Products in the P&U Territory. Such license shall be\nexclusive so long as P&U is making Royalty Payments to Gilead under Article 5,\nand thereafter shall be perpetual with respect to the name \"Vistide\" and other\nproduct names and logos previously designated by Gilead specifically for\nLicensed Product, but shall expire with respect to Marks used more generally by\nGilead. P&U may sublicense its rights under this Section 7.3 to its non-\nAffiliates with the prior written consent of Gilead, which consent shall not be\nunreasonably withheld. P&U shall submit any materials bearing the Gilead Marks\nto Gilead for approval prior to using such materials to commercialize Licensed\nProducts, and Gilead shall not unreasonably withhold such approval. P&U will\nnot take any action which may damage the goodwill associated with the Gilead\nMarks and will not damage the reputation for quality associated with the Gilead\nMarks. Except as provided in this Section 7.3, P&U shall have no right or\ninterest in any Gilead trademark used in association with any Gilead product.\n\n 7.4 USE OF THE GILEAD NAME. Gilead and P&U agree that the packaging and\npromotional materials for the Licensed Product marketed by P&U and\/or P&U's\nsublicensees shall identify Gilead as developer and licensor, to the extent that\nP&U can reasonably accommodate same. P&U hereby acknowledges Gilead's ownership\nof the Gilead Sciences name. Gilead hereby agrees to indemnify and hold P&U\nharmless from any use hereunder of the Gilead Sciences name in connection with\nLicensed Product in the P&U Territory which occurs with the consent of Gilead,\nprovided that P&U provides Gilead prompt notice of any such claim and grants to\nGilead the exclusive ability to defend (with the reasonable cooperation of P&U)\nand settle any such claim. If only one name is allowed pursuant to governmental\nlaws or regulations, then P&U may use its name alone, without identifying Gilead\nas developer and licensor.\n\n 7.5 DISTRIBUTION OF LICENSED PRODUCT. P&U shall be responsible for\ndistribution of Licensed Product in the P&U Territory. Gilead shall apply for\nexemptions or waivers available under U.S. export control laws applicable to the\nshipment of Licensed Products to locations designated by P&U.\n\n 7.6 EXPORT CONTROL. This Agreement is made subject to any restrictions\nconcerning the export of products or technical information from the United\nStates of America or other countries which may be imposed upon or related to\nGilead or P&U from time to time. Each party agrees that it will not\n\n\n 17.\n\n\n\nexport, directly or indirectly, any technical information acquired from the\nother party under this Agreement or any products using such technical\ninformation to a location or in a manner that at the time of export requires an\nexport license or other governmental approval, without first obtaining the\nwritten consent to do so from the appropriate agency or other governmental\nentity.\n\n ARTICLE 8\n\n PAYMENTS; RECORDS; AUDIT\n\n 8.1 PAYMENT; REPORT. All amounts payable to either party under this \nAgreement shall be paid in U.S. dollars within [ ] of the end \nof each calendar quarter or as otherwise specifically provided herein. Each \npayment of Royalty Payments shall be accompanied by a statement, country by \ncountry, of the amount of Net Sales during such quarter and on a cumulative \nbasis for the current year and the amount of Royalty Payments or other \npayments due on such sales. An itemized calculation of [ \n ] as described in \nSection 6.4 will also be provided together with quarterly payments.\n\n 8.2 EXCHANGE RATE; MANNER AND PLACE OF PAYMENT. All payments due\nhereunder from time to time shall be paid in U.S. Dollars. For purposes of\ncomputing such payments, the Net Sales of Licensed Product sold for foreign\n(i.e., non-United States) funds shall first be determined in the foreign funds\nfor which such Licensed Product is sold and then converted to its equivalent in\nthe U.S. Dollars. Conversion of the amounts of Net Sales from local currencies\nto U.S. dollars will be made using the same method by P&U in the normal\nconversion of financial statements for internal and external reporting purposes\non a monthly basis using at least three (1st, 15th and end of month) exchange\nrates as published by the local country source customarily used by P&U in the\nmonth in which sales were invoiced.\n\n Notwithstanding the foregoing, if by reason of any restrictive\nexchange laws or regulations, P&U shall be unable to convert to U.S. Dollars the\namount, determined as above, equivalent to the amount due by P&U hereunder, then\nP&U shall so notify Gilead promptly and provide an explanation of the\ncircumstances. In such event, P&U shall make all such payments or the balance\nthereof due hereunder and which is not paid in foreign currency as provided\nbelow, in U.S. Dollars as soon as reasonably possible after and to the extent\nthat such restrictive exchange laws or regulations are lifted so as to permit\nP&U to pay amounts due under this Section 8.2 in U.S. Dollars. P&U shall\npromptly notify Gilead if such restrictions are so lifted. At its option Gilead\nshall meanwhile have the right to request the payment (to it or to its nominee),\nand, upon request, P&U shall pay or cause to be paid amounts due (or such\nportions thereof as are specified by Gilead) in the currency of any other\ncountry designated by Gilead and legally available to P&U under the then-\nexisting laws or regulations. Any payments shall be payable to Gilead by wire\ntransfer at such bank in the United States as Gilead shall specify from time to\ntime. Not less than one (1) business day prior to such wire transfer, the\nremitting party shall telefax the receiving party advising it of the amount and\nof the payment to be made.\n\n 8.3 RECORDS AND AUDIT.\n\n (a) P&U shall keep complete and accurate records pertaining to\nthe sale or other disposition of the Licensed Product and of the Royalty\nPayments and other amounts payable under this Agreement in sufficient detail to\npermit Gilead and\/or its licensors to confirm the accuracy of all payments due\nhereunder. Gilead shall have the right to cause an independent, certified\npublic accountant to which P&U has no reasonable objection to audit such records\nto confirm P&U's Net Sales and Royalty Payments including supply price\nadjustments as described in Section 6.4 for the preceding year. Such audit\nrights may be exercised no more often than once a year, within three (3) years\nafter the Royalty Payment period\n\n [*] CONFIDENTIAL TREATMENT REQUESTED\n 18.\n\n\n\nto which such records relate, upon notice to P&U and during normal business\nhours. Gilead will bear the full cost of such audit unless such audit discloses\nan underpayment of more than five percent (5%) from the amount of Royalty\nPayments due. In such case, P&U shall bear the full cost of such audit. The\nterms of this Section 8.3 (a) shall survive any termination or expiration of\nthis Agreement for a period of three (3) years.\n\n (b) Upon reasonable notice, P&U may perform GMP audits of Gilead\nfacilities, or contract manufacturers for Gilead, as they are or might be used\nin the production of items controlled in the registration applications under\nParagraph 3.2(c) when the registration transfers to P&U or Paragraph 3.2(b) when\nP&U successfully gains its own approvals. Expenses for such audits will be\nborne by P&U.\n\n\n 8.4 WITHHOLDING TAXES. All payments made by P&U to Gilead under this\nAgreement and the Stock Purchase Agreement shall be made free and clear of any\ndeductions or withholdings except to the extent provided for in this Section\n8.4. Any and all taxes levied on account of Royalty Payments paid or owed from\na country in which provision is made in the law or by regulation for withholding\nwill be deducted from Royalty Payment paid Gilead hereunder. P&U shall\ncooperate with Gilead to claim exemption from such deductions or withholdings\nunder any double taxation or similar agreement in force from time to time and\nshall endeavor to secure any such exemptions before Royalty Payments are made\nhereunder. If P&U makes any payment without reduction for withholding and it\nlater transpires that an amount of tax should have been withheld on such Royalty\nPayment (\"under withheld tax\"), P&U shall be entitled to recover the under\nwithheld tax by an additional withholding from any payment due to Gilead under\nthis Agreement. Similarly, if P&U withholds an amount of tax which is later\ndetermined to have not been due, P&U shall reimburse Gilead for such over\nwithheld amounts.\n\n ARTICLE 9\n\n TERM AND TERMINATION\n\n 9.1 TERM. The term of this Agreement shall commence upon the Effective\nDate and, unless sooner terminated as provided in this Article 9, expire on the\nexpiration of all the Royalty Payment obligations set forth under Article 5.\n\n 9.2 LICENSES UPON EXPIRATION. In the event that the Agreement expires\nas set forth in Section 9.1 above without early termination, the license granted\nunder Section 2.1 with respect to the Gilead Technology shall automatically\nbecome a non-exclusive, irrevocable, fully-paid license to use and\/or sublicense\nthe use of Gilead Know-How to manufacture, use and sell the Licensed Products\nworldwide. In any event of termination of this Agreement by reason other than\nbreach of this Agreement by Gilead, the licenses to Gilead set forth in Section\n2.1(b) shall survive.\n\n 9.3 TERMINATION FOR BREACH. Each party shall have the right to\nterminate this Agreement and its obligations hereunder for material breach by\nthe other party, which breach remains uncured for ninety (90) days after written\nnotice is provided to the breaching party, or in the case of an obligation to\npay Royalty Payments or other amounts owing under this Agreement, which breach\nremains uncured for thirty (30) days after written notice to the breaching party\nunless there exists a bona fide dispute as to whether such Royalty Payments or\nother amounts are owing. Notwithstanding any termination under this Section 9.3,\nany obligation to pay Royalty Payments which had accrued or become payable as of\nthe date of termination shall survive termination of this Agreement.\n\n\n 19.\n\n\n\n 9.4 TERMINATION IN EVENT OF PATENT CHALLENGE. Gilead shall have the\nright to terminate this Agreement if P&U challenges the validity of the Gilead\nPatents within any country in the P&U Territory effective thirty (30) days after\nP&U's receipt of written notice of such termination by Gilead.\n\n 9.5 UNCONDITIONAL RIGHT TO TERMINATE. P&U may in its sole \ndiscretion terminate this Agreement in whole but not in part by providing \n[ ] written notice to Gilead, provided that such termination \nshall not be effective until at least [ ] after the Effective Date. \n Termination under this provision will not relieve P&U of any obligation \noccurred prior to termination, such as confidentiality, payments and other \nprovisions which by their nature would survive termination.\n\n 9.6 REVERSION OF PRODUCT RIGHTS. In the event that a party terminates\nthis Agreement pursuant to Sections, 9.3, 9.4 or 9.5 above, all licenses granted\nto the other party under Section 2.1 hereof shall terminate. In the event that\nP&U permanently loses its right to use and sell the Licensed Product in any\ncountry other than by reason of any action or failure to act on the part of\nGilead or any party acting on behalf of Gilead, all licenses granted under\nSection 2.1(a) hereof shall terminate in such country.\n\n 9.7 SURVIVAL. Articles 1, 9, 11, 12, 14 and 15 and Section 3.6 of this\nAgreement shall survive termination of this Agreement for any reason (subject to\nany subsequent dates of termination referred to in such individual Articles).\n\n ARTICLE 10\n\n INTELLECTUAL PROPERTY\n\n 10.1 PROSECUTION OF PATENTS. Gilead Patents shall be prosecuted and\nmaintained by Gilead or its licensors, at Gilead's expense. P&U Patents shall\nbe prosecuted and maintained by P&U, at its expense. In the event that Gilead\nelects not to maintain any issued patent within the Gilead Patents or not to\nfile any patent term extensions to the Gilead Patents which P&U believes are\nappropriate to obtain an extended period of market exclusivity for Licensed\nProduct, Gilead will offer to assign such patent rights to P&U. If P&U elects\nto take over responsibility for such patent rights any license obligations which\nspecifically relate to such patent rights are terminated, i.e., royalties for\nPatented Products.\n\n 10.2 INFRINGEMENT OF PATENTS BY THIRD PARTIES.\n\n (a) NOTIFICATION. Each party shall promptly notify the other in\nwriting of any alleged or threatened infringement of the Gilead Patents of which\nit becomes aware.\n\n (b) GILEAD PATENTS. Gilead shall have the right, but not the\nobligation, to bring, at Gilead's expense and in its sole control, an\nappropriate action against any person or entity infringing a Gilead Patent\ndirectly or contributorily. If Gilead does not bring such action within ninety\n(90) days of notification thereof to or by P&U, P&U will have the right to bring\nsuch action at P&U's sole expense and will be entitled to all relief and damages\nawarded. In either situation, P&U or Gilead will fully cooperate with the\nresponsible party at the responsible party's expense. Such cooperation shall\ninclude, if required in order to bring such an action, providing information\nrelating to infringement.\n\n 10.3 INFRINGEMENT OF THIRD PARTY RIGHTS. In the event that any Licensed\nProduct manufactured, used or sold under this Agreement becomes the subject of a\nthird party claim for patent or trademark infringement anywhere in the world,\nand irrespective of whether Gilead or P&U is charged\n\n [*] CONFIDENTIAL TREATMENT REQUESTED\n 20.\n\n\n\nwith said infringement, and the venue of such claim, the parties shall promptly\nmeet to consider the claim and the appropriate course of action. Unless the\nparties otherwise agree, the party against which such third party infringement\nclaim is brought shall defend against such claim at its sole expense and the\nother party shall have the right, but not the obligation, to participate in any\nsuch suit, at its sole option and at its own expense. Such other party shall\nreasonably cooperate with the party conducting the defense of the claim,\nincluding if required to conduct such defense, furnishing a power of attorney.\nNeither party shall enter into any settlement that affects the other party's\nrights or interests without such other party's written consent, which consent\nshall not be unreasonably withheld. If in the opinion of P&U's counsel, a\nlicense with respect to such third party patents or trademarks is necessary to\nenable P&U to continue to make, use, sell offer for sale or import Licensed\nProduct, then P&U shall notify Gilead of such conclusion and the basis for it\nand give Gilead a reasonable opportunity to oppose such claim. In the event\nthat Gilead elects not to oppose the claim or does not successfully obtain any\nnecessary license, P&U shall have the right to negotiate directly with such\nthird party for a license. Fifty percent (50%) of any royalty payable to a\nthird party by P&U necessary to make, use or sell Licensed Product will be\ndeductible from any royalty due Gilead but no such deduction will be more than\nfifty percent (50%) of any amount due Gilead in a reporting period. Any third\nparty royalties not deductible in any one reporting period may be carried over\nto the next reporting period until extinguished.\n\n 10.4 PATENT MARKING. P&U shall mark Licensed Products with appropriate\npatent numbers or indicia at Gilead's instruction and election, as, when and\nwhere P&U may reasonably accommodate same, given packaging, printing schedules\nand other factors, in those countries where markings have notice value as\nagainst infringers.\n\n 10.5 JSC REVIEW OF PATENT STRATEGY. The JSC will review overall patent\ndefense and enforcement strategy, and resolve any disagreements between the\nparties on patent-related matters.\n\n\n ARTICLE 11\n\n INDEMNIFICATION\n\n 11.1 INDEMNIFICATION BY GILEAD. Gilead hereby agrees to indemnify, hold\nharmless and defend P&U against any and all expenses, costs of defense\n(including without limitation attorneys' fees, witness fees, damages, judgments,\nfines and amounts paid in settlement) and any amounts P&U becomes legally\nobligated to pay because of any claim or claims against it to the extent that\nsuch claim or claims (i) arise out of the failure of bulk Cidofovir supplied\nhereunder to meet the Specifications, (ii) arise out of the breach or alleged\nbreach of any representation or warranty by Gilead hereunder, or (iii) are due\nto the gross negligence or willful misconduct of Gilead; PROVIDED that (a) P&U\nprovides Gilead with prompt notice of any such claim and the exclusive ability\nto defend (with the reasonable cooperation of P&U) and settle any such claim and\n(b) such indemnities shall not apply to the extent such claims are covered by\nP&U's indemnity set forth in Section 11.2 below.\n\n 11.2 INDEMNIFICATION BY P&U. P&U hereby agrees to indemnify, hold\nharmless and defend Gilead against any and all expenses, costs of defense\n(including without limitation attorneys' fees, witness fees, damages, judgments,\nfines and amounts paid in settlement) and any amounts Gilead becomes legally\nobligated to pay because of any claim or claims against it to the extent that\nsuch claim or claims (i) result from P&U's activities under this Agreement, (ii)\narise out of the breach or alleged breach of any representation or warranty by\nP&U hereunder, (iii) are due to the gross negligence or willful misconduct of\nP&U, or (iv) arise out of the possession, final manufacture, use, sale or\nadministration of the Licensed Product by P&U or P&U's Affiliates or\nsublicensees; PROVIDED that (a) Gilead provides P&U with prompt\n\n\n 21.\n\n\n\nnotice of any such claim and the exclusive ability to defend (with the\nreasonable cooperation of Gilead) or settle any such claim and (b) such\nindemnities shall not apply to the extent such claims are covered by Gilead's\nindemnity set forth in Section 11.1 above.\n\n 11.3 MECHANICS. In the event that the parties cannot agree as to the\napplication of Sections 11.1 and 11.2 above to any particular loss or claim, the\nparties may conduct separate defenses of such claim. Each party further\nreserves the right to claim indemnity from the other in accordance with Sections\n11.1 and 11.2 above upon resolution of the underlying claim, notwithstanding the\nprovisions of Sections 11.1 and 11.2 above requiring the indemnified party to\ntender to the indemnifying party the exclusive ability to defend such claim or\nsuit.\n\n 11.4 INSURANCE COVERAGE. Both Parties represent and warrant that they\nare covered and will continue to be covered by a comprehensive general liability\ninsurance program which covers all their activities and obligations hereunder.\nEach party will provide the other with written notice at least fifteen (15) days\nprior to any cancellation or material change in such insurance program. Each\nParty will maintain such insurance program, or other program with comparable\ncoverage, beyond the expiration or termination of this Agreement during (i) the\nperiod that any Licensed Product is being commercially distributed or sold other\nthan for the purpose of obtaining regulatory approvals by P&U or by a\nsublicensee, Affiliate or agent of P&U and (ii) a commercially reasonable period\nthereafter.\n\n ARTICLE 12\n\n CONFIDENTIALITY\n\n 12.1 PROPRIETARY INFORMATION; EXCEPTIONS. Each party will maintain all\nProprietary Information received by it under this Agreement in trust and\nconfidence and will not disclose any such Proprietary Information to any third\nparty or use any such Proprietary Information for any purposes other than those\nnecessary or permitted for performance under this Agreement. In particular,\nneither party shall use any Know-How of the other party for the manufacture or\nsale of any product other than the Licensed Product, except as expressly\nauthorized by this Agreement. Each party may use such Proprietary Information\nonly to the extent required to accomplish the purposes of this Agreement.\nProprietary Information shall not be used for any purpose or in any manner that\nwould constitute a violation of any laws or regulations, including without\nlimitation the export control laws of the United States. Proprietary\nInformation shall not be reproduced in any form except as required to accomplish\nthe intent of this Agreement. No Proprietary Information shall be disclosed to\nany employee, agent, consultant, Affiliate, or sublicensee who does not have a\nneed for such information. To the extent that disclosure is authorized by this\nAgreement, the disclosing party will obtain prior agreement from its employees,\nagents, consultants, Affiliates, sublicensees or clinical investigators to whom\ndisclosure is to be made to hold in confidence and not make use of such\ninformation for any purpose other than those permitted by this Agreement. Each\nparty will use at least the same standard of care as it uses to protect its own\nProprietary Information of a similar nature to ensure that such employees,\nagents, consultants and clinical investigators do not disclose or make any\nunauthorized use of such Proprietary Information, but no less than reasonable\ncare. Each party will promptly notify the other upon discovery of any\nunauthorized use or disclosure of the Proprietary Information.\n\n Proprietary Information shall not include any information which:\n\n (a) is now, or hereafter becomes, through no act or failure to\nact on the part of the receiving party in breach hereof, generally known or\navailable;\n\n\n 22.\n\n\n\n (b) is known by the receiving party at the time of receiving\nsuch information, as evidenced by its written records;\n\n (c is hereafter furnished to the receiving party by a third\nparty, as a matter of right and without restriction on disclosure;\n\n (d) is independently developed by the receiving party without\nany breach of this Agreement; or\n\n (e) is the subject of a written permission to disclose provided\nby the disclosing party.\n\n The parties agree that the material financial terms of the Agreement will\nbe considered Proprietary Information of both parties. Notwithstanding the\nforegoing, either party may disclose such terms except for Cost of Goods and\nRoyalty Payments to bona fide potential corporate partners, to the extent\nrequired or contemplated by this Agreement, and to financial underwriters and\nother parties with a need to know such information. All such disclosures shall\nbe made only to parties under an obligation of confidentiality.\n\n 12.2 AUTHORIZED DISCLOSURE. Notwithstanding any other provision of this\nAgreement, each party may disclose Proprietary Information if such disclosure:\n\n (a) is in response to a valid order of a court or other\ngovernmental body of the United States or a foreign country, or any political\nsubdivision thereof; PROVIDED, HOWEVER, that the responding party shall first\nhave given notice to the other party hereto and shall have made a reasonable\neffort to obtain a protective order requiring that the Proprietary Information\nso disclosed be used only for the purposes for which the order was issued;\n\n (b) is otherwise required by law or regulation, including SEC\nrelated documents; or\n\n (c) is otherwise necessary to file or prosecute patent\napplications, prosecute or defend litigation or comply with applicable\ngovernmental regulations or otherwise establish rights or enforce obligations\nunder this Agreement, but only to the extent that any such disclosure is\nnecessary. Under no circumstances will P&U disclose publicly proprietary\nfeatures of Gilead manufacturing technology for Cidofovir; PROVIDED, HOWEVER,\nthat Gilead shall cooperate with P&U to disclose such information to the extent\nrequired to provide P&U with reasonable protection from liability by reason of\nthis prohibition on disclosure.\n\n 12.3 RETURN OF PROPRIETARY INFORMATION. In the event either party loses\na license to Know-How which was granted to it under this Agreement, such party\nshall use diligent efforts (including without limitation a diligent search of\nfiles and computer storage devices) to return all Proprietary Information\nreceived by it from the other party, PROVIDED, HOWEVER, that such party may keep\none copy of such Proprietary Information for legal archival purposes. Access to\nthe copy so retained by a party's legal department shall be restricted to\ncounsel and no use of such Proprietary Information shall not be used except in\nthe resolution of any claims or disputes arising out of this Agreement.\n\n\n 23.\n\n\n\n ARTICLE 13\n\n REPRESENTATIONS AND WARRANTIES\n\n 13.1 MUTUAL REPRESENTATIONS AND WARRANTIES. Each party hereby represents\nand warrants:\n\n (a) CORPORATE POWER. Such party is duly organized and validly\nexisting under the laws of the state or country of its incorporation and has\nfull corporate power and authority to enter into this Agreement and to carry out\nthe provisions hereof.\n\n (b) DUE AUTHORIZATION. Such party is duly authorized to execute\nand deliver this Agreement and to perform its obligations hereunder.\n\n (c) BINDING AGREEMENT. This Agreement is a legal and valid\nobligation binding upon it and is enforceable in accordance with its terms. The\nexecution, delivery and performance of this Agreement by such party does not\nconflict with any agreement, instrument or understanding, oral or written, to\nwhich it is a party or by which it may be bound, nor violate any law or\nregulation of any court, governmental body or administrative or other agency\nhaving authority over it.\n\n 13.2 GILEAD REPRESENTATIONS AND WARRANTIES.\n\n (a) Gilead represents and warrants that it is unaware of any\npatents or trade secret rights owned or controlled by a third party, to which it\ndoes not already have rights, which would dominate, or be infringed or\nmisappropriated by the manufacture of Licensed Product or its use or sale, and\nis unaware of any claims of such domination, infringement or misappropriation.\n\n (b) Gilead makes the following representations and warranties\nwith respect to all bulk Cidofovir supplied by it hereunder:\n\n A. Such Cidofovir shall be manufactured in accordance with all\nUnited States federal, state and local statutes, ordinances and regulations,\nincluding but not limited to, the Federal Food, Drug and Cosmetic Act of 1938,\nas amended from time to time (the \"Act\"), and the regulations thereunder,\nincluding Good Manufacturing Practice Regulations which are in force or are\nhereafter adopted. Gilead shall also endeavor in good faith to satisfy any\nadditional requirements of other regulatory agencies with respect to the bulk\nCidofovir supplied by it to P&U hereunder.\n\n B. Cidofovir delivered hereunder shall not be adulterated or\nmisbranded within the meaning of the Act.\n\n C. Gilead has good and marketable title to, and the right to\nsell, the Cidofovir and Licensed Product.\n\n 13.3 NO OTHER REPRESENTATIONS. THE EXPRESS REPRESENTATIONS AND\nWARRANTIES STATED IN THIS ARTICLE 13 ARE IN LIEU OF ALL OTHER REPRESENTATIONS\nAND WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, THE WARRANTIES\nOF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.\n\n\n 24.\n\n\n\n ARTICLE 14\n\n DISPUTE RESOLUTIONS; VENUE AND GOVERNING LAW\n\n 14.1 DISPUTES. The parties recognize that disputes as to certain matters\nmay from time to time arise during the term of this Agreement which relate to\neither party's rights and\/or obligations hereunder or thereunder. It is the\nobjective of the parties to establish procedures to facilitate the resolution of\ndisputes arising under this Agreement in an expedient manner by mutual\ncooperation and without resort to litigation. To accomplish this objective, the\nparties agree to follow the procedures set forth in this Article 14 if and when\na dispute arises under this Agreement.\n\n In the event of disputes between the parties, including disputes among the\nmembers of the JSC which such committee is unable to resolve, either party may,\nby written notice to the other, have such dispute referred to their respective\nexecutive officers designated below or their successors, for attempted\nresolution by good faith negotiations within fourteen (14) days after such\nnotice is received. Said designated officers are as follows:\n\n FOR P&U: Secretary\n\n FOR GILEAD: Chief Executive Officer\n\nIn the event the designated executive officers are not able to resolve such\ndispute, either Party may at anytime after the 14 day period invoke the\nprovisions of Section 14.2 hereinafter.\n\n 14.2 ALTERNATIVE DISPUTE RESOLUTION. Any dispute, controversy or claim\narising out of or relating to the validity, construction, enforceability or\nperformance of this Agreement, including disputes relating to alleged breach or\nto termination of this Agreement, other than disputes which are expressly\nprohibited herein from being resolved by this mechanism, shall be settled by\nbinding Alternative Dispute Resolution (\"ADR\") in the manner described below:\n\n (a) ADR REQUEST. If a party intends to begin an ADR to resolve\na dispute, such Party shall provide written notice (the \"ADR Request\") to\ncounsel for the other Party informing such other Party of such intention and the\nissues to be resolved. From the date of the ADR Request and until such time as\nany matter has been finally settled by ADR, the running of the time periods\ncontained in Section 9.3 as to which party must cure a breach of this Agreement\nshall be suspended as to the subject matter of the dispute.\n\n (b) ADDITIONAL ISSUES. Within ten (10) business days after the\nreceipt of the ADR Request, the other party may, by written notice to the\ncounsel for the party initiating ADR, add additional issues to be resolved.\n\n 14.3 ARBITRATION PROCEDURE. The ADR shall be conducted pursuant to\nENDISPUTE Rules A and C (1993), attached hereto as Exhibit B. Notwithstanding\nthose rules, the following provisions shall apply to the ADR hereunder:\n\n (a) ARBITRATOR. The arbitration shall be conducted by a panel\nof three arbitrators (\"the Panel\"). The Panel shall be selected from a pool of\nretired independent federal judges to be presented to the parties by ENDISPUTE.\n\n\n 25.\n\n\n\n (b) PROCEEDINGS. The time periods set forth in the ENDISPUTE\nrules shall be followed, unless a party can demonstrate to the Panel that the\ncomplexity of the issues or other reasons warrant the extension of one or more\nof the time tables. In such case, the Panel may extend such time tables, but in\nno event shall the time tables being extended so that the ADR proceeding extends\nmore than 18 months from its beginning to the Award. In regard to such time\ntables, the parties (i) acknowledge that the issues that may arise in any\ndispute involving this Agreement may involve a number of complex matters and\n(ii) confirm their intention that each party will have the opportunity to\nconduct complete discovery with respect to all material issues involved in a\ndispute within the framework provided above. Within such time frames, each\nparty shall have the right to conduct discovery in accordance with the Federal\nRules of Civil Procedure. The Panel shall not award punitive damages to either\nParty and the Parties shall be deemed to have waived any right to such damages.\nThe Panel shall, in rendering its decision, apply the substantive law of the\nState of California, without regard to its conflict of laws provisions, except\nthat the interpretation of and enforcement of this Section 14.3(b) shall be\ngoverned by the Federal Arbitration Act. The Panel shall apply the Federal\nRules of Evidence to the hearing. The proceeding shall take place in the City\nof Chicago. The fees of the Panels and ENDISPUTE shall be paid by the losing\nParty which shall be designated by the Panel. If the Panel is unable to\ndesignate a losing party, it shall so state and the fees shall be split equally\nbetween the Parties.\n\n (c) AWARD. The Panel is empowered to award any remedy allowed\nby law, including money damages, multiple damages, prejudgment interest and\nattorneys' fee, and to grant final, complete, interim, or interlocutory relief,\nincluding injunctive relief but excluding punitive damages.\n\n (d) COSTS. Except as set forth in Section 14.3(c), above, each\nparty shall bear its own legal fees. The Panel shall assess its costs, fees and\nexpenses against the party losing the ADR unless it believes that neither party\nis the clear loser, in which case the Panel shall divide such fees, costs and\nexpenses according to the Panel's sole discretion.\n\n (e) CONFIDENTIALITY. The ADR proceeding shall be confidential\nand the Panel shall issue appropriate protective orders to safeguard each\nparty's Proprietary Information. Except as required by law, no party shall make\n(or instruct the Panel to make) any public announcement with respect to the\nproceedings or decision of the Panel without prior written consent of each other\nparty. The existence of any dispute submitted to ADR, and the award, shall be\nkept in confidence by the parties and the Panel, except as required in\nconnection with the enforcement of such award or as otherwise required by\napplicable law.\n\n 14.4 JURISDICTION. For the purposes of this Article 14, the parties\nacknowledge their diversity (Gilead having its principal place of business in\nCalifornia and P&U having its principal place of business in Luxembourg) and\nagree to accept the jurisdiction of the Federal District Court in San Francisco,\nCA for the purposes of enforcing awards entered pursuant to this Article and for\nenforcing the agreements reflected in this Article.\n\n 14.5 GOVERNING LAW. This Agreement is made in accordance with and shall\nbe governed and construed under the laws of the State of California, as such\nlaws are applied to contract entered into and to be performed within such state.\n\n\n 26.\n\n\n\n ARTICLE 15\n\n MISCELLANEOUS\n\n 15.1 AGENCY. Neither party is, nor will be deemed to be, an employee,\nagent or legal representative of the other party for any purpose. Neither party\nwill be entitled to enter into any contracts in the name of, or on behalf of the\nother party, nor will a party be entitled to pledge the credit of the other\nparty in any way or hold itself out as having authority to do so. This\nAgreement is an arm's-length license agreement between the parties and shall not\nconstitute or be construed as a joint venture.\n\n 15.2 ASSIGNMENT. Except as otherwise provided herein, neither this\nAgreement nor any interest hereunder will be assignable in part or in whole by\nany party without the prior written consent of the other; PROVIDED, HOWEVER,\nthat either party may assign this Agreement to any successor by merger or sale\nof substantially all of its business to which this Agreement relates in a manner\nsuch that the assignor will remain liable and responsible for the performance\nand observance of all its duties and obligations hereunder. This Agreement will\nbe binding upon the successors and permitted assigns of the parties and the name\nof a party herein will be deemed to include the names of such party's successors\nand permitted assigns to the extent necessary to carry out the intent of this\nAgreement. Any assignment which is not in accordance with this Section 15.2\nwill be void.\n\n 15.3 DISCLOSURE. Any public disclosure of this Agreement and the terms\nhereof, including but not limited to press releases, will be reviewed and\nconsented to by each party prior to such disclosure. Such consent shall not be\nuntimely or unreasonably withheld by either party.\n\n 15.4 AMENDMENT. No amendment or modification hereof shall be valid or\nbinding upon the parties unless made in writing and signed by both parties.\n\n 15.5 NOTICES. Any notice or other communication required or permitted to\nbe given to either party hereto shall be in writing unless otherwise specified\nand shall be deemed to have been properly given and to be effective on the date\nof delivery if delivered in person or by facsimile or three (3) days after\nmailing by registered or certified mail, postage paid, to the other party at the\nfollowing address:\n\nIn the case of Gilead:\n\nGilead Sciences, Inc.\n353 Lakeside Drive\nFoster City, CA 94404\nTelephone: (415) 574-3000\nFAX: (415) 578-9264\nAttention: Chief Executive Officer\n\nIn the case of P&U: and copy to:\n\nSecretary V.P. of Business Development\nPharmacia & Upjohn S.A Pharmacia & Upjohn Company\nc\/o Credit Europeen 7000 Portage Road\n52 route d'Esch Portage, Michigan 49001\nL-1470 Luxembourg FAX 616-323-6247\n\n\n 27.\n\n\n\nEither party may change its address for communications by a notice to the other\nparty in accordance with this Section 15.5.\n\n 15.6 FORCE MAJEURE. Any delay in performance by any party under this\nAgreement shall not be considered a breach of this Agreement if and to the\nextent caused by occurrences beyond the reasonable control of the party\naffected, including but not limited to acts of God, embargoes, governmental\nrestrictions, strikes or other concerted acts of workers, fire, flood,\nearthquake, explosion, riots, wars, civil disorder, rebellion or sabotage. The\nparty suffering such occurrence shall immediately notify the other party and any\ntime for performance hereunder shall be extended by the actual time of delay\ncaused by the occurrence.\n\n 15.7 SEVERABILITY. If any term, condition or provision of this Agreement\nis held to be unenforceable for any reason, it shall, if possible, be\ninterpreted, to achieve the intent of the parties to this Agreement to the\nextent possible rather than voided. In any event, all other terms, conditions\nand provision of this Agreement shall be deemed valid and enforceable to the\nfull extent.\n\n 15.8 CUMULATIVE RIGHTS. The rights, powers and remedies hereunder shall\nbe in addition to, and not in limitation of, all rights, powers and remedies\nprovided at law or in equity, or under any other agreement between the parties.\nAll of such rights, powers and remedies shall be cumulative, and may be\nexercised successively or cumulatively.\n\n 15.9 WAIVER. No waiver by either party hereto on any breach or default\nof any of the covenants or agreements herein set forth shall be deemed a waiver\nas to any subsequent or similar breach or default.\n\n 15.10 ENTIRE AGREEMENT. This Agreement, the Stock Purchase Agreement and\nany and all Exhibits referred to herein and therein embody the entire\nunderstanding of the parties with respect to the subject matter hereof and shall\nsupersede all previous communications, representations or understandings, either\noral or written, between the parties relating to the subject matter hereof.\n\n IN WITNESS WHEREOF, both Gilead and P&U have executed this Agreement by\ntheir respective officer hereunto duly authorized.\n\nGILEAD SCIENCES, INC. PHARMACIA & UPJOHN, S.A.\n\nBy: \/s\/ John C. Martin By: \/s\/ Robert C. Salisbury\n --------------------------- ---------------------------------------\nName: John C. Martin Name: Robert C. Salisbury\n ------------------------- -------------------------------------\n\nTitle: CEO Title: Chairman, Board of Directors, PUSA\n ------------------------ ------------------------------------\n\n\n By: \/s\/ Carl-Johan Blomberg\n ---------------------------------------\n Name: Carl-Johan Blomberg\n -------------------------------------\n Title: Finance Director, PUSA\n ------------------------------------\n Date: August 7, 1996\n\n 28.\n\n\n\n<\/pre>\n